Hart & anr v Burbidge & anr

Analysis

In 2006 the deceased made a will directing a sale of two properties, No 7 and No 43 (the properties), with the proceeds to be shared between her sons (the Harts). On the same date the deceased gave another property, Unit 15, to her daughter and son-in-law, Mr and Mrs Burbidge, and also released them from a debt of £44,000. In 2007 the deceased made a further will leaving No 7 to the Harts and No 43 to her siblings and any grandchildren surviving her with the residue to be divided equally amongst her children.

Having decided to live with the Burbidges, the deceased transferred her savings of £290,000 to them. She subsequently sold the properties and transferred the net proceeds from these sales (approximately £410,000) to the Burbidges. In 2008, the Burbidges bought a property, Little Manor, for £700,000. This was registered in their sole names and funded entirely by money from the deceased. Shortly afterwards the deceased died. The Burbidges, contending that the transfer of the proceeds of sale from the properties were loans from the deceased to them, sold Little Manor for £595,000 and paid £410,000 to the executor of the deceased’s estate by way of repayment of the loan.

The Harts and the deceased’s surviving siblings and grandchildren commenced proceedings against the Burbidges alleging undue influence by Mrs Burbidge in respect of the transfer of the £290,000 and the net proceeds of sale of the properties (the transactions).

The trial judge held that Mrs Burbidge was guilty of undue influence in respect of the transactions and that Mr Burbidge was liable to the same extent as one who had been unjustly enriched by the undue influence but not as a constructive trustee. The judge ordered that the Burbidges reimburse the deceased’s estate with the sum necessary to put the claimants in the position they would have been in had the transactions not occurred.

The Burbidges appealed.

Held (dismissing the appeal and refusing to set aside permission to extend time for the appellant’s notice):

1. 1) The judge was right that the juridical basis of the grant of relief in respect of transactions impugned by undue influence was unjust enrichment and that the criteria for such a claim had been made out against Mr Burbidge despite not finding him to be a constructive trustee. The court is not always constrained by the legal issues that the parties agree for determination (para [43]).
2. 2) The judge was not wrong to not consider the transfer of the £290,000 in insolation and was justified in finding that it called for an explanation. Disposing of almost the entirety of one’s cash by way of gift would seem obviously to call for an explanation since it deprives one of security, an income, and the ability to live alone (paras [47] and [48]).
3. 3) The transfers of the proceeds of sale of No 7 and No 43 as a loan were transactions calling for an explanation. The deceased was giving up almost the entirety of her income in return for a place to stay that might or might not prove satisfactory and would have no money to pay for medical attention or care facilities should she need these. The fact she did not take a share of Little Manor made the arrangement even more disadvantageous (para [49]).
4. 4) None of the transactions were readily explicable by the relationship between the deceased and Mrs Burbidge nor by the fact the deceased was fed up with the Harts (paras [48] and [49]).
5. 5) If a transaction called for an explanation and a reasonable explanation was available which did not involve undue influence, the court was justified in not proceeding to the reversal of the burden of proof or the rebuttal of the presumption which would otherwise arise. However where no such reasonable explanation was available the judge was right to move to consider whether the presumption had been rebutted. (paras [50] and [ 51]) (Turkey v Awadh [2006] WTLR 553 considered).
6. 6) The judge was right to find that Mrs Burbidge had failed to rebut the presumption of undue influence in circumstances where (a) the transactions were not necessary for the deceased to live with the Burbidges or to change her will to reduce the Harts’ inheritance, (b) the deceased was left with no fall-back position and with no income apart from her state pension, (c) the sales of the properties were not advantageous to the deceased because the proceeds were loaned to the Burbidge’s on disadvantageous terms and Little Manor put in their sole names and (d) there was no coherent explanation as to why the deceased was not given an interest in Little Manor nor why there was no formal loan agreement secured on the property and repayable on normal terms during her lifetime. The fact that the deceased had ‘come out of herself’ since her husband died did not mean that she was acting wholly independently of Mrs Burbidge’s influence (paras [52], [53], [54],[57] and [58]).
7. 7) The judge was correct in not making an allowance for the Harts’ bad conduct towards their mother when granting relief (para [60]).
8. 8) Any argument that the deceased was better protected by a loan agreement than an interest in Little Manor only operated with the benefit of hindsight since nobody knew that the market would continue to fall nor when the deceased would die (para [61]).
9. 9) There was a prima facie inconsistency between the judge deciding that the properties would, absent the undue influence, have been sold during the executor’s year, and then compensating the claimants on the basis of the values at which they were sold about a year earlier, where there was evidence that the market generally had fallen in that period. However the judge was justified in concluding that it was reasonable to take the actual sales prices as the values at which the properties would have sold after the deceased died on the evidence available (para [64]).
10. 10) The judge’s decision that the Burbidges pay 95% of the claimants’ costs was one he was entitled to reach despite the claimants losing on some allegations in circumstances where the judge had stated that he did not think that these had materially increased costs. The court cannot second guess the decision of an experienced judge who was best placed to make such an assessment having sat through the entire trial. Further, the Judge was entitled to hold that the executor’s costs incurred as a result of the litigation should be borne by the Burbidges (paras [65] and [66]).
11. 11) It was implicit in the grant of permission to appeal that the necessary extension of time requested in the appellant notice had also been granted. It is no longer right to say that the court should have regard to the factors in old CPR r3.9(1) when considering whether to grant permission to extend time for filing an appellant’s notice. In this case, the delay was justified since the Burbidges needed time to consider the complex order actually made and in drafting their Grounds of Appeal. (para [67]) (Sayers v Clarke [2002] 3 All ER 490 and Denton v TH White Limited [2014] EWCA Civ 906 considered).

JUDGMENT LORD JUSTICE VOS Introduction [1] These appeals are from the judgment of Sir William Blackburne, sitting as a deputy judge of the Chancery Division, delivered on 12 June 2013 in two actions that Master Moncaster ordered to be tried together on 24 August 2011. The judge held that Mrs Susan Anne Burbidge (Mrs Burbidge) …

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