Incomplete Gifts
Bankruptcy Act
Fraudulent and Voluntary Conveyances
Avoidance of fraudulent preferences.
57.—(1) Every conveyance or transfer of property or charge made thereon, every payment made, every obligation incurred and every judicial proceeding taken or suffered by any person unable to pay his debts as they become due from his own money in favour of any creditor or of any person in trust for any creditor, with a view to giving such creditor, or any surety or guarantor for the debt due to such creditor, a preference over the other creditors, shall, if the person making, incurring, taking or suffering the same is adjudicated bankrupt within six months after the date of making, incurring, taking or suffering the same, be deemed fraudulent and void as against the Official Assignee; but this section shall not affect the rights of any person making title in good faith and for valuable consideration f through or under a creditor of the bankrupt.
( 2 ) ( a ) Where a person is adjudicated bankrupt and anything made or done is void under subsection (1) or was void under the corresponding provisions of the law in force immediately before the commencement of this Act as a fraudulent preference of a person interested in property mortgaged or charged to secure the bankrupt’s debt, then (without prejudice to any rights or liabilities arising apart from this section) the person preferred shall be subject to the same liabilities and shall have the same rights as if he had undertaken to be personally liable as surety for the debt to the extent of the charge on the property or the value of his interest, whichever is the less.
( b ) The value of the said person’s interest shall be determined as at the date of the transaction constituting the fraudulent preference, and shall be determined as if the interest were free of all encumbrances other than those to which the charge for the bankrupt’s debt was then subject.
( c ) On any application made to the Court in relation to any payment on the ground that the payment was a fraudulent preference of a surety or guarantor, the Court shall have jurisdiction to determine any questions relating to the payment arising between the person to whom the payment was made and the surety or guarantor, and to grant relief in respect thereof notwithstanding that it is not necessary so to do for the purposes of the bankruptcy, and for that purpose may give leave to bring in the surety or guarantor as a third party as in the case of an action for the recovery of the sum paid.
( d ) Paragraph (c) shall apply, with the necessary modifications, in relation to transactions other than the payment of money as it applies to payments.
Avoidance of certain transactions.
58.—(1) If within three months before he is adjudicated bankrupt a debtor commits an act of bankruptcy and thereafter either sells any of his property at a price which, in the opinion of the Court, is substantially below its market value or enters into or is a party to any other transaction which, in the opinion of the Court, has the effect of substantially reducing the sum available for distribution to the creditors, such transaction shall be void as against the Official Assignee, unless the transaction was bona fide entered into and the other party had not at the time of the transaction notice of any prior act of bankruptcy committed by the bankrupt.
(2) Subsection (1) shall not affect the rights of any person making title in good faith and for valuable consideration through or under a person (other than the bankrupt) who is party to a transaction mentioned therein.
(3) Subsection (1) shall not apply to any transaction mentioned in section 57 (1) or 59.
Avoidance of certain settlements.
59.—(1) Any settlement of property, not being a settlement made before and in consideration of marriage, or made in favour of a purchaser or incumbrancer in good faith and for valuable consideration, shall—
( a ) if the settlor is adjudicated bankrupt within two years after the date of the settlement, be void as against the Official Assignee, and
( b ) if the settlor is adjudicated bankrupt at any subsequent time within five years after the date of the settlement, be void as against the Official Assignee unless the parties claiming under the settlement prove that the settlor was, at the time of making the settlement, able to pay all his debt without the aid of the property comprised in the settlement and that the interest of the settlor in such property passed to the trustee of such settlement on the execution thereof
(2) A covenant or contract made by any person (in this section called the settlor) in consideration of his or her marriage, either for the future payment of money for the benefit of the settlor’s spouse or children, or for the future settlement, on or for the settlor’s spouse or children, of property wherein the settlor had not at the date of the marriage any estate or interest, whether vested or contingent, in possession or remainder, shall, if the settlor is adjudicated bankrupt and the covenant or contract has not been executed at the date of the adjudication, be void as against the Official Assignee, except so far as it enables the persons entitled under the covenant or contract to claim for dividend in the settlor’s bankruptcy under or in respect of the covenant or contract, but any such claim to dividend shall be postponed until all the claims of the other creditors for valuable consideration in money or money’s worth have been satisfied.
(3) Any payment of money (not being payment of premiums on policy of life assurance) or any transfer of property made by the settlor in pursuance of a covenant or contract to which subsection (2) applies shall be void as against the Official Assignee in the settlor’s bankruptcy, unless the persons to whom the payment or transfer was made prove that:
( a ) the payment or transfer was made more than two years before the date of the adjudication of the settlor, or
( b ) at the date of the payment or transfer, the settlor was able to pay all his debts without the aid of the money so paid or the property so transferred, or
( c ) the payment or transfer was made in pursuance of a covenant or contract to pay or transfer money or property expected to come to the settlor from or on the death of a particular person named in the covenant or contract, and was made within three months after the money or property came into the possession or under the control of the settlor;
but, in the event of any such payment or transfer being declared void, the persons to whom it was made shall be entitled to claim for dividend under or in respect of the covenant or contract in like manner as if it had not been executed at the date of the adjudication.
(4) In this section “settlement” includes any conveyance or transfer of property.
Cases
MC v FC
M.C. (A Ward of Court suing by her committee Margaret Molony) and Margaret Molony v F.C. and J.H. and J.H. T/A H Brothers [2013] IESC 36
Judgment of Mr. Justice John MacMenamin delivered the 30th day of July, 2013.
1. This is an appeal against a judgment and order of the High Court (Feeney J.) delivered on the 17th May, 2013. In that judgment, the High Court declared that F.C., a nephew of M.C., a Ward of Court, exercised undue influence over his aunt, and that alleged gifts from her to him, amounting to in excess of €900,000 should be set aside.
The Supreme Court as a court of appeal
2. In view of the way the appeal proceeded, it is necessary to re-iterate the role of this Court and the effect of the legal authorities which govern this Court in the appeal process.
3. Article 34.4.1 of the Constitution provides that the Supreme Court is the Court of Final Appeal. This Court exercises an appellate jurisdiction from the High Court. The jurisdiction of this Court on such appeals is addressed in the case of Hay v O’Grady [1992] I.R. 210. This Court does not engage in a complete re-hearing of a case on appeal. It proceeds rather on the facts as found by the trial judge and his inferences based on these facts. As Hay v O’Grady makes clear, if the findings of fact made by a trial judge are supported by credible evidence, then this Court is bound by those findings, even if there is apparently weighty evidence to the contrary. This Court will only interfere with findings of the High Court where findings of primary fact are not supported by evidence, or cannot in all reason be supported by the evidence (see also Pernod Ricard and Comrie plc v Fyffes plc (Unreported, The Supreme Court, 11th November 1988)). Furthermore, in Hay v O’Grady, McCarthy J. pointed out that an appellate court will be slow to substitute its own inference of fact for that of the trial judge, where such inference depends upon on oral evidence or recollection of fact. In drawing of inferences from circumstantial evidence, an appellate tribunal is, of course, in as good a position as the trial judge (see also O’Connor v Dublin Bus [2003] 4 IR 459; Quinn (A Minor) v Mid Western Health Board and Another [2005] 4 IR 1).
4. It is necessary to re-iterate that these basic principles as the appeal, presented by F.C., the first named defendant in person, appeared to be premised on the assumption that there were some segments of evidence before the High Court judge which should have lead him to a different conclusion. The questions are whether the findings of fact are based on evidence; and whether inferences are correctly and factually drawn. Moreover, the Court would point out that the main evidence in defence of this claim came from F.C. himself. The trial judge rejected this evidence as being entirely unreliable on a range of the fundamental issues in the case.
The facts as found by the High Court
5. M.C. is a Ward of Court, so declared by order of the High Court, dated the 4th November, 2009. She was born on the 18th May, 1925, and is a widow without child, grandchild or other direct descendant. By order of the 27th January, 2010, Margaret McGreevy was appointed Committee of the person and of the estate of M.C. By further order, dated the 12th April, 2010, Margaret Molony, the second named plaintiff, was substituted as Committee of the estate and person of M.C.
6. F.C., the first named appellant, is M.C.’s nephew. As a child, he formed a close relationship with M.C. He spent some periods with her. When F.C. became an adult, he visited his aunt on a regular basis.
7. The second and third named appellants are brothers who live in the same county as F.C. They own a business hiring out agricultural machinery. F.C. is said to work in that business.
8. On the 25th February, 2006, when M.C. was residing alone in Dublin, she became unwell. She was admitted to hospital. At that time, she had no close relations in Dublin but had a number of relations in her own native county, including F.C. Contemporaneous hospital records show she was admitted to hospital in Dublin with a history of intermittent confusion, amidst neighbours’ concerns about her welfare. She remained in hospital until the 26th April, 2006.
9. Prior to her discharge, M.C. was adamant that she wanted to go home to her house in Dublin. A family meeting took place. There, a plan was devised that M.C. would instead return to her native county and live there with M.K., who was F.C.’s partner. For approximately the next four years, she lived at various different locations either under F.C.’s supervision, or actually living with him under the one roof. On the 11th March, 2010, she was admitted to a nursing home, where she now continues to reside.
10. In circumstances which are described below, M.C.’s house in Dublin was sold yielding a net balance of €2,717,313.05. Some of these monies were used to purchase a house in her native county. On the 2nd May, 2008, the balance of €1,938,453.40 was transferred into M.C.’s account. The trial judge found that from the 16th May, 2008, until the 14th May, 2009, eight withdrawals took place from that account. The largest withdrawal, some €500,000, was made on the 14th April, 2009. By then, over €400,000 was transferred, either into F.C.’s sole account, or joint accounts in the names of F.C. and M.C. In total, therefore, some €900,000 was transferred to accounts over which F.C. exercised effective control.
11. As outlined later, a substantial part of the monies were placed in a machinery hire business where F.C. worked with the second and third named appellants. In order to justify this disposal of the monies, F.C. claimed that in 2006, he had made a “gentleman’s agreement” with J.H., the second named appellant, that funds would be provided to purchase machinery for the business, and that F.C. would be given a wage as soon as the business was built up. J.H. and F.C. were to hold joint ownership of the machinery, and if the business did not prosper, the machinery would be returned to F.C.’s sole ownership. The trial judge rejected the appellant’s evidence that, while of full capacity, his aunt knew of, or agreed to this very unusual and unprofitable arrangement.
Evidence and findings on the capacity of the Ward
12. A range of expert evidence was available from social workers, consultant psychiatrists and other doctors regarding M.C.’s state of mind prior to, and during, the period that these transactions took place (2006 – 2009). The judge heard medical evidence from Dr. Niall Gormley, a consultant psychiatrist; Nurse Molony, Dr. Patrick Geoffrey O’Donoghue, a consultant psychiatrist; Ann Kelly, an occupational therapist, and Carsten Kohl, a social worker attached to the Protection Service for Older Persons in the county in question. This evidence established to the judge’s satisfaction that on admission to hospital on the 25th February, 2006, M.C. was already fragile, vulnerable, and suffering from the early stages of dementia.
13. The trial judge found on the evidence that, during 2007 and 2008, M.C.’s cognitive impairment progressed from mild to moderate. The Court concluded that, at no time during 2008 or 2009 did M.C. have the capacity to engage in complex financial transactions, even though she did retain some capacity to deal with day to day affairs. At the hearing, F.C. produced taped phone calls between himself and his aunt. It might be thought this was a very strange thing to do unless there was some reason for it. F.C.’s ostensible reason for doing this was to demonstrate that his aunt retained full decision making capacity. The judge, in fact, held that these tapes demonstrated precisely the opposite; that M.C. was a person manifesting moderate dementia with a significant inability to communicate in a logical and coherent manner.
The High Court’s findings on F.C. as a witness
14. The defence of the claims hinged on F.C.’s credibility. The judge found him to be an entirely unreliable witness. He concluded that his testimony was inconsistent, and that, when information and documents became available which demonstrated his initial evidence was incorrect, the appellant demonstrated a willingness to change his evidence without regard to the truth. The judge concluded that his evidence was “so unreliable and so inconsistent and shifting that I concluded that I was able to place little reliance on F.C.’s willingness to truthfully account for his dealings with his aunt’s monies”.
The law on undue influence
15. The learned trial judge had regard to the decision of this Court in Carroll v Carroll [1999] 4 I.R. 241. In Carroll, Denham J. outlined two classes of transaction which may be set aside on the grounds of undue influence. The first of these is where the court is satisfied that the gift(s) was the result of influence expressly used by the donee for that purpose; the second, where the relations between the donor and donee, at, or shortly before the execution of the gift(s), were such as to raise a presumption that the donee had influence over the donor. Feeney J. held the transactions in question here fell into the second class.
16. He quoted Denham J. in Carroll to the following effect:
“In such a case the Court sets aside the voluntary gift, unless it is proved in fact the gift was a spontaneous act of the donor acting under circumstances which enabled him to exercise an independent will and which justifies the Court in holding that the gift was the result of a free exercise of the donor’s will”.
The learned trial judge also referred to Reg. (Proctor) v Hutton [1978] N.I. 139; Inche Noriah v Shaik Allie Bin Omar [1929] AC 127; and Allcard v Skinner [1887] 36 Ch.D. 145.
17. Once a relationship giving rise to a presumption of undue influence is established, and where it has been shown in evidence that a donee has received a substantial benefit, the law provides the onus then lies on the donee to establish that the gift or transaction resulted from the free exercise of the donor’s will. That onus can be discharged by evidence showing the gift was the independent and well understood act of a person in a position to exercise free judgment. The Court held that the appellant had failed to discharge that onus.
The sale of M.C.’s Dublin property
18. The trial judge concluded on the evidence that when M.C. decided to put her house on the market, she was dependent on her nephew and that the house was sold at F.C.’s instigation and as a result of pressure from him. This conclusion was in part based on his conclusion that the nephew had taken part in preparing a forged letter. This letter purported to come from a “welfare inspector” in the Department of Social Welfare. F.C. claimed this forged letter was his aunt’s idea. His testimony at the trial was that he merely assisted in its preparation in that he obtained blank note paper from the Department of Social and Family Affairs. One can only describe as bizarre F.C.’s claim, made both to this Court and the High Court, that the letter was dictated or prepared by M.C. as part of a plan to ward off other family members who, F.C. claimed, were pressuring M.C to act in some manner against her, but in fact the nephew’s, interest. The judge concluded that the appellant’s explanation was concocted. The forged letter conveyed that, absent M.C.’s agreement to selling the house, the State would take possession of it and would be responsible for selling it. The closing paragraph said that an Inspector from the Department of Social and Family Affairs would be making a visit to F.C. and his aunt. The trial judge unsurprisingly concluded that the clear intent behind this letter was to put pressure on M.C. to sell, where the very existence and phraseology of the letter showed the aunt’s reluctance to do so. The trial judge held that F.C. also engaged in the preparation and completion of other forged correspondence necessary for the sale of the house. The effect of the sale was, of course, to realise the value of the aunt’s property into liquid cash.
The High Court’s findings on the financial transactions
19. The judge concluded that the circumstances in which M.C. resided, after coming out of hospital in Dublin 2006, created a situation where influence was readily acquired. He determined that the influence arose through disparities of age, mental and physical capacities between M.C. and F.C.
20. The High Court was satisfied from the evidence, that the large sums of money which had been removed from the bank account between May 2008 to April 2009 were as a result of F.C.’s express influence. He concluded that F.C. had sought to exercise control and dominion over M.C., and to ensure that she acted in accordance with his wishes and for his benefit. He found support for his findings by what he found were F.C.’s dishonest and misleading dealings with Mrs. Wardlaw, his aunt’s solicitor, and his clear steps to bring about the sale of the Dublin property. The judge had regard, too, to the fact that F.C. attempted to have property which M.C. bought in her native county placed in their joint names.
21. The High Court concluded that there was no credible evidence that M.C. had received any legal or financial advice from the date that the sum of €1,938,453.41 was lodged to her bank, up to and after the final withdrawal of €500,000 on 14th April 2009. He concluded that F.C. gave false testimony in relation to the purchase of two properties in Poland. At one point in the hearing when seeking to explain this attempted concealment of part of the money in Poland, F.C. accepted that part, at least, of his evidence on the issue was “rubbish”.
22. The High Court held that the capacity of F.C. to influence M.C. to his benefit without regard to her genuine wellbeing, was best illustrated by the circumstances surrounding the final withdrawal of €500,000 in April 2009. This took place at a time when F.C. was aware an imminent psychiatric examination was due to be carried out on his aunt to assess her mental capacity. The judge held F.C. was involved in the cancellation of an initial appointment for the assessment, which had been due to take place just a matter of days after the withdrawal. He concluded that, to proceed with the withdrawal of €500,000, representing almost a third of M.C.’s remaining funds, when such funds were used by F.C. for a number of transactions for his own benefit, led inexorably to the conclusion that this withdrawal was as a result of influence used by F.C. for the purposes of obtaining such funds.
23. The trial judge found that €322,560 of the money was invested in the machinery hire business. All this money came from M.C.’s bank account. He also found that €215,000 was transferred from the same source to accounts in Poland under the control of F.C. and a Polish national, I.S. The trial judge found that F.C. transferred this money in order to ensure it would be invested in property there and not be available for repayment in the event of M.C. being taken into wardship.
The appellant’s submissions on appeal
24. In this appeal, F.C. made submissions on behalf of all three appellants. The other appellants adopted his submissions. The appellant essentially sought to revisit the findings of fact of the trial judge and the inferences drawn from them. He continued to assert that, at the time of the transactions, M.C. had full capacity to engage in financial transactions of this type, and that all times he had merely acted in accordance with his aunt’s wishes. He sought to lay emphasis on short excerpts from the evidence when the broader picture conveyed a different impression.
25. At the appeal, F.C. mistakenly claimed that M.C. had actually received independent financial advice on the purchase of investments and shares. The person to whom reference was made during the appeal did not testify, ostensibly on the grounds of illness, despite the trial taking place in two blocs in October and December 2012. F.C. attempted again to offer explanations for his role in the forged letter and trying to hide the money in Polish properties. He sought to lay some blame on Mrs. Eleanor Wardlaw, M.C.’s solicitor, who, the trial judge, held was a careful, honest and credible witness. Finally, he claimed that M.C.’s constitutional rights to autonomy had been seriously violated and desecrated. The appellant had no locus standi to make such a claim. The appellant’s misconceptions on the role of this Court have been explained. There was ample evidence before the High Court judge for him to reach his conclusions.
Conclusions
26. The High Court’s findings here were highly dependent on factual context and his view of the nature and quality of the evidence. This Court is entirely satisfied that the High Court judgment was correct in fact and law. The findings of fact were founded on credible, weighty, testimony; the inferences drawn were based on clear, supporting evidence. The judge was well-entitled to hold that the appellant had not discharged the evidential onus of showing the gift was the independent and well understood act of a person in a position to exercise free judgment.
27. The appellants herein have failed to raise any substantial grounds of appeal. In the circumstances, this appeal will be dismissed. This Court affirms all the orders of the High Court, inter alia, setting aside the alleged gifts, and declaring that the monies and property bought therewith remain the property of the Ward of Court.
Moyles v. Mahon
[2000] IEHC 197 (6th October, 2000)
Delivered extempore by the Honourable Mr Justice Thomas Smyth on 6th October 2000
________________________ page break ________________________
1
1. The Plaintiff is now aged 80 and lives in an old person’s home in Birr, Co. Offaly. He is a widower, his wife having predeceased him in September 1994. There were a number of children of the marriage, which seems to have been unhappy, the eldest of whom is the Defendant Mrs Mahon who married in 1968 and who is now a widow, her husband having died in March 1995.
2. The Plaintiff lived at Kinnitty, Birr, for many years. His mother apparently bought the house in 1935 for him and he moved in there in 1940.
3. In opening the case Mr Maguire described the family as fractious and the evidence certainly bore that out.
4. In the differences between the Plaintiff and his deceased wife the Defendant, while not wishing to cut off her mother, tended to side with the Plaintiff in such rows as occurred. The Defendant’s home appears to have been a haven from the turmoils of Kinnitty for the Plaintiff where he was made welcome and treated with that degree of affection which a dutiful and affectionate daughter could be expected to show to a parent. The Plaintiff went to live with the Defendant in 1991.
5. In 1991 things came to a head in Kinnitty. From a situation of having a regular routine of Christmas dinner and Sunday lunch at the Defendant’s and intermittent visits as a respite home, things changed to a structured position of residence. This came about as a result of matrimonial proceedings between the Plaintiff and his wife. The proceedings in the District Court concluded in a barring order being made in or about October 1991. The Plaintiff was naturally very upset
________________________ page break ________________________
2
about this as it meant him having to leave Kinnitty which (notwithstanding that he and his wife lived in separate sections of the house to the extent that there were two front doors) he felt was his home. He contacted the Defendant and did not turn to her in vain. He found accommodation with her in her home. Later, because of some rather unsocial habits (coming in in the early hours of the morning after a night of playing cards; putting on the television; smoking in his bedroom; coughing and making some noise) the Defendant became worried and anxious for the peace and good order of her home. Eventually the Plaintiff’s accommodation was to change to what has been variously called a shed and an apartment, being some form of outhouse or out-building altered and adopted for residential use. At all times the Plaintiff’s meals, other than breakfast on frequest occasions, and his laundry were looked after by the Defendant.
6. Very shortly after the barring order was made and when the Plaintiff was residing with the Defendant he transferred ten-and-a-half or eleven acres of land the subject of Folio 8511 County Offaly, which Mr Enright, the auctioneer called on behalf of the Plaintiff, valued at £16,000 as at 1991 and in respect of which Mr Shepherd’s valuation this morning was considerably lower.
7. The transfer of 27th November 1991 of this land is sought to be set aside for a variety of reasons set out in the pleadings but which were confined at the hearing to (1) the improvidence of the transaction; (2) the absence in the deed of a revocation clause or a right of maintenance and support or a right of residence; (3) the lack of independent legal advice.
________________________ page break ________________________
3
8. Other than the time sequence referred to, the circumstances were that the Plaintiff presented himself with the Defendant to Mr James Lucey, solicitor. Mr Lucey had been his solicitor in the matrimonial proceedings and knew the Plaintiff quite well and got on well with him. Mr Lucey described the Plaintiff as well versed in the ways of the world, placid but determined and an experienced businessman (the Plaintiff had been a butcher for years and dealt in cattle and sheep; he had bought and sold property and helped to the extent of some £70,000 his son Eddie, elsewhere described as £50,000, to buy a property at Mount Bolus; he had given sums of money, machinery and sheep to various members of the family who were grown up and either married or independent).
9. Mr Lucey tried to dissuade the Plaintiff from disposing of his land because a Will would have been quite sufficient. Mr Lucey thought that the Plaintiff wished to reward the Defendant or show her loyalty as she was his sole family ally in the matrimonial dispute. He also thought that the Plaintiff may have wanted to get back at the other members of the family. Mr Lucey was absolutely clear that the Plaintiff unreservedly wanted to transfer the land without reservations and was adamant that he wanted to give the land to the Defendant.
10. Mr Lucey gave the Plaintiff careful and considered advice. Notwithstanding the absence of a written record, I am satisfied that Mr Lucey advised the Plaintiff against proceeding to divest himself of the property and that the concerns pleaded to and advanced in court were properly put to the Plaintiff.
________________________ page break ________________________
4
11. Having carefully considered the evidence of Mr Lucey, I was left with the clearest impression of a sound and sensible man who, no matter what advice he was given, was going to do what he wanted to do. Mr Lucey knew the Defendant with whom he did not have a particularly easy relationship due to an outburst by her in the District Court during the Plaintiff’s matrimonial proceedings (in the events that later occurred in 1992 Mr Lucey came off record and refused further instructions). The Defendant was not a client of Mr Lucey and his only knowledge of her appears to have been as I have indicated.
12. On the basis of Mr Lucey’s evidence I am satisfied that the advice given by him was of an independent character.
13. Elsewhere in his evidence Mr Lucey described the Plaintiff as a pragmatist, genial, very resilient and very determined but calm; that he had considered that he had taken care of the whole family; that he had in the past sold a schoolhouse in Kinnitty for about £4,000, a transaction with which the Defendant may have been involved. Mr Lucey knew the Defendant but never acted for her.
14. Notwithstanding the foregoing, Mr Lucey felt that the Plaintiff should have further legal advice as the transaction was a voluntary conveyance. Accordingly, he gave the Plaintiff a list of about six local solicitors from which the Plaintiff, not the Defendant Mrs Mahon, chose Mr Tom Dalton. The Plaintiff and the Defendant having left Mr Lucey’s office, Mr Lucey inquired by telephone if Mr Dalton would be prepared to advise the Plaintiff on the transaction, which Mr Dalton duly did. Mr Dalton very briefly reported to Mr Lucey and the transaction
________________________ page break ________________________
5
proceeded to a conclusion.
15. Mr Dalton went to meet the Plaintiff at the house of the Defendant where he was living at the time. Mr Dalton had once acted for the Defendant when she purchased a property in Galway. Mr Dalton spoke to the Plaintiff for about half an hour in the absence of the Defendant. He received the deed from the Defendant on his arrival and gave it back to her at the conclusion of the meeting. Mr Dalton was quite clear that the Plaintiff was not under any duress. Furthermore, notwithstanding explaining to the Plaintiff the finality of the transaction and advising him on the question of revocation, maintenance and residence (I accept that the question of residence may have been tangential because there was no residence on the land) the Plaintiff was simply not interested in all this advice and that all the Plaintiff wanted was for the Defendant to have the land with no strings attached. Mr Dalton was clear that the Plaintiff knew what he was doing and acted independently and freely of his own accord.
16. Mr Dalton may not have made exhaustive inquiries as to all the assets and liabilities of the Plaintiff’s estate but I have no doubt that he was acutely aware of these as, according to Mr Lucey, the District Court order in the matrimonial proceedings was under appeal by both parties at this time. In the circumstances I think that it would have been both inappropriate and perhaps unprofessional for Mr Dalton to inquire into matters which were outside the scope of the limited duty undertaken by him and when the Plaintiff had his own solicitor. I am satisfied and find as a fact that the deed is that of the Plaintiff and resulted from an exercise of his own free will.
________________________ page break ________________________
6
17. As Mr Lucey had come off record in the Plaintiff’s matrimonial proceedings the Plaintiff consulted Ms Bernadette Owens, Solicitor, in or about March 1992. Miss Owens never had anything to do with the 1991 transaction. Her instructions were to prosecute the appeal in the Circuit Court. Between March and November 1992 Ms Owens came to deal with at least the five following items of business for the Plaintiff: 1. The matrimonial proceedings in the Circuit Court. At one stage Ms Owens went to the office of J. J. Kennedy, solicitors, in Birr where she had arranged to meet the Plaintiff to go through all the various assets and liabilities of the parties to the matrimonial action. 2. A dispute concerning the key to a gate associated with a hairdressing salon, a separate part of the property at Kinnitty. 3. The question of an assault by Percy Moyles on the Plaintiff and the Defendant. 4. A dispute concerning the issuing by Canada Life of a cheque or draft in respect of the redemption of what appears to have been a joint entitlement in a single name. 5. A Will for the Plaintiff on his instructions at that time. At this time he wanted to know his rights as the surviving spouse.
18. The outcome of the matrimonial proceedings was that the court sanctioned the division of the Kinnitty property into two separate and segregated units, one for the wife and one for the husband. Now that finality had been arrived at (if finality can ever be said to exist in matrimonial disputes) the Plaintiff was anxious to go back to Kinnitty. When he attempted to return, however, he found that the section of the property that had been allocated to him had been ransacked and was uninhabitable, which quite naturally upset him. The rancour that seems to be part of the Kinnitty property and the cost of restoration, seen
________________________ page break ________________________
7
cumulatively with his relative comfort at the Defendant’s premises, seem to have convinced the Plaintiff after a brief interval that he was better off living with the Defendant in Banaher.
19. While accepting that there may be some self-interest in the depiction by the Defendant of the life of the Plaintiff, she was not seriously challenged that the Plaintiff was a genial sociable man, fond of cards and interested in hurling and that most weeks he was out six out of seven nights. Ms Owens does not appear to have had any dealings with the Plaintiff between November 1992 and September 1994.
20. Immediately after the death of his wife in early September 1994 the Plaintiff called on Ms Owens at her office. Both he and the Defendant were not recognised in the death notice in the newspaper, presumably arranged by other family members. When the Plaintiff and the Defendant called on Ms Owens on the day after the funeral the Defendant simply brought her father to the office. The Plaintiff was upset that the house at Kinnitty had been stripped of many items of furniture and effects, items that had been regarded as either bought or as family possessions. On the following day Ms Owens wrote to the solicitors for the deceased. Ms Owens stated that the Plaintiff said that he wanted a third of his wife’s estate in or about this time or shortly thereafter.
21. At no time during the various transactions in 1992 or in September 1994 was the question of a transfer of lands mentioned or discussed by the Plaintiff. He had, as Ms Owens said, left the Kinnitty property to the Defendant in his 1992 Will. Ms Owens said that her first note
________________________ page break ________________________
8
about the transfer of the house in Kinnitty is dated 7th October 1994. When the matter was put to Ms Owens by Mr Maguire, her evidence was that she said to the Plaintiff that he need not be in any hurry about it because he had made a Will in favour of the Defendant. The Plaintiff was alone with Ms Owens when she was giving him advice concerning this transaction. The Defendant was not present during the time devoted to that element of advice and had not been present at a later stage when the transfer was being read over to him. Ms Owens also said that the Plaintiff understood and agreed with its contents. While Ms Owens did not have a very detailed note of her consultation, I am fully satisfied and find as a fact that she advised the Plaintiff about the finality of the deed, explained to him the various ‘reservations’ that he should consider in his own interest, that is a revocation clause, a clause providing for maintenance and support, and advised him that there was no need for him to transfer the property at that time because there was a Will in place to that effect. Ms Owens clearly understood that the Plaintiff, notwithstanding her advice and attempts to dissuade him from going ahead with the transfer, wanted and was determined to have finality. The Plaintiff’s determination was perfectly understandable in view of the unhappy history of the Kinnity property and the shameful family events of the previous month.
22. A considerable time was spent in cross-examining Ms Owens who had a very detailed knowledge of the Plaintiff’s affairs through dealing with the matrimonial proceedings. It was put to her forcefully that she was acting for both parties. Ms Owens said that she did not know the Defendant, save perhaps by sight, had never acted for her or advised her in relation to this transaction or any other transaction
________________________ page break ________________________
9
and did not know much about her, Ms Owens, who was so clearly a truthful witness, said that if she had known that the transaction had the type of bargain contended for, that is, that in addition to natural love and affection the Plaintiff would live with the Defendant for the rest of his life and that the Defendant would look after him, she would not have let the Plaintiff sign the deed but would have tried to defer it if she had known that the Defendant would not keep such a bargain.
23. However, I am satisfied and find as a fact that there was no such bargain; if there was, it was not expressly conveyed to Ms Owens. She may have surmised, as Mr Lucey did, that there may have been some amicable family understanding as between the Plaintiff and the Defendant. As in the case of Mr Lucey in the 1991 transaction, the Plaintiff knew what he wanted to do and did it.
24. When the deed was typed up it was read over to both parties who understood it and signed it. Some two weeks later both parties called back to Ms Owens on 25th October 1994. When she read over and explained to the Plaintiff in the presence of the Defendant the contents of both the Declaration of Insolvency and the Family Home Declaration, the Plaintiff, she says, understood them. The Defendant agreed to discharge the fees and stamp duty on the transaction. Ms Owens was left with the clear impression that the Plaintiff was content to have brought finality to the business, and I find as a fact that it was a free act of the Plaintiff.
25. There was much evidence concerning events which occurred after the execution of both deeds,in particular in 1996. The issues arising
________________________ page break ________________________
10
from this part of the evidence seem to me to be largely irrelevant to the question of the validity of the deed. If, as alleged by the Plaintiff, the Defendant failed to fulfil the alleged bargain to look after the Plaintiff for the rest of his days, this of itself would not affect the validity of the deed. On the other hand, if the deed is invalid, then no matter for how long and how well the Defendant looked after the Plaintiff after the execution of either deed would not of itself render them valid. However, since the issue of the allegation to honour an alleged bargain has been raised, in general I accept and prefer the account of the Defendant.
26. As to the Plaintiff’s dealings with the 11 acres post-1991 (referred to at page 50, question 448 of the Plaintiff’s own evidence) and his post-1994 conduct regarding the house, the indication is that, notwith-
standing the Defendant’s ownership, she allowed him dignity, a sense of usefulness, of having choice and a sense of interest and involvement, and I find such as a fact.
27. I realise that I would wish to be more firm in reaching this view but as at July 1999 the Plaintiff was, unfortunately, regarded as so infirm as to be unable to come to court and his evidence was taken on commission. Accordingly, I did not have the opportunity of assessing the Plaintiff as a witness. I am unimpressed, however,by his refusal or failure to answer a considerable number of questions during the course of his evidence in July 1999, in particular questions 301, 302, 383, 385, 419, 420, 425, 426 and 456. His failure of recollection in other matters of five or eight years earlier is understandable.
________________________ page break ________________________
11
28. Neither party impressed me with the evidence regarding the sums of money. In my view it is an unproven and unsustainable claim.
29. The submissions on behalf of the Plaintiff were as follows:
(1) There is a position of undue influence presumed for the following reasons:
(a) the special relationship of the parties;
(b) the apparent improvidence of the transactions;
(c) the absence of a revocation clause;
(d) the absence of any consideration having regard to the overall assets of the Plaintiff.
(2) There was no independent legal advice, the question arising being whether the transactions were free and independent acts of a man having full advice. Was he emancipated?
(3) Shortly before the execution of the transfers the relationship between the parties was such as to raise a presumption that the Defendant had influence over the Plaintiff. The transfers should be set aside unless the court is satisfied that the gifts in the transfers were the spontaneous free acts of the Plaintiff in circumstances which enabled him to exercise an independent will and which justifies the court in holding that the gifts were the result of a free exercise of the donor’s will. It is submitted that the court should hold on the evidence that a deemed-to-be-coerced situation existed because (a) the Plaintiff did change his mind from time to time; (b)that if, as suggested by the Defendant, the Plaintiff was susceptible to influence by his son Eddie, so also he should be regarded as susceptible to influence by the Defendant.
________________________ page break ________________________
12
(4) The decision of the Supreme Court in Carroll v Carroll [2000] 1 ILRM 210, in particular the passages from the judgment of Denham J. at page 223 dealing with the public policy dimension of deemed undue influence and also her consideration at pages 224 and 225 of the presumption of undue influence are applicable in the instant case.
(5) The nature and quality of the legal advice was deficient because of (a) the absence in both deeds of the safeguards of clauses of revocation; (b) the adequacy of clauses of revocation, maintenance and support and a right of residence; (c) adequacy is not necessarily an expression of free will; (d) Mr Dalton’s evidence disclosed that (i) his recollection was inaccurate in that he did not remember taking an attendance and (ii) he was unaware of the Plaintiff’s general circumstances; (iii) he was not independent because he had in the past acted for the Defendant who, on the occasion of his visit, gave him the actual deed.
(6) All the solicitors said what they would have advised but none had a note to this effect. If notes existed of their attendances on the Plaintiff saying that, the notes did not disclose all they said they would have done, in particular the distinction in character and effect of the deed as opposed to the element of revocability.
(7) In particular, Ms Owens when acting for both parties was wanting in documentary evidence as to the nature and extent of the advice which she gave to the Plaintiff. In the circumstances there must be documentary evidence to corroborate the advice stated in evidence to have been given.
________________________ page break ________________________
13
(8) When the transactions took place in 1991 and 1994 the occasions of vulnerability of the Plaintiff should have been most particularly guarded against.
30. The submissions on behalf of the Defendant were as follows:
(1) The case is distinguishable on its facts from the several cases relied upon in opening by Mr Maguire.
(2) McCormack v Bennett [1973] ILT 127 is still applicable and is the case most closely analogous to the facts in the instant case and should be followed and applied.
(3) The decision of the Supreme Court in Carroll v Carroll , particularly the judgment of Barron J. at pages 231 and 232 of the report, indicates not the position contended for by the Plaintiff but one in which the position is on a case-by-case decision on facts based on the legal principles enunciated in Carroll v Carroll and in the earlier cases therein referred to.
(4) The quality of the legal advice in all instances was quite adequate and sufficient. Mr Lucey and Ms Owens both fully understood the Plaintiff’s circumstances. While Mr Dalton may not have done so, the position is that his advice was still adequate in all the circumstances.
(5) The Plaintiff was well versed in dealing with property and had dealt with other members of the family and looked after them as he considered appropriate, which is borne out by the evidence of Mr Lucey.
________________________ page break ________________________
14
(6) The Plaintiff was not an innocent abroad, as borne out by the evidence not merely of the Defendant but of the various other witnesses, particularly the evidence of the solicitors all three of whom had met the Plaintiff at different times in different places and in different circumstances. All considered him to be a man of calm deliberation but very determined.
(7) The departure of the Plaintiff from Banaher was not as stated by him but as contended for by the Defendant.
(8) The position about the moneys was unconvincing and there was no vouching. To the extent that amounts could be established, other members of the family did receive moneys in or about the same time and of the same order as the Defendant.
31. In summary, my findings are as follows:
(1) Neither the 1991 nor the 1994 deed was executed as a result of undue influence or duress on the part of the Defendant.
(2) The Plaintiff had no mental or physical infirmity which prevented him from understanding the nature and consequences of either deed.
(3) The Plaintiff had the benefit of independent advice from the solicitor of his choice and that advice was fully and carefully made available to him.
(4) The possibility of a clause of revocation was explained to the Plaintiff. The desirability of making a revocable disposition of his property was urged upon him.
(5) Both deeds are on their face improvident in that the Plaintiff disposed of his entire interest or estate in the properties without
________________________ page break ________________________
15
valuable consideration.
(6) Mr Lucey did surmise and Ms Owens had a general understanding that the Plaintiff was executing the deed in favour of the Defendant for looking after him or would look after him.
(7) If there was, as contended for by the Plaintiff, a bargain in the terms alleged, same was not fully expressed to any of the solicitors -Mr Lucey, Mr Dalton and Ms Owens.
(8) The preliminary letter dated 20th March 1997 from the Plaintiff’s solicitor contains no mention of any deal, agreement or bargain.
(9) There was no deal or bargain or arrangement made between the Plaintiff and the Defendant that in consideration for looking after him for the rest of his life or that in consideration for going to live with the Defendant he would transfer either property.
(10) The Plaintiff executed both transfers in his expectation and belief, not induced by the Defendant, that he would secure or reinforce what he believed to be the genuine loyalty and affectionate attention of his daughter the Defendant.
32. It seems to me that the concluding remarks of Finlay J. in McCormack vBennett [1973] ILT 127 at page 131 are apposite:
‘I accept and adopt as applicable to this case the reasoning of Mr Justice Budd in the case of Gregg versus Kitt reported in 1956 Irish Reports at page 183. In particular I would adopt and repeat the portion of his judgment at page 196 where he says “Where the relations between the donor and another person raise a presumption that that other person had influence over the donor and the evidence shows that the third party is both closely related to the donee and was closely associated in action and interest with the donee at the time of events leading to the transaction it would seem to be on principle that the onus in such circumstances must be likewise thrown on the donee to establish that the gift resulted from the free exercise of the donor’s will. The presumption may of course be rebutted either by showing that the donor has had competent independent advice and acted of his
________________________ page break ________________________
16
own free will or in some other way.”
‘As Lord Hailsham says in Inche Noriah versus Shaik Allie Bin Omar “The most obvious way to prove that the gift was the result of the free exercise of independent will is to establish 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 influence from the donee and with full appreciation of what he was doing.” If that method of rebutting the presumption is adopted and it is not the only method open the advice relied on must in the words of Lord Hailsham be given with a knowledge of all relevant circumstances and must be such as a competent and honest adviser would give if acting solely in the interests of the donor.
‘The ignorance by Mr Wallace at the time when he was advising the late James Seery of the promises made by Mrs Bennett in respect of a transfer of the land meant that he was not a person with knowledge of all relevant circumstances. If to defend this deed and to discharge the onus which is in my view upon her the defendant must rely only on the independent advice of Mr Wallace she must therefore fail. However, from the passage which I have quoted that Mr Justice Budd was of the view and in this I am in full agreement with his judgment that the presence of full and satisfactory independent advice is not the only way of proving that a voluntary deed even though it may be on the face of it improvident resulted from the free exercise of the donor’s will. I am satisfied that James Seery in October 1967 himself was particularly concerned to make an out and out transfer of these lands by deed to his daughter Mrs Bennett. I am satisfied that that idea for practical purposes originated with him and certainly did not originate with the defendant Mrs Bennett. His reason for making such a transfer instead of a will which would have been revocable was I am satisfied that he wanted a permanency and finality with regard to the disposition of his affairs. I think it is a reasonable inference from the evidence which I have heard that he was a sufficiently astute man to know that no form of bargain or commercial transaction concerned with his land was likely to secure for himself and his wife what they really needed and that was personal care and attention granted largely through affection and kindness by a member of their family. I believe therefore that James Seery when he executed this deed did so in the expectation and belief which was his own and not induced to them that by so doing he would secure or reinforce what he believed to be the affectionate attendance of his daughter for both himself and his wife. In these circumstances I conclude that there is evidence before me which I accept other than and in addition to the evidence of the independent advice which James Seery received before executing the deed which satisfies me that the deed was his own act and resulted from an exercise of his own free will. In these circumstances as I understand the legal principles applicable I must uphold this deed even though it may on the face of it appear improvident and even though events which occurred after its execution may have made James Seery in his lifetime dissatisfied with it.’
________________________ page break ________________________
17
33. I now proceed to deal with the submissions of the Plaintiff in reply:
(1) There was indeed a situation which would give rise to presumed influence because of the relationship of the parties. The transaction, as I have already held, is improvident. There is no revocation clause and there are no rights reserved. Mr Lucey (who drafted the first deed and gave advice against proceeding) and Ms Owens (who drafted the second deed and gave advice against proceeding) both had full knowledge of the affairs of the donor. Mr Dalton did not. That does not in any way diminish the fact that Mr Dalton was consulted at the behest of Mr Lucey.
(2) Was this man emancipated? The answer to that is an unequivocal yes.
(3) Was the relationship between the parties shortly before the execution of the deed such as to raise the presumption that the Defendant had influence over the Plaintiff? There is certainly some evidence of a sense of dependency. However, I am quite satisfied that the Plaintiff’s decisions were made in each instance to bring to an end the unhappy circumstances in which he found himself and that he was the originator in each instance. There is no evidence that he was prompted, cajoled or induced to take either of these courses. In my view the Plaintiff exercised a spontaneous act of free will in both instances, and that is taking into account the submissions very properly put and skilfully argued by Mr Maguire of the deemed-to-be-coerced situation. I do not believe that the Plaintiff’s change of mind indicates a man of fickleness. Changes were made at different times in different circumstances for what appeared to be good and valid reasons. His susceptibility to influence, as suggested, is part of the peripheral dimension to this case which has not surfaced in court and which is
________________________ page break ________________________
18
clearly rumbling in the background. At the time he was dealing with these two transactions the Plaintiff was not, in my opinion, susceptible to influence. I am quite satisfied that the solicitors gave the Plaintiff time, assessed him, and knew what they and he were about. I do not believe that he was susceptible to influence in any way.
(4) The principles in Carroll v Carroll are still applicable and germane. In Carroll v Carroll the facts are totally distinguishable. In this regard I totally agree with Mr Abbott’s submission. In Carroll v Carroll Mr Joyce acted for Mr Carroll Junior who literally brought his father along by the hand at a time when he was devastated by his wife’s death, unlike the situation here, where Mr Carroll had told his daughters who were coming up and down to Dublin that there would always be a home for them there and who, when Thomas Junior came to running the business, assisted him. The whole series of circumstances until the daughters fell out with their sister-in-law is quite different and quite unrelated to the circumstances in the present case.
34. The nature and quality of the legal advice clearly differed because the times, circumstances and knowledge of the different solicitors varied. However, the two solicitors acting for the Plaintiff, Mr Lucey and Ms Owens, knew about his affairs and had plenty of opportunity of sizing him up. Mr Dalton, who met the Plaintiff once, was satisfied that he was a man with his wits about him and knew what he wanted to do. Having acted in the past for the Defendant Mrs Mahon, I do not think that Mr Dalton coloured the advice given to the Plaintiff. He clearly did not know all the circumstances.
________________________ page break ________________________
19
35. Whatever Mr Lucey told Mr Dalton was not explored. His recollection of not taking an attendance of a once-off half-hour visit does not make the rest of his recollection improbable or unreliable. Part of the gravamen of the Plaintiff’s case is that the advice stated to have been given was not of such a quality as to fully inform the Plaintiff, as the solicitors themselves were not fully informed. I am satisfied that Mr Lucey himself was fully informed. Mr Dalton was fully informed within his remit. But I am equally satisfied that the situation is not to be discounted because there is no note or memorandum (to satisfy the Statute of Frauds!). I know that that is drawing the analogy a bit too far but I do take on board what Mr Maguire said. It is certainly desirable that there should be a fuller note than exists in this case.
36. In that regard I must make a judgment of the witnesses – their integrity, sense of togetherness, sense of directness and their understanding and demeanour. I am satisfied that all three solicitors gave their evidence truthfully, fully and unequivocally and did advise as they stated. I do not think it is necessary to have attendances to corroborate what they said they would have done. It is certainly desirable to have an attendance but it is not a mandatory requirement. If one of these solicitors had died, there might be grave difficulty in certain circumstances without a contemporaneous note.
37. While it is true that in 1991 and in 1994 the position of the Plaintiff may have been vulnerable, he showed himself to be determined and resilient. Without commenting on his intended return to his home in Kinnitty, he showed the signs of a man who was not readily put down. As a businessman, I am satisfied that the Plaintiff made his decisions
________________________ page break ________________________
20
in circumstances where he considered them correct and appropriate and that they were of his own volition.
38. In the circumstances I do not think I need comment on the Defendant’s submissions as they seem to have been borne out by the facts that emerged during the evidence.
Lynn v O’Hara
[2015] IEHC 689
UDGMENT of Ms. Justice Iseult O’Malley delivered the 5th November, 2015
Introduction
1. These proceedings concern the circumstances in which the late Sean Lynn, with the consent in writing of his wife, Mrs. Bridget Lynn, transferred their farm and family home to their son, the late Padraig Lynn. The transfer took place on the 24th November, 2008. It is common case that Padraig’s 35th birthday was on the 26th November and that there were tax advantages to finalising the transaction before that date.
2. The defendant in both actions, Olive O’Hara Lynn, was Padraig’s wife and is his legal personal representative. Padraig died intestate in tragic circumstances on the 7th December, 2011, and the defendant is therefore entitled to the entirety of his estate.
3. In the first of the above entitled proceedings, commenced on the 31st July, 2013, Bridget Lynn (known to her family and friends as Queenie Lynn) claims that the transfer is void on the basis that it was an improvident and/or unconscionable transaction brought about by duress or undue influence. She says that she signed the relevant documents because of pressure, duress and/or undue influence on the part of her husband Sean and her son Padraig, that she did not act of her own free will and that she was not given appropriate independent advice.
4. The plaintiff would be entitled, under the terms of the transfer, to maintenance and support, but says that she has received none. She does not seek any order in this regard (in circumstances where she contends that the transfer is void). However, the claim that the transfer was improvident is based in part on her assertion that, although she still has a right of residence in her home, she has been given no maintenance and now derives no income from the farm.
5. She suffers from a number of medical difficulties and says that she is unable to pay for the care that she needs now and into the future.
6. The defence delivered on behalf of Sean Lynn in those proceedings admits that he presented the scheme for the transfer to Bridget Lynn and that he pressurised her, placed her under duress and unduly influenced her. However, it is denied that he in any way participated in or drew up that scheme. It is claimed that he was induced to present it and to execute it by duress, improper and illegal pressure, threats and undue influence on the part of Padraig Lynn.
7. The second set of proceedings was commenced by the late Sean Lynn by way of plenary summons dated the 19th September, 2013. Sean Lynn died shortly afterwards, on the 15th October, 2013. By order of the court those proceedings are now carried on by his son Michael Lynn as Sean’s executor. The plaintiff seeks rescission of the deed of transfer, on the basis of duress and/or actual undue influence and/or illegal pressure and threats by Padraig. Specifically, it is pleaded in the statement of claim (delivered some months after the death of Sean Lynn) that the transfer was Padraig’s idea; that Sean had been unwilling to transfer the property; that Padraig had shown little interest in farming; that Padraig became threatening and abusive as the deadline for the tax exemption approached; and that Padraig threatened to kill himself if the property was not transferred to him before the 26th November, 2008.
8. Olive O’Hara Lynn has denied the claims made in both proceedings. She says that soon after Padraig’s death in December, 2011 she was put under significant pressure to disclaim her inheritance in favour of Sean and Bridget Lynn. However, no suggestion was ever made that the transfer was in any way tainted by duress or undue influence until 2013, when she was registered as the owner of the property. It is pleaded that the transfer was entered into voluntarily on the part of Sean and Bridget Lynn, with the full benefit of legal and accountancy advice and in full knowledge of the relevant tax reliefs. It is contended on her behalf that the only reason for these proceedings is that she refused to disclaim her inheritance, with the result that the property will not remain with blood relatives of the Lynn family.
Background facts
9. The house in question, which is on a farm of about 52 acres in Ballyoate, County Westmeath, was the family home of Bridget Lynn when she was a child. After her marriage to Sean in 1963, Bridget’s parents transferred the property into Sean’s name and it was thereafter the Lynn’s family home. The main use of the farmland has been for sheep.
10. There were six children of the marriage: Mary, Michael, Deirdre, Tom, Siobhan and the late Padraig. The eldest, Mary, has Down’s syndrome. She lives in a residential centre and attends a workshop during the week. At weekends she comes home to her mother. All of the other surviving children have their own livelihoods and their own homes.
11. Padraig Lynn, born in 1973, was the youngest of the children. After gaining a degree in business he worked for a bank for some years. He had always been involved in sport and set up his own business with a fitness and health centre. He also did fitness training with the county football team, as well as obtaining qualifications relevant to farming. At some point he inherited a piece of land beside the Lynn family home place, which was bequeathed to him by Sean Lynn’s brother Michael (known as Fr. Michael).
12. Padraig was in a relationship with Olive O’Hara for some 15 or 16 years before their marriage in August, 2008. They had built a house together on Padraig’s land and moved into it in 2006. It is common case that Padraig spent a lot of time looking after his mother in subsequent years.
13. It appears that Padraig developed some mental health difficulties. This affected his marriage to the extent that Olive left the house in August, 2011, in circumstances considered in greater detail below. Despite receiving professional help over a period of time, Padraig tragically killed himself in December, 2011.
Conveyances and transfers during the lifetime of Sean Lynn
14. Sean Lynn was, by all accounts, a successful farmer. Apart from the Ballyoate farm, he had owned land of his own before his marriage and he continued to acquire property. As well as farmland he bought some commercial properties in the town of Mullingar.
15. To put events in context, it is helpful to set out the provision made over the years in respect of each of the children.
16. In 1993, Sean gave his daughters Deirdre and Siobhan a commercial property in Mullingar. Deirdre is now living with her family in New Zealand. Siobhan owns a business in Mullingar.
17. In 1997, Sean and Bridget gave Michael just under a hundred acres in Enfield. They had previously given him a few acres for his 21st birthday. Michael has also bought farmland himself, and owns land adjoining the family farm, upon which he has built a house. He also has business interests in Mullingar.
18. In June, 2000 Sean gave Tom land in Churchtown. Tom had inherited about a hundred acres from Sean’s uncle Pat and had bought other land himself.
Testamentary provision
19. Sean Lynn made a number of wills. The first of those presented in court to make specific provision for his children by name dates from May, 1994.
The 1994 will
20. The family home and farm were left to his wife for her lifetime, and thereafter to Michael. Other specified lands were left to Tom and Padraig, subject to a right of support, clothing and maintenance in favour of Bridget. The residue of the estate and a further specified property were left to Bridget. Mary was to be provided for, at Bridget’s discretion, out of the residue and that property.
The 1997 will
21. Under a will made in January 1997, the home and farm were left to Bridget for her lifetime, and thereafter to Padraig. Another property was left to Bridget for her lifetime and thereafter to Michael. Tom was also to receive land, subject to a right to support, clothing and maintenance in favour of Brigid. Again, Mary was to be provided for at Bridget’s discretion. It was confirmed that provision had already been made for Siobhan, Deirdre and Michael, and that no further provision was being made for them in the will. Tom and Padraig were appointed as executors.
The 1999 will
22. In July 1999, a new will left the family home and farm, and another small property, to Bridget for her lifetime and thereafter to Padraig. About 11 acres in Ballyoate were left to Bridget for her lifetime and thereafter to Michael.
23. A separate property in Rathtrim, comprising 60 acres, was left to Bridget for her own use and benefit absolutely (unless she predeceased Sean or died with him, in which case Michael would inherit it).
24. Under this will Tom was left 72 acres for his own use absolutely. Another 10.78 acres in Balroe were left to Bridget for her lifetime and thereafter to Tom.
25. A property in Mullingar town was left to Bridget absolutely. In the event that she did not survive Sean this property was to go to Deirdre and Siobhan.
26. Shares in FBD were left to Michael.
The 2004 will
27. Under this will the family home and farm were left to Bridget for her lifetime and thereafter to Padraig. The Ballyoate lands were left to Bridget for her lifetime and thereafter to Deirdre and Siobhan. The 60 acres in Rathtrim were left to Bridget absolutely, and to Padraig in the event that Bridget did not survive Sean.
28. The Balroe land was left to Bridget for her lifetime and thereafter to Tom. The Mullingar property was left to Bridget absolutely, and to Deirdre in the event that Bridget did not survive Sean. The FBD shares were left to Michael.
The 2009 will
29. This was made in February, 2009 (after the transfer of the family home and farm to Padraig).
30. Under this will Bridget inherited the whole of Sean’s estate for her own use and benefit absolutely. In the event that she did not survive him for more than 30 days the estate was to be divided between their children in a specified manner. Padraig and his wife Olive would have received another piece of land.
31. The court has also been given information in relation to testamentary provision made by Bridget Lynn in so far as it relates to Padraig. The following aspects are of relevance.
32. In 1994, Bridget made a will in which she left all of her investments in a particular bank to Padraig.
33. A will made in 1999 left her bank shares to Sean, and in the event that he did not survive her to Padraig.
34. A 2004 will left bank shares to Sean, and to Padraig in the event that Sean did not survive her. FBD shares were left to her sons in equal shares. In the event that she survived Sean, Padraig was to receive the 60 acres in Rathtrim. The rest of her estate was to be divided between her children (including Padraig) in equal shares.
35. A will made in February, 2011 (after the transfer but before Padraig’s death) left all shares, money and the residue of her estate to Padraig.
36. Subsequent wills were made after Padraig’s death and are not of relevance.
The transfer documentation
37. The various documents associated with the transfer were drafted by the Lynn’s solicitor Mr. Crowley, of J.J. Macken solicitors in Mullingar. They were signed in the presence of, and witnessed by, Mr. Louis Kiernan of Nooney & Dowdall, also of Mullingar. There are eight documents, all dated the 24th November, 2008.
38. The first is a deed of transfer between Sean Lynn and Padraig Lynn. It recites that the transfer of the lands is in consideration of natural love and affection, and that it is subject to rights of residence and of support, clothing and maintenance in favour of Sean and Bridget Lynn as specified in documents of the same date. It is certified that, inter alia, the Young Trained Farmers Relief provided for in s.81AA of the Stamp Duties Consolidation Act 1999 is applicable to the transaction. The deed includes Bridget Lynn’s signature confirming her consent to the transfer for the purposes of s.3 of the Family Home Protection Act 1976.
39. The second is a deed of indenture between Padraig Lynn of the one part and Sean and Bridget Lynn of the other part. By its terms Padraig covenanted to support, clothe and maintain Sean and Bridget “in the like manner as they have been heretofore accustomed”. There is a proviso to the effect that, in the event of either of them going to reside in a hospital, home or other institution, Padraig would give them money in lieu (to an amount at his discretion), and a further provision by virtue of which they both agreed to postpone all of their rights if it was necessary to enable Padraig to raise any borrowing against the property.
40. The third document is a deed of grant, by virtue of which Padraig Lynn granted a right of residence to his parents for their respective lifetimes.
41. The fourth is a declaration executed by Sean and Bridget Lynn in fulfilment of the requirements of the Family Home Protection Act, 1976; the Family Law Act, 1981; the Judicial Separation and Family Law Reform Act, 1989; the Family Law Act, 1985 and the Family Law (Divorce) Act, 1996.
42. The fifth document is headed “Acknowledgement and Admission” and is signed by Bridget Lynn. This records her awareness of the transfer and her acceptance that she had been advised fully as to her rights as a spouse under the Succession Act 1965. That clause continues:
“It is has also been explained to me and I understand that following the transfer my husband Sean and myself will have the following rights over the property:-
(a) Exclusive Right of Residence in the dwelling house for our respective lifetimes
(b) Right of Support, Clothing and Maintenance out of the lands.
I am fully satisfied with this arrangement and fully satisfied that my husband Sean shall proceed with the Voluntary Transfer of the property accordingly and I hereby irrevocably consent to the said Voluntary Transfer to my son Padraig.”
43. The document goes on to record that the full meaning and effect of her rights under the Family Home Protection Act and her obligations as a parent under s.117 of the Succession Act had been explained to her. It was stated that the full meaning and effect of the grant of the rights of residence and of support, clothing and maintenance had been explained and that she understood that, apart from those rights, she would have no claim or right whatsoever in respect of the property. She also understood that Padraig would be able to deal with the property as he saw fit, including selling or mortgaging it, without reference to her or to Sean.
44. Finally, the document recites as follows:
“I have obtained independent legal advice from Louis Kiernan, Solicitor Mullingar County Westmeath on all matters set out in this Acknowledgement and Admission and he has explained the same fully to me. I am satisfied that my husband Sean proceed with this Voluntary transfer of my property to my son Padraig.”
45. The next document is a similar “Acknowledgement and Admission” signed by Sean Lynn. It confirms that the full meaning and effect of a “revocation clause” has been explained to him and that he requires the deed to be irrevocable. The rest of the document is much the same as that signed by Bridget, with the difference that the reference to the right of support, clothing and maintenance omits the words “out of the lands”.
46. The seventh document is a declaration of solvency by Sean Lynn. It also records his understanding of the difference between revocable and irrevocable, and his instructions that the deed should be irrevocable. It is noted that he had availed of independent legal advice.
47. The final document is a declaration by Sean Lynn with respect to any burdens or other matters that might affect the folio.
Evidence relating to the transfer
48. I propose to deal firstly with the evidence from the accountant and solicitor who advised Sean and Bridget Lynn, despite the fact that they were called as witnesses for the defence. This is because it is easier to summarise Mrs. Lynn’s evidence in a comprehensible fashion if their version is set out first.
The accountant
49. Mr. Malachy Stephens is a chartered accountant. He said that he has acted as accountant to the Lynn family for 12 to 15 years, and for Padraig Lynn from around 2005. During that period he did the annual returns in relation to Sean Lynn’s farm income. He was aware of the details of the land holdings, stock, herd numbers and other assets. He was also familiar with the previous transfers effected by Sean, although they had been carried out before he began to act for him.
50. Mr. Stephens said that he met with Bridget and Sean Lynn on the 29th October, 2008. An entry in his office diary records the appointment as being with Bridget, from which he draws the inference that she was the person who arranged it. He has produced notes made by him at that meeting.
51. The subject of the meeting was noted as being the proposed transfer of the house and farm to Padraig. There was reference to retention of a right of residence. Indicative valuations were noted for the purpose of considering potential tax liability. The figures were €1m for the farm and €120,000 for the house. There was also a note referring to a house and six acres at a value of €200,000 which was said to relate to Padraig’s property. It was estimated that he had borrowed that figure by way of mortgage.
52. It was noted that Sean had a contributory pension of approximately €120,000. Bridget did not have a pension and there was a query as to whether she would be eligible for a non-contributory pension. Mr. Stephens said that it was his view that the transfer of the land would not affect either of their pension entitlements. The benefit of the transfer lay in the 50% stamp duty relief because Padraig was a qualified young farmer. The duty at the time was of the order of 9%, which in the case of a property worth €1.6 m would have been around €150,000. The saving therefore would have been about €75,000.
53. Mr. Stephens said that both Sean and Bridget Lynn were astute business persons and they would “absolutely” have had consideration for this saving. However, the main purpose of the meeting was to establish whether or not any tax liability would be incurred by reason of the transfer.
54. The first issue was capital gains tax. Disposal of the property would constitute a capital gains tax “event”. However, because of Sean’s age and his history of farming the land he would qualify for retirement relief, exempting him from capital gains tax liability.
55. The second issue was gift tax. Based on the indicative values Mr. Stephens calculated that, after the transfer, 84% of Padraig’s assets would be agricultural. Because this was over the figure of 80% prescribed in respect of agricultural relief, the value of the gift would be reduced for tax purposes by 90%. This would leave the gift under the taxable threshold for a gift from parent to child.
56. The notes of the meeting also list the other properties owned by Sean Lynn. Mr. Stephens said that this was part of the initial discussions, centred on the fact that the transfer would lead to a loss of income.
57. There was also a discussion about how the land would be farmed after the transfer. Mr. Stephens said that there was “a general agreement” that Sean and Padraig would create a partnership for the farm. The possibility was raised that Bridget might be entitled to carer’s benefit or allowance. His office subsequently followed this up.
58. On the 7th November, 2008, Mr. Stephens wrote a letter addressed to Sean headed “Transfer of lands to your son Padraig Lynn”, referring to and summarising the discussion at the meeting.
59. There was a further meeting on the 24th November, 2008, at the request of the Lynns’ solicitor Mr. Crowley. This was to consider the figures again, based on the professional valuations that had by then been received. Mr. Stephens was able to confirm that the tax liability would be nil.
60. Mr. Stephens said that Bridget Lynn attended both meetings and was fully apprised of all relevant information. She did not express any unhappiness or concern about the transfer.
61. On the 16th June, 2009, Mr. Stephens’s office wrote to Mrs. Lynn advising her as to the qualifications for carer’s benefit and allowance.
62. Mr. Stephens also identified accounts he had prepared for the farm partnership established between Sean and Padraig after the transfer. This partnership covered the entire holding of the lands owned by Sean and Padraig.
63. When the partnership was set up Sean had contributed just under €40,000 by way of farm equipment and stock. He had also put in €25,340 in cash.
64. The accounts covered the period from the 1st January, 2009, up to the 7th December, 2011 (the date of Padraig’s death). Livestock sales for that period were approximately €60,000 per year. Farm subsidies were about €31,500 per year. Sean had withdrawn €47,623 over the period, while Padraig had withdrawn €5,668. The closing balance attributed to Sean was €10,178 and to Padraig was €6,347.
65. In cross-examination Mr. Stephens confirmed that he had not met with Bridget Lynn on her own in relation to the matter.
66. He further confirmed that he was aware that the transfer would have to be effected before Padraig’s birthday on the 26th November in order to avail of the relief against stamp duty.
67. Mr. Stephens was asked why the letter of the 7th November, 2008, was addressed only to Sean Lynn. He said it was because the file was in his name.
68. Asked by counsel for Michael Lynn whether he had detected any signs of stress or pressure on Sean’s part, Mr. Stephens said that he had not.
The solicitors
69. Mr. Patrick Crowley is the principal in the firm of J.J. Macken, having been a partner there since 1990 and having taken over the practice in 2007 on the retirement of his partner. The Lynns were clients of the firm.
70. Mr. Crowley recalled being contacted by Sean and Bridget in relation to the proposed transfer of the land to Padraig. The reason for the transfer was so that he could avail of “the farmers’ scheme” and for this purpose it had to be done while he was under 35 years of age. Mr. Crowley said that Sean and Bridget called in to him a number of times.
71. Mr. Crowley identified handwritten notes dated the 4th November, 2008, as being his notes from the first consultation in relation to the matter. Sean and Bridget were present. Mr. Crowley noted inter alia the following items of relevance:- the description of the property; Padraig’s date of birth; the fact that Padraig had the requisite certificates; the circumstances pertaining to Mary; whether the farmyard was to be included in the transfer; and the extent of the area surrounding the house to be included with the right of residence.
72. The notes included the following:
“No support and maintenance. Income solely and entirely his.”
73. This note was made, according to Mr. Crowley, because he asked Sean and Bridget how they would support themselves in the future. He said that it was “not good” to transfer substantial lands without provision for support and maintenance. Sean and Bridget specifically instructed him that they did not wish to include such a right. He noted in the attendance that they owned other properties, which were listed, and that Mary was to be provided for out of them. His understanding was that they were sufficiently provided for and that “they knew what they were doing”.
74. The note also referred to the possibility of reserving a right of residence for Mary, but not an exclusive right. Advice was given in relation to Succession Act implications, for Mary in particular.
75. In the event, Mr. Crowley decided on his own initiative to include a covenant for maintenance and support. He said that he was not satisfied to do a transfer of this sort without such a covenant. He put it in, not because he was not satisfied that the Lynns could provide for themselves, but because one could not know the future. He wanted to ensure that the transferors were protected and that the transferee knew what he was taking on.
76. The attendance also notes that Sean and Bridget were advised in relation to obtaining independent legal advice. Mr. Crowley said that this was his usual practice, and was for the protection of everyone concerned.
77. Mr. Crowley estimated that this meeting would have lasted at least an hour and probably an hour and a half. He said that there was nothing to suggest that Sean and Bridget were under pressure. It was his understanding that they had a good idea of what was involved.
78. On the 18th November, 2008, Mr. Crowley sent a fax to Mr. Stephens in which he stated inter alia that he had been consulted by Mr. Sean Lynn and Mrs. Bridget Lynn about the transfer.
79. Mr. Crowley next saw the Lynns on the 20th November, 2008, although the office diary records telephone contact on other dates. A further appointment was made for them for the following afternoon, the 21st, at 2.30. The intention appears to have been to have the documents executed on the 21st but in the event the Lynns met with Mr. Stephens for a final discussion on Monday 24th, before attending at Mr. Kiernan’s office in the firm of Nooney & Dowdall later that day. Mr. Crowley said that the matters dealt with by Mr. Stephens included the farming partnership and joint bank account to be set up between Sean and Padraig.
80. Mr. Crowley said that it was his firm belief that Bridget Lynn understood what she was signing. She had not indicated to him that she had any concerns or that she was being put under pressure. If she had, or if he had thought for one moment that she was not happy to go through with the transfer, he would not have gone ahead with it.
81. Mr. Crowley said that Sean did not alter the will he made in 2009. He also recalled seeing Bridget about her own will subsequently. She had some other queries but never raised any issue in relation to the transfer. No complaint had ever been made to the Law Society about his advices in the matter.
82. In cross-examination Mr. Crowley accepted that he had not seen any of the three persons involved – Sean, Bridget or Padraig – on their own. He agreed that he had considered that he was acting for Padraig as well as his parents. It was put to him that Bridget had wanted to see him on her own but never got the opportunity. He responded that all she had to do was ring and ask to see him.
83. He said that he did not know whether Bridget had a legal interest in any of Sean’s property. He was aware that Padraig had inherited land from his uncle and had his own house. He did not consider whether or not it was advisable, in those circumstances, to transfer the family home. However, it was his view that it is not appropriate to transfer a family home, and his usual practice is to discuss this with the client.
84. Mr. Crowley thought that Bridget Lynn might have contacted him with questions about family property maybe five or six times before the matter of the transfer. Asked about her health in November, 2008 he said that he had been aware that she had Parkinson’s disease and sometimes used a walking stick. He did not know of any other complaints. He knew she was getting medical treatment.
85. Asked further about the advice he had given, Mr. Crowley said that he told Bridget Lynn that she had certain rights under the Succession Act and that if she went ahead with the transfer she would forego all of those rights in relation to the property. He also explained to both Bridget and Sean that they had a moral duty under the Succession Act to provide for all their children in accordance with their means, and that if they did not do so the transfer could be challenged. He said that he would have checked their wills before proceeding, as he would never do a transfer such as this without checking the wills. It was put to him that this was an inter vivos transfer to a child of the deceased, which could not be the subject of a challenge under the Succession Act, and he said that he was erring on the side of caution.
86. Mr. Crowley was asked
“What did Bridget Lynn gain, if anything, by effecting this documentation?”
His reply was that she gained the fulfilment of her wishes.
87. It was accepted by Mr. Crowley that under Law Society rules now in force he could not act for more than one of the three parties concerned in such a transaction. He was permitted to do so in 2008 but had taken the precaution of ensuring that Sean and Bridget got independent advice. He did not accept that they should have been advised separately, in circumstances where he had been instructed not to make provision for maintenance.
“In view of what’s happened it may well be correct. That’s all very fine saying that today.”
88. It was put to him that Bridget had more to lose than Sean, and he responded that she was “firmly behind” getting the transfer done as quickly as possible.
89. Certain passages from the 2002 Law Society guidelines were put to Mr. Crowley including the following: –
“A solicitor should not accept instructions which he suspects have been given by a client under duress or undue influence. Particular care should be taken where a client is elderly or otherwise vulnerable to pressure from others. A solicitor will usually but not always see a client alone. In the case of suspected duress or undue influence the solicitor should ensure that the client is seen alone.”
90. He responded:
“Well, it must be borne in mind that I was consulted by Bridget, the late Sean Lynn and Bridget Lynn, who came to me with a firm, clear and fixed intention of transferring their property to their son Padraig. Padraig Lynn, I don’t think he contacted me, I think it was about the 20th before I saw him, I may have spoken to him before that. But in all honesty he wasn’t, he did not involve himself in the transaction, as far as I could see, at all, until he was asked by me to come in, I think it was on the 20th, to go through documentation so that I could explain to him his obligations as well as what was happening in the transfer.”
91. He said that if he had sensed any question whatsoever he would have acted differently. It was his professional judgment, having known the Lynns over the years, that there was no question of undue influence. It was put to him that the Law Society guidelines stated that a solicitor’s obligations were not fulfilled simply by carrying out instructions. He said that he had carried out instructions but not “in a vacuum”. He had known the people he was dealing with for a number of years and had formed the view that they were there because they wanted to be.
92. He did not accept that Sean Lynn had rung his office and said that his wife did not wish to proceed. If that had happened he would have taken a completely different course.
93. Mr. Crowley accepted that no one had adverted to the possibility that Padraig might predecease his parents. However it was his view that the rights of support and maintenance conferred in the transfer were still in place and were enforceable against Padraig’s estate.
94. Ms. Ethel Battle has worked in the office of J.J. Macken for over 40 years. She answers the telephone, logs calls, makes appointments and is responsible for maintaining the office diary. She also witnessed all of Sean Lynn’s wills referred to above.
95. Ms. Battle said that she knew both of the Lynns very well from coming in and out of the office for a long number of years. They were clients of Mr. Crowley’s predecessors before he took over the practice. She was on first name terms with them. Sometimes they came separately and sometimes together, generally after making an appointment.
96. Ms. Battle was asked about an entry in the diary for Wednesday the 29th October, 2008, which read “Mrs. Lynn transfer”. She explained that if a client who rang the office had a few different matters in train she would ask which they were calling about, so that she could tell Mr. Crowley when putting the call through to him. On this occasion Mrs. Lynn had said that she needed an appointment about a transfer.
97. An entry in the diary for Friday the 30th recorded a call made by Mr. Crowley to Mrs. Lynn.
98. On the 4th November Mrs. Lynn had an appointment at 2.30 pm. Ms. Battle recalled that Mr. Lynn came with her, and that she showed them into the consultation room. She estimates that the meeting took an hour to an hour and a half.
99. On Wednesday the 5th November Mrs. Lynn called to give Padraig’s date of birth.
100. On the 12th November Mr. Crowley rang Mrs. Lynn about a valuation. On the 18th November Mr. Crowley rang Mr. Lynn about stamp duty. Ms. Battle explained that Mr. Crowley would ask her to ring “Sean or Bridget Lynn” and she would put through whichever of them answered the phone.
101. On the 20th November there was an appointment at 2.30 pm for Sean, Bridget and Padraig Lynn. On the following day there was an appointment at the same time for Sean and Bridget.
102. On the 24th November there was an appointment noted in the diary for a meeting with Mr. Malachy Stephens at 3.45pm in his office.
103. Ms. Battle confirmed in cross-examination that Mrs. Lynn had never attended the office on her own in relation to this particular matter. She had, however, come on her own in relation to her own will.
104. Mr. Louis Kiernan has been a solicitor in the firm of Nooney & Dowdall for over 12 years. He said that he did not know the Lynns personally but was aware of them from living nearby. His uncle and aunt had been friendly with Sean and Bridget. He himself knew Thomas and Michael from football, and had played on the same team as Padraig but they were not friends “as such”.
105. Mr. Kiernan recalled getting a phone call from Mr. Crowley asking him if he was available on the 24th November, 2008, to give independent legal advice. The documentation and the covering letter were delivered to his office before the Lynns came to him. He familiarised himself with the documents before they arrived.
106. Mr. Kiernan said that the meeting went on for 20 to 30 minutes. He went through each document in turn. He remembered it as being “a pleasant consultation”. They were “a nice couple” and he was satisfied that they understood everything that was being discussed. Sometimes one might have a concern, and he would always look out for indications that the person was uncomfortable, didn’t seem to understand or was expressing doubts. There were no worries in this case. He asked them, in relation to each document, whether they understood it and were happy with it. The Lynns were happy to proceed, did not ask any questions and did not express any concerns.
107. Asked about his role, Mr. Kiernan said that he made it clear to them that he was independent of Mr. Crowley’s office and that he was taking a fresh look to explain things to them. He was not there to persuade them one way or the other. However, if he had had any doubts he would have stopped, having regard to the fact that this was a big transfer involving a family home. He wanted to make sure that they understood that it was irrevocable and that they would no longer have control.
108. Mr. Kiernan referred to notes made at the meeting. They record that he had satisfied himself as to the capacity of the Lynns, because they were older people. He recalled that Bridget was walking with a distinct hunch but he had no worries in relation to her mental capacity. He had also written the words “consent” and “no pressure or coercion” in the notes. He said that he had asked them whether they were under any pressure or coercion, whether there was anybody “in the background” forcing them to do this and they had said that there was not and that they were happy to go ahead. He said that he was getting responses from both of them.
109. The notes record that Mr. Kiernan explained that Padraig would be “free to sell, gift, sell, part, pass it on etc”.
110. Mr. Kiernan said that he was not aware that Sean had intended to leave the property to Padraig in any event, or of any other financial considerations. They did discuss the fact that there were other children and that Sean and Bridget were happy that the others had been looked after.
111. The transfer documentation was then signed by Sean and Bridget in Mr. Kiernan’s presence and was witnessed by him.
112. In cross-examination Mr. Kiernan was asked if he would, in the same circumstances, see the two of them together now. He said that he would not, because of his experience in this case and because of the fact that the Law Society no longer permitted solicitors to act for both sides of a transaction even in the case of a voluntary disposal.
113. He said that he was aware that Padraig had his own house. He did not raise any question with Sean and Bridget as to why, that being so, the family home was being transferred to Padraig. He did not make enquiries as to Padraig’s assets. He did not ask Bridget or Sean whether they had any other assets. He did not advert to the possibility that Padraig would predecease his parents. He said that he did deal with the possibility that Padraig might divorce, remarry or move abroad. He asked whether there were other persons with an interest in the property, but not whether there was anyone else living there. He did not advise Bridget that her right to maintenance was related only to the income from the land.
114. Mr. Kiernan said that it was his clear impression that Bridget Lynn understood the implications of the transfer and was happy to proceed. He did not see it as part of his role to ask whether she would make any financial gain from it.
115. Mr. Kiernan said that no complaint had been made to the Law Society about his handling of the matter.
Bridget Lynn’s evidence
116. As of the date of the hearing, Mrs. Lynn was living in the house with her brother-in-law Pat. He has lived there since Sean and Bridget got married, in an extension they built for him. He has always required assistance with daily life and is now 84 years old.
117. Mrs. Lynn said that in 2008 Padraig was living with his wife in the house he built on the land given to him by Fr. Michael. She said that he had six acres and that she and Sean had given him another six.
118. Mrs. Lynn said that no one spoke to her in 2008 about giving more land to Padraig. She was very disabled at that time and in great pain because of problems with her back. She said that on the 18th or 19th November, 2008, she had been to a medical appointment in Dublin. When she came home her husband said to her that “they were thinking of leaving the home place to Padraig”. She said she couldn’t believe this. She was in great pain at the time.
119. On the following morning Sean said to her that “they” had decided to give it to Padraig while he (Sean) was still alive, and that Malachy Stephens, the accountant, had advised this. Mrs. Lynn says that she responded that this was ridiculous, that she was not giving away her home. Sean said that it had to be given to Padraig before he turned 26 (sic) so that he could get his grants.
120. Mrs. Lynn said that she was brought to J.J. Macken’s to see Mr. Crowley. At that stage she saw a letter addressed to Sean from Mr. Stephens. It referred to a discussion on a date at the beginning of November but she did not know about it.
121. Mrs. Lynn said that Sean put pressure on her, and told her that Padraig was putting pressure on him. This was on a Friday evening. She continued:
“I didn’t want to cause trouble if you like and break up a marriage and not give it to them and I said there will be murder or war or there will be a lot of disturbance. I decided at that stage that I’d give it to them. I didn’t want to give it to them. I cried for the two nights. Monday night I had to go in and sign for it…”
122. The meeting with Mr. Crowley was described. Mrs. Lynn said that she asked him what would happen to her, and he told her that she would be looked after and that nothing would change for her. She would still be in control of her home. He said that he would get someone to advise her, and then sent her up to Dowdalls to see Mr. Kiernan. She did not get a chance to talk to Mr. Crowley on her own. She did not see the documents in his office.
123. Mrs. Lynn said she was brought to meet with Mr. Kiernan in his office on a different day. She said he asked her did she know “what was in the letter” and she made some remark to the effect that “you have to trust in your professional people and hope they do the best for you”. They were there for 10 to 15 minutes. She was not on her own with Mr. Kiernan at any time. She said she signed with great regret and did not do it voluntarily. She would never give her home away and did not know what had happened.
124. Asked about the “Acknowledgment and Admission” document, Mrs. Lynn identified her signature but said that she did not remember signing it. She said that she understood that she had entitlements as a spouse, but that she did not remember it being explained to her. She understood that the references to the exclusive right of residence meant that she was entitled to live there as long as she wanted. She understood that the right of support, clothing and maintenance meant that she would get what she needed as before “from the profits of the land”. However, she said that it was not explained to her. She did not remember being asked was she “fully satisfied” with these arrangements, and she had not been so satisfied. She did not accept that the “full meaning and effect” of her rights under the Family Home Protection Act had been explained to her, or the relevant provisions of the Succession Act, or the implications of the transfer.
125. Mrs. Lynn said that she did not accept that Mr. Kiernan had fully explained the matter to her. He should have sat her down and talked to her for an hour to explain it. She should have been given time to consider the documents. She does not think (despite acknowledging her signature) that she saw the documents in Mr. Kiernan’s office.
126. Mrs. Lynn said that she signed because she was forced to by Sean. He, in turn, was under pressure from Padraig. She and Sean feared that Padraig’s marriage would break up if they did not.
127. Mrs. Lynn accepted that the other children had been given land. However, she said, Padraig got education and money instead. He was not really a farmer.
128. Shown the document containing the Family Home consent, Mrs. Lynn said she understood that by signing it she was signing away the farm and the house. She understood, but did not remember, the clause providing that her rights under the transfer would be postponed in the event of the property being mortgaged or charged, or in the event that she went to reside in an institution.
129. According to Mrs. Lynn, she has received no maintenance or support since the date of the transfer. She got nothing from Padraig or from his estate. She said that she knew nothing about the partnership between Sean and Padraig.
130. Mrs. Lynn said that after the transfer Padraig and Olive took over the farm and put sheep and eight horses on it. She and Sean had previously been getting between €20,000 and €25,000 from farm subsidies. That was their income and it was now lost forever. Her only income now, she said, is the widow’s pension of €230 a week.
131. Mrs. Lynn’s health continues to be poor. She said that she has the assistance of HSE home help for brief periods in the morning and evening, and her family assist when they can. Her home is unsuitable for a wheelchair user. (However, it must be noted that she did not refer to the fact, established in evidence by a witness called on her behalf, that she has been receiving assistance from the Home Instead agency since a date some weeks before the hearing. That witness said she did not know who was paying the bills).
132. In cross-examination, Mrs. Lynn was asked about her relationship with Sean. She agreed that he was “terrific” with her and very loyal to her. He was a very hard working man, devoted to his family. She agreed that all the land transfers to the children were discussed with her and she had signed some of them.
133. Each of the wills Sean had made was put to Mrs. Lynn. In relation to the 1997, 1999 and 2004 wills, under which the home place was left to Padraig, she said that she did not recall this feature but was not saying that she did not know about it.
134. Mrs Lynn agreed that Padraig had done a Teagasc course in 2003 and was a “qualified farmer” after it. She denied that there was an intention at that time that he should take up his inheritance and farm the homestead, and said that he was too busy training sport teams.
135. Mrs. Lynn described Padraig as being very helpful as her health failed. He would take her to the doctors. He put her to bed and helped her up. He brought her to the bathroom and took her out on drives to cheer her up. He was also very good to his uncle Pat and would get up at night to look after him.
136. For the year before Padraig died he was in receipt of the Carer’s Allowance. However, Mrs. Lynn took issue with the suggestion that he had put the money into her household account, and said that he spent it on his flower garden and a jeep.
137. Padraig and Olive got married in 2008, having been going out together for some 16 years. Olive was working for the HSE and had a project that involved bringing children to ride horses on Padraig’s land. Mrs. Lynn did not accept that she had known Olive “for years and years”, saying that they met occasionally. “She was young and I was old”.
138. Mrs. Lynn agreed that Padraig continued to help Sean on the farm and to look after her after his marriage. However, she said, his time was very scarce and they did not see much of him.
139. It was put to Mrs. Lynn that not long after the wedding she had told Olive that Padraig would be getting the home place, as Sean had willed it to him. She said that she did not recall. She further said that she did not recall Sean ever saying that he wanted Padraig to have it.
140. Asked about an application to the Department of Agriculture under the REPS scheme, in which Padraig was the nominated farmer, Mrs. Lynn said that she did not know about it but agreed that she was not surprised by it. She nonetheless maintained that Padraig was not a farmer, saying that he never engaged in manual labour on the farm like the other boys in the family. She accepted that the Department would have carried out checks.
141. It was put to Mrs. Lynn that it had been decided that Sean could retire, with Padraig taking over the land as the registered farmer. Sean and she would be the beneficiaries of the Department’s retirement scheme provided the transfer occurred while Padraig was under 35. She agreed that his birthday was the critical date.
142. It was further put that the professional advice was that the lands should be transferred to Padraig rather than leaving them to him. Mrs. Lynn expressed a view to the effect that the professional advisers had let her down.
143. Mrs. Lynn was asked about her claim to have no income, in view of the fact that she had inherited all of Sean’s estate. She said that she did not know whether she had. It was put to her that under the 2009 will he had left her all his lands and stock, and the benefit of the farm partnership. She said that she was not involved in the partnership and did not know if she benefited from it. She got no money from Padraig. She denied any knowledge of the fact that income continued to come from the farm after Padraig’s death, none of which went to Olive. She did not know that Sean had applied to the Department for a new herd number for the farm in January, 2012.
144. In answer to a question from the court Mrs. Lynn said initially that Sean had had 40 or 60 acres when he died. She then said it was 60 to 70, but that she did not know if she owned it. Finally she said that it was 80 to 100 acres.
145. Mrs. Lynn confirmed that it was her evidence that she had nothing to do with any preparations for the transfer and that it was foisted upon her. The letter of the 7th November, 2008, from Mr. Stephens, referring to the recent meeting about tax liability arising from the proposed transfer, was put to her. She denied that she had been at such a meeting. She was not interested in tax issues and knew nothing about it.
146. It was then put to her that Mr. Stephens had a note of the meeting of the 29th October, 2008, with herself and Sean and she said that she could not remember it. She would not accept that the transaction was discussed with her and continued to maintain that she knew nothing until asked to sign.
147. She also denied having consulted JJ Macken about the transaction, as suggested in the faxed letter of the 18th November from Mr. Crowley to Mr. Stephens. The record of her phone call to the solicitor’s office on the 29th October was put to her and she denied it. She said that it was not true that she was in that office on the 4th November. She did not accept that there had been a call on the 12th November about the valuation and she knew nothing about it.
148. Mrs. Lynn further denied telling Mr. Kiernan that she consented to the transfer, or that she had been asked by him whether she was under any pressure or coercion. She asserted that she had told him that she did not want to sign, that she did not know whether it was right or wrong to sign.
149. In cross-examination on behalf of the estate, Mrs Lynn was asked about the pressure she claimed had been put on her by Sean. She responded:
“He just said to do it and that was the right thing. He was very quiet about all this. I don’t know why. He was just, I don’t know was he a bit depressed or I don’t know what was wrong but he was anxious to get it done and he said we should do it. I said I didn’t want to, your home is your home. I said my parents wouldn’t like this and I didn’t want it done and that is it. I didn’t want it breaking up marriages or breaking up my own marriage or causing disagreements or arguments and I didn’t have much of an option, but I did it against my will…”
150. She clarified that she did not think that her own marriage would break up, but feared that there would be rows.
151. Padraig had, she said, been in ill health. He had been getting psychiatric help for two years before his death and had gone to counsellors and to hospital. When he wasn’t well he felt very low and slept a lot. He was very upset when his wife moved out. She did not think there had been any physical violence on his part, but she thought that Sean would have been worried about Padraig’s reaction if the transfer had not gone through.
Medical evidence relating to Bridget Lynn
152. There is no doubt but that Mrs. Lynn has for several years suffered from poor health.
153. Her current GP, Dr. D’Alton, stated that he had first met her in August, 2008. At that time she had a history of severe Parkinson’s disease since about 1998; spinal disease for which surgery was required in 2002; osteoarthritis and coronary disease. She was attending a neurologist, a cardiologist and an orthopaedic surgeon with a particular interest in spinal surgery.
154. Dr. D’Alton went through the medications Mrs. Lynn was taking in 2008. These included sleeping tablets, an inhaler, stomach tablets and combinations of medicines in respect of her heart condition and Parkinson’s.
155. Dr. D’Alton confirmed that Mrs. Lynn had seen her neurologist, Professor Timothy Lynch, on the 19th November, 2008, and that this was a review which had been scheduled nine months earlier. He also confirmed that on the 19th November Professor Lynch had reported that Mrs. Lynn’s Parkinson’s disease was reasonably stable, and that he would see her again in one year’s time.
156. Dr. D’Alton said that he had not been asked to assess any question of Mrs. Lynn’s fitness in relation to testamentary capacity when she made wills in 2011 and 2012.
157. Professor Lynch said that he had been seeing Mrs. Lynn since 2002. She had highly complex medical problems, which he listed as “coronary heart disease; hypertension; underactive thyroid gland; osteoarthritis; osteoporosis; high cholesterol; bladder problems; bowel problems etc including significant back problems and neck problems”. He gave a description of the main symptoms she was experiencing in 2008.
158. As far as Mrs. Lynn’s current condition is concerned, Professor Lynch said that things have gotten harder for her over the years by reason mainly of the combination of Parkinson’s disease and arthritis and she required more care. He noted that she had said to him that her “motivation and drive and initiative were a bit less than before” and commented:
“Which is perhaps remarkable because over the years Bridget has soldiered on from 1997 to 2014 and has always struck me and others as a very motivated driven woman who coped with many illnesses and just got through them.”
159. Asked in cross-examination about his use of the words “motivated” and “driven” Professor Lynch said that he meant this “in the best terms”. He agreed that Mrs. Lynn had a sharp brain, and that he would not describe her as a “wilting violet”.
Evidence of Olive O’Hara Lynn
160. Ms. O’Hara Lynn said that she had been seeing Padraig since about 1992. They got engaged in 2004, and started building their house on the land left to Padraig by Fr. Michael. They moved into the house in 2006. In the same year she took up a job with the HSE. Padraig was partly engaged with his fitness business and partly with farming. He was also involved in training the county team. Ms. O’Hara Lynn said that they did not have a lot of money and were furnishing the house piece by piece.
161. She said that she had a good relationship with Sean Lynn, who she described as an impressive man. She always got along with Queenie also, and did not remember ever having an argument with her. Ms. O’Hara Lynn said that Queenie told her at some point that Padraig was to get Ballyoate. However, she says that in fact Padraig never told her about the transfer until 2010.
162. Padraig and Olive got married in August, 2008. Ms. O’Hara Lynn said that Queenie was in good health at the time and had a great day at the wedding. The couple went away for a few days after the wedding but left the honeymoon until December, when they went to the Caribbean.
163. By this time the fitness business had closed although Padraig was still doing some evening classes and a bit of team training. According to Olive, he was working full time on the farm in the partnership with Sean.
164. Ms. O’Hara Lynn is a Resource Worker with the HSE, working mainly with young adults with intellectual and physical disabilities. She had spent several years working with horses previously and in 2010 she did a course in “equine assisted learning”. This is a specialised therapy using horses for people with special needs. She subsequently, with HSE approval, set up facilities for the treatment of young autistic persons using the Ballyoate property.
165. Ms. O’Hara Lynn said that Padraig began to become very unwell around October or November, 2010. He was low, tearful and under pressure. People had high expectations of him and he felt that he could not meet them. She brought him in to see Dr. D’Alton. Padraig was relieved to have discussed the issue with the doctor and subsequently went several times to see Professor Murphy, a psychotherapist. Professor Murphy was trying to get him to see that he was spending too little time on himself and his own activities. Padraig began to improve for a while but then started to go down again.
166. In August, 2011 Ms. O’Hara Lynn left the house and went to stay with a friend. She said that she did so because she was not equipped to deal with what was happening and wanted to force him to get help. He did go to Edmundsbury Hospital. He was seeing Professor Murphy and a counsellor, and Olive kept in touch with them. She also remained in phone contact with Padraig and met him on occasion.
167. However, Ms. O’Hara Lynn became increasingly concerned about Padraig’s behaviour. He came to her workplace and was driving around to her friends’ houses and to her brother looking for her. She felt that he was not himself and, after speaking to his counsellor and a female Garda, she applied for a safety order. The sworn information grounding the application stated that she was in fear of her life due to her husband’s continuous mental and physical abuse and harassment since she left the family home. The order was made on the 10th November, 2011. Padraig was present in court and consented to the order.
168. Ms. O’Hara Lynn said that this was heartbreaking for her because she really loved him. She did not suggest to him that the marriage was over, or discuss selling the house or land.
169. In answer to the suggestion that she might not have married Padraig unless the lands were transferred, Ms. O’Hara Lynn pointed out that they were already married when that happened. She said that that year, 2008, was one of the happiest years of their lives. Padraig was very well that year and in great form. It had never been suggested to her by Sean that Padraig put pressure on him, or had said that he would harm himself if he was not given the land. Nor did she hear it said, before 2013, that the transfer had been improvident.
170. Ms. O’Hara said that she received no money in respect of either the stock or the land until 2013, when she got a single farm payment. She has not been farming the land. She had moved back into her house for a while in 2012, during which time Sean Lynn frequently called in to her. Michael also came a few times, looking for letters from the Department of Agriculture. He asked her if she had found out how much tax she would have to pay back on the six acres to get it back into her name.
171. She said that it became clear that she was not welcome in the area and she rented out the house from August, 2012.
172. In cross-examination Ms. O’Hara Lynn was asked why she thought the Lynn’s family home had been included in the transfer, given that she and Padraig had a house of their own. She said that Padraig had envisaged that at some stage they would sell their own house and move into the farmhouse to look after his parents. She understood that Mrs. Lynn has a deep attachment to her home, and agreed that she had told her that it would always be her home. She had fully intended to sign it back to her until she was asked to sign the disclaimer. Communications broke down and everything was being done by solicitors’ letters. She could not say what her present intentions are, given everything that had happened and what had been said about Padraig.
173. Ms. O’Hara Lynn agreed that she had seen Padraig lose his temper. However she had never seen him act aggressively towards Sean and had never seen Sean afraid of Padraig. She did not accept the proposition that there were “two Padraigs”.
Medical evidence relating to Padraig
174. Dr. D’Alton was also Padraig’s GP. According to his records, he saw Padraig in April, 2005. On that date he noted the following:
“Depressed, traumatic family split, reduced interest, tearful, not suicidal, refer for counselling.”
Dr. D’Alton did not recollect any detail as to the circumstances giving rise to this.
175. There was no further mention of depression or psychiatric illness in the records from that point up to October, 2010. At that time Dr. D’Alton noted that Padraig was in a depressed mood and had thoughts of suicide. He referred him to a consultant, Dr. Matt Murphy in Edmundsbury Hospital. The letter of referral reports Padraig and Olive as saying that psychological problems had been ongoing for several years, and that Padraig had seen psychologist Michael Byrne for one session, which he found helpful.
176. Mr. Byrne’s report noted that Padraig was struggling with a lack of appreciation from his family for the care that he was giving his parents and his uncle. Dr. D’Alton’s observation on this was that he was aware that Padraig was a very hard working, conscientious person who gave very generously of himself.
177. Dr. Murphy saw Padraig in November, 2010. Padraig told him that he had been “in a dark place” for about six months but was now much better. He described sleep disturbance, thoughts of self harm and exhaustion.
178. In cross-examination on behalf of the estate Dr. D’Alton was asked about the note he made in October, 2010 that Padraig had a “difficult” relationship with his father. He responded that he had no particular information on that issue, other than that Padraig worked very hard on the family farm and that fathers and sons do not always agree. He was asked if he had seen any indication of “anger issues” and replied that he had not.
Events after the death of Padraig
179. It is apparent that after Padraig’s death matters developed in a direction which unfortunately led to the current proceedings. However, to a large extent the court is not concerned with what exactly occurred. The following evidence is referred to only on the basis that it can shed some light on the parties’ perception of previous events.
180. Padraig’s funeral was on a Saturday. On the morning of the following Monday Olive O’Hara Lynn went with her brother Cyril to her house in Ballyoate. She found a number of people there before her including Bridget Lynn, Bridget’s sister Margot, Michael Lynn, Siobhan Lynn and Siobhan’s partner. It appears that they must have let themselves in with Padraig’s key. It also appears, as conceded in evidence by Bridget, that they were looking at some papers of Padraig’s.
181. According to Ms. O’Hara Lynn, Michael Lynn said to her that she had got everything she wanted when she left. Siobhan asked her if what she wanted was a few acres for her horses. Queenie said that she wanted her house back, and Olive said that it was hers (Queenie’s) and always would be. She had her own home. Michael said that he had been good to her the previous week but that the show was over and it was down to business. She said that Queenie told her that she should get a solicitor, and not to go to J.J. Macken’s.
182. Ms. O’Hara Lynn said that she never agreed to waive her rights in relation to Padraig’s estate.
183. The detail of her evidence in relation to the events of that day was supported by her brother Cyril O’Hara. Mr. O’Hara also said that around Easter 2012 he received a phone call from Michael Lynn. Michael said that no matter what, the place was coming back to them. He asked Mr. O’Hara to put pressure on Olive.
184. Mr. O’Hara was not cross-examined.
185. Mrs. Lynn accepted that she had been there, claiming that she had been looking for papers that belonged to her. She also accepted that there had been a discussion about the land. It was possible that she told Olive to get a solicitor. She said that she could not remember instructing a solicitor herself but it was very possible. Olive had said that her house was her own and had also agreed to give the land back. She agreed that she subsequently asked Mr. Crowley for copies of the transfer documents.
186. After this incident Ms. O’Hara Lynn did engage a solicitor, Mr. Tynan, and the Lynns instructed a new solicitors’ firm to deal with the matter.
187. Also shortly afterwards Michael Lynn phoned Mr. Stephens. He told him that he understood that Olive was going to disclaim her inheritance, which would mean that his parents would inherit Padraig’s estate. He asked for advice on the tax implications for his parents.
188. On the 15th December, 2011, a solicitor from the firm of O’Donovan Cowen emailed Olive’s solicitor Mr. Tynan. He stated that he had been instructed by Sean and Bridget to “regularise” affairs following Padraig’s death. He understood that agreement had been reached with Olive in relation to “the transfer back” of both the family home and the farm. A further letter on the 5th January, 2012, referred to Sean and Bridget’s instructions that Olive had indicated that she would sign the necessary documents after the Month’s Memory.
189. The correspondence between the solicitors continued for a lengthy period of time. I do not propose to deal with it in detail except to note two aspects. One is that each solicitor maintained a consistent position – Messrs. O’Donovan Cowan asserted that a binding agreement had been entered into on the Monday after the funeral, while Messrs. Tynan Larkin said that that there had been no agreement on the part of their client to waive her rights and that she would finalise her attitude in due course.
190. The second noteworthy aspect is that in May, 2012 O’Donovan Cowan were concerned about finalising matters because of a risk that the farm entitlements might be lost in the absence of proof to the Department’s satisfaction as to ownership. Tynan Larkin responded by proposing that the entitlements should be transferred into Ms. O’Hara Lynn’s name, since she was the person entitled to extract administration, “pending a final decision being made in relation to all of these matters”. This letter concluded as follows:
“For the purpose of clarity let there be no doubt whatsoever that Mr. and Mrs. Lynn, Snr. will not be disturbed in the family home and they will continue to reside there with the same rights and privileges as before and their maintenance and support will be provided for from the income derived from the farm as heretofore.”
191. On the 6th April, 2013, letters of administration were granted to Ms. O’Hara Lynn.
192. Proceedings were initiated by Mrs. Lynn on the 31st July, 2013.
Valuations and current use of the farm
193. It will be recalled that at the time of the transfer Mr. Davitt valued the house and lands at a total of €1.6m.
194. For the purposes of these proceedings Mr. Michael Farrelly was engaged on behalf of Mrs. Lynn. Mr. Farrelly is a brother-in-law of Michael Lynn but assured the court that he had carefully considered the situation and was satisfied that there was no conflict of interest and nothing to prevent him from giving a proper professional opinion. He considered that the value had been overestimated by Mr. Davitt and also for the Inland Revenue affidavit. The true value of the house, in his estimation, is €60,000 to €70,000 – in effect, the value of the site. The farmland, at average Westmeath prices, is worth €300,000.
195. In relation to the house, Mr. Farrelly makes the point inter alia that the closeness of the farmyard to the house makes it undesirable or difficult to separate the house from the farm. There also appears to be a right of way from the lands belonging to Michael Lynn to the farmyard beside the house, for the purpose of using the sheep-dip.
196. Mr. Farrelly agreed that there were some sheep on the land when he inspected it in 2014, and that a gateway leading to Michael Lynn’s land was open.
197. On behalf of Ms. O’Hara Lynn, Ms. Eileen McLoughlin has valued the house at €220,000, the lands at €520,000 and the sheds and outbuildings at €15,000. These are the same figures as set out in the Inland Revenue affidavit relating to Padraig’s estate. She also referred to the fact that there were open gates, with sheep going from one paddock to another.
198. In the autumn of 2012 Ms. O’Hara Lynn engaged an agricultural advisor, Mr. Jimmy Forbes. Mr. Forbes gave evidence that when he entered Padraig’s herd number into the Department of Agriculture single farm payment system the name and address of Sean Lynn, rather than Padraig Lynn, came up. Mr. Forbes explained that the single farm payment is attached to a herd number, rather than to any specific piece of land. However, a farmer must have land available to qualify for the payment.
199. It appeared from the records that after the 2008 transfer Padraig had a herd number covering the home farm and also other lands owned by Sean but leased to Padraig. The payment was made into a nominated bank account which he understood to have been the partnership account set up by Padraig and Sean. It further appeared that after Padraig’s death Sean had applied to the Department to have the herd number transferred back into his name as herd owner. Mr. Forbes successfully applied for a herd number covering Padraig’s lands, including the home farm, and transferred the entitlements to Ms. O’Hara Lynn with effect from 2013. However, in both 2013 and 2014 some other person had put in a claim in respect of the land.
200. Mr. Forbes said that he had inspected the farm in October, 2014. It was being farmed. There were sheep on the land, most of which had no identification.
201. Mrs. Lynn denies knowing anything about who has been farming the land since Padraig’s death. Michael Lynn has not given evidence.
Hearsay evidence
202. Both sides have adduced a certain amount of evidence that is, on the face of it, hearsay.
203. A number of witnesses were called on behalf of the estate of the late Sean Lynn with a view to establishing his attitude to the transfer at the time he was entering into it. The admissibility of this evidence was debated at the hearing. Determination of the admissibility issue was held over to this judgment.
204. Ms. Olive O’Hara Lynn, the defendant, also gave evidence about Sean’s state of mind in the period after Padraig’s death and before the proceedings were issued. Although no objection was taken to her evidence it seems proper to apply the same criteria throughout.
Evidence adduced on behalf of the estate of Sean Lynn
205. Mr. Denis Killeen said that he was a sheep farmer and had known the Lynn family for many years. He described the late Sean Lynn as a sound man to deal with, level headed, clever and generous.
206. Mr. Killeen said that he recalled Sean coming to visit him in November, 2008. He remembered that it was shortly after his daughter’s first birthday, which was on the 14th. He said that Sean told him that he felt that he was being pressurised into signing over the land and that his wife did not want to. Sean thought that going through with the transfer might help with Padraig’s marriage problems. Mr. Killeen expressed the view that Sean seemed under pressure.
207. Mr. Killeen described Padraig as a happy, jolly fellow who was very helpful. He could not say that Sean was afraid of him at that time.
208. In cross-examination Mr. Killeen said that he had not spoken to Mrs. Lynn or to Michael Lynn, or to any other person, about this conversation. He did not know why the solicitor contacted him asking if he had information relevant to this case.
209. He is friendly with Michael Lynn and knows his phone number off the top of his head. He did not socialise with Sean. He did not give him any advice on the occasion of the conversation.
210. Mr. Clive Walsh said that he had known the Lynns for 12 years. In 2008 he was 17 years old and helped out on the farm. He described the relationship between Sean and Padraig as “touchy”, saying that Padraig might “jump down Sean’s throat” but that Sean would walk away rather than retaliate.
211. On one occasion Padraig told Sean to “fuck off”. Mr. Walsh said that he believed Sean was afraid of Padraig. Another time, he saw Padraig put his own head through a plastic tray out of annoyance with his mother.
212. Mr. Walsh said that he had come to give evidence because Michael rang and asked him how his relationship with Sean and Padraig was. He has been doing occasional work for Michael, for which he is paid in cash and in firewood. He also helps out at the home place if Mrs. Lynn needs help to fix anything.
213. Mr. Eamon Drew lives close to the Lynns and has worked on the farm on and off over the years. He would often join Sean for breakfast on Sundays. Asked to describe the relationship between Sean and Padraig, Mr. Drew said that after the transfer “it wasn’t good, it was bitter”. He recalled an occasion when Padraig had lost his temper because his uncle Pat spilled some water in the yard. Sean had been used to running the farm and now Padraig was taking over. Padraig made Sean remove his tools from a workshop and he had to bring it to Michael’s place. Sean was a peaceful man. Asked if Sean was afraid of Padraig, Mr. Drew said “I’d say he was the latter end”, adding that it was his view that Padraig was “never right”. It transpired that what he meant by this was that Padraig had killed himself.
214. Mr. Denis Linehan is the solicitor acting on behalf of Sean Lynn’s estate. His evidence was that he was originally instructed in relation to Bridget Lynn’s proceedings, in which Sean was a defendant. He said that he had two consultations with Sean in August 2013, one being on the 12th and the other on the 24th. There are typed attendances in respect of both but the original notes are missing in respect of the 24th August.
215. The attendance for the 12th August records the instructions relevant to the transfer. Padraig was said to have approached his parents in mid to late summer of 2008. He said to them that he was a qualified farmer and that the stamp duty exemption would no longer apply after he reached 35. Sean Lynn said that he was “fearful” as to what would happen to Padraig if the land was not transferred, meaning that he felt Padraig would harm himself. The attendance records him as saying that he had known that Padraig was going through marital difficulties at the time, and that Padraig had said that the transfer would save his marriage. Sean also described Padraig as “difficult” and said that he had been aggressive on many occasions. He expressed, according to Mr. Linehan, “a certain fear” of Padraig but said that he had never assaulted him
216. Mr. Linehan discussed the statement of claim in Bridget’s proceedings with Sean and was instructed by him that he had “convinced” his wife that transferring the property was the best thing to do. He was also instructed that the assertion in the statement of claim that Sean had telephoned J.J. Macken’s and told somebody there that Bridget did not want to proceed was correct. However she subsequently changed her mind. Sean said that the matter was dealt with “in a rush”.
217. On the 24th August, 2013, Mr. Linehan met again with Sean and Michael. This time the attendance records that Sean told him that the primary reason for the transfer was so that Olive could engage in her “horse activities”. He said that Bridget had told him she was not happy, and he had communicated this to Mr. Crowley. However, Sean continued to put pressure on her and told her that Padraig would either commit suicide or harm them unless the farm was transferred. Padraig had indicated this to him. Sean accepted that this was not communicated to Mr. Kiernan. He felt that he had no option but to “comply or die”.
218. Mr. Linehan was asked in cross-examination how he had come to be involved in the case. Initially he said that he had previously acted for a cousin of Michael Lynn. Subsequently he said that he had acted for Michael himself in some business dealings. Michael had instructed him to enter an appearance for Sean, before Mr. Linehan had met with Sean. Michael had set up the consultations, retrieved the pleadings from Sean’s former solicitor and given Mr. Linehan the transfer documents.
219. Mr. Linehan said that Sean had not told him about any conversation with Denis Killeen. That information had come from Michael. This was also the case in respect of Clive Walsh and Eamon Drew. However he had contacted Aidan Davitt, the valuer, on his own initiative.
220. Mr. Linehan noted that Mr. Crowley’s file in relation to the transfer had been opened only three weeks before the transfer took place, and gave it as his opinion that there had indeed been “something of a rush”. He accepted that he had not been aware, until discovery was made in these proceedings, that Padraig had been the intended beneficiary in relation to the home place under Sean’s wills.
221. Mr. Aidan Davitt said that he was an auctioneer. He is a nephew of Mrs. Lynn, being the son of her sister Margot. He said that in November, 2008 Sean Lynn came to see him by appointment and asked him to carry out a valuation of his house and farm, and also Padraig’s house and farm. Mr. Davitt said that Sean “didn’t seem himself, he seemed to be a bit worried”. He told him twice, while Mr. Davitt was working on the valuation, not to tell Mrs. Lynn about it.
Hearsay evidence of Olive O’Hara Lynn
222. Ms. Olive O’Hara Lynn said that after Padraig’s death Sean was very supportive of her and frequently called in to her house. She felt that he was unhappy with the direction matters were taking. He said that he was under severe pressure at home, particularly from Michael.
223. Ms. O’Hara Lynn said that she received a text message from Tom (who, she went to some pains to say, was not involved in putting any pressure on her) on the 9th May, 2012. The message asked her to ring Sean because he was in fear of his life.
Conclusions on the hearsay issue
224. Not all of the above material is hearsay but the more significant parts are. In so far as hearsay evidence has been given, I do not consider it appropriate to take it into account. It suffers not only from the normal infirmities of hearsay, in that it is simply impossible to cross-examine upon it, but is in my view downright unreliable.
225. Neither Mr. Killeen, Mr. Walsh or Mr. Drew were mentioned to Mr. Linehan by Sean Lynn as being people to whom he had expressed concern about the transfer. They were all brought into the picture by Michael, after Sean’s death. It is particularly odd in the case of Mr. Killeen, since he said that he had never discussed the conversation he had with Sean with anyone else. All of them are connected by friendship, relationship or employment to the Lynn family and in particular to Michael.
226. The evidence given by Mr. Davitt, that he was asked by Sean not to tell Queenie that he had done a valuation, makes very little sense in circumstances where he was in receipt of a letter from Mr. Crowley referring to the fact that he was instructed by both Sean and Bridget.
227. The evidence given by Mr. Linehan as to his instructions are problematic in a different way. I have no reason to doubt that his notes accurately record the instructions given by Sean Lynn. However, it is a striking fact that the first of these consultations, which concerned the statement of claim in Bridget’s case, took place on the 12th August, 2013. The statement of claim was not delivered until the 20th August. The only inferences that could be drawn from this are either that the attendances have been falsified (which I consider unlikely) or (which is overwhelmingly more likely) that Sean was given a copy in advance. In circumstances where both of them had previously been instructing a solicitor with a view to having the transfer reversed, the possibility of a discussion between Bridget and Sean as to the possibility of getting the transfer invalidated is one that cannot reasonably be excluded. It further seems likely that they had discussed the best approach to this. It would not, therefore, be safe to rely upon the attendances as evidence of the truth of their contents.
228. In so far as the non-hearsay evidence is concerned, it seem to me that it does not take things further than to say that Sean and Padraig did not always get along.
229. Olive O’Hara Lynn’s evidence as to Sean’s unease after Padraig’s death is in my view too equivocal to bear any weight. Nor, in my view, would it be safe to draw any inferences from the content of the text message from Tom. Tom was not called as a witness by either party, and it may well be that he does not wish to take sides in the matter. However, he is the only person who could explain the context of his message. I therefore propose to disregard it.
Submissions on behalf of Mrs. Lynn
Unconscionable or improvident transaction
230. On behalf of Mrs. Lynn, reliance is placed on the following definition:
“First, that one party was at a serious disadvantage to another by reason of poverty, ignorance or otherwise, so that circumstances existed of which unfair advantage could be taken; secondly, that the transaction was at an undervalue; and thirdly, that there was a lack of independent advice.”
231. This formulation, taken from Hanbury & Martin on Modern Equity (4th ed., 1991) was quoted with apparent approval by Shanley J. in Carroll v. Carroll [1998] IEHC 42; [1998] 2 ILRM 218, and further adopted by Gilligan J. in Prendergast v. Joyce [2009] IEHC 199 (both discussed further below).
232. Counsel submits that the transfer under consideration comes within these criteria. It is argued that Mrs. Lynn was under a serious disadvantage in that she was the person with most to lose in relinquishing her family home rights and her Succession Act rights, while also losing the ability to provide for her own future care from the farm income. She was further under a disadvantage by reason of her age and medical condition, and because Padraig was her carer. It is said that “the circumstances were such as to enable unfair advantage to be taken, whether or not such advantage was taken.”
233. It is further submitted that the transaction was at an undervalue. Mrs. Lynn was, it is contended, a beneficial co-owner of house and lands which were valued at €1.6 m. She derived no benefit from the transfer. It is further contended that the provisos in relation to the right of clothing, maintenance and support significantly increased the vulnerability of Mrs. Lynn, as did the right of the new owner to charge the property without any provision for her protection.
234. It is submitted that there is no explanation as to why the family home should have been transferred to Padraig, given that he had his own house on his own lands. There would have been no tax implications if it had not been transferred. Mr. Crowley did not give any advice as to the prudence of this aspect, despite it being his view that it is not usual to transfer the family home and that retention of a right of residence is not really sufficient.
235. The differences between the two documents headed “Acknowledgement and Admission” are pointed out and it is argued that these differences were never explained to Mrs. Lynn. It is further pointed out that Mr. Crowley did not advise her that, if the house was not transferred, she could have a right under the Succession Act 1965 to appropriate it in the event that Sean predeceased her. There appears to have been no advice in respect of the position of her daughter Mary.
236. It is submitted that Mrs. Lynn was in a vulnerable position, not being the owner of the land, and that the advice she received could not be considered appropriate independent advice as required by the Law Society guidelines. She was never advised while on her own, but always in the presence of her husband. Mr. Crowley was in a position of advising all three parties, while Mr. Kiernan was advising both Sean and Bridget Lynn.
Undue influence
237. In reliance on the House of Lords decision in Allcard v. Skinner (1887) 36 Ch D 145, cited with approval by the Supreme Court in Carroll v. Carroll [1999] 4 I.R. 241, counsel submits that undue influence cases fall into two categories. The categories are set out in the judgment of Cotton L.J. as follows:
“First, where the Court has been satisfied that the gift was the result of influence expressly used by the donee for the purpose; second, where the relations between the donor and the donee have at or shortly before the execution of the gift been such as to raise a presumption that the donee had influence over the donor. In such a case the Court sets aside the voluntary gift, unless it is proved that in fact the gift was the spontaneous act of the donor acting under circumstances which enabled him to exercise an independent will and which justifies the Court in holding that the gift was the result of a free exercise of the donor’s will…In the second class of cases the Court interferes, not on the ground that any wrongful act has in fact been committed by the donee, but on the ground of public policy, and to prevent the relations which existed between the parties and the influence arising therefrom being abused.”
238. It is submitted that the instant case properly falls within the second category but that the plaintiff has in any event discharged the burden of proof in respect of the first.
Submissions on behalf of Michael Lynn
239. Counsel for the estate of Sean Lynn relies on the authorities referred to above as establishing a presumption of undue influence in the case of an inter vivos transaction between persons who are in a special relationship. It is submitted that in this case the presumption is not rebutted by the rationale proffered for the gift – namely, the tax relief – since the evidence showed that it was not necessary to transfer the family home in order to avail of the relief. This, it is contended, is clear evidence that Sean Lynn was not acting of his own free will.
240. It is further submitted that undue influence can be inferred from Mrs. Lynn’s evidence as to what Sean said to her about Padraig; the note in Dr. D’Alton’s records that Sean and Padraig had a difficult relationship; the evidence of Messrs. Killeen, Walsh and Drew; the attendances of Mr. Linehan and the sworn information lodged by Olive in her application for a safety order.
241. Padraig is described in counsel’s submissions as “a powerful and threatening personality” in contrast to the “vulnerable” Sean.
Submissions on behalf of the defendant
242. On behalf of Ms. O’Hara Lynn it is submitted, in reliance on Provincial Bank of Ireland v McKeever [1941] I.R. 471, that the presumption of undue influence can be rebutted by evidence that the donor took independent advice or that the transaction was the free exercise of the donor’s will. Both of these matters are said to be established, as is the absence of any mental infirmity on the part of Sean and Bridget Lynn. It is argued that the plaintiff’s case here must fall with the rebuttal of the presumption since there is no evidence of actual undue influence or duress.
243. The defendant lays emphasis on the evidence of the proposed bequests of farmland to Padraig by both Sean and Bridget Lynn, both before and after the transfer, in the context of other transfers and bequests to his siblings.
244. In so far as the law on unconscionable or improvident transactions is concerned, the defendant refers to the following passage from Professor Delany’s Equity and the Law of Trusts in Ireland (4th ed., 2007), as approved by Laffoy J. in Keating v. Keating [2009] IEHC 405:
“A transaction may be set aside in equity where one party is at a serious disadvantage by reason of poverty, ignorance or some other factor such as old age, so that unfair advantage may be taken of that party. Equity will intervene particularly where a transfer of property is made for no consideration at all or at an undervalue and where the transferor acts without the benefit of independent legal advice.”
245. It is submitted that these considerations have no application in the instant case. It is argued that events after the death of Padraig do not support the plaintiff’s contention that the transfer was improvident. If she has received no income from Ms. O’Hara Lynn, it is because the lands are being farmed by the plaintiffs.
The authorities
246. The Supreme Court decision in Carroll v. Carroll [1999] 4 I.R. 241 concerned the transfer of a public house, together with residential accommodation, by an elderly widower to his son. The property was in practical terms the father’s only asset. On his expressed instructions a right of residence was reserved for himself but no right of maintenance and support. The solicitor who drafted the transfer was engaged and paid by the son, and the file was in the son’s name. He met with the father twice, for a total of about thirty minutes, and kept no record of the discussion. He did not enquire as to whether the father had any other assets, or whether there were other children – there were two daughters, who had been assured by their father at all times that they would have a home in the premises. All of the solicitor’s correspondence was directed to the son.
247. In upholding the finding of the High Court that the presumption of undue influence had not been rebutted, Denham J. referred to the two categories of “undue influence” cases described in the passage from Allcard v. Skinner quoted above at paragraph 237. On the facts of the case, the Court was dealing with the second category, and the onus therefore lay on the donee to establish that the gift resulted from the free exercise of the donor’s will. Citing Delany on Equity and the Law of Trusts in Ireland, Denham J. said that rebuttal of the presumption involved two main issues:- whether independent legal advice had been received and whether it could be shown that the decision to make the gift was “a spontaneous and independent act” or that the donor “acted of his own free will”.
248. Having regard to the evidence, the Court considered that the solicitor was not in a position to advise the father appropriately in the absence of any information as to the lack of other assets and the father’s other children. The Court also considered that the absence of evidence that the document was read over to the father before he signed it was an important matter. The fact that the undisputed evidence was that the father was a mentally alert man did not determine the issue.
249. The Court emphasised that it was not deciding that the son had taken advantage of his position, or had carried out specific acts of undue influence, but rather that he had not taken “assiduous care” to avoid taking advantage. In the circumstances the presumption was not rebutted.
250. The Court also upheld the trial judge’s finding that the transaction was improvident. The father, in a frail state of health, had disposed of practically his only asset without retaining a right of maintenance or support. In all the circumstances, it was clear that he was an unequal party and the equitable jurisdiction of the Court to set aside the transaction was properly invoked.
251. In Prendergast v. Joyce [2009] IEHC 199, a 70-year old woman who was found by the court to have been “very frail, depressed and severely anxious”, as well as suffering from poor concentration and memory, opened a joint account with her nephew a few days after the death of her husband. She subsequently transferred significant amounts of money, which had previously been held in an account with her husband, into the account.
252. In applying the principles discussed in Carroll v. Carroll and finding that a presumption of undue influence arose, Gilligan J. rejected a submission that there would first have to be evidence that the transactions were in themselves wrongful and explicable only on the basis of undue influence. There was no requirement of improper behaviour on the part of the beneficiary. He also found that the advice given to the donor by the bank manager did not suffice to rebut the presumption, saying (at p.541):
“It should be noted that the focus in this regard is on ensuring that the particular donor fully appreciates the quality of the transaction. This means that greater care must be taken to ensure that persons who are particularly susceptible to exploitation, such as those who are aged, or suffer from ill health, or are vulnerable , genuinely understand the nature and effect of the transactions into which they enter, particularly when those transactions are of substantial value. The advice must also be such as a competent advisor would give if acting solely in the interests of the donor. In my view a person in such a position vis-à-vis [the aunt] would of necessity have cautioned her about the gravity of what she was doing. The evidence does not establish that this was done in the present case …I am not satisfied on the evidence that [she] received adequate independent expert advice to give her a full appreciation of what she was doing at the time she gave effect to the transfer.”
253. In considering whether the transaction was, additionally, improvident, Gilligan J. quoted the criteria set out in Hanbury & Martin on Modern Equity, referred to by Shanley J. in the High Court in Carroll v. Carroll.
254. Gilligan J. further held, referring to Noonan v. O’Connell (Unrep., High Court, Lynch J., 10th April 1987), that the jurisdiction to set aside an improvident transaction covered gifts as well as transactions for value. There was no requirement of proof of any element of moral turpitude on the part of the donee.
Discussion and conclusions
255. In the first instance it must be noted that the plaintiff has not, in reality, offered any evidence to support the plea of duress or made submissions in relation thereto. The case therefore turns on the issues of undue influence and, perhaps to a greater extent, improvidence.
256. The first question in relation to an allegation of undue influence is whether the evidence can give rise to a finding that undue influence was in fact used to bring about the transfer, or whether the case can be categorised as one giving rise to a presumption of undue influence by reason of the relationship between Padraig Lynn and his parents.
257. I am satisfied that there is no adequate evidence to support the contention that the transfer was actually brought about by the exercise of undue influence by Padraig. The allegation that he told his father that his marriage would break down, or that he would harm himself or them unless the land was transferred to him appears, in my view, to be based on a conflation of the time of the transfer – November 2008 – with the difficulties that Padraig began to experience with increasing intensity from late 2010 onwards. Although Padraig had sought treatment for depressive symptoms in 2005, there is nothing to contradict the evidence of his wife Olive that 2008, with their marriage in August of that year, was one of the happiest years of their lives. I accept that it is possible or even likely that Padraig told his parents about the significance, in terms of tax liabilities, of his 35th birthday but that in itself could not amount to undue influence.
258. I do accept, on the evidence, that the case is one giving rise to a presumption of undue influence and that the onus is therefore on the defendant to establish that the gift to Padraig (and the consent to that gift on the part of Bridget Lynn) involved the free exercise of the will of his parents. This is because of the close relationship between parent and child which, in this case, involved Padraig taking a primary role amongst his siblings in caring for his mother. (I note here that he was not, officially, her carer until a considerable time after the transfer.)
259. The first question then is as to the advice received by Sean and Bridget before the transfer was carried out.
260. The plaintiff’s case is that she knew nothing of the proposal until a few days before she signed the documents, that she was never advised by Mr. Stephens and was given only skimpy advice by Mr. Crowley and Mr. Kiernan without being given a chance to talk to them alone or to consider the documents.
261. It was not put to either Mr. Stephens or Mr. Crowley, or indeed Ms. Battle, that they had fabricated their evidence (including notes of meetings and the office records) with regard to Bridget Lynn’s contact with their offices or her presence at and participation in the meetings they describe. The only possible explanations for the conflict of evidence between her and them seem to be that there was fabrication, that Mrs. Lynn has forgotten the meetings or that she has fabricated a significant part of her evidence.
262. I do not accept her evidence in this regard. Mrs. Lynn, despite her age and undoubted health problems, is a clear-minded lady who has the respect of the professionals with whom she dealt and whose mental acuity is not doubted by her medical advisors. Her testimony did not leave the court in any doubt as to her understanding of the issues involved in the transfer – she was able, without difficulty to say what each of the documents meant. In my view she said that she could not remember things when faced with evidence that contradicted her position. It seems to me to be clear that she was fully involved in consulting both the accountant and the solicitor, and in agreeing with her husband on the course of action to be taken.
263. The advice given by both of these professionals seems to me to have been appropriate to the circumstances. It seems to me that in relation to this aspect the facts of the case could hardly be further from those of Carroll v. Carroll.
264. Mr. Stephens had been acting for Sean Lynn for years. His evidence, supported by his notes, makes it clear that he concerned himself with the consequences of the transfer in terms of loss of income, and that he was informed as to the other assets owned by the Lynns. The establishment of the partnership between Sean and Padraig, discussed with Mr. Stephens before the transfer and in fact implemented afterwards, was a further reason to suppose that the Lynns would continue to have an income from the farm. It is fair to point out that the discussion about other assets was to an extent extraneous to the taxation matters upon which the Lynns had sought his advice, and is an indication that Mr. Stephens performed his role as professional advisor in a responsible manner. It is also fair to point out that no issue has been taken with his advice on the tax issues.
265. Mr. Crowley’s evidence, similarly, leads the court to accept that he applied his mind to and gave advice on the relevant aspects of the transaction. He went through the assets owned by the Lynns and inquired about the provision being made or to be made for the other children. His evidence that he took matters into his own hands in including the right to maintenance and support is unchallenged, and I accept that he did so in order to protect Sean and Bridget against the unexpected. Although he regarded Padraig as being one of his clients in the matter (which I note would not be acceptable under current guidelines), I accept his evidence that Padraig did not in any way play a leading role, only came to the office when requested and was not present when Mr. Crowley was advising his parents. It has to be remembered that Mr. Crowley had known both Sean and Bridget for many years and I accept that he would have been aware of any hesitancy or reluctance on their part. It is quite obvious that Mrs. Lynn felt free to ring his office when she wished and could have spoken to him about any concerns. I do not accept the suggestion that Sean Lynn rang the office and said that his wife did not wish to proceed -I can see no reason why Mr. Crowley would not have followed up on such information.
266. It is true that Mr. Kiernan’s meeting with the Lynns did not cover as much ground, and significantly he did not inquire as to the other assets available to the Lynns. Had the evidence been that this was the only occasion upon which they received advice, and if in fact they had not had other assets, this alone might lead to the conclusion that the presumption had not been rebutted. However, in the light of the fact that this had already been discussed in detail by Mr. Stephens and Mr. Crowley, I do not think that such weight can be attached to the omission by Mr. Kiernan to deal with the issue.
267. In the circumstances it is clear that the Lynns received advice that was independent of Padraig. The fact that Mr. Crowley considered that he was also obliged to act in Padraig’s interests does not, on the evidence, obviate the fact that he gave appropriate advice on all relevant matters. There is nothing to indicate that at any stage he neglected his duty to the Lynns in order to further Padraig’s interests. It is true that no one appears to have considered the possibility that Padraig would predecease his parents. However, I am not convinced that a solicitor is obliged to look beyond the material wellbeing of his clients, and to ensure that they have no objection to a spouse of a son or daughter inheriting what they give to that son or daughter.
268. I am equally satisfied that the transfer was the result of the exercise of the free will of Sean and Bridget Lynn. It must be borne in mind that Sean had been planning for many years to leave the property to Padraig, subject to a right of residence for Bridget. There can be little doubt but that she was aware of this. Her evidence, at this stage, that Padraig was never really a farmer is contradicted, not only by his qualifications, but by her own intentions in years gone by to leave him farmland if she survived Sean. The evidence of Mr. Stephens, that he was consulted with a view to the tax implications of the transfer, demonstrates that in executing the transfer they were conscious of the stamp duty relief and the fact that there would be no other tax liability.
269. The fact that the partnership between Sean and Padraig was established immediately after the transfer also points to careful planning on the part of the former. Sean put in more money and money’s worth into the farm business – he also drew out more, and was entitled to more from the closing balance at Padraig’s death. There is nothing here to indicate that his will had been in any way overborne by Padraig.
270. The ultimate result was that Padraig received, during his parents’ lifetime, what had for a long time been intended to give him after Sean’s death. As things have turned out, Mrs. Lynn is now in the same position, in material terms, that she would have been had Padraig survived Sean.
271. The contention that the transfer amounted to an improvident transaction is also not borne out by the evidence. I cannot see that any of the potential criteria have been met. This was not a situation involving ignorance, poverty or other vulnerability such as might create a situation of inequality. The fact that a valuable asset was involved cannot be decisive since, again, it is clear that the Lynns owned a significant amount of other assets and that their advisors satisfied themselves that they would be left with an income.
272. The point has been made that tax considerations had no bearing on the decision to transfer the family home, and that this was not only unnecessary but a feature that increased Mrs. Lynn’s family home. It may well be that a transfer of the farmland without the house could have been effected, but it appears from the evidence of Mrs. Lynn’s valuer Mr. Farrelly that there would always have been a difficulty in respect of the farmyard and the right of way to the sheep dip if the property were to be divided. Bearing in mind that that the transfer was supposed to leave Padraig free to charge the property, this would be a material consideration.
273. Mrs. Lynn has said that after the transfer she and Sean had no income from the farm. Having regard to the partnership accounts that does not appear to be accurate. She has also said that she has been left with no income other than the widow’s pension. I am not clear as to why that should be. In the first place, she inherited the entirety of Sean’s estate and I am quite sure that she knows the value of that even if she is reluctant to state its extent. There has been no evidence as to what assets Sean might have owned apart from land. It will be recalled that Mr. Stephens’s notes made reference to Sean’s pension but there has been no evidence as to what became of that. It also appears from Mrs. Lynn’s testamentary documents that she has or had assets of her own.
274. Finally, there is the fact that Ms. O’Hara Lynn is on record as stating, well before the litigation commenced, that if the farm entitlements were put in her name she would pay them over to Mrs. Lynn by way of maintenance and support. If that had been done, it is difficult to see how the transaction could be described as improvident. However, what happened was that after Padraig’s death, the herd number was taken over by Sean. Subsequently, some person has been farming the land. It is clearly not Ms. O’Hara Lynn. I find it unlikely that Mrs. Lynn does not know who it is. The observations made by the valuers and by the agricultural advisor as to the presence of sheep, coupled with evidence of open gates leading onto Michael Lynn’s land, point in one obvious direction.
275. Michael Lynn was manifestly involved in the instructions to Sean Lynn’s solicitor and in the finding of witnesses. He has also been the subject of evidence, particularly in relation to what was said to Olive after Padraig’s death, and of comment on the part of the defence. He was in court, if the comments from the defendant’s counsel were correct, throughout the hearing. However, he has not given evidence. The court does not draw any direct inference from this but simply records the fact that these matters went unchallenged.
276. I therefore cannot see that the defendant is to blame if Mrs. Lynn has not been given any of the income from the farm.
277. In the circumstances I find that the allegations of duress, undue influence and improvidence have not been made out. I will dismiss both claims.
United Dominions Trust (Ireland) Ltd. v. Shannon Caravans Ltd
[1976] IESC 2; [1976] IR
Supreme Court
Griffin J
The contract between the plaintiffs and the defendants was for the sale by the defendants to the plaintiffs of the caravan in question for the sum of £3,330 which was duly paid by the plaintiffs to the defendants. Section 12 of the Sale of Goods Act, 1893, provides that in a contract of sale, unless the circumstances of the contract are such as to show a different intention, there is an implied condition on the part of the seller that, in the case of a sale, he has a right to sell the goods, and that, in the case of an agreement to sell, he will have a right to sell the goods at the time when the property is to pass. At no time had the defendants any property in or the right to sell this caravan. It was never the intention of Shannon Foods or the defendants that the property in the caravan should pass to the defendants and from the defendants to the plaintiffs, and no property in the goods passed or was capable of passing from the defendants to the plaintiffs.
In these circumstances. can it be said that there was not a total failure of consideration and that the benefit obtained by the plaintiffs from the hire to Shannon Foods prevents the failure from being total?
This question is well covered by authority; the case most frequently cited in relation to failure of consideration in the sale of goods is Rowland v. Divall [1923] 2 KB 500. In that case, the plaintiff bought a motor car from the defendant and used it for several months. It then appeared that the defendant had no title to it as it had been stolen by the person from whom the defendant acquired it. The police took possession of the car from the plaintiff, who then brought an action against the defendant to recover, as money paid on a consideration which had totally failed, the price paid for the car. Lord Justice Atkin said at p.506 of the report: — “It seems to me that in this case there has been a total failure of consideration, that is to say that the buyer has not got any part of that for which he paid the purchase money. He paid the money in order that he might get the property, and he has not got it. It is true that the seller delivered to him the de facto possession, but the seller had not got the right to possession and consequently could not give it to the buyer … there can be no sale at all of goods which the seller has no right to sell. The whole object of a sale is to transfer property from one person to another … can it make any difference that the buyer had used the car before he found out that there was a breach of the condition? To my mind it makes no difference at all. The buyer accepted the car on the representation of the seller that he had a right to sell it, and inasmuch as the seller had no such right he is not entitled to say that the buyer has enjoyed a benefit under the contract. In fact the buyer has not received any part of that which he contracted to receive — namely, the property and right to possession — and, that being so, there has been a total failure of consideration.”
In the present case, the plaintiffs were purchasing the caravan so as to enable them, as owners, to enter into a hire-purchase agreement with Shannon Foods. As the defendants had no right to sell the caravan, there was a total failure of consideration for they completely failed to give what they contracted to give, i.e., the ownership of the caravan. The fact that an incidental benefit has come to the hands of the plaintiffs under the purported hire-purchase agreement is irrelevant, and the plaintiffs are entitled to recover the purchase money paid to the defendants. Therefore, the plaintiffs would be entitled to recover the entire of the £3,330 paid by them to the defendants. In the High Court the learned trial judge gave judgment for the sum of £2,383, being the sum of £3,330 claimed less the £917 received by them by way of instalments paid by Shannon Foods. This deduction of £917 is not justified as the defendants are not entitled to credit for the sums paid by Shannon Foods under the purported hire-purchase agreement. I would dismiss this appeal and vary the amount of the judgment to £3,330. In doing so, I would point out that this case does not call for any ruling as to the rights of the plaintiffs and Shannon Foods following on the collapse of the purported hire-purchase agreement and after the plaintiffs had been paid £917.60 in instalments on foot of that purported agreement.
Mallett & Son (Antiques) Ltd -v- Rogers
[2005] IEHC 131 [2005] 2 ILRM 471
Quirke J
DECISION
The basic rule as to the transfer of title to personal property is that no one can give a better title than his own; he can give possession but not a title which is not vested in him. That is the doctrine “nemo dat quod non habet”.
Section 12 of the Sale of Goods Act, 1893 (as amended by s. 10 of the Sale of Goods and Supply of Services Act, 1980) provides inter alia as follows:
(1) In every contract of sale, other than one to which subs. (2) applies, there is
(a) an implied condition on the part of the seller that, in the case of a sale, he has a right to sell the goods and, in the case of an agreement to sell, he will have a right to sell the goods at a time when the property is to pass,
(b) an implied warranty that the goods are free, and will remain free until the time when the property is to pass, of any charge or encumbrance not disclosed by the buyer before the contract is made and that the buyer will enjoy quite possession of the goods except insofar as it may be disturbed by the owner or other person entitled to the benefit of any charge or encumbrance so disclosed.”
The Act draws a distinction between an agreement to sell and a sale. Where under a contract of sale the property in the goods is transferred from the seller to the buyer, the contract is called a sale; but where the transfer of the property and the goods is to take place at a future time or subject to some condition to be fulfilled later, the contract is called an agreement to sell. An agreement to sell becomes a sale when the time elapses and the conditions (subject to which the property in the goods is to be transferred) are fulfilled.
Where there is an agreement to sell the property remains with the seller until some act or event completes the sale and causes the property to pass.
In the instant case the defendant entered into an agreement with Mr. Synge whereby he agreed to sell a bookcase to the plaintiff. The sale was to be completed when the defendant delivered the bookcase to the plaintiff and the latter paid the sum of STG£80,000 to the defendant.
On 30th January, 2000, the defendant delivered the bookcase to the plaintiff and on 3rd February, 2000, the plaintiff paid to the defendant the sum of STG £80,000 in purported completion of the contract for sale.
However, on 3rd February, 2000, the defendant did not have a right to sell the bookcase to the plaintiff because he did not own the bookcase. It was the property of Lord Roden. It had been stolen from Lord Roden. The defendant had no title to the bookcase. Therefore no title to or property in the bookcase passed from the defendant to the plaintiff. There was an agreement for sale but the sale was not completed.
The consideration for the sale was the title to the bookcase (in return for the sum of STG80,000).The title to the bookcase never passed from the defendant to the plaintiff. The consideration for the sale failed wholly and the plaintiff is entitled to the return of the sum of STG£80,000.
The contract for the sale by the defendant to the plaintiff of the bookcase was a contract for sale to which s. 12(1) of the 1893 Act (as amended) applied.
It was therefore subject to an implied condition on the part of the defendant that the defendant had the right to sell the bookcase at the time when the property in the bookcase was intended to pass from the defendant to the plaintiff.
Mr. Ralston argues that Mr. Synge knew or ought to have known from the circumstances of the transaction that the defendant had not yet acquired the bookcase at the time when the plaintiff agreed to purchase the bookcase from the defendant.
He appears to be relying upon the provisions of subs. (2) of s. 12 of the Sale of Goods Act, 1893 (as amended) which provides as follows:
“In a contract of sale, in the case of which there appears from the contract or is to be inferred from the circumstances of the contract an intention that the seller shall transfer only such title as he or a third party may have, that is,
(a) an implied warranty that all charges or encumbrances known to the seller shall have been disclosed to the buyer before a contract is made,…”.
This sub-section is concerned with the intention of the parties at the time of the contract for sale.
On the evidence adduced in these proceedings it has been unequivocally established that, at the time of the contract for sale it was the intention of the defendant to pass good title to the bookcase to the plaintiff for STG£80,000 and the intention of the latter to purchase it from the defendant on that basis. The evidence also disclosed that it was the intention of the defendant to purchase the bookcase from Messrs. Eacrett and Daly on the same basis.
No evidence has been adduced which would suggest that at the time of the contract for sale it was the intention of the defendant to “transfer only such title as he or a third party may have” in the bookcase to the plaintiff. Nor can it be inferred from the circumstances of the contract that such was the intention of either of the parties.
I believe Mr. Ralston’s reliance upon the decision of the High Court (Henchy J.) in Anderson v. Ryan [1967] I.R. 34 is misplaced.
In that case a Mr. Davis agreed to purchase a Sprite Motorcar. He paid for it by exchanging his own motorcar (a Mini) for the Sprite.
At the time of that transaction the person who purported to sell the Sprite fraudulently misrepresented that he had title to the vehicle. In fact it had been stolen.
The court was required to deal with a subsequent dispute as to the ownership of the Mini. Henchy. J. observed (at p. 38) that:
“Therefore, the central question which decides the points raised under both s. 12 and s. 30 and s. 21 is; ‘did the defendant have a good title to the car when he sold and delivered it to the plaintiff?’ To decide this question one must go back to the circumstances under which the original owner, Mr. Davis, parted with the possession of the car. As I have said, he exchanged it for the Sprite. The inducement for him to do so was not alone the desirability to him of the exchange but also the representation by the other party that the Sprite was his property. That was a false and fraudulent representation as to an existing fact. The contract of exchange was, therefore, a voidable contract. Since Mr. Davis intended to pass the ownership of the Mini, the person who got the car in exchange acquired a title to it, but it was a voidable title, that is, voidable at the option of Mr. Davis. It would have been different if Mr. Davis had parted with the Mini as a result of larceny by a trick, for then no title would have passed…there is no evidence that there was any immediate sale of the Mini between the fraudulent exchange and the sale to the defendant. In fact, all the likelihood is that the car was sold to the defendant by or on behalf of the person who effected the fraudulent exchange. One looks then to see what title, if any, such person conveyed to the defendant. The answer is to be found in s. 23 of the Act, which is as follows:
‘ When the seller of goods has a voidable title thereto, but his title has not been avoided at the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith and without notice of the seller’s defect of title.’ It is clear from the evidence that Mr. Davis had not avoided the title of the person who sold the car to the defendant at the time of that sale, and it has not been suggested that the defendant bought otherwise than in good faith and without notice of the sellers defect of title.”
The position in the instant case is wholly different. In this case Messrs. Eacrett and Daly did not have a voidable title to the bookcase. They had no title to it. The defendant, accordingly, never had any title to the bookcase. At all times material to this case the title to the bookcase was vested in the estate of Lord Roden.
It follows that the plaintiff is entitled to repayment of the sum of STG£80,000. being monies paid to the defendant upon a consideration which has wholly failed.
It has been fairly and candidly acknowledged on behalf of the defendant that at the time when he agreed to sell the bookcase to the plaintiff the defendant knew that the express purpose for which the plaintiff required the bookcase was to carry out expensive restoration work upon the bookcase in order to put it on view and to sell it.
It has also been acknowledged that the plaintiff spent the sum of STG£31,533.00 on the restoration of the bookcase and that this expenditure was reasonable in the circumstances.
The bookcase has now been returned to its owner and the plaintiff is at a loss of STG£31,533.00.
It had not been disputed on behalf of the defendants that this loss has been a direct consequence of the defendant’s (albeit unwitting) breach of contract.
Prima facie the plaintiff is entitled to recover damages from the defendant in respect of any loss or damage which it has sustained as a result of the defendant’s breach of contract. This is so provided that such losses would reasonably have been within the contemplation of both parties at the time when they made the agreement.
At that time both parties knew, or ought to have known that if the contract failed then any sums expended by the plaintiffs towards restoring the bookcase would be lost. The plaintiff’s financial loss of STG£31,533.00 has flowed directly from the failure of the contract and, prima facie, it is entitled to recover its loss by way of damages from the defendant (See Hadley v. Baxendale [1854] 9 EX 341 and Mason v. Burnighan [1949] 2 K.B. 545).
It has been argued on behalf of the defendant that the loss sustained by the plaintiff in restoring the bookcase was caused or contributed to by the plaintiff’s negligence in failing to check the authenticity of the bookcase before its purchase or before it had been fully restored.
Having considered the evidence of Mr. Synge and in particular the evidence of Mr. Julian Radcliffe who is the proprietor of the Art Loss Register I am satisfied that in January 2000 it was not the practice of reputable dealers in antique furniture and paintings to consult the Art Loss Register before purchasing furniture.
Mr. Fintan Daly had taken the bookcase to Messrs Sotheby’s for the purpose of valuation on the 9th December, 1999. The bookcase was valued by Sotheby’s which is an internationally renowned firm which specialises in the sale and purchase of fine art and furniture.
Messrs Sotheby’s offered to take the bookcase to London and put it up for sale there. Their letter containing this offer did not suggest that an authenticity check should be carried out in respect of the bookcase.
This is by no means conclusive as to practice in 1999 (since Sotheby’s were merely conducting a valuation on the bookcase). However it tends to support the testimony of Mr. Synge and Mr. Radcliffe as to the practice at that time and at the beginning of 2000 and it is that testimony which I accept on that issue.
In the circumstances then I am not satisfied that the defendant has discharged the onus which rests upon him to show that the plaintiff has been guilty of negligence of the kind which would have caused or contributed to its losses.
It follows therefore that the plaintiff is entitled to recover the sum of STG£31,533.00 by way of damages from the defendant.
The plaintiff has also claimed interest arising out of the failure of the defendant to make good the plaintiffs losses between the date when the plaintiff first claimed damages and the date of trial.
The award of interest in these circumstances is discretionary and I do not in the circumstances of this case consider that it should be an appropriate exercise of the court’s discretion to direct payment of interest.
There must therefore be judgment for the plaintiff in the sum of STG£111,533.00.
Anderson v. Ryan.
[1967] IR 34
Henchy J. 35
HENCHY J. :
In the month of January, 1965, an advertisement appeared in a Dublin evening paper for the sale of an Austin-Healey (Sprite) motor-car. A Mr. Edwin Davis saw it and, being interested in cars, he telephoned a number indicated in the advertisement. As a result, two men called to his house with the Sprite. It happened that Mr. Davis had an Austin (Mini) motor-car. The two men seemed to take a fancy to the Mini, as Mr. Davis did to the Sprite, and the upshot of the negotiations was that it was agreed to exchange the Mini for the Sprite. The two men left with the Mini and Mr. Davis found himself with the Sprite. No money had passed; it was a straight swop. The unfortunate part of the transaction was that, unknown to Mr. Davis, the Sprite was a car that had been stolen in Northern Ireland. Within a week detectives descended upon him and took it away. Later a man pleaded guilty in the Dublin Circuit Court to fraudulently obtaining the Mini from Mr. Davis by falsely pretending that he was the owner of the Sprite. Mr. Davis eventually recovered the Mini and has since sold it.
In the meantime, someone approached the defendant in this action, who carries on business as a panel-beater in Cork Street, Dublin, and indicated that he was prepared to sell the defendant a Mini for £200. It was, in fact, the Mini belonging to Mr. Davis. The defendant was interested in the purchase but was not prepared to go through with it until he had obtained a purchaser to whom he could sell the car at a profit. The plaintiff, who is a garage owner in Bray, turned out to be such a person. He visited the defendant’s premises, where the Mini happened to be, inspected the car, and agreed to buy it for £225 plus £22 for panel repairs to it, which the defendant agreed to do. The plaintiff, having made enquiries which
showed that the car was not subject to a hire-purchase agreement, there and then, on the 15th January, 1965, made out a cheque in favour of the defendant for the sum of £244 10s. 0d. to cover the £225 for the Mini and also to cover an account that the plaintiff owed to the defendant for panel beating which had been previously done for the plaintiff by the defendant. The defendant lodged the cheque to his account on the following day. My impression from the evidence is that the defendant had no title to the Mini when that deal was made. But, later, on the same evening as he got the cheque from the plaintiff, the defendant gave a cheque for £200 for the car to someone who purported to be, but was not, Mr. Davis. The defendant proceeded to do the panel beating which he had arranged with the plaintiff to do.
A few days later the plaintiff called to the defendant’s premises, paid the defendant the sum of £22 for the further panel beating, collected the registration book (which showed Mr. Davis to be the owner) and took the Mini away. He then placed it on display in the forecourt of his garage in Bray as a second-hand car for sale. Once again the arm of the law reached out. Two detectives called and said that the Mini was the subject matter of criminal proceedings. They told the plaintiff that he would have to allow them to take it away and that if he did not give it to them they would return with a warrant. He let them take it away. That is the last he saw of the car or his £247. The plaintiff recovered judgment in the Circuit Court against the defendant for the sum of £247, and the defendant has appealed against that judgment.
The plaintiff rests his case on ss. 12 and 21 of the Sale of Goods Act, 1893. In support of his contention that he is entitled to recover the £247 as money paid upon a consideration that has wholly failed, he relies upon sub-s. 1 of s. 21 which is as follows:”Subject to the provisions of this Act, where goods are sold by a person who is not the owner thereof, and who does not sell them under the authority or with the consent of the owner, the buyer acquires no better title to the goods than the seller had, unless the owner of the goods is by his conduct precluded from denying the seller’s authority to sell.”
In the present case, it is clear that, if the defendant was not the owner of the Mini at the time he sold it to the plaintiff, the plaintiff got nothing for his money and he would be entitled to recover the £247 as money paid upon a consideration that had wholly failed. Counsel for the plaintiff says that the car was sold on the 15th January, 1965, when the plaintiff inspected it, agreed on the price and gave a cheque for £244 10s. 0d.; and that the defendant then had no title.
In my view, the flaw in that argument is that it confuses an agreement to sell with a sale. The distinction is made clear in s. 1 of the Act of 1893, which is in the following terms:”(1) A contract of sale of goods is a contract whereby the seller transfers or agrees to transfer the property in goods to the buyer for a money consideration, called the price. There may be a contract of sale between one part owner and another. (2) A contract of sale may be absolute or conditional. (3) Where under a contract of sale the property in the goods is transferred from the seller to the buyer the contract is called a sale; but where the transfer of the property in the goods is to take place at a future time or subject to some condition thereafter to be fulfilled the contract is called an agreement to sell. (4) An agreement to sell becomes a sale when the time elapses or the conditions are fulfilled subject to which the property in the goods is to be transferred.”
The transaction between the plaintiff and the defendant on the 15th January, 1965, was no more than an agreement to sell. The property in the car did not pass. It was plainly the intention of the parties that the property would not pass until the panel beating had been done by the defendant and the balance of £22 had been paid; until that had happened the agreement to sell would not have merged into a sale. Sect. 21, sub-s. 1, has reference only to a case “where goods are sold,” i.e. where there has been a sale of goods. It matters not for the purposes of the sub-section if the seller is not the owner at the time of the agreement to sell. He may mend his hand between then and the sale. But if at the time of the sale (i.e. when the property passes or is due to pass) the seller is neither the owner nor a person selling under the authority or with the consent of the owner, and in fact has no title whatsoever, the buyer would be entitled to claim the purchase money back on the ground that he has paid it on a consideration that has totally failed, subject to the proviso that the owner may be estopped by his conduct from denying the seller’s authority to sell. Sect. 21, sub-s. 1, is applicable in the present case only if I hold that the defendant had no title to transfer ownership when he handed over the car.
The plaintiff also rests his case on s. 12 of the Act to the extent that it provides that in a contract of sale, unless the circumstances of the contract are such as to show a different intention, there is (a) an implied condition on the part of the seller that, in the case of a sale, he has a right to sell the goods, and that, in the case of an agreement to sell, he will have a right to sell the goods at the time when the property is to pass, and (b) an implied warranty that the buyer shall have and enjoy quiet possession of the goods. The circumstances of this case do not show a contrary intention, so the plaintiff would be entitled to damages for breach of an implied warranty if he shows that the true legal position is that, when the car was handed over to him, he did not get the property in it together with the ancillary right of quiet possession.
Therefore, the central question which decides the points raised under both s. 12 and 8. 21 is:”Did the defendant have a good title to the car when he sold and delivered it to the plaintiff?” To decide this question one must go back to the circumstances under which the original owner, Mr. Davis, parted with possession of the car. As I have said, he exchanged it for the Sprite. The inducement for him to do so was not alone the desirability to him of the exchange but also the representation by the other party that the Sprite was his property. That was a false and fraudulent representation as to an existing fact. The contract of exchange was, therefore, a voidable contract. Since Mr. Davis intended to pass the ownership of the Mini, the person who got the car in exchange acquired a title to it, but it was a voidable title, that is, voidable at the option of Mr. Davis. It would have been different if Mr. Davis had parted with the Mini as a result of larceny by a trick, for then no title would have passed. Authority for the conclusion that what passed on the exchange was a voidable title is to be found in Cundy v. Lindsay (1); Robin & Rambler Coaches, Ltd. v. Turner (2); Central Newbury Car Auctions Limited v. Unity Finance Ltd. (3) and Archbold on Criminal Pleading (36th ed.) para. 1497.
There is no evidence that there was any intermediate sale of the Mini between the fraudulent exchange and the sale to the defendant. In fact, all the likelihood is that the car was sold to the defendant by or on behalf of the person who effected the fraudulent exchange. One looks then to see what title, if any, such person conveyed to the defendant. The answer is to be found in s. 23 of the Act, which is as follows:”When the seller of goods has a voidable title thereto, but his title has not been avoided at the time of the sale, the buyer acquires a good title to the goods, provided he buys them in good faith and without notice of the seller’s defect of title.” It is clear from the evidence that Mr. Davis had not avoided the title of the person who sold the car to the defendant at the time of that sale, and it has not been suggested that the defendant bought otherwise than in good faith and without notice of the seller’s defect of title.
I am satisfied, therefore, that the defendant acquired a good title to the car and that he in turn passed a good title to the plaintiff. It is unfortunate that the plaintiff has been deprived of a car of which he was the rightful owner, but the fault for that does not lie with the defendant. As the plaintiff may wish to recoup his loss in other proceedings, I express no view on the legal interpretation to be put on the events that led to him being permanently deprived of a car that was lawfully his. I go no further than saying that no liability attaches to the defendant for the plaintiff’s loss and that the plaintiff’s claim must be dismissed. The order of the Circuit Court will be reversed.
McFarlane v McFarlane
[1972] NI 139 (Court Of Appeal)
The facts are set out in Lord McDermott LCJ’s judgment.
Lord MacDermott LCJ: This appeal, by way of case stated, concerns the beneficial interest in two properties, namely, the dwelling-house and yard known as 6/8 Cliftonpark Avenue, Belfast, and the dwelling-house known as “St Valentines”, Church Road, Holywood, Co Down. The facts material to an understanding of the general nature of the dispute respecting these properties may now be stated in outline.
The parties are husband and wife. They married in 1946 and have four children. They separated in 1968 and the wife has since instituted proceedings for divorce. When she married, the wife was principal of a primary school outside Belfast. As such she occupied a free residence. The husband dealt in second-hand cars and carried on this business in the vicinity of the school-house, the school residence having become the first matrimonial home. In 1952 the parties moved to Belfast where there appeared to be more scope for the husband’s activities. This meant the wife had to give up her principalship, but she quickly secured another teaching post in Belfast, though at a reduced salary. Things did not go well at first with the husband’s business. He took a tenancy of 6/8 Cliftonpark Avenue and moved in there with his wife and family. The yard appears to have been used for the car business, but his partner in this business proceeded against him, the partnership was dissolved and the husband was ordered in 1954 to pay £600. He had to borrow to do this and it may therefore be taken that as of that year what remained of his business was in poor shape. About this time the wife got a better post as principal of a school at Crumlin in Co Antrim to which she travelled from 6/8 Cliftonpark Avenue daily. From somewhere about 1955 the husband’s fortunes began to improve and this seems to have been due in large measure to his decision to enter on an insurance broking business. Here the wife played an important and increasing part. After school had ended in the afternoon she would work at this business at home until 10 p m. It is found that she had “a very quick brain and was very good in the business.”
By 1957 the wife’s salary as a teacher had risen to £941 per annum. She used it in meeting the ordinary household expenses including the feeding of the entire family and most of her own and the children’s clothing, thus relieving the husband of much, though not all, of his domestic financial obligations. She spent all she had in this way and if more was needed the husband gave her more. At this time there was only one bank account. This was in the name of the husband and he alone operated it. The wife’s salary as a teacher was not paid into this account, but all monies received from the car and insurance broking businesses were; and all the outgoings (including the husband’s drawings) were met from it. This account was therefore essentially a business account though some other items may have passed through it.
At the end of 1957 the husband persuaded the wife to give up her teaching post at Crumlin and to spend her entire time in the insurance broking business. In return she got a salary, comparable with her teacher’s salary, from that business, and this, it would seem, was expended, as her former salary had been, in meeting the expenses of the household as far as it went.
By March 1958 the insurance broking business had grown to such dimensions that a separate bank account was opened for it, all premiums being paid in and all remittances to insurers being paid thereout. This is referred to in the stated case as the No. 2 account, the earlier account being the No. 1 account which continued to be used in relation to the car business. The No. 2 account was also in the husband’s name.
Shortly after the No. 2 account was opened the parties thought it would be well to purchase 6/8 Cliftonpark Avenue (of which the husband was tenant) and this transaction seems to have been completed in the early summer of 1959 when this property was bought and paid for by two cheques for the total sum of £1,500 drawn on the No. 1 account. It is found that “at the time it was intended by both parties that it (ie 6/8 Cliftonpark Avenue) should continue to be the matrimonial home until a suitable alternative could be acquired.” Later that year, however, an alternative was acquired, namely, “St Valentines” in Holywood. It was bought by the husband for £4,000 which was paid partly out of the No. 1 account and partly out of the No. 2. The parties and their family moved into “St Valentines” in April 1960, and it remained the matrimonial home until the separation in 1968. The assurances of both these properties were taken by the husband in his own name alone. But there can be no doubt that the wife, by keeping down the household expenses and, even more, by the services she rendered in connection with the insurance broking business, had made a substantial, if indirect, contribution to the balances out of which the two properties were purchased. As the case finds “the wife relieved the husband of a considerable financial burden and indirectly increased the amount of money in the bank accounts of the husband or otherwise available to him”.
After the separation, the wife claimed by summons in the county court, under s 17 of the Married Women’s Property Act 1882, a declaration that she was entitled beneficially to a half interest in each of these properties. Section 17, so far as material, reads thus:
“17.In any question between husband and wife as to the title to or possession of property, either party … may apply by summons or otherwise in a summary way to any judge of the High Court of Justice in England or in Ireland, according as such property is in England or Ireland, or (at the option of the applicant irrespectively of the value of the property in dispute) … in Ireland to the chairman of the civil bill court of the division in which either party resides, and the judge of the High Court of Justice … or the chairman of the civil bill court (as the case may be) may make such order with respect to the property in dispute, and as to the costs of and consequent on the application as he thinks fit …”.
The learned county court judge, Judge Brown, QC, delivered a considered judgment in which he referred to two recent decisions of the House of Lords and held, mainly on the opinions therein expressed, that the wife’s claim failed in law and should be dismissed. These decisions are – Pettitt v Pettitt [1970] AC 777 and Gissing v Gissing [1971] AC 886. On appeal the decision of the county court judge was reversed by Gibson J who held that the cases just cited did not preclude the wife’s claim, and found that she was entitled to a beneficial interest in each of the properties, which he measured at a two-fifths share, and that the husband was similarly entitled to the remaining three-fifths share. At the request of the husband he then stated the case dated 19 February 1971 which is now before us and which incorporates the learned judge’s written judgment.
Before Pettitt (the earlier of the cases I have cited) s 17 of the Act of 1882 had been interpreted on occasion as conferring a wide discretionary power which enabled the courts to dispense a kind of palm-tree justice in property disputes between spouses or former spouses, unshackled by the rules of law which had previously obtained in this particular field. This development was to some extent formalised by the emergence of what may be called the “family assets” doctrine which found favour in the English Court of Appeal and is thus described by Lord Denning MR in his judgment in that court in Gissing [1969] 2 Ch 85 at 93:
“We come down to the question: to whom does this house belong? This depends on whether it is a family asset. This principle has been frequently stated. I tried to do it myself in Fribance v Fribance (No 2) [1957] 1 WLR 384 at p 387, but it has been much better done by Diplock LJ in Ulrich v Ulrich and Felton [1968] 1 WLR 180, 189. It comes to this: where a couple, by their joint efforts, get a house and furniture, intending it to be a continuing provision for them for their joint lives, it is the prima facie inference from their conduct that the house and furniture is a ‘family asset’ in which each is entitled to an equal share. It matters not in whose name it stands: or who pays for what: or who goes out to work and who stays at home. If they both contribute to it by their joint efforts, the prima facie inference is that it belongs to them both equally: at any rate, when each makes a financial contribution which is substantial.”
If the present case could have been decided under the “family assets” doctrine the wife might well have succeeded in her claim; for, as I have indicated, her efforts made a substantial, if indirect, contribution to the funds out of which the properties in question were purchased. In my opinion, however, that approach is no longer possible in the light of the opinions expressed in the House of Lords in Pettitt and in Gissing. The facts of those cases, unfortunately, were not such as to facilitate or encourage a comprehensive statement of this vexed branch of the law, and much remains unsettled. But two points were put beyond question. The “family assets” doctrine was definitely rejected. See Pettitt, per Lord Reid at p 795, per Lord Hodson at p 810, and per Lord Upjohn at p 817. And, secondly, s 17 of the Act of 1882 was held to be only a procedural provision which did not empower the court to alter the existing rights of the parties. See per Lord Reid at p 793, per Lord Morris of Borth-y-Gest at pp 798-799, per Lord Hodson at p 808, per Lord Upjohn at p 813, and per Lord Diplock at p 820.
These decisions, as I understand them, have also established or affirmed two rather less negative propositions of law to which I must now refer. The first is that, in the absence of proof to the contrary, a spouse who has acquired the legal title to property purchased with the aid of a substantial monetary contribution from the other spouse will hold the property subject to a beneficial interest therein belonging to the other spouse: see Pettitt, per Lord Reid at p 794B, per Lord Hodson at p 810G, per Lord Upjohn at p 815 G-H; and Gissing per Lord Pearson at p 264G-265B. This may be the result of some binding agreement between the spouses; but more usually it will flow from a resulting trust in favour of the contributing spouse who has not the legal title. The extent of the beneficial interests will depend on the circumstances. They will not necessarily be equal, but may be held so where that conclusion accords with the broad merits of the respective claims or with what is fair and reasonable when there is some difficulty or uncertainty in assessing the contributions: see Rimmer v Rimmer [1953] 1 QB 63.
The second proposition which I take to be now accepted in Pettitt and Gissing must be stated in a qualified form. It is that in certain circumstances the first proposition can also apply in favour of the spouse without the legal title where that spouse has contributed to the purchase, not directly by finding a part of the price, but indirectly and in a manner which has added to the resources out of which the property has been acquired as, for example, by work done or services rendered or by relieving the other spouse of some, at any rate, of his or her financial obligations.
The facts in Pettitt related to improvements in the property concerned after its acquisition, and what I have referred to as the second proposition did not arise for decision. But I think it would be right to say that the general tenor of Lord Reid’s opinion in that case was to make no distinction in principle between the consequences of direct and indirect contributions. To the same effect was the decision of the Court of Appeal in Nixon v Nixon [1969] 1 WLR 1676; and later, in Gissing, Lord Reid, as we shall see, went far in his opinion to assimilate the two types of contribution.
Holding, as I do, that the authorities support the second proposition in the qualified form in which I have stated it, the next step is to ask what is imported by the qualifying words I have used – “in certain circumstances”. It is at this point that the light of precedent gets dim and there arises what I consider to be the main debatable issue of law in this case. It is whether contributions of the kind mentioned in the second proposition (ie indirect contributions) have to be the subject of some agreement or arrangement between the spouses before they can be held to found a claim to a beneficial interest in the property acquired with their aid; or whether, as in the case of direct monetary contributions to the price of what was acquired, a resulting trust in favour of the contributor will follow as a matter of course in the absence of rebutting evidence. On this Lord Reid in Gissing stated his view clearly at p 896F in the following passage:
“As I understand it, the competing view is that, when the wife makes direct contributions to the purchase by paying something either to the vendor or to the building society which is financing the purchase, she gets a beneficial interest in the house although nothing was ever said or agreed about this at the time: but that, when her contributions are only indirect by way of paying sums which the husband would otherwise have had to pay, she gets nothing unless at the time of the acquisition there was some agreement that she should get a share. I can see no good reason for this distinction and I think that in many cases it would be unworkable.”
It seems open to doubt, however, whether that view has gained general acceptance, and Lord Pearson’s opinion in Gissing indicated that some kind of “arrangement” was necessary before one could derive a beneficial interest from indirect contributions. What he said on this will be found at p 903B:
“Contributions are not limited to those made directly in part payment of the price of the property or to those made at the time when the property is conveyed into the name of one of the spouses. For instance there can be a contribution if by arrangement between the spouses one of them by payment of the household expenses enables the other to pay the mortgage instalments.”
The conclusion I have reached on this important and difficult question is that there is a relevant distinction between the two kinds of contribution and that the indirect contribution, if it is to earn a beneficial interest in the property acquired, must be the subject of agreement or arrangement between the spouses. Here I do not refer to a contractual relationship solely, but would include any understanding between the spouses which shows a mutual intention that the indirect contributions of one or the other will go to create a beneficial proprietary interest in the contributor. Such, in my opinion, is the nature of the qualification mentioned in what I have described as the second proposition. I do not think it has, as yet, been ruled upon by the House of Lords My reasons for the view expressed may be enumerated as follows:
(1) The point has to be settled in relation to the institution of marriage rather than in relation to broken marriages and the length of the divorce lists. To choose the latter course would be to found general rules on special situations and to ignore what is perhaps the outstanding feature of normal matrimony, namely, that it depends primarily on a state of mutual trust and co-operative striving rather than on a building-up of legal rights by the individual spouses under the law of the land. So it is, I believe, that most married couples arrive at some informal modus vivendi by which they harness or apply their energies, their talents, their standards and their resources to the common purpose of their joint lives, including of course provision for a home and family. The pattern is not stereotyped. Where a bank account is kept, for example, it will sometimes be in the husband’s name, sometimes in the joint names, occasionally in the wife’s name alone, or it may be that each spouse will maintain a separate account. But, by and large, the common purpose remains dominant, and I think it may be postulated with reasonable certainty that in most cases what either spouse contributes thereto – in work or services or in bearing the cost of household or other expenses – will not be contributed with any thought of building up a beneficial interest in one form of property or another. Such activities are, I believe more often than not, all part of a joint and unselfish adventure; and while that remains the true state of affairs I see no ground on which a court of equity should say to one spouse that he or she has gained by such indirect contributions and must as a matter of fair-dealing share that gain beneficially with the contributor. But circumstances may arise, even in the best regulated marriages, where the spouses agree in thinking it provident and right that some form of wealth to be produced by the indirect contributions of one or other of them should enure and be held for the benefit of the contributor – perhaps against a rainy day or as a reward, or for some other reason. In such event a court of equity would be faced with quite a different situation. It would not then be asked to intrude upon the ordinary collaborative course of married life, but would be asked and entitled to say that the holder of the fund or property in question was bound as a matter of fair-dealing to hold the same or some share thereof on behalf of the contributor. At this point the indirect contribution has become, by virtue of the arrangement or undertaking between the spouses, as much the basis of a resulting trust as a direct contribution in money to the cost of acquiring a particular property.
In stating this reason for the conclusion I have reached I am conscious of the weight that must attach to the views of Lord Reid and the reasoning which led him in this context to equate direct and indirect contributions. I feel, however, that the distinction is too well marked to be disregarded. Money contributions are apt of their very nature to be more formal and deliberate than those that are indirect; and when the doctrine of the resulting trust developed that was probably even more the case than it is to-day. But I cannot accept that that doctrine was ever intended to regulate the usual co-operative efforts of matrimonial life regardless of the intentions of the spouses.
(2) If the indirect contributions of a spouse for family purposes were to be put on an equality with direct contributions in order to ascertain the resulting beneficial proprietary interests, it would amount, in the absence of any agreement or arrangement between the spouses, to an application of the now discredited doctrine of family assets.
(3) Where (as here) the husband carries on a business in which his wife has no proprietary interest as a partner or otherwise, and the husband’s business bank account is under his sole control, the wife’s indirect contributions, though helping to create a credit balance, cannot raise a trust in her favour unless her interest is sufficiently defined and protected by some agreement between the spouses. Without that her contributions may never have any chance of coming back to her in the form of a proprietary right for they may be called upon to meet the needs of the business and, it may be, the demands of its creditors as well. And –
(4) If, as I think, there can be no resulting trust in respect of indirect contributions in the absence of some agreement or arrangement between the spouses, and if, as I would also hold, the family assets doctrine cannot be applied, the only remaining way of upholding an indirect contributor’s claim without any basis of agreement would seem to be to have recourse to some kind of legal fiction, as by imputing an intention or other state of mind which never existed or by implying some stipulation or agreement which was never made. In the past our jurisprudence owed much to legal fictions; but that day has waned and the fiction has fallen into general disuse as a device for finding the answer to modern issues. In London Graving Dock Co Ltd v Horton [1951] AC 737 at 756 Lord Normand observed that “fiction is no longer an acceptable solution for the problems of industrial relationships.” In my opinion the same may be said of proprietary issues between spouses such as that with which we are now concerned.
So much for my reasons for the view stated – that the indirect contributions of a spouse must, if they are to earn or generate a beneficial interest in the fund built up or the property acquired, be the subject of some agreement or arrangement between the spouses sufficient to show a mutual intention that the indirect contributions will benefit the contributor in this way. It remains to consider the result of applying this proposition to the facts and findings of this case. Gibson J had no difficulty in reaching the conclusion that the wife had made a substantial but indirect contribution over the years to the funds out of which the properties in dispute were bought. But he seems to have been of opinion that this was enough to establish a beneficial interest in the wife and his task then became one of measuring what the interest should be.
After a close scrutiny of the stated case and the written judgment of Gibson J I have been unable to discover anything to support the existence of any agreement or arrangement or understanding, such as I have mentioned, between the parties. I can find nothing sufficient to establish even the most informal of understandings from which the necessary intention regarding the wife’s indirect contributions could reasonably be inferred. These indirect contributions helped to create what the learned judge describes as “a surplus pool derived from their joint and several efforts”; and it was from this pool that the properties in question were purchased. But while the surplus was accumulating the indirect contributions of the wife seem to me, on the findings, to have been nothing more than the fruits of her able, energetic and willing collaboration as a spouse. There is no sign that I can discern of her having sought or agreed to some quid pro quo in the nature of a proprietary benefit. During the lean years that would have been very difficult, for she must have realised that her contributions to the business could not stay in her control as they would have to be available to carry it on and to help finance its expansion. Later, as things got easier, there seems to have been no material change of attitude. The spouses were doing well and living in amity and the nature of their collaboration does not appear to have changed significantly. If, then, I am right in the proposition of law I have stated, it would follow that the wife had acquired no beneficial interest in the surplus monies in the bank accounts out of which the properties concerned were purchased.
If the matter ended there my conclusion would therefore be that the wife’s claim failed and that the appeal should be allowed. But the stated case contains further findings relative to the understanding or agreement between the spouses when the properties were purchased in succession, and each as a matrimonial home. These findings raised some difficulty for they are in apparent contradiction. In paragraph 5(4) of the case it is found:
“At the dates of the purchases of 6/8, Cliftonpark Avenue and “St Valentine’s” the husband and wife were living amicably together and collaborating in their business activities and the common, though unexpressed, intention at these dates was that each should be the matrimonial home and that each should be beneficially enjoyed by both parties.”
I read that finding as referring not to the ownership but to the user by the spouses of the premises in question. Later, in paragraph 6 there is this finding:
“I found no evidence as to the intention of either party on the question of who should own either house, save that the purchase price in each case was paid by cheques drawn by the husband on his bank accounts and that the deeds showed him as the purchaser and owner in each case.”
In the incorporated judgment, however, there is to be found the following passage, the concluding part of which seems at variance with what I have just quoted. It runs:
“In the case of both 6/8, Cliftonpark Avenue and the Holywood house I find that there was a resulting trust to the wife commensurate with the amount of her contributions and I also find that both husband and wife at the dates of purchase intended, though they may never have formulated it in words, that each should be owned beneficially by both.”
If these findings were material, on the views I have expressed, it would be necessary to send the case back for clarification. I am of opinion, however, that this course is unnecessary. The last finding is that most favourable to the wife. I shall assume it is true and correct. But if so, does it show a beneficial interest in the wife? This question must be examined on the basis that my previously stated conclusion is right and that the wife had no beneficial interest in the monies out of which the properties were purchased. Does the finding of an intention that the purchased houses should be beneficially owned by both spouses suffice to give the wife an interest therein which she had not in the purchase monies? I fear the answer to this must again be unfavourable to the wife, for on the basis mentioned she was in the position of a volunteer and the doctrines of equity had nothing to give her.
For these reasons I am of opinion and hold that the wife had no interest of a beneficial kind either in the purchase monies or in what those monies bought and, accordingly, that the husband’s appeal should be allowed and the first question answered in the negative.
I reach this decision with some reluctance. We do not know enough to be sure as to where exactly, the merits lie; but, I certainly do not presume to think that the conclusion I have reached does any better justice between the parties than that of Gibson J. It may well do less, but in this type of litigation the law now is that it is the law and not the merits that must be followed.
Lowry J: I respectfully concur in my Lord’s conclusions and also in his general observations, but, without pretending to exhaust this complicated subject, venture to add a few remarks of my own.
As Lord Reid has said in Pettitt v Pettitt [1970] AC 777, 792D, “for the last twenty years the law regarding what are sometimes called family assets has been in an unsatisfactory state.” This may be traced to a number of causes, among which is the fact that disputes regarding such assets have commonly arisen between spouses whose marriage has broken down and in whose case accordingly the alleged merits of the parties have tended to obtrude upon the question as to rights of property. Moreover, s 17 of the Married Women’s Property Act 1882 gives the judge power to make “such order with respect to the property in dispute … as he thinks fit.” And finally, even if both parties are frank, the facts are often hard to ascertain.
The House of Lords, however, in Pettitt and in Gissing v Gissing [1971] AC 886 has, so to speak, made a fresh start by reviewing the cases and by deliberately going further into general considerations than would have been strictly necessary for the purpose of decision, so that it now seems possible with reasonable confidence to derive from their Lordships’ observations some general principles.
It seems that, where one spouse claims a beneficial interest in property the legal title to which is vested in the other, the claimant must show that he or she has made a pecuniary contribution to the purchase. The contribution may be direct, whether it is made in one payment or by instalments and whether it is made before purchase or afterwards (for example by helping to pay off an overdraft or building society instalments) or partly before and partly afterwards. In such a case the legal owner will be a trustee to the extent of the contributions for the contributing spouse, whose beneficial interest in the property will be proportionate to his or her contribution.
This may have to be worked out and, if the proportions cannot be ascertained, the maxim “Equality is equity” may be applied. A husband who has contributed all or part of the price to property bought in his wife’s name may be confronted with the presumption of advancement, but the presumption is more easily rebutted than it used to be.
The contribution may be indirect and in practice this will most often happen where the husband is the legal owner and the wife has an income, whether from employment, from her own business or from other sources, or works in the husband’s business and in one way or another eases the husband’s financial position and thereby indirectly augments the fund out of which the husband buys the property. In such a case the wife acquires a beneficial interest if, and only if, there is an agreement or arrangement between the spouses that she is to have such an interest.
During the last twenty years, however, many property disputes between husband and wife have been decided on the footing that indirect contributions do not require any agreement or arrangement in order to give the wife an equitable interest in property, such as the matrimonial home, standing in the husband’s name. This solution has been promoted by a liberal interpretation of the court’s powers under section 17, by the framing of a doctrine of “family assets” in a modern society, and, (more logically, perhaps), by a willingness to equate indirect with direct contributions, as if on the basis that equity looks to the substance rather than to the form.
Concerning the first of these three factors I need only say that the House of Lords has clearly established, – “restored” may be the better word – the meaning of the words “as he thinks fit” in section 17. As to the second, “family assets” and its attractive sister, “family savings,” the term used by Mr Appleton to embellish his argument, may be useful expressions, so long as one heeds the warnings of Lord Upjohn in Pettitt at p 817F and of Viscount Dilhorne in Gissing at p 262E and so long as it is recognised that neither here nor in England do they warrant a departure from the ordinary law of property and trusts.
Thirdly, it has now been made clear that indirect contributions serve the purpose of direct contributions only where there is a mutual intention that they should do so. See Gissing per Viscount Dilhorne at p 900GH, per Lord Pearson at p 903B, and per Lord Diplock at p 909E-G, where he says:
“Difficult as they are to solve, however, these problems as to the amount of the share of a spouse in the beneficial interest in a matrimonial home where the legal estate is vested solely in the other spouse, only arise in cases where the court is satisfied by the words or conduct of the parties that it was their common intention that the beneficial interest was not to belong solely to the spouse in whom the legal estate was vested but was to be shared between them in some proportion or other.
Where the wife has made no initial contribution to the cash deposit and legal charges and no direct contribution to the cash deposit and legal charges and no direct contribution to the mortgage instalments nor any adjustment to her contribution to other expenses of the household which it can be inferred was referable to the acquisition of the house, there is in the absence of evidence of an express agreement between the parties, no material to justify the court in inferring that it was the common intention of the parties that she should have any beneficial interest in a matrimonial home conveyed into the sole name of the husband, merely because she continued to contribute out of her own earnings or private income to other expenses of the household.”
Thus a tacit, or even express, agreement that the wife in the present case should use her salary as she did is not an agreement or an arrangement that by doing so she was to acquire an interest in the property. Or, as Mr Murray put it, indirect contributions which are unrelated to the acquisition of the property cannot found an equitable interest in it.
The House of Lords has further made it plain that imputed intention is not enough: the intention must be a real one and not a legal fiction introduced for the purpose of achieving a result thought by the court to be just but not intended by the parties. A real intention may be either express or to be implied from the conduct of the parties, but the latter must be confused with imputed intention. To find an implied intention one has to look at the facts of each case and see whether they warrant the implying of an intention by the spouses that, for example, the matrimonial home should be beneficially owned, (and not merely beneficially enjoyed), by both of them. One cannot imply an intention by predicating a supposedly desirable legal result and then inferring from what the spouses do in the course of a normal marriage that they must have intended that result. I would just refer at this point to the observations of Lord Morris of Borth-y-Gest in Pettitt at p 804F:
“The mere fact that parties have made arrangements or conducted their affairs without giving thought to questions as to where ownership of property lay does not mean that ownership was in suspense or did not lie anywhere. There will have been ownership somewhere and a court may have to decide where it lay. In reaching a decision the court does not find and, indeed, cannot find that there was some thought in the mind of a person which never was there at all. The court must find out exactly what was done or what said and must then reach conclusion as to what was the legal result. The court does not devise or invent a legal result. Nor is the court influenced by the circumstances that those concerned may never have had occasion to ponder or to decide as to the effect in law of whatever were their deliberate actions. Nor is it material that they might not have been able – even after reflection – to state what was the legal outcome of whatever they may have done or said. The court may have to tell them. But when an application is made under section 17 there is no power in the court to make a contract for the parties which they have not themselves made. Nor is there power to decide what the court thinks that the parties would have agreed had they discussed the possible breakdown or ending of the relationship.
Nor is there power to decide on some general principle of what seems fair and reasonable how property rights are to be reallocated. In my view, these powers are not given by section 17.”
See also the further observation in Gissing of the noble Lord at p 898C and of Viscount Dilhorne at p 900F.
Discussion of implied intention calls to mind the doctrine of implied terms in relation to contract. It is useful to remember that terms are implied in order to give business efficacy to the contract on the understanding that without them the contract would not be businesslike or, in some case, workable. It would often be easy, in the interests of business efficacy, to imply, in relation to individuals who were not husband and wife, a term that one person making an indirect contribution to the wealth of another should have his recompense in the shape of an equitable interest in property purchased by that order, but to speak of giving “business efficacy” to domestic relations in unusually a contradiction in terms: Balfour v Balfour [1919] 2 KB 571.
In my opinion the recent cases in the House of Lords clearly show that the rights acquired by a wife in property which at law belongs to her husband depend not on her deserts as a wife but on legal principles which are equally applicable between strangers: a direct contribution to the purchase price will, in the absence of a contrary intention, attract an equitable interest; an indirect contribution accompanied by an agreement will, and unaccompanied by an agreement will not, give the contributor as equitable interest. Two modifications apply between spouses, first that an arrangement is as good as an agreement, and second that the doctrine of advancement may operate against a husband contributor.
Lest is be argued that such a result is unfair to wives, one may consider the position of the virtuous wife who “looketh well to the ways of her household, and eateth not the bread of idleness”, but who in most cases neither pursues a career nor helps directly in her husband’s business. Her price may be far above rubies, but such a wife has nothing to gain from the family assets doctrine. Yet who could deny her merits or even her probable financial value to her husband from a business standpoint? Where community of ownership between spouses is not the law, it seems unfair to give to some wives but not to others property rights beyond those of other people in similar circumstances.
In applying the principles to this case I am forced to conclude that the reason given in paragraph 6 of the case stated does not support the learned judge’s conclusion of law. The facts indicate an indirect contribution by the wife without any mutual intention, express or implied, or even any understanding on the part of the wife, that she was to acquire a beneficial interest in property purchased or to be purchased by the husband.
Therefore I agree that the first question should be answered in the negative, and the second question does not arise.
I have not in this judgment mentioned the position of third parties, such as business creditors and equitable mortgagees; and what I have said is not meant to affect the discussion of their rights against a family fund or against property bought therewith.
In re Wilson; Grove-White v. Wilson.
Johnston J. [1933] IR 739
JOHNSTON J. :
1. Nov.
The late Mr. W. H. Wilson of Carrickmines was very generous in his benefactions to his relatives, servants and friends. Most of his gifts were perfected by one or other of the methods by which a valid gift may be regularly and legally mademethods which are set out comprehensively by Turner L.J. in Milroy v. Lord (5); but in the case of two of these alleged gifts a certain amount of doubt has been suggested as to whether the deceased had, in the words of Turner L.J., “done everything which, according to the nature of the property comprised in the settlement, was necessary to be done in order to transfer the property and render the settlement binding upon him.” A gift is a gift, and, of course, if a donor, while expressing an intention to give something and taking certain steps in the direction of giving it, has not gone the whole way, the expectant donee has no equity to compel the completion of the gift. This is good sense and good law. As Grant M.R. put it in Antrobus v. Smith (6), there is a locus poenitentiaeas long as the gift is incomplete. Story (7) puts it in this way: “For, regularly, equity is remedial to those only who come in upon an actual consideration, and therefore there should be some consideration, equitable or otherwise, expressed or implied.”
The first matter arises in regard to a transaction that took place in December, 1918, just after the termination of the late war. The deceased was at the time a member of the Dublin Stock Exchange in partnership with his nephew, Mr. Ion Grove-White, and he resided in Carrickmines. He had had three sons killed in the war and he was anxious (as I am informed through the affidavit of Mr. Gerald Grove-White, who, also, is a nephew of the deceased and one of the executors of his will) to provide a sum of £5,000 by way of gift for his only surviving son, Mr. John Hugh Wilson, who is one of the defendants. To effect this he is said to have credited his son’s account in the clients’ ledger of his firm with the sum of £5,000 and to have debited his own account in the private ledger of the partners with the same sum. This sum was balanced on the other side of the account by £10,000 Manilla Railway Company preference shares and £3,000 United Havana Railway Company ordinary stock. These securities were in the name of the Hibernian Bank (with other securities) as collateral security for the testator’s loan account. I am informed also by Mr. Grove-White that from time to time these investments were changed and certain substituted investments were lodged as security with the bank, and “at the date of the testator’s death the investments representing the original £5,000 were £500 Rhodesian Railway Company debentures (bonds), £3,500 Manilla Railway 5 per cent. debentures (bonds) and £5,000 Manilla Railway preference shares which were in the name or custody of the said bank.” Mr. Grove-White exhibits a letter, dated November 7th, 1924, in the handwriting of the testator, “which the said J. Hugh Wilson informs me was handed to him by the testator.” This letter was in these terms: “To my Executors. The Manilla Railway securities (both bonds and shares) and £500 Rhodesian Railway 3 per cent. bonds deposited by me with the Hibernian Bank as part of the securities in my loan account, are the property of my son John Hugh Wilson and do not form part of my assets. W. H. Wilson, 7th November, 1924.” The testator did not inform the bank then or subsequently that he had made over these securities to his son, but he addressed a letter to the bank on November 25th, 1925, in these terms: “Please accept release orders for shares held on my behalf when signed by my son, Mr. J. Hugh Wilson”; and all the dividends paid on the original and the substituted securities were credited by the late Mr. W. H. Wilson’s firm to the account of Mr. J. H. Wilson since December, 1919. Mr. Grove-White states further: “After the transaction referred to had been effected the testator informed me that as I was an executor of his will he thought I ought to know that he had made over the said bonds and preference shares to his son.”
The testator died in London on February 10th, 1931, without having done anything further to perfect or complete the gift of these securities to his son, and there can scarcely be any doubt that if there was nothing more in the case, the gift, being incomplete, was not one that could have been enforced in equity. There was no assignment by deed or delivery to the donee, nor was there any transfer of the shares into his name. The case is not unlike that of Lambert v. Overton (1), a case in which it appeared that shares had been deposited in a bank as security for a debt owing by the donor, and it was held that a gift of the shares by the donor to his son was incomplete and that the shares (when the debt to the bank had been satisfied) formed part of the estate of the deceased on the donor’s death. In the present case, the shares, to the day of the death of the testator, remained in the Hibernian Bank as security for the deceased’s liabilities, and under the circumstances the intended benefaction would have fallen to the ground had it not been for the fact that the testator nominated Mr. J. H. Wilson as one of the executors of his will, and thereby gave validity to what would have been otherwise an imperfect and invalid gift, as decided in the case of In re Stewart (2). I do not agree with Mr. Lavery’s critical attitude towards that case. It was referred to with approvalor at any rate, without disapprovalby Kennedy L.J. in the Court of Appeal four years later in Pink v. Pink (3), and has never been doubted in any case of which I am aware.
It was decided in Hyslop v. Hyslop (4) that the mere appointment of a debtor of a deceased person as the executor of the will of the deceased was not in itself sufficient to enable a debt owing by the executor to be discharged. North J. said in that case that in order that the principle established in Strong v. Bird (5) should be brought into operation there must be evidence of the creation of some equity in the debtor apart from his appointment as executor. Now, here there are, in the first place, the entries in the books of the firm of which the late Mr. Wilson was a partner. I must assume that these books were under his control, and although the entries are not in the handwriting of the alleged donor (as they were in the case of Pink v. Pink (3)a case which in all other respects resembles the present case) I am satisfied that they were made by Mr. Wilson’s direction and that they undoubtedly represented his wishes. I think also that Mr. J. H. Wilson is entitled to rely upon the letter of directions “to my executors.” A very similar document formed the subject-matter of a decision of North J. in In re Hyslop, Hyslop v. Chamberlain (1). He held that, the document in question”general instructions” to an executorhaving been found amongst the papers of the deceased and never having been communicated to the alleged donee, must be regarded as testamentary in its character and, not having been executed as a will, could not be looked at. The document in this case, however, would appear to have been handed by the late Mr. Wilson to his son, and that fact raises the very distinguishing feature that is referred to by North J. in his judgment. The other matters that are set out in Mr. Grove-White’s affidavit, in my opinion, place this question beyond controversy. I may say in conclusion that I have carefully considered the case of In re Innes (2), which has been so strongly relied upon by Mr. Lavery, and in my opinion it has no application to this case. The answer to question one, therefore, will be: “Yes, subject to the limitation that the excess, if any, in the value of the said securities when realised, over the sum of £5,000, belongs to the executors as assets of the deceased.”
The second matter is more difficult and calls for rather more consideration. Mr. W. H. Wilson retired from the partnership in 1924, and, with the marked consideration that he had always shown for his son, he introduced Hugh as a partner in his place. Then in 1926 came the next benefit which the son was to receive from the father. On August 3rd in that year, Marcella Wilson, the testator’s second wife, died, and he decided to make over the Carrickmines house and property to Hugh absolutely. This gift was properly and regularly effected by three deeds, executed on December 4th, 1926, and the property conveyed consisted of two parcels of land held by the testator in fee and registered in the Registry of Titles and another parcel of land held by the testator under two leases, made in 1861, and a third, made in 1862, for long terms, subject to three rents of £30, £10 and £24. These conveyances by the testator purported to be “for the natural love and affection for his son, the said John Hugh Wilson” and “for other good causes and considerations,” none of which are set out. In the assignment of the leasehold premises there is a covenant by the son to pay the rent reserved by, and to observe the covenants contained in, the original leases. Mr. Grove-White in his affidavit says that in 1926 the testator decided to give up Carrickmines House to his son,”he, the said John Hugh Wilson, agreeing to keep up Carrickmines House and grounds and to receive the testator as a guest whenever the testator wished to come there, and keep the testator’s motor-car and chauffeur, the testator estimating the period during which he would probably desire to reside as four months in the year.” It is strange that there is no reference to this agreement in any of the three deeds, or in any letter, note, or memorandum, supplemental to them. One would have thought that a donor who was giving up his home absolutely and for ever to another, even though that other was his only surviving son, would, if he had intended to reserve to himself a right of residence therein as a legal and enforceable right, have seen to it that the agreement and its conditions and terms were dependent upon something more tangible than the recollection of the parties. But something more was left unexpressed. Mr. Grove-White adds that when the property was conveyed to Hugh in December, 1926, “the testator agreed to make up an allowance to the said John Hugh Wilson, with the said ground rents, of £600 per annum to help towards the maintenance and upkeep of the property.” It was not until almost a year laternamely, on August 22nd, 1927 when the testator was on the point of marrying the second defendant, who was then Miss Edna Gladys White, that the document upon which Hugh Wilson relies was drawn up, and as to it I wish to say generally that it differs very materially from the verbal agreement of December, 1926, which was made at the time when the property was legally transferred.
The document of August, 1927, is a most peculiar one. Instead of covenanting to pay to his son a certain sum per annum, or of charging specific property with the payment of that sum, or of assigning to him such stocks and shares or other property as would produce that sum, the late Mr. Wilson “agrees” “to give directions” to certain persons to pay certain moneys to Hugh Wilson, “which several sums together with certain rents reserved by leases and issuing out of the property transferred to the said John Hugh Wilson and out of the lands of Rampere would produce £600 per annum or thereabouts,” a most unusual and most cautious way of securing an annuity. The persons who are to be given directions to pay these sums to the defendant are “the trustees of the will of C. H. Wilson, deceased,” the trustees of the donor’s own marriage settlement, and the Northern Nigeria (Bauchi) Tin Company (in which company the testator owned £1,000 preference shares). Down to this point the agreement was one to pay, or to secure the payment of, the sum of £600 annually to Hugh, or rather to secure the payment of £600 yearly less the amount of the rents payable out of the property which had already been conveyed to Hugh. The agreement then proceeds in these terms:
“For the purpose of securing said sum of £600 per annum after the death of the said William Henry Wilson, the said William Henry Wilson hereby agrees to transfer the said sum of £1,000 Preference Shares in the Northern Nigeria (Bauchi) Tin Company into the joint names of himself and the said John Hugh Wilson, also to transfer three Policies of Insurance2 with the Scottish Amicable Co. and 1 with the Commercial Union Insurance Co. for £500 each on the life of Alfred T. Collinsto the said John Hugh Wilson, also to transfer to the said John Hugh Wilson the following Policy of Insurance on the life of the said William Henry Wilson with the Scottish Provident Institution, viz., Policy No. 72748, which last mentioned Policy is subject to a mortgage of £3,500 to the said Scottish Provident Institution, and also to convey the fee farm rent issuing out of the lands of Rampere or the Land Bonds representing the same. And the said William Henry Wilson agrees to execute formal transfers of the said several policies and property whenever called on so to do by the said John Hugh Wilson, or else to bequeath same to him by will.”
Immediately after the making of this agreement namely, on September 3rd, 1927the testator executed a marriage settlement on his marriage to Miss Edna White, by which a sum of £6,000 was to be provided, at the latest, six months after the death of Mr. Wilson, “to be a first charge on his estate after payment of his debts, funeral and testamentary expenses;” and the income of that sum is to be paid to Mrs. Wilson during her life. The marriage took place on September 16th, and the husband and wife went to the South of France where they lived for some time; and then a flat was taken in London. In the summer of 1928 they went to visit at Carrickmines where (as Mr. Wilson says in one of his letters) “Hugh was most courteous and kind”; but he adds that when they went back in the summer of 1929, “there was an air of hostility and a feeling that we weren’t wanted there;” and they remained only three weeks. It is only fair to Mr. Hugh Wilson to say that he denies that there was any ground for his father’s feeling in this matter. This unfortunate episodeit can scarcely be called a quarrelleft no bad effects, for we find the father making his will on September 16th, 1929, and making provision therein for the allowance that he had promised to his son. By this will the testator directed that the £6,000 that had been provided by the marriage settlement was to be “treated as a first charge on my estate, ranking equally with my debts, funeral and testamentary expenses.” The wife was to get £200, “to be paid to her out of the first available moneys in my executor’s hands,” and she was given also the income for her life from a sum of £4,000. The testator then proceeded to carry out the promise he had made in the memorandum of agreement with Hugh in these terms:”I leave to my son, John Hugh Wilson, certain policies on the life of A. T. Collins, also the balance of all moneys coming to me on foot of policy number 72748 on my own life with the Scottish Provident Institution. I also bequeath to him a holding in Land Bonds representing a fee-farm rent formerly paid out of the lands of Rampere (Raheen)”;and he appointed Hugh as his residuary devisee and legatee to the extent of one-third of any residue. There is no mention in the will of the Northern Nigeria (Bauchi) Tin Company preference shares (which had never been transferred out of the testator’s own name), and that omission was not an accident. The testator had sold those shares on October 4th, 1929, retaining the proceeds of the sale for his own use. Further, the Policy of Insurance on his own life which is recited in the memorandum of agreement to have been mortgaged to secure a sum of £3,500, was utilised by the testator to raise a further sum of £500. There was no difficulty in carrying out that transaction, as there had been no assignment or delivery of the Policy to Hugh and no notice of any right in Hugh had been given to the Insurance Company.
On that state of facts can it be held that the defendant, Mr. Hugh Wilson, has any legal or equitable right that can be enforced in this Court by virtue of the memorandum of agreement of August, 1927, or any subsequent agreementinter vivos, whether supplemental or substituted? I think that a good deal could be said for the view, though it was not relied upon very strongly by Mr. Lavery, that an entirely new arrangement was arrived at between the father and son in 1929, by which the former agreed to pay to the latter a sum of £400 a year during the life of the father and that this arrangement was in substitution for the former one. The testator on October 21st, 1929, wrote to Mr. Grove-White: “I won’t allow him more than £400 a year, and if he doesn’t accept it I will stop the whole £600, and let him do what he likes.” On November 1st, he wrote: “Don’t worry me with any more letters until you have fixed up the £400 a year allowance.” On November 18th Mr. Grove-White, writing on behalf of Hugh, says:”Hugh does not wish to go further into the question of the Bauchi shares, Moore’s wages, or any other matters.If you have decided to reduce his £600 to £400 a year, he accepts your decision.” On the 28th the testator wrote:”I send you the list with the dividends I propose to take over.” And on December 20th, Mr. Grove-White writes to his uncle: “We went through your suggestions about making up the £400 a year,” and a list of securities and properties is set out in this letter, the annual income from which is stated to be £413 10s. 0d. I have analysed all this correspondence very closely and for myself I cannot see, in the face of the new terms that seem to have been arrived at, how the defendant can allege that any potency remained in the document of August, 1927, or how any part of the arrangement of that date remained in force.
However, I am willing to consider the case from the point of view that is most favourable to Mr. Hugh Wilson, and, on the assumption that the new arrangement was merely supplemental to the old, how does the matter stand? The document provides for the payment of an allowance of £600 a year, reduced subsequently to £400, to Hugh Wilson during the lifetime of his father, and I assume that this payment was made and that there are no arrears. If there is some small amount of this allowance outstanding, I shall hear counsel later as to what ought to be done.
The second half of the document provides that “for the purpose of securing said sum of £600 per annum after the death of the said William Henry Wilson” the latter”hereby agrees to transfer” the Bauchi shares into the joint names of himself and his son and to transfer to the donee three policies of life insuranceone on his own life and two on the lives of anotherand to convey to him a fee-farm rent issuing out of certain lands or land bonds (payable by the Land Commission) “representing the same.” The operative part of this clause is contained in the last sentence: “And the said William Henry Wilson agrees to execute formal transfers of the said several policies and property whenever called on so to do by the said John Hugh Wilson or else to bequeath same to him by his will.”
This document is alleged by the defendant to be an agreement for valuable consideration and enforceable as such. I do not think that it can possibly be so regarded.
It is simply an agreement by a father, who, having made over certain property to his only surviving son “for natural love and affection,” desired to make that son an allowance “to help towards the maintenance and upkeep of said property.” The covenant entered into by Hugh, in one of the conveyances, to pay the rent and observe certain covenants cannot be regarded as valuable consideration for an agreement executed nearly nine months later for a collateral purpose that was not spoken of in the conveyance of the property; but even if the liability undertaken by Hugh in December, 1926, could by any process of implication be read into the memorandum executed in August, 1927, the rule established by the Court of Appeal in Lee v. Mathews (1) would prevent it having the potency that Hugh Wilson wishes to give it. The principle of that decision is to be found very clearly set out in the judgment of FitzGibbon L.J. He decided that when leasehold premises are assigned subject to onerous burdens, the question “whether the transaction was a bargain involving mutual considerations, or was a gift involving merely bounty from one party to the other,”was a question of fact to be decided upon the evidence and not a question of abstract law. The law on this question in England as laid down in Price v. Jenkins (2) and some subsequent cases seems to be different; but I think that the decision of the Irish Court of Appeal, given three years later, is more in accordance with sound principle than that in the English case and I shall follow it. In Pricev. Jenkins (2), Hall V.C., a very distinguished equity Judge, was reversed by the Court of Appeal; but that decision has not passed unscathed in England during the fifty years of its life. Applying, then, the test supplied by FitzGibbon L.J., it seems tome that, in view of the relationship of the parties and the circumstances under which the memorandum was drawn up, it would be impossible to do otherwise than find that it represented the conferring of bounty by a father upon a son and not the making of a bargain involving mutual considerations. Any other conclusion would be contrary both to common sense and sound judgment.
Then it is argued that there was an agreement between father and son in effect that the former should have a right of residence in Carrickmines House, and that this was part of the bargain. I can find no evidence of any such legal obligation. If such a right had been reserved by the deceased it would have been set out in the conveyance of the property to Hugh Wilson, but nothing of the kind is to be found in the deed; nor is there any reference to it in the subsequent memorandum. In the lengthy correspondence that took place in 1928 the deceased says:”There was an understanding that my wife and I were to be always welcome to Carrickmines House”; and later he said:”If he [Hugh] cannot keep Carrickmines House, let him sell it, or let it for four or five years.” The complaint that runs through the whole of this correspondence is a complaint of inhospitable conduct on the part of the son; there is no definite suggestion of any breach of contract.
The memorandum of August, 1927, then, was a voluntary agreement and not one for valuable consideration, and it was an imperfect or incomplete contract at that. Indeed, there is on the face of the document a statement which amounts to an admission by the parties that the contract was incomplete. It was a mere promise on the part of the alleged donor to make a certain provision for his son after the death of the donor. If Hugh Wilson had taken proceedings in his father’s lifetime to compel him to make the transfers referred to in the document, he would, I think, have failed, because he had no legal title to the property and equity would not have assisted him to enforce a voluntary settlement which was incomplete. The rest of the promise was of a testamentary character and had all the defects of such, as decided in cases of the type of Cross v. Cross (1) and Towers v. Hogan (2). Nor can the alleged donee gain any assistance from the principle established in Strong v. Bird (3) for the reason which is given by Neville J. in In re Stewart (4). In the latter case the learned Judge decided that when a testator has expressed the intention of making a gift of personal estate to one who, upon his death, becomes his executor, the intention continuing unchanged, the executor is entitled to hold the property for his own benefit; but, adds Neville J.,”the intention to give, however, must not be an intention of testamentary benefaction, although the intended donee is the executor; for, in that case, the rule cannot apply, the prescribed formalities for testamentary disposition not having been observed.” The plain meaning of the document is that if the promise is not translated into an effective disposition by a legal transfer in the lifetime of the testator, then the donee must be satisfied with whatever testamentary provision the testator may make for him. The testator did make provision for his son by his will, and he must be satisfied with that provision.
In the Matter of an Interpleader Application pursuant to O. 57 of the Rules of the Superior Courts
AIB Finance Ltd v. Sligo County Council and Andrew Curneen
1990 No. 3 Sp
High Court
25 October 1994
[1995] 1 I.L.R.M. 81
(Morris J)
MORRIS J
delivered his judgment on 25 October 1994 saying: This matter comes before the court as an interpleader summons brought by Allied Irish Bank Finance Co. Ltd. There is on deposit with the company the sum of £51,749.57 plus accrued interest in deposit account No. 1/MC/8423/011. The original *83 deposit of these funds was made by Fr Stephen McGuinness (otherwise Patrick Stephen McGuinness) and the funds were lodged on 2 September 1986 in the joint names of Fr McGuinness and the Sligo County Council. They were originally lodged to the Sligo branch of Allied Irish Banks plc and were subsequently transferred to the account in Allied Irish Bank Finance Ltd.
Fr McGuinness died on 18 April 1987 and probate to his estate was granted to the second named claimant, Mr Andrew Curneen, on 4 February 1988.
Both Mr Curneen in his capacity as the executor of the late Fr McGuinness, and the Sligo County Council claim to be entitled to the money standing to the credit of the account and in these circumstances the bank has claimed relief by way of interpleader.
The basis upon which each of these parties claims to be entitled to the funds is as follows.
The Sligo County Council claims that the funds ‘are and always were a fully constituted gift’ and that Fr McGuinness and the Sligo County Council were joint trustees of the money in the account.
The second named claimant claims to be entitled to the money as the personal representative of the late Fr McGuinness and claims that there is a resulting trust in favour of Fr McGuinness.
The circumstances in which this action arises can be summarised as follows. The late Fr McGuinness was a native of Aclare in the County of Sligo. During his lifetime he acquired certain funds and on his retirement, in or about the year 1983, he conceived the desire to benefit the area of Aclare. His first steps in that direction took the form of acquiring a playing field for the area. With this he achieved only limited success and was dissatisfied in that he felt the persons in effective control of the playing field were not adequately answerable for the way in which it was used. He therefore believed that any future ventures should be undertaken through some statutory body which would be answerable for the proper management of any enterprise to which he might subscribe. He contacted the Sligo County Council and was referred to the Sligo County Development Team and in particular to Mr Terence Byrne who was county development officer for Sligo county. Through the co-operation of various people and bodies Fr McGuinness was able to achieve his ambition by being in part instrumental in the building of a factory in Aclare. The construction of the factory cost £83,000 and Fr McGuinness contributed £25,000 towards that objective. The county council were authorised to accept the contribution from Fr McGuinness towards that objective by virtue of the Local Authorities (Acceptance of Gifts) Act 1945 and it, the county council, passed a resolution on 23 June 1984 creating the Aclare (Fr Stephen McGuinness) Civic Improvements Scheme. The contribution made by Fr McGuinness, £25,000, was paid into that fund in November 1984.
That concluded this transaction and Fr McGuinness then turned his attention to further benefiting the community and approved of the suggestion which was *84 made to him that an urban renewal scheme for the village of Aclare should be carried out and he enthusiastically agreed to make available further funds towards such a scheme. The significance of his contribution was that with his agreement to make available these funds, the county council could seek the support of other individuals and bodies so as to finance the project. Without such a commitment by Fr McGuinness the urban renewal of Aclare, no matter how desirable, would have been low in the county council’s list of priorities.
In furtherance of the urban renewal scheme an expert was commissioned, at the expense of the county council, to prepare plans for the redevelopment of Aclare and these were approved, not only by the residents of Aclare, but also Fr McGuinness. The county council set about the implementation of these plans. This involved the acquisition of certain derelict buildings. It also involved the acquisition of a licensed premises for the purpose of conversion into a community centre. The significance of this acquisition was that such an acquisition was not immediately capable of finance from any of the recognised funds available to the county council and it made this acquisition on the assumption that Fr McGuinness’s funds would be available to meet the cost.
In the months of January/February 1986 Fr McGuinness took up residence in Nazareth House in Sligo and he then took the appropriate steps to realise funds by the sale of his shares to finance the project and in July 1986 he was in a position to lodge the money in the Sligo branch of the AIB.
On 2 September 1986 arrangements were made for Fr McGuinness and Mr Paul Byrne, the then county manager for the County of Sligo, to attend at the offices of the Allied Irish Banks plc at 26 Stephen Street, Sligo and they there met with Ms Concepta Cuddy, the manager’s secretary, where they executed a mandate to the bank and opened a joint deposit account in the names of Fr Patrick Stephen McGuinness and the Sligo County Council. The terms of that mandate are of importance and it reads:
We Reverend Fr Patrick Stephen McGuinness and Sligo County Council hereby request and authorise you:
(1) To open and keep a deposit account (‘the account’) for us in our joint names at your 26 Stephen Street, Sligo branch or such other branch or branches as may from time to time be substituted therefor, to be used by us for the receipt and dispersement of monies placed on interest bearing deposit account with you.
(2) To give effect to any request, direction or instruction relating to withdrawals and transfers from the account on the signature of Reverend Fr Patrick Stephen McGuinness.
(3) Upon the death of Reverend Fr Patrick Stephen McGuinness to pay the balance on the account to Sligo County Council as survivor.
*85
And we and each of us declare that the within mandate unless terminated by death or incapacity of either of us or by operation of law shall continue in full force and effect until notice in writing signed by either of us countermanding your authority and instructions is received by you.
This mandate was duly signed by the parties and Fr McGuinness paid into the account the sum of £56,871.20.
Thereafter there were two dealings in this account; the first took place on 8 January 1987 when at the request of Fr McGuinness the fund was transferred from the Allied Irish Banks to AIB Finance Ltd so that it would attract a more beneficial rate of interest. The Sligo County Council took no part in this transaction. The second was the making of a loan to a Mr Egan for the purpose of acquiring tools and equipment to commission the factory which had earlier been built in Aclare. While the county council was aware of this transaction, its authority and consent to it was neither sought nor given and the extent of its involvement was limited to a provision that the interest on the loan would be paid to it.
On 16 March 1987 Fr McGuinness requested that the Sligo county manager, the chairman of the Sligo County Council and the secretary of the Sligo County Council attend at his rooms in Nazareth House and there execute a document entitled ‘agreement’.
This document is of relevance. It reads:
Whereas a deposit account in the joint names of Reverend Fr Patrick Stephen McGuinness and Sligo County Council has been opened in the AIB Stephen Street, Sligo branch it is hereby agreed that such monies in said accounts as may be paid to Sligo County Council shall be used by said council only for the purposes of and/or consistent with the objectives of the Aclare (Fr Stephen McGuinness) Civic Improvement Scheme or the McGuinness Aclare Fund which is the £57,000 deposit on that occasion. To this sum may be deposited any balance left over from Fr Stephen McGuinness’s previous donation of £25,000 to the county council for the purpose as stated above, including a medical centre, renewal of derelict houses and improvement in the environments.
The previous donation was used for building a factory generously aided by the county council, the Sligo County Development Team and Finance Department per IDA.
Any previous agreements on the above donation should be cancelled.
The agreement was signed by Fr McGuinness, the county manager, the chairman of the county council and the county secretary.
Fr McGuinness was at all times enthusiastic that the project of the urban renewal of Aclare should be completed without delay and constantly enquired *86 as to progress.
I have no doubt whatever that if Fr McGuinness had survived, the funds in question would have been made available and paid over to the county council for the benefit of the project. They were still in AIB Finance Ltd at the date of his death on 18 April 1987.
The Sligo County Council claimed to be entitled to these funds on the basis that there was a completed gift by Fr McGuinness of these funds to the county council.
Fr McGuinness’s executor disputes that there was a completed gift and contends that if there was a gift it was to come into effect only upon his death and accordingly was ineffectual.
I accept as a clear and unambiguous statement of the law, that part of the judgment of Fitzgibbon J in Owens v. Greene [1932] IR 225 at p. 249 where he cites with approval the following passage:
… this transaction was, in effect, an attempt to make a nuncupative testamentary disposition. Father O’Flaherty remained the owner during his life of moneys which, on his death, he wished to pass to his successor, just as he intended, in the case of his nieces, that the money which he intended for them should go by survivorship. There are two principles applicable to the subject matter, of which one or other appears to be fatal to the respondent’s contention. The first is that a testamentary disposition can only be made by will, and that any attempt to make it by parol inter vivos must fail. The other is exemplified by Richards v. Delbridge. A voluntary trust may be created by a declaration of trust, or by a completed assignment of the legal ownership to a trustee; but it is impossible to turn an incomplete, conditional or postponed gift into a trust, where there is no intention to create the relationship of trustee and cestui que trust. It was not intended that this money should be left derelict, or that any trust should take effect upon it, during the life of Father O’Flaherty. So long as he lived he was owner and nothing less.
On any examination of Fr McGuinness’s actions and conduct in this case it is clear that he never made a complete assignment of the legal ownership of these monies to the Sligo County Council. In making that finding I rely, inter alia, on the following matters:
(1) The wording of the mandate is clear and reserves to Fr McGuinness the sole right to make requests or give directions or instructions to the bank relating to the withdrawal or transfer from the account. The Sligo County Council had no such right. Fr McGuinness did in fact exercise this right in the two instances already referred to i.e. by the transfer of the funds and by the making of a loan to Mr Egan. The Sligo County Council took no active part in either transaction.
(2) In the earlier transaction, that is to say, when the factory premises were being built when Fr McGuinness intended to benefit the civic improvement *87 scheme, he paid over the sum of £25,000 to the Sligo County Council who in turn lodged it to the benefit of the Aclare (Fr Stephen McGuinness) Civic Impovement Scheme in accordance with the resolution adopted by the county council on 23 July 1984. No such payment or lodgment was made in the case of the funds which are the subject matter of these proceedings.
(3) I consider it to be of significance and importance that the county council commenced the acquisition of the derelict property in February of 1986 which included the acquisition of a licensed premises. Fr McGuinness’s funds would have been of significant help in the payment of the deposits and the cost of acquisition and it appears to me that the county council, for the very laudable reason of not wishing to rush this elderly gentleman, withheld any request for funds but relied upon the fact, as they saw it, that they were safe by reason of their rights to the funds by surviving Fr McGuinness. I believe that it was in their contemplation at all times that the funds would pass on his death. This was in all respects a reasonable anticipation considering that at this time Fr McGuinness was 92 years of age. If Fr McGuinness intended to make an immediate gift that, in my view, was the best possible moment to do so.
(4) The fact that Fr McGuinness still considered himself to be in control and possession of the fund is, in my view, reflected in the agreement signed on 16 March 1987 which speaks of ‘such monies in said accounts as may be paid to Sligo County Council’. I consider that phraseology inconsistent with the submission that there has been a completed gift. It can only be interpreted as relating to a further gift of funds, the amount of which has not as yet been fixed.
In the consideration of the issues in this case I find myself to be in complete agreement with the judgment of O’Hanlon J in Lynch v. Burke [1991] 1 IR 1 where having reviewed the relevant authorities he says (at p. 13):
The foregoing review of decisions by the courts of high authority in other jurisdictions appears to indicate the existence of a strong and uniformed current of authority disputing the correctness of the decision of the former Supreme Court in Owens v. Greene and Freely v. Greene [1932] IR 225. I consider that in the present case I am bound to follow and apply that decision but having regard to the fact that it is a decision which appears to conflict with the interpretation of this branch of the law in so many other common law jurisdictions, it might well be a case where the Supreme Court would be disposed to review again the correctness of that decision, if a suitable opportunity arose for doing so.
Accordingly, finding, as I do, that there was at most an uncompleted gift by Fr McGuinness to the county council and finding, as I do, that it was his intention to and that he did in fact retain dominion and control over these funds up to the time of his death and finally that no relationship of trustee and cestui que trust existed between Fr McGuinness and the county council, I refuse the reliefs *88 sought by the first named claimants and make an order as sought at paragraph 18a of the second named claimant’s counterclaim.
Mary Lynch v Moira Burke and Allied Irish Banks plc SC
1990 Nos. 81, 86
Supreme Court
7 November 1995
[1996] 1 I.L.R.M. 114
(Nem. Diss.) (Hamilton CJ, O’Flaherty, Egan, Blayney and Denham JJ)
7 November 1995
O’FLAHERTY J
(Hamilton CJ, Egan, Blayney and Denham JJ concurring) delivered his judgment on 7 November 1995 saying: This is an appeal brought by Moira Burke from the judgment and order of the High Court (O’Hanlon J) of 16 January 1990 ([1990] 1 IR 1), granting the plaintiff declarations in her favour in respect of monies held on a deposit account with AIB Bank plc in the joint names of Frances McFadden, deceased, and her niece, the first named defendant Moira Burke.
Frances McFadden, a widow, died on 10 January 1986. She had made her last will on 20 July 1983, whereby she gave all the property of which she died possessed of or entitled to to her sister, Mary Lynch, the plaintiff; as well she appointed her sole executrix.
Moira Burke had a sad life. She lost her father when young. Her mother re-married. She migrated to Glasgow in 1971 when she was 17 and stayed for about two years with her aunt, Frances McFadden. She married in 1975 but the marriage broke up in 1976. After the marriage break-up, the husband ceased to make maintenance payments after some short time and, during these hard times, it appears that Frances McFadden had been generous to her.
In September 1983 Frances McFadden (who at that time had returned to live in County Donegal) visited Moira Burke in Glasgow and told her that she wanted *117 to put her name into a joint account with a bank in Falcarragh, Co. Donegal. On 28 September 1993, a deposit account was opened with the Falcarragh branch of the AIB Bank in the joint names of Frances McFadden and Moira Burke. A sum of £29,401.72 was lodged to the credit of the account by Frances McFadden and, thereafter, there were further lodgments made from time to time by Frances McFadden. At the date of trial the amount standing to the credit of the account was £53,364. At the hearing of the appeal we were told that the amount had now risen to about £65,000, including accumulated interest.
The deposit book was endorsed by the bank official as follows: ‘Payable to Frances McFadden only or survivor’. The word ‘only’ was underlined. Moira Burke’s address in Glasgow was inserted beneath Frances McFadden’s name though, as already stated, Mrs McFadden lived in Co. Donegal at this time.
The learned trial judge said that he was satisfied that Frances McFadden, when opening the account in the joint names, intended that her niece, Moira Burke, should be entitled to the beneficial interest in any monies standing to the credit of the account on Frances McFadden’s death, should she pre-decease her niece. He was further satisfied that Frances McFadden intended to retain control over the account during her lifetime to the extent that no withdrawals could be made from it save only on her application.
The judge also attached some significance to the fact that Frances McFadden, two months before she opened the joint deposit account, had made her last will and he was of the opinion that the opening of the joint deposit account was intended to exclude any claim by the plaintiff to those monies remaining on deposit in the account at the time of her death.
Notwithstanding these findings, the judge felt constrained on the authority of the decision of the then Supreme Court in Owens v. Greene and Freeley v. Greene [1932] IR 225 to hold that Moira Burke was not entitled by survivorship to these monies.
The question for resolution on this appeal is whether that result can be upheld as one that is justified in law or equity?
The first inquiry to make is to find out the legal effect of the opening of the deposit account in the joint names. Thereby, the bank undoubtedly became a debtor to Frances McFadden in the amount lodged. The bank and Frances McFadden contracted that only Frances McFadden could make withdrawals from the account but that on her death Moira Burke would be entitled to the monies standing to the credit of the account on that date. By her presence (she had journeyed especially from Glasgow to Falcarragh for the occasion, at Mrs McFadden’s request) and signature it is manifest that Moira Burke was a party to this contract from the outset. It is agreed on all sides that if the bank had paid over the monies then in the account to Moira Burke on Frances McFadden’s death it could incur no liability to the estate of the deceased. However, it is contended for the plaintiff that in that situation Moira Burke would have to *118 account to the estate for the monies so received. The monies on deposit with the bank represent a debt or chose in action. Since Frances McFadden and Moira Burke contracted jointly with the bank it would seem right that the bank should be liable to both — in accordance with the terms of the contract. There was sufficient mutuality of interest between Frances McFadden and Moira Burke to justify this assessment of the legal situation.
Mr McCann SC’s essential submission before us is to leave aside any question of contract and instead submit that what we are concerned with is that this chose in action or debt could not be gifted to Moira Burke except by a declaration of trust, a completed gift or by will.
He says that there has been no declaration of trust and he says that what we have here is an imperfect or incomplete transaction. Equity, it has been said, will not come to the aid of a volunteer to perfect an imperfect gift.
In this regard, we do well to recall something that Barry LJ said in the case of Gason v. Rich (1887) 19 LR Ir 391 at p. 402, a case relied upon as one which, together with O’Flaherty v. Browne [1907] 2 IR 416, is said to provide a basis for the decision in Owens v. Greene:
This question as to what does, or does not, constitute a complete voluntary gift of property so as to be supported in a court of equity has been the subject of discussion over and over again almost for a century, and the decisions upon it are very numerous, and not very easy to reconcile with each other, and it is difficult to extract any principle from them. It is impossible not to feel that legal ingenuity is far oftener exercised in defeating the intention of parties than in supporting them.
Leaving aside for the moment the concept of gift, I think that it is best to consider, in the first instance, the contractual aspects of the case to find whether that provides a solution. In my judgment, it does. I have outlined what I think was agreed between the parties and it amounts to this: Moira Burke must be regarded as entitled to claim as a party to the contract under the actual terms of the contract.
In McEvoy v. Belfast Banking Co. [1935] AC 24 the House of Lords was concerned with a case which had many similarities to the instant case. The ultimate decision turned on whether the donee could claim money that he had, after the donor’s death, assisted in appropriating to a business that failed — that aspect of the case need not detain us. However, Lord Atkin had the following of interest to say in the course of his speech relating to the form of contract that emerges when a deposit account is opened in joint names. He said, at p. 43:
The suggestion is that where A. deposits a sum of money with his bank in the names of A. and B., payable to A. or B., if B. comes to the bank with the deposit receipt he has no right to demand the money from the bank or to sue them if his *119 demand is refused. The bank is entitled to demand proof that the money was in fact partly B.’s, or possibly that A. had acted with B.’s actual authority. For the contract, it is said is between the bank and A. alone. My Lords, to say this is to ignore the vital difference between a contract purporting to be made by A. with the bank to pay A. or B. and a contract purporting to be made by A. and B. with the bank to pay A. or B. In both cases of course payment to B. would discharge the bank whether the bank contracted with A. alone or with A. and B. But the question is whether in the case put B. has any rights against the bank if payment to him is refused. I have myself no doubt that in such a case B. can sue the bank. The contract on the face of it purports to be made with A. and B., and I think with them jointly and severally. A. purports to make the contract on behalf of B. as well as himself and the consideration supports such a contract. If A. has actual authority from B. to make such a contract, B. is a party to the contract ab initio. If he has not actual authority then subject to the ordinary principles of ratification B. can ratify the contract purporting to have been made on his behalf and his ratification relates back to the original formation of the contract. If no events had happened to preclude B. from ratifying, then on compliance with the contract conditions, including notice and production of the deposit receipt, B. would have the right to demand from the bank so much of the money as was due on the deposit account.
In this case, as I have pointed out, Moira Burke was a party to the contract from the outset.
In Russell v. Scott (1936) 55 CLR 440, the High Court of Australia was called upon to deal with a problem that I think is almost identical to the one presented to us. The question posed in that case was as follows:
… whether the survivor of two persons opening a joint bank account is beneficially entitled to the balance standing at credit when the other dies, if all the moneys paid in have been provided by the deceased acting with the intention of conferring a beneficial interest upon the survivor in the balance left at his or her death but not otherwise, and of retaining in the meantime the right to use in any manner the moneys deposited.
Dixon and Evatt JJ in the course of a joint judgment said the following by way of answer at pp. 450–451:
The contract between the bank and the customers constituted them joint creditors. They had, of course, no right of property in any of the moneys deposited with the bank. The relation between the bank and its customers is that of debtor and creditor. The aunt and the nephew upon opening the joint account became jointly entitled at common law to a chose in action. The chose in action consisted in the contractual right against the bank, i.e., in a debt, but a debt fluctuating in amount as moneys might be deposited and withdrawn. At common law this chose in action passed or accrued to the survivor….
*120
The right at law to the balance standing at the credit of the account on the death of the aunt was thus vested in the nephew. The claim that it forms part of her estate must depend upon equity. It must depend upon the existence of an equitable obligation making him a trustee for the estate. What makes him a trustee of the legal right which survives to him? It is true a presumption that he is a trustee is raised by the fact of his aunt’s supplying the money that gave the legal right a value. As the relationship between them was not such as to raise a presumption of advancement, prima facie there is a resulting trust. But that is a mere question of onus of proof. The presumption of resulting trust does no more than call for proof of an intention to confer beneficial ownership; and in the present case satisfactory proof is forthcoming that one purpose of the transaction was to confer upon the nephew the beneficial ownership of the sum standing at the credit of the account when the aunt died. As a legal right exists in him to this sum of money, what equity is there defeating her intention that he should enjoy the legal right beneficially?
The answer the court gave was that there was none and distinguished Owens v. Greene and certain Canadian cases in reaching this conclusion.
The case as pleaded and apparently presented in the High Court on the plaintiff’s behalf was to say that the monies on deposit were held on an implied or resulting trust by Moira Burke for the benefit of the estate of the deceased. As already pointed out, the learned trial judge felt that he was constrained by the decision in Owens v. Greene to uphold this submission.
Since historically the concept of an implied or resulting trust was an invention of equity to defeat the misappropriation of property as a consequence of potentially fraudulent or improvident transactions, it would surely be paradoxical, if the doctrine is allowed to be invoked to defeat the clear intention of the donor as found by the trial judge, an intention so clear, as the Chief Justice observed in the course of the debate before us, that he could not possibly have made any other finding as regards the donor’s intention than the one that he did make. In this regard it is apposite to recall what Lindley LJ said in Standing v. Bowring (1885) 31 Ch D 282 at p. 289:
Trusts are neither created nor implied by law to defeat the intentions of donors or settlors; they are created or implied or are held to result in favour of donors or settlors in order to carry out and give effect to their true intentions, expressed or implied. It appears to me there are no equitable as distinguished from legal grounds on which the plaintiff can obtain relief.
As to Owens v. Greene the requirement that that case seems to lay down for a donee to benefit is that the deposit receipt is a joint one and that it is payable to the parties or the survivor thus putting it out of the depositor’s power to deal with the fund without the concurrence of his co-owner during his lifetime. This certainly appears from the judgment of Fitzgibbon J at pp. 245–246 of the report. *121 This concept appears to be implicit, also, in the judgment of Kennedy CJ (the relevant passage is quoted at length by the learned trial judge); or, at the least, that the donee should be entitled equally with the donor to resort to the funds during the joint lives. The judgments were also concerned to emphasise the importance in the legal scheme of things that testamentary dispositions should be required to comply with the relevant statutory requirements. Of course, if one were dealing with a testamentary disposition there would have to be compliance with the relevant requirements of the legislation in question. But that is to beg the question; if the arrangement made was not testamentary (which in my judgment it was not) then the legislative provisions (see Part VIII of the Succession Act 1965) have no application.
Towards the end of his submissions, Mr McCann no doubt in the light of the trial judge’s finding about the donor’s intentions, came to submit that his client’s claim rested in law and to say that the case was not concerned with a trust, express or implied. He says the situation is simply that the monies on deposit belonged to the estate of the deceased. However, I believe that at law the niece had a legal interest in the monies on deposit either by reason of the contractual relationship of the parties or, in the alternative, as a gift which admittedly was not a completed gift in the conventional sense but is nonetheless one that should be upheld as being a gift subject to a contingency viz. that of the death of the donor which contingency does not disqualify it as being a proper gift.
It seems to me that Owens v. Greene gives cause for unease on a number of grounds. In the first place, the judgments contain a number of severe criticisms of witnesses in the case which sound strange to us since we are accustomed to holding that matters of primary fact are exclusively for the trial judge and even in regard to inferences of fact respect must always be afforded to the trial judge’s finding. (cf. Hay v. O’Grady [1992] 1 IR 210; [1992] ILRM 689). But since no report of the judgment of the trial judge (Meredith J) is extant we do not know what findings of fact he made. Further, criticisms are made in the course of the judgments concerning counsel’s submissions which it is difficult to square with the manner in which the case was pleaded and, indeed, the account of the argument put forward for the donees as it appears in the report. The case pleaded was that the deceased declared that the monies on deposit were to belong beneficially to the plaintiff in the event of the death of the deceased and would not in that event form any part of his estate. The argument apparently presented to the court was that the sole question was whether the trial judge was justified in finding as a fact, as he did find, that the donor intended and expressed the intention that each (donee) should be entitled beneficially to the property of which he became the legal owner on the death of the donor, so rebutting the presumption of a resulting trust.
As his last stand, Mr McCann, has urged that if it is thought that the concept of trust must be considered (and in my view because of the course that the case *122 took in the High Court it is clear that we must deal with the relevance of the trust concept) that we should not overrule Owens v. Greene since it has stood for so long and, therefore, has been relied upon over the years by practitioners in advising clients. In the circumstances, since I believe — a view shared by all members of the court — that the decision was wrongly decided it should be overruled. (cf. Ryan’s Car Hire Ltd v. Attorney General [1965] IR 642; Mogul of Ireland v. Tipperary (North Riding) County Council [1976] IR 260 and Finucane v. McMahon [1990] 1 IR 165; [1990] ILRM 505).
Further, this will introduce a measure of consistency in our jurisprudence: it restores equity to the high ground which it should properly occupy to ameliorate the harshness of common law rules on occasion rather than itself be an instrument of injustice. Further, it brings us into line with other common law jurisdictions.
I would allow the appeal.