This article discusses the recent High Court decision in Paull v Paull [2018] EWHC 2520 (Ch) concerning whether a property transfer from an elderly father to his son could be set aside for presumed undue influence.
The facts
The claimant was Neville Paull. The defendant was his son, Bradley Paull. In 2010 Neville transferred his home to Bradley. At the time, Neville and his partner, Linda, lived at the property. Neville argued that he only transferred the property on the basis that Bradley agreed he would ‘look after the property’ for him and allow him and Linda to remain in the property for their lifetime.
Neville was 67 years old at the time of the transaction and he was thought to be frail and vulnerable. It was Bradley’s case that his father wanted to transfer the property because Neville:
- Wanted to ensure that no part of his property went to Linda’s children from an earlier relationship;
- That he wanted to avoid the property being sold by the local authority to pay care home fees; and
- That he wanted to avoid the payment of Inheritance Tax upon his death.
Neville sought to have the transaction set aside on the grounds that Bradley had unduly influenced him to make the transfer.
Undue Influence
The principles regarding claims for undue influence can be traced as far back as 1887 to the case of Allcard v Skinner (1887) 36 Ch D 145, in which the judgment of Lindley LJ outlined that there were two requirements to be satisfied to found a claim of presumed undue influence:
- ‘A’ reposes trust and confidence in ‘B’ and is therefore predisposed to follow B’s direction; and
- The transaction calls for explanation in that in cannot be reasonably accounted for by reference to the nature of the relationship between ‘A’ and ‘B’.
If the presumption is established, the defendant must then rebut the presumption. If the defendant fails to do this, the transaction is declared voidable.
Applying the above test, Master Bowles found that both requirements were satisfied in Neville’s favour. As such, he could presume that Neville had been unduly influenced.
It was significant that:
- Evidence as to the nature of the relationship between Neville and Bradley following the transaction demonstrated that Neville delegated significant control over his documentation to Bradley.
- There was nothing to suggest a contrary relationship had existed between them before the transaction.
- Neville stated in oral evidence, accepted by Master Bowles, that the idea for the transfer had emanated from Bradley;
- Bradley proved to be an unreliable witness;
- The transaction ‘undoubtedly called for explanation’ given that its result was to deprive Neville and his partner of their sole residence and leave them with less than half of their capital assets.
The burden of proof consequently fell to Bradley to establish that the transaction was entered into as a result of a free and independent decision by Neville. To this end, Bradley relied on the fact that the solicitor acting in the transaction had advised Neville on the consequences of the transfer prior to the transaction being entered into.
However, Master Bowles, on the authority of Pesticcio v Huet [2004] EWCA Civ 372 and Thompson v Foy [2010] P&CR 16, found that the solicitor’s involvement was insufficient to dissipate or negate the effects of Bradley’s undue influence and therefore the transaction ought to be set aside.
Master Bowles’ reasoning was based heavily:
- On the fact that the solicitor had failed to ensure Neville truly understood the nature of the transaction and the fact that it was irrevocable. The solicitor, in an interview with Neville designed to discourage the transaction, read the Firm’s note on the subject which proved inaccessible to laypeople. It did not explain with any clarity that the transfer was irrevocable. It could not be expected to have made Neville take pause and consider his decision.
- The solicitor not taken steps to ensure that Bradley was not in proximity to Neville when the advice was given (the court found that it was not enough for Bradley to be removed from the room when advice was given).
The court was clear that a solicitor in these cases was under a significant obligation to ensure that the claimant was making the decision freely and independently.
Comment
The High Court set aside the transfer from Neville to Bradley.
Importantly, it was the solicitor’s failure to take reasonable steps to ensure that Neville was independently advised that clinched the decision, as demonstrated by comparison with the case of Brindley v Brindley [2018] EWHC 157 (Ch). In Brindley, the transaction was not voidable for undue influence because the court found that the solicitor had ensured that the claimant had received independent advice before the transaction was entered into, and therefore the decision was freely and independently made.
Solicitors should, therefore, be advised that, in a case where the claimant is particularly susceptible to influence and appears to have reposed a lot of trust in the defendant, it is crucial to ensure that any advice given is clear, comprehensive and, significantly, independent from the defendant’s input.
