McCreanney v. McCreanney Ch Div 10 April 2003

ROYAL COURTS OF JUSTICE

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Claim No HCO1CO3108

10 April 2003

BETWEEN:

JASON VINCENT MCCREANNEY

Claimant

-and-

JENNIFER A McCREANNEY

SARAH L MANSFIELD

SANDRA M MARIEN

Defendants

APPROVED JUDGMENT

of Mr Nicholas Warren QC

(sitting as a deputy Judge of the High Court)

I direct that pursuant to CPR PD 39A no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

1. I have before me two actions which are minor images of each other. They are family disputes. I shall use the first names of the parties for ease of identification. The claimant in the first action, Jason, seeks to have cautions on a property known as 60 Mile Oak Road, Southwick, Sussex ('the Property') registered under title no WSX991735 vacated. These cautions were registered by the three Defendants, his sisters, Jennifer, Sandra and Sarah. There is one other brother, John, who is not a party to these proceedings but has given evidence to me. The other action is brought by Jennifer, as personal representative of their mother ('Mrs McCreanney') to set aside a transfer of the Property to Jason made in 1991. Before me, Jason was represented by Counsel, Miss Parker who has conducted this case with sensitivity and has assisted the court in identifying such points as there are which can be made against her client; the three sisters appeared in person.

2. At the outset, I should say that this is a sad story of three sisters in conflict with their younger brother. Many serious allegations have been made by the sisters against their brother; and there is much in the witness statements and oral evidence which sought to show Jason in bad light. If I do not deal with all of that evidence expressly, it should not be thought that I am not aware of it. However, much of it is entirely irrelevant to the issue which I have decide, not even going to the credit of Jason. I do not, however, propose to comment on it one way or the other and thus risk making bad family relationships worse.

3. The background (which is not controversial) is this. Mrs McCreanney and her husband acquired a tenancy of the Property (which was then Council property) in the late 1970s. The tenancy was transferred to Mrs McCreanney's sole name in 1980. In 1985, Mrs McCreanney acquired the Property pursuant to the 'right to buy' legislation. The purchase price was £16,005. I do not know the precise source of the purchase price, but it appears from the property register that it was raised in part by borrowing from the National Westminster Bank. In 1986, there was a refinancing with the Gateway Building Society which took a charge over the Property: Sandra, who was no doubt instrumental in arranging this, permitted her house to be used as collateral security. There is no documentary evidence of the amount of the loan or the terms of its repayment but it appears to be common ground that the loan was equal to the whole purchase price and was repayable over the next 8 years (ie 10 years from the original purchase).

4. The original intention was that all five children and their father would contribute to the outgoings on the house and this is what happened (although John did not contribute to the mortgage but says that he made other contributions: nothing turns on that and he does not, in any case, claim any interest in the Property and never has done). The Property was the family home; at one time or another, all the children except Sandra have lived there. But there is no doubt that, until the transfer to Jason which I will come to in due course, the Property belonged absolutely and beneficially to Mrs McCreanney and that none of the children had any interest in it. Because the sisters have, from time to time in their witness statements and in other documents, described the Property in a way which suggests they claim a beneficial interest for themselves, I asked specifically on more than one occasion whether they did so. Their unequivocal answers were that they did not. The Property was quite clearly acquired by their mother and such contributions as they made were not intended to give rise to any beneficial interest in them They may have had expectations that the Property would, in due course, pass to them on their mother's death but they recognised that it was open to Mrs McCreanney to do just what she wanted with the Property. For completeness, I should add that no contributions were made after the Property had been transferred to Jason: there is therefore no question of any beneficial interest having been acquired in that way.

5. The financial arrangements were carried out through what has been referred to as the '5-way account'. This was a bank account in the names of Mrs McCreanney, her three daughters and Jason: John did not feature in this. It was through this account that the contributions of the family to meet the mortgage payments were channelled. Other outgoings, but not all of them, were also dealt with through this account. Jason says - and this was not challenged -that at the beginning his father paid £100 pm, Sarah and Jason paid £50 pm and Sandra and Jennifer paid £100 pm. Jason was having difficulty in 1988 meeting his contribution and did not pay it for some months.

6. Mrs McCreanney's husband died in July 1989, after which things appear to have gone wrong. Sarah was upset by her father's death and, according to Jason, did not make any further direct monetary contributions. This was not challenged by Sarah, He also says that Sandra (for reasons which I need not go into) made no further contributions after the father's death and, again, this was not challenged. Jennifer, who had previously been, but was no longer, in fulltime employment, seems to have stopped contributing some time before November 1991 and was unable to help financially at the time. She was, in fact, at this time trying to find and buy a house of her own. Jason, for his part, had started paying about £200 pm into the 5-way account sometime in 1991 and continued to do so up until the Property was transferred to him by the Transfer; although this is not accepted by the sisters, I believe what Jason has to say about this.

7. By a transfer dated 16 December 1991 ('the Transfer'), the Property was transferred to Jason in circumstances which I will come to in due course.

8. So much for the background which is not, as I understand it, in dispute. It is, in any event, fully supported by the evidence and I find it established as a matter of fact.

9. Although the fact of this the Transfer is not disputed., Jennifer seeks to have it set aside. The sole issue in the case reduced to whether she is entitled to succeed on that allegation: neither she nor her sisters have any other claim in relation to the Property since (i) as I have already said, they do not claim to have had any beneficial interest in the Property prior to the Transfer and (ii) there is no evidence at all which would substantiate any claim that they had acquired an interest in the Property after the Transfer. Indeed, their whole case is that the Property was their mother's all along and that she had been duped and swindled by Jason. I think that part of the problem with which I have to deal has arisen because of a confusion in the minds of the daughters about the most important aspect - that the Property belonged to Mrs McCreanney and was hers to do with exactly as she wished. Thus a statement such as the one which I now set out by Sarah is a fundamental misconception, fixing in her mind the idea that she now has a claim to a share in the Property:

My father, sisters and I all contributed to payment for my mother's property because her house, was the family's house, it belonged to us all.

10. It is true that the Property had, at one time or another, been the home not only of Mrs McCreanney but also of all the children except Sandra. But the position in that respect did not change with the transfer to Jason.

11. I now come to the events in the autumn of 1991 through to the late summer of 1992, but before I consider those, I should say something about the evidence which I have had.

12. First, there is some contemporaneous documentation which assists me a great deal in resolving the issues in the case. Second, I have had evidence from Jason, the three sisters and John in the form of witness statements which they have affirmed. Jennifer and Sandra were cross-examined. There were no other witnesses. I need to point out that the case on behalf of the sisters rests to a significant extent on what Mrs McCreanney is alleged to have said at various times to Jennifer and Sandra. So far as Jennifer is concerned, the relevant conversations took place as late as 1998, some 7 years after the events in question. Jennifer reports what her mother told her, to the effect that the Transfer was a mistake, that she (her mother) had not understood what she was doing; and that the Transfer was 'reversible' (by which I understand her to mean that her mother could have the Property back if she wanted it). I treat with a great measure of circumspection this evidence which is uncertain and to some extent inherently self-contradictory. Jennifer was, herself, a witness prone to exaggeration and to get slightly carried away; she is also prone to make assertions which, although she might believe they are correct, are not supported by evidence. I make the same observations about Sandra. The evidence of John and Sarah did not take the matter further in relation to the issues which I have to decide.

13. At the beginning of this period, Jason was in the army, posted in Northern Ireland. Although his family home was at the Property, he did not live there but visited only when on leave. He left the army sometime in the early summer 1992 and, after a break of about a week when he stayed at the Property, he went to live in Belgium where he and his brother John were starting up a business. Jennifer and her young daughter were living at the Property together with Mrs McCreanney.

14. Sarah was married in the late autumn of 1991. The family had gathered together for the wedding. It became known to Jason that he was the only current contributor to the 5-ways account; and it became known to the family generally that the mortgage payments were in arrears. As at November, the mortgage payments were 3 months in arrears and the family were concerned about the mortgagee commencing possession proceedings.

15. In November 1991, a family meeting was held (shortly before Sarah's wedding for which Jason had returned on leave). At that meeting, at which it appears that all five children, as well as Mrs McCreanney herself, were present, it also became apparent that Mrs McCreanney had run up substantial credit card debts, probably in the order of £7,000 (and of course, carrying a high rate of interest) and other debts remained outstanding, such as Council Tax. Although it had been known before the meeting that were debts, the scale of them only became known to the children at the meeting.

16. At that meeting, Jason at first suggested that he would take over the mortgage repayments. There was initially no suggestion that the Property would be transferred to him. However, the scale of Mrs McCreanney's other debts then became apparent.

17. Jason says that he was unwilling to take on responsibility for those debts as well. He says that he was willing to take over the Property altogether and to raise the finance to discharge all Mrs McCreanney's debts and to discharge the mortgage; but he says that this was only on the basis that he would take a transfer of the Property, effectively buying his mother out. Jason, says that it was understood that his mother would be entitled to remain living at the house for the rest of her life if she wished, and that she would be able to allow other family members to stay there is she wished to allow that. Jennifer says that this was not the way Jason put things at the meeting. She says that she, her sisters and John were all under the impression that Jason was simply agreeing to take over responsibility for the mortgage and the debts, but that the Property would remain Mrs McCreanney's home. There was, she says, no discussion that the Property would be transferred to Jason.

18. Jumping ahead, I remark that Jennifer and her sisters also asserted that it was agreed that the transaction would be reversed: Jason's help with the mortgage and debts was a temporary expedient designed to help Mrs McCreanney over a difficult period when her daughters were unable to help her. I am not clear whether Jennifer says that this is what was agreed at the meeting which I have just referred to or whether it is simply something which Mrs McCreanney subsequently told her, many years later, in about 1998. It cannot, consistently with her evidence that a transfer to Jason was not discussed at the meeting, be the case that it was agreed at the same meeting that the transfer would be reversed. It must, therefore, be the case that the reversibility of the transfer was something discussed between Mrs McCreanney and Jason on some subsequent occasion if it was discussed at all. I shall return to this aspect later.

19. In the light of all the evidence (some of which I refer to later), I prefer Jason's version of events. His version fits with the subsequent actions of Mrs McCreanney in transferring the Property to him and with the fact that an application was made for housing benefit in relation to the rent which Mrs McCreanney became liable. But even if that is wrong so that the result of the meeting was that Jason agreed to take over the mortgage and debts out of the goodness of his heart, the Property would have remained owned by Mrs McCreanney and she could have done what she liked with it - including subsequently deciding to sell it to Jason. The other children can have no complaint in law if that is what Mrs McCreanney decided to do, much as they may dislike the result.

20. What in fact happened was that Mrs McCreanney transferred the Property to Jason on 16 December 1991 in consideration of the sum of £25,000. As it happens, this amount is more than the tenanted value of the Property but significantly less than the vacant possession value. I base that finding on the valuation report obtained for use on an appeal against the refusal of housing benefit in August l992. That valuation is almost contemporaneous and provides, in my judgement, a reliable basis for ascertaining the value of the Property. I do not gain much assistance from a valuation report obtained by Jennifer, Sarah and Sandra in 2002 putting the tenanted value at £30,000: quite apart from the fact that that valuation was only seen by Jason and his advisers when it was produced in court out of the blue (notwithstanding that the sisters had had it for many months), it is, in my judgment, far less reliable being made over 11 years later. It is not suggested by Jason, however, that he obtained any valuation for the purposes of ascertaining the consideration which he would pay his mother. Rather, it was an assessment of the sum which was needed to discharge the mortgage on the Property and Mrs McCreanney's other debts as well as leaving something to provide for future outgoings it was the most which Jason could raise and service.

21. In relation to the transfer, it appears that Mrs McCreanney took the advice of solicitors, John Healey & Co. In the bundle is a letter dated 10 December 1991 from Mr Oberman of that firm to Mrs McCreanney headed 'Your sale of [the Property]'. He advised as follows

I was pleased to meet you to-day and write just to confirm that I mentioned to you, very clearly, that on completion of the sale you would entirely lose all rights of occupation and that you would be in a very difficult position if your son, or his Building Society, were to ask you to vacate the property.

You said that you fully understood this but that it was a family matter and that you had thought everything through. Nevertheless I thought I should confirm this to you as I am now doing.

That advice could not be clearer.

22. The same firm acted for Jason, but it would seem from the correspondence that a different partner was involved. It may well be that Jason found the firm of solicitors and took his mother to them to deal with the transfer of the Property to him. There is no reason, however, to think that Mrs McCreanney was not fully and properly advised or that she was unaware of what she was doing when she transferred the Property. I entirely reject any suggestion, which was hinted at by Jennifer, that the solicitors did not advise properly or were somehow involved in a plot to do down her mother.

23. Jason says that there was no discussion at any time before the transfer about it being reversible. Indeed, if it were, I would have expected that fact to have been mentioned to Mr Oberman: and if it had been it is scarcely believable that he would neither have mentioned it in the letter which I have mentioned nor ensured that Mrs McCreanney's right to reacquire the Property was enshrined in an enforceable document.

24. Following the transfer, Mrs McCreanney, according to Jason, was granted an oral tenancy of the Property to reflect the agreement that she should be allowed to remain in the house. This is confirmed by the application which she made for housing benefit to meet the rent which she was to pay pursuant to that tenancy. It is certainly the case that Mrs McCreanney remained living at the Property until the end of her life. There is a bitter disagreement between Jason and his sisters about whether Jason tried to force his mother to go into a hospice at the very end of her life. In the light of the breakdown of relations between them arising out of the conflicting view of the legal and moral rights and wrongs concerning the Property, this further unhappy episode is not altogether surprising. It has nothing to do, however, with the issues which I have to decide, and I find no need to resolve or take any view on this factual dispute in order to decide those issues.

25. The application for housing benefit was refused - as I understand it mainly because the relevant authority considered that Mrs McCreanney had deliberately and voluntarily deprived herself of the Property. The matter was appealed - in the end successfully but only after some delay and a tribunal hearing. In order to deal with the appeal, Mrs McCreanney instructed solicitors, a different firm, Griffiths Smith. It is not known when or how she found these local solicitors. Jason has no clear recollection of the process of the appeal or whether he had any contact with the solicitors. He thinks it is quite possible that he spoke to them on the phone but does not think that he visited them.

26. What is quite clear is that Mrs McCreanney did visit the solicitors and that she did so without any other family members being present. Unless Jason instructed them about the details of the case, Mrs McCreanney herself must have given them the relevant details. There is nothing to lead me to conclude that Jason provided the details. Indeed, given the attendance of Mrs McCreanney at the meeting with the solicitors (on 30 July 1992) followed by a letter dated 10 August 1992 to Income Support in Worthing from them containing details of the case, my conclusion is that Mrs McCreanney herself provided the details. In that letter the solicitors state as follows:

a. 'As you are aware, the property was transferred to Mrs McCreanney to her son, without vacant possession. Mr [clearly this should be Mrs] McCreanney was simultaneously granted an oral tenancy of the property at the time of completion of the Transfer.'

b. 'She was substantially in arrears with her mortgage repayments and there was a serious risk that possession proceedings would be taken against her by the Mortgagees. Mrs McCreanney's family therefore mounted a rescue package which involved the Transfer of her property, to enable her to ease her financial difficulties ... As we have pointed out, the property was not sold at an undervalue ...'

27. In my judgment, Mrs McCreanney fully appreciated that she had transferred the Property to Jason; she also knew that he thereby became the owner of it to the exclusion of Mrs McCreanney herself. She made no suggestion that she had not understood that that was what she had done; at least none is recorded. In fact, she could not have told her solicitors that she had not intended to effect the transfer since, if she had done so, they would have been duty bound to assert its invalidity if there were valid grounds of attack and would not have been able to make the representations to Income Support and subsequently to the Tribunal which they did. And the position is the same in that respect if the transaction had been reversible, at least if it was the case that Jason was to be expected to return the Property for no consideration if asked. There is of course another possibility: which is that the Transfer was simply a sham designed to obtain housing benefit for the advantage of the family. But no-one asserts that that is the case: all the family say that Mrs McCreanney was an honest person and would not have countenanced such a course of action. There is not, in any case, any evidence at all to support such a suggestion.

28. Sandra has given evidence that she took her mother to the Tribunal. She relates that during the course of the hearing, suggestions were made that she had transferred the Property to Jason simply to enable her claim for housing benefit to be made. Sandra says that her mother broke down in tears and felt completely humiliated. I had initially thought that she meant that her mother was humiliated because she was, in effect, being accused of entering into a dishonest scheme. But on further questioning, it became clear that she meant that her mother was humiliated because she then, and only then, realised what she had done ie that she had disposed of the Property which was no longer hers. That Mrs McCreanney broke down in tears is no doubt true. But I treat with caution the reason which Sandra gives for this. I consider that Sandra's evidence on this issue is something which she has come to believe in the light of the animosity felt to Jason. I think it is just as likely that Mrs McCreanney' s tears were brought about by the criticism made of her by the Tribunal and possibly because she might then have regretted that she had transferred the Property to Jason; I do not accept that it shows that she had not understood that she had in fact transferred the Property to Jason.

29. Sandra says that when she took her mother home to the Property, she was still very upset and in tears. Jennifer lived at the Property at that time, and although she was not there when her mother arrived home, she herself arrived later. Sandra says that she did not tell Jennifer about what had happened at the Tribunal, but thought that it must have come out 'because of all the tears' as she put it. But Jennifer says that it was not until 1994 that she learned of the transfer; and not until later in 1998, in conversation with her mother, was it suggested to her that the Transfer was meant to be reversible.

30. I am afraid that I am unable to accept these accounts. If, as Sandra says, her mother was upset and humiliated for the reasons Sandra gives, I find it almost inconceivable that this would not have been a matter discussed between mother and daughters. If it was really the case that Mrs McCreanney had not understood, until the Tribunal, what she had done (ie transfer the Property to Jason) and had told her daughters of that, it is also inconceivable to my mind that they would not have raised it with Jason. There is no suggestion that they did so.

31. I have no doubt that, on more than one occasion, Mrs McCreanney, expressed to her daughters her regret at what she had done in transferring the house to Jason. It is also the case that on one or two occasions, she asked Jason to reverse the transaction but that he refused. On one occasion, Jason was asked to sell the Property to Sandra and her husband. He may have been willing to do so at a proper price, but I am satisfied that there was never any time when any family member was in a financial position to acquire the Property for market value from Jason.

32. In that context, I should mention again the assertion by the daughters that the transfer was reversible. As I have already said, that was not something which was, or could consistently with Jennifer's own evidence, have been discussed at the November 1991 meeting. It was never, even on the daughters' case, something discussed between them and Jason directly. The reason the daughters make the assertion (unless they are simply making it up) is that Mrs McCreanney told them that this was agreed. But there is simply no evidence to support such an assertion; and Mrs McCreanney's own actions (in failing to mention it to her solicitors on the transfer, and in pursuing the Tribunal appeal with out mentioning it) were not consistent with it. She may have regretted what she did, and may have needed to convince herself that she had not done it after all. There may have been other family pressures on her which led her to make an excuse for what she had done. But that is all speculation. My judgment is that at the time of the Transfer itself, Mrs McCreanney knew what she was doing. The Transfer was intended to be an absolute transfer and was not agreed to be reversible. I would only add that, even it had been reversible, that would not have meant that Jason should simply return the Property to Mrs McCreanney without being able to recover the benefit of the expenditure which he had incurred. The evidence is that no family members were in fact in a position to provide such reimbursement.

33. Jennifer, in her written statement of case, asserts that Jason procured the transfer of the Property by coercion, by deceit and through the betrayal of Mrs McCreanney's trust, and that she was tricked into signing it. The allegation that Mrs McCreanney was duped and coerced into signing the transfer was repeated in the written submission handed up in closing submissions. Sarah says that Jason 'swindled' their mother. These are allegations which, in my judgment, ought never to have been made. There is no evidence at all to support them. The most that can be said is that Jason gave his mother a choice effectively between accepting his assistance by selling the Property to him to allow her to pay off her debts and mortgage or to see the Property sold. He did not offer her a blank cheque or even one limited to her debts. Nor, it should be pointed out, did the daughters or John; none of them, including Jason, could afford to do that in the context of their own overall finances.

34. The misconception which I have referred to in paragraph 9 above also flows through into the final written submission on behalf of Jennifer, Sandra and Sarah which was handed up. The relevant passage reads as follows:

Prior to the transfer we had an unwritten agreement concerning the mortgage, the ownership and entitlement of the family home. The transfer broke this agreement.

However, it will be apparent from what I have already said that I do not agree with this passage. The unwritten agreement was that everyone would contribute the mortgage - an agreement broken by everyone at one time or another, but being observed by Jason alone at the time when the crisis arose. The agreement about ownership and entitlement to the family home was that Mrs McCreanney alone was entitled. It is clear that none of her children was entitled to any beneficial interest. The Transfer did not break that agreement: it only superseded it because the agreement about mortgage contributions had broken down, a matter for which Jason cannot be blamed. There may have been an understanding between the children that the Property would pass to all of the children equally on Mrs McCreanney's death. But such an understanding would not have survived the failure of the parties to keep up the mortgage payments and the transfer to Jason; nor would it have prevented Mrs McCreanney doing what she liked with the Property, including giving it away to a third party or selling it to Jason.

35. If I had any residual doubt, which I do not, that Mrs McCreanney knew what she was doing in making the Transfer, that doubt would be removed by these additional factors: She never once, during her lifetime, sought, so far as is known, any advice to see if the transaction could be set aside. Nor is there any evidence that she ever asserted to Jason that she had not understood what she was doing. She asked him to reverse the transaction (which he refused to do) and said that she regretted what she had done but there is no evidence that she ever asserted to anyone before 1998 (in conversation with Jennifer) that there was an agreement with Jason that the Transfer was reversible.

36. In theory, the Transfer could be attacked on the basis of undue influence, unconscionable bargain or economic duress. I have already rejected any allegation based on fraud or coercion since there is no evidence to support it. I deal with all of these possibilities only to explain to the daughters, who appear in person, why they cannot succeed on any of them.

37. The relationship of son and mother does not give rise to any presumption of undue influence by the son on the mother. On the facts of the present case, there can be no question of establishing any express undue influence. There is nothing to suggest that Mrs McCreanney was anything other than a woman of firm character. She was at the time in good health. Jason was in his early twenties and away from home in the army. He was not in any position of control of his mother's finances and not in a position to exert influence over her. Indeed, if he had done, Jennifer would have known about it as she lived in the Property with her mother. There is simply no evidence to support any suggestion of express undue influence.

38. The relative positions and characters of Mrs McCreanney and Jason make it inherently difficult to establish that the transfer represented an unconscionable bargain. But quite apart from that, the terms of the bargain itself do not seem to be to be unconscionable in any way. Jason acquired the Property for £25,000, which was, as it transpires, more than the tenanted value of the Property. He granted his mother a tenancy as is shown by her success in obtaining housing benefit. She actually lived there until she died; and consistently with what Jason says was agreed, family members resided from time to time in the Property with her. Jason's financial intervention enabled her to discharge her debts and to avoid the building society from bringing possession proceedings. Criticism is made of Jason by his sisters in that he did not investigate alternative courses of action. For instance, it is said that the mortgage outgoings could have been reduced by extending the term (although there is no evidence that this would have been permitted for a lady of Mrs McCreanney's age); then it is said that Mrs McCreanney would have been able to get assistance from the local authority to meet her mortgage outgoings. However, even if an alternative course of action could have been found which would have staved of possession proceedings, the money still had to be found to meet not only the mortgage but also the other, mounting, debts. Jason was not obliged to find some other way of helping his mother out of her crisis. There is nothing, in my judgement, in the suggestion that there was an unconscionable bargain in the present case.

39. Finally, there is the suggestion that Jason's actions amounted to economic duress. In my judgment, there is nothing in this suggestion either: Jason applied no illegitimate pressure nor made illegitimate threats - indeed there is no evidence that he applied pressure or made any threats at all. What he did do was to offer his mother a way out of her predicament. He was under no obligation to do and if he had done nothing and the Property had been sold following possession by the mortgagee, no-one could possibly have any claim against him. Whether other family members would have had grounds for moral censure because, in those circumstance, he had failed to help his mother when she needed help and when he could have done so, is not a matter for the court, although I note that Jason was surely entitled to look to his own economic welfare as much as were his sisters who had, or were looking to acquire, their own homes. Jason's actions were, I consider, nowhere near establishing a case of economic duress.

40. In these circumstances, I consider that the transfer to Jason was valid. Jennifer's claim to the contrary is dismissed. The cautions must be removed and I order rectification of the register accordingly.