Analysis
The dispute between the parties concerned the ownership of a four-bedroom London apartment (the property). Monica Elaine Crossfield (the appellant) had become the council tenant of the property in 1987 under a secure tenancy with the London Borough of Lambeth (LBC). By a lease dated 26 August 2003 (the lease), LBC demised the property to her for a term of 125 years in consideration of a premium of £109,500 (the premium). The premium was calculated by the market value of the property, minus a right to buy discount by virtue of the appellant being a secure tenant. The premium was provided by the appellant’s brother, Franklin Roy Jackson (the respondent). By a declaration of trust (the deed) of the same date, the appellant declared that, upon the lease being completed, the property would be owned beneficially by the respondent.
Upon the respondent bringing an action to enforce the deed, the appellant submitted by way of counterclaim that (i) the deed could be set aside on the grounds of undue influence, unilateral mistake or misrepresentation; and (ii) the payment of the premium by the respondent amounted to a loan which, by the date of the trial, had been paid off leaving the appellant as the sole beneficial owner.
At first instance in Manchester County Court, Recorder GD Smith held the respondent was entitled to an order that the property be conveyed to him and that the counter-claim should be dismissed. As a finding of fact, he confirmed that the agreement was as set out in the documents and in the respondent’s evidence, namely the appellant purchased the legal interest in the property and held the equitable interest on trust for the respondent. It was never an agreement by the respondent to lend the purchase price to the appellant. It was further held that the appellant did not repose trust and confidence in Franklin as to the management of her financial affairs, either generally or in relation to this transaction. Further, the transaction did not call for an explanation. There was no mistake, and even if the appellant was not aware of the true nature of the deed, this made no difference because she would have signed it had she been aware of its true nature. In addition, in light of the recorder’s findings, there was no representation by Franklin that Monica would obtain an interest in the property if she entered into the transaction.
The appellant appealed and permission was granted on paper by Patten LJ on 17 March 2014. The appellant indicated she did not seek to challenge the primary findings of fact made by the judge or his conclusions as to witness credibility. Instead, it was contended that (i) the judge’s conclusion that there was no relationship of trust as between her and the respondent was unsustainable; and (ii) the mismatch between what the appellant had received by way of payment from the respondent and what she was giving up ought to have prompted the judge to conclude that the transaction called for an explanation.
Held (dismissing the appeal):
- 1) Gloster LJ giving judgment (with McFarlane LJ and The Chancellor agreeing) held that the appellant’s challenge to the judge’s principal conclusions in reality amounted to a wholesale attack on the judge’s careful and holistic analysis of the entire factual situation as between the appellant and the respondent and his assessment of their respective credibility and their characters. A decision as to whether there is a relationship of trust and confidence as between two people, and whether a transaction has been procured by undue influence, is necessarily highly fact sensitive and justifiably dependent upon the view formed by the judge of the principal protagonists. On the facts, no justification whatsoever existed for going behind the conclusions reached by the judge.
- 2) The judge at first instance was clearly entitled to come to the conclusion on all the evidence before him that theappellant did not repose trust and confidence in the respondent as to the management of her financial affairs, either generally or in relation to the particular transaction. In coming to that conclusion he was clearly entitled to rely on the appellant’s evidence that she mistrusted the respondent as a result of their previous loan dealings; that she thought he was selfish; and that she rejected any suggestion that he provided financial assistance to her. The judge had given detailed and careful consideration to the appellant’s evidence as to her alleged learning difficulties and, having seen her performance in the witness box, was clearly entitled to conclude that such difficulties as she did have did not affect her ability to understand the basic nature of the transaction and that they did not render her a particularly vulnerable person.
- 3) By the same token, the judge’s conclusion that the transaction did not call for an explanation could not be faulted. The judge was clearly entitled to conclude that a deal whereby the appellant received £10,000 effectively in consideration of making the discount available to the respondent, was not so commercially surprising as to call for an explanation. The split fairly represented her weak bargaining position and inability to raise funds.
4) Accordingly, on the evidence before him, the judge was entitled to reach the conclusion that the deed should not be set aside on the grounds of undue influence.
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