H.H. Judge Keyser Q.C.:
Introduction
- Wynne Evans ("Wynne") was a farm worker. His entire working life from the age of fourteen was spent in the service of the proprietors of the farm known as Cefnbarrach, Trefeglwys, Caersws—latterly the defendants, Mr David Lloyd ("David") and his wife Mrs Elizabeth Lloyd, and before that David's parents and grandparents. During the whole of that period and until his death Wynne resided at the farm.
- Wynne died on 2 September 2006 at the age of seventy-nine years. Before he died, he had made to Mr and Mrs Lloyd a gift of two agricultural holdings that he had inherited from one of his brothers, David Ieuan Evans ("Ieuan"). Those holdings comprised substantially the whole of Wynne's estate.
- There is an issue as to whether Wynne died testate or intestate. The claimants say that he died intestate. However, the defendants say that he died testate and that the will, of which David was the residuary beneficiary, has been lost.
- The first claimant, Howell Evans ("Howell"), is Wynne's sole surviving brother. If Wynne died intestate, he is entitled to Wynne's estate. Howell has been resident in nursing homes since 1996. He is old, infirm and unable to manage his own affairs. He executed a two-page witness statement dated 20 July 2011 but appears otherwise to have taken no part in these proceedings, which have been brought and pursued by the second and third claimants.
- The second claimant, Mr David Bernard Evans ("Bernard"), is a cousin of Howell's and Wynne's. Since 2012 he and his wife, the third claimant, Mrs Helen Evans, have held a power of attorney for Howell. With that power, on 22 June 2012 they took out letters of administration to Wynne's estate. In addition, they are named as the sole beneficiaries of Howell's latest will, which was made in May 2011.
- In these proceedings, the claimants claim rescission of the gifts of the agricultural holdings to Mr and Mrs Lloyd on the ground that either they were unconscionable transactions or they were procured by Mr and Mrs Lloyd's undue influence over Wynne. Mr and Mrs Lloyd deny that there was an unconscionable transaction or that they exercised undue influence over Wynne, and they counterclaim an order that the lost will be admitted to probate.
- Throughout this judgment, I shall generally refer to the main characters by their forenames. This is simply for ease of exposition and I trust that it will not be thought discourteous.
- Written and oral evidence was received at trial. I have had regard to all of it but shall refer only to some of it. The submissions of Mr Thomas for the claimants and of Mr Jones Q.C. and Mr Hughes for the defendants have been of great assistance.
The facts
Background to the transactions
- Howell is one of the four sons of Evan Evans and Annie Evans. Ieuan was the eldest son. Next was Emlyn. Howell and Wynne were twins, born on 25 September 1926. None of the brothers ever married or had children. Mr and Mrs Evans senior died in the mid 1980s. Ieuan died in 1985. Emlyn died in 1994. Wynne died, as I have said, in 2006.
- When Wynne was about fourteen years old, in 1940, he left his family home and went to work and reside at Cefnbarrach. At that time the farm was owned and run by David's grandparents. Later it passed to his parents. David was born in 1958. He married the second defendant in 1983 and became a partner in the farming business at Cefnbarrach at around that time. Cefnbarrach is now run in partnership by Mr and Mrs Lloyd and their son, Richard. For the purposes of the narrative that follows it is relevant to record that the Lloyd family and the Evans family knew each other well and that the defendants and David's parents were on close terms with Wynne's brothers, including until recently Howell.
- As I have said, Wynne lived with the Lloyd family at the farm until his death. There is a considerable amount of evidence relating to his relationship with the family. I shall summarise my conclusions later in this judgment. Here it suffices to record that Wynne became in effect a member of the Lloyd family and until his death enjoyed the closest and warmest of relationships with them and, in particular, with David.
- At some time after Wynne had gone to Cefnbarrach, Mr and Mrs Evans senior and the three other brothers moved to live at a nearby smallholding known as Tanyfron, which comprised a house and outbuildings and about fifteen acres of land. Ieuan, Emlyn and Howell resided at Tanyfron for most of their lives thereafter.
- In 1964 Mr Evans senior conveyed Tanyfron to Ieuan by way of gift. Although the conveyance described Ieuan as an agricultural worker, he farmed Tanyfron on a part-time basis and held employment with the local authority as a roadman. However, in 1966 he enlarged the agricultural unit by purchasing about ten acres of land at the nearby holding of Waenhir. After retiring from his employment on grounds of ill health, Ieuan devoted a greater proportion of his time to the smallholding in the last few years of his life. From 1978, he was assisted in this by Wynne and David.
- A few weeks before his death, Ieuan made his last will, which was dated 11 July 1985. The will appointed Wynne as the sole executor and trustee and, by clause 2, gave Tanyfron and Waenhir to Wynne absolutely, subject to the proviso that he should not sell the house at Tanyfron until after the death of Howell and Emlyn, who were to have to right to live there for as long as they should desire. The residue of the estate was divided equally among Wynne, Howell and Emlyn. In October 1985 Wynne took a grant of probate of the will, and Tanyfron and Waenhir were vested in him by assents dated 15 November 1985.
- At that time, Bernard and his wife were the landlords of the Red Lion public house in Trefeglwys; they were there from 1980 until 1987. Both Wynne and Howell drank at the Red Lion. Wynne would drink there on a Sunday afternoon and frequently on a Saturday also. Before becoming landlord of the public house, Bernard, who was born in 1944, did not know Wynne very well, because his childhood visits to his cousins at Tanyfron took place after Wynne had already gone to Cefnbarrach. Although he got to know Wynne better through the Red Lion, he acknowledged in evidence that Wynne generally kept himself to himself at the Red Lion and that he treated Wynne like any other customer.
- Bernard's relationship with Howell was closer, both because of the family visits when he was a child and because Howell was a more regular visitor to the Red Lion and appears to have been more gregarious than Wynne, at least when in drink.
- According to Bernard, Howell was very upset when he learned that Ieuan had left Tanyfron and Waenhir to Wynne, with nothing more than a right of residence to him and Emlyn. He came into the Red Lion one day with a copy of Ieuan's will and complained of the injustice of its provisions. It seems likely that any upset on Howell's part was short-lived in the immediate aftermath of Ieuan's death and was exacerbated by drink and by the emotions attendant on the bereavement. The probable reason for the bequest to Wynne was that, of the surviving brothers, Wynne alone was a farmer. Ieuan was naturally concerned that Tanyfron should be available as a home to Howell and Emlyn, should they want it, but it is understandable that he should not have wanted to leave the smallholding to either of them, when they were not farmers and were unlikely to be able to look after the land. David gave evidence that, when he and Wynne were keeping Tanyfron well maintained in the years that followed, it was clear that Howell was very happy with an arrangement that permitted him to remain at his home and meant that the land would be looked after.
- Bernard also gave evidence concerning a conversation he had with Wynne in 1985. He said that, shortly after Ieuan's death, he drove Wynne to an appointment with a solicitor, Mr Gareth Morgan of Milwyn Jenkins & Jenkins, concerning Ieuan's will. The solicitor suggested to Wynne that he might wish to make a will of his own, so Bernard left the room while that matter was discussed. In the course of the return journey, Wynne told him that he was leaving Tanyfron by his will to Bernard's son, Richard, because he bore the same name as Wynne's grandfather who himself had once owned Tanyfron. Thereafter (said Bernard) he expected that Tanyfron would be left to Richard. Only in 2005, when he learned that Tanyfron was on the market for sale, did he have cause to doubt the assurance he had been given in 1985, and only after Wynne's death did he know that his hopes were to be disappointed.
- I reject Bernard's evidence about this conversation, primarily because I am satisfied that Wynne never had the least intention of leaving Tanyfron to Bernard or to his son. First, the suggested motive for the assurance is weak; although people do sometimes act from weak motives. Second, the relationship between Wynne and Bernard was not sufficiently close to make such a gift likely. Third, David's evidence, which I accept, was that Wynne told him that he did not like Bernard, though he did not tell him why and said nothing about Richard. Fourth, it is probable that Wynne would be more concerned with the agricultural future of the land than with the name of the beneficiary. A gift to Richard would not be the same thing as the retention of the holding by him; that would be likely only if he were willing and able to farm the land. The evidence does not suggest either that Wynne was close to Richard or that Richard had any obvious interest in farming. Fifth, even if Wynne had thought of leaving the property to Richard, it is unlikely that he would make any decision in that regard without some prior discussion, having regard to his probable concerns that the property be well farmed. Sixth, it is probable that Wynne would already have had in mind that Tanyfron and Waenhir be farmed together with Cefnbarrach, and in those circumstances it is unlikely that he was making arrangements for the holdings to be divided again on his death. Seventh, all of the other evidence in the case suggests that Wynne always intended the holdings to go to the Lloyd family. Eighth, Wynne did in fact give instructions in respect of a will in October 1985. Whether or not that will was executed (a question to which I turn later in this judgment), it made no provision for Bernard or Richard; it gave Wynne's money to Howell and Emlyn equally and gave the rest of his estate to David.
- Of course, it is possible that Wynne told Bernard that he was leaving Tanyfron by will to Richard, even though he had no intention of doing so: whether because it amused him to have some fun at the expense of an avaricious relative or for some other reason. However, I find that he did not do so. First, it is inherently more probable than not that he did not tell a falsehood to Bernard. Second, I do not regard Bernard as being an entirely straightforward witness. Some parts of his evidence were, indeed, fair and candid. But he was frequently evasive when he was cross-examined and at times the truth was dragged from him with reluctance. In my judgment he has to some extent embroidered his account of events in order to clothe with the appearance of moral right his concerted efforts to bring about a state of affairs in which Wynne's inheritance from Ieuan should go to Howell and thence to himself. An example of that is paragraph 9 of his witness statement, where he implies that on an occasion in 2005 Wynne was inhibited by the presence of David's mother from speaking of concerns of which he would have unburdened himself to Bernard. I do not believe that evidence, because it is entirely contrary to the totality of the evidence both regarding Wynne's relationships with Mrs Lloyd senior and Bernard and regarding Wynne's attitude to the dealings with Tanyfron.
- David's evidence was to the effect that, when Wynne inherited Tanyfron and Waenhir, he made clear that he had no interest in farming those holdings on his own account, even on a part-time basis, but instead proposed that the farm and the smallholding be farmed as one unit; and that is what happened. I accept David's evidence on these matters.
- In 1990 Wynne sold a small part of Waenhir to the owners of the adjacent land. He did not retain the sale price of £20,000 but instead gave it to the Lloyds to build a new building at Cefnbarrach, where lambing could take place indoors. David said that it was Wynne who wanted to use the money in that way; the suggestion had not come from the Lloyds. He accepted that Wynne had not taken or been encouraged to take advice about the use of his money. He also accepted that it was the Lloyds who had benefited financially from what happened, though he made the point that the erection of the new building made Wynne's work easier.
The transactions
- For several years after this sale, Wynne remained the owner of Tanyfron and (what remained of) Waenhir, but they were farmed together with and as a single unit with Cefnbarrach and as part of the Lloyds' business. Emlyn and Howell continued to reside in the house at Tanyfron.
- In December 1994 Emlyn died. Howell was increasingly unwell, suffering from problems with his legs and feet; when he was at home, he was unable to look after himself properly, and he was frequently admitted to hospital. Conditions at the house at Tanyfron had deteriorated badly; David, who called them "indescribable", painted a graphic picture of filth and squalor, which I accept as accurate but shall not repeat here.
- After Emlyn's death Wynne was concerned about the future of Tanyfron. Howell was incapable of farming the land or of restoring and maintaining the house to a proper standard; doubtless Wynne realised that he would not be able to stay at the house for very much longer. No other members of the extended family showed any interest in the smallholding. Wynne was also concerned that, if he should at some future time require residential care, the local authority might have recourse to the property to fund the cost of care, thereby necessitating its sale. Therefore it was probably during 1995 that Wynne began to consider what was to become of Tanyfron and to discuss with the Lloyds the plans that were put into effect in and after 1996.
- Toward the end of 1996 Howell was again admitted to hospital. This time it was clear that he could not return home to Tanyfron. A decision was made by the social services and the hospital staff that he should go into residential care. In or about December 1996 he took up residence at Maes-y-Wennol Nursing Home in Llanidloes. On 21 November 1996 he had made a will (in which his address is shown as Tanyfron) that appointed Mrs Elizabeth Lloyd as his executor and sole beneficiary of his estate.
- On 24 December 1996 Wynne conveyed Tanyfron to Mr and Mrs Lloyd. On 9 January 1997 he conveyed the remaining part of Waenhir to them. The conveyances were probably executed at the same time, although they were dated differently for practical reasons. There was subsequently some confusion as to whether Tanyfron had been conveyed as intended, though it is now clear that it had been. Some evidence was given in relation to that confusion, but as I have not found it to be of any material assistance I shall not refer to it further, other than to observe that, until the conveyance of Tanyfron was found shortly before the trial, David had mistakenly remembered that Tanyfron had been conveyed in 1994, before Howell left for Maes-y-Wennol.
- The tenor of David's evidence regarding the conveyances was as follows. Wynne was concerned about the dreadful condition of the farmhouse at Tanyfron. He was unwilling to see it fall down and wanted it to be renovated. That was not something that he would undertake on his own account; it made sense for the Lloyds to do it. (Wynne was 70 years old, of course, and there was no question at all of him moving out of Cefnbarrach and occupying his own home.) He also did not want a situation to arise where he, like Howell, had to go into a nursing home and social services had recourse to the land in order to cover the costs of his care. So Wynne told the Lloyds that he wanted to give them Tanyfron and Waenhir. "He didn't want money": David's evidence meant, I think, both that Wynne did not want payment for the property and that he was not interested in owning money at all. David said that it never entered his head to offer to buy the land and that he offered neither payment nor a share of the profits of the farm or the renovation.
- The Lloyds contacted their solicitor, Mr John Hollis, who was at that time the principal of Milwyn Jenkins & Jenkins, to deal with the conveyancing. They paid for the conveyancing, but Mr Hollis confirmed in evidence that he regarded Wynne as his client for the purposes of the transaction. The question of conflict of interest would (he said) have been in his mind, but he considered that there was no conflict of interest in the particular case because of the quasi-family relationship that existed: "The Lloyds were his family." Mr Hollis said that he had no recollection of what he actually said to Wynne in connection with the transaction; that is hardly surprising after sixteen years. I shall mention below his evidence as to what he believes he would have said.
After the transactions
- With the aid of a grant from the county council, the defendants renovated the house at Tanyfron; the works were completed in 2000, and for the next five years the house was let out before being sold in 2006. They also converted the adjoining barn into a dwelling from 2002 and sold it in 2005. David said, and I accept, that Wynne knew that the dwellings at Tanyfron were to be sold and were sold and that he was perfectly happy with the position. In 2007, after Wynne's death, the defendants sold some further land as amenity land at Tanyfron to the owners of the house for £25,000. In 2009 they sold a parcel of land at Waenhir for £20,000. These sales comprised about half an acre of land in total, according to David's estimate. The rest of the land continues to be farmed as part of Cefnbarrach.
- In 2005 Wynne was diagnosed with terminal prostate cancer. He underwent treatment to slow the advance of the disease, but during roughly the last year of his life he was able to do no more than potter around the farm, looking after the dogs and tidying the farmyard. He was admitted to Llanidloes Hospital on 21 August 2006 and died on 2 September 2006.
- On 11 July 2006 Howell had made a further will; Mrs Lloyd was again the principal beneficiary, though there was provision for a legacy to a third party. The will is of interest, in circumstances where it is said that Howell believed, or at least now believes, that the Lloyds had robbed Wynne of his property. Howell remained at Maes-y-Wennol until 2008, when he suffered a stroke and was moved to the nursing home at which he now resides. Bernard had not visited him at Tanyfron more than once or twice and he was at best an infrequent visitor to Howell at Maes-y-Wennol; in cross-examination he accepted that he did not visit there regularly or by routine but claimed that he called in whenever he was in Llanidloes. However, in recent years Bernard has visited Howell more frequently. At one point in his evidence, he claimed that he began to visit because no other member of the family was doing so. I do not accept that evidence. I am satisfied that he knew that Howell was receiving frequent visits from David and from Mrs Elizabeth Lloyd until the summer of 2011, when the escalation of the current dispute in solicitors' correspondence led them to conclude that they ought no longer to visit. In my judgment, Bernard's decision to visit Howell more regularly was largely, albeit probably not solely, motivated by a desire to ingratiate himself with Howell with a view to the possibility that Wynne's inheritance from Ieuan could be recovered for Howell and in due course pass from him to Bernard and his family.
- On 9 May 2011 solicitors acting for Howell and for Bernard, on the latter's instructions, commenced correspondence with Milwyn Jenkins & Jenkins regarding Wynne's gifts to the Lloyds. On 25 May 2011 Howell made a will in favour of Bernard and Mrs Helen Evans, who were told both of the will and that Howell was to give them a power of attorney. On 20 July 2011 Howell signed his witness statement for the present claim. On 22 June 2012 letters of administration of Wynne's estate were granted to Bernard and Mrs Helen Evans, and on 26 June 2012 they registered the power of attorney granted to them by Howell. The claim was commenced on 11 July 2012.
- Bernard was asked in cross-examination concerning the making of Howell's will. This was one of the less satisfactory passages of his evidence. Although initially he gave the impression that he had learned of the making of the will only after the event, he eventually acknowledged that it was he who had contacted the solicitor to tell him that Howell wanted to make a will. At this time, he was visiting Howell regularly. Although he knew that Howell had no property, he had told Howell of his intention to challenge the gifts made by Wynne to the Lloyds. He denied trying to tell Howell what to put in the will, but he acknowledged that Howell knew what he wanted and would always be led by him. He said that Howell was happy to leave everything to him and his wife, because he believed that the Lloyds had wrongfully taken Wynne's property. Bernard said that he was pleased when he learned that the effect of the 2011 will was to cut out Mrs Lloyd, and he said that, if Howell's estate went to him rather than being shared with the other cousins, it was "well and good". During much of the cross-examination Bernard maintained that he did not know that Howell had made a previous will and had thought that, if he did not make one, he would die intestate and such property as he owned would go to the government. His later answers, however, indicated the probability that as early as the time of Howell's admission to Maes-y-Wennol he had either known or suspected that a will had been made in Mrs Lloyd's favour.
The claimants' case: law
- The claimants seek to have Wynne's gifts to the defendants of Tanyfron and Waenhir set aside on two distinct but related grounds: first, that they were unconscionable transactions; second, that they were made on account of the defendants' undue influence over Wynne. I shall first summarise the law relating to these two grounds, taking them in reverse order. Then I shall consider the claimants' case on the facts.
Undue Influence
- The principles relating to undue influence have been clearly stated by the Court of Appeal in Allcard v Skinner (1887) 36 Ch D 145 and by the House of Lords in Royal Bank of Scotland plc v Etridge (No. 2) [2001] UKHL 44, [2002] 2 AC 773. Although I shall make only limited reference to the judgments and speeches in those cases, I take them and in particular the speech of Lord Nicholls of Birkenhead in Etridge as the basis of the discussion that follows.
- The present case concerns an allegation not of "actual undue influence" but of "presumed undue influence". These labels are rather misleading, because they suggest that the doctrine of undue influence applies both in cases where there actually has been undue influence and in cases where there has not in fact (actually) been undue influence. Properly, however, the two labels describe different ways in which undue influence is exercised and, accordingly, different ways of proving that undue influence has in fact been exercised. In very general terms, in a case of actual undue influence it is necessary to prove some overt act by which influence was exercised, whereas in a case of presumed undue influence the influence will be exercised less directly and its existence is inferred from a consideration of the facts relating to the transaction under consideration and the relationship of the parties to that transaction. The distinction was explained as follows by Ward LJ, with whom the other members of the Court of Appeal agreed, in Daniel v Drew [2005] EWCA Civ 507, at para 31:
"In the broadest possible way, the difference between the two classes is that in the case of actual undue influence something has to be done to twist the mind of a donor whereas in cases of presumed undue influence it is more a case of what has not been done, namely ensuring that independent advice is available to the donor."
In what follows I shall consider only presumed undue influence.
- A transaction between two persons, A and B, is liable to be set aside on the ground of undue influence if it arises out of a relationship in which A has acquired over B a measure of influence or ascendancy of which A takes unfair advantage. As undue influence has "a connotation of impropriety", the court should beware of attributing it to a person who has acted in a manner reasonably to be expected of him. However, it is not necessary to show deliberate exploitation or sharp practice; the doctrine will apply where there has been a failure of the obligation of candour and fairness owed by A to B and a preference by A of his interests to those of B. In Niersmans v Pesticcio [2004] EWCA Civ 372, at para 20, Mummery LJ observed: "A transaction may be set aside by the court, even though the actions and conduct of the person who benefits from it could not be criticised as wrongful…"
- The principle will be engaged where the relationship is such that B places such trust and confidence in A that he is, without more, disposed to agree a course of action proposed by A (typically where B relies on A to look after his affairs and interests), and where A takes advantage of that trust and confidence. But the principle is not confined to such a case; it extends to the exploitation of the dependent and vulnerable and to any case "in which the position of the donor to the donee has been such that it has been the duty of the donee to advise the donor, or even to manage his property for him" (per Lindley LJ in Allcard v Skinner (1887) 36 Ch D 145, 181). As Lord Nicholls observed in Etridge at para 8, relationships are "infinitely various". At para 11 he said this:
"… The principle is not confined to cases of abuse of trust and confidence. It also includes, for instance, cases where a vulnerable person has been exploited. Indeed, there is no single touchstone for determining whether the principle is applicable. Several expressions have been used in an endeavour to encapsulate the essence: trust and confidence, reliance, dependence or vulnerability on the one hand and ascendancy, domination or control on the other. None of these descriptions is perfect. None is all embracing. Each has its proper place."
With these observations firmly in mind, and purely for convenience, I shall refer to the necessary relationship as one of "trust and confidence".
- With specific reference to the facts and arguments in the present case, I make two comments regarding the relationship of trust and confidence. First, although Lord Hobhouse suggested in para 104 of his speech in Etridge that the relationships that engage the principle of undue influence are "typically" fiduciary or closely analogous relationships, I do not find it helpful to ask, as Mr Jones would have me do, whether there was in this case a relationship of or akin to a fiduciary nature. Such an approach risks unduly narrowing the scope of the doctrine and, as it seems to me, introduces unnecessary complication into what is legally, if not always factually, a straightforward question. Second, although I have said that the doctrine applies in a case where B is naturally disposed to agree a course of action proposed by A, it is not necessary that the course of action in question should have been proposed by A; the proposal might emanate from B precisely because of his position of vulnerability, trust or dependence.
- Generally, proof of (i) a relationship of trust and confidence and (ii) a transaction that calls for explanation, in the sense explained below, will constitute prima facie evidence that A abused his influence over B in that he preferred his own interests and did not act fairly. In those circumstances the evidential burden shifts to A to prove that the transaction was not caused by an abuse of his influence over B. If A fails to discharge that burden, proof of these (as I shall call them) "two prerequisites"—namely, a relationship of trust and confidence, and a transaction that calls for explanation—will lead to the drawing of the inference that the influence was abused.
- The second prerequisite was explained by Lindley LJ in Allcard v Skinner at 185: "But if the gift is so large as not to be reasonably accounted for on the ground of friendship, relationship, charity, or other ordinary motives on which ordinary men act, the burden is on the donee to support the gift." In the words of Lord Scarman in National Westminster Bank plc v Morgan [1985] AC 686 at 704, the transaction must be wrongful in that it constituted "an advantage taken of the person subjected to the influence which, failing proof to the contrary, was explicable only on the basis that undue influence had been exercised to procure it." In Etridge, Lord Scott of Foscote referred at para 220 to "a transaction which cannot be explained by reference to the ordinary motives by which people are accustomed to act".
- When considering this second prerequisite, one must consider the transaction not in isolation but in the circumstances of the case looked at as a whole. A prima facie inference of undue influence does not arise just because the transaction, looked at by itself, calls for an explanation. It arises only if on the evidence as a whole the transaction cannot be explained in the relevant way; "that is to say, the transaction calls for an explanation and that explanation is not forthcoming": per Buxton LJ, with whom Chadwick LJ agreed, in Turkey v Awadh [2005] EWCA Civ 382, [2005] 2 P. & C.R. 29, at para 15.
- This last point is important, because it clarifies both (i) when the evidential burden shifts to A and (ii) what A must prove to discharge that evidential burden. I turn to this second question.
- The evidential burden only shifts to A when it has been established that the transaction cannot be explained by normal human motivation, in the sense already discussed. Therefore the burden on A is not to show that, after all, the transaction can be so explained; that issue has already been dealt with. The burden on A is, rather, to show that, even though the transaction cannot be so explained, it was nevertheless the result of the free exercise by B of an independent will. This point has been often repeated in the authorities. In Inche Noriah v Shaik Allie Bin Omar [1929] AC 127 (PC), Lord Hailsham LC said at 135: "It is necessary for the donee to prove that the gift was the result of a free exercise of independent will." In Hammond v Osborn [2002] EWCA Civ 885, Ward LJ at para 25 adopted as a "useful guide" the following words from Snell's Equity:
"In order to rebut the presumption 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."
In the same case, at para 26, Sir Martin Nourse said that A was required to prove that the gift was made "only after full, free and informed throught about it", and he explained that "it could hardly be suggested that a donor would act spontaneously under circumstances which enabled him freely to exercise an independent will if he was not fully informed not only of the nature of the gift but also of its effect." As a final example, I take the words of Lord Hobhouse in Etridge at para 111:
"[F]or the purpose of negativing undue influence it is necessary to be satisfied that the agreement was … given freely in knowledge of the true facts. It must be remembered that the equitable doctrine of undue influence has been created for the protection of those who are sui iuris and competent to undertake legal obligations but are nevertheless vulnerable and liable to have their will unduly influenced. It is their weakness which is being protected not their inability to comprehend."
- When the nature of the burden on A is understood, it is clear why the cases are dominated by consideration of the role of independent advice given to B before the transaction was entered into. In the Inche Noriah case (above), after explaining the need for the donee to prove that the gift resulted from the free exercise of an independent will, Lord Hailsham LC continued:
"The most obvious way to prove this is by establishing that the gift was made after the nature and effect of the transaction had been fully explained to the donor by some independent and qualified person so completely as to satisfy the Court that the donor was acting independently of any interference from the donee and with a full appreciation of what he was doing; and in cases where there are no other circumstances this may be the only means by which the donee can rebut the presumption."
As the concluding words of that passage make clear, proof that B received independent legal advice may not be essential in all cases. On the other hand, such proof may not be sufficient to discharge the burden on A. In Etridge Lord Nicholls said at para 20:
"Proof that the complainant received advice from a third party before entering into the impugned transaction is one of the matters a court takes into account when weighing all the evidence. The weight, or importance, to be attached to such advice depends on all the circumstances. In the normal course, advice from a solicitor or other outside adviser can be expected to bring home to a complainant a proper understanding of what he or she is about to do. But a person may understand fully the implications of a proposed transaction, for instance, a substantial gift, and yet still be acting under the undue influence of another. Proof of outside advice does not, of itself, necessarily show that the subsequent completion of the transaction was free from the exercise of undue influence. Whether it will be proper to infer that outside advice had an emancipating effect, so that the transaction was not brought about by the exercise of undue influence, is a question of fact to be decided having regard to all the evidence in the case."
Unconscionable Transactions
- Under the heading "Exploitation of a Special Disadvantage", Snell's Equity, 32nd edition 2010, states the law as follows at para 8-036 (footnotes omitted, here and below):
"There is a well-established equitable jurisdiction to set aside a purchase from 'a poor and ignorant man' at a considerable undervalue unless the purchaser satisfies the court that the transaction was fair, just and reasonable. The doctrine is distinct from undue influence because it does not require a pre-existing relationship between the parties and may arise between parties who are completely unknown to each other. However: 'A bargain cannot be unconscionable unless one of the parties has imposed the objectionable terms in a morally reprehensible manner; that is to say, in a manner which affects his conscience.' …
The doctrine applies where (1) C is suffering from certain kinds of disability or disadvantage; (2) the bargain is oppressive to the complainant (C); and (3) the counter-party (D) acted unconscionably in that the or she knowingly took advantage of C. … Where these three requirements are met the burden then passes to D to satisfy the court that the transaction was 'fair, just and reasonable'."
- Regarding the first requirement, poverty and lack of education are well-established disabilities or disadvantages for the purpose of this doctrine. The expression "a poor and ignorant man" is taken from the judgment of Kay J in Fry v Lane (1888) 40 ChD 312 at 322. In Cresswell v Potter [1978] 1 W.L.R. 255, decided in 1968, Megarry J said that the principle in Fry v Lane remained good, even though some such euphemism as "a member of the lower income group" might be substituted for "poor", and "less highly educated" for "ignorant". He held that "poor" did not mean destitute and that the plaintiff, a Post Office telephonist in receipt of legal aid, was "poor" in the relevant sense. Further, though no doubt possessed of the skill and alertness to be good at her job, she was "'ignorant' in the context of property transactions in general and the execution of conveyancing documents in particular." Accordingly, disability or disadvantage "needs to be judged in the light of the transaction in question and of the documentation which it involves": per Ouseley J in Chagos Islanders v Attorney General [2003] EWHC 2222 (QB) at para 559.
- The second requirement is explained in Snell's Equity at para 8-038:
"It must be established that the terms were 'overreaching and oppressive' and that they 'shock the conscience of the court'. It is not sufficient to establish that the transaction was imprudent."
- As to the third requirement, Snell's Equity states at para 8-039:
"The jurisdiction will not be exercised unless the purchaser was guilty of unconscionable conduct. This refers not only to the oppressive terms 'but to the behaviour of the stronger party, which must be morally culpable or reprehensible'. It is not sufficient that the parties had unequal bargaining power or that the terms of the bargain were more favourable to one party than to another. Although the terms of the transaction may be so oppressive that the court may draw an inference that the defendant behaved unconscionably, a court will not find unconscionable conduct if D was unaware that C was acting under a special disadvantage, or if, in the course of negotiating the transaction, D behaved properly (i.e. did not use unfair or illegitimate tactics nor sought to take advantage of a mistake)."
In Boustany v Piggott [1993] UKPC 17, 69 P. & C.R. 298, 302-3, Lord Templeman, delivering the opinion of the Judicial Committee of the Privy Council, emphasised this point by expressing their Lordships' "general agreement" with the following propositions:
"(1) It is not sufficient to attract the jurisdiction of equity to prove that a bargain is hard, unreasonable or foolish; it must be proved to be unconscionable, in the sense that 'one of the parties to it has imposed the objectionable terms in a morally reprehensible manner, that is to say, in a way which affects his conscience': Multiservice Bookbinding v. Marden [1979] Ch 84, 110.
(2) 'Unconscionable' relates not merely to the terms of the bargain but to the behaviour of the stronger party, which must be characterised by some moral culpability or impropriety: Lobb (Alec) (Garages) Limited v. Total Oil (Great Britain) Limited [1983] 1 W.L.R. 87, 94.
(3) Unequal bargaining power or objectively unreasonable terms provide no basis for equitable interference in the absence of unconscientious or extortionate abuse of power where exceptionally, and as a matter of common fairness, 'it was not right that the strong should be allowed to push the weak to the wall': Lobb (Alec) (Garages) Limited v. Total Oil (Great Britain) Limited [1985] 1 WLR 173, 183.
(4) A contract cannot be set aside in equity as 'an unconscionable bargain' against a party innocent of actual or constructive fraud. Even if the terms of the contract are 'unfair' in the sense that they are more favourable to one party than the other ('contractual imbalance'), equity will not provide relief unless the beneficiary is guilty of unconscionable conduct: Hart v. O'Connor [1985] AC 1000, applied in Nichols v. Jessup [1986] N.Z.L.R. 226.
(5) 'In situations of this kind it is necessary for the plaintiff who seeks relief to establish unconscionable conduct, namely that unconscientious advantage has been taken of his disabling condition or circumstances': per Mason J. in Commercial Bank of Australia Ltd. v. Amadio (1983) 46 A.L.R. 402 at 413."
- In this case, the point of contention regarding the law of unconscionable transactions was whether the doctrine extended to gifts. For the defendants, Mr Jones submitted that it did not but was confined to bargains. He relied on the decision of Mr A.W.H. Charles (as he then was), sitting as a deputy judge of the Chancery Division, in Langton v Langton [1995] 2 F.L.R. 890. The plaintiff had transferred his bungalow to the defendants, his son and daughter-in-law, by deed of gift. The deputy judge set aside the gift on the ground of undue influence. However, he also considered the alternative ground of unconscionable bargain and held that it did not apply to gifts, for several reasons: first, the result of applying the jurisdiction to gifts would mean that, in the case of all gifts by poor and ignorant persons without legal advice, the onus would be on the donee to prove that the gift was fair, just and reasonable; second, that the application of the jurisdiction to gifts would sit uneasily with dicta concerning undue influence; third, that the expression "fair, just and reasonable" makes good sense when applied to bargains but not when applied to gifts; and fourth, that the rationale of the jurisdiction—the justice of protecting those in need of ready money or a similar benefit from their own folly at the hands of third parties who, being in a position to provide such a benefit, are in a position to take advantage of the needy—applies to a bargain but "does not apply to a gift, which is a different type of disposition and one where the donor is not by definition seeking a return." He considered that the validity of gifts should be decided in accordance with the law relating, in particular, to undue influence. Langton was mentioned with approval, though obiter, by Mr E. Bartley-Jones Q.C., sitting as a deputy judge of the Chancery Division, in Randall v Randall [2004] EWHC 2258 (Ch) at para 94.
- I respectfully decline to adopt the view expressed by Mr Charles in Langton, for the following reasons.
(1) In agreement with Mr Thomas and disagreement with Mr Jones, I consider that Mr Charles' remarks were obiter. He decided to set aside the gift on the ground of undue influence and, as he acknowledged, it was unnecessary for the purposes of his decision to proceed to say that he would not have set it aside as an unconscionable transaction. Mr Jones submitted that the discussion of gifts set out the reasoning for rejecting one ground of the claim and therefore contained a ratio decidendi of the case. In my view, that confuses two rather different matters. In Jacobs v London County Council [1950] A.C. 361, 369, Lord Simonds observed that it was not always easy to determine "how far, when several issues are raised in a case and a determination of any one of them is decisive in favour of one or other of the parties, the observations upon other issues are to be regarded as obiter." However, there was:
"no justification for regarding as obiter dictum a reason give by a judge for his decision, because he has given another reason also."
However, that was not the case in Langton. The deputy judge's remarks concerning unconscionable gifts were not a statement of a reason for his decision; they were an explanation of why, if he had not reached the decision he reached, namely to set aside the gift, he would have reached a different decision. "[T]he only thing in a Judge's decision binding as an authority upon a subsequent Judge is the principle upon which the case was decided": per Sir George Jessell M.R. in Osborne v Rowlett (1880) 13 Ch D 774 at 785.
(2) I have not been referred to any decision that is authority for the proposition that the doctrine does not apply to gifts, nor am I aware of any such authority.
(3) The origins of the doctrine in the equitable jurisdiction to set aside bargains made with reversioners or expectants ought not to determine its present limits and has, indeed, not done so. Further, although "the doctrines of undue influence and unconscionable bargain share a common root—equity's concern to protect the vulnerable from economic harm— … they are generally regarded as distinct doctrines" (Lawrence v Poorah [2008] UKPC 21, at para 20), and it is not clear that it is helpful to seek to define the development of the one doctrine by reference to that of the other; cf. David Capper, Unconscionable Bargains and Unconscionable Gifts, Conv. 1996, Jul/Aug, 308-314.
(4) To exclude gifts from the scope of the doctrine is to make its application turn on form over substance, which is to be avoided if possible in an equitable jurisdiction. In Cresswell v Potter the plaintiff released and conveyed to the defendant her interest in the property "in return for an indemnity against the liabilities under the mortgage but for no other consideration": per Megarry J at 256C. This was "in substance" a gift—see 259H—although, strictly speaking, the indemnity constituted valuable consideration. I find it hard to see any good reason why the doctrine should apply in such a case but not in a case where the transaction is a gift in form as well as in substance; cf. the similar view expressed in para 8-036 of Snell's Equity. The underlying rationale of the doctrine as identified by Mr Charles at 908F—namely, the justice in protecting those in need of ready money or other immediate benefit from their folly at the hands of third parties who can provide such a benefit by taking advantage of that need through an unfair bargain—ceases to apply when the consideration is wholly or largely a matter of form.
(5) It is possible to give a principled statement of the law that avoids unmeritorious distinctions. In Blomley v Ryan (1956) 99 C.L.R., at 415, Kitto J said that the jurisdiction arose "whenever one party to a transaction is at a special disadvantage in dealing with the other party because illness, ignorance, inexperience, impaired faculties, financial need or other circumstances affect his ability to conserve his own interests, and the other party unconscientiously takes advantage of the opportunities thus placed in his hands". In Equity, 2nd edition 2006, Professor Worthington suggests that the underlying rationale of the doctrine is a form of procedural unfairness, namely knowingly taking advantage of impaired consent. Whether the matter be put in terms of impaired consent or some other vulnerability, it is in my view the character of the transaction as unconscionable rather than its legal characterisation that is important. It may be that the doctrine would benefit from reformulation in more general and principled terms than those deriving from Fry v Lane; even with the benefit of Megarry J's euphemisms, there is perhaps something rather patronising and uncomfortable in enquiring into a grantor's poverty and ignorance. However, I do not think that such problems are best dealt with by limiting the doctrine at the point of distinction between gifts and bargains.
(6) I doubt whether it is correct to think that a power to set aside gifts as being unconscionable would be attended by disadvantageous consequences. The donee would be under a burden to show that the gift was "fair, just and reasonable" only if the gift were challenged and the three requirements mentioned above were satisfied. Most gifts would be unaffected by the doctrine. Other common law jurisdictions, notably Australia and the Republic of Ireland, do not appear to have been troubled by inconveniences arising from the application of the doctrine to gifts. For Australia, where the doctrine of unconscionable transactions "appears to be particularly vigorous" (Lawrence v Poorah, at para 20), see the decisions of the High Court of Australia in Wilton v Farnworth (1948) 76 C.L.R. 646 and Louth v Diprose (1992) 175 C.L.R. 621. For the Republic of Ireland, see Prendergast v Joyce [2009] IEHC 199, where Langton was briefly considered. In this regard, the restrictive approach in Boustany v Piggott, above, is significant, because it belies any suggestion that the "hard, unreasonable or foolish" nature of the transaction is itself sufficient to impose on the recipient the burden of showing that the transaction should be upheld.
The claimants' case: discussion
Undue influence
- Mr Thomas submits that the relationship between Wynne and the Lloyds was one of trust, dependence and vulnerability. Since he was a boy he had been wholly dependent on them for his employment, accommodation and board. He had little education and practically no experience of the world outside their home and was not equipped for an independent existence. The gifts in question were of substantial value and, more importantly, comprised practically the entirety of his property. These matters are sufficient to justify an inference of undue influence, unless the defendants adduce evidence to show that Wynne made the gifts freely and with full knowledge of the true facts. There is no such evidence; Wynne received nothing in the nature of independent legal advice and appears to have been unaware both of the options available to him (for example, to grant a lease or a licence to the Lloyds) and of the fact that he could retain a certain amount of capital in the event that he required nursing care.
- I reject the claim that the conveyances of Tanyfron and Waenhir be set aside on the ground that they were procured by undue influence. My reasons are as follows.
- First, in my judgment it has not been established that the relationship between Wynne and the defendants was of the requisite quality of trust and confidence, or dependence, or ascendancy, in the sense more fully explained above.
- It is necessary to say rather more than has been said so far about Wynne's relationship with the Lloyd family and his life at Cefnbarrach. In respect of those matters, I accept in its entirety the evidence given by the defendants, whom I regard as thoroughly straightforward and honest witnesses.
56.1 Mr John Hollis explained that Wynne was what is known in Welsh as a "gwas". This refers generally to a servant who lives with the family he serves; in particular, as in this case, it is used of an agricultural labourer who forms part of the household at the farm. Mr Hollis said that the expression did not have a pejorative connotation and that the gwas might be in effect a part of the family. David said that similar arrangements existed at nearby farms, although the closeness of the relationship in the present case was notable.
56.2 Wynne was regarded by the Lloyds as part of their family and I am satisfied that he regarded them as his family. His relationship extended, of course, over several generations of the family. He was 31 years old when David was born and their relationship was never that of employer and employee, save in a strict legal sense until 1991. Speaking of David to others when he was a boy, he called him "Wynne's little boy". David said in evidence that he regarded Wynne as an elder brother. Although there were spare rooms at the Cefnbarrach farmhouse, Wynne and David shared a bedroom until David married in 1983, "because (as David explained in his witness statement) we were such good friends". When, near the end of his life, Wynne became too weak to shave himself, David would shave him in front of the fire. David's mother, Mrs Lloyd senior, cut Wynne's hair until the end of his life.
56.3 Wynne's life revolved entirely around his life with the family and farm at Cefnbarrach. From the time he went to work on the farm in 1940 until his admission to hospital during his final illness, he never spent a night away from Cefnbarrach. He enjoyed daytrips to the agricultural shows, to which he would go with members of the Lloyd family (he drove a tractor but did not otherwise drive); but he never took a holiday, not because he could not do so but because he did not want to. He worked on all the tasks of the farm and was fully committed to the work and to the farm. Before the lambing shed was built in the mid 1980s, he would stay in the fields with the ewes until the small hours of the morning when the need arose. Similarly, if a cow had difficulty calving, he would stay with the animal as long as necessary, whatever the time of day.
56.4 Until he attained the age of 65, Wynne was paid the agricultural wage for a farm worker, increasing with length of service. He was paid monthly by cheque. The only deductions from his pay were in respect of tax and National Insurance; no deductions were made for food, accommodation, clothing or other incidentals. He would cash the cheque at the public house. Although he had a building society account, he did not save to any significant extent. He would keep cash in an envelope in the kitchen. He was provided with all his meals and agricultural clothing.
56.5 Outside work, Wynne had simple tastes. Although from time to time he would save a little money in his building society account, his wages were spent on weekend visits to the public house (often with Mr Lloyd senior, until his death), on tobacco and on small gifts for family members. He also paid for his own clothing for wearing outside work; he required Mrs Lloyd senior to buy these clothes for him, as he was rather particular about how he was turned out. He read a newspaper each day and liked watching the news. He also kept a dog and chickens at the farm.
56.6 When in 1991 he reached the age of 65, Wynne officially retired. Thereafter he was not paid a wage; his only income was his state pension. Otherwise, however, nothing changed. He continued to work as before, slowing down only as age and ill health dictated, and remained part of the household in just the same way as previously.
56.7 Bernard gave some very fair evidence regarding Wynne's relationship with the Lloyds. He accepted that Wynne was accepted as a member of the family; that he always appeared happy and never complained of being in want of anything; that the Lloyds had shown him nothing but kindness; that he admired them for the way they had looked after him and could find no fault with them in that regard; and that they were thoroughly decent people. He tempered his praise only with the belief that, being unable to resist the lure of money, they had wrongly taken Wynne's property from him.
- Mr Thomas summarised a number of features of the relationship between Wynne and the Lloyds that he said brought the principle of undue influence into play: Wynne lived in the Lloyds' home for all his adult life; he was employed by the Lloyds for all his working life; his entire adult existence was "defined" by the Lloyds; and his lack of education and very limited experience of the world beyond Cefnbarrach made him wholly unequipped for independent existence. Further, as he pointed out, it is the defendants' case that the relationship was characterised by complete trust and affection.
- That the relationship between Wynne and the Lloyds was extremely close is beyond doubt. So too is the fact that it was characterised by mutual love and trust; the former would not have existed without the latter. It is also true that he depended on them for his accommodation, food and transport and, by the age of 70, was not equipped to live independently. However, these matters do not in my view establish dependence in the relevant sense. The concern of the doctrine of undue influence is directed to the question of independence of will. Other questions of dependency are, of course, material, but only because they have implications for the ability to exercise such independence.
- I agree with Mr Jones's submission that the evidence in the present case does not indicate that in a relevant sense Wynne was in a relationship of dependence towards the Lloyds, or they had ascendancy over him, or his position vis-à-vis them was vulnerable, or he reposed trust and confidence in them in respect of the management of his affairs. There is no evidence that the Lloyds managed Wynne's finances or told him how to manage them. He held a building society account and invested or spent his wages and latterly his pension as he chose. Although Mr Hollis described Wynne as a "simple man", he made clear that this referred to a simplicity and uncomplicated nature of life and aspiration; Wynne was not simple-minded. As I have mentioned, he was an avid reader of newspapers and, although these were not of the wordier kind, the evidence of Judith Coates, a near neighbour of Cefnbarrach, was that he showed a good grasp of current affairs. There was also evidence that Wynne had a mind of his own. Meurig Rees, a farm contractor who knew Wynne for the last thirty years of his life, gave evidence that he was "an independent minded man". He did not elaborate on that description, but he was not challenged or questioned about it in cross-examination. There was also evidence that Wynne favoured a different political party from that favoured by the Lloyds and that he entered into lively political debates with them on the matter. These details, though in themselves perhaps trivial, serve to counter any false image of Wynne as a servile dependent and, as I have said, they must be set against a lack of any evidence that Wynne's financial affairs were directed, let alone dictated, by the Lloyds. It might also be borne in mind that, by the time of the gift in 2006, Wynne was 70 years old; he had ceased to be an employee five years previously and remained at Cefnbarrach purely because he was to all intents and purposes a family member.
- Two further pieces of evidence have some relevance on this point. First, Bernard accepted, as do I, that the defendants were thoroughly decent people. Second, there is positive evidence, which I accept, that the gift of Tanyfron and Waenhir was Wynne's idea and was not suggested by the Lloyds. Taken together, these points mean that a case in undue influence must be put—as Mr Thomas did indeed put it, with a glance at para 111 in Lord Hobhouse's speech in Etridge—on the basis that the relationship of dependence/ascendancy was such that Wynne's own judgement was controlled by his perception of "what was expected of him" by the ascendant party, the defendants. Such a conclusion is not axiomatic; there is no presumption of such dependence/ascendancy, any more than in the case of children or parents or other natural relations. It is for the claimants to prove the factual basis of their case, and I do not find that basis established by the evidence. That it is not established is also suggested, first, by the improbability that thoroughly decent people created such a relationship of ascendancy over Wynne and, second, by a consideration of the reasons for the gift.
- My second reason for rejecting the claim on the ground of undue influence is that, in my judgment, the transactions can "be explained by reference to the ordinary motives by which people are accustomed to act" (cf. Lord Scott at para 220 in Etridge).
- In his oral submissions, Mr Thomas said that the satisfaction of what I have called this second prerequisite, namely that the transaction calls for an explanation, "almost goes without saying", because Wynne gave away practically all his property when there was no need for him to do so. In my view, however, it only goes without saying that the second prerequisite is satisfied if one misapplies the legal test of "a transaction which calls for explanation" and fails to approach it in the manner explained by Buxton LJ in Turkey v Awadh; see paragraph 43 above. It is wrong to look at the quality of the transaction—in this case, a gift of substantially all Wynne's property—in the abstract, without considering it in the context of the relationship between donor and donee. Rather, the transaction must be viewed in the round and in context, in the light of all the evidence relating to its circumstances.
- When the transactions are viewed in the light of all the circumstances, they do seem to me to be reasonably accounted for by normal human motivation. The fact that the nature of the transactions—a gift of practically all one's property—is highly unusual does not mean that they cannot be accounted for in terms of normal human motivation; it merely illustrates that the circumstances of cases are almost infinitely various and that this is an unusual case. I would reject any contention that Lindley LJ's dictum in Allcard v Skinner at 185, cited in paragraph 42 above, means that gifts of a certain size or amounting to a certain proportion of a person's wealth ipso facto are inexplicable by normal human motives.
- I have already set out the facts that are the context of the gift and, in my judgment, explain it and I shall not repeat them here in detail. The Lloyds—the defendants, but also their children and Mrs Lloyd senior—were the family of which Wynne was to all intents and purposes a member and to whom he was bound by the strongest ties of affection. It is readily understandable that he wished Tanyfron and Waenhir to go to the defendants, both because of the family bond and because, as a farmer through and through, he wanted that holding to remain with farmers rather than go to members of the Evans family who were not farmers. The latter consideration is similar to that which had caused Mr Evans senior to leave Tanyfron to Ieuan and Ieuan, in turn, to leave Tanyfron and Waenhir to Wynne.
- The facts that the gift was made during Wynne's lifetime rather than by will and that it comprised the entirety of Wynne's property are relied on by the claimants but do not seem to me to affect the conclusion that it can be accounted for in terms of normal human motivation. Wynne was 59 years old when he first owned property, upon becoming the owner of Tanyfron and Waenhir; until then he had nothing. I am satisfied that he had no interest in owning property or having wealth, and he did not want either to leave Cefnbarrach or to farm his holdings independently. He wanted only to continue to live the life he had known for many years. Although lack of interest in wealth might be rare, it neither indicates lack of an independent will nor means that the gift cannot adequately be explained by ordinary human motives (in this case, the desire to benefit the family with which he lived and which had become his own). The gift to the Lloyds was made when Wynne was 70 years old. By then he had been retired for five years. He remained as uninterested in money or a change of lifestyle as before and it is entirely understandable that, although he did not want to see Tanyfron become dilapidated, he had no interest in renovating it on his own account. The gift benefited his family, left the farming unit at Cefnbarrach unchanged and provided a benefit to the farming business by reason of the opportunity to develop the buildings at Tanyfron. Just as importantly, it had no effect on his ability to continue to live the life he wanted to live. It is true that it involved giving away all his wealth (there is no evidence as to the monetary value of the gift). But Wynne was not concerned with that, because the property remained in the family and his continued ownership of it personally made no difference at all to his ability to continue to live the life he wanted to live.
- Mr Thomas submitted, however, that the gift was unnecessary, because Wynne could have sold his property to the Lloyds or to third parties or could have granted to the Lloyds a tenancy or licence to enable them to continue farming his land. The effect of this unnecessary gift was to deprive Wynne of any security in the event that something untoward were to happen at Cefnbarrach, whether to the relationship with the Lloyds or to the family or to the farming business. Further, insofar as Wynne was concerned that recourse would be had to the property to fund the fees of a nursing home, he was labouring under a misapprehension, because he was unaware, as was David, that the first £20,000 of his capital would be protected from nursing charges.
- These points have to be considered in terms of practicalities rather than abstract possibilities. This was not the familiar case of an elderly person moving in with younger relatives, where the parties' ability to live together in harmony in one household was untested; there was no likelihood at all of a falling out between Wynne and the Lloyds, as he no doubt knew full well. It was notionally possible that the entire family apart from Wynne would meet with a sudden catastrophe or that the farming business might fail and the home at Cefnbarrach would be lost. But the former possibility was remote and not such as should reasonably be expected to have dictated or even influenced Wynne's decision, and I am satisfied, on the basis of the evidence as to the history of the farm and its trading and as to its capital value, that the latter possibility was fanciful. Further, the eventualities against which it is supposed Wynne should have protected himself would have involved the loss of all he held dear and placed him in a position in which the possession of land or its monetary equivalent would not have provided him with anything he would have considered of value or offered him any life that he might wish to live and could not otherwise live.
- It may very well be that Wynne did not know that some of his capital would remain untouched if he went into residential or nursing care; David said in evidence that, as he had not known this, he thought Wynne had probably not known it either. I do not regard this as a significant point. First, on the question whether the gift was explicable in terms of normal human motivation, it is wholly irrelevant. Only when addressing the distinct question whether, after the evidential burden has shifted to the defendants, the gift was the product of a free and fully informed independent will might the point be relevant. Second, on the facts of this particular case, Wynne's ability to retain (it is said) £20,000 in the event of entering residential or nursing care is hardly likely to have been of any interest to him, even if he knew of it. That ability could only be relevant when the greater part of the asset had been eaten up in care costs. Mr Thomas's objection that this point relates to a financial disadvantage to the Lloyds, rather than to Wynne, serves only to highlight the motive of the gift. Further, the evidence as to Wynne's character and priorities gives no basis for supposing that he would have considered it of any value to himself that, facing his last years in residential or nursing care, he had £20,000 in the building society.
- Third, if (contrary to my judgment) the evidential burden were to have shifted to the defendants to show that the gift was not procured by undue influence, I would find that the burden had been discharged.
- There are cases in which the inference that a gift was procured by undue influence is so strong that it can hardly be rebutted. In other cases, relatively slight evidence will be sufficient to discharge the defendants' evidential burden. As I hold that the burden has not shifted to the defendants in this case, it is somewhat artificial to discuss how heavy that burden would have been if it had shifted. However, it follows from what I have already said that, if the evidential burden had shifted to the defendants, I would have regarded it as a light burden.
- As explained above, the question at this stage of the enquiry would be whether the gift, though not adequately explained by ordinary motives, was the product of an independent will. The evidence establishes to my satisfaction that the gift not only was voluntary but was made on Wynne's initiative, without the suggestion or bidding of the defendants, who are decent people and made no attempt to influence or direct his will.
- There is evidence of some, albeit limited, advice given to Wynne in connection with the transactions. As I have already noted, Mr Hollis acted for Wynne in respect of the conveyances on the instructions of the defendants, who paid for his services. However, he said in evidence that he regarded Wynne as his client, and I have no reason to suppose that he was not conscientious towards Wynne or unmindful of his duty towards him. Mr Hollis admitted, unsurprisingly, that he had no memory of his conversation with Wynne, but he explained how he would have acted in accordance with his normal practice. In order to be sure that Wynne knew what he was doing and was acting in accordance with his own free will, he would have "chatted", perhaps for half an hour or so, before discussing the transaction itself. Then he would have discussed the transaction, explaining its effect not merely in technical conveyancing terms but as a matter of substance. He said that he would certainly have told Wynne that he was acting unusually in making a gift of his property to those outside his true family. If he had had any doubts that Wynne was acting freely and with full understanding, he would either have refused to act or told Wynne that he should go to see another solicitor. However, he had no such doubts.
- Mr Hollis's evidence is not the strongest evidence with which to rebut a prima facie inference of undue influence, but in this case I would have considered it just about sufficient, had it been necessary. It can be said that Mr Hollis, as the Lloyds' solicitor and being paid by them, was not wholly independent. However, as I have indicated, I have no reason to doubt that he discharged his duty towards Wynne as to his client. Further, "independent legal advice" is a factor to be taken into account, not a legal requirement for the discharge of the burden, and the important thing is to look at the facts of the case, whatever labels may be put on specific relationships. The main problem with his evidence is the limited nature of his advice: in particular, he did not advise Wynne as to the options that were available to him, such as granting a lease or licence over his land or selling it to the Lloyds, and he did not explain that Wynne could retain some capital that would be protected from any claim for recoupment of the costs of residential or nursing care.
- In this particular case, I do not regard these limitations to the advice given as being significant. To sell the land to the Lloyds would have been entirely self-defeating: it would have imposed a burden on them and would have provided no practical benefit to Wynne. To retain the land, or indeed the proceeds of sale, would jeopardise their receipt of what he wished them to have, in the event that he, like his twin, had to go into residential or nursing care. For Wynne, the possibility of retaining a small capital sum was inconsequential, for reasons already stated. The requirement of a fully informed will must be applied practically, with due regard to what matters are and are not material to the case. In the context of the facts as a whole, I would if necessary have found that Mr Hollis's evidence, limited as it was, sufficed to confirm that Wynne's will was exercised not only freely but independently and with a full knowledge of all the facts material to its exercise.
Unconscionable Transactions
- For the claimants, Mr Thomas submits that Wynne, having left school at the age of thirteen or fourteen and having very little experience of the wider world or of property affairs, was "less highly educated", and that as an agricultural worker in the service of the Lloyd family he was both "a member of the lower income group" and at a special disadvantage on account of his dependence on the family for employment, board and accommodation. The transactions were "oppressive", because they involved giving away significant value, which was all the property of substance he owned. The defendants' conduct was unconscionable, because they knew of Wynne's disadvantage and took no steps to dissuade him from his course of action or to encourage him to seek independent legal advice; and thereby they permitted him to act in such a manner as to deprive himself of all chance of independence, should the need or desire for such arise.
- I accept that for the purposes of the impugned transactions Wynne was "poor" and "ignorant" in the sense described by Megarry J in Cresswell v Potter. I also accept that the gifts of the properties were disadvantageous to Wynne, in the sense that they divested him of practically all his assets and were unnecessary; though I cannot help thinking that he would have been surprised to see it said that he acted to his own disadvantage. However, in order to succeed in respect of this ground of relief, the claimants would have to show that the defendants' conduct was "unconscionable", in the sense explained in paragraph 50 above. Even if I had accepted that the defendants induced the gifts of Tanyfron and Waenhir by the exercise of undue influence over Wynne in the manner alleged on behalf of the claimants, neither such a finding nor any other finding of fact that could reasonably be made in this case—and certainly no finding of fact that I have made—could support a finding that the defendants acted with sufficient moral culpability to justify the grant of relief on this basis of claim. In truth, if the claimants succeeded on the ground of undue influence, they would not need to rely on this alternative head of claim, whereas if they fail (as they do) on the ground of undue influence they cannot conceivably succeed on this alternative ground.
Defences
- The defendants relied on the equitable defences of laches, estoppel and acquiescence. I think that only the first two need be considered, because in the present case the concept of acquiescence adds nothing to what falls for consideration under the concepts of laches and estoppel; cf. the comments of Lord Neuberger of Abbotsbury in Fisher v Brooker [2009] UKHL 41, [2009] 1 WLR 1764, at para 62.
- The argument advanced on the basis of estoppel was that, during Wynne's lifetime and with his knowledge and assistance, the defendants expended time, labour and money on the renovation of the house at Tanyfron and the conversion of the barn at Tanyfron in the belief, which he did nothing to challenge but impliedly confirmed, that they were the beneficial owners of the property. I accept the factual basis of this defence. However, it is the claimants' pleaded case that the defendants' influence over Wynne continued until the end of his life, and it seems to me that there would be no proper basis for finding that such influence, if it existed, ended during Wynne's lifetime. If the original gifts were voidable on the ground that they were procured by undue influence or unconscionably, no failure by Wynne to object to the defendants' use of the given property while he remained within the relationship complained of could render the gifts unimpeachable. Further, insofar as Wynne's estate would be enriched by reason of the work done by the defendants on the property, there would be no difficulty in making an allowance to them for their work and preventing any injustice that might otherwise arise. Therefore, if I considered that the gifts were otherwise liable to be set aside, I would not refuse relief on the ground that anything done during Wynne's lifetime gave rise to an estoppel.
- The defendants also contend that any claim for equitable relief is barred on account of lapse of time. No limitation period under the Limitation Act 1980 is applicable to the claim, whether on the ground of undue influence or of unconscionable transactions. Mr Jones submitted that a six-year period under the Limitation Act 1980 ought to be applied by way of analogy; presumably the analogy would be with a claim in unjust enrichment, though Mr Jones did not say so. I agree with Mr Thomas that the matter is more correctly considered as falling under the principle of laches; see Goldsworthy v Brickell [1987] Ch. 378 at 410. Anyway, if Wynne were subject to the influence of the defendants, he could not reasonably be expected to have taken any action to impeach the gifts during his lifetime, as he would not have been freed from their influence. The claim was brought within six years of Wynne's death, and it is the date of Wynne's death and his emancipation from the alleged influence that is the earliest appropriate date to take as a starting-point when considering matters of delay. See Allcard v Skinner, above, per Lindley LJ at 187 and per Bowen LJ at 191. In Humphreys v Humphreys [2004] EWHC 2201 (Ch), at para 99, Rimer J rejected the argument that the Limitation Act 1980 provided a defence to the claim before him and continued:
"I prefer the view that, so long as the undue influence persists, claims can be brought whatever the period since the transaction; but that once the complainant is no longer under the defendant's influence, a claim to set the transaction must be brought within a reasonable time. A failure to do so will be likely to attract a defence based on the equitable doctrine of laches, described as follows by Sir Barnes Peacock in Lindsay Petroleum Co. v Hurd (1874) LR 5 PC 221, at 239, 240:
'Now the doctrine of laches in Courts of Equity is not an arbitrary or a technical doctrine. Where it would be practically unjust to give a remedy, either because the party has, by his conduct, done that which might fairly be regarded as equivalent to a waiver of it, or where by his conduct and neglect he has, though perhaps not waiving that remedy, yet put the other party in a situation in which it would not be reasonable to place him if the remedy were afterwards to be asserted, in either of these cases lapse of time and delay are most material.'"
In Patel v Shah [2005] EWCA Civ 157 the Court of Appeal reiterated the approach that it had previously adopted in Frawley v Neill [2000] CP Rep 20 is as follows:
"The inquiry should require a broad approach, directed to ascertaining whether it would in all the circumstances be unconscionable for a party to be permitted to assert his beneficial right. No doubt the circumstances which gave rise to a particular result in decided cases are relevant to the question whether or not it would be conscionable or unconscionable for the relief to be asserted, but each case has to be decided on its facts applying the broad approach."
More recently, in Fisher v Brooker, above, Lord Neuberger, with whose speech the other members of the Appellate Committee agreed, said this:
"[L]aches is an equitable doctrine, under which delay can bar a claim to equitable relief. In the Court of Appeal, Mummery LJ said that there was 'no requirement of detrimental reliance for the application of acquiescence or laches'—[2008] EWCA Civ 287, para 85. Although I would not suggest that it is an immutable requirement, some sort of detrimental reliance is usually an essential ingredient of laches, in my opinion. In Lindsay Petroleum Co v Hurd (1874) LR 5 PC 221, 239, the Lord Chancellor, Lord Selborne, giving the opinion of the Board, said that laches applied where 'it would be practically unjust to give a remedy' and that, in every case where a defence 'is founded upon mere delay … the validity of that defence must be tried upon principles substantially equitable.' He went on to state that what had to be considered were 'the length of the delay and the nature of the acts done during the interval, which might affect either party, and cause a balance of justice or injustice in taking the one course or the other, so far as relates to the remedy.'"
- The claims in the present case were commenced more than fifteen years after the transactions that are impugned and nearly six years after Wynne's death. Howell, as Wynne's next of kin and the person entitled to a grant of representation in respect of his estate, took no step to take a grant or to challenge or even enquire as to the gifts until May 2011, when I am satisfied he was, to put the matter at its lowest, acting upon the encouragement of Bernard. Having made a will in favour of Mrs Elizabeth Lloyd shortly before Wynne's death, Howell remained on close terms with the defendants until Bernard's involvement led to correspondence in 2011. In the context of all the circumstances, including the will made in Mrs Lloyd's favour, it is impossible to see this state of affairs as evidencing anything other than an acceptance of Wynne's actions in 1996 and an implicit decision to accept them.
- Further, if contrary to my view Howell cannot be said to have behaved in a manner amounting to a waiver of any claim against the defendants, I should be of the view that by his conduct and neglect he has put the defendants in a situation in which it would now be unreasonable and unjust to assert a remedy against them. Although the defendants have not advanced evidence relating directly to matters of detrimental reliance in the period since Wynne's death, it would not in my judgment be right to ignore the practical realities of their situation. They have at all relevant times ordered their affairs on the basis that they were the owners of the property and not required to account for the proceeds of the disposals they have made. The farm is a substantial capital asset but, unsurprisingly, it trades with the assistance of an overdraft at the bank, and since 2007 or 2008 that overdraft has been secured by a charge—whether extending to Tanyfron and Waenhir as well as Cefnbarrach itself, I am unsure. The financial climate, both generally and for agriculture, is far less favourable now than it was at any time when a prompt challenge to the transactions might have been made. In the absence of any specific evidence to the contrary, I think that I am entitled to draw the reasonable inference that the defendants are not unusually sheltered from the financial climate, particularly as they do in fact rely on a relationship with their bank. When set in the context of the claimants' delay in bringing this claim, these matters do in my view make it unjust for the defendants to be required at this time to unsettle what have for many years been to all appearances settled transactions.
- Accordingly, although I would have rejected the defence of estoppel, I would have upheld the defence of laches.
Conclusion on the claim
- For the reasons given, the claim fails and will be dismissed.
- It will have become apparent that I shall dismiss the claim without any regret. In his closing submissions, Mr Jones forthrightly ventured (as he acknowledged) outside the confines of strict legal analysis and said that, if Wynne knew what was being attempted by the claim, he would be turning in his grave. I regard that as fair comment.
The counterclaim: did Wynne leave a will?
- The answer to this question is of little importance in the light of the conclusions I have reached concerning the conveyances of Tanyfron and Waenhir. However, in my judgment it has not been established that Wynne died testate.
- Shortly after Wynne died, Mrs Elizabeth Lloyd was sorting out the papers that he kept in an unlocked bureau in the living room at Cefnbarrach, when she found a draft will in his name. The unexecuted document, which had been prepared by solicitors in 1985, provided that David be appointed as executor, that all Wynne's money be given to Howell and Emlyn and that the rest of Wynne's estate be given to David. Although Wynne had previously mentioned an intention of leaving his property to the Lloyds, he had never shown them either a draft or an executed will.
- No executed will has come to light. There is, however, an index card from the offices of Milwyn Jenkins & Jenkins, who were dealing with Ieuan's estate in 1985. The card as originally drawn was marked only with Wynne's name and address and the date "23.10.85". Next to that date has been added, "(out to WR – 7 ix 06)".
- Evidence was given by Mr William Ransford, a solicitor in the employment of Milwyn Jenkins & Jenkins. He never met Wynne and had no involvement in the preparation of a will for him, but he explained the operation of the index card system. The earlier date, 23 October 1985, is the date at which the will was placed into the firm's storage system. When a document is retrieved from the storage system, the index card is marked with the date of retrieval and the name of the solicitor to whom it has been given, in this case "WR", Mr Ransford. The occasion for retrieving the will on 7 September 2006 was a telephone call from Mrs Elizabeth Lloyd, informing him that Wynne had died. However, what he retrieved was only a draft will. He has no recollection of ever seeing an executed will of Wynne's. He stated that since he joined the firm in 1996 it had never been the practice to place draft documents in the firm's storage system; only executed documents were stored. He expressed the opinion that an executed will had probably been placed in the system and had subsequently been misplaced within the system and remained there, although searches and enquiries had proved fruitless and he could not discount the possibility that only a draft had been placed in the system or that any executed will had been destroyed. Interestingly, when Mr Hollis gave evidence he said that, although he had no personal knowledge of the will, he understood from Mr Ransford that the will had probably never been executed.
- The evidence falls far short of permitting an inference that the will was executed. There is no evidence from anyone who prepared the will or arranged or witnessed its execution. Wynne had only a draft, not an executed will. No executed will has ever been found. Despite Mr Ransford's evidence as to his firm's practice since 1996, it is clear that a draft will was indeed stored by the firm: he himself gave evidence that what he retrieved was a draft. No explanation has been given of why the firm would have stored a draft as well as an executed will or of how the two would have become separated if stored under the same reference. Mr Hollis's evidence is of some, albeit limited, relevance, because he showed no surprise that the draft of an unexecuted will should have been stored by the firm. Although it is possible that the will was executed and has been lost, I think it far more likely that a draft was prepared on Wynne's instructions and then retained to await his decision to execute it but that he never did so decide.
- Accordingly the counterclaim fails.
