IN THE SUPREME COURT OF JUDICATURE
CHANCERY DIVISION
BEFORE MR JUSTICE NEUBERGER
Monday, 14th April 2003
Between:
-and-
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Jeffrey Littman (instructed by Charles Crookes
& Jones, Cardiff) for the claimant.
Simon Hoffman (instructed by Huw James, Cardiff) for the first defendant.
Karen Walden-Smith (instructed by Shoosmiths, Northampton) for the second defendant.
Bryan Thomas (instructed by North & Nam, Cardiff) for the third and fourth defendants.
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1. On 1st February 1998, Bernard Pesticcio (“Bernard”) executed a deed of gift (“the 1998 Deed”) of a freehold house, 155 Railway Street, Splott (“the house”) to his sister, Maureen Niersmans (“Maureen”). On 14th December 1999, Maureen sold the house to Alan Huet (“Alan”) for £50,000, of which £47,500 was provided by Abbey National Plc (“Abbey”) who were granted a mortgage over the house by Alan. Until after the conveyance of 14th December 1999 “the 1999 conveyance”) the house was not registered under the Land Registration Act 1925.
2. By an order made on 11th October 2000 the Court of Protection appointed one of Bernard’s brothers, Ronald Pesticcio (“Ronald”), his receiver, the Court of Protection authorised Ronald “to take such legal proceedings as may be advised and to apply for legal aid in respect of the patient’s [sc. Bernard’s] assets”.
3. Pursuant to that authority, Ronald caused Bernard to bring these proceedings as claimant against Alan, Abbey, Maureen, and Maureen’s husband, Leonard (“the defendants’). There are thus four sets of parties to these proceedings, three of whom (Bernard, Alan, and Maureen and her husband) are funded by the Legal Services Commission, and one of whom, Abbey, is privately funded.
4. The issues in these proceedings are as follows:
(i) Was Bernard’s mental state such that he had insufficient capacity to execute the 1998 Deed?
(ii) If he had sufficient capacity, was the 1998 Deed executed by Bernard under the undue influence of Maureen?
(iii) If lack of capacity or undue influence is established:
(a) Did Maureen have notice of the lack of capacity (it being accepted on her behalf that she must be treated as knowing of any undue influence on her part)?
(b) Did Alan have notice of the lack of capacity or undue influence?
(c) Did Abbey have notice of the lack of capacity or undue influence?
5. In relation to each of these questions, Bernard contends that the answer is in the affirmative, and the defendants, or the relevant defendants, contend that the answer is in the negative.
6. Before turning to the facts, the evidence, and the issues, there is one further point which should be mentioned. Until the hearing, it had been indicated on behalf of Bernard, both in the pleadings, and by virtue of an express concession in court, that neither Alan nor Abbey would be affected by Bernard having had lack of capacity to execute the 1998 Deed, unless they had notice of the same at the time that they acquired their respective interests in the house. This was on the basis that such lack of capacity would have rendered the 1998 Deed voidable, and such voidability could not be enforced against third parties who subsequently acquired an interest in the house without notice of the lack of capacity. Mr Jeffrey Littman, who appears on behalf of Bernard, indicated just before trial that he wished to contend that such lack of capacity would have rendered the 1998 Deed void, and that this would mean that neither Alan nor Abbey had in fact acquired an interest in the house, as Maureen, their vendor, had acquired no title to the house. I decided that it was too late for that contention to be raised.
7. Cosmo Pesticcio (“Cosmo”) started living in the house as a tenant in 1957, together with his wife, Mary (“Mary”) and their five sons (including Bernard, the third son, born in 1933, and Ronald, the fourth son born four years later) and their twin daughters. In 1959, Cosmo purchased the freehold of the house. During the 1960s, all the sons, with the exception of Bernard, left home. Cosmo died intestate in October 1970, and letters of administration to his estate were granted to Mary (his wife) and Ronald, albeit not until 9th July 1981. Shortly thereafter, on 3rd August 1981, Mary and Ronald, as the administrators of Cosmo’s estate, assented to the vesting of the house in Mary. On the same day, Mary executed a deed of gift of the house (“the 1981 Deed”) in favour of Bernard.
8. From the time of Cosmo’s death until May 1997, Bernard lived in the house with his mother, Mary. The reason that Bernard stayed with his mother was that he had contracted meningitis at the age of about 3 months, and, sadly, this had resulted in his being both mentally and physically disadvantaged. He did not have a normal education, but was sent away to a special needs school, from which he was sent back home, apparently because of his epilepsy, a condition which also appears to have originated from his meningitis. His mother taught him to read and write. It is clear that there was a very strong bond between them.
9. For most of his adult life, Bernard was not employed. However, in the early 1950s, he had a job selling newspapers from a stand in Cardiff. It seems this job lasted about 9 months. While it was a long time ago and the evidence is unsurprisingly vague on the point, it would appear that he had to leave this job partly because of his epilepsy and partly because he could not be relied upon to look after the financial side of the job.
10. In 1969, Bernard was hit by a bus after coming out of an epileptic fit. Four years later, he started his second job as a kitchen porter, which appears to have involved carrying things from the kitchen to the wards of the Heath Hospital, Cardiff. After 3 months, he had to leave that job, because he slipped on the hospital kitchen floor and broke his hip. Although the details are obscure, it is clear that he brought personal injury proceedings through Cardiff solicitors, Thompsons, and counsel, which involved him being examined by two orthopaedic surgeons. His claim was settled in 1976,, virtually at the door of the court, for a payment of £8,000.
11. After 1973, Bernard’s physical condition was not particularly good, as a result of his infantile meningitis, and his accidents in 1969 and 1973. Although paralysed on his right side, with a claw and a clubfoot, and needing to rely on a walking stick to walk, he nonetheless appears to have been mobile in terms of being able to get around, both in the house and outside it. This was important, because his mother, Mary, also had health difficulties, having being diagnosed with cancer in 1981, which resulted in her jaws being removed. Her speech was consequently poor, and she had to eat and drink: with the aid of a straw. From at least 1981 until 1997, Bernard was responsible for keeping the household supplied with cash and living materials. Thus, it would be he who paid into the bank any sums or cheques payable to him or his mother in respect of pension, disability benefit or social security, it was he who cashed cheques at the bank for any cash that was required, and it was he who did the shopping. He had his own bank account and his own Post Office account. He also had an insurance policy with the Allied Dunbar group, which was surrendered in 1997, for about £5,000.
12. People would visit the house, and talk to Bernard. He would go to the pub, and talk to people. He used a CB Radio where his codename was The Baron. He watched television and listened to music. Bernard also enjoyed swimming. It also appears that he regularly visited the municipal working men’s club and a social club for disabled persons, both in Cardiff. He went to church every week. He visited Lourdes about 20 times over the years. He seems to have formed an attachment with two women at different times, one of whom was called Brenda, whom he met through the social club, and one of whom was called Angela, whom he met through the working men 3 s club. It is unclear quite how close these relationships were, although it appears that there was some talk of Bernard and Brenda marrying when their respective mothers died. However, neither relationship matured into a formal engagement, let alone a marriage. Bernard also normally owned a dog until 1997
13. Some two or three years after the house had been given to Bernard, he executed a legal charge (“the 1984 charge”) in favour of the National Westminster Bank Plc (“the Bank”), on 19th April 1984, to secure a comparatively small “Home Improvement Loan”, which was presumably spent on the house. In the 1984 Charge, Bernard was described as “disabled”. This charge was paid off in 1994.
14. Mary and Bernard lived together in the house between 1981 and 1997, until 11th May 1997, when Bernard had a fall which was sufficiently serious for him to be hospitalised for 25 weeks. He appears to have gone into a coma, and then to have suffered brain damage. After his stay in hospital, he transferred to St Albans Nursing Home, where he remains resident to this day, although he visited his mother and Maureen from time to time thereafter.
15. Even before Bernard went into the nursing home, Maureen would, according to her, “physically” help him in collecting his benefits. From late 1997, when he went into the nursing home, she took over the collection of his benefits, the payment of his nursing home fees and the payment of the balance to him (or his mother). She would do this by paying the nursing home, and then paying the balance to Bernard and Mary, from her account. Some time after late 1997, Maureen started carrying out the same exercise for Mary (including paying Mary’s nursing home fees after she had gone into the nursing home).
16. Immediately after Bernard’s accident, Mary went to live in the Plymouth public house, in Grangetown, with her granddaughter, Caroline Niersmans (“Caroline”), the daughter of Maureen and Leonard. Caroline was managing that pub with her then-boyfriend, Alan. Shortly thereafter, Caroline and Alan moved from the Plymouth to the Cardiff Arms Public House, Cardiff, (which had, for a few years previously, been managed by Maureen and Leonard). Mary moved with them, but, she was apparently unhappy living in the Cardiff Arms, possibly because of the number of stairs she had to climb. She therefore moved in with Maureen (her daughter, and Caroline’s mother) and Maureen’s husband Leonard, who owned a house at 2 Muirton Road, Tremorfa. However, Mary wanted to move back to the house, and, when she did so, in early 1998, Maureen (and Leonard) moved with her in order to continue looking after her. They let 2 Muirton Road.
17. In July 1997, Dawn Tindall, a solicitor practising under the name of Triangle Legal Services at Brunswick Street, Cardiff, was contacted by Maureen or Caroline. They knew her because she sometimes frequented the Cardiff Arms public house, which they ran, and where she played darts. She went to the house, which Bernard was visiting from hospital, on 3rd October 1997, when she saw Mary, Bernard, Maureen and (briefly) Caroline.
18. On 15th October 1997, Miss Tindall visited Bernard at the hospital. On that visit Bernard executed a will which had been drafted for him by Miss Tindall, and under which he appointed Maureen and Caroline as his executors. In this will (“the 1997 Will”), he left his assets (other than any dwelling house he owned) on trust in six equal parts, of which two were to be held for Maureen, two for Caroline, one for his nephew Christopher, and one for Christopher’s children. The 1997 Will provided that any house which Bernard owned should be occupied by Mary for life (and if the house was sold, the proceeds should be Mary’s for life) and, on her death, the house was, or any proceeds were to be held on the trust already described. Miss Tindall was one of the two witnesses to the 1997 Will.
19. On the same occasion on 15th October 1997, Bernard executed an enduring power of attorney (“the EPA”) in favour of Maureen. Miss Tindall drafted the EPA using the standard form, and was the witness thereunder to Bernard’s signature. At the time of the execution of the 1997 Will, it appears that, although it seemed pretty clear from what she was told that Bernard owned the house, Miss Tindall had not been able to obtain the relevant title documentation from the Bank. The EPA was not apparently completed until 1999.
20. Thereafter, Miss Tindall obtained the relevant title documentation, and she had a meeting with Bernard and Maureen on 8th January 1998. She explained that, if Mary vacated the house then, so long as Bernard owned it, the house would be taken into account as part of his assets by the local authority, when considering Bernard’s ability to pay towards the cost of the home. According to Miss Tindall, Bernard wanted to give the house to his sister Maureen, so that she could look after Mary as he had done. Even at that time, it did not seem likely that Bernard would ever leave the nursing home.
21. Accordingly, Miss Tindall drew up the 1998 Deed, which, understandably, indeed sensibly, followed the wording of the 1981 Deed. She went to the house on 3rd February 1998, when Bernard was visiting from the nursing home. She spoke to him about the 1998 Deed in the absence of Maureen. He and Maureen then executed it. The signatures of Bernard and Maureen on the 1998 Deed were each witnessed by Miss Tindall.
22. On the same day the 1998 Deed was executed, Miss Tindall also saw Mary, who signed a will prepared by Miss Tindall. It was virtually identical to that which had been made by Bernard, namely the 1997 Will, but there was no reference to any real property, because, at any rate by then, it was clear that the house had been owned by Bernard and not by Mary.
23. By April 1999, it appears that Maureen was finding it increasingly difficult to look after Mary, who went into St Albans Nursing Home, initially for respite care. However, she decided to stay, and she remained there until her death at the age of 95, which took place during the present hearing, on 19th March 2003.
24, Meanwhile, Alan, who was the boyfriend of Caroline, the daughter of Maureen and Leonard, was seeking to purchase a property. He completed an Abbey mortgage application in respect of his proposed purchased of a property at 60 Janet Street on 12th August 1999, but, about 3 months later, he informed Abbey that he would be purchasing the house instead. That was because the vendor of 60 Janet Street withdrew, and Alan (and Caroline) had agreed with Maureen (and Leonard) that he would purchase the house from Maureen. Maureen said that she wished to leave the house at least because she was being pestered by Ronald. Alan had already instructed a firm of solicitors called Ashmans to act for him, and they arranged for Maureen to instruct a firm with whom they had a connection (albeit that there was no financial interest between the two firms) called Elliott-Jones in Abertillery.
25. The individual acting on the transaction for Ashmans, on behalf of Alan and Abbey, was Michael Clements, who had joined Ashmans as a trainee in July 1999, and qualified as a solicitor in October 2000. He was, so far as I can judge, in early middle age, and he had previously been a businessman, with experience in property.
26. The documents of title which Mr Clements saw, included the 1981 Deed, the 1984 charge, and, the 1998 Deed. He noticed that the 1998 Deed did not bear any Particulars Delivered Stamp, or a valid Certificate of Value and Exemption. This led him to seek a quotation from insurers in respect of an indemnity, but that was refused. After he had discussed the matter with Elliott-Jones, he agreed that they should contact Miss Tindall (whose name appeared on the back sheet of the 1998 Deed), both for the purpose of having it stamped and for the purpose of obtaining a declaration of solvency.
27. Both these purposes were achieved. Elliott-Jones apparently sent the 1998 Deed to the Stamp Office, and it was stamped as being exempt from duty. Further, a declaration of solvency was obtained on 3rd December 1999 from Maureen, in her capacity as attorney for Bernard under the EPA. Although Mr Clements saw this declaration of solvency, he did not see the EPA, but assumed that Elliott-Jones had seen it and was satisfied that it was valid. On 7th December 1999, Mr Clements decided that he was satisfied with the title to the house, and completed a Certificate of Title for the benefit of Abbey. Contracts between Maureen and Alan were exchanged on 8th December 1999, and the transaction was completed on 14th December 1999. Maureen and Leonard, meanwhile, purchased their present house at St Athan.
28. Ronald, who had already had been unhappy when he had learnt that Bernard had given the house to Maureen, was even more unhappy after he learnt that Maureen had sold it to Alan. Relations between Ronald, and Maureen and her family, had never been good and they deteriorated in 1998 and 1999. At some point in 2000, there was a serious falling out between Ronald and Maureen Leonard and Caroline (“the individual defendants’). It may have been precipitated by a scuffle at the nursing home, but its nature and cause do not matter. Whatever the reason, the falling out seems to have caused Mary, who had previously favoured Maureen, and, as I find, had not trusted Ronald, to change sides, and it would seem that Bernard did so too.
29. It may have been as a result of this apparent change of heart on the part of Bernard, coupled with his concern about the gift and subsequent sale of the house, that Ronald applied to the Court of Protection for an order substantially in the form granted on 11th October 2000. Thereafter, he began the present proceedings for relief against Alan, Abbey, and Maureen (and, because of possible following on tracing claims, against Leonard) on the basis of the contentions that Bernard lacked the necessary capacity to enter into the 1998 Deed and/or that he entered into the 1998 Deed under the undue influence of Maureen.
30. I propose to consider the issues in the following order. First, whether Bernard had the necessary capacity to enter into the 1998 Deed. Secondly, whether Bernard entered into the 1998 Deed under the undue influence of Maureen. Thirdly, the extent to which Maureen and/or Alan had actual notice of lack of capacity and/or undue influence. Fourthly, the extent to which Alan and Abbey had deemed notice, through Ashmans, of lack of capacity and/or undue influence. I shall then express my conclusions.
31. In In re Beaney Dec’d [1978] 1 WLR 770, Mr Martin Nourse QC, sitting as a Deputy Judge, had to consider the question of capacity in relation to a Deed of Gift. As he said at 773A:
[T]he question in each case is whether the person concerned is capable of understanding what he does by executing the deed in question when its general purport has been fully explained to him.
It was common ground in that case that the donor had to understand:
First, that she was making a gift, secondly that the subject matter of the gift was the house, and thirdly that the person to whom she was giving it was her daughter Valerie (at 773B).
However, what was in dispute was whether, in addition:
[I]t was also necessary for [the donor] to understand that she was giving away her only asset of value, and was thus depriving her other two children of any real interest in her estate (at 773C).
32. As Mr Nourse explained, this disputed additional factor for establishing capacity would have been required if what had been involved was a will rather than a deed of gift., He accepted that, at least in that case, this additional factor was required. At 774D-E, he said this:
The degree or extent of understanding required in respect of any instrument is relative to the particular transaction which it is to effect. In the case of a will the degree required is always high. In the case of a contract, a deed made for consideration or a gift inter vivos ... the degree required varies with the circumstances of the transaction. Thus, at one extreme, if the subject matter and value of the gift are trivial in relation to the donor’s other assets a low of understanding will suffice. But, at the other extreme, if its effect is to dispose of the donor’s only asset of value and thus, for practical purposes, to pre-empt the devolution of his estate under his will or on his intestacy, then the degree of understanding required is as high as that required for a will, and the donor must understand the claims of all potential donees and the extent of the property to be disposed of.
33. In this case, as in Beaney, it appears to me that “the degree of understanding required is as high as that required for a will” essentially because the house represented over 90% of Bernard’s assets. In those circumstances, it is perhaps not unhelpful to refer to paragraph 34.29 of Tristram and Coote’s Probate Practice 20 Edition, which says this in relation to the requirements of testamentary capacity:
The testator must understand the nature of the act and effect; the extent of the property of which he is disposing; the claims to which he ought to give effect; and, with a view to the latter object; no disorder of the mind must poison his affections, pervert his sense of right or prevent the exercise of natural faculties, and no insane delusion must influence his will in disposing of his property, and bring about a disposal of it which, if the mind had been sound, would not have been made.
34. That passage (in the 28th Edition) was cited and relied on by Rimer J when deciding whether a gift was valid - see In re Morris Dec'd [2001] WTLR 113 7 at 1195 -1196.
35. Both Beaney and Morris, and the earlier cases upon which they directly or indirectly relied, involved minds which were diseased or had deteriorated, normally through the passage of time. The issue therefore was the extent to which the purported testator or donor suffered from mental illness, and in particular Alzheimer’s disease or senility. The present case is slightly different. Almost certainly because of his epilepsy, Bernard has suffered from relatively low mental ability and understanding since he has been three months old.
36. In this connection, it is important to record that it is common ground that his mental ability and understanding have remained substantially the same for the whole of Bernard’s adult life. In particular, it is agreed that neither the accidents suffered by Bernard, nor the passage of time up to 2001, caused deterioration in Bernard’s mental state. Although some of the witnesses called on behalf of the defendants said that they thought that Bernard was of average or ordinary intelligence, I am clearly of the view that he was not, in light of the other evidence, to which I have referred, or to which I will refer during the course of this judgment.
37. Given that Bernard was of significantly lower than average intelligence and understanding, it appears to me that, although the problem is slightly different from that in the cases to which I have directly or indirectly referred, the issue is ultimately the same, and is encapsulated in the passages I have quoted from Beaney, and from Tristram and Coote. The difficulty I face, therefore, does not arise from identifying the test to be applied, but from having to apply the test to the facts of this case, as they have emerged in evidence.
38. To support his contention that Bernard lacked the necessary capacity to execute the 1998 Deed, Mr Littman relies on three aspects of the evidence. The first is Ronald’s testimony, the second is the order of the Court of Protection, and the third is expert opinion.
39. Ronald’s evidence was to the effect that Bernard was “incapable of fully understanding the implications of any legal documentation”. I did not find Ronald a particularly satisfactory witness, in that he exaggerated his closeness to, and concern about, both his mother Mary and his brother Bernard. While he visited them from time to time at the house, I accept the evidence of Maureen that Mary did not get on with, or approve of, Ronald, not least because he borrowed money from Maureen and Mary to feed his gambling habit (as, to his credit, he admitted). His suggestion that he was close to Mary is belied by the fact that he appears to have done nothing to look after her when Bernard had to go to hospital, and it was left entirely to Maureen and her family to look after Mary.
40. Further, although Ronald suggested that his concern was simply to protect Bernard, I think he was at least as interested to ensure, as far as he could, that he obtained an interest in the house. He rather gave the game away when he described himself as having been “ripped off” as a result of the 1998 transfer. Although I do not suggest that he did not care about Bernard at all, I consider that Ronald was primarily motivated by his own possible loss of any interest in the house as a result of its having been given to Maureen and subsequently sold to Alan.
41. So fox as the order of the Court of Protection is concerned, it was sought on the basis of a medical certificate signed by Dr C Davies on 21st January 2000, in which she stated that she had “last examined” Bernard on 25th January 2000, “and in my opinion [he] is incapable by reason of mental disorder of managing and administering his property and affairs”. This opinion was expressed to be based on evidence consisting of “childhood meningitis resulting in epilepsy [and] head injury resulting in hemiparesis”. On 14th July 2000, the Public Trust Office describe this “medical evidence” as “unclear”, which appears to be correct, given that neither epilepsy not hemiparesis necessarily involve or lead to any mental disorder.
42. As a result, Dr G Foy, a partner of Dr Davies, also practising from Splott, wrote a letter on 4th August 2000, stating that he had been asked by “the brother of my patient Bernard ... to provide evidence of Bernard’s mental capacity”. Dr Foy went on to say that he had been Bernard’s GP since 1989 had “noted on each occasion that he is of low IQ”, and that this was consistent with a specialist’s report to Bernard’s then GP in July 1957 “which indicated low intelligence equations and poor memory”. The central part of Dr Foy’s letter was in these terms:
It is my firm opinion that Bernard ... is of sufficiently low intelligence as the result brain damage in childhood due to meningitis that he would be incapable of fully understanding the implications of any legal documentation.
43. Mr Littman relies on the fact that Bernard has been found by the Court of protection to be “a person who is incapable, by reason of mental disorder, of managing his affairs” (by virtue of the terms of the October 2000 order and of sections 94 to 96 of the Mental Health Act 1983). He first contends that that is conclusive of the issue I have to decide, given that it is common ground that Bernard’s mental state was the same in 1997 and 2001. I do not agree. The defendants are bound by the fact that Bernard is subject to the order of October 2000 - i.e. that he is a patient. They are not bound by the grounds upon which he became a patient: they were not even notified of the application for the order. If Bernard had been married, and had then had got divorced, on the grounds of his desertion, unreasonable behaviour and /or adultery, the defendants would have had to accept that he was divorced, but, as persons who had not been parties to the divorce proceedings, they would not have been bound by any findings or admissions of desertion, unreasonable behaviour or adultery.
44. Mr Littman alternatively argues that the existence of a Court of Protection order is of some evidential assistance to the claimant’s case. With that I agree. However, the views of a doctor, who has not been cross-examined must be taken into account with particular care. Further, the fact that Bernard is “of low IQ”, and even that he “would be incapable of fully understanding the implications of any legal documentation”, would not be determinative of the issue of Bernard’s capacity. Low IQ is too vague, plainly. As to the second observation, it would be necessary to know what sort of “legal documentation” Dr Foy had in mind, what the full “implications” which have to be “fully understood”, how “full” an understanding he envisaged, and the extent to which his view might change if the effect of the documentation was tolerably simple, and had been clearly explained to Bernard. After all, Mr Nourse in Be referred to “the general purport” having to be understood, after a full explanation. Quite apart from this, there is no necessary congruity between the concept of incapability of managing affairs and that of absence of capacity.
45. The expert opinion relied on by Mr Littman was that of Dr Frank Vingoe. He is a Chartered Psychologist (Forensic and Clinical) and whose qualification are BA(Hons), MA, PhD, ABEPH, and FBPsS. His report is long and detailed. It begins by setting out Bernard’s medical records, which tend to demonstrate that he has always suffered from physical and mental disadvantages. Dr Vingoe then summarises the pleadings in these proceedings in a little detail. The report then describes the interview which Dr Vingoe had with Bernard, and then turns to the tests which were carried out by Dr Vingoe, and their results. In terms of “reading comprehension”, “verbal intelligence”, and “verbal understanding”, Bernard was in the lowest one percentile of the population. His “age-equivalent” in basic reading, spelling, and reading comprehension was between 6.9 and 7.9. His IQ in respect of “verbal”, “verbal comprehension”, and “working memory”, was around 60.
46. Dr Vingoe’s report describes Bernard’s “level of verbal understanding [as] very limited indeed”. It also states that Bernard “had quite significant deficits in his ability to concentrate, and his short term memory was extremely poor”. It describes Bernard’s “general understanding, both with written and oral material [as] extremely limited”. Dr Vingoe also reports that:
[l]t seemed very clear that [Bernard] was very limited in his ability to communicate, and understand the communications from others, whether in written or oral form.
47. The report concludes:
Therefore, on the balance of probabilities, it seems that [Bernard] was mentally incapable of dealing with his affairs and did not have sufficient mental capacity to understand the implications of the legal documents. More specifically, it is extremely doubtful indeed that [Bernard] fully understood the issues involved in the transfer of [the house] to his sister ... via a deed of gift in February 1998.
48. Having been appointed as a single joint expert pursuant to CPR 35.7, Dr Vingoe was asked questions by the solicitors for the individual defendants. In answer to the question whether Bernard “was capable of understanding that he was the owner of the house in May 1997, Dr Vingoe described the question as “difficult to answer” because of Bernard’s fall on 10th May 1997, which he thought rendered it “highly likely that [he] may have been confused and was not aware or remembered that he owned the house”. However, he went on to say that “following the accident in May 1997” there may have been “times [when] he may have had at least a vague idea that he did own the [house]”. This answer is slightly unsatisfactory from my point of view, as it is linked (through no fault of Dr Vingoe) to the period after May 1997, when Bernard had his fall, whereas I am concerned with the situation as at February 1998.
49. Dr Vingoe went on to say that “this would mean that [Bernard] would also have been capable of understanding the effect of the deed of gift was that he would no longer own the [house]”. He also said that, even if Bernard “vaguely underst[ood] that he had passed the property on to [Maureen] he may not have understood that that was a final arrangement and that he could not just get it back from [Maureen] willy nilly”. However, Dr Vingoe thought that Bernard “was probably aware that he was dealing with his sister at the time of the deed of gift”.
50. Dr Vingoe was also of the view that Bernard’s lack of understanding would not necessarily have been apparent without formal testing. He said this:
In certain instances many people may appear more intelligent than they are, particularly if they are amongst people they know well. It is consistent with the writer’s [sc. Dr Vingoe’s] assessment that a lay-person may be unaware of the lack of understanding. In the writer’s opinion, it is not enough to ask [Bernard] whether he understands, but to actually have him “spell out” his understanding of the proceedings.
51. Cross-examination of Dr Vingoe established, as seemed fairly apparent from his report, that he had not in fact asked Bernard any questions which were directly germane to the issue which I have to determine, namely as to his recollection or understanding as to the ownership of the house and of the effect of the 1998 Deed. Nonetheless, as is again fairly apparent from his report, Dr Vingoe was sceptical about the notion that Bernard would have understood the concept of his ownership of the house, and, even more, the effect of the 1998 Deed, and its ramifications.
52. Dr Vingoe substantially stuck to his views in cross examination. He appeared to be somewhat defensive and dogmatic in his manner of answering questions, but I do not consider that it would be safe to draw any adverse inferences from this. His somewhat belligerent manner may have been his natural style or it was attributable to nothing more than sensitivity to criticism. Further, although he came across as somewhat opinionated at times, he was, at least on occasions, engagingly aware of his tendency to overstate his case. There were unsatisfactory aspects of his evidence.
53. First, it seems clear that some of Dr Vingoe’s information was obtained from discussions with Ronald. Ronald was under a misconception as to when Bernard contracted meningitis, and that misconception found its way into Dr Vingoe’s report; and some of Dr Vingoe’s apparently contemporaneous notes seem pretty clearly to be based on discussions with Ronald. Yet, Dr Vingoe did not seem to recall having had any such discussions, let alone what he was told in those discussions. Secondly, and connected with this, Dr Vingoe’s discussions with Ronald may have influenced his perception of Bernard, because, as was clear from his evidence, Ronald has a strong opinion about Bernard’s mental state, and I am confident that he would have conveyed to Dr Vingoe that strong opinion. Dr Vingoe did not receive any countervailing opinion from, for instance, Maureen, because he did not have any discussions with her.
54. Thirdly, I think that it is a fair point on behalf of the defendants that Dr Vingoe does not appear to have asked Bernard any questions which directly impinged on the extent of his comprehension in relation to his ownership of the house and his having given it to Maureen in 1998. Fourthly, as mentioned, Dr Vingoe was also unable to identify, at least to my satisfaction, any answers given by Bernard to any questions he put, which, even indirectly, would have thrown much light on Bernard’s understanding of that sort of issue.
55. Fifthly, I think that there is some force in the criticism that Dr Vingoe seemed, no doubt unconsciously, somewhat to have slanted his report. Thus, although his notes show that Bernard knew his own date of birth and the year Ronald was born, which Dr Vingoe appeared to accept was not without significance in the context of the present enquiry, he made no record of that. Furthermore, although it is to his credit that Dr Vingoe went through the many hospital notes relating to Bernard, it does seem to me that he laid greater emphasis on those notes which called into question Bernard’s mental capacity, rather than those which tended to point the other way.
56. Sixthly, in so far as Dr Vingoe directed his mind to the specific question of Bernard’s capacity in relation to the 1998 Deed, I thought that he concentrated more on the issue of the extent to which Bernard would have understood the relevant legal documentation, and in particular the 1998 Deed, as opposed to the centrally relevant issue of whether Bernard would have understood the “general purport” of the legal documentation, if it had been “fully explained” to him. I have little difficulty in accepting that, had Bernard been limited to reading the 1998 Deed, relatively simple as it is, he may not have understood its import. However, if its general purport was fully explained to him, it is by no means clear, even on Dr Vingoe’s evidence, that he would not have appreciated its effect, albeit that I accept that Dr Vingoe’s view is that he would probably not have understood its general purport even if it had been fully explained to him.
57. It is right to mention that the reliability of Dr Vingoe’s conclusions is reinforced by the fact that the individual defendants successfully applied for Dr Vingoe to be treated as Bernard’s expert, and for permission to call their own expert, which they have not done. It is likely that the individual defendants instructed a psychologist who either provided them, or else indicated that he would provide them, with a report which would not have been substantially inconsistent with that of Dr Vingoe, and, in particular, would not have tended to support the contention that Bernard had sufficient capacity to execute the 1998 Deed.
58. However, the defendants were in a position to point to other evidence to support the contention that Bernard did have such capacity. First, he had had the two jobs to which I have referred. Secondly, there were his various activities which it is clear he was capable of carrying out. I have in mind the fact that he had his own bank and post office accounts, the paying in of cheques to the bank, taking money out of the bank, shopping, using his CB Radio, and reading the newspapers. Thirdly, in addition to the evidence of Maureen, Leonard, their daughter Caroline, and her former boyfriend Alan, I heard from five witnesses who were not related to the Pesticcio family, and a nephew of Bernard, Paul John, who was not involved in this dispute. All these six witnesses had known Bernard quite well or very well over a long period. It is fair to say that these six witnesses appear to have known Maureen and/or Caroline, but it was not suggested to them in evidence, or to me in argument, that they were not telling the truth, and I saw no reason to doubt their honesty.
59. The picture of Bernard that emerges from these six witnesses, which was consistent with the picture painted by the evidence of the individual defendants and Caroline, was as follows. He was friendly and talkative, albeit that he talked slowly and rather unclearly. When people visited the house he appears to have talked to them happily. His trips to the Bank and to the shops would often last a very long time, because he would stop and talk to people whom he knew in the street. He was happy to have discussions in the pub when he went there. He discussed topics which he had read about in the newspapers, and he held strong views on various subjects. He was careful with his money, and noticed on occasions when he was short changed. His physical disabilities were plain to see, but he was not evidently mentally subnormal.
60. Jeanette Rego who had known the Pesticcio family for 30 years, said “he could tell you cash and change” and that he was “pretty good with money”. She also said that he could remember lottery numbers from a day before, and she recalled having seen him read the newspapers. Elizabeth Kemble, another life-long friend of the Pesticcio family, said that Bernard could keep the score on a dart board, and he would frequently ask question or speak about “his home, sport and politics, especially the Gulf War when my husband was on standby”.
61. Charles Browan, a friend of Bernard, said that he had seen Bernard fill in betting slips, and that, if he won, he would know the amount of his winnings. June Lewis, a friend of Maureen, said he often exchanged “family banter”, and that he also “did word puzzles”, albeit of a fairly elementary nature. Paul John said he “would never describe [Bernard] as having any form of mental disability”. He saw Bernard checking his bank statements.
62. These witnesses had all known Bernard for a long time and were fond of him. Because they had known him for a long time, there is a risk that they may have overlooked the fact that he was mentally subnormal, just as one may not appreciate a person with whom one has lived for a long time is very eccentric. The fact that these people were fond of Bernard may well have caused them to be resistant to the notion that he was mentally subnormal. I also accept Dr Vingoe’s point that people, who do not have his professional experience and qualifications, may not appreciate how little a person who is mentally subnormal actually understands. However, even allowing for those factors, I find it very hard to reconcile the evidence of these witnesses with the very bleak picture which the claimant seeks to paint of Bernard’s mental condition, with the assistance of Dr Vingoe’s evidence.
63. The evidence of Maureen, Leonard, Caroline and Alan was to much the same effect. Maureen did not strike me as a wholly reliable witness. Her suggestion that Bernard said he wanted to transfer the house to her as early as mid-1997 seems unlikely and self-serving. It is inconsistent with the notes of Miss Tindall, who recorded that, on 3rd October 1997, Bernard “wanted to give the property to his mother so that she could live as long as she wished, and that it should go to Maureen and Caroline and Christopher”. Maureen’s evidence that a list of work carried out to the house was prepared over a long period, when the work was done, seemed incredible: the note was pretty clearly prepared over a short period as a single exercise. However, I did not think Maureen was by any means wholly unreliable as a witness either. I thought Caroline and Leonard exaggerated the amount of work done on the house after Maureen and Leonard moved into the house in 1998. Again, however, I do not think that they were wholly unreliable witnesses. Alan was a more reliable witness but he did not know Bernard nearly as well as the other individual defendants and Caroline.
64. With the exception of Ronald (whose evidence was generally not very reliable), no evidence from those who knew Bernard was called on behalf of the claimant. This is not without significance, especially as, in the claimant’s pleaded case, it was alleged that the allegation of incapacity was partly based on “the advice and experience of too many persons to particularise”. However, the claimant may have chosen to limit his evidence to the testimony of Dr Vingoe and Ronald on the basis of cost-effectiveness. However, it should be added that a similar point may be made about the defendants not having called expert evidence.
65. Over and above the oral evidence, there are other factors to suggest that the rather bleak assessment of Bernard’s mental capacity for which the claimant contends is overstated. The most important extraneous fact, albeit that the details are (not surprisingly) lacking, is that Bernard brought and settled a personal injury claim in the mid-1970s, which involved his instructing and meeting experienced solicitors, counsel, and two medical experts. It is not so much that Bernard apparently instructed them himself (because I accept that he may have been assisted in that connection), but none of them appear to have concluded that he was incapable of instructing them, even to the point of agreeing a settlement on his behalf. It is not as if Bernard’s mental state can have deteriorated between the date of the settlement of his personal injury action and 1998 or 2001, because it is common ground that his mental state has effectively remained constant.
66. Of more minor significance, but nonetheless not irrelevant, are the facts that Bernard applied for and obtained a home improvement loan by way of mortgage in April 1984, which he redeemed in October 1997, that he made a will in 1988, and that at some point he took out an insurance policy with Allied Dunbar. These transactions must have involved other parties, namely the Bank, the solicitor who drew up the will, and Allied Dunbar, respectively; they were all prepared to deal with Bernard without apparently challenging his capacity. Of course, it would be wrong to make too much of these factors because, as with the settlement of his personal injury litigation, I have not heard from any of the parties involved in the transactions, and, other than their existence, I know very little about them.
67. Finally there is the evidence of Miss Tindall. Her first contacts were with Maureen and Caroline, there were aspects of the way in which she carried on her practice (and in particular her record keeping in late 1997 and early 1998) which, as she fairly accepted, can be criticised, and there were aspects of her evidence which I could not accept. Nonetheless, it was rightly not suggested that she was a dishonest witness. Nor do I think that she was an incompetent solicitor.
68. She was prepared to act for Bernard, in relation to his will and the EPA in late 1997, and in relation to the 1998 Deed itself. She had previously worked with large firms, and had specialised in private client work. In her note of a meeting on 5th November 1997, she records that she read through the EPA and “was satisfied that [Bernard] understood the contents and was happy to proceed” and that “he was happy with the contents” of the will. In her evidence, she made it clear that she had considered the question of Bernard’s capacity, and had concluded that he did indeed have sufficient capacity to execute the 1998 Deed.
69. While Miss Tindall was an honest witness in my view, she was somewhat defensive and I think that, to a degree, she persuaded herself that certain things had happened when they had not. Most importantly, I do not think that she was consulted about a possible gift of the house by Bernard and Maureen in 1997, as she says. Her contemporaneous notes record nothing to that effect, as I have mentioned. Indeed, they indicate that Bernard wished to leave the house to Mary. Miss Tindall also had failings, as she admitted, in her record keeping. Nonetheless, I have no reason to doubt the accuracy of her evidence as to her concern about, and her being satisfied of, Bernard’s capacity. Nor do I doubt that she specifically considered that topic before he signed the 1998 Deed, and that she satisfied herself that he was competent to sign it.
70. I have come to the conclusion, not without hesitation, that Bernard had the necessary capacity to execute the 1998 Deed. My hesitation is principally due Dr Vingoe’s evidence and to the high degree of understanding required by the law, bearing in mind that the effect of the 1998 Deed was to deprive Bernard of his only significant asset, and, indeed, of what had been his home for nearly 40 years. In light of the evidence, looked at as a whole, I have reached the following views as to Bernard’s understanding.
71. First, it seems to me pretty clear that Bernard had sufficient capacity to understand that he owned the house. The evidence of the witnesses, who knew Bernard and were called by the defendants, would have to have been quite misleading, and Miss Tindall would have to have been really incompetent, for it to be otherwise. The argument that Bernard may not have understood the effect of legal documents does not really impinge on this conclusion, and Dr Vingoe’s evidence does not cause me much concern on this first point.
72. Secondly, with rather more hesitation, I consider that Bernard was capable of understanding the effect of giving the house to Maureen. I appreciate that, as Dr Vingoe said, a child may understand the concept of giving his marbles to another child, while finding it more difficult to understand the effect of giving a house to someone. Nonetheless, the concept of giving away a building permanently does not seem to me to be particularly complex. Once again, the evidence of the people who knew Bernard and of Miss Tindall would be hard to reconcile with any other conclusion. I accept that the conclusion is rather more difficult to reconcile with Dr Vingoe’s evidence, but in the end I feel that its effect is outweighed by the other evidence, and, in any event, there were features of Dr Vingoe’s evidence which were not entirely satisfactory, although it would be unfair on him to overstate such criticisms.
73. Where I have most difficulty is on the question of whether Bernard understood the ramifications of giving the house to Maureen, bearing in mind the effect on other parties. He was plainly very anxious to protect his mother, with whom he had an exceptionally close relationship. Therefore, as Mr Littman points out, it is, at least at first sight, surprising that Bernard gave the house to Maureen. The effect of that gift was that Maureen could have required Mary to leave the house at any time. However, it seems clear to me from all the evidence, particularly the testimony of Miss Tindall and Maureen, that Mary wanted Bernard to give the house to Maureen. Mary, and indeed Bernard, apparently wanted Maureen to look after her in the house, and felt that there was a better chance of achieving this if Maureen owned the house. Nonetheless, the outright, unqualified, gift of the house to Maureen was not logical if Bernard’s primary concern was to protect his mother. There is therefore real room for wondering whether he appreciated the effect of what he was doing.
74. However, the very person, namely Mary, that he wished to protect, namely his mother, wanted him - indeed was keen for him - to take the very step which he took. It is, therefore, I think, hard to conclude that he cannot have understood the effect of that step, simply because it may have had a detrimental effect on the person he was seeking to protect.
75. I have no reason to think that Bernard would have been concerned about anybody other than his mother, and, possibly, Maureen, who was looking after his mother. Certainly, despite Ronald’s evidence suggesting the contrary, I do not consider that, in 1998, Bernard would have been concerned or interested in benefiting Ronald. As to his other siblings, nephews or nieces, there is nothing to suggest that Bernard was anxious - or felt obliged - to do anything for them, other than the fact that he left Christopher, and Christopher’s children an interest in his 1997 will. However, there is nothing to suggest that anyone other than Mary (because she was his mother with whom he had lived all his life, and with whom he had an exceptionally close relationship) and, possibly, Maureen, would have been treated by Bernard as having a “claim” in the sense of being able to raise any moral (or legal) obligation on Bernard in their favour.
76. Miss Tindall says that she explained to Bernard, before he signed the 1998 Deed, that he could give the house to anyone he wished. She says that he “confirmed that, as his sister cared about them both [so. Bernard and Mary] he would give it [sc. the house] to his sister Maureen”. I accept that evidence, and have come to the conclusion that, when he signed the 1998 Deed, Bernard appreciated its general purport. Accordingly, I conclude that Bernard had the necessary capacity to execute the 1998 Deed.
77. The law relating to undue influence has been considered and explained in a number of recent cases, the most notable and authoritative of which are the decisions of the House of Lords in Barclays Bank Plc v. O’Brien [1994] 1 AC 180 and Royal Bank of Scotland Plc v. Etridge (No.2) [2002] 2 AC 773. The law on the topic was also recently considered in an unreported decision of the Court of Appeal, Hammond v. Osborn [2002] WTLR 1126.
78. So far as the existence of undue influence is concerned, there are two primary categories of case, as explained in paragraph 8 of Lord Nicholls’s speech in Etridge. As he explained:
The first comprises overt acts of improper pressure or coercion such as unlawful threats ... The second form arises out of a relationship between two persons where one has acquired over another a measure of influence, or ascendancy, of which the ascendant person then takes unfair advantage.
79. The claimant’s case against Maureen is in the second category: there is no suggestion, let alone evidence, of the sort of “overt acts” mentioned by Lord Nicholls.
80. The second category of undue influence cases itself has two classes, as explained by Lord Nicholls in paragraph 18 of Etridge. First, there are certain relationships where “the law presumes, irrebuttably, that one party had influence over the other”. If this was such a case, then, as Lord Nicholls went on to say, Bernard would “[not] need [to] prove he actually reposed trust and confidence in the other party. It [would be] sufficient for him to prove the existence of the type of relationship”. That, however, is not this case. The sort of relationships which give rise to the presumption were described by Lord Nicholls as “parent and child, guardian and ward, trustee and beneficiary, solicitor and client, and medical adviser and patient”. It was not suggested, in my view rightly, that a sibling relationship gives rise to the presumption.
81. In those circumstances, it is necessary for the claimant to establish that the circumstances existed which give rise to the presumption of undue influence. The burden of proof is on the claimant, and in order to discharge that burden, there are what Lord Nicholls identified in paragraph 21 in Etridge “two pre-requisites”, which he went on to describe in these terms:
First, that the complainant [sc. Bernard] reposed trust and confidence in the other party, or the other party acquired ascendancy over the complainant. Second, that the transaction is not readily explicable by the relationship of the parties.
82. If these two requirements are satisfied, then the transaction will be set aside “in the absence of a satisfactory explanation” for it - see per Lord Nicholls in paragraph 14. Further, it may be possible to defeat the claim of undue influence on the basis that the claimant has independent advice on the transaction - see per Lord Nicholls in Etridge at paragraph 20. 83. Three questions therefore arise:
(i) Did Bernard place “trust and confidence” in Maureen?
(ii) If yes, was the gift effected by the 1998 Deed to Bernard’s “manifest disadvantage”?
(iii) If yes, is there a “satisfactory explanation” for the gift, or some other basis upon which undue influence can be rebutted?
84. Realistically, the defendants accept that the transaction concerned, namely the 1998 Deed, by which Bernard gave the house to Maureen, was to Bernard’s “manifest disadvantage”. Particularly as the house was his only asset, and had been his home for some 40 years, it would be hard even to mount an argument that giving it away was not, at least on the face of it, to his “manifest disadvantage”. It is therefore necessary to consider only the first and third questions. I turn to consider whether Bernard reposed “trust and confidence” in Maureen, sufficient to satisfy the first requirement of a case of undue influence.
85. I do not consider that it is either sensible or realistically possible to provide an exhaustive definition of what is meant by reposing trust and confidence. However useful guidance is to be obtained from some of the cases. At paragraph 14 in Etridge, Lord Nicholls said:
Proof that the complainant placed trust and confidence in the other party in relation to the management of the complainant’s financial affairs, coupled with the transaction which calls for explanation, will normally be sufficient, failing satisfactory evidence to the contrary, to discharge the burden of proof.
86. In In re Morris, to which I have referred, Rimer J had to consider a submission that the relationship in that case was not “of the kind which it is possible to presume that [other parties] had influenced [the complainant] unduly into making the financial transaction in question”. This was on the basis that the other parties’ “role was confined to that of carers concerned with the provision of [the complainant’s] domestic needs, and they were not in the habit of dealing with her financial affairs” – see at paragraph 1155-6. In the following paragraph, Rimer J rejected that contention, saying this, at 1156:
Cases of undue influence are invariably about financial transactions and there is no suggestion in [the authorities] that the relationship between the complainant and wrongdoer must be one in which the wrongdoer was accustomed to give advice on financial matters to the complainant.
87. Rimer J then described the question of whether or not the complainant “reposed a sufficient degree of trust and confidence” in the other parties, was a “factual question”, which involved “a consideration of the nature of the relationship and the circumstances in which the transactions were effected”. As the word “sufficient” indicates, there must be enough trust and confidence, before a complainant can establish a case of undue influence. Indeed, the very expression “undue influence” carries with it an acceptance that there can be “due”, i.e. unexceptionable or acceptable, influence. Indeed, I think that this was effectively accepted by Lord Nicholls at paragraph 19 in Etridge when he said “there is nothing unusual or strange in a wife, for motives of affection or other reasons, conferring substantial financial benefits on her husband”. So too will there be cases where the claimant establishes some “trust and confidence” but of an insufficient degree to establish a claim of undue influence (at least where the presumption is being invoked in the absence of a relationship, which automatically gives rise to the presumption).
88. The primary person in whom Bernard reposed trust and confidence at the time of the 1998 Deed (and indeed, almost up to the time of her death) was his mother, Mary. Indeed, on the evidence available, I have little doubt but that it was she who primarily “called the shots” so far as Bernard was concerned. That accords with the evidence of Ronald (who described Bernard as “extremely obedient and loyal to our mother” and who said that Bernard “always abides by her wishes”), and with the evidence of the individual defendants and Caroline, in general terms. It is also supported by the evidence of some of the six other witnesses who knew Bernard. Ms Rego said Bernard and Mary “basically idolised each other”; Ms Kemble said Mary would have a substantial say in the decision of the family”. Miss Tindall also had the clear impression that Mary was the strongest character in the house when she visited in July and October 1997.
89. There is no allegation by the claimant of undue influence having been exerted on Bernard by Mary, his mother; the allegation concerns Maureen, his sister. The fact that Bernard reposed trust and confidence in his mother, as I find, does not, however, prevent his having reposed trust and confidence in his sister as well. Nonetheless, the fact that his mother was the most influential figure in his life, make it more difficult to contend that he reposed sufficient trust and confidence in his sister. An individual can place trust and confidence in more than one person, and there can therefore, in my opinion, be no reason why an individual cannot place sufficient trust and confidence in more than one person for one of those persons to be capable of exerting undue influence on the individual in respect of a transaction. Nonetheless, especially where the two persons are the individual’s mother and sister, and the mother is undoubtedly the person in whom trust and confidence was primarily placed by the individual (and especially as the mother had influence in relation to the specific transaction sought to be impugned), a claim against the sister must be scrutinised with particular care.
90. The factors which are relied on to support the contention that by February 1998, Bernard had reposed sufficient trust and confidence in Maureen are as follows. First he delegated all his financial affairs to her under the EPA in October 1997. Secondly, he had deputed to her the responsibility for receiving, in her own name, the disability and other benefits payable to Bernard, and the paying out therefrom of his nursing home fees, and of spending money to him and his mother. Thirdly, Maureen received and retained in her own bank account (to dispose of as Bernard and his mother told her) the proceeds from the surrender of his Allied Dunbar policy. Fourthly, he trusted her to look after his mother: that was one of his main purposes (to put it at its lowest) of giving the house to Maureen. Fifthly, these factors have to be judged in the context of Maureen being Bernard’s sister, Bernard being mentally subnormal and Mary, his mother, being the most important influence on him and supporting the transaction.
91. In my judgment, these various factors, when taken together, do establish the necessary degree of trust and confidence for the claimant to satisfy the first of the three requirements for his claim in undue influence. By February 1998, Bernard had placed his financial affairs under Maureen’s control, both in principle (the EPA) and in practice (the receipt of his benefits and of the policy surrender and the payment of his nursing home fees). He also entrusted to her the care of the person who mattered most to him, and to whom he was closest, namely his mother. (In this connection, the absence of a legal obligation in the 1998 Deed on Maureen to care for Mary can be said to reinforce the trust and confidence placed by Bernard in Maureen.) This was trust and confidence of a pretty high order. The fact that Bernard was mentally below normal seems to me to reinforce the conclusion, not least but not solely, because the law relating to undue influence is based on public policy - see Hammond at paragraphs 12 and 32, citing Allcard v. Skinner (1887) 36 Ch. D 145 at 171.
92. I do not consider that the fact that Bernard placed trust and confidence in Mary alters this position. First, it does not directly detract from the primary facts the claimant relies on against Maureen: there was no EPA in favour of Mary; Mary had no direct control over Bernard’s money: on the contrary, by February 1998, it may be that Maureen was controlling Mary’s money - if not, she was shortly to do so; it was Mary who was to be looked after by Maureen. The fact that Mary was in favour of the gift of the house to Maureen can be said to help the claimant’s case as much as hinder it. It appears to me more likely than not that Mary favoured the gift, because it would enable her to be cared for in the house by Maureen; that means that Mary’s support of the gift of the house was based on her trusting Maureen to care for her. Accordingly, albeit in an indirect way, Mary’s support for the gift can be seen as an aspect of the fourth factor relied on by the claimant in support of his case in trust and confidence.
93. It is therefore necessary to consider whether there is an adequate or “satisfactory explanation” for the 1998 Deed, or some other basis for rebutting undue influence, the final question which must be considered in relation to a claim to set aside a transaction on the basis of alleged undue influence. Two points are put forward by the defendants. The first is that the 1998 Deed can be, and has been, satisfactorily explained. The second is that Bernard had independent legal advice on the Deed from Miss Tindall. I do not consider that either point assists the defendants.
94. The explanation put forward for the gift of the house has two facets. First, that Bernard wanted to avoid the house being taken into account and, possibly, sold, when the local authority assessed his liability for nursing home fees. Secondly, that Bernard gave the house to Maureen to protect his mother. The first problem with these explanations is that, so long as Mary was living at the house, it would not be taken into account by the local authority when assessing Bernard’s liability for nursing home fees. The second problem is that a gift of a person’s house, if that person is already in a nursing home, can be set aside at the instance of the local authority, if the gift’s purpose was to avoid liability for the fees. The third problem is that the terms of the 1998 Deed conferred no protection on Mary whatsoever: Maureen could have evicted Mary from the house as soon as the 1998 Deed was executed. The fourth problem is that the gift deprived Bernard of well over 90% of his assets (the house was worth over £50,000 and his only significant asset appears to have been the £5,000-odd proceeds from his Allied Dunbar policy). The fifth problem is that, if Bernard had been left with £ 18,000 that would not have been taken into account when assessing his nursing home fees. Taking all these factors together, I do not think that there is a “reasonable explanation” for the 1998 Deed.
95. It may be sensible briefly to explain why I consider that the above reasons, for rejecting the contention that there is a “reasonable explanation” for the 1998 Deed, do not cause me to doubt my conclusion that Bernard had the necessary capacity to enter into the same. First, the absence of a good reason for a person entering into a deed is not direct evidence of lack of capacity, although I certainly accept it is a factor which should frequently be taken into account in considering such an issue. Secondly, at least in the present case, the absence of a reasonable explanation for Bernard having entered into the 1998 Deed is merely one of a number of factors to be taken into account when considering his alleged lack of capacity, and many of the other factors are of more direct relevance in connection with that issue. Thirdly, it seems to me that the fact that Bernard’s mother was keen for him to enter into the 1998 Deed is an important factor which serves to explain why he did so when it comes to the question of his capacity. However, I do not think that it is enough to provide a “reasonable explanation” when it comes to the issue of undue influence. Fourthly, rebutting a lack of capacity contention, and rebutting the presumption of undue influence involve different considerations, as is well illustrated by a passage in Snell’s Equity, 30th Edition, at 617 (cited by Ward LJ at paragraph 39 in Hammond):
In order to rebut the presumption [of undue influence] it is not sufficient to show that the complainant understood what he was doing and intended to do it. The problem is not lack of understanding but lack of independence.
96. I turn, then, to the second ground upon which it is said by the defendants that the presumption of undue influence is rebutted, namely the fact that Miss Tindall, a solicitor, advised Bernard in relation to the 1998 Deed. In this connection, it appears to me that the centrally important point to bear in mind is that it is not sufficient for the defendants to establish that Bernard was advised as to the effect of the transaction by Miss Tindall. Once presumed undue influence is established by a complainant against a person, the presumption will only be rebutted if that person can show that the complainant “was free to act on the advice ... given to her”: see Allcard at 184, at paragraphs 20, per Lord Nicholls, and 153, per Lord Scott, in Etridge, and at paragraph 26 in Hammond. The same point was made by Mr Kevin Garnett QC, sitting as a Deputy Judge, in Williams v. Williams (TLC 607/02, unreported, 27th February 2003, at paragraphs 25 and 26).
97. As I have already indicated, Miss Tindall was an honest witness, but had persuaded herself that certain things had happened when they had not, and, as a solicitor, was generally competent but was by no means without fault. I do not accept her evidence to the effect that she was consulted by Bernard about the possibility of giving the house to his mother in 1997. Her contemporaneous notes contain nothing to that effect, and, indeed, they suggest the opposite. Further, if her evidence is correct, it is not entirely easy to understand why she prepared a will for Bernard in 1997 which involved disposing of the house, but only prepared the deed of gift some 3 months later. Further, although she made a contemporaneous note of her three attendances on Bernard in 1997, there were no contemporaneous notes of her two attendances on Bernard in 1998.
98. In my view, Miss Tindall did not consider the question of whether Bernard might be executing the 1998 Deed on the basis of any undue influence. In her witness statement, and in her three attendance notes for 1997, it is clear that she was alive to the question of Bernard’s possible lack of capacity. In her first attendance note, relating to the meeting on 30th July 1997, she recorded:
Whilst he suffers from a physical problem and he is not fully comprehending the situation, I believe he has sufficient mental capacity to complete a will and an EPA.
In her note of the meeting of 3rd October 1997, she recorded;
He was slow speaking but clearly understood what I was saying as he comprehended my comments.
99. In her proof of evidence, Miss Tindall said:
I was happy that Bernard satisfied the three capacities in that he was over 18, he knew the extent of his property, and he was mentally competent. He also knew of all potential beneficiaries and explained clearly why some beneficiaries were omitted as beneficiaries of the will and some were included.
100. It is fair to say that Miss Tindall said in her evidence that she had “concerns about the influence of [Mary] as it seemed to me that she may have been directing Bernard to follow her lead at the initial meeting”. She went on to say that, as a result, she saw Bernard separately, and “he confirmed coherent and practical reasons for the transfer of the property to his sister”. I find that hard to accept, not least because, as I have explained, the reasons put forward for justifying the transfer of the house to Maureen were neither coherent nor practical. It would not “ensure his mother would have a home”, as Miss Tindall immediately went on to say in her evidence. Further, there was nothing to indicate what would happen if Bernard left the nursing home: he would have had nowhere to live as of right, because he would have given away his only home, an unencumbered house, to his sister.
101. In my opinion, while Miss Tindall did consider the question of Bernard’s mental capacity, she did not consider the question of undue influence, despite her suggestion to the contrary. She did not do that which she should have done, namely to make it clear to Bernard what his options were, and advise him in particular against the potential disadvantage to himself, and indeed to his mother, of giving away the house to Maureen, without imposing any obligations on her at all. My view of Miss Tindall’s evidence on this aspect is quite neatly illustrated by my assessment of her evidence that she “explained [to Bernard] that he did not have to follow [his mother’s] or anyone else’s wishes but he could give the house to whoever he wanted”.
102. First, even taking that statement at face value, the essential point is that the vital advice, namely that he did not have to give the house to anyone, but would be very well advised to retain it for himself, was not given. Secondly, there appears to be no suggestion that he could and should have imposed an obligation on Maureen to house their mother, and, indeed, himself, if he left the nursing home, as a condition of giving her the house. Thirdly, Miss Tindall did not advise Bernard that he could retain £18,000 worth of assets without the risk of their being then taken into account for his nursing home fees. Fourthly, although I consider that she has persuaded herself that it is true, I do not think that Miss Tindall specifically explained to Bernard that he need not follow the wishes of Mary, Maureen or anyone else. Now that the question of undue influence has been raised, I believe that Miss Tindall has persuaded herself that she did direct her mind, and indeed her advice, to that topic, when she did not in fact do so. Her contemporaneous notes do not suggest that that was of any concern to her, and it is only her subsequent evidence (and her retrospectively reconstructed attendance notes) which make any reference to that aspect.
103. Although I should emphasise that there is no suggestion of Miss Tindall being in any way dishonest, I think that she may have been influenced by the fact that she was friendly with Caroline and Maureen, and was happy to act in the transaction which involved the house being given to Maureen. This may have subconsciously coloured her attitude to Bernard. That view is supported by the fact that the letters Miss Tindall wrote in connection with the house were addressed to Caroline and Maureen at the house, and not to Bernard at the nursing home. While I accept that she regarded Bernard as her client, she was happy to write to, and even to take instructions (albeit not final instructions) from, Maureen (and possibly Caroline), rather than Bernard.
104. Miss Tindall said that Bernard authorised her to communicate with Maureen and Caroline, rather than with himself. However, it appears that Miss Tindall wrote to Maureen and Caroline, rather than to Bernard, not merely because Bernard agreed, but because she asked him if she could do so. I do not think that that was a sensible request to make to a client, particularly one who was in a nursing home and was mentally subnormal. That criticism is reinforced by the fact that Miss Tindall never checked whether Bernard received her letters. Although there was a suggestion by Maureen and Caroline that they relayed the contents of Miss Tindall’s letters to him, I do not believe them. The notion of either of them solemnly reading out a two-page solicitor’s letter to Bernard in his nursing home, which is what they say happened, seems to me to be fanciful.
105. All in all, I believe that Miss Tindall did not really distinguish between Maureen and Caroline, on the one hand, and, Bernard, on the other hand. I reach that view on the basis of my impression of the oral evidence, by Miss Tindall’s friendship with Caroline and Maureen, and the fact that she wrote directly to them rather than to Bernard in connection with the house.
106. In these circumstances, particularly bearing in mind that Bernard was mentally subnormal, and that this was apparent to Miss Tindall (not least because she said that she specifically considered his mental capacity), I consider that the fact that Bernard had legal advice from Miss Tindall in connection with the 1998 Deed does not, on the unusual facts of this case, enable the defendants to rebut the presumption of undue influence. I think the problem in connection with the legal advice in the present case may well originate at least in part from the fact that it was obtained from an acquaintance, even a friend, of the person, or the daughter of the person, who exerted the presumed undue influence. For future reference, it would plainly be sensible if a person who may exercise (presumed or actual) undue influence ensures that the solicitor who gives the advice to the potential claimant is wholly unconnected with that person.
107. The claimant, to my mind rightly, accepts that there is no basis upon which it can be alleged that Abbey had actual notice of Bernard’s lack of capacity (if, contrary to my view, there was such lack of capacity) or that he was subject to undue influence, when entering into the 1998 Deed. What the claimant contends is that Maureen and Alan had actual notice of such lack of capacity and of such undue influence. I am not sure that the question of notice applies to Maureen, as the recipient of the gift under the 1998 Deed, but, in any event, it is conceded, again in my view quite rightly, that she could not rely on lack of notice so far as undue influence is concerned.
108. The first question which I should consider, therefore, is whether either Maureen or Alan would have had notice of Bernard’s lack of capacity, if I had found that he did indeed not have the necessary capacity to enter into the 1998 Deed. Inevitably, because I have found that Bernard did not lack capacity, it is rather difficult for me to determine whether Maureen and/or Alan would have had notice of his lack of capacity, not least because it would depend on the extent to which Bernard lacked capacity. Thus, if Bernard only just lacked capacity, it would be easier to conclude that a person who knew him would not have appreciated that he lacked capacity, than it would be if Bernard lacked capacity in a high degree. Inevitably, given that I have concluded that Bernard did not lack capacity, I am inclined to proceed on the basis that, if he did lack capacity, it was only by a relatively small degree.
109. On the assumption that Bernard lacked capacity, I am tolerably confident that Alan would not have had actual notice of this. First, as I have indicated, it seems to me that I should proceed for these purposes on the basis that Bernard fell modestly short of having capacity. Secondly, as I have mentioned, Dr Vingoe accepted that, on the basis that Bernard lacked capacity (as I think he believed), this may not have been clear to a layperson, especially one who did not know him very well. While I accept that Alan quite frequently saw Bernard, the effect of the evidence is that he did not talk to him a great deal or in depth. Unless he was being dishonest or self-deceiving in his evidence, Alan’s own testimony indicates pretty clearly that he did not think that Bernard lacked capacity. While I think that Alan rather overstated Bernard’s mental ability, I am quite satisfied that he was an honest witness. Any such overstatement was attributable to the two factors I have already mentioned, namely the fact that he was pretty familiar with Bernard, and therefore likely to overlook (or effectively take for granted) any mental subnormality, and because he liked Bernard, who is plainly an agreeable person, and therefore may not like to have thought of him as mentally subnormal. Nonetheless, even allowing for these factors, it seems to me that if Bernard had been plainly mentally subnormal, those sort of factors could not, on their own, have explained why Alan said that he thought Bernard’s mental ability was normal: Alan would, to put it bluntly, have had to have been lying, and I do not think he was a liar.
110. In these circumstances, I do not consider that Alan would have had actual notice of Bernard’s incapacity, if, indeed, Bernard had lacked capacity. The position with regard to Maureen is plainly more difficult. She was Bernard’s sister, they had lived together for a long period, until she moved out of the house, and she plainly knew him very well. In relation to Maureen, I find it almost impossible to reach a satisfactory conclusion as to whether, had I found Bernard lacked capacity, Maureen would have had notice of it.
111. If I have to reach a decision on the issue of whether Maureen would have had notice of Bernard’s mental incapacity, my conclusion, for what it is worth, would be that she did have such notice. The length and closeness of their relationship means that, apart from Mary (whose perception would have been very much affected by the fact that she was Bernard’s mother and had lived with him all his life), Maureen appears to have been the person who would have known him best. In those circumstances, I think that she would have had as much information as anybody about Bernard’s mental ability, and therefore should be treated as having had notice of his incapacity. In reaching that conclusion, I am assuming that having notice of all the facts which give rise to incapacity is sufficient to amount to notice of incapacity, and that it is not necessary to know of the legal concept, let alone the legal implications, of lack of capacity. That was not a point which was gone into at the hearing.
112. The remaining question relating to actual notice is whether Alan had actual notice of Maureen’s undue influence on Bernard. So far as that is concerned, there is no evidence that Alan knew of many of the factors which gave rise to the presumption of trust and confidence, such as the execution of the EPA, and the entrusting of Bernard’s financial affairs in Maureen. Furthermore, he did not know of the details of the transaction which culminated in the 1998 Deed. In these circumstances, I consider that he did not have actual notice of sufficient facts which gave rise to the conclusion that Bernard executed the 1998 Deed under the undue influence of Maureen. Accordingly, it follows that I do not consider that Alan was fixed with actual notice of undue influence.
113. On behalf of the claimant, Mr Littman does not suggest that Abbey or Alan can have had notice of Bernard’s incapacity (if, contrary to my view, he had such incapacity) through the solicitor who were acting on their behalf in connection with the 1999 conveyance, namely Mr Clements of Ashmans. However, the claimant does contend that they had notice of undue influence through Ashmans.
114. Alan and Abbey contend that they were each bona fide purchasers for value without notice, the expression “purchaser” clearly extending to Abbey in its capacity as mortgagee, by virtue of section 205(1)(xi) of the Law of Property Act 1925. The only aspect of their case which is challenged by the claimant relates to the absence of “notice”. Mr Littman contends that Alan and Abbey, through the information obtained by Ashmans during the course of the conveyancing transaction which culminated in the 1999 conveyance (and the contemporaneous mortgage to Abbey), obtained sufficient information to enable them to know of, or alternatively to put them “on Inquiry” as to (or afford them constructive notice of), Bernard having executed the 1.998 Deed under the undue influence of Maureen.
115. In connection with putting on inquiry (or constructive notice), reference should be made to section 199(1) of the 1925 Act which provides, so far as is relevant:
A purchaser shall not be prejudicially affected by notice of -
(i) any instrument or matter capable of registration under the provisions of the Land Charges Act 1925 ... ;
(ii) any other instrument or matter or any fact or thing unless -
(a) it is within his own knowledge, or would have come to his knowledge if such inquiries and inspections that had been made as ought reasonably to have been made by him; or
(b) in the same transaction with respect to which a question of notice to the purchaser arises, it has come to the knowledge of his counsel, as such, or of his solicitor or other agent, as such, or would have come to the knowledge of his solicitor or other agent, as such, if such inquiries had been made as ought reasonably to have been made by the solicitor or other agent.
The importance of section 199(1)(ii)(b) was emphasised in Halifax Mortgage Services Limited v. Stepsky [1996] Ch. 207.
116. The concept of being “put on inquiry” (or constructive notice) in the context of section 199(1)(ii) therefore arises both in relation to what the “purchaser” knows, under paragraph (a), and in relation to what his solicitor knows, under paragraph (b). In connection with this part of the case, I am only concerned with solicitors and paragraph (b).
117. The basis of the claimant’s argument in this connection can thus be characterised that Alan and Abbey had actual notice or were put on inquiry. Although Miss Karen Walden-Smith who appears for Abbey initially contended that the burden is on the person alleging actual or constructive notice, she subsequently conceded that the burden may be on the person alleging he is a bona fide purchaser for value without notice. That concession may well be right in light of what Lord Hoffmann said in Barclays Batik Plc v. Boulter [1999] 1 WLR 1919 at 1924F. However, it will only be a rare case where the issue is resolved by reference to the burden of proof.
118. It is helpful to refer, albeit briefly, to one or two other cases which give useful guidance as to what may constitute putting on inquiry or constructive notice. The effect of the judgment of Chadwick LJ in Abbey National Plc v. Tufts [1999] 2 FLR 399, is that any knowledge which came to the attention of Mr Clements, the solicitor dealing with the transaction at Ashmans, in the course of his inquiries in relation to the transaction, or which ought to have come to his attention upon the making of reasonable inquiries in the course of the transaction, is thereby imputed to Alan and Abbey. Further, as was decided in Woolwich Plc v. Gomm (2000) 79 P&CR 61, the standard to be adopted, at least in relation to a mortgagee such as Abbey, is not that of a “suspicious” bank or building society, but that of a “reasonably prudent` bank or building society. Inevitably, each case will turn on its own particular facts.
119. The facts which are said by the claimant to give rise to the conclusion that Mr Clements had actual knowledge of the undue influence involved in the 1998 Deed, or was put on inquiry in relation to that undue influence, are as follows. First, that the 1998 Deed involved the gift of a house, which was apparently the residence of the donor (because Bernard’s address was given as being the house), without any apparent benefit to the donor, to his sister who lived at the same address. Secondly, that the gift effected by the 1998 Deed was made to a person, namely Maureen, who was the donor’s attorney, the relevant power of attorney having been executed a few months earlier. Thirdly, that the donor was described as “disabled” in an earlier document, namely the 1984 mortgage granted to the bank, and he signed the 1998 Deed with a tremulous signature. Taking these factors together, Mr Littman argues that a reasonable solicitor in the position of Mr Clements had actual notice of the presumed undue influence, or that he was, or should have been, put on inquiry as to the possibility of the title of his clients’ proposed vendor, namely Maureen, having a defective title, in that she had acquired the freehold of the house under a deed of gift which was liable to be set aside for undue influence.
120. Miss Walden-Smith, whose submissions in this connection were supported by Mr Simon Hoffmann, who appears on behalf of Alan, raises two points in reply. The first is that, even when taken together, the facts relied on to justify the contention that, through Mr Clements, Abbey and Alan had actual notice or were put on inquiry in relation to the undue influence are insufficient. The second point is that, in any event, even if Mr Clements was put on inquiry, any inquiries which would have been made would have led to his being reasonably satisfied that there was no undue influence. In my judgment, each of those two points is well founded. I shall deal with them in turn.
121. The fact that Maureen, the vendor under the 1999 conveyance, had acquired the house by way of a gift from a member of her family (who also lived there) does not appear to me to be of particular significance, at least if taken on its own. Mr Clements said that he noticed that Bernard had himself acquired the house by a gift from a member of his family (who also lived there), namely under the 1988 Deed. Mr Clements made two other points. The first is that he was not, and at the time had not been, unfamiliar with roots of title which included a gift within a family, and his only concern in that connection was whether the gift had been effected in order to defraud creditors. It was for that reason that, in this case, he required a declaration of solvency. Secondly, he said that he noticed from the back sheet of the 1998 Deed that it had been prepared by a solicitor, namely Miss Tindall, and that he had assumed that she had advised Bernard in connection with the gift. This was not an unreasonable assumption, essentially for two reasons. First, he was right: Miss Tindall had advised Bernard in connection with the 1998 Deed. Secondly, as Mr Clements said, it would be somewhat surprising, and in his experience be very unusual, for a donee of a freehold property to receive separate legal advice in connection with a gift. The fact that the donor apparently lived in the property the subject of the gift, and was related to the donee who lived at the same address, does not seem to me to take matters much further.
122. The facts that Bernard was described as “disabled” in the 1984 mortgage, and that his signature on the 1998 Deed was tremulous do not seem to me to take matters significantly further. Although I accept that one can refer to a person as mentally “disabled”, it is at least as usual for the expression to describe physical disability, as Mr Littman naturally accepted. Indeed, the fact that as the “disabled” owner had taken out (and then redeemed) a mortgage from a bank, and had subsequently effected a gift with the apparent advice of a solicitor would tend to suggest that the disability is physical rather than mental, because otherwise there might be some question as to his capacity, which, as I have mentioned, one would expect a bank or a solicitor to notice. The tremulousness of Bernard’s signature was consistent with his being physically disabled: indeed, that seems to me to be a probable cause of the tremulousness of his signature.
123. I turn to the fact that the donor of the gift under the 1998 Deed, Bernard, had signed an EPA in favour of the donee, Maureen, a few months earlier (albeit that the EPA had not been completed until more than a year after the gift). That is a factor which gives me pause for thought, particularly when taken with the other factors to which I have referred. As it happens, Mr Clements did not call for the EPA: the only reason he knew of its existence was because Maureen made the declaration of solvency on Bernard’s behalf, in her capacity as his attorney. The declaration refers to the EPA as having been signed by Bernard on 15th October 1997 and by Maureen on 23rd November 1999. Accordingly, Mr Clements was not led to believe that the EPA had been actually completed before the 1998 Deed. However, he would have seen it had it been signed by Bernard before the 1998 Deed. If he had called for the EPA, Mr Clements would have noticed that Bernard’s signature was witnessed by Miss Tindall, who was, of course, one of the witnesses to Bernard’s signature on the 1998 Deed, as well as having her name on the back sheet.
124. Taking these factors together, I reject the claimant’s contention that Mr Clements, and therefore Alan and Abbey, had actual notice of the fact that the 1998 Deed was executed under presumed undue influence. The only evidence available to Mr Clements, which could have suggested any trust and confidence having been reposed in Maureen by Bernard was the EPA. None of the other factors, which have gone to persuade me to that conclusion were known to Mr Clements.
125. I would accept that the claimant’s case to the effect that Mr Clements was effectively put on inquiry has more force, but in the end I reject it. First, I bear in mind that there is always a danger of judging this question with wisdom of hindsight: various facts which would not at the time have seemed remarkable, retrospectively assume a potentially somewhat sinister aspect. Secondly, many of the features that have persuaded me that Bernard reposed sufficient trust and confidence in Maureen and that there was presumed undue influence were not known to Mr Clements. He did not know of Bernard’s mental weakness, and the fact that he had in practice placed all his financial affairs in Maureen’s hands. Nor was Mr Clements aware that Maureen received the proceeds of the Allied Dunbar policy or that Bernard gave the house to Maureen for the primary purpose of looking after his mother, for which he trusted Maureen. Thirdly, the relationship between Bernard and Maureen, as a brother and sister, is not one which automatically gives rise to a presumption of undue influence. Fourthly, Mr Clements relied, and rightly relied as it turns out, on the fact that Bernard appeared to have been advised in connection with the 1998 Deed by a solicitor. Fifthly, there was the fact that Bernard had himself acquired the house by gift in 1981. Lastly, Mr Clements struck me as an impressive witness and a competent solicitor. Mr Littman, very fairly, did not challenge that view, although he understandably relied on the fact that Mr Clements was relatively inexperienced as a solicitor, particular at the time of the 1999 conveyance.
126. In all the circumstances, I have reached the conclusion that it would only be a “suspicious” bank or solicitor who would have been put on inquiry by the facts vouchsafed to Mr Clements during the course of the conveyancing transaction in 1999. A reasonably prudent bank or solicitor would not have been put on inquiry.
127. Over and above this, it seems to me that Miss Walden-Smith is right in her alternative contention that, even if it is established that Mr Clements was put on inquiry, the claim would not succeed. It is clear from the evidence of Mr Clements (and indeed it accords with common sense), that if he had appreciated that there may have been undue influence exerted in relation to the 1998 Deed, he would have got in touch with the solicitor whose name appears on the back sheet of the Deed, and who witnessed Bernard’s signature, namely Miss Tindall, and asked her about the circumstances of the execution, and the validity, of the 1998 Deed. Mr Littman contends that Miss Tindall would have refused to answer any such inquiries, citing her reluctance to give information in these proceedings.
128. I am unimpressed with that point. Miss Tindall seemed forthcoming and anxious to help, if somewhat too inclined to fill in gaps in her recollection. The only reason she was slow in producing information was, I believe, because of her anxiety about her duties in litigation particularly in light of the Court of Protection involvement; hence she contacted the Law Society and the Court of Protection. In 1999, when inquiries would have been made of her, it would have been in a routine, friendly conveyancing, not a litigation, context, and at a time when the Court of Protection was not involved.
129. If Mr Clements had asked her, I believe that it is clear from Miss Tindall’s evidence, and indeed from the facts, that she would have told him that she had indeed acted for, and advised, Bernard in connection with the 1998 Deed. That would not have breached client confidentiality. She would also have told Mr Clements that there was no reason to doubt the validity of the 1998 Deed. Indeed, she would have told Mr Clements, if he had asked, that Bernard had not executed the 1998 Deed under the undue influence of Maureen. I reach that conclusion not, self evidently, because I think it is the correct analysis, but because that was the effect of her evidence. While I have rejected her evidence on this point, I do not think that she was lying: she believed what she said, and, at least on the balance of probabilities, I think that it is what she would have told Mr Clements, if he had asked her, in 1999. It is true that she had not considered the question of undue influence in 1998 but that does not vitiate my conclusion as to what she would have said about it, if asked in 1999.
130. Mr Littman to argues that this conclusion does not not assist Abbey or Alan so far as the doctrine of constructive notice is concerned. The argument is that, if I had concluded that, through Mr Clements, they were put on inquiry by virtue of the facts on which the claimant relies, then, whatever the result of the “inquiry” might have been, they are fixed with the actuality, namely that the 1998 Deed was entered into under the undue influence of Maureen.
131. I believe that that point is answered by the way in which section 199(1)(ii)(b) is expressed. The question which, it appears to me, has to be answered is what would have come to the attention of the solicitor, “if such inquiries and inspections had been made as ought reasonably to have been made by [that solicitor]”. Mr Littman did not challenge the contention, supported by common sense and the evidence of Mr Clements, that, had he been put on inquiry, the sensible course for Mr Clements to take would have been to make inquiries of Miss Tindall. As I have mentioned, she would have told him that Bernard had not executed the 1998 Deed under the undue influence of Maureen. In those circumstances, even if I am wrong and Mr Clements was “put on inquiry”, the inquiry which he would have made, would reasonably have put his mind at rest. Therefore, there would have been no question of Mr Clements, and therefore of Abbey or Alan, having had notice that the 1998 Deed was executed under the undue influence of Maureen.
132. In these circumstances, my conclusions are as follows:
(i) Bernard had the necessary capacity to execute the 1998 Deed;
(ii) The 1998 Deed was executed by Bernard under the undue influence of Maureen;
(iii) Maureen had notice of the fact that the 1998 Deed was executed under undue influence;
(iv) Neither Abbey nor Alan had notice of that fact.
133. I believe it follows that the claim against Alan and Abbey must be dismissed. The claim against Maureen is in principle successful, but I am not entirely clear what relief is sought from her. In principle, I would have thought that a tracing or following claim may be maintainable, but, so far, there has been no argument in connection with that. The claim against Leonard may also be maintainable, on a following or tracing basis.
134. Mr Littman has indicated that he would ask for a charge over Maureen and Leonard’s new house, presumably purchased in part with the proceeds of sale of the house in late 1997. Without deciding what, if any relief, should be ultimately accorded to the claimant, I think that there should be such a protective charge over the new house, which I am told is already subject to two charges. Mr Littman’s proposal involves the new house being charged to the extent of £50,000, the value of the house at the time of the 1998 Deed. My preliminary view is that, if it is permissible to do so, and subject to further argument, the claimant’s claim against Maureen should be limited to that sum (together with interest). I would, at least as presently advised, be reluctant to accord Bernard any increase in the value of the new house subsequent to the date of gift. Bearing in mind that Maureen is only guilty of presumed undue influence, it would be oppressive on her and unreasonably indulgent to Bernard, if he was compensated more generously than on the basis that he had sold the house at its then market value to Maureen or at the date of the 1998 Deed.
135. There is a further complication that, as I have mentioned, there was evidence that some work had been carried out to the house after it was given to Maureen, and indeed further work was carried out after it was sold to Alan. I am most anxious to avoid an inquiry or other further hearing in connection with that issue. I am satisfied that some work was done to the house, but I am certainly not satisfied that all the work to which Leonard and Maureen deposed can be established. In any event the question is ultimately the value of the house at the date of the 1998 Deed, so any inquiry, I believe, would be limited to improvements before that date. If it is necessary for the point to be investigated, I would strongly urge the parties to try and agree: if they cannot do so, I will probably order a stay for mediation on the issue.
136. In these circumstances, I would invite counsel to make farther submissions, preferably in writing, so that I can deal with subsequent matters, including the question of costs. It is right to add that this judgment contains one or two additions resulting from further written submissions after the draft had been made available to Counsel.
137. Finally, I should add this. One of the reasons, indeed the main reason, why I would hope that outstanding matters can be dealt with in writing or by agreement, is the costs involved in these proceedings. As I understand it, the current value of the house is in the region of £100,000. This action took over 4 days to try, and it effectively involved four parties, each of whom was separately advised by a firm of solicitors, and each of whom was separately represented by counsel. Three of the parties have received finding from the Legal Services Commission. It is inconceivable that the total amount expended on legal costs in these proceedings cannot have exceeded the value of what is at stake, namely the house, by a very substantial margin. To put it mildly, that is very regrettable.