Unconscionable Bargains
Cases
Lloyds Bank Ltd v Bundy
[1974] EWCA 8
Lord Denning MR
“The general rule
Now let me say at once that in the vast majority of cases a customer who signs a bank guarantee or a charge cannot get out of it. No bargain will be upset which is the result of the ordinary interplay of forces. There are many hard cases which are caught by this rule. Take the case of a poor man who is homeless. He agrees to pay a high rent to a landlord just to get a roof over his head. The common law will not interfere. It is left to Parliament. Next take the case of a borrower in urgent need of money. He borrows it from the bank at high interest and it is guaranteed by a friend. The guarantor gives his bond and gets nothing in return. The common law will not interfere. Parliament has intervened to prevent moneylenders charging excessive interest. But it has never interfered with banks.
Yet there are exceptions to this general rule. There are cases in our books in which the courts will set aside a contract, or a transfer of property, when the parties have not met on equal terms – when the one is so strong in bargaining power and the other so weak – that, as a matter of common fairness, it is not right that the strong should be allowed to push the weak to the wall. Hitherto those exceptional cases have been treated each as a separate category in itself. But I think the time has come when we should seek to find a principle to unite them. I put on one side contracts or transactions which are voidable for fraud or misrepresentation or mistake. All those are governed by settled principles. I go only to those where there has been inequality of bargaining power, such as to merit the intervention of the court.
The categories
The first category is that of “duress of goods.” A typical case is when a man is in a strong bargaining position by being in possession of the goods of another by virtue of a legal right, such as by way of pawn or pledge or taken in distress. The owner is in a weak position because he is in urgent need of the goods. The stronger demands of the weaker more than is justly due: and he pays it in order to get the goods. Such a transaction is voidable. He can recover the excess: see Astley v Reynolds (1731) 2 Stra. 915 and Green v Duckett (1883) 11 Q.B.D. 275 . To which may be added the cases of “colore officii,” where a man is in a strong bargaining position by virtue of his official position or public profession. He relies upon it so as to gain from the weaker – who is urgently in need – more than is justly due: see Pigott’s case cited by Lord Kenyon C.J. in Cartwright v Rowley (1799) 2 Esp. 723 , 723-724; Parker v Bristol and Exeter Railway Co (1851) 6 Exch. 702 and Steele v Williams (1853) 8 Exch. 625 . In such cases the stronger may make his claim in good faith honestly believing that he is entitled to make his demand. He may not be guilty of any fraud or misrepresentation. The inequality of bargaining power – the strength of the one versus the urgent need of the other – renders the transaction voidable and the money paid to be recovered back: see Maskell v Horner [1915] 3 KB 106.
The second category is that of the “unconscionable transaction.” A man is so placed as to be in need of special care and protection and yet his weakness is exploited by another far stronger than himself so as to get his property at a gross undervalue. The typical case is that of the “expectant heir.” But it applies to all cases where a man comes into property, or is expected to come into it – and then being in urgent need – another gives him ready cash for it, greatly below its true worth, and so gets the property transferred to him: see Evans v Llewellin (1787) 1 Cox 333 . Even though there be no evidence of fraud or misrepresentation, nevertheless the transaction will be set aside: see Fry v Lane (1888) 40 Ch.D. 312 , 322 where Kay J. said:
“The result of the decisions is that where a purchase is made from a poor and ignorant man at a considerable undervalue, the vendor having no independent advice, a court of equity will set aside the transaction.”
This second category is said to extend to all cases where an unfair advantage has been gained by an unconscientious use of power by a stronger party against a weaker: see the cases cited in Halsbury’s Laws of England, 3rd ed., vol. 17 (1956), p. 682 and, in Canada, Morrison v Coast Finance Ltd (1965) 55 D.L.R. (2d) 710 and Knupp v Bell (1968) 67 D.L.R. (2d) 256 . The third category is that of “undue influence” usually so called. These are divided into two classes as stated by Cotton L.J. in Allcard v Skinner (1887) 36 Ch.D. 145 , 171. The first are those where the stronger has been guilty of some fraud or wrongful act – expressly so as to gain some gift or advantage from the weaker. The second are those where the stronger has not been guilty of any wrongful act, but has, through the relationship which existed between him and the weaker, gained some gift or advantage for himself. Sometimes the relationship is such as to raise a presumption of undue influence, such as parent over child, solicitor over client, doctor over patient, spiritual adviser over follower. At other times a relationship of confidence must be proved to exist. But to all of them the general principle obtains which was stated by Lord Chelmsford L.C. in Tate v Williamson (1866) 2 Ch.App. 55 , 61:
“Wherever two persons stand in such a relation that, while it continues, confidence is necessarily reposed by one, and the influence which naturally grows out of that confidence is possessed by the other, and this confidence is abused, or the influence is exerted to obtain an advantage at the expense of the confiding party, the person so availing himself of his position will not be permitted to retain the advantage, although the transaction could not have been impeached if no such confidential relation had existed.”
Such a case was Tufton v Sperni [1952] 2 T.L.R. 516 .
The fourth category is that of “undue pressure.” The most apposite of that is Williams v Bayley (1866) L.R. 1 H.L. 200 , where a son forged his father’s name to a promissory note and, by means of it, raised money from the bank of which they were both customers. The bank said to the father, in effect: “Take your choice – give us security for your son’s debt. If you do take that on yourself, then it will all go smoothly: if you do not, we shall be bound to exercise pressure.” Thereupon the father charged his property to the bank with payment of the note. The House of Lords held that the charge was invalid because of undue pressure exerted by the bank. Lord Westbury said, at pp. 218-219:
“A contract to give security for the debt of another, which is a contract without consideration, is above all things, a contract that should be based upon the free and voluntary agency of the individual who enters into it.”
Other instances of undue pressure are where one party stipulates for an unfair advantage to which the other has no option but to submit. As where an employer – the stronger party – has employed a builder – the weaker party – to do work for him. When the builder asked for payment of sums properly due (so as to pay his workmen) the employer refused to pay unless he was given some added advantage. Stuart V.-C. said: “Where an agreement, hard and inequitable in itself, has been exacted under circumstances of pressure on the part of the person who exacts it, this court will set it aside”: see Ormes v Beadel (1860) 2 Giff. 166 , 174 (reversed on another ground, 2 De G.F. & J. 333 ) and D&C Builders Ltd v Rees [1966] 2 QB 617 , 625.
The fifth category is that of salvage agreements. When a vessel is in danger of sinking and seeks help, the rescuer is in a strong bargaining position. The vessel in distress is in urgent need. The parties cannot be truly said to be on equal terms. The Court of Admiralty have always recognised that fact. The “fundamental rule” is
“if the parties have made an agreement, the court will enforce it, unless it be manifestly unfair and unjust; but if it be manifestly unfair and unjust, the court will disregard it and decree what is fair and just.”
See Akerblom v Price (1881) 7 Q.B.D. 129 , 133, per Brett LJ, applied in a striking case The Port Caledonia and The Anna [1903] P. 184 , when the rescuer refused to help with a rope unless he was paid £1,000.
The general principles
Gathering all together, I would suggest that through all these instances there runs a single thread. They rest on “inequality of bargaining power.” By virtue of it, the English law gives relief to one who, without independent advice, enters into a contract upon terms which are very unfair or transfers property for a consideration which is grossly inadequate, when his bargaining power is grievously impaired by reason of his own needs or desires, or by his own ignorance or infirmity, coupled with undue influences or pressures brought to bear on him by or for the benefit of the other. When I use the word “undue” I do not mean to suggest that the principle depends on proof of any wrongdoing. The one who stipulates for an unfair advantage may be moved solely by his own self-interest, unconscious of the distress he is bringing to the other. I have also avoided any reference to the will of the one being “dominated” or “overcome” by the other. One who is in extreme need may knowingly consent to a most improvident bargain, solely to relieve the straits in which he finds himself. Again, I do not mean to suggest that every transaction is saved by independent advice. But the absence of it may be fatal. With these explanations, I hope this principle will be found to reconcile the cases. Applying it to the present case, I would notice these points:
(1) The consideration moving from the bank was grossly inadequate. The son’s company was in serious difficulty. The overdraft was at its limit of £10,000. The bank considered that its existing security was insufficient. In order to get further security, it asked the father to charge the house – his sole asset – to the uttermost. It was worth £10,000. The charge was for £11,000. That was for the benefit of the bank. But not at all for the benefit of the father, or indeed for the company. The bank did not promise to continue the overdraft or to increase it. On the contrary, it required the overdraft to be reduced. All that the company gained was a short respite from impending doom.
(2) The relationship between the bank and the father was one of trust and confidence. The bank knew that the father relied on it implicitly to advise him about the transaction. The father trusted the bank. This gave the bank much influence on the father. Yet the bank failed in that trust. It allowed the father to charge the house to his ruin.
(3) The relationship between the father and the son was one where the father’s natural affection had much influence on him. He would naturally desire to accede to his son’s request. He trusted his son.
(4) There was a conflict of interest between the bank and the father. Yet the bank did not realise it. Nor did it suggest that the father should get independent advice. If the father had gone to his solicitor – or to any man of business – there is no doubt that any one of them would say: “You must not enter into this transaction. You are giving up your house, your sole remaining asset, for no benefit to you. The company is in such a parlous state that you must not do it.”
These considerations seem to me to bring this case within the principles I have stated. But, in case that principle is wrong, I would also say that the case falls within the category of undue influence of the second class stated by Cotton L.J. in Allcard v. Skinner, 36 Ch.D. 145 , 171. I have no doubt that the assistant bank manager acted in the utmost good faith and was straightforward and genuine. Indeed the father said so. But beyond doubt he was acting in the interests of the bank – to get further security for a bad debt. There was such a relationship of trust and confidence between them that the bank ought not to have swept up his sole remaining asset into its hands – for nothing – without his having independent advice. I would therefore allow this appeal.”
Alec Lobb (Garages) Ltd v Total Oil (GB) Ltd
[1984] EWCA Civ
Dillon LJ
“The basis of the contention that the transaction of the Lease and Lease back ought to be set aside in equity is that it is submitted, and in the Court below was accepted on behalf of Total, that during the negotiations for the Lease and Lease back the parties did not have equal bargaining power, and it is therefore further submitted that a contract between parties who had unequal bargaining power can only stand and be enforced by the stronger if he can prove that the contract was in point of fact, fair, just and reasonable. The concept of unequal bargaining power is taken particularly from the judgment of Lord Denning MR in Lloyd’s Bank v Bundy [1975] QB 326. The reference to a contract only standing if it is proved to have been in point of fact fair, just and reasonable is taken from the judgment of Lord Selborne LC in Earl of Aylesbury v Morris LR 8 Ch.App 484 at 490-491. Lord Selborne was not there seeking to generalise; he was dealing only with what he regarded as one of the oldest heads of equity, relieving against fraud practised on heirs or expectants, particularly fraud practised on young noblemen of great expectations, considerable extravagance and no ready-money. It is none the less submitted that the logic of the development of the law leads to the conclusion that Lord Selborne’s test should now be applied generally to any contract entered into between parties who did not have equal bargaining power.
In fact Lord Denning’s judgment in Lloyd’s Bank v Bundy merely laid down the proposition that where there was unequal bargaining power the contract could not stand if the weaker did not have separate legal advice. In the present case Mr Lobb and the Company did have separate advice from their own solicitor. On the facts of this case, however, that does not weaken the appellants’ case if the general proposition of law which they put forward is valid. Total refused to accept any of the modifications of the transaction as put forward by Total which the Company’s and Mr Lobb’s solicitor suggested, and in the end the solicitor advised them not to proceed. Mr Lobb declined to accept that advice because his and the Company’s financial difficulties were so great, and, it may be said, their bargaining power was so small, that he felt he had no alternative but to accept Total’s terms. Because of the existing valid tie to Total which had, as I have said, three to four years to run, he had no prospect at all of raising finance on the scale he required from any source other than Total. There is no suggestion that there was any other dealer readily available who could have bought the property from him subject to the tie. The only practical solutions open to him were to accept the terms of the Lease and Lease back as put forward by Total on which Total was not prepared to negotiate, or to sell the freehold of the property to Total and cease trading. In these circumstances, it would be unreal, in my judgment, to hold that if the transaction is otherwise tainted it is cured merely because Mr Lobb and the Company had independent advice.
But on the learned deputy Judge’s findings can it be said that the transaction is tainted? Lord Selborne dealt with the case before him as a case of fraud. He said at pages 490-1: “The usury laws, however, proved to be an inconvenient fetter upon the liberty of commercial transactions; and the arbitrary rule of equity as to sales of reversions was an impediment to fair and reasonable, as well as to unconscionable, bargains. Both have been abolished by the Legislature; but the abolition of the usury laws still leaves the nature of the bargain capable of being a note of fraud in the estimation of this Court; and the Act as to sales of reversions (31 Vict. c. 4) is carefully limited to purchases “made bona fide and without fraud or unfair dealing”, and leaves under-value still a material element in cases in which it is not the sole equitable ground for relief. These changes of the law have in no degree whatever altered the onus probandi in those cases, which, according to the language of Lord Hardwicke, raise “from the circumstances or conditions of the parties contracting — weakness on one side, usury on the other, or extortion, or advantage taken of that weakness” — a presumption of fraud. Fraud does not here mean deceit or circumvention; it means an unconscientious use of the power arising out of these circumstances and conditions; and when the relative position of the parties is such as prima facie to raise this presumption, the transaction cannot stand unless the person claiming the benefit of it is able to repel the presumption by contrary evidence, proving it to have been in point of fact fair, just, and reasonable.”
The whole emphasis is on extortion, or undue advantage taken of weakness, an unconscientious use of the power arising out of the inequality of the parties’ circumstances, and on unconscientious use of power which the Court might in certain circumstances be entitled to infer from a particular — and in these days notorious — relationship unless the contract is proved to have been in fact fair, just and reasonable. Nothing leads me to suppose that the course of the development of the law over the last 100 years has been such that the emphasis on unconscionable conduct or unconscientious use of power has gone and relief will now be granted in equity in a case such as the present if there has been unequal bargaining power, even if the stronger has not used his strength unconscionably. I agree with the judgment of Browne-Wilkinson J. in Multiservice Bookbinding Ltd v Marden [1979] Ch 84 which sets out that to establish that a term is unfair and unconscionable it is not enough to show that it is, objectively, unreasonable.
In the present case there are findings of fact by the learned Deputy Judge that the conduct of Total was not unconscionable, coercive or oppressive. There is ample evidence to support those findings and they are not challenged by the appellants. Their case is that the Judge applied the wrong test; where there is unequal bargaining power, the test is, they say, whether its terms are fair, just and reasonable and it is unnecessary to consider whether the conduct of the stronger party was oppressive or unconscionable. I do not accept the appellants’ proposition of law. In my judgment the findings of the learned Judge conclude this ground of appeal against the appellants.
Inequality of bargaining power must anyhow be a relative concept. It is seldom in any negotiation that the bargaining powers of the parties are absolutely equal. Any individual wanting to borrow money from a bank, building society or other financial institution in order to pay his liabilities or buy some property he urgently wants to acquire will have virtually no bargaining power; he will have to take or leave the terms offered to him. So, with house property in a seller’s market, the purchaser will not have equal bargaining power with the vendor. But Lord Denning did not envisage that any contract entered into in such circumstances would, without more, be reviewed by the Courts by the objective criterion of what was reasonable. See Lloyd’s Bank v Bundy at page 336. The Courts would only interfere in exceptional cases where as a matter of common fairness it was not right that the strong should be allowed to push the weak to the wall. The concepts of unconscionable conduct and of the exercise by the stronger of coercive power are thus brought in, and in the present case they are negatived by the deputy Judge’s findings.
Even if, contrary to my view just expressed, the Company and Mr and Mrs Lobb had initially in 1969 a valid claim in equity to have the Lease and Lease back set aside as a result of the inequality of bargaining power, that claim was, in my judgment, barred by laches well before the issue of the Writ in this action.”
Gregg v. Kidd
[1956] IR 183
Budd J. 194
Voluntary gifts, made inter vivos, obtained by persons standing in a confidential, fiduciary, or other relation to the donor in which dominion may be exercised over him may, upon principles of general public policy, be set aside where there has been some improper conduct, overreaching or coercion exercised against the donor. The general principles are well stated in White and Tudor’s Leading Cases in Equity in the notes appended to the case of Hugueninv. Baseley (1). As Lord Cottenham states in Dent v. Bennett (2): “The relief . . . stands upon a general principle, applying to all variety of relations in which dominion may be exercised by one person over another.” It applies of course where the gift is the result of influence expressly used by the donee and also “where the relations between the donor and 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 a 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”: per Cotton L. J. in Allcard v. Skinner (3).
The courts have never confined the application of the principle to any stated forms of relationship. To do so would fetter that wide jurisdiction to relieve against all manner of constructive fraud which courts administering equitable principles have always exercised. The principle has been exercised in the case of an improvident voluntary settlement by a younger sister in favour of an elder sister, who had obtained great ascendancy and influence over the younger sister, the younger sister not having the benefit of independent advice: Harvey v. Mount (4). In Sharpv. Leach (5) a voluntary deed, under which a brother obtained an advantage from a sister who lived with him and consulted him about her affairs, was set aside. The improvidence of the transaction was held to cast the onus on the defendant to show that the deed emanated from the free will of the sister after it had been explained to her. Similarly in Griffiths v. Robins (6), an old lady, nearly blind, who reserving only a life estate to herself, made a deed of gift of all her property to her niece and her husband, on whose kindness and assistance she depended, was held entitled to have the deed set aside. The onus was held to be upon the recipients to establish that the deed was made of her own free will and effected through the intervention of some indifferent person.
The authorities cited leave no doubt that the principle can be extended to the relationship of brother and sister, where a sister has for one reason or another acquired an influence or dominion over a brother and uses that influence improperly for her own ends. Likewise it can be extended in similar circumstances to the relationship between uncle and nephew. The influence may arise or be acquired in many ways, such as through disparity of age or the mental or physical incapacity of the donor or, indeed, out of a mere dependence upon the kindness and assistance of another. To bring the principle into play it must be shown that the opportunity for the exercise of the influence or ascendancy on the donor existed, as where the parties reside together or meet frequently. While close family relationship creates a situation where influence is readily acquired, mere blood relationship is not sufficient of itself to call the principle into play; it must be shown that the actual relations between the parties give rise to a presumption of influence.
Although the exercise of undue influence is pleaded against the donee of the deed impugned, as well as against others, it is true to say that the evidence was mainly directed to establishing that influence had been obtained and exercised over the donor by Mrs. Hannah Kidds mother of the donee. There is in my mind no doubt that if it be shown that this deed was obtained by the undue influence of Mrs. Hannah Kidd or as a result of her dominion of mind over her brother, improperly exercised to benefit a member of her family, this deed cannot stand. Indeed, it is only right to say that a contention to the contrary was never made by the advisers of the defendants. Although authority is scarcely required on the point, I recall the words of Lord Eldon in the first paragraph of his judgment in Huegenin, v. Baseley (1) where he says:”I should regret that any doubt could be entertained, whether it is not competent to a Court of equity to take away from third persons the benefits which they have derived from the fraud, imposition, or undue influence of others.” If the proper deductions from the evidence adduced are that Jack Kidd knew perfectly well that his mother had acquired influence over the donor and that they acted together in order to obtain some advantage from the donor, the grounds for interfering are all the stronger.
Some debate took place during the hearing as to where the onus of proof lay. In the case of a voluntary gift where the relations between the donor and donee are such as to raise a presumption that the donee had influence over the donor, the onus lies, in my view, on the donee to establish that the gift was the spontaneous act of the donor acting in circumstances which enabled him to exercise an independent will and that the gift was the result of a free exercise of the donor’s will. This proposition I believe to be one well established. Authority will be found for it in the cases of Allcard v. Skinner (1), Sharp v. Leach (2),and Griffiths v. Robins (3), already referred to, and also in the observations of Lord Romilly in Cooke v. Lamotte (4).If more modern authority is required it will be found in the judgment of Lord Hailsham in the comparatively recent case of Inche Noriah v. Shaik Allie Bin Omar (5).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 that third party is both closely related to the donee and was closely associated in action and interest with the donee at the time of the events leading to the transaction, it would seem to me 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 own free will or in some other way. As Lord Hailsham says, in Inche Noriah v. Shaik Allie Bin Omar (6):”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 nature of that advice naturally must vary with the circumstances of each particular case.
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The duty of a solicitor advising a donor suffering from a degree of mental or physical infirmity about to make a voluntary settlement of the greater portion of his property is not an easy one. The judgment of Farwell J. in Powellv. Powell (4) has been relied on as stating the duty. Having stated that in his view a solicitor who acts for both parties cannot be independent of the donee in fact and that it is not sufficient that the donor should have an independent adviser unless he acts on the advice, Farwell J. points out that it is the duty of the solicitor to protect the donor against himself and not merely against the personal influence of the donee. He was dealing with a case of child and step-parent but the same considerations apply, in my view, to a case such as the present. He goes on to say that the solicitor does not discharge his duty by satisfying himself simply that the donor understands and wishes to carry out the particular transaction, and adds (at p. 247):”He must also satisfy himself that the gift is one that it is right and proper for the donor to make under all the circumstances; and if he is not so satisfied, his duty is to advise his client not to go on with the transaction, and to refuse to act. further for him if he persists.” He found that the solicitor in question had not, inter alia, advised the donor in that case of the proper course to adopt or recommended the insertion in the settlement of a power of revocation. The Privy Council in Inche Noriah v. Shaik Allie Bin Omar (1) were not prepared to affirm that independent legal advice, when given, does not rebut the presumption unless it be shown that the advice was taken. What is necessary, Lord Hailsham said, is that the donee should prove that the gift was the result of the free exercise of independent will. He adds that the most obvious way to prove this is by establishing that the gift was made after the nature and effect of the transaction had been fully explained to the donor by some independent and qualified person so completely as to satisfy the Court that the donor was acting independently of any influence from the donee and with the full appreciation of what he was doing. Finally, he says, the advice must be given with a knowledge of all relevant circumstances and must be such as a competent adviser would give if acting solely in the interests of the donor. With great respect to that learned Judge there are two statements in his judgment on which I venture to differ from the views of Farwell J. In accordance with the view of the Privy Council it seems to me that independent legal advice may in certain circumstances rebut the presumption even though that advice is not taken. Moreover, I do not think that a solicitor is bound to refuse to act further for his client in all cases of the nature I am dealing with where his advice to his client not to proceed with the transaction is not taken, though in some extreme cases that may be the proper course. Apart from these two matters I adopt the views of Farwell J. and Lord Hailsham as to the duties of a solicitor in similar cases, observing, however, that they are not necessarily exhaustive. The nature of the advice to be given must in all instances depend upon the facts and circumstances of each case.
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The findings I have so far made are sufficient to determine the action, but the plaintiff does not rest his case solely on the contentions I have dealt with. He also relies on the decision in Grealish v. Murphy (1), a decision of Gavan Duffy J., as he then was, and says that the circumstances of this case cause it to fall within the principle of that decision.
The plaintiff in that proceeding, who was mentally deficient, executed a deed transferring his farm to a much younger man. The deed reserved a life estate to the plaintiff but the lands were charged with the defendant’s right of residence and maintenance during the plaintiff’s life. The defendant covenanted to reside on, and to work and manage, the farm without reward during the plaintiff’s lifetime, to account for moneys received and expended and to pay the plaintiff £1 for every week in which he failed to reside on the farm and to indemnify the plaintiff for any loss or expense incurred or the maintenance or wages of any person employed to do work which the defendant failed to do. I have only taken the salient factors of the deed. They show that the plaintiff was more adequately protected than was George Gregg. Gavan Duffy J. took the view that the circumstances of the case brought into operation the principle stated by Lord Hatherley, in O’Rorke v.Bolingbroke (2) (in which he dissented on facts), that equity comes to the rescue whenever the parties to a contract have not met upon equal terms, the corollary being, he said, that the Court must inquire whether a grantor, shown to be unequal to protecting himself, has had the protection which was his due by reason of his infirmity. Having stated that the principle applies to improvident grants and that in several instances the inadequacy of the explanations given to the grantor has been a decisive factor in the Court’s action against an improvident deed, the learned Judge set aside the improvident deed by reason of the plaintiff’s weakness of mind coupled with the deficiencies of the legal advice under which he acted and his unawareness.
The late President expressly stated that the deed could not be avoided by reason of any undue influence and that the case was not one where any presumption of undue influence arose from the relationship of the parties. The degree of the plaintiff’s incapacity coupled with deficiencies of advice and the improvidence of the transaction was held sufficient in the circumstances of that case to entitle the donor to relief. That degree of incapacity was that the donor had not attained the normal power of an adult. I have already expressed the view that the deed made by George Gregg was improvident. He was suffering from such incapacity as would prevent him from understanding anything but the simplest transaction. His solicitor had not got the facts as to the nature of his illness or his incapacity. Apart from any question of the donor being subject to influence, he did not consider what safeguards might be necessary to protect George Gregg for the future nor warn him as to the improvidence of what he contemplated and against entering into the transaction as proposed. He did not advise him as to what steps he ought to take to protect himself, such as the insertion of a power of revocation. Since he was not warned of the improvidence of the transaction nor told what steps could be taken to safeguard himself, George Gregg was never fully aware of what he was doing or its consequences and could not, in my view, be said to have fully understood the transaction. The case therefore in some of its essential features falls within the principle of the decision of Gavan Duffy J. in Grealish v. Murphy (1), but as, in my view, the case falls more properly within the principles laid down in the other cases I have dealt with, I prefer to rest my judgment on the basis that the relations existing between the donor, on the one hand, and the donee and his mother, on the other, were such as to raise a presumption that the donee’s mother and the donee acting through and with her had influence over the donor and that that presumption has not been rebutted by showing that in fact the gift was the spontaneous act of the donor acting under circumstances which enabled him to exercise an independent will and that the gift resulted from a free exercise of the donor’s will.
The indenture of the 28th September, 1953, must, therefore, be set aside and the deed must be delivered up to be cancelled.
Daniel v Drew
[2005] EWCA Civ 507
Ward LJ
The judge’s directions as to the law.
He said that the relevant law was not in dispute and was contained in Lord Nicholls of Birkenhead’s speech in Royal Bank of Scotland v Etridge (No. 2) [2002] 2 AC 773 and he quoted from paragraphs 6 to 12 inclusive. In this part of his speech Lord Nicholls had found it “necessary to go back to first principles”. He explained in paragraph 6 that:-
“Undue influence is one of the grounds of relief developed by the Courts of Equity as a court of conscience. The objective is to ensure that the influence of one party over another is not abused.”
In paragraph 7 he explained how equity supplemented the common law which dealt narrowly with duress:-
“Equity extended the reach of the law to other unacceptable forms of persuasion. The law will investigate the manner in which the intention to enter into the transaction was secured; “how the intention was produced”; in the oft repeated words of Lord Eldon as long ago as 1807 (Huguenin v Baseley 14 Ves 273, 300). If the intention was produced by an unacceptable means the law will not permit the transaction to stand. The means used is regarded as an exercise of improper or “undue” influence and hence unacceptable, whenever the consent thus procured ought not fairly to be treated as the expression of a person’s free will. It is impossible to be more precise or definite. The circumstances in which one person acquires influence over another, and the manner in which influence may be exercised, vary too widely to permit of any more specific criterion.”
In paragraph 8 he drew the distinction between “overt acts of improper pressure or coercion such as unlawful threats” and the second form now commonly referred to as presumed undue influence which:-
“arises out of the relationship between two persons where one has acquired over another a measure of influence, or ascendancy, of which the ascendant person then takes unfair advantage.”
As he explained in paragraph 9:-
“Typically this occurs when one person places trust in another to look after his affairs and interests, and the latter betrays this trust by preferring his own interests.”
In paragraph 11 he pointed out that:-
“The principle is not confined to cases of abuse of trust and confidence. It also includes, for instance, cases where a vulnerable person has been exploited. Indeed there is no single touchstone for determining whether the principle is applicable. Several expressions have been used in an endeavour to encapsulate the essence: trust and confidence, reliance, dependence or vulnerability on the one hand and ascendancy, domination or control on the other. None of these descriptions is perfect. None is all-embracing. Each has its proper place.”
Judge Weeks, a very experienced judge, said this:-
“The reference to “exploitation of the vulnerable” in paragraph 11 was made in the context of what used to be called “presumed undue influence”. Although this is a case, if anything, of express undue influence, I think the reference is relevant because the exploitation of the vulnerable can be regarded as an example of unacceptable conduct where the consent procured ought not fairly to be treated as an expression of a person’s free will.”
The judge’s conclusion.
Having asked whether Margaret’s intention had been procured by unacceptable means he decided:-
“Mrs Drew was, in my judgment, a vulnerable person, unversed in business, anxious to avoid confrontation and eager to comply. Nicholas Daniel was younger and according to his aunt did not show her the respect she thought he should. I have heard him give evidence. He has a keen appreciation of his own interests and scant regard for those of others. “Unscrupulous” would be too harsh a description but he is, at the very least, insensitive. Again, in my view, “aggressive” would probably be too harsh and “forceful” might be a better description of his character.
He knew that if his aunt was given the chance to talk to her son or her solicitors the transaction would not proceed as he wished. He deliberately chose not to involve them, but to take advantage of his aunt’s naiveté in business matters. In my judgment the means by which her signature was procured is unacceptable. Mrs Drew’s consent, obtained in the circumstances that I have described ought not fairly to be treated as an expression of her free will.”
The appellant’s case.
In summary, Mr Batstone advances this case on behalf of the appellant, though only the first two submissions were set out in the grounds of appeal in the appellant’s notice.
i) It was necessary for the claimant, Aunt Margaret, to establish that her signatures had been procured by overt acts of improper pressure or coercion and the judge neither found that nor was there evidence to support any such finding.
ii) The judge was wrong to take account of her vulnerability: in doing so he elided actual and presumed undue influence.
iii) Lord Eldon’s often quoted words, “The question is, not, whether she knew, what she was doing, had done, or proposed to do, but how the intention was produced”, are applicable only in cases of presumed undue influence and so the judge erred in applying them here.
iv) To observe that the court would have to resolve the dispute cannot amount to unlawful or improper pressure.
v) The judge erred in the fact-finding exercise in that (i) he failed to weigh the medical evidence properly (ii) he failed to take into account the contemporaneous note written by the claimant (iii) he was wrong to find that Aunt Margaret was a vulnerable lady (iv) he failed to deal at all with the evidence of Nicholas and Mr Joint that he would leave the deed with her to decide at leisure whether or not to sign it (vi) accordingly, the judge made too great an invasion into the sanctity of understandings reached between individuals simply because one had been persuaded by the other.
Actual undue influence.
It is true that Lord Nicholls defined actual undue influence in terms of “overt acts of improper pressure or coercion such as unlawful threats”. He drew the distinction between cases of presumed undue influence and those where there was evidence of “specific overt acts of persuasion” or “overt acts of persuasive conduct”. Judge Weeks directed himself in accordance with that speech and for my part I cannot accept that he did not have those matters in mind. It is, of course, only one way of describing the first class of undue influence because, as Lindley L.J. observed in Allcard v Skinner (1887) 36 Ch.D 145, 183:-
“As no Court has ever attempted to define fraud so no Court has ever attempted to define undue influence, which includes one of its many varieties.”
His description at page 181 of the first category was this:-
“There are the cases in which there has been some unfair and improper conduct, some coercion from outside, some over-reaching, some form of cheating, and generally, though not always, some personal advantage obtained by a donee placed in some close and confidential relation to the donor.”
In the broadest possible way, the difference between the two classes is that in the case of actual undue influence something has to be done to twist the mind of a donor whereas in cases of presumed undue influence it is more a case of what has not been done namely ensuring that independent advice is available to the donor. I will return to the question of whether or not this is established in this case.
Mr Batstone is also correct in his submission that when Lord Nicholls included cases “where a vulnerable person has been exploited”, he was still dealing with presumed undue influence. Where I disagree with Mr Batstone is in his submission that the judge fell into the error of eliding the two classes of cases. He did not. He was clear that the reference to “exploitation of the vulnerable” was made in the context of presumed undue influence and that this case was “if anything, [one] of express undue influence”. He did not elide the two classes. He was, however, justified in treating the exploitation as a relevant factor because it “can be regarded as an example of unacceptable conduct where the consent procured ought not fairly to be treated as the expression of a person’s free will”. There is in any given case a vast penumbra of facts which bear upon the question whether actual undue influence was exerted. The vulnerability of one party must feature in that analysis. So does the forcefulness of the personality of the other. I can see no error in the judge’s approach.
I cannot accept Mr Batstone’s submission that Lord Eldon’s words apply only in the case of presumed undue influence. He draws support for that submission from this passage in Lindley L.J.’s judgment at page 181-182 which I cite at length:-
“The second group consists of cases in which the position of the donor to the donee has been such that it has been the duty of the donee to advise the donor, or even to manage his property for him. In such cases the Court throws upon the donee the burden of proving that he has not abused his position, and of proving that the gift made to him has not been brought about by any undue influence on his part. In this class of cases it has been considered necessary to show that the donor had independent advice, and was removed from the influence of the donee when the gift to him was made. Huguenin v Baseley was a case of this kind. The defendant had not only acquired considerable spiritual influence over the plaintiff, but was entrusted by her with the management of her property. His duty to her was clear, and it was with reference to persons so situated that Lord Eldon used the language so often quoted and so much relied on in this case. He said: “Take it that she (the plaintiff) intended to give it to him (the defendant): it is by no means out of the reach of the principle. The question is, not, whether she knew, what she was doing, had done, or proposed to do, but how the intention was produced: whether all that care and providence was placed round her, as against those, who advised her, which, from their situation in relation with respect to her, they were bound to exert on her behalf.” This principle has been constantly recognised and acted upon in the subsequent cases, but in all of them, as in Huguenin v Baseley itself, it was the duty of the donee to advise and take care of the donor. Where there is no such duty the language of Lord Eldon ceases to be applicable.”
I venture to think Mr Batstone has misunderstood the last sentence. What Lindley L.J. was saying is that if there is no duty of the kind which fixes the case in class two, then there is no need to question why the donor acted as she did. The court does not enter upon that enquiry unless the relationship of ascendancy, which is how Lord Nicholls described it, has first been established. Without that evidence a case of presumed undue influence simply would not get off the ground.
Nothing in Lindley L.J.’s judgment suggests that Lord Eldon’s dictum should be as narrowly confined as Mr Batstone submits. If there is no presumed undue influence then there is no need to inquire what prompted the relevant decision taken by the donor but if actual influence is under consideration the enquiry seems equally apposite. Lindley L.J. went on in his judgment on page 182 to examine the principle which underlies both classes of undue influence and he set it out in these terms:-
“Is it that it is right and expedient to save persons from the consequence of their own folly? or is it that it is right and expedient to save them from being victimised by other people? In my opinion the doctrine of undue influence is founded upon the second of these two principles. Courts of Equity have never set aside gifts on the ground of the folly, imprudence, or want of foresight on the part of donors. The Courts have always repudiated any such jurisdiction. Huguenin v Baseley is itself a clear authority to this effect. It would obviously be to encourage folly, recklessness, extravagance and vice if persons could get back property which they foolishly made away with, whether by giving it to charitable institutions or by bestowing it on less worthy objects. On the other hand to protect people from being forced, tricked or misled in any way by others into parting with their property is one of the most legitimate objects of all laws; and the equitable doctrine of undue influence has grown out of and been developed by the necessity of grappling with insidious forms of spiritual tyranny and with the infinite varieties of fraud.
As no Court has ever attempted to define fraud, so no Court has ever attempted to define undue influence, which includes one of its many varieties. The undue influence which Courts of Equity endeavour to defeat is the undue influence of one person over another; not the influence of enthusiasm on the enthusiast who is carried away by it, unless indeed such enthusiasm is itself the result of external undue influence. But the influence of one mind over another is very subtle …”
This passage, which I repeat applies to both forms of undue influence, demonstrates to me that in all cases of undue influence the critical question is whether or not the persuasion or the advice, in other words the influence, has invaded the free volition of the donor to accept or reject the persuasion or advice or withstand the influence. The donor may be led but she must not be driven and her will must be the offspring of her own volition, not a record of someone else’s. There is no undue influence unless the donor if she were free and informed could say “This is not my wish but I must do it”.
Any doubt that Lord Eldon’s words apply to both classes of undue influence is removed by paragraph 7 of Lord Nicholls’ speech which I have set out in paragraph 24 above where, when dealing with undue influence in general he expresses the view that the law will investigate the manner in which the intention to enter into the transaction was secured. Mr Batstone was forced to concede that Lord Nicholls was dealing with both forms of undue influence and that seems to me to be the end of his argument on this ground. The judge was perfectly entitled to pose the question he had to answer in terms culled from Lord Nicholls’ speech: “How was that intention procured and was it procured by unacceptable means?”
Grealish v Murphy
[1946] IR 35
Gavan Duffy J. 45
The settlement purports to make Peter Grealish, as beneficial owner, assign the farm absolutely as from Peter’s death to Thomas Murphy, his heirs and assigns, subject to a life interest in Peter; the land is expressly charged with a right for Murphy to reside in Peter’s house and to be supported and maintained out of the land during Peter’s life; Murphy for his part covenants with Peter, during Peter’s life, without reward to reside in the house and work and manage the land and sow and harvest the crops and attend to and take proper care of all farm stock and implements and the buying and selling of stock and generally to perform all the farm work and the duties of a labourer as required by Peter and (a very important covenant) duly and properly to account for all moneys expended or received by him on behalf of Peter; and Murphy covenants to pay Peter £1 a week for every week in which he fails to reside with Peter and to indemnify Peter for any loss and expense incurred on the maintenance or wages of any person employed by Peter to perform any work that Murphy may fail to do.
Thus Peter executed an improvident settlement, surrendering irrevocably his own absolute title for a life interest in consideration of personal covenants, backed by no adequate sanctions; the farm itself was hypothecated to secure the newcomer, beside whom Peter was a Croesus; and Peter was to be left for the remainder of his life very much at the mercy of a rather impecunious young man, who had no ties of blood and was still unproved as a friend. I think effective safeguards for Peter could have been devised, if there was to be a settlement, or alternatively Peter might have contracted to settle the property on Murphy by will, upon the lines suggested by Coverdale v. Eastwood (1);whatever plan was adopted, I think that suitable conditions could and should have been determined in negotiation between the solicitors for the parties, each of whom ought to have been separately represented. But these reflections are otiose, if the conclusive answer to Peter’s present claim is that he was separately advised by an independent solicitor.
That contention deserves careful examination and I have examined it with great care. I am satisfied that Peter received from an experienced solicitor advice that was absolutely independent and I am satisfied that the draft deed was settled by very able counsel, upon instructions reflecting, of course, the state of mind and knowledge of the solicitor. Nevertheless, the question of Peter’s actual understanding of the solemn document that he executed on October 20th, 1942, is a question of first importance. Dr. Comyn, who avows that he looked upon the settlement as a transaction similar to the three attempts which, as Peter told him, had broken down, says that he was absolutely satisfied that Peter understood the instructions he gave for the deed. I have no doubt that Peter did know that the deed would secure the land to Murphy at Peter’s death and that he knew generally the undertakings that Murphy was giving in return; Peter showed his own understanding of the young man’s obligations, when he formulated his grievance in his own words:”He (Murphy) did not do anything about the agreement; he failed. . . . He was bound to look after me and buy and sell and give up the moneywhat he did not do.” But the trouble is that the solicitor, whose advice was essential to Peter, did not advise en connaissance de causeand that Peter’s actual knowledge of what he was doing fell very short of the knowledge that the settlor ought to have had. That is the result in my mind of candid evidence from Dr. Comyn himself and of inferences thereform. Consequently the principle of Harrison v. Guest (1) and Coomber v.Coomber (2), that a competent assignor, who knows what he is doing, must be held to his deed, does not apply here.
The evidence proves that the solicitor did not know all the material facts, that he did not give Peter a complete explanation of the nature and effect of the deed, and that the duty of illuminating Peter’s benighted mind was more imperative and more formidable, if the task was possible, than the solicitor supposed.
First. Dr. Comyn did not get the facts. He did not ascertain the total of Peter’s property, nor the proportion between that total and the value of the farm at Carnmore; yet that was relevant and material information for an adviser. Still more important to be known was the fact that Peter had already placed £2,000 on deposit in the joint names of himself and Murphy, with Murphy’s ready acquiescence, under the illusion, known to Murphy, that this device would ward off the imaginary terrors of Dublin Castle. Murphy, knowing Peter for what he was, could not assume that Peter had mentioned the episode, still less that he had given an accurate account of it; Murphy ought to have told the solicitor all about it, but he persisted in his curious policy of silence. Perhaps Murphy did not know positively how silly Peter’s ruse was as a measure of defence, but he is intelligent enough, in my estimate of him, to have felt the transaction to be one of questionable virtue and of very dubious value, and, both for this reason and because he stood to gain a large sum of money from his pitiable patron, he ought to have spoken out at this juncture. Here was cogent evidence, had the solicitor and counsel known it, that Peter was and would be incapable of taking care of his own interests and that Peter and Murphy combined were and would be unequal to the burden of taking care of his property. Instead of favouring the projected settlement, as he did, Dr. Comyn must have gone into the whole affair very much more warily, had he known. He did not know, because, by agreement or coincidence, each of the two men vitally concerned said nothing.
Secondly. Peter was not told and did not realise how gravely he was committing himself and jeopardising his own interests; he probably understood neither the immediate pledging of his favour to Murphy nor the effect of that charge; certainly the difference between this deed and a will was not explained to him, nor the fact that the settlement was to be irrevocable and his alienation irretrievable, no matter how badly Murphy might behave, no matter what untoward development might supervene; and he was certainly not a man to apprehend the risks, at least without the clearest and most insistent exposition of them. What precautions were taken in the deed against the vicissitudes of life? Murphy might have mismanaged the farm hopelessly, for all the solicitor could tell; or, for all he could tell, Murphy might have taken to drink or gone to the devil or married a shrew who would make Peter’s life a torture; he might have become a bankrupt; he might have been sent to hospital for years, or been committed for some time to an asylum; he might even have been sentenced to imprisonment. Unlikely events, very unlikely? Perhaps, but why do I insure my house against fire, and how was the solicitor, a stranger to Murphy, to gauge the probabilities of an ensuing incapacity or incompetence? An act of God is always unlikely (before it happens) and the devil’s action may often seem unlikely too. And if some such calamity had smitten Peter, the law might or might not have given him some costly redress. It was unlikely, perhaps very unlikely, that the young man would predecease the old; but how deplorable would Peter’s position have been, if Murphy had died after a few months’ work under the deed and perhaps twenty years before Peter himself! However, Peter’s advisers had no more dark forebodings than their client. Clearly there were some important aspects of the deed far outside poor Peter’s ken, when he scratched his rude mark upon the paper.
Thirdly. The solicitor quite erroneously considered and treated Peter as a normal member of the farming community; in fact I think he treated him as a man of high intelligence. Taking his client to be a competent judge of his own man, the solicitor, who just knew Murphy to be a farmer’s son and no relative and Peter’s dumb attendant, made no inquiries at all as to Murphy’s antecedents, character, capacity or financial position; he assumed both the fitness of Murphy and the value of his covenants; he did not suspect how easily the young man might become master of the situation, nor how much he would be tempted to abuse his trust; and the deed reflects that kindly confidence; whether Dr. Comyn seriously expected Murphy to keep accounts, I do not know. No need was felt to appoint trustees; perhaps they would have been hard to find, but, had the solicitor realised the settlor’s weakness, he would have seen that Peter required and must have the protection for which trusts were invented. Unless there be a legal presumption of undue influence against Murphy, making other questions quite subordinate, I regard it as a matter of high importance that Peter’s advisers in this particular transaction should have been equipped to advise him with a just appreciation of his mental debility and his special need of protection. They were not so equipped and Peter did not get the circumspect advice and protection so necessary to him.
Now, how is Murphy affected by any criticism reflecting upon the advice under which Peter acted? I have shown that Murphy’s own conduct in the matter was not beyond reproach, but any impartial person will see that it is quite impossible to say that the deed was procured through Murphy’s undue influence, even if he did his part during nearly nine months, as he naturally would, to keep the old man’s ardour alive. Nor is this the familiar case in which the Court, from the relation of the parties, must presume undue influence until disproved positively by the recipient of the bounty; Murphy had constituted himself Peter’s interim confidential agent in January, 1942, and had thus placed himself in a very delicate position, an exceptionally delicate position in view of Peter’s mentality; but the undoubted fact is that some such transaction as that eventuating in the actual settlement had been expressly envisaged by the parties from the outset, before Murphy can have acquired any influence whatsoever; therefore I cannot fairly impute to him Peter’s decision to put the business on a legal basis as soon as the way was made clear by the final elimination of the Fox interest, the only obstacle. And Murphy in no way interfered with the drafting of the deed in the particular form which it took.
Peter had intended all through to leave the property to Murphy and to bind himself to that effect, in return for the precious services to be rendered by the vigorous young man to the rather helpless old one. As from January, 1942, Murphy had only to be kind to Peter, as he was, and to retain his goodwill, as he certainly did, in order to secure his reward from that eager benefactor. Besides, the plan was not originated by Murphy, but by Peter, and by Peter alone. Murphy on his side had faced appreciable risks in accepting Peter’s advances; and any picture of him as an adventurer, inveigling his witless victim into a trap in the October settlement, would be a caricature. Much as I blame Murphy for his reticence (partly perhaps through ignorance) as to the existence of his own solicitor and for his want of candour in suppressing the eccentric and disquieting £2,000 deposit in the joint names, I could not in common sense treat these faults as any evidence of undue influence in relation to the settlement on the facts; and, if Murphy throws doubt on the veracity of his own evidence concerning Peter’s alleged original offer to settle money on him, by his failure to mention that important promise to Dr. Comyn and his failure to call upon the solicitor to make good that promise in the deed, here again my criticism of Murphy as a witness is foreign to the issue of undue influence in fact and remote from any evidence that would raise a legal presumption of undue influence against Murphy, so far as the settlement is concerned.
The result is that the plaintiff’s attempt to set aside the deed on the ground of undue influence, whether actual or presumptive, by Murphy cannot succeed, and, if the deed had to stand or fall upon that issue, there would be nothing more to say. But the position in law as I see it, upon the pleadings, is not so simple as that; there is another crucial matter to be determined.
Peter cannot avoid the deed for undue influence; but his claim is further based on the improvidence of the transaction and also he directly alleges (though in connection with the charge of undue influence) his own mental incapacity; I think I can reasonably read these averments together without calling for an amendment of his pleadings.
The issue thus raised brings into play Lord Hatherley’s cardinal principle (from which the exceptions are rare) that Equity comes to the rescue whenever the parties to a contract have not met upon equal terms, see Lord Hatherley’s judgment (dissenting on facts) in O’Rorke v. Bolingbroke (1);the corollary is that the Court must inquire whether a grantor, shown to be unequal to protecting himself, has had the protection which was his due by reason of his infirmity, and the infirmity may take various forms. The deed here was in law a transaction for value: Colreavy v. Colreavy (2);however tenuous the value may have proved to be in fact, and, of course, a Court must be very much slower to undo a transaction for value; but the fundamental principle to justify radical interference by the Court is the identical principle, whether value be shown or not, and the recorded examples run from gifts and voluntary settlements (including an abortive marriage settlement) to assignments for a money consideration. The principle has been applied to improvident grants, whether the particular disadvantage entailing the need for protection to the grantor were merely low station and surprise (though the grantor’s rights were fully explained): Evans v. Llewellin (1), or youth and inexperience: Prideaux v. Lonsdale (2); Everitt v. Everitt (3), or age and weak intellect, short of total incapacity, with no fiduciary relation and no “arts of inducement” to condemn the grantee: Longmate v. Ledger (4); Anderson v. Elsworth (5).Even the exuberant or ill-considered dispositions of feckless middle-aged women have had to yield to the same principle: Phillipson v. Kerry (6); Wollaston v. Tribe (7).
The principle prevailed, when the deed was “the most honest thing in the world” so far as the settlor and her solicitor were concerned: Everitt v. Everitt (3), and though the evidence of the solicitor acting for the grantor was fully accepted: Phillipson v. Kerry (6), and again where the deed had been prepared by the grantor’s own solicitor, a man of honour, but the grantor, while fully understanding the benefit to accrue to the grantee, had not fully understood the effect of her deed as it affected her own interests: Anderson v. Elsworth (5); in several other instances the inadequacy of the explanations given to the grantor has been a conspicuous, indeed a decisive, factor in the Court’s action against an improvident deed, the Court either assuming: Prideaux v. Lonsdale (2), or having direct evidence: Phillipson v. Kerry (6); Wollaston v. Tribe (7), to prove a serious lack of understanding. The least the Court can demand is that an infirm grantor shall have known what he was doing. In the much more frequent, but analogous, instances of deeds attacked for undue influence the Judicial Committee has insisted that the donor must have had a complete explanation of the nature and effect of the transaction, from an advisor who himself knew all the relevant circumstances: Inch Noriah v. Shaik Allie Bin Omar (8), even where the advisor was selected by the donor: Williams v. Williams (9),and the same imperative requirement was stressed in a transaction for value by Isaacs J. upon a deed closely resembling the deed in this action in some aspects, but obtained by undue influence: Watkins v. Combes (1).
In my judgment, without any regard to any question of undue influence, upon Lord Hatherley’s principle and the concurrent authorities the plaintiff by reason of his own weakness of mind, coupled with the deficiencies in the legal advice under which he acted and his unawareness, is entitled to have the improvident indenture of settlement, dated October 24th, 1942, set aside and the Register of Freeholders rectified.
I may add that the balancing of equities is not complicated here by any plea of estoppel, nor have I on the evidence any reason to suppose that the defendant has suffered any prejudice worth mentioning through executing the settlement.
Keating -v- Keating & Anor
[2009] IEHC 405 (24 August 2009)
Judgment of Miss Justice Laffoy delivered on the 24th day of August, 2009.
The plaintiff, who was born on 1st August, 1937, is a bachelor. He has lived for most of his life on a small farm located in West Clare near Loop Head. In 1966 he became the owner of the farm which is registered on Folio 1454F, County Clare. He lived in a dwelling house on the land with his brother, a tradesman, who also helped on the farm, until his brother’s death in 1994. Thereafter, he lived there alone. The plaintiff’s parents had predeceased his brother, his father having died in 1973 and his mother having died in 1979. The plaintiff has one sister, but she has no connection with the events which have given rise to these proceedings.
The first named defendant is the widow, and the second named defendant is the son, of Patrick Keating (Mr. Keating Senior), who was a first cousin of the plaintiff. Mr. Keating Senior was approximately twelve years younger than the plaintiff. He died suddenly in January 1999 at the age of 48 from a massive heart attack. During his lifetime, Mr. Keating Senior had been the joint owner with the first named defendant of a farm of land adjoining the plaintiff’s farm. Mr. Keating Senior was a full-time employee of the Electricity Supply Board (the ESB) prior to his death. It was the first named defendant who was primarily concerned with their farming enterprise. For many years, the plaintiff and Mr. Keating Senior and the first named defendant enjoyed a friendly relationship and were frequent visitors to each others houses. As the second named defendant put it, his family lived only two fields away from the plaintiff. The second named defendant was born in January, 1977, so that he was just 22 years of age when the events which are the subject of these proceedings commenced. Having finished school, the second named defendant lived and worked in England and later in the United States. Following the unexpected death of his father in January 1999 he returned home. His dealings with the plaintiff in February 1999 were the genesis of these proceedings.
The plaintiff’s claim and the defendants’ response thereto as pleaded
The plaintiff’s claim as pleaded and as pursued is one of some complexity, notwithstanding the modest nature of the property the subject of the proceedings. It contains a number of elements.
First, arising out of a transfer dated 12th July, 1999 (the Land Transfer), whereby the plaintiff transferred the land registered on Folio 1454F of the Register of Freeholders, County Clare to the first named defendant for value, the plaintiff seeks an order setting aside the Land Transfer on the ground that it was procured by duress or undue influence or, alternatively, on the ground that it was an improvident transaction or an unconscionable bargain. The plaintiff claims ancillary relief with a view to having the title to the land restored to him. He also seeks an order directing the first named defendant to account for all the rents and profits received by her in respect of the land since the date of the Land Transfer. The land registered on Folio 1454F comprises three parcels: land at Feeard comprising 10.9560 hectares (approximately 27 acres); a plot in the townland of Ross comprising .4880 hectares (slightly over an acre); and one undivided thirteenth part of commonage in Feeard comprising 47.7300 hectares. In relation to his share of the commonage, the plaintiff had entered into an agreement for exchange dated 23rd February, 1987 with the Irish Land Commission for the exchange of his one undivided thirteenth share in the entire commonage for an area in the townland of Feeard comprising 4.173 hectares (slightly more than 10 acres), which the plaintiff beneficially owned in 1999. There was, and is, a modest single storey dwelling house on the land registered on Folio 1454F and there were certain farm buildings on the land. As regards this element of the case, the position of the defendants is that the Land Transfer was not procured by duress or undue influence. The defendants further contend that the Land Transfer was for full value and was not an improvident transaction or an unconscionable bargain.
The second element relates to what is described as a purported transfer of the plaintiff’s Suckler Cow Premium Quota (the quota) dated 28th May, 1999 (the Quota Transfer) and purportedly made between the plaintiff of the one part and the first defendant of the other part. The plaintiff contends that he did not enter into any agreement with the first named defendant for the sale of the quota to her and that the signature purporting to be his signature appearing on the Quota Transfer was forged. The plaintiff also seeks an order directing the first named defendant to account to the plaintiff in respect of all monies and profits received by her on foot of or by reason of the Quota Transfer from 28th May, 1999. The defendants deny that the plaintiff’s signature on the Quota Transfer was forged.
The third element is that the plaintiff seeks damages for detinue and conversion in relation to two separate species of property. First, the plaintiff contends that the defendants removed and converted to their use approximately 47 head of cattle, which were the property of the plaintiff and that the plaintiff received a total of approximately IR£3,500 from the defendants, being a sum significantly less than the combined value of the cattle. Secondly, it is alleged that the defendants removed and converted to their use two items of machinery the property of the plaintiff not included in the sale – a tractor mower and a hay turner. This claim was expanded to include a silage wagon and a trailer. It is alleged that the second named defendant dumped some of those items in a slurry pit. The defendants deny any wrongdoing in relation to either species of property. Their position in relation to the livestock is complicated, in that they contend that some of the cattle were included in their agreement to purchase land from the plaintiff, some of the cattle accompanied the Quota Transfer and, as regards animals which were the property of the plaintiff and were sold, they were sold for full market value and the defendants paid or proffered the full proceeds to the plaintiff.
The fourth element is a claim for damages, including aggravated or punitive damages or both, against the second named defendant for trespass to the person and assault by the second named defendant on the plaintiff. The incident which gives rise to this claim, which occurred after the plenary summons in these proceedings, which issued on 15th February, 2002, was served on the second named defendant on 16th February, 2002 is admitted.
The final element of the plaintiff’s claim is based on an allegation that the second named defendant severed the water supply to the plaintiff’s house and closed in the septic tank servicing the plaintiff’s house. The plaintiff claims injunctive relief in relation to such alleged interference.
In addition to traversing all of the allegations made by the plaintiff, the defendants have pleaded laches, delay, acquiescence and estoppel. On the basis of allegations of trespass on their land, that is to say, the land registered on Folio 1454F, against the plaintiff, they have counterclaimed for injunctive relief restraining trespass. Insofar as so much of those allegations as were not withdrawn were pursued, in my view, the allegations of trespass against the plaintiff were not established by the evidence.
The circumstances of the plaintiff in February, 1999
The plaintiff was 61½ years of age in February 1999. The significance of this is that he was eligible to participate in a scheme operated by the Department of Agriculture and Food known as the Scheme of Early Retirement from Farming (the ERS), which was put in place as a result of the 1992 CAP Reform. It was designed to encourage farmers between their 55th and 66th birthdays, who had been farming as their main occupation for 10 years, to retire from farming and to transfer their land to younger farmers who would thus expand their holdings. There was an upper age limit of 50 for transferees, who had to have a certain amount of farming experience or a relevant farming qualification in order to participate. A transferor received a monthly pension, which amounted to IR£7,275.31 (equivalent to €9,327.74) in 1999. The pension was payable for up to 10 years, but not beyond the transferor’s 70th birthday. The ERS required production or quota rights to be transferred with the land or otherwise disposed of. For participants who would become eligible for a State pension, for example, an old age non-contributory pension, provision was made for offset of the State pension against the pension payable under the ERS. The plaintiff was due to become eligible for a State pension as of 1st August, 2003, having attained the age of 66.
The evidence did not indicate what level of income the plaintiff had from his farming activities in February 1999, but I think it is reasonable to infer that it was fairly modest. What is clear is that the plaintiff had financial problems for at least two years and that he had been considering a number of options. This is clear from the evidence of Mr. Michael F. Nolan, a solicitor practising in Kilrush, who acted in the transaction at the heart of these proceedings, which culminated in the Land Transfer. The plaintiff consulted Mr. Nolan in September 1997. At that time the sale of the plaintiff’s house was mooted, but nothing happened. The following year, in February 1998 the plaintiff asked Mr. Nolan to act for him in connection with a mortgage transaction with The Wise Mortgage Company Limited (Wise). In fact, the plaintiff had entered into a commitment letter dated 3rd February, 1998 with Wise in relation to an advance of IE£25,000, to be secured by a charge on the land registered on Folio 1454F, County Clare. Mr. Nolan actively discouraged the plaintiff from proceeding with the transaction with Wise because of the high rate of interest which was being charged and the procurement and broker’s fees, which he regarded as being unfair. It also transpired that the land registered on Folio 1454F was already charged in favour of ACC Bank Plc. (ACC). It came to light that ACC held the land certificate in relation to the Folio when Mr. Nolan requested it from solicitors who had acted for the plaintiff, as one of a group of landowners, in a sale to the Commissioners of Irish Lights in connection with the Loran C mast at Loop Head. ACC had also registered a judgment mortgage on the Folio in October, 1997 on foot of a judgment obtained in March 1997 in the sum of IR£15,800.65. The position, therefore, was that the plaintiff could not give a charge to Wise. By April 1998 the plaintiff’s indebtedness to ACC had risen to IR£17,878.20.
I am satisfied on the evidence that Mr. Nolan gave prudent advice to the plaintiff in the period from February to April 1998. I am also satisfied that Mr. Nolan advised the plaintiff of what was, in his view, a way of dealing with the plaintiff’s problem, which was how he could raise the money to discharge his indebtedness to ACC. Mr. Nolan’s evidence was that he suggested to the plaintiff that he should consider availing of the ERS, which would allow him raise a lump sum by selling the land and reserving the right to stay in the house. This would also provide him with a valuable pension at a time when he was five years short of the old age pension qualifying age. While the plaintiff admitted that Mr. Nolan had suggested that he might avail of the ERS, his evidence was that he did not agree to it and that he was not interested in the ERS and he wanted to continue farming. I have no doubt that the plaintiff subsequently decided to apply to participate in the ERS.
At the time, around April 1998, the plaintiff held a quota of 37 premium rights. The following month, May 1998, he transferred two tranches of premium rights, aggregating 19.3 premium rights to two farmers in County Clare, leaving him with 17.7 premium rights. It is not clear from the evidence what consideration the plaintiff received for those transfers. However, what is clear is that he did not reduce his indebtedness to ACC. The plaintiff admitted that he was in serious financial difficulty at the time. However, his evidence was that he could have dealt with the problem by selling cattle or by applying for grants under the Rural Environmental Protection Scheme (REPS), for which he was waiting to qualify.
There is no doubt that the plaintiff’s health was compromised and he was in poor physical condition at the end of 1998 and the beginning of 1999. The plaintiff’s own evidence was that at the end of 1998 he got very sick, but he did not know what was wrong with him. He had blood on his coat. A cousin told him he had shingles. It was not until early February, 1999 that he decided to go to a doctor. He went to Dr. Thomas Martin Nolan, a brother of Mr. Nolan, who practised in Kilkee and Kilrush at the time. Dr. Nolan was called on behalf of the defendants. Dr. Nolan’s evidence was that he had no record of an attendance at his surgery by the plaintiff before February, 1999. He attended on a number of occasions in February, 1999 and he was treated for ulcerated shingles. Dr. Nolan’s evidence was that he recalled the plaintiff’s condition vividly. He had a very bad lesion on his right shoulder. Dr. Nolan described it as “shocking”. It had been there for some time. He also described the plaintiff’s back as “pretty awful”. Dr. Nolan treated the plaintiff with dressings and changes of dressings and he prescribed pain relieving medication.
The plaintiff’s evidence was that he was in a bad state of health in March and April 1999. He was run down and eating little. He was in severe pain with the shingles and that it continued up to the summer of 1999. By July he was still sick. The illness affected him in every way, including his nerves.
In January, 2005, six years after the outbreak of shingles, the plaintiff was referred by his solicitor for a medical report in connection with these proceedings to Mr. John A. Griffin, Consultant Psychiatrist at St. Patrick’s Hospital, Dublin. Dr. Griffin saw the plaintiff twice, on 27th January, 2005 and on 5th June, 2008. He described the plaintiff as “a rather circumstantial historian”, but nonetheless stated that he completely believed what the plaintiff told him during the course of both interviews. On the issue which I have yet to address, the plaintiff’s allegation that he was pressurised by the second named defendant to sell the farm, Dr. Griffin concluded that he was seriously pressurised. He also suggested that the vulnerability of his body and mind due to herpes zoster (shingles) would have played a part in worsening the pressure, which the plaintiff had described as being bullied, intimidated and threatened by the second named defendant and, on a number of occasions being beaten, punched and bruised. Dr. Griffin’s evidence was that post herpetic neuralgic pain can cause clinical depression. He expressed the view that a person suffering from depression should not make financial decisions.
Dr. Nolan who saw the plaintiff probably four or five times during February and March 1999 testified that there was no evidence of the plaintiff having been beaten when he physically examined him. Moreover, he has no record of the plaintiff having told him of any threat to beat him. He was looking to ascertain the underlying reason for the shingles. There was nothing in his examination of the plaintiff which suggested mental incapacity at the time. He made the point that the plaintiff was able to drive in and out to and from his surgery. He acknowledged that stress has a role in shingles.
There was other evidence of deterioration in the plaintiff’s physical condition around this time. Garda Charles Killeen, who had known the plaintiff since 1989, and who investigated the events of 16th February, 2002, testified that the plaintiff was in a bad state health wise around 1999. He was aware that the plaintiff had a bad dose of shingles and that his general condition disimproved. He saw a big change in the plaintiff, who had lost a lot of weight, and he also saw a change in the manner in which he kept himself, cleanliness being an issue.
The evidence also indicates that conditions around the plaintiff’s farm at this time were poor which, I think has to be attributed, at least in part, to the plaintiff’s ill health. There was evidence of overcrowding and underfeeding of cattle, of machinery being in a poor state and of the slurry overflowing.
Events between February 1999 and July 1999
There are three series of events during the period from February 1999 to July 1999 which have to be considered. The first is the series of events which led to the execution of the Land Transfer. The second relates to the submission of the Quota Transfer to the Department of Agriculture. The third relates to the disposal and movement of the plaintiff’s cattle. While the three are interconnected, I propose considering them separately initially.
However, it is necessary to make some general comments about the evidence. There was a complete conflict between the plaintiff, on the one hand, and the defendants, on the other hand, on most of the crucial events which gave rise to the proceedings. It is extremely regrettable that, when the parties came to testify as to the events in February and March 1999 in this Court, ten years had elapsed since the events had taken place. The parties were understandably vague on the detail of those events, although on certain matters a party testified as to what happened ten years ago with what can only be described as questionable certainty. Fortunately, Mr. Nolan’s conveyancing file, and, in particular, his contemporaneous attendances throw some light on what actually happened.
Events leading to the Land Transfer
There was a formal agreement for the sale of the land registered on Folio 1454F by the plaintiff to the first named defendant, the terms of which I will outline later. There is a serious conflict as to the circumstances in which that agreement came about.
The plaintiff’s evidence was that he came under pressure to sell the land from Mr. Keating Senior before his death and, after his death, he came under pressure from the second named defendant. The defendants’ position was that, as it was put to the plaintiff in cross-examination, he was “plaguing” Mr. Keating Senior and his family to buy his land, because the plaintiff wanted to sell his land but wanted it to remain in the Keating name.
In relation to the allegations of pressure by Mr. Keating Senior, the plaintiff’s evidence was that Mr. Keating Senior started to put pressure on him to sell the land following his brother’s death in 1994. Mr. Keating Senior put severe pressure on him a lot of times and the pressure was getting “more and more”. He was being bullied and assaulted by Mr. Keating Senior, who was twelve years younger than him and who was stronger than him. Specifically he alleged that Mr. Keating Senior assaulted him by putting him up against the wall in his home on more than six occasions at a time when, even though he was in severe pain, he was still working, which I understand to mean that the assaults occurred in December 1998 and January 1999. The plaintiff’s evidence was that he did not attend the funeral of Mr. Keating Senior because he was sick and he was disgusted with how he had been treated by Mr. Keating Senior.
The allegations of physical assault on the plaintiff by Mr. Keating Senior were first made during the plaintiff’s evidence in chief. The allegations were not pleaded in the case and the plaintiff made no complaint to the Gardaí or to Dr. Griffin that he was assaulted by Mr. Keating Senior. On the evidence I find that the plaintiff was not assaulted by Mr. Keating Senior, which will necessitate considering the submission made on behalf of the defendants that the plaintiff has not come to court with clean hands and should not be afforded any equitable remedy to which he might otherwise be entitled.
The plaintiff’s evidence was that, following his return from the United States at the time of his father’s death, the second named defendant started putting pressure on him to sell the land. He alleged that the second named defendant beat him in his own home on around twenty occasions. He alleged that he beat him with his fists on his back, on his face, on his eyebrows, everywhere. The second named defendant denied that he assaulted the plaintiff. His evidence was that the day after his father’s funeral, he was informed by a neighbour that the plaintiff wanted to see him. When he went to the plaintiff’s home he found him in a bad state. He took off the plaintiff’s shirt and bathed his back. He offered to take the plaintiff to the doctor the following day, but, when he arrived to do so, the plaintiff had already gone to see the doctor. Around this time, he visited the plaintiff most days. On each occasion the plaintiff would ask the second named defendant to buy the land.
In his evidence in chief the plaintiff said that he never agreed the terms which formed the basis of the formal agreement for sale of the land, although he acknowledged in cross-examination that there may have been discussion relating to the sale of the land. However, he was adamant that there was no discussion in relation to the transfer of any of his cattle.
The evidence of the second named defendant was that in the course of a conversation between the plaintiff and the second named defendant in a motor vehicle in February or March 1999, the plaintiff offered to sell, first, for IR£60,000, and later for IR£45,000, the land, the farmhouse and sheds and the quota and the cows that went with it. The plaintiff was going to sell the remainder of the stock. The response of the second named defendant to the offer was that he would have to talk to the first named defendant. He spoke to the first named defendant. She decided that she would buy. After a few days the plaintiff and the second named defendant met. The second named defendant told the plaintiff that his mother had agreed to buy and they shook hands on the deal. It was agreed that the plaintiff would continue to live in the house on the land until he passed away. The next step was to go to a solicitor. Mr. Nolan was chosen, although another firm was acting in the administration of the estate of Mr. Keating Senior. The evidence of the defendants was that Mr. Nolan was chosen to act at the behest of the plaintiff, one of the reasons being that the plaintiff did not want people to know he was selling the land. It was agreed that a deposit of IR£3,000 would be paid by the first named defendant.
In general, the evidence of the first named defendant was vague and unclear as to the terms on which the sale had been agreed. She gave the impression that the agreement had been made between the plaintiff and the second named defendant and that she simply went along with it. However, it was the first named defendant who was involved in instructing Mr. Nolan in relation to the purchase from the purchaser’s perspective.
The plaintiff attended at Mr. Nolan’s office on 8th March, 1999. Mr. Nolan noted in an attendance docket what he had been told by the plaintiff. It was that he was selling certain land, which approximated to all of the land registered on Folio 1454F to the first named defendant. The price was IR£40,000 plus IR£1,000 per year for five years commencing on 1st December, 1999 and thereafter on each 1st December. The first named defendant had paid the plaintiff IR£3,000 by way of deposit. Of the IR£40,000, IR£20,000 was to go to ACC. Mr. Nolan was told that the first named defendant was under fifty and that her name had been on the farm for more than five years. She had not spoken to the bank, obviously about getting finance for the purchase, yet. Mr. Nolan noted that the contract was to be subject to sanction for the ERS for the plaintiff and subject to the first named defendant getting finance.
All of that is very clear. However, the plaintiff’s evidence was that he did not know what the deal was. He did not discover it until a long time after. He knew he was signing about land but he had no idea what about. When it was put to him that his account was improbable, his response was that he could not tell Mr. Nolan anything, as he had not a clue and he was very sick. Moreover, it was the plaintiff’s evidence that he was brought to Mr. Nolan’s office by the second named defendant, who had beaten him up that morning, told him what to say and waited outside for him. He had received a cheque for IR£3,000 from the first named defendant. He cashed the cheque at the branch of AIB in Kilkee either before or after his attendance at Mr. Nolan’s office. He then gave the cash, under threat, to the second named defendant. Evidence was given by an employee of AIB that on 8th March, 1999 the plaintiff had negotiated a cheque drawn on the account of Catherine and Patrick Keating for IR£3,000, for which he obtained a bank draft of IR£1,000 at a charge of IR£1.50, paid an ESB bill in the sum of IR£55 and received the remainder in cash (IR£1,943.50). When he was recalled on the sixth day of the hearing, at the conclusion of the evidence, the plaintiff’s evidence was that he had actually cashed two cheques for the same amount on that date and that the above transactions must have been paid from the other cheque which had been lodged. On the basis of the documentary evidence furnished that is patently not the case. I accept the evidence of the second named defendant that he did not receive the proceeds of the cheque of IR£3,000.
Mr. Nolan’s evidence was that there was no indication that the plaintiff had been subject to a beating prior to his attendance at his office. It is quite extraordinary, however, that Mr. Nolan did not seek to take the cheque for IR£3,000, which he was aware had been furnished by the first named defendant as a deposit, from the plaintiff and hold it as stakeholder pending the completion of the transaction, in accordance with the normal practice in a conveyancing transaction.
The first named defendant attended at Mr. Nolan’s office on the following day, 9th March, 1999. Mr. Nolan’s attendance docket records that four matters were raised at that meeting. The first was that the first named defendant wanted Mr. Nolan to check her eligibility for a pension from the ESB. The second was that he was to check the acreage on the folios. The third was that he was to ensure that the first named defendant could be certified as an appropriate transferee under the ERS. The relevant form ERS1A was filled out and signed by the first named defendant and subsequently submitted to Teagasc. On 22nd March, 1999 the relevant certificate confirming the first named defendant’s status was furnished by Teagasc. The fourth matter was that IR£20,000 was to be paid as soon as possible.
Mr. Nolan attended to all of the matters which arose at the meeting with the first named defendant. He wrote to the first named defendant on 24th March, 1999 giving details of the land registered on Folio 1454F, omitting the plaintiff’s interest in the commonage, and stating that although the house was to be transferred to the first named defendant, the plaintiff would be retaining his right to live in it for his lifetime. The purchase price as set out in the attendance docket of 8th March, 1999 was set out, as was the fact that the plaintiff had already received a deposit of IR£3,000 from the first named defendant. It was recorded that the plaintiff had no milk quota and the same had been recorded on the form ERS1A, which also noted that no herd number was being transferred. The first named defendant was advised to get written confirmation of her loan sanction.
There was confusion up to 8th April, 1999 as to what acreage the plaintiff was transferring to the first named defendant. In a file note made on 8th April, 1999, Mr. Nolan recorded that the plaintiff had telephoned him to say that he had been discussing the matter with the first named defendant. The land being sold amounted to 35 acres because he had been allocated a share in the commonage. The plaintiff told Mr. Nolan that he had signed documents for the Land Commission in respect of the allocation. He promised to leave in Area Aid maps to Mr. Nolan which confirmed where that land was. Mr. Nolan noted that he duly did so. The note suggests to me that the plaintiff had a clear understanding of what he was selling to the first named defendant.
Mr. Nolan also recorded that the first named defendant, who had called to his office the previous day, had left him a bank draft for IR£17,000 pending the requirements of her lender, Bank of Ireland, being sorted out. The bank draft, which was dated 1st April, 1999, was drawn on Bank of Ireland and the first named defendant was the payee. The first named defendant’s evidence was that she gave the bank draft to Mr. Nolan in order to have the plaintiff’s deeds released from ACC. The bank draft was endorsed in favour of the plaintiff and was furnished by Mr. Nolan to ACC on 9th April, 1999 in full and final settlement of the monies owing by the plaintiff to ACC. This is another extraordinary feature of the transaction – that Mr. Nolan would permit the first named defendant’s money to be used to discharge the plaintiff’s secured indebtedness to ACC prior to the sale being completed. Mr. Nolan’s evidence was that he did not know who negotiated the settlement figure of IR£17,000 with ACC. When it was put to the plaintiff that he negotiated with ACC and negotiated the debt down from IR£20,000 to IR£17,000, he denied that and stated that no one had told him that the debt had been paid off. That evidence is simply not credible.
A formal contract in the form of the Law Society’s Standard Conditions of Sale bearing the date 8th April, 1999 was executed by the plaintiff and the first named defendant. On the evidence I believe that the first named defendant signed on 7th April, 1999 and that the plaintiff signed on 8th April, 1999. The contract reflected the terms which Mr. Nolan had previously recorded. It recorded that the deposit of IR£3,000 had been paid. The closing date was to be not later than one month from execution when the sum of IR£37,000 would be payable. The balance of IR£5,000 payable by instalments was to be secured by a charge executed by the first named defendant in favour of the plaintiff and any arrears were to carry interest at the rate of 15% per annum until payment. Special condition 6 erroneously stated that the purchaser, rather than the vendor, should be allowed to retain the use of the dwelling house on the land for his lifetime but would retire completely from farming. Special condition 7 stated that there was no milk quota attached to or appurtenant to the land in sale.
Following 8th April, 1999, Mr. Nolan attended to the title matters: the transfer of the plaintiff’s interests in the commonage which was dealt with in correspondence with the Department of Agriculture and Food; and the acceptance by ACC Bank of the sum of IR£17,000 in full and final settlement of the plaintiff’s indebtedness and the release of the land certificate in relation to Folio 1454F. On 16th April, 1999 Mr. Nolan gave Bank of Ireland an undertaking to lodge the land certificate in relation to Folio 1454F with the bank as security for the first named defendant’s indebtedness in due course and in the meantime to hold the title documents in trust for the bank.
On 26th April, 1999 Mr. Nolan wrote to the plaintiff informing him that the documents were ready for signing by himself and the first named defendant and suggested the following Friday, 30th April, 1999, for the closing of the sale. The letter explained that the first named defendant would hand over the balance of the purchase money in exchange for vacant possession of the land. Mr. Nolan spelt out that that meant that the plaintiff’s stock had to be cleared off the land. Mr. Nolan informed the plaintiff that he had the documentation ready in connection with the ERS, but it could only be lodged when the plaintiff had got rid of all his cattle, as he was required to show that he had retired from farming. He would also have to give up his herd number.
Closing did not take place on 30th April, 1999, although on the previous day the first named defendant had obtained a bank draft in her favour in the sum of IR£20,000 from Bank of Ireland. Both the plaintiff and the first named defendant attended at Mr. Nolan’s office on 30th April, 1999. What occurred is in dispute. Mr. Nolan’s evidence was that there was a short meeting, lasting about ten minutes. Mr. Nolan’s recollection was that there was an amicable discussion between the parties. The original contract signed on 8th April, 1999 could not be located. A blank counterpart was, however, available. Mr. Nolan’s evidence was that the parties signed the counterpart with the error in special condition 6 having been corrected. The counterpart was then dated 30th April, 1999. The plaintiff’s evidence was that he walked out of the meeting on 30th April, 1999 after refusing to sign any documentation. The plaintiff acknowledged that the signature on the contract which bears the date of 30th April, 1999, the original of which was put in evidence, is his signature, but he had not signed it on that day. Mr. Nolan’s evidence was that, if the plaintiff had walked out, he would have recorded that fact and that he would have ended his involvement in the matter, if there had been an issue between the parties.
On reviewing the situation, I think the probability is that Mr. Nolan’s recollection is incorrect and that all that happened on 30th April, 1999 was that Mr. Nolan inserted the date 30th April, 1999 on the undated counterpart, which had already been signed by the first named defendant on 7th April, 1999 and by the plaintiff on 8th April, 1999 and corrected the error in the special condition. I have come to this conclusion from comparing the manner in which Mr. Nolan witnessed the respective signatures of the plaintiff and the first named defendant on the copy of the contract dated 8th April, 1999 which is available and on the original of the contract dated 30th April, 1999. The plaintiff’s signature is witnessed by him as “M.F. Nolan”, whereas the first named defendant’s is written by him as “Michael Nolan”, which is consistent with the signatories not having signed at the same time. If I am correct on this, it is understandable that Mr. Nolan should have forgotten what actually happened ten years previously.
What is of more significance is that Mr. Nolan noted two matters on an attendance docket dated 30th April, 1999. The first was that the “quota of 20 animals are to be transferred to” the first named defendant. The second was that the land was to be vacated. It was noted that 16, obviously meaning cattle, would be put on to other land and that 20 had been sold to the second named defendant. Mr. Nolan could not recollect who gave him that information. He regarded the matter of the quota to be the parties’ business and he could not elaborate further on what he had written. Mr. Nolan’s evidence was that at the end of the meeting the parties left on good terms to work out when vacant possession would be available.
Mr. Nolan wrote three reminders to the plaintiff in relation to closing the sale and having vacant possession available for the first named defendant after 30th April, 1999. The first was dated 4th May, 1999. In that letter, Mr. Nolan stated that the first named defendant was anxious to close, because she was concerned that she would lose the quota and there would probably be problems for her as well with the Area Aid. The plaintiff was requested to attend on 19th May, 1999 to complete and to move his cattle off the land not later than 18th May, 1999. The second reminder was dated 10th June, 1999. Again, Mr. Nolan stated that the first named defendant was anxious to complete and referred to the fact that completion had been postponed to allow the plaintiff to dispose of his cattle. The plaintiff was also reminded that he was losing pension at the rate of IR£160 per week for every week that the closing of the sale was postponed, so that the delay was costing him a lot of money. The third reminder was dated the 2nd July, 1999. Again, this letter seems to have been prompted by the first named defendant. In it the plaintiff was reminded that he would have to put some arrangement in place about his cattle and he was reminded that he was losing his pension. At the end of that letter Mr. Nolan stated that it was a simple matter for the plaintiff to transfer the ownership of the cattle to the second named defendant so that he could get his pension.
The sale was closed on 12th July, 1999, when the plaintiff executed the Land Transfer of that date in favour of the first named defendant. The bank draft of 29th April, 1999 for IR£20,000 was negotiated on that day. A right of residence in favour of the plaintiff was not reserved in the transfer. It would appear that there was a separate deed of charge in relation to the outstanding balance of the purchase money, IR£5,000, which was payable by instalments. In due course on 18th November, 1999 the first named defendant was registered as full owner on Folio 1454F in succession to the plaintiff and a charge for IR£5,000 was registered as a burden in favour of the plaintiff. The judgment mortgage of ACC was subsequently discharged. While the plaintiff’s right of residence is not registered as a burden on the folio, the plaintiff’s entitlement to a right of residence for life in the house on the land is not, and never has been, disputed by the defendants.
The Quota Transfer
The quota was first mentioned to Mr. Nolan on 30th April, 1999. His evidence was that he suggested that the parties deal directly with the Department of Agriculture and Food. He had no recollection of seeing the transfer form, and, if it had been left into his office for forwarding to the Department, he would have expected that there would be a covering letter of some kind, which there was not. The evidence of the first named defendant was that she wrote to the Department for the transfer form and she filled out most of it and signed it and dated it. It was dated 28th May, 1999. There was an urgency about completing the form because the application had to be lodged not later than 31st May, 1999. This is clear from the form itself. The first named defendant testified that the plaintiff had also signed the form and that he had filled in the information in relation to the price and the number of units being sold. The first named defendant denied forging the plaintiff’s signature, as did the second named defendant. While the form suggested that there was an agreed price of IR£10,000 (IR£550 for each of the 18 units), it was common case that no money was ever paid for the quota.
The plaintiff testified that he never agreed to sell the quota to the first named defendant. The signature on the form was not his signature, nor had he authorised anyone to sign it on his behalf. He never saw the form until he received the transferor’s copy from the Department. However, he had done nothing about the matter when he received the copy, which must have occurred in June, 1999. The quota transfer form comprised three pages, the middle and bottom copies being self-carbonising. The middle and bottom copies were returned to the transferor and the transferee respectively with the receipt clause duly stamped. It is clear that the Department received the completed form on 31st May, 1999. The transferor’s copy with a receipt showing the date of 4th June, 1999 was returned to the plaintiff shortly after that date.
Mr. Sean Lynch, forensic document examiner, was called on behalf of the plaintiff. His evidence was that the signature of the plaintiff on the transfer form was a forgery and had been created from a tracing from the signature of the plaintiff on the contract dated 8th April, 1999, the original of which is not forthcoming. No evidence was adduced by the defendants to contradict the evidence of Mr. Lynch. I have come to the conclusion, not lightly, that the plaintiff’s name, purporting to be his signature, was inserted on the quota transfer form either by the first named defendant or the second named defendant. I have reached that conclusion on the balance of probabilities. I reject the submission made on behalf of the defendants, in respect of which no authority was advanced, that this aspect of the case requires to be proved beyond reasonable doubt. In this civil case the standard of proof is proof on the balance of probabilities in relation to all aspects of the plaintiff’s claim.
The disposal and removal of the plaintiff’s cattle
The plaintiff’s evidence was that in February, 1999 his herd was tested and at the time he had 60 animals, including 40 cows.
In March 1999 the second named defendant, with the assistance of a neighbour, rounded up 12 or 13 animals, perhaps including a calf, from the plaintiff’s yard and moved them to the defendants’ nearby land. The plaintiff arrived on the scene and became angry at what was taking place. His evidence was that he objected to the defendants taking the cattle. According to the second named defendant, it had been agreed between the parties that the sale would include 12 cattle and that the plaintiff would get rid of the remaining stock. The second named defendant admitted that he had selected the cattle to be taken without reference to the plaintiff and that the plaintiff had become furious. However, the second named defendant suggested that it was not the fact that the cattle were being taken away that annoyed the plaintiff, but rather the presence of a neighbour when this was taking place, because the plaintiff did not want his neighbours to know about the sale of the land. The second named defendant’s version of events was that this argument, like other arguments between the plaintiff and himself in 1999, was forgotten next day.
The position, accordingly, was that there were in the region of 47 animals on the land when the sale was closed on 12th July, 1999. In connection with his application under the ERS, the plaintiff was required to surrender his herd number to the Department of Agriculture and Food. He did so by a surrender document dated 16th August, 1999. Thereafter, the plaintiff’s stock had to be dealt with under the herd number of the first named defendant in relation to testing, disposal and suchlike.
The plaintiff and the ERS
Mr. Nolan assisted the plaintiff in connection with his application in relation to the ERS. The application form was signed by the plaintiff on the 16th August, 1999 and submitted to the Department on the 3rd September, 1999. The form disclosed that all of the land on Folio 1454F had been transferred to the first named defendant but the use of the house had been retained.
The plaintiff’s application was duly approved and the plaintiff was awarded a pension from 21st October, 1999 but not beyond 1st August, 2007. The plaintiff was notified of this by letter dated 23rd February, 2000 from the Department. The pension initially was at the rate of €9,237.74 (IR£7,275.31) “at 1999 prices”.
Disposal of the remainder of the plaintiff’s stock
In May 2000, the first named defendant involved Mr. Nolan once again in the matter of the disposal of the plaintiff’s stock, which is clearly indicative of tension between the parties. What the first named defendant told Mr. Nolan at that stage, as he recorded in an attendance note dated 8th May, 2000, was that she had bought 12 animals separately from the plaintiff for which she had paid by cheque and that another 18 were bought with the quota and were considered to be included in the purchase price for the land. The complaint of the first named defendant was that there were still 16 animals on the land, between cows and heifers and she wanted them either to be sold or removed immediately. All had been duly tested. Later, some of the animals were sold under the first named defendant’s herd number (although I note that all of the statements were directed to the second named defendant) at Clare Marts Limited in June 2000 and the cheque of the first named defendant in the sum of IR£2,302 was furnished via Mr. Nolan to the plaintiff, with a covering letter dated 19th June, 2000 from Mr. Nolan in which the deductions which had been made by the first named defendant (haulage and veterinary fees for testing) from the amount paid by Clare Marts Limited were explained. In that letter Mr. Nolan made it clear that the first named defendant wanted the remaining 9 cows on the land to be disposed of by the end of the year and arrangements would be made for their disposal.
In the following October, more animals were sold through Clare Marts Limited and the first named defendant’s cheque for the full amount (IR£925.22) paid was remitted to the plaintiff via Mr. Nolan.
On 4th December, 2001 Mr. Nolan sent to the plaintiff a further cheque from the first named defendant representing the proceeds of sale of 3 cows and calves through Clare Marts Limited on 8th October, 2001. The cheque was subsequently returned by the plaintiff uncashed. Mr. Nolan in his letter stated that 4 cows, the property of the plaintiff, remained on the land and he set out the tag numbers. He informed the plaintiff that the second named defendant intended bringing the cows to the Mart as soon as possible and would account to the plaintiff for the proceeds of sale. It is clear that the instructions for that letter were given to Mr. Nolan by the second named defendant. There is an attendance note dated 3rd December, 2001 on the plaintiff’s file in relation to the contention of the second named defendant that the first named defendant became entitled to 18 cows with the quota from the plaintiff. Mr. Nolan recorded that he knew nothing about 18 cows going with the land as part of the deal. He was informed by the second named defendant that he could “argue that point himself”. Mr. Nolan’s evidence was that 3rd December, 2001 was the first occasion on which he met the second named defendant.
IR£5,000 balance of the purchase money
With his letter of 4th December, 2001, Mr. Nolan sent to the plaintiff a cheque drawn on the account of the first named defendant in the sum of IR£2,000 representing two instalments of the balance then due. The plaintiff also returned that cheque. The first named defendant tendered two further cheques for the Euro equivalent of IR£1,000, which were dated respectively 14th November, 2002 and 26th November, 2004. In a reply dated 13th August, 2007 to a notice for further and better particulars from the plaintiff’s solicitors, it was stated that it was believed that a further payment of IR£1,000 had been made by the first named defendant to the plaintiff in respect of the sale monies. No evidence of that payment was adduced.
Other complaints
The evidence is replete with complaints by the plaintiff against the defendants and vice versa. The plaintiff complained that at some point in the middle of 1999 the second named defendant cut the water mains at the back of the plaintiff’s house while using a digger on the land, cutting off the water supply to the house and leaving him without drinking water and sanitary and heating facilities. At a later stage the second named defendant erected a fence near the plaintiff’s house which restricted his access to the well on the land, which has since become contaminated. The second named defendant admitted that he cut the water mains but he said that he did so accidentally and that he had repaired it. The fence was erected in order to prevent cattle from straying out on to the road.
The plaintiff’s complaint in relation to his machinery was that the second named defendant had taken some items and buried other items in a slurry pit on the land. The second named defendant’s response was that the machinery was scrap and of no use to the plaintiff. However, he acknowledged that the plaintiff was extremely annoyed at his course of action.
The second named defendant in turn, in December, 2001, raised with Mr. Nolan the issue of old machinery belonging to the plaintiff which remained on the land. Mr. Nolan advised him to contact the Environmental section of Clare County Council.
The position by December 2001 was that serious tension had built up between the plaintiff and the defendants. It was at that stage that the plaintiff instructed his current solicitor in relation to the matter. His evidence was that the trigger for his decision was that his cattle had been sold when they were worth nothing.
The evidence of the second named defendant was that by that stage he was getting sick of the situation in relation to the land because the plaintiff was refusing to sell his cattle and did not want his neighbours to know that he had sold the land to the first named defendant. He decided to return to the United States. He could no longer handle the arguments with the plaintiff, stating that “enough was enough”. The first named defendant’s evidence corroborated her son’s. She said he had been getting “hassle” from the plaintiff which he eventually was no longer able to handle and this led to his decision to sell stock and return to the United States.
The decision of the second named defendant to return to the United States brought matters to a head. These proceedings were issued on 15th February, 2002 without a preliminary letter having been dispatched to the defendants. The plenary summons was served on the second named defendant on the 16th February, 2002, because it became known that he was leaving the country.
Since February 2002 the first named defendant has farmed the land she acquired herself with the assistance of her neighbours. She has kept her herd number open in the hope that the second named defendant will return to Ireland.
The assault
The proceedings were served on the second named defendant by a summons server on the evening of Saturday, 16th February, 2002. He was socialising in a public house in the Kilbaha area after an international rugby match between Ireland and England. The summons server testified that he asked him to come outside and served him with the papers outside. The second named defendant then drove to the plaintiff’s house. In his statement to Garda Killeen on 19th February, 2002, he said he went to the plaintiff’s house to find out why the plaintiff alleged that he had not been paid for the land. When he arrived, the plaintiff withdrew into the house and locked the door, refusing to answer him. The second named defendant kicked the door in a fit of temper, picked up a battery and threw it through the glass of the plaintiff’s front door and then threw a spare wheel in through the plaintiff’s window. In his statement, he said that he knew what he did was wrong, he was sorry for breaking the glass and offered to pay for the damage done. The second named defendant was charged, appeared before the District Court and was given the benefit of the Probation Act.
Garda Killeen testified that the plaintiff was very upset about the incident. When he was investigating that incident, the plaintiff informed him that he had been threatened by the second named defendant. However, no complaints had been made to the Gardaí before that and Garda Killeen said that he never saw the plaintiff “roughed up”. The plaintiff’s evidence was that, as a result of the incident, he was so terrified that he had slept in one of the outhouses on the land for a few days. He also said that he has not gone out much since that time.
The second named defendant in his evidence expressed regret for the incident but he accepted that he had not apologised to the plaintiff at the time.
Value of the land as of 1999
No evidence of the market value of the land registered on Folio 1454F as of April 1999 was adduced on behalf of the defendants. However, Mr. Nolan expressed the opinion that the figure of IR£45,000 was a reasonable figure in the context of the deal in question. His view, from his knowledge of the area, was that it was not an undervalue but he did not rule out the possibility that a better price could have been got for the land. He emphasised that the number of potential transferees who fitted the profile of a qualifying transferee for the purposes of the ERS was limited. The fact that the plaintiff was remaining in the house for life was also a factor. His view was that the price was in accordance with the “going rate” or not that far from it.
Mr. Michael Fitzpatrick, a chartered surveyor and valuer, gave evidence on behalf of the plaintiff. He inspected the property on 4th February, 2002 and on 6th May, 2002 and gave his first report on 14th May, 2002. He estimated the open market value of the property as of 8th April, 1999 at IR£240,000 (€304,737). That figure had taken into consideration the plaintiff’s right of residence in the dwelling house for his lifetime. In his oral evidence Mr. Fitzpatrick stated that the market value would have been IR£40,000 higher if no right of residence had been reserved. The figure of IR£240,000 included what Mr. Fitzpatrick described as “Hope Value” of IR£100,000, the hope being that planning permission would be forthcoming for approximately 4 detached housing sites. Mr. Fitzpatrick described the property as having extensive road frontage and as being in a scenic location.
Mr. Victor Leyden, an architect, gave evidence on the prospects of obtaining planning permission in April 1999. Mr. Leyden inspected the land in June 2006 and he gave a report of July 2006. As he pointed out, because of the unusual configuration of the land registered on Folio 1454F, which is a long narrow holding traversed by three public roads, it comprises three separate parcels of land with five separate lengths with public road frontage. Mr. Leyden’s opinion at the time was that the land could accommodate four dwelling houses in addition to the existing dwelling house, which under the Clare County Development Plan 1999 could have been used as homes for local people or as holiday homes. Mr. Leyden’s oral evidence was that planning permission might have been obtained for four houses but, as I understood his evidence, it did not go beyond the realms of possibility.
Mr. Fitzpatrick’s initial valuation, leaving aside the land at Ross which is bog and which he did not value, and leaving aside the “Hope Value”, put almost IR£3,800 per acre on the plaintiff’s land as of April 1999. He did not cite even one comparison. In an updating report dated 25th February, 2009 he analysed statistical evidence published by the Central Statistics Office for the year 2000, there being no statistics available for 1999. Applying the figure for 2000, and again leaving aside the bog, he came up with a higher figure for the land, based on IR£4,500 per acre. Further, extrapolating from the Permanent TSB/ESRI House Price Index and applying the Revenue Commissioners “rule of thumb”, whereby site value represents approximately 25% of the total value of the dwelling house, he valued the four sites. His revised figure for the combined land value and “hope development value” was €340,911.
I consider the valuation evidence adduced on behalf of the plaintiff to be totally divorced from the reality which prevailed in 1999. I do not believe that any prospective purchaser would factor any development value into the price of the land. I also believe that the value put on it as agricultural land by Mr. Fitzpatrick is grossly exaggerated.
Having regard to the state of the evidence, it is impossible to reach a conclusion as to what the entire holding would have fetched if sold on the open market with vacant possession in April 1999. I think it is probable that it would have fetched more that IR£45,000. However, the deal encompassed in the agreement made by the plaintiff with the first named defendant in April 1999 ensured benefits for the plaintiff, which would not have been available on an open market sale – the reservation of a right of residence for life in the house and guaranteed eligibility for the ERS.
Duress/undue influence
As I have said at the outset, the plaintiff seeks to have the transfer set aside on the basis that it was procured by duress and undue influence. It is common case that it is only actual, not presumptive, undue influence which could arise on the facts of this case. As I have already stated, I find on the evidence that Mr. Keating Senior did not beat or bully the plaintiff in the manner alleged by the plaintiff in his evidence. I also find on the evidence that, prior to the plaintiff attending on Mr. Nolan on 8th March, 1999 and giving him instructions in connection with the sale to the first named defendant, the second named defendant did not beat, bully or intimidate the plaintiff to procure the sale of the land to the first named defendant, as the plaintiff alleged in his evidence. Moreover, as I have stated, I am satisfied that the plaintiff’s evidence that he was forced to hand over the proceeds of the deposit cheque of IR£3,000 to the second named defendant is untrue.
Taking an overview of the evidence, I think the true position is that it was the plaintiff who was trying to persuade Mr. Keating Senior during his lifetime, and after his death, the second named defendant to purchase the plaintiff’s land. I reach that conclusion because I believe that the evidence shows that the plaintiff’s motivation was to get a lump sum to discharge his indebtedness to ACC and to put himself in a position where he would be eligible for a pension under the ERS.
Accordingly, I consider that neither the contract for the sale of the land registered on Folio 1454F nor the Land Transfer, insofar as it gave effect to the contract, was procured by duress or undue influence, as alleged by the plaintiff.
Clean hands?
As is explained in Delany on Equity and the Law of Trusts in Ireland (4th Ed., 2007) (at p. 19), the equitable maxim that he who comes to equity must come with clean hands reflects the discretionary nature of equity and requires that a person seeking equitable relief must restrain from fraud, misrepresentation or any other form of dishonest or disreputable conduct if he wishes to be granted a remedy. An important aspect of the application of the maxim (cf. Delany at p. 21) is that a court will decline to intervene on the basis of the “unclean hands” principle unless there is a sufficient connection between the inequitable conduct and the subject matter of the dispute. The subject matter of the dispute with which I am now concerned is the Land Transfer. The plaintiff made an allegation of conduct on the part of Mr. Keating Senior, who is dead, and the second named defendant which, if true, would constitute serious wrongdoing. Because I do not accept the veracity of the plaintiff’s evidence on the allegations, I am satisfied that such wrongdoing has not been proven by the plaintiff and he has not established that the Land Transfer was procured by duress or undue influence. For whatever reason, in my view, the plaintiff has not given evidence which reflects the true position at the end of 1998 and the beginning of 1999. That means that one aspect of his claim fails. However, in my view, it does not mean that he cannot pursue an equitable remedy with a different foundation.
Therefore, I consider that it is appropriate to consider the alternative basis on which the plaintiff seeks to set aside the Land Transfer, namely, that it was of such an unconscionable and improvident nature that the court should intervene and set it aside in equity.
Unconscionable transaction
In making his case, counsel for the plaintiff relied on the following passage from Delany (op. cit.) (at p. 701):
“A transaction may be set aside in equity where one party is at 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 transferee acts without the benefit of independent legal advice.”
The circumstances in which the court will intervene to set aside an improvident transaction were considered by the Supreme Court most recently in Carroll v. Carroll [1999] 4 I.R. 241. There, in her judgment, Denham J. quoted the oft quoted passage from the judgment of Gavan-Duffy J. in Grealish v. Murphy [1946] I.R. 35 (at p. 49/50) to the following effect:
“The issue thus raised brings into play Lord Hatherley’s cardinal principle (from which the exceptions are rare) that Equity comes to the rescue whenever the parties to a contract have not met on equal terms, see Lord Hatherley’s judgment (dissenting on facts) in O’Rorke v. Bolingbroke; the corollary is that the Court must inquire whether a grantor, shown to be unequal to protecting himself, has had the protection which was his due by reason of his infirmity, and the infirmity may take various forms. The deed here was in law a transaction for value …; however tenuous the value may have proved to be in fact, and, of course, a Court must be very much slower to undo a transaction for value; but the fundamental principle to justify radical interference by the Court is the identical principle, whether value be shown or not, and the recorded examples run from gifts and voluntary settlements (including an abortive marriage settlement) to assignments for a money consideration. The principle has been applied to improvident grants, whether the particular disadvantage entailing the need for protection to the grantor were merely low station and surprise (though the grantor’s rights were fully explained) …, or youth and inexperience …, or age and weak intellect, short of total incapacity, with no fiduciary relation and no ‘arts of inducement’ to condemn the grantee …. Even the exuberant or ill-considered dispositions of feckless middle-aged women have had to yield to the same principle …”.
Counsel for the plaintiff submitted that, if the court were to find, as I have found, that it was the plaintiff who pursued the defendants to purchase the land, that is not a bar to the plaintiff being able to maintain an action to have the Land Transfer set aside as improvident. Counsel pointed to the fact that in Grealish v. Murphy, Gavan-Duffy J. found that the plan to put in place the transaction which was set aside in that case was not originated by the defendant, but by the plaintiff, Gavan-Duffy J. commenting that any picture of the defendant “as an adventurer, inveigling his witless victim into a trap in the October settlement, would be a caricature”. Those observations of Gavan-Duffy J. were made in the context of considering whether there was evidence of undue influence in relation to the transactions sought to be set aside.
Professor Delany in her commentary refers to a number of different formulations of the circumstances in which equity will intervene as being more specific or more comprehensive than the reference of Gavan-Duffy J. to the parties not having “met upon equal terms”. For instance, she quotes from the judgment of Peter Millett Q.C., as he then was, in Alec Lobb (Garages) Ltd. v. Total Oil (Great Britain) Ltd. [1983] 1 WLR 87 (at pp. 94/95) in which the essential pre-conditions for setting aside a transaction on the grounds of unconscionability are set out as follows:
“First, one party has been at a serious disadvantage to the other, whether through poverty, or ignorance, or lack of advice, or otherwise, so that circumstances existed of which unfair advantage could be taken. Second, this weakness of the one party has been exploited by the other in some morally culpable manner … And thirdly, the resulting transaction has not merely been hard or improvident, but overreaching and oppressive … In short, there must, in my judgment, be some impropriety, both in the conduct of the stronger party and in the terms of the transaction itself … which in the traditional phrase ‘shocks the conscience of the court’ and makes it against equity and good conscience of the stronger party to retain the benefit of a transaction he has unfairly obtained.”
That passage, in my view, provides helpful guidance for determining whether a transaction should be set aside in equity on the ground of unconscionability. I would observe that I have no doubt that, on the peculiar facts as recorded by Gavan-Duffy J. in Grealish v. Murphy, if the requirements set out in that passage had been applied, they would have been met.
Before considering whether each of those requirements has been fulfilled in this case, I propose summarising what I consider the evidence establishes in relation to the plaintiff’s approach to the transaction and his understanding of it.
The plaintiff’s actions through 1997 and 1998 clearly indicate that he felt under financial pressure. There was no evidence of what he earned in 1998 or 1999, but it is reasonable to infer that receipt of a pension under the ERS would be more beneficial to him than continuing to operate as a farmer and I believe that was his thinking at the time. In late 1998 and early 1999 he had two objectives. He wanted to raise a lump sum to discharge his indebtedness to ACC and he wanted to become entitled to a pension under the ERS. In the course of the hearing, alternative options to selling the land were suggested as being available to the plaintiff, for example, leasing the land for, say, ten years or continuing farming and selling stock to settle the ACC debt. In reality, neither option could have achieved both of the plaintiff’s objectives.
Counsel for the plaintiff put forward ignorance on the part of the plaintiff and his physical and mental health as support of the argument that he was under serious disadvantage.
On the issue of ignorance, in my view, the plaintiff had learned a lot from his dealings with Mr. Nolan in 1997 and 1998. I think he understood that selling the land, but reserving the house or a right of residence in the house, and obtaining a pension was the best way forward for him, even though he resiled from that position when testifying. He demonstrated in his dealings with Mr. Nolan on 8th March, 1999 that he understood the requirements of the ERS. He demonstrated later that he understood the acreage involved in the sale and the complexities of the exchange in relation to the commonage. I am satisfied that he was capable of sorting out his liability to ACC and negotiating a sum in full and final settlement and did so. What the plaintiff did not understand, or, alternatively, did not want to know, was that once the land was sold he could not keep his stock on the land and in the farm buildings for as long as he wished. In the course of his cross-examination, when the plaintiff’s obvious dissatisfaction with the deal after the contract was in place was put to him, the second named defendant stated that the plaintiff wanted to sell the farm and still farm at the same time. I think there is a large element of truth in that. However, the second named defendant also stated that the plaintiff wanted to go through with, that is to say, complete, the transaction. I do not think that it true. I think it is probable that the plaintiff did not realise that he would have to remove his stock from the land until he received Mr. Nolan’s letter of 26th April, 1999. The reason the sale of the land was not closed on 30th April, 1999 was because the plaintiff was not in a position to give vacant possession. The plaintiff’s delay in closing the sale suggests that he was reluctant to dispose of his stock with a view to closing. I think it probable that the plaintiff was pressurised by the defendants to close after 30th April, 1999 and his resistance to the pressure was weak because of his physical and psychological condition.
Apart from that, having regard to the defendants’ case as to the terms they agreed with the plaintiff, the Land Transfer cannot be considered on its own. There were parallel transactions in relation to the quota and the stock. As I have already found, the plaintiff’s signature was forged on the Quota Transfer. The quota had value, and the plaintiff should have received its value but he did not. As regards the stock, the defendants’ story evolved over time and is riddled with inconsistencies. However, I am taking their final position, as conveyed to Mr. Nolan in 2000 and 2001, as being that 18 animals passed with the quota and 12 animals were bought separately. I do not accept the evidence of the defendants that the overall transaction included agreement by the plaintiff for the transfer of the quota with 18 cattle. Apart from the finding that the plaintiff did not sign the Quota Transfer, the quota rights were notional rights which were transferable as such and stock would not normally accompany the transfer of quota rights. Moreover, even if there was a separate agreement between the plaintiff and the second named defendant for the sale of 12 cattle in early March 1999 and the defendants paid for those animals, which I doubt, there being no proof in the form of a cashed cheque adduced in evidence, even though such evidence was adduced in relation to other aspects of the parties’ dealings, the second named defendant rode roughshod over the plaintiff in selecting and removing animals without the consent of the plaintiff. In their dealings with the plaintiff in relation to the quota and the stock after March 1999, the defendants took unfair advantage of the plaintiff and I think it is probable that the second named defendant bullied and intimidated the plaintiff. Even though the dealings in relation to the quota and the stock were outside Mr. Nolan’s purview, in my view, they permeated the whole transaction, and, in any event, on the defendants’ case they were part of it.
I have come to the conclusion that the plaintiff was seriously disadvantaged because of his lack of understanding of the overall ramifications of what he was doing after he contracted to sell the land to the first named defendant and his state of health was a contributory factor in relation to his inability to understand, or, alternatively, to do anything to reverse the situation. The second named defendant, with the approbation of the first named defendant, exploited the situation once the plaintiff was contractually bound to sell the land. Unfortunately, in the words of Gavan-Duffy J. the plaintiff did not have “the protection which was his due by reason of his infirmity”. Mr. Nolan allowed the Land Transfer to come to fruition on an irregular basis, in that the plaintiff had actually received almost half the purchase price, and had disposed of most of it, when the contract was signed. After the contract was signed, Mr. Nolan’s focus was on the first named defendant getting title and vacant possession. In my view, given those circumstances, the plaintiff could not be said to have got independent legal advice. Aside from those circumstances, applying the principles set out by Barron J. in Carroll v. Carroll (at p. 265), the plaintiff could not be said to have got the benefit of independent legal advice.
In determining whether the transaction entered into by the plaintiff with the first named defendant was improvident, it is necessary, in my view, to have regard to the fact that the plaintiff’s objective was to qualify for a pension under the ERS and to continue to live in the house, with the implications those factors had in relation to the price he was likely to achieve. On the evidence before the Court, I cannot form a view as to what would have been a reasonable price having regard to those factors. However, when one puts the benefits which the first named defendant obtained in the overall transaction – the land, the house subject to the right of residence, the outbuildings, the quota and 18 head of cattle – alongside the price the plaintiff was to receive – IR£45,000 – with payment of one ninth of it deferred over a period from one to five years, in my view, the overall transaction was improvident. It was also oppressive and unfair.
Accordingly, I have come to the conclusion that the Land Transfer should be set aside unless it has been established by the defendants that on the basis of some equitable principle, the plaintiff has lost the right to have it set aside.
Affirmation and laches
For the reasons which have informed the conclusion that the plaintiff was disadvantaged in dealing with the defendants after he signed the contract for the sale of the land, I am of the view that, until he instructed his current solicitors around December 2001, the plaintiff was not cognisant of the facts which gave rise to his entitlement to have the transaction set aside, or, alternatively, he was, for the same reasons, incapable of taking the necessary steps to have the transaction set aside.
Accordingly, he cannot be said to have affirmed or acquiesced in the transaction, nor can he be said to be guilty of laches. Therefore, those defences fail.
Restitutio in integrum
The parties did not address the mechanics of the setting aside of the Land Transfer. In particular, they did not address the issue of whether restitutio in integrum is possible, as they should have done. The first named defendant paid IR£40,000 for the land. I am basing that conclusion on the assumption that, in the absence of concrete evidence to the contrary, the plaintiff was not paid one instalment of IR£1,000, and on the fact that he rejected the remaining four instalments which were proffered. On the setting aside of the Land Transfer, the first named defendant is entitled in equity to the return of the sum of €50,790 (IR£40,000). Subject to hearing further submissions from the parties on this point, what I would propose is that, on repayment of the sum of €50,790 to the first named defendant, either by way of set off against sums to which the plaintiff becomes entitled from the defendants or otherwise, the court make an order directing that:
(a) the plaintiff be registered as full owner on Folio 1454F in place of the first named defendant,
(b) the charge registered on the folio to secure the sum of IR£5,000 be discharged, and
(c) the land certificate in relation to the folio be delivered by the first named defendant to the plaintiff free from any equitable charge or lien, which will obviously necessitate the discharge of any monies owing by the first defendant on the security of the land.
Other remedies
Leaving aside the incident on 16th February, 2001, which I will deal with separately, the plaintiff has made an elaborate claim for damages under various headings which, in my view, is wholly unrealistic and exaggerated. It is also inconsistent with the claim to set aside the Land Transfer, insofar as counsel for the plaintiff were prepared to rely on the evidence adduced on behalf of the defendants that prior to the Land Transfer the plaintiff was not able to properly manage his farm and his domestic situation or even his person.
The major element of the plaintiff’s claim for damages is a claim for loss of profits and interest thereon from 1999 to 2009, the final amount of which came to almost €190,000. The foundation of this claim was the evidence of Mr. Pat McMahon, a member of the firm of Philip Farrelly & Partners, Agricultural Consultants. Mr. McMahon carried out an exercise in which he assessed, on a theoretical basis, the profits which the plaintiff would have earned from farming between 1999 and 2009 on the assumption that he would have been carrying on a suckler cow enterprise and a dry stock enterprise on the land. The exercise was wholly theoretical and it took no account of what the plaintiff actually earned in 1999 or 1998 from his actual farming enterprise. Mr. McMahon’s evidence was that he was told that accounts were not available. The theoretical exercise took no account of the plaintiff’s age or ability to farm. The pension which the plaintiff actually received in the period, which was payable only on the basis that he did not own the land, was not deducted. The taxation implications of Mr. McMahon’s theoretical assessment were considered by Mr. Niall Garvey of the firm of Niall C. Garvey & Co., Chartered Accountants. Mr. Garvey’s opinion was that, since income tax would be exigible on the missed profits and the interest thereon, the relevant sums should be paid in gross to the plaintiff. Mr. Brendan Lynch, Actuary, then performed the exacting task of calculating interest at the rate of 8% per annum on the missed profits after tax. For good measure, Mr. Garvey grossed up the interest to take account of the fact that the plaintiff would be liable for income tax on the interest.
I find absolutely no basis in fact for the proposition that the plaintiff missed any profits by reason of not being involved in farming from mid-1999 onwards. If there was a basis in fact for such a claim, it could have been substantiated by putting in evidence the facts that demonstrated that the plaintiff was making a profit before he applied for the pension under the ERS in mid-1999. The fact that no such evidence was adduced, which the plaintiff would have been capable of adducing if it existed, leads me to the conclusion that there is no such evidence, because there was no profit. Taking an overview of the evidence, I have come to the conclusion that, had he been farming, the plaintiff would not have made profits in excess of his pension under the ERS or from 1st August, 2003 in excess of the combined value of the pension under the ERS and the old age non-contributory pension thereafter, whether one factors in the interest for which he would have been liable to ACC or not, which the plaintiff’s expert witnesses also ignored. Accordingly, I do not consider it appropriate to award any damages for missed profits.
The plaintiff’s claim is even more bizarre when it comes to quantifying the claim for the items of machinery which it is alleged were appropriated by the second named defendant or ended up in the slurry pit. One of the items in question, a mower, was represented as having been purchased in 1993 for IR£1,800, although no evidence of this was adduced. Its value for the purposes of this claim was put at IR£800. Mr. Garvey in his report, which was put in evidence, went to the trouble of considering whether Capital Gains Tax would be exigible on an award in respect of, inter alia, this item. Overall, a value in excess of €10,000 is put on four items of machinery, which it is claimed that the second named defendant appropriated or destroyed, and over €7,000 in respect of interest is claimed on top of that. The second named defendant admitted that he disposed of a wagon and trailer, but he contended that they were scrap. I think it probable that they had very little value and I am going to award €2,000 damages under this heading.
Departing from the case as pleaded in the statement of claim, the plaintiff also seeks damages representing the value of 37 cattle on the basis that he received payment for 23 of the 60 cattle which were on the farm in February 1999. The contemporaneous evidence in relation to the disposal of cattle, based on the information given by the first named defendant or the second named defendant to Mr. Nolan as appears from his file, and the evidence given at the hearing, is contradictory and very confusing and, frankly, impossible to reconcile. I consider that the fair course is to compensate the plaintiff for the loss of 30 animals. Mr. McMahon has suggested figures based on the average prices for animals sold through Clare Marts Limited in the spring of 1999 as appropriate. The figures in question are considerably in excess of the prices achieved on the sales by the second named defendant of his own and of the plaintiff’s stock through Clare Marts Limited in 2000 and 2001, as evidenced by the statements put in evidence. Moreover, the evidence suggested that the plaintiff neglected his animals after the defendants took over the land and it was the second named defendant who had to feed and maintain the stock. In the circumstances, I propose to award €12,000 damages under this heading.
The plaintiff’s claim for restocking the land, which was particularised at €38,000 in June 2007, and evaluated by Mr. McMahon at between €40,000 and €45,000, is unsustainable. If the plaintiff were to restock the farm at the level represented by those figures, presumably, he would get value for his money.
In relation to the Quota Transfer, I consider that the plaintiff’s claim as pursued involves double accounting. He has claimed through Mr. Garvey’s calculations the Euro equivalent of IR£10,000, the price which appeared in the Quota Transfer but was never paid, together with interest on that sum which also has the benefit of the grossing up exercise. In addition, the plaintiff has claimed an account from the first named defendant of the profits she actually received from the Department of Agriculture and Food in respect of the premium rights which accrued to her following the submission of the Quota Transfer to the Department which amounted, in fact, to 15.7 premium rights, the Department having deducted two premium rights on the transfer. The profits were received by the first named defendant either under the Suckler Cow Scheme while it was still in force, or by leasing out quota, or under the Single Payment Scheme since it came into operation in 2005. Based on evidence given by an official of the Department of Agriculture and Food, I consider that the plaintiff’s calculation of the sums the first named defendant received at €39, 527.60, roughly speaking, correctly reflects the aggregate value of the benefits which accrued to her from her ownership of the quota. The first named defendant should account to the plaintiff for this sum. Therefore, as the plaintiff is, in effect, being recompensed for the loss of the quota, there can be no question of the plaintiff being recompensed for not being paid IR£10,000 for the Quota Transfer in 1999.
Finally, there was no evidence on the basis of which the court could assess the cost of restoring the water supply and sanitary facilities to the house. In any event, in relation to this element of his claim, the plaintiff failed to mitigate his loss. The injunctive relief sought is not appropriate, as the land will be reverting to the plaintiff.
Summary of remedies
In summary, therefore, the reliefs to which the plaintiff is entitled in relation to the Land Transfer, the Quota Transfer, the appropriation of his cattle and the loss of the machinery and equipment are that:
(1) the Land Transfer will be set aside on the basis that restitutio in integrum will be effected by set off to the extent appropriate,
(2) the first named defendant is liable to account to the plaintiff for the sum of €39,527.60 in respect of the quota,
(3) the plaintiff is awarded €14,000 damages for the loss of machinery and cattle.
Damages for assault/trespass
I have no doubt that the plaintiff had a very frightening experience on 16th February, 2001, which affected him adversely. However, I do not accept, as is asserted in the plaintiff’s claim, that he has suffered post-traumatic stress disorder in consequence of that event or his treatment generally by the defendants.
The plaintiff apparently did not receive any medical treatment following that incident. As I have stated, he was first seen by Dr. Griffin in January 2005. In fact, he was seen twice by Dr. Griffin, on both occasions, for medico legal purposes, not for treatment. The purpose of Dr. Griffin’s first report dated 28th January, 2005 was obviously to establish that the plaintiff was disadvantaged when he entered into the transactions with the defendants in the spring of 1999. In an addendum to his second report dated 6th June, 2008, Dr. Griffin stated that the plaintiff “probably fits into a diagnosis now of post-traumatic stress disorder”. More than seven years had elapsed since the events of February 2001, when this diagnosis was made. Therefore, it is not possible to find a causal link between the second named defendant’s maltreatment of the plaintiff and the condition Dr. Griffin diagnosed.
The appropriate level of damages for personal injuries is, in my view, €12,500.
With the leave of the court by order dated 16th October, 2006, the plaintiff delivered an amended statement of claim on 15th October, 2006. Apart from correcting an error in relation to the date of the Quota Transfer, the only change in the statement of claim was to seek aggravated or punitive damages or both from the second named defendant for trespass to the person or assault. While the conduct of the second named defendant on 16th February, 2001 was unquestionably reprehensible, and while, as I have recorded, he did not apologise to the plaintiff, he admitted what had happened both in the criminal proceedings brought against him and in these proceedings. I do not think that this is an appropriate case in which to award aggravated damages, particularly as I have found that the plaintiff in his testimony made allegations against the second named defendant which I have found to be untrue. I see no basis for exemplary or punitive damages on the facts of this case. In arriving at those conclusions, I have had regard to the principles laid down in Conway v. Irish National Teachers Organisation [1991] 2 I.R. 305.
General observations
The plaintiff is now ten years older than he was in 1999 when he considered that it was time to retire. He is now 72 years of age. Since he retired there have been changes at EU level and at national level in the monetary aids which are available to farmers. For instance, the Single Farm Payment was introduced in 2005. An important point made by Mr. McMahon in his report is that, even if the plaintiff returns to farming in the future, he will not have an entitlement to a single farm payment as he did not farm in the relevant years. Apart from that, the plaintiff’s changed circumstances as a result of this judgment may have implications in relation to his past and future entitlement to an old age non-contributory pension. This is something to which consideration will have to be given by the plaintiff and his advisors.
Finally, this action ran for six days in the High Court. While the court was not informed of the rateable valuation of the land, I would be very surprised if it exceeded the jurisdiction of the Circuit Court. All of the principal witnesses as to fact and most of the professional witnesses travelled from Clare or Limerick. I think the action would have been more appropriately brought in the Circuit Court in County Clare. I make that observation from the perspective of the real value of the claim and the cost and convenience to all concerned, not in response to the suggestion in the submissions made on behalf of the defendants that the plaintiff’s evidence might have been different if he had to give it in the Circuit Court in Kilrush. Notwithstanding that submission, the defendants took no steps to have the proceedings remitted to the Circuit Court.
MC (A Ward) & Anor -v- FC & Ors
[2013] IEHC 272 (02 May 2013)
DEFENDANTS
Judgment of Mr. Justice Feeney delivered on 2nd day of May, 2013.
1.1 MC is a ward of Court so found and declared by order of this Court dated the 4th November, 2009. She was born on the 18th May, 1925 and is a widow without child, grandchild or other descendant. She resided with her late husband at their family home at, Rathgar, Dublin, up to his death in 1991 and thereafter she continued to reside in that house by herself until 2006.
1.2 By order of this Court of the 27th January, 2010, Margaret McGreevy was appointed committee of the person and of the estate of MC. By further order dated 12th April, 2010, Margaret Molony, the second named plaintiff, was substituted as committee of the estate and of the person of MC.
1.3 FC, the first named defendant, is the nephew of MC. He resides at T A, K, County Wexford. The second and third named defendants are brothers of R, D, County Wexford and work as agricultural contractors under the trade name of H Brothers.
1.4 MC is the owner of the property at County Wexford (“T A”) and was residing in that property with the first named defendant, her nephew, FC, up until the time that she was admitted to a nursing home on the 11th March, 2010. She continues to reside in that nursing home. FC remains in occupation of the property at T A. That property was purchased in 2008 subsequent to the sale of MC’s house in Rathgar.
2.1 On the 25th February, 2006, at the time that MC was residing alone in Rathgar, she became unwell and was admitted to St. James’s Hospital. At that time MC had no close relations in Dublin but had a number of relations who resided in County Wexford which was the county where MC had been born and brought up. FC was one of her nephews and due to a number of circumstances he had formed a close relationship with MC. When FC was a child he spent two extended periods with his aunt. The first was when FC was three years old and on that occasion he spent approximately six months with his aunt and uncle in Dublin. Some five years later he spent a further period of two months with his aunt in Dublin after he had been hospitalised. When FC became an adult he visited his aunt, MC, on a regular basis from his home in Wexford. MC lived alone after her husband’s death in 1991 up until she moved to Wexford. During that period she did not work, having given up her pre-marriage employment on marriage. Prior to marriage she had worked as a legal assistant/secretary to a partner in a firm of solicitors in Dublin.
2.2 On the 25th February, 2006 MC was admitted to St. James’s Hospital after her neighbours became apprehensive as to her wellbeing and of her ability to look after herself. The hospital records noted that she was admitted with a history of intermittent confusion and concerns from her neighbours about her ability to self-care. The ability to self-care was confirmed following admission at an interview between MC and a hospital social worker. The hospital records state that MC was admitted with the condition of “acopia”. During the course of evidence, Dr. O’Donoghue gave evidence that acopia was a medical term or slang for being “not able to cope”. The medical records covering her stay in St. James’s Hospital noted that the admission had arisen in circumstances where the neighbours had called an ambulance to bring MC to hospital as a result of “ongoing concerns about her poor self-care skills, vulnerability at home”. The notes indicated that MC expressed the view that her neighbours were overreacting. However, the hospital notes record that MC had “considerable difficulty in personal self-care, cooking (eats biscuits only throughout the day) cleaning, etc”. During the course of the hearing, Sinead McSharry, a medical social worker attached to the Accident and Emergency Department at St. James’s Hospital, gave evidence that she carried out an assessment of MC shortly after her admission. Her evidence supported by contemporaneous notes indicated that MC was obviously a vulnerable woman and that during the course of the assessment it became clear that there were areas where she was struggling with her personal life and that she was having difficulty with personal care, managing her nutrition and managing to mobilise safely in her home. Shortly after MC’s admission to St. James’s Hospital, a mini mental state examination (MMSE) was carried out. That examination, also known as the Folstein Test, is a brief thirty point questionnaire test that is used to screen for cognitive impairment and is also used as a basic test or indication for dementia. The MMSE test carried out on MC in the days following her admission resulted in a score of twenty out of thirty. While in hospital there were two occasions when MC was identified as being disorientated but the medical view was that such disorientation arose from active infection. The evidence to me indicated that the interpretation of MMSE scores proceeds on the basis that a score equal to or greater than twenty five points is indicative of normal cognition and that a score of ten to twenty points is indicative of moderate impairment while a score of twenty one to twenty four points is indicative of mild cognitive impairment.
2.3 After MC’s admission to St. James’s Hospital, a medical condition unrelated to the reason for her admission was diagnosed. That medical condition was an aortic aneurysm and she required surgery. She remained in hospital until the 26th April, 2006 when she was discharged into the care of the first named defendant, FC. From the end of April 2006 up until MC went to reside in a nursing home in County Wexford on the 11th March, 2010, she resided with her nephew, FC, at various different addresses. On release from hospital, MC resided in her original family home at C, County Wexford with FC, her nephew, and his father, who was her brother-in-law being the widower of MC’s late sister.
2.4 Prior to her discharge from St. James’s, MC had indicated to the medical social worker on the 3rd April, 2006 that she was adamant that she wanted to go home to her house in Dublin and that she believed that she was able to do so as her neighbour was present to support her. The notes of that attendance indicated that MC became very annoyed at any idea of moving to Wexford. Prior to her discharge at the end of April 2006, a family meeting occurred which was attended by FC and a plan was identified whereby she would live at C, in County Wexford. The social worker at St. James’s Hospital continued to keep in touch with MC after her discharge for four months. She recorded that FC had tried to persuade MC to sell her house in Dublin and buy in Wexford but that there had been no success.
2.5 Towards the latter part of 2006, MC moved from the house at C, to St M. R H, County Wexford, which was the home of a M K. M K was the partner of FC. She resided in that house for approximately one year until following a dispute in late 2007, she returned to C under the supervision of her nephew, FC. She was there for a number of months until returning to reside at St. M in early 2008.
2.6 The evidence establishes that from her discharge from St. James up until May of 2007, MC was at best reluctant, and at times opposed, to the sale of her home in Rathgar. The evidence, as confirmed by the attendance of the medical social worker, was that FC was desirous of having the Rathgar house sold and an arrangement put in place whereby MC would live with him on a permanent basis. By May of 2007 MC was seriously considering selling her Rathgar property and contact was made with Eleanor Wardlaw (Mrs. Wardlaw), a local solicitor based in Killinick, in County Wexford, who was known to the family. Mrs. Wardlaw gave comprehensive and precise evidence to me and demonstrated that she was an efficient, considerate and committed solicitor. I am satisfied that her evidence was accurate and truthful. This was reinforced by the efficient and comprehensive manner in which she kept attendances. She ensured that MC’s interests were fully and properly identified and represented. She was initially contacted by telephone on the 16th May, 2007 and made an appointment to meet MC two days later. On the 18th May, 2007, FC brought MC to Mrs. Wardlaw. By that date MC was dependent upon her nephew, FC, for transport and for the provision of a place to reside. At the meeting MC indicated that she wanted to sell the house in Rathgar and hoped to obtain a price of approximately €2.5m. Mrs. Wardlaw indicated that she would instruct estate agents to assist in the sale and that she would consider the title deeds. Mrs. Wardlaw gave evidence that she was experienced in dealing with elderly people and that, therefore, at the first consultation she sought and obtained the identity of MC’s general practitioner and took limited instructions in relation to her medical history. Mrs. Wardlaw was informed that MC intended to purchase a house in Wexford and was considering a property in Tagoat. Mrs. Wardlaw also gave evidence that after the consultation on the 18th May, 2007, FC rang her to inform her that MC’s general practitioner, Dr. Liz O’Sullivan, was satisfied in relation to MC’s health and mental state. That contact was, on the evidence of Mrs. Wardlaw, entirely unsolicited and was made at a time before Mrs. Wardlaw had contacted the general practitioner.
2.7 FC’s enthusiasm for the house in Rathgar to be sold and to progress the sale was not only illustrated by his statement to the medical social worker and by his unsolicited contact with Mrs. Wardlaw in relation to MC’s health and mental state, but was also demonstrated by his conduct in late 2006 or early 2007. During that period, whilst MC was residing with FC, he was the active participant in the preparation of a forged letter which purported to have come from a Welfare Inspector in the Dublin South Region in the Department of Social Welfare. That letter later became available in evidence through another relation of MC and was the subject of extensive evidence. The letter is undated but clearly was written during the period between MC’s discharge from St. James’s Hospital in May of 2006 and when she went to see Mrs. Wardlaw on the 18th May, 2007. The letter was obtained by a relation of MC by the name of E R and that letter was then made available in these proceedings. FC gave evidence that he assisted in the preparation of that letter in that he obtained blank notepaper of the Department of Social and Family Affairs and used that notepaper to type a letter addressed to himself but on his evidence it was dictated by MC. He gave evidence that the letter was produced in the latter part of 2006 or early 2007. FC failed to provide any rational explanation as to the reason or circumstances for the production of that forged letter and the suggested dictation of it by his aunt. The letter was addressed to FC and having regard to its contents it is clear that it was prepared for the purpose of putting pressure on MC to encourage her to sell her house in Rathgar. The letter was typed by FC and was addressed to him and the suggestion that it was dictated to him by MC lacks credibility. When one has regard to the content of the letter and to whom it was addressed, it is clear that the purpose of the letter was so that it could be used by FC to put pressure on MC to sell her house. References within the letter to an assumption that absent MC agreeing to sell the house, that “the State will be taking possession of MC’s house at the end of July” and that “the State will be responsible for selling it”, together with a closing paragraph that indicated that “an Inspector from the Department of Social and Family Affairs will be making an unannounced visit to you and your aunt at your address in R” and that “this visit will be different from the usual visits . . . from the local health authority”, all point to an intent to put pressure on MC. It is probable that not only did FC obtain the headed notepaper and type the letter, but that he also was the person who composed the letter. The reason for writing the letter was to put pressure on MC and it is probable that it was used for that purpose. That letter is demonstrative of the reluctance that MC had to arrive at a decision to sell her home in Rathgar and also of FC’s efforts to try and persuade her. Mr. Kohl, in giving evidence, also stated that the forged letter from the Department of Social and Family Affairs had come into his possession through a relation of MC and that he discussed the letter with FC who confirmed that he had written the letter. As set out above, FC in his evidence to this Court disputed that he composed the letter and swore that he only typed the letter from instructions given to him by MC. I conclude that the version given by FC to Mr. Kohl was correct. The attempt by FC to resile from this admission during his evidence resulted in him giving false evidence. FC’s claim that MC dictated a letter which contained threats against her, and sought to put pressure on herself to sell her house is not credible.
2.8 Mrs. Wardlaw’s attendances confirm that following the initial meeting and the unsolicited contact from FC in relation to his aunt’s health and mental state that FC endeavoured to further progress a sale by informing Mrs. Wardlaw that his aunt, MC, had met with the auctioneers and was happy to go along with them and that it had been agreed that the house in Rathgar could be sold by private treaty with a reserve in the region of €2.5m. Thereafter, FC brought the title deeds, a valuation and a marriage and death certificate into Mrs. Wardlaw. After that activity in the second half of May of 2007 there was no contact in relation to the proposed sale until the 19th July, 2007. On that date Mrs. Wardlaw rang FC. FC informed her that MC now accepted that she did not own a second house and that the proposed sale related to her Rathgar property. Mrs. Wardlaw was also informed of the intention of MC to make a will. The issue of the purchase of a new house by MC was also raised and it was indicated by FC that that house might be put into the joint names of the two of them. By September 2007 Mrs. Wardlaw had been contacted by two different relations of MC, other than FC, raising certain apprehensions concerning M C’s health and her ability to complete a sale. Mrs. Wardlaw was already proceeding on the basis that MC would require to be independently advised in the absence of any other person by her and that prior to any sale, a medical report as to her capacity would be required. On the 20th July, 2007, MC signed a letter of that date addressed to Anna Rossy in Sherry Fitzgerald, Auctioneers. The probability is that that letter was typed by FC given his involvement in the preparation and completion of the forged letter. The letter commenced by indicating that MC had made up her mind and decided to sell her house in Rathgar and that she was sorry for the delay in trying to make up her mind. The letter also stated that MC knew that the auctioneers had been dealing with her nephew, FC, and that she would trust him to deal with any problems that may arise on her behalf. The letter also stated that MC would leave her nephew to deal with Sherry Fitzgerald on her behalf and that he would take care of the details. On the 14th September, 2007, Mrs. Wardlaw met in private with MC. She inquired about the proposed sale of the house in Rathgar and whether MC was satisfied to sell that house. Mrs. Wardlaw gave advice to MC and informed her that Mrs. Wardlaw was going to write to her general practitioner to obtain a medical report and that she would see MC the following week. After the private meeting with MC, Mrs. Wardlaw spoke to FC to make arrangements about contacting Dr. O’Sullivan and she also suggested that another family member might help FC in dealing with the details of the sale as some members of the family did not trust him. On the date of the consultation, Mrs. Wardlaw wrote to Dr. O’Sullivan requesting a medical report on MC’s capacity and she stated in the letter that –
“I myself have no concerns in relation to MC’s mental capacity, although I can see that at times she comes across as a bit scatty, which I understand was always her way. I do not have any particulars in relation to her health and what medication, if any she is on and whether or not she would be capable of living alone”.
She went on to request a report on MC’s general health and her capacity to deal with her affairs and any views that the general practitioner might have in relation to MC’s future. Following the written request for a report there was telephone contact between Mrs. Wardlaw and Dr. O’Sullivan on the 26th September, 2007. Dr. O’Sullivan informed Mrs. Wardlaw that she had done a test on MC which was quite extensive and that she was quite surprised as to how well MC had done and that she was satisfied that she was in possession of all her faculties. She indicated that MC was able to make up her own mind and was not at a stage where she would need to go into a nursing home but Dr. O’Sullivan indicated that she accepted that MC would need to live with somebody else. Following that telephone call, the house in Rathgar was auctioned on the following day, that is, the 27th September, 2007, and the property was sold at auction for €2,800,000. A contract was signed and a deposit of €280,000 paid.
2.9 In November 2007, MC had a falling out with her nephew, FC, and his partner and she left their house and returned to her family home at C. She resided there for a number of weeks with her nephew, FC, staying at night time. Mrs. Wardlaw saw MC on her own in relation to accommodation and discussed with her the possibility of staying permanently in C and finding a companion. On the 15th November, 2007, Mrs. Wardlaw wrote to Dr. O’Sullivan informing her that MC no longer lived in R H and had returned to C, K. In C there were two houses, a newer house where her nephew, J C, and his wife lived with their children, and the old family home which was where MC resided. In that letter Mrs. Wardlaw commented on MC’s long-term situation and stated “I do not know whether going forward she (MC) can stay where she is. It seems what is best for her or what she wants is not the same as what FC would like”. In the final paragraph of the letter Mrs. Wardlaw stated –
“I have advised FC that any decisions for MC’s future will be made by herself in consultation by you and myself. I would therefore welcome at this stage your views in relation to her capability of living alone. I have suggested to her that she might consider a live-in companion. It is accepted that MC does not want to go to a nursing home and this does not arise . . . at present”.
On the 17th December, 2007, Mrs. Wardlaw wrote to MC after the sale of the Rathgar property had closed, indicating that there was a net balance after expenses of €2,717,313.05. A month later, on the 14th January, 2008, Mrs. Wardlaw again wrote to MC indicating that it was difficult for MC to make a decision in relation to investment long-term until she had sorted out her house situation and wondering if she wanted Mrs. Wardlaw to set up “an appointment with an investment adviser”. She suggested that that advice might be obtained before the deposit renewal date on the initial investment of the net proceeds expired on the 11th February, 2008. Dr. O’Sullivan wrote to Mrs. Wardlaw on 14th January, 2008 and confirmed the oral report that she had given following the examination of MC on the 19th September, 2007. In that report, Dr. O’Sullivan stated in relation to the mental state examination as follows:
“Mini mental state examination was performed and MC performed extremely well. I enclose a photocopy of this exam. Essentially MC is of normal mental state and capable of making her own decisions and managing her own affairs. In short, MC was in good physical and mental health at the time of review. However in view of her age and previous illness I do feel she requires support and is not capable of living completely independently. While she can manage to dress and feed herself with no difficulty she is at the stage where a live-in companion is advised and she realises that.”
The mini mental state examination which was enclosed with that letter indicated a score of thirty three out of thirty. That score was incorrect and should have read twenty eight out of thirty.
2.10 On the 22nd January, 2008, Mrs. Wardlaw met in private with MC. MC indicated that she had returned to live in R H but did not like it. The words that she used were I “hate it” and that she wanted “a place of her own”. Mrs. Wardlaw informed MC of Dr. O’Sullivan’s report and of the fact that Dr. O’Sullivan was of the view that she could not live alone. MC indicated that she was happy to buy a new property at T A which was near to FC’s house and that there was a room downstairs that could be converted into a bedroom for herself. She confirmed that she was happy to buy the property and was not being pressurised by anybody to do so and she informed Mrs. Wardlaw that there was land with the house and that she was happy that FC could use the land for his own use and that FC was going to move into the new house with her but that FC’s partner was not going to accompany him. The attendance note taken on the 22nd January, 2008 states that MC informed Mrs. Wardlaw that “the house will be sold after your day” and “FC only there for your lifetime”. Mrs. Wardlaw gave evidence that it was clear from the consultation that MC agreed to FC living in the house at T A while she was there but that it was never envisaged that FC would live there on his own and that what was envisaged was that the house would be sold after MC had died and that at that stage FC would get a generous inheritance. It was suggested in cross-examination by the first named defendant that MC agreed to give FC a life interest in the property. Mrs. Wardlaw refuted such suggestion and confirmed that a life interest was never discussed and that what was envisaged was that FC would live there whilst MC resided in the house. After the meeting on 22nd January, 2008, arrangements were made for the purchase of the property at T A, K, County Wexford together with adjoining lands and that purchase was completed in April 2008 for a purchase price of €744,000. MC moved into the house at T A together with FC. FC’s partner did not move into the house but after a short period, F C’s daughter, her boyfriend, and a Polish woman named I S came to reside in the property. After MC went into the nursing home in March of 2010, FC continued to reside in the house. His partner has now also moved into T A.
2.11 On the 10th April, 2008, Mrs. Wardlaw met with MC and discussed the transfer of the balance of the funds arising from the sale of the house in Rathgar which were left after the purchase of the property at T A. Mrs. Wardlaw informed MC that there was a balance of €1,938,300 on deposit with the ICS Building Society and that a representative of the Bank of Ireland Private Banking would meet with MC, as had previously been discussed, to consider the investment of the balance. Mrs. Wardlaw also advised MC that she should ensure that all bills were paid by cheque rather than giving her nephew, FC, sums of money. Prior to that meeting in April 2008, Mrs. Wardlaw had been informed by MC that she was going to the Bank of Ireland Private Banking Section to obtain investment advice. Following the consultation on the 10th April, 2008, Mrs. Wardlaw was in contact with MC and advised her that the balance of monies were being transferred to the Bank of Ireland/ICS Building Society and that a meeting with Bank of Ireland Private Banking was arranged and would take place during the first week of May 2008. Mrs. Wardlaw contacted a representative in the Bank of Ireland and confirmed that contact had been made with a representative of Bank of Ireland Private Banking to make an appointment for MC to receive investment advice and that on that basis Mrs. Wardlaw agreed to fax and post the request for transfer of funds. On the 2nd May, 2008, €1,938,453.41 was transferred into MC’s ICS Building Society’s account at the Bank of Ireland in R H.
2.12 In the following fourteen months no contact was made with Mrs. Wardlaw and she was not in a position to give any independent advice or to see MC on her own. The evidence established that no independent financial advice was received by MC and that the proposed meeting with Bank of Ireland Private Banking did not occur. It is what occurred after the 2nd May, 2008 when the sum of €1,938,453.41 was lodged which forms the core matters in issue in this case and, in particular, the mode and manner in which sums were withdrawn and the use to which those sums were put.
3.1 The payments which are the subject matter of these proceedings are eight withdrawals which took place from MC’s account. The first withdrawal was on the 16th May, 2008 and the last withdrawal on the 14th April, 2009. There is no dispute but that the sum of €1,938,453.41 was lodged to MC’s account on the 2nd May, 2008 resulting in a balance in that account of €1,949,619.16. Thereafter, eight withdrawals occurred which are relevant to these proceedings. Those eight withdrawals are set out in eight lettered paragraphs A to H inclusive. (Hereafter in this judgment I shall refer to such withdrawals by such letters).
A – 16th May, 2008 – withdrawal of €100,000 by transfer to account in sole name of FC;
B – 16th May, 2008 – transfer of €10,000 to joint account in names of MC and FC;
C – 3rd July, 2008 – withdrawal of €93,800 lodged to account in sole name of FC;
D – 13th August, 2008 – withdrawal of €42,000 lodged to the account in the sole name of FC;
E – 22nd September, 2008 – transfer of €42,000 to the account in name of FC;
F – 15th December, 2008 – transfer of €50,000 to the account in the joint names of MC and FC;
G – 28th January, 2009 – transfer of €100,000 to account in joint names of MC and FC;
H – 14th April, 2009 – transfer of €500,000 to account in the sole name of FC.
Other than for the withdrawal of the 15th December, 2008, the transfers and withdrawals were executed by MC after she was brought to the Bank of Ireland Branch in Rosslare where the transactions took place. The transfer on the 15th December, 2008 took place in circumstances where MC was in hospital and was carried out by FC. MC had signed a withdrawal slip and that was used in her absence. FC’s evidence in relation to this matter was that he had a number of blank withdrawal slips signed by MC so that transactions could take place without her having to attend at the bank.
3.2 The largest withdrawal was the transfer ‘H’ on the 14th April, 2009. By that date over €400,000 had been transferred either into the sole or joint accounts of FC in a period of less than eleven months. On the 14th April, 2009, FC brought M C to the bank in Rosslare and the transfer was carried out in the public office. At no time was MC spoken to by a senior official and, such conversation as took place, took place with an official from the bank at the public counter and in circumstances where FC, who had brought MC to the bank, was also present in the public office. The process and procedures followed by the bank were cursory and had no regard to the sums involved, the frequency of withdrawals or the age of the account holder. As of the date of that transfer, MC was not only elderly and fragile, but was due within a matter of days to have an assessment as to her mental capacity. To allow and permit the immediate transfer of such a substantial sum of money, representing a significant portion of the funds available to MC, without a private meeting or real consideration is indicative of a lack of full or proper procedures being followed in the bank’s dealing with elderly and potentially vulnerable customers.
3.3 FC acknowledges in evidence that he received all the sums of money set out in the earlier paragraph (i.e. ‘A’ to ‘H’ inclusive) and states that he used those sums for particular purposes. He claims that his aunt agreed to each and every one of the transfers and had determined that he should receive half of her funds and that she was aware of the intended use by him of the money and what purchases he would make. FC dealt with his claim that his aunt wished to provide him with funds for the purchase of items of machinery and to provide him in total with half of the money available in his cross-examination. (Day 5, pages 120 – 124). He claims that there was a gentleman’s agreement between him and MC and J H, the second named defendant, that funds would be provided to purchase machinery for the H machinery business and that FC would be given a wage as soon as the business was built up and that J H and FC would hold joint ownership of the machinery and if the business did not prosper, that the machinery would be returned to the sole ownership of FC. FC claimed that that agreement was an oral agreement first made in 2006 at a time prior to the sale of the house in Rathgar. FC claimed that his aunt stated that “she was going to look after us”, that is, himself and J H. At that time J H was assisting in relation to the tidying up and clearing out of the house in Rathgar. FC gave further evidence that his aunt remained interested in the machinery business and would ask questions about it on different occasions. He gave evidence that “he imagines” that the agreement was made sometime in the summer of 2007. When asked to provide details of the agreement, he stated in relation to the agreement that his aunt said she would look after him and that his health was not the best and MC wanted to look after him and that she wanted J H to do that and that his future would be looked after and that he would have a job and that he, FC, would have some machinery of his own. FC gave evidence that he presumed that when it was first mentioned, that his aunt meant he would be looked after when the house was sold, and that he did not recollect or remember any discussion about money other than at one stage his aunt stated that when the house was sold in Dublin, if it was sold for over a million euro, she would give him half of it but he was unable to remember when that was said. Clearly, if that was said, it would have to have been said prior to the sale. He also stated that in relation to his aunt’s statements that she said she would give him half of the proceeds and that if he was not mistaken she had said it on more than one occasion and that to the best of his recollection the first occasion would have been in August/September 2006. FC produced a document in purported support of his claim for an oral gentleman’s agreement which was dated the 13th July, 2011 and was signed by him and JH. The subject was identified as a gentleman’s agreement and the document read as follows:
“This statement is confirmation of a gentleman’s agreement between MC, FC and J H. The agreement was that J H would give FC a wage as soon as the business was built up enough to be able to support an extra wage, and was acknowledged by all three of us that this would not happen overnight and would take a few years for this to materialise. J H and FC would hold joint ownership of the machinery and if the business did not work out, ownership of the machinery would return to FC as full owner. Any maintenance including parts, would be paid from the proceeds of the business. I requested J H to confirm this agreement between us in writing for the benefit of the High Court.”
It was signed by FC and JH. Other than for the claim that MC was agreeable at the date of each transfer for such transfer to take place, and was aware of the purported use or the general intended use of the funds on each occasion, the only matters upon which FC relies upon in support of his claim that he is entitled to retain all the sums transferred out of MC’s account is the purported gentleman’s agreement and the evidence that he gave relating to MC’s desire to give him half of her funds. The claim in relation to MC’s intended wish to give him half of the funds is a matter which was not originally pleaded but which was given in evidence by FC after he delivered an amended defence and counterclaim at the start of the trial.
3.4 Carsten Kohl, a social worker attached to the Protection Service for Older Persons Unit of Wexford Community Service gave evidence to me. He is a senior case worker for the protection of older people within the Wexford Community Services and he became involved with MC when he received a phone call from John R, a brother-in-law of MC, on the 15th January, 2009, wherein he raised certain matters of concern. As a result of that phone call, Mr. Kohl made a home visit to T A on the 26th January, 2009. During the course of Mr. Kohl’s interview with MC, she stated that she bought the house and that she gave half of her remaining money to F, referring to FC, and that he bought some machinery with the money. She was asked how she managed her financial affairs and she said that she had a cousin in Rathmines working in a bank but did not go into any further details and she also told Mr. Kohl that F, again referring to FC, had begged her for half of her money. She also indicated that in the past she was running the country and that she was the Taoiseach at some stage and that she ran the whole of Ireland. Mr. Kohl determined to have a follow up visit and visited MC for a second time on the 5th March, 2009. She did not recognise Mr. Kohl from his earlier visit and on that date she appeared quite confused and he formed the impression that she was even more confused on the second occasion than she had been on the first occasion. FC informed Mr. Kohl on that occasion that MC’s memory was as usual but that she was more confused after waking up and generally she only became more active and alert later in the day. On the occasion of the second visit Mr. Kohl informed MC that he was planning a referral to a psychiatrist for old age because he felt that it was important that MC’s capacity should be tested. Mr. Kohl gave evidence that he had decided to proceed on that basis as a result of his observations and impressions during his two visits. He checked with Dr. Gormley’s office and established that a referral to him had already been made in relation to MC through the public health nurse. Dr. Niall Gormley is a Consultant Psychiatrist for old age with Wexford Mental Health Service. FC was aware of the intended consultation with Dr. Gormley which was arranged for April 2009. On the 18th May, 2009, Mr. Kohl rang FC to ascertain what had occurred at the appointment and was informed by FC that MC had missed the appointment as she was sick and that another appointment had been arranged for the end of June. On the occasion of that phone call, FC informed Mr. Kohl of the circumstances of the €500,000 withdrawal on the 14th April, 2009. He told Mr. Kohl that MC had overheard a conversation which had indicated that she might be made a ward of Court and that MC then insisted that she be brought to the bank so that she could put all her money into FC’s name. FC told Mr. Kohl that he rang the bank in advance of the visit and asked the manager and the staff to go along with the transaction and FC informed Mr. Kohl that €500,000 was transferred into his account. He told Mr. Kohl that all the money, that is the €500,000, would be invested and would be used for MC’s care.
3.5 At the start of May 2008, Mrs. Wardlaw had made arrangements with Bank of Ireland Private Banking Division to advise MC in relation to her funds. After that, she was not involved with MC until July of the following year when, on the 9th July, 2009, she received a phone call from Mr. R, a brother-in-law of MC. Mr. R raised the issue of MC being made a ward of Court. On the following day Mrs. Wardlaw tried to contact Dr. O’Sullivan and contacted the Bank of Ireland in Rosslare and informed them that she had received expressions of concern in relation to a recent transaction on MC’s account. The acting manager confirmed to Mrs. Wardlaw that Carsten Kohl, a social worker with the HSE, had called to the branch on the previous day. Mrs. Wardlaw advised the acting manager that her phone call was a formal telephone call and that she was putting the bank on notice of her concern and that she reminded the bank that they had a duty of care to their clients and, in particular, to elderly clients. The acting manager, Peter Hudson, confirmed that he was investigating the matter and that he was seeking advice from the bank’s legal department. Mrs. Wardlaw informed the acting manager that if there had been a transaction involving €500,000 that surely that that would have been brought to the attention of the bank manager and not dealt with solely by a teller. The acting manager thanked Mrs. Wardlaw for contacting him. Mrs. Wardlaw was later in contact with Carsten Kohl who informed her that MC had transferred €500,000 to FC and that it would appear that that occurred when there was an assessment pending from Dr. Gormley. Carsten Kohl also informed Mrs. Wardlaw that the money which had been transferred was available for MC’s care as it had been invested and he had been informed of that by FC. A few days later FC informed Mrs. Wardlaw of the letter from the HSE to say that an appointment had been made to have MC assessed and that he, that is FC, subsequently postponed the appointment. Mrs. Wardlaw continued to endeavour to deal with the issue concerning the use of MC’s funds and on the 10th August, 2009, met with MC in her office. FC was also present. MC indicated that she wanted him to be present at the meeting. Mrs. Wardlaw asked why the money available to MC had not been invested through Bank of Ireland Private Banking and FC stated that MC only wanted to invest €1m and that the bank suggested €1.75m so that MC had said no. During that meeting MC indicated that she did not know that she had given away as much as €500,000 and FC informed her that on the 12th April, 2009 MC gave him €500,000 “to look after her for the rest of her life” and added that he did not ask for it. FC also mentioned that he still regarded the €500,000 as being MC’s and that when Mrs. Wardlaw asked him if he would be agreeable to sign a declaration of trust in favour of his aunt, that he indicated that he would be agreeable. At that meeting Mrs. Wardlaw was informed by FC that €70,000 remained in the bank in R H in two accounts, one in his name and the name of IS with a balance of €50,000 and another in his sole name with a balance of €20,000. Mrs. Wardlaw suggested that the money should be refunded to MC immediately. FC agreed to repay €65,000, out of the two bank accounts, to MC. Two days after the meeting with Mrs. Wardlaw, FC confirmed that the transfer would be done and that he was going to the bank the following day. FC did not transfer any funds.
3.6 Dr. Niall Gormley called to see MC on the 9th June, 2009 and following that visit, he wrote a report dated the 18th June, 2009. In that letter Dr. Gormley stated that:
“FC described MC as eccentric by nature, and that she had struggled to provide care for herself when living independently. In addition to the eccentricity, he described a gradual deterioration in her memory, most significantly since a hip fracture last November. On a few occasions she had wandered off from the house and had to be returned by neighbours, but there have been no recent episodes as according to FC MC is never alone at home.”
Dr. Gormley carried out a mini mental state examination to test MC’s cognitive ability. MC displayed global impairment with an MMSE test result of eighteen out of thirty. At the examination Dr. Gormley identified that MC was inconsistent regarding her move from Dublin and that at times she stated she missed Dublin and did not know why she had left, although later she said she was quite content living in K. Dr. Gormley identified MC’s speech pattern as being quite rambling and disjointed. Dr. Gormley concluded as follows:
“In summary MC is an 84 year old lady living with her nephew and his two daughters. Her presentation is consistent with a dementia of moderate severity, on a background of what appears to be a grandiose or eccentric type personality. Her general care appears to be good, and MC did not raise any specific concerns with me. MC would appear to retain decision making capacity for basic day to day affairs, but would not be capable of engaging in any complex financial decision making.”
3.7 I also heard evidence from Nurse Molony, an experienced and qualified nurse who had graduated in 1983. In late 2007 she was engaged to provide certain care to MC. She provided care to MC from December 2007 until March 2010. She attended on a regular basis, at least once a week, and she gave evidence as follows (Day 3, question 36):
“But right from the beginning I didn’t question the fact that I was also dealing with someone who perhaps was in the early stages of dementia. Now, I never had a diagnosis of that and I never asked for it and it was not part of my remit. But having worked with people who did have it, I just thought for quite a while that it was early stage. I mean, her conversations could jump from one thing to the other and it was never really very much present day, except when she spoke of Francis.”
She also gave evidence that (Day 3, question 40):
“The other thing I noticed on a couple of occasions was that when I would go – in my copybook that I kept notes in my fee would always have been left there by FC and on a few occasions she would insist on paying me also. She wouldn’t take money back. She used to say to me ‘Take one of those’. I was never sure whether she realised it was a twenty euro or a fifty euro or not. I am not sure, but that is something I noticed.”
3.8 Dr. Patrick Geoffrey O’Donoghue, a Consultant Psychiatrist and registered medical specialist in general adult psychiatry, gave evidence to me. He had carried out a full review of all available medical records in relation to MC. He also gave evidence that he examined MC on the 29th September, 2009 to enable him to make an assessment as of that date. He gave evidence that as of that date he was very clear that MC had very significant cognitive deficits such that he would make a diagnosis of moderate to severe dementia. He also thought that she was incapable of managing her affairs and could be considered a person of unsound mind. He gave evidence that the dementia was probably an Alzheimer type of dementia which had been running over seven to ten years. A person presenting with the type of symptoms and cognitive capacity demonstrated by MC as of September 2009 would have a history going back “certainly five years or more”. He gave evidence that from his examination of the medical records that (Day 1, page 118):
“She was not orientated in time and place, it was fairly consistent throughout the admission in 2006 and certainly for the latter part of her admission in 2006 she wasn’t physically unwell. She had, you know, Dr. Nuala Caffrey on 3 April (2006) that she was probably back to her baseline level of function. I think she had significant cognitive deficits at that time, and that makes sense. Everybody was concerned; can this woman care for herself. And I think she had an enduring deficit at that time and it had progressed steadily and slowly.”
3.9 I also heard evidence from Ann Kelly who is an occupational therapist who qualified in 2005. She worked in Waterford Regional Hospital from 2005 to 2010. In 2008, whilst working in the orthopaedic ward, she came into contact with MC who was being treated in the hospital as a result of an injury. As part of her examination of MC she carried out a mini mental state examination on the 16th December, 2008. That mini mental state examination was scored as having an outcome of thirteen out of thirty. However, in evidence it was acknowledged that the totting up of the figures of that examination was incorrect and that it should have been sixteen out of thirty. Ann Kelly gave evidence that (Day 2, question 72):
“From my records I would feel that this lady was somebody that had some difficulties with her memory in terms of applying things, you know, from day to day and applying the advice that would have been provided to her. So I suppose that she would be somewhat vulnerable and needing help from other people to manage her daily activities safely at home.”
3.10 I also heard evidence from Elizabeth C who was called in evidence by FC. She lived in the house with MC for a period of approximately six months, either in the second half of 2006 or the first half of 2007. Mrs. C gave evidence, in cross-examination, that MC was rambling in her speech but that she disagreed with Nurse Molony’s evidence that MC was a person in the early stages of dementia. Mrs. C indicated that she respected the opinion of Nurse Molony and that Nurse Molony had got to know MC and therefore would have been able to assess her as it was Mrs. C’s experience that MC dealt with outsiders differently from people that she knew.
4.1 The preponderance and weight of evidence that I heard leads me to the conclusion that by the date of MC’s admission to St. James’s Hospital on the 25th February, 2006, she was suffering from the early stages of dementia. There are differing outcomes from the of mini mental state examinations which take place after the date of admission in 2006 and different opinions expressed by medical doctors and paramedicals. The different results indicated that MC’s condition was not constant and that, depending upon the date and circumstances, she could be more alert and perceptive showing increased cognitive ability depending upon the circumstances and location of the test. However, the weight of evidence and the expert medical opinion, which I accept, is that by February of 2006, MC was suffering from early stage mild dementia with some cognitive impairment. The evidence, which I again accept, is that that is a condition which varies but which, from an overall perspective, progresses. The evidence demonstrates that by February 2006, MC was a fragile individual who had lived alone for a considerable period of time and was clearly having difficulty in caring for herself. It was her inability to care for herself which was the stated cause of her being admitted to hospital in February 2006. By that date MC was in a vulnerable position and was a person who required assistance and care and had reached a stage where she no longer could live alone. The evidence shows that MC was a strong-willed, opinionated lady but had reached a stage where she was vulnerable without assistance and help in everyday activities. The differing views expressed by MC as to her willingness or lack of willingness to sell her house in Rathgar and her views as to where she should reside whilst in County Wexford are indicative of a person who was erratic and inconsistent in her views and liable to alter or change those views. By the time that MC was discharged from St. James’s Hospital in April 2006, her mental state and physical condition were such that she could not live by herself and was dependent upon others to provide essential everyday requirements. She could not take care of herself without assistance; she was a person who required to be looked after.
4.2 The medical examination carried out by Dr. O’Sullivan in September 2007 indicates that at that time MC’s cognitive capacity was sufficient to enable her to make decisions as regards managing her own affairs. Dr. O’Sullivan, in her report of the 14th January, 2008, following her examination on the 19th September, 2007, makes it clear that in view of MC’s age and previous illness, that she “requires support” and “is not capable of living completely independently”. That report confirms my conclusion that there can be no doubt that by September 2007, and in all probability from her discharge from St. James in May 2006, MC could not live independently and required care and assistance. Between the examination by Dr. O’Sullivan in September 2007 and the admission of MC to Waterford Regional Hospital on the 28th October, 2008, there appears to have been a significant deterioration in MC’s condition and in her cognitive ability. This is confirmed by the mini mental state examination carried out on the 16th December, 2008, which demonstrates moderate cognitive impairment. Dementia of a moderate severity was identifiable by December 2008 and was confirmed by the Consultant Psychiatrist’s examination in June 2009 and given his evidence in relation to the nature and progress of dementia, the probability is that during 2007 and 2008, MC’s cognitive impairment had progressed from mild to moderate and that at no time during 2008 had MC the capacity to engage in any complex financial decision making even though she did retain a capacity to deal with basic day to day affairs. In relation to her day to day existence, the evidence establishes that from May of 2006, MC did not have the capacity to care for herself without help and assistance and had become dependent.
5.1 The claim of the second named plaintiff, as the committee of the person of the first named plaintiff who is a ward of Court, is set out in the amended statement of claim delivered on the 21st March, 2011. The plaintiffs contends that all the funds withdrawn and as set out in paragraphs ‘A’ to ‘H’ above were beneficially owned by MC and that, accordingly, the first named defendant holds such funds on trust for the first named plaintiff. It is also claimed that the first named defendant is accountable to the plaintiffs in respect of all of the eight sums withdrawn from the account of MC. The plaintiffs also claim a full account in respect of the withdrawn sums. It is claimed that the monies properly belong to and are the property of MC. There is also a claim that FC has admitted that he holds the sum of €500,000 upon trust for MC but that despite being called upon to do so, that he has failed and neglected and/or refused to lodge the same in Court for the benefit of MC. There is also an alternative claim made in conversion.
5.2 The first basis upon which the plaintiffs make their claim is that at all material times MC was a person of unsound mind and incapable of managing her person or property. It is claimed that it follows that it would be inequitable and unconscionable for the first named defendant to retain any money of the first named plaintiff and that any transaction by which the first named plaintiff may have been divested of any of her assets constitutes an improvident or unconscionable bargain or transaction and any such bargain or transaction ought to be set aside by order of the Court.
5.3 The second and alternative basis upon which the plaintiffs claim is that at all material times the first named plaintiff, MC, was an elderly and vulnerable person who depended upon FC, the first named defendant, to act in the first named plaintiff’s best interests and that FC by his own conduct has purported to take charge of the first named plaintiff’s affairs and has placed himself in a position of dominion and trust over MC and that, in the circumstances, the plaintiffs’ claim that the first named plaintiff, insofar as the transactions the subject matter of the proceedings are concerned, acted under the presumed undue influence of the first named defendant or, alternatively MC acted under the actual undue influence of FC.
5.4 It is also claimed that the first named defendant was in breach of a duty of care owed to the first named plaintiff not to withdraw any money or undertake any transactions which was contrary to the interests of the first named plaintiff. The plaintiffs plead that the first named defendant exerted influence and pressure on the first named plaintiff together with an alternative plea that the first named plaintiff acted under the presumed undue influence of the first named defendant. The plaintiffs claim a constructive trust in relation to the funds for the use and benefit of the first named plaintiff absolute and for an order that the first named defendant should be compelled to account for such sums and to repay them for the benefit of the first named plaintiff. It is also claimed that the first named defendant continues to reside in the first named plaintiff’s property at T A and that he uses the property for his own use and benefit and that notwithstanding that the first named defendant has been called upon to deliver up vacant possession of the property that he has failed to do so and that he is, therefore, trespassing and that he should be directed to deliver up vacant possession of the property.
5.5 It is also claimed by the plaintiffs that the first named defendant has admitted that since the year 2008 he has paid or transferred part of the first named plaintiff’s monies, being part of the monies withdrawn at paragraphs ‘A’ to ‘H’ inclusive, to the second and/or third named defendants for the purpose of the purchase of machinery by the first and/or second and/or third named defendants for use by the second and third named defendants in the course of their business and that an order should be made for the return of each and every item of machinery purchased. It is pleaded that neither the second or third named defendants are purchasers for value and that they knew or ought to have known that the money provided by the first named defendant to purchase the plant and machinery was the property of and beneficially owned by the first named plaintiff and that in the premise the plant and machinery purchased by the defendants with the first named plaintiff’s funds is held upon trust by the second and third named defendants for the first named plaintiff. It is also claimed that any income or profit generated by the second and third named defendants in the use of the machinery is the property of the first named plaintiff and should be accounted for. It is also claimed that any depreciation and/or loss of value in respect of any of the plant or machinery purchased with the first named plaintiff’s funds, insofar as it causes a loss to the first named plaintiff, gives rise to a claim for damages.
5.6 The plaintiffs claim a declaration that the first named defendant holds the sum of €937,800 withdrawn from the first named plaintiff’s account, being the property of the first named plaintiff together with interest accrued thereon upon trust for the plaintiffs, and that the plaintiffs are entitled to judgment together with interest for that sum. Certain additional ancillary reliefs in relation to injunctions are also claimed. The claims against the first defendant for conversion and/or breach of contract and/or breach of duty is recognised by the plaintiffs as being alternative claims which do not arise in the event of judgment being granted for the sum claimed. Another ancillary relief claimed is a declaration that the funds held in account No. 54947355 – Bank of Ireland, which account is in the name of the first named defendant is the property of the first named plaintiff and an order is sought that those funds be immediately lodged in Court to the credit of the first named plaintiff.
5.7 As regards the second and third named defendants, the plaintiffs claim not only a declaration that all plant and machinery are held in trust, but also a declaration that the first named plaintiff is entitled to recover, as beneficial owner, each and every item of plant and machinery together with all documents of title and/or registration in respect of such plant and machinery. An order is also sought against all the defendants for the delivery of the plant and machinery together with the documents of title and/or registration together with a claim for an account in relation to income which has been earned by use of the machinery. There is also a claim against the second and third named defendants for damages.
6.1 The first named defendant has put in a full defence and counterclaim. He denies that he has wrongfully converted any monies to his own use and that all monies transferred to him have been accounted for and are not due or owing to the plaintiffs. It is expressly denied by the first named defendant that the first named plaintiff is a person of unsound mind or incapable of managing her person or her property. In support of his defence, the first named defendant claims that the first named plaintiff voluntarily put the first named defendant in the said funds in order to provide for his future and that it was the intention and wishes and instructions of the first named plaintiff to transfer the funds in issue to the first named defendant. In effect, the first named defendant claims that in respect of each and every transfer as set out in paragraphs ‘A’ to ‘H’ inclusive, that at the time of each transfer the first named plaintiff intended the sums of money to be transferred to the first named defendant for his use and that the first named plaintiff agreed to such transfers, and that in so agreeing she was putting in place and implementing her previously expressed intention of transferring funds for the benefit of the first named defendant.
6.2 It is also denied by the first named defendant that the first named plaintiff was an elderly or vulnerable person who depended upon him to act in the first named plaintiff’s best interests and it is denied that she acted under either the actual influence or the presumed undue influence of the first named defendant.
6.3 Insofar as the plaintiffs rely on a claim that the first named plaintiff is a vulnerable person, it is denied by the first named defendant that the first named plaintiff was a vulnerable person but rather was a responsible and capable person possessed of an outstanding ability to make important decisions and never relied upon the first named defendant or any other person to make decisions. The first named defendant claims that in transferring the funds to his benefit he was carrying out the first named plaintiff’s express instructions and that in so doing, he was not acting contrary to the interests of the first named plaintiff because he was carrying out her instructions. There is also a denial that any of the transactions were an improvident or unconscionable bargain or ought to be set aside.
6.4 The first named defendant denies that he exerted any pressure upon the first named plaintiff. It is also denied that the first named plaintiff depended upon the first named defendant other than that she relied upon him to carry out certain duties when requested to do so. It is denied that the first named plaintiff received no independent financial or legal advice in relation to the transactions in issue and it is claimed that the first named plaintiff had legal representation at all material times from Mrs. Wardlaw and also had the benefit of financial advice from the ICS Building Society. It is also claimed that the first named plaintiff had two separate appointments with financial advisers and that they provided the first named plaintiff with all financial advice and assistance when required. The first named defendant pleads that the plaintiffs were aware at all material times that the first named plaintiff had the benefit of both her solicitor, Mrs. Wardlaw, and the financial advice of Bank of Ireland Private Banking and the investment services of FBD. It is also denied that the first named defendant holds €500,000 on trust for the first named plaintiff or that the first named plaintiff has suffered the alleged or any loss.
6.5 In relation to the claim that the first named defendant deliver up vacant possession of the first named plaintiff’s property, the first named defendant claims that he is not prepared to deliver up vacant possession of the property because of the arrangement made between him and the first named plaintiff on or about July 2006 which provided that he would have a permanent right of residence in the property subject to him maintaining and providing security for the property and he denies that he is trespassing. In the alternative, it is claimed by the first named defendant that he is entitled to a life interest in the property.
6.6 Insofar as funds were transferred for the benefit or for the use of the second and third named defendants, the first named defendant claims that such funds were transferred for the use of those defendants in their business and it was done at the request of and with the approval of the first named plaintiff in order to provide security for the first named defendant in the future.
6.7 The first named defendant makes complaint in relation to statements that were made in Court by and on behalf of the plaintiffs which it is claimed had the effect of identifying the ward of Court as the first named defendant was personally named. The first named defendant claims that the second named plaintiff wilfully misled the Court. The first named defendant contends that the Court does not have jurisdiction in relation to what transpired between him and the first named plaintiff and other parties prior to the date upon which she was made a ward of Court and that since all transactions prior to that date were made with the first named plaintiff’s knowledge and consent, that such transactions cannot be reviewed by the Court.
6.8 The first named defendant counterclaims for the sum of €551,686, which is claimed as being the balance owed to him, which it is claimed is confirmed by an attendance docket of Mrs. Wardlaw dated the 10th August, 2009. The first named defendant also claims that as a result of these proceedings that he has suffered health problems and has been placed under duress and hardship and is entitled to damages. There is also a claim that the proceedings against the first named defendant are frivolous and amount to a defamation of his character. The first named defendant contends that insofar as the second named plaintiff holds property on behalf of the general solicitor that she holds such property which belongs to the first named defendant on trust for him.
6.9 Finally, the first named defendant counterclaims that as a result of false and misleading information being provided to the Court, that he was deprived of his liberty and spent ten days in prison, having been committed for contempt, and that he is entitled to damages arising therefrom.
7.1 The second and third named defendants delivered a defence on the 24th November, 2011. In that defence the second and third named defendants deny that the purchase of the plant and machinery in issue in these proceedings is the property of or beneficially owned by the first named plaintiff and, in making such denial, rely upon what is identified as the gentleman’s agreement made between MC, JH and FC. It is claimed that that agreement was made on or about July 2006 and that on foot of that agreement the first named plaintiff acknowledged and recognised that any property bought would not be her property and that she did not desire the return of any such property.
7.2 The second and third named defendants also rely upon a claimed understanding that they had in relation to them accepting funds to purchase machinery that the first named plaintiff had discussed such proposed purchases with her solicitor, and had sought legal advice. It is also claimed that there was consideration insofar as the second and third named defendants guaranteed a job to the first named defendant for his life. The second and third named defendants claim that a request for the return of the plant and machinery is not a request by the first named plaintiff as it is contrary to the gentleman’s agreement entered into by the first named plaintiff.
7.3 The second and third named defendants also rely on the defence as maintained by the first named defendant and claim that all transfers of funds were with the consent of the first named plaintiff and in accordance with her directions and wishes. The second and third named defendants deny the plaintiffs’ entitlement to any of the reliefs sought and make the same plea as contended for by the first named defendant that any transactions that took place between MC and any of the defendants before she was made a ward of Court cannot be the subject of a Court order and the Court does not have jurisdiction in relation to such transactions.
8.1 All matters raised in the first named defendant’s counterclaim are in issue and the plaintiffs deny that the first named defendant is entitled to any of the reliefs sought in his counterclaim.
9.1 I have already determined that as a matter of probability that from the start of 2008, MC was suffering from a cognitive and mental incapacity. The impairment was not fixed. The evidence establishes that the extent and severity of the impairment varied and altered and was not constant but that there was, in all probability, a gradual deterioration. I had the report of Dr. Niall Gormley, a Consultant in Old Age Psychiatry, and it is clear from his expert opinion that by June of 2009, MC was incapable of engaging in any complex financial decision making. The evidence as to MC’s mental state and condition at the time of her admission to Waterford Regional Hospital on the 28th November, 2008 is such that the probability is that by that date there was a lack of capacity on the part of MC to engage in any complex financial decision making. The evidence of Nurse Molony, who commenced her regular visits to MC in late 2007 establishes to my satisfaction that the probability is that from the start of 2008, MC’s early stage dementia had reached a level that whilst she was able to make decisions in relation to basic every day matters, that she had no longer the capacity to engage in any complex financial decision making. Nurse Molony’s evidence about MC’s conduct and her inability to deal with simple financial transactions, when taken together with Dr. Gormley’s expert evidence in relation to the progress and course of dementia, leads me to the finding that I am satisfied that as and from the start of 2008, MC was no longer capable of engaging in any complex financial decision making.
9.2 In respect of the extent and nature of MC’s dementia and cognitive impairment in the period from her discharge from St. James in May 2006 up to being made a ward of Court, the evidence establishes that for that entire period MC was incapable of minding herself without assistance and had been become dependent to such an extent that FC was in a position to exercise dominion over her. The evidence that I heard leads to the conclusion that after MC’s release from St. James’s Hospital in May 2006, she could not live alone and required assistance and supervision and, absent same, she would have required to be in a nursing home. She could not live alone. MC was at a clear disadvantage in relation to her nephew, FC, by reason of her mental capacity, increasing dementia and her dependence upon him for independent living. As and from her discharge from St. James’s Hospital, MC was, in effect, in the care of FC until she went into a nursing home in 2010. It was the provision of the care, back-up, supervision and management of her daily life by FC which enabled MC to continue to cope. Absent such assistance MC would have been incapable of independent living and coping.
9.3 I am satisfied from the evidence that the transfer of funds from MC’s bank account to the control of and to the benefit of FC from May 2008 to April 2009 were as a result of influence expressly used by FC for the purpose of obtaining such funds. The evidence establishes that FC sought to exercise control and dominion over MC, and to ensure that she acted in accordance with his wishes and to his benefit. This is apparent from the efforts that he made to compel, and to some extent coerce, MC into selling her house in Rathgar thereby raising a substantial capital sum. FC’s preparedness to forge a letter purporting to come from a State body was carried out by him in late 2006 or early 2007 and I am satisfied that that forged letter was concocted by FC for the express purpose of persuading or forcing MC to sell her house in Rathgar and thereby achieving a situation where there would be substantial sum of money available. My finding in relation to this matter is further supported by FC’s dealings with Mrs. Wardlaw and his clear attempts to progress the potential sale of the Rathgar property. The intentions of FC are further identifiable from his attempt to have the property in Wexford, which MC purchased, placed in the joint names of himself and MC. The intentions of FC are further demonstrated by the manner in which he arranged to have blank bank withdrawal slips signed by MC so that they could be used without her having to attend at the bank. After May 2008 no financial advice was made available, and no legal advice was available to MC at the time of the withdrawals and FC was aware of this fact. By May 2008, given the extent of MC dependence and her need for day to day supervision, it must have been apparent to FC that at the time that each of the eight withdrawals and transfers the subject matter of these proceedings were made, that MC had received no independent legal advice, or financial advice. Notwithstanding that, FC pleaded in his defence that such advice, both legal and financial, had been provided. Notwithstanding that plea, no credible evidence was led as to any advice either legal or financial being received by MC from the date that €1,938,453.41 was lodged on the 2nd May, 2008 up to and after the withdrawal of €500,000 on the 14th April, 2009. FC accompanied MC to the bank to make all the withdrawals other than on the one occasion when he withdrew the funds using a pre-signed withdrawal slip. I am satisfied from the evidence of Nurse Moloney, who was a regular visitor to MC during the entire of 2008, that it must have been apparent to FC that MC was suffering from cognitive impairment and had difficulty comprehending financial transactions and making any detailed or considered decision in relation to any significant financial matter. The true intentions of FC in his dealings with his aunt’s financial affairs is further established by the evidence that I heard concerning how he responded to being questioned in relation to the €500,000 withdrawal which had occurred in April 2009. FC informed Mr. Kohl that the entire sum would be invested and used for MC’s care. I accept Mr. Kohl’s evidence in relation to this matter and it is supported by his contemporaneous note. That statement made by FC to Mr. Kohl was a false statement and one which FC must have known was untrue as the entire funds were not available to be invested and used for MC’s care when he made that statement. FC also informed Mrs. Wardlaw that he would transfer the funds remaining under his control to MC’s account, and, notwithstanding that he indicated to Mrs. Wardlaw that he would be attending at the bank to complete such a transfer, no transfer took place. Mrs. Wardlaw was not questioned in relation to her evidence that FC made such a statement. I accept Mrs. Wardlaw’s evidence in relation to this matter and her evidence was supported by a contemporaneous note. FC provided me with no explanation as to why he went back on his word and chose to proceed on the basis that the funds were available to him for his own use.
9.4 I have already set out my findings in relation to the forged letter. I am satisfied that in relation to that matter, FC gave false evidence. His preparedness to give false evidence was further apparent from the evidence that he gave in relation to the purchase of two properties in Poland. His evidence on that matter was inconsistent and when information and documents became available which demonstrated that his initial evidence was incorrect, FC demonstrated a willingness to change his evidence without regard to the truth. The manner in which FC dealt with the purchase of two properties in Poland, including details of the actual purchases, the names of the persons purchasing the properties, the price received, the advice obtained before the purchases were completed, the location of the properties and the very presence of FC in Poland, was so unreliable and so inconsistent and shifting that I concluded that I was able to place little reliance on FC’s willingness to truthfully account for his dealings with his aunt’s monies.
9.5 In his defence, FC sought to rely on a series of recorded phone calls which took place from January 2009 up to August/September of that year. There was one further call at Christmas 2011 but that was of no relevance. Transcripts of those calls were available in evidence and FC sought to rely on the contents of those calls to establish that his aunt had agreed that she would give him half of her property and had agreed to support him out of her funds. Having considered the contents of those phone calls, in their entirety, it is clear that rather than demonstrate that MC had formed the clear intention to gift half her money to FC and to support him in his business dealings, that they demonstrate a person manifesting moderate dementia with a significant inability to communicate in a logical and coherent manner. The telephone calls are entirely consistent with the description contained in Dr. Gormley’s report that by the year 2009, MC’s speech pattern was quite rambling and disjointed. FC sought to place considerable emphasis on what is described as call No. 1 in support of his claim that his aunt wanted to give him half of her funds, but it is apparent from the overall content that during that telephone conversation MC was at times rambling and incoherent. Insofar as any conclusion can be drawn from those phone calls, they support the findings and conclusions contained in Dr. Gormley’s report of June 2009. All of the telephone calls relied upon by FC occurred after 2008 and at a time when MC was presenting as a person with dementia of moderate severity. The content of those phone calls is consistent with that diagnosis.
9.6 The capacity and intent of FC to influence MC to his benefit, without regard to her genuine wellbeing, is best illustrated by the circumstances surrounding the final withdrawal of €500,000 in April 2009. That withdrawal took place in circumstances where FC was aware that there was a psychiatric examination due to be carried out on his aunt for the purpose of ascertaining her mental capacity. FC was involved in and knew of the cancellation of the initial appointment which was due to take place within a matter of days of the date of withdrawal. To proceed with a withdrawal of such a substantial sum as €500,000, representing almost a third of MC’s remaining funds, and when such funds were to be used by FC for a number of transactions which were for his own benefit, leads to the conclusion that there is no doubt but that the €500,000 withdrawn in April 2009 can be viewed as being as a result of influence used by FC for the purposes of obtaining such funds. FC’s purported defence that he was acting on his aunt’s freely expressed wish at a time that she was capable of making such a decision lacks credibility given FC’s knowledge of his aunt’s dealing with Mr. Kohl and the imminent psychiatric examination.
9.7 I have already identified that by the start of 2008, MC was in a situation that FC had influence over her. FC in his defence claims that insofar as the plaintiffs seek to shift the onus on to him to establish that each of the gifts or transfers resulted from the free exercise of the donor’s will, that such onus can be discharged by him establishing that MC received independent legal and financial advice. The evidence of Mrs. Wardlaw, which I accept, establishes that no legal advice was given by her from early May 2008 until after the last withdrawal in April 2009. Nor was there any evidence of any other legal advice. Mrs. Wardlaw in her evidence showed that she was a caring and attentive solicitor who would have ensured that M C received separate and independent advice and that she was properly and fully advised on financial matters before engaging in the transfer of any substantial sums of money. The evidence of Mrs. Wardlaw, which I accept, was that in relation to the circumstances and manner upon which the funds the subject matter of these proceedings were withdrawn were such that she was “horrified”. That evidence shows that any transfer of funds that would have occurred after her advice would have taken place in entirely different circumstances from those that actually occurred. There is no evidence that at the time when the funds were transferred to the control and benefit of FC, that any legal advice was given. Whilst it was pleaded by FC that independent financial advice was provided by Bank of Ireland Private Banking, there is no evidence whatsoever of such advice and I am therefore satisfied that MC received no independent legal or financial advice in relation to any of the transfers either shortly before or at the time that such transfers occurred.
9.8 I shall deal later in this judgment as to how the funds that were withdrawn by the eight withdrawals the subject matter of these proceedings were used. That will include the purchase of the machinery, the use of that machinery, the site comprised in Folio 54540 of County Wexford, the two Polish properties and other miscellaneous expenditure. I shall also deal with the dwelling house and lands at T A which are owned by the first named plaintiff and where the first named defendant resides.
9.9 The first named defendant in his defence raised an issue, which was not pleaded, but which was dealt with in evidence, relating to a claim that his aunt agreed to give him half of her funds. FC dates his aunt’s purported agreement to give him half of her funds to late 2006 and also claims that she might have repeated her intention to make such a gift. That purported agreement was made long before any final decision had been made to sell the house in Rathgar and before there was any knowledge of what was the amount of the net proceeds of sale. The terms and conditions of such purported contract are so uncertain and vague that it would be impossible to conclude that there was a contract or agreement between MC and FC. No evidence was led as to what was actually agreed or as to the terms that the parties actually bound themselves to. For contractual obligations to arise from an agreement between two parties, I would have to be able to identify an agreement containing an offer to perform a certain action on certain terms and acceptance of that offer and also to identify consideration passing between the parties. The first named defendant’s evidence went no further than to suggest that he received an indication from his aunt that he would at some time in the future receive half of her monies. At best, that amounted to no more than a promise and it was never sufficiently clearly identified so that I could conclude that there was a contract or an agreement or, indeed, any commitment. Even if I accept the evidence of FC in relation to his aunt’s indication, I am unable to identify what his aunt’s real intention was, nor can it be said that the intention of MC was clearly communicated and understood by FC. Even on the basis of FC’s own evidence, there is no evidence that MC intended to make a contract and, at best, any statement that she made in relation to an intention to provide FC with half of her funds at some future date. It was no more than a promise and was not a legally binding contract or agreement.
9.10 In relation to the so-called gentleman’s agreement, I have already identified that when FC gave evidence in relation to this matter, that he presumed that when it was first mentioned that his aunt meant that he would be looked after when the house was sold. He did not recollect or remember any discussion about money other than at one stage his aunt stated that when the house was sold in Dublin, if it was sold for over a million euro, she would give him half of it. He was unable to remember when that was said. Again, even if MC made such a statement, it does not and cannot amount to a contract or an agreement. It fails to demonstrate any intention on the part of MC to create a binding legal agreement and fails to identify what was MC’s real intention in making such a statement. In relation to the so-called oral gentleman’s agreement, it is once again apparent that the terms of such purported agreement or contract are so uncertain as to be unenforceable. It is impossible to ascertain from the purported gentleman’s agreement what are the true intentions of MC and to what extent, if any, she agreed to provide funds to FC and JH. Even if I were to accept the evidence of FC in relation to the gentleman’s agreement, I have no evidence which enables me to identify the terms by which it is claimed that MC agreed to be bound and there is no evidence of offer and acceptance or of consideration. There is no evidence of the meetings of mind which is implicit in the concept of any legally enforceable agreement.
9.11 An examination of the transactions the subject matter of these proceedings confirms that there were eight separate transfer of funds, either by cash being withdrawn by FC or funds being transferred into an account or accounts controlled by him. It is therefore necessary that I look at each of those transactions separately and determine whether or not in respect of all or any of the transfers there was the free exercise of the will by MC in and about the transfer of such funds. In addressing that issue, I shall look at the legal authorities available to assist me in determining whether or not all or any of those transactions should be set aside.
10.1 The issue of undue influence and improvident transactions and the legal principles to be applied was considered by the Supreme Court in Carroll v. Carroll [1999] 4 I.R. 241. That case dealt with undue influence and did not address the issue of lack of capacity. Denham J. considered the issue of undue influence commencing at page 253 of her judgment. She held:
“There are two classes of transactions which may be set aside on the grounds of undue influence. They were described by the House of Lords (in the judgment of Cotton L.J) in Allcard v. Skinner (1887) 36 Ch.D. 145 at p. 171 as: –
‘The question is – Does the case fall within the principles laid down by the decisions of the Court of Chancery in setting aside voluntary gifts executed by parties who at the time were under such influence as, in the opinion of the Court, enabled the donor afterwards to set the gift aside? These decisions may be divided into two classes – 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 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.’
This case arises under the second class of case. Counsel for the defendant quite rightly accepted that this case falls into the latter category. He acknowledged that the relationship between Thomas Carroll senior and Thomas Carroll junior and the surrounding circumstances gave rise to the presumption of undue influence.
The legal situation arising on such relationship being established was described in ‘Equity and the Law of Trusts in Ireland’ by Hilary Delany at p. 482 as: –
‘Once a relationship giving rise to a presumption of undue influence is established, and it is shown that a ‘substantial benefit’ has been obtained, the onus lies on the donee to establish that the gift or transaction resulted from the ‘free exercise of the donor’s will’. As Dixon J put it in Johnson v. Butress, the evidence must establish that the gift was ‘the independent and well-understood act of a man in a position to exercise a free judgment based on information as full as that of the donee’. The manner in which this presumption may be rebutted relates to two main issues; first, the question of whether independent legal advice has been received and secondly, whether it can be shown that the decision to make the gift or transfer was ‘a spontaneous and independent act’ or that the donor ‘acted of his own free will’.’
I adopt this analysis of the law and apply it. In this case the presumption is established and a substantial benefit was obtained thus the onus lies on the donee, the defendant, to establish that the transfer was the free exercise of the will of the donor, Thomas Carroll senior. Thus, it was for the defendant to provide the evidence that the transfer was the independent and free gift of Thomas Carroll senior. The issue then arising is whether there was evidence upon which the learned trial judge could be satisfied that the presumption was not rebutted. In analysing this the first matter is that of independent legal advice. . . .
In considering whether Thomas Carroll senior acted of his own free will an important matter was whether or not the transfer was read over to Thomas Carroll senior. There was no evidence of this even though the defendant was given an opportunity in the High Court to address the matter.
This case is not about the presence or absence of mental capacity. The onus is on the defendant to produce evidence to dislodge the presumption of undue influence.
The learned trial judge concluded, on this aspect of the case, at p. 230 that:-
‘I am not satisfied that the [defendant] has established as a matter of probability that the transaction was the result of the free exercise of the donor’s will such as to rebut the presumption of undue influence. Mr Joyce allowed that in substance and fact he was acting as the ‘family solicitor’ in the transaction for both parties. He saw the donor on two occasions for a total of about 35-40 minutes, not all of which was devoted to the business of the transfer. It is clear that the donor never read the transfer deed nor had it read to him by anyone else. While its contents were apparently discussed between him and Mr Joyce, I am not satisfied that any real consideration was given to the fact that the donor (a frail man, in dependant circumstances) was disposing of all his real assets without reserving to himself (by way of a revocation clause or by way of charging the property with his maintenance and support), any protection for his own future particularly in the event of a falling out with his son, or in the event of his son predeceasing him. It is, I think, clear that Philip Joyce was not aware of the family’s circumstances either in the context of the position of the other members of the family, the totality of the assets held by the family members or the assurances given by the donor to other members of the family including the plaintiffs as to their user of the Burke Street premises during their lifetimes. Thus, while I accept the evidence (which was not really disputed) that the donor was a man who was mentally alert at the date of the transfer, I am not at all happy that at the date of the transfer he had the necessary independent advice (whether it was that of a legal advisor or a competent and qualified lay person) such as would persuade me that the transaction was made of his own free will.’
There was evidence before the learned trial judge upon which he could reach these conclusions of fact. Thus, I would affirm his determination.
Counsel for the defendant submitted that for the plaintiffs to succeed there should be evidence that Thomas Carroll junior exercised undue influence on Thomas Carroll senior. This submission was at the core of the appeal. Counsel argued strongly that as Thomas Carroll junior himself had not unduly influenced his father that was sufficient to rebut the presumption. He argued that in this case Thomas Carroll junior did not exercise undue influence, or in counsel’s word, ‘wiles’ on Thomas Carroll senior. That being the case, it being accepted that Thomas Carroll senior was mentally capable, it was submitted that he could give away his assets as he wished. Counsel for the defendant relied on the lack of undue influence exercised by Thomas Carroll junior and referred to Reg. (Proctor) v. Hutton [1978] N.I. 139.
However, this is not a case of actual undue influence being expressly exercised but is rather a case in which the relationship between the donor and donee has raised the presumption of undue influence. It is then for the defendant to rebut the presumption. The burden was described in Inche Noriah v. Shaik Allie Bin Omar [1929] AC 127 at p. 135 by Hailsham L.C.:-
‘It is necessary for the donee to prove that the gift was the result of the free exercise of independent will. The most obvious way to prove this is by establishing that the gift was made after the nature and effect of the transaction had been fully explained to the donor by some independent and qualified person so completely as to satisfy the Court that the donor was acting independently of any influence from the donee and with the full appreciation of what he was doing; and in cases where there are no other circumstances this may be the only means which the donee can rebut the presumption. But the fact to be established is that stated in the judgment already cited of Cotton L.J., and if evidence is given of circumstances sufficient to establish this fact, their Lordships see no reason for disregarding them merely because they do not include independent advice from a lawyer. Nor are their Lordships prepared to lay down what advice must be received in order to satisfy the rule in cases where independent legal advice is relied upon, further than to say that it must 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.’
In Reg. (Proctor) v. Hutton [1978] N.I. 139 at p. 146, Lowry L.J. described the different approaches to the different classes of undue influence. He stated:-
‘When relying on ‘express undue influence’ the plaintiff must prove that an unfair advantage has been gained by an unconscientious use of power in the form of some unfair and improper conduct, some coercion from outside, some overreaching, some form of cheating. The undue influence which is presumed in the second class of case is influence of the same kind: the difference lies in not being able to prove its exercise but, by virtue of the presumption, undue influence is deemed to have been exercised until its exercise is negatived on a balance of probabilities by evidence.’
It is clear that what is at issue is whether the donee has taken advantage of his position or ‘… been assiduous not to do so. The question can only be answered in each case by a meticulous consideration of the facts’: Hanbury, ‘Modern Equity’ (9th ed.) p. 652.
I am satisfied that this is the correct approach. In this case, the presumption existing, it was then necessary to conduct a careful analysis of the facts. On the facts it was a matter of determining if the donee, Thomas Carroll junior, had taken advantage of his position or had been assiduous not to do so. This was not a case where the issue was whether Thomas Carroll junior had taken advantage of his position expressly. Rather it was a case where in the circumstances assiduous care should have been taken not to take advantage of the position of Thomas Carroll senior.
The learned trial judge conducted a painstaking analysis of the facts as has been set out fully in this judgment. I am satisfied that the appeal was argued on a mistaken approach to the law. The reason for the equitable law to protect Thomas Carroll senior is one of public policy – to protect a frail person. As Cotton L.J. said in Allcard v. Skinner (1887) 36 Ch. D. 145 at p. 171:-
‘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.’
Thus, the issue is whether on the facts and circumstances of the case the donee has rebutted the presumption of undue influence. The facts and circumstances of this case were fully considered and determined by the learned High Court Judge. In this case the donor was giving away practically his sole asset and the learned trial judge made careful findings of fact about the transaction.”
10.2 There are two classes of transactions which a court can set aside on the grounds of undue influence. There is also a separate and related ground upon which a transaction can be set aside and that is on the basis of the absence of mental capacity. As was identified in the judgment of Denham J. in the Carroll case, that particular case was not about the presence or absence of mental capacity. I have already determined earlier in this judgment that the probability is that from early 2008, MC was suffering from a cognitive and mental incapacity to deal with any matter requiring complex financial decision making. When looking at particular transactions it is the capacity of the persons making such transactions at the time of the transactions which is critical. The first in time of the eight transactions under review occurred on the 16th May, 2008 and I am satisfied from the evidence that by that date MC had a cognitive and mental incapacity to deal with transactions of that nature. MC’s impairment was such that her condition was subject to gradual deterioration. This case is, therefore, a case where the presence or absence of mental capacity is in issue. On the basis of the determination that I have made concerning MC’s mental capacity as and from May 2008, I am satisfied that she did not have the mental capacity to engage in or carry out any of the eight transactions the subject matter of these proceedings. On that ground alone, I am satisfied that each of the transfers of funds were not made by MC as an exercise of her free will. She, as donor, did not have the necessary capacity.
10.3 In relation to the plaintiffs’ claim concerning undue influence, the extract from the judgment of Denham J. in the Carroll case makes it clear that there are two classes of transactions which may be set aside on the grounds of undue influence. I adopt and apply the approach of Denham J. concerning undue influence as set out in her judgment in the Carroll case. The first class identified are cases where the evidence establishes that voluntary gifts executed by a party were made at a time when that party was under such influence that the Court is satisfied that such gift was as a result of influence expressly used by the donee for that purpose. That class can be identified as actual undue influence being expressly exercised. To establish that there was such undue influence, a plaintiff must establish, in the words of Laurie L.J. in the Reg. (Proctor) v. Hutton case:
“. . . that an unfair advantage has been gained by an unconsciousness use of power in the form of some unfair and improper conduct, some coercion from outside, some overreaching, some form of cheating.”
It is unnecessary for the plaintiffs to take on the onus of proving such unfair advantage in this case. That arises from the fact that I am satisfied that there is clear and compelling evidence that this case comes within the second class of undue influence as identified in the judgment of Denham J. The facts establish that the relations between MC and FC at or shortly before the date when each of the eight transactions were carried out were such as to give rise to a presumption that FC, the effective donee of such funds, had influence over MC. As held by Denham J. in the Carroll case:
“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 adopting and applying the analysis of the law set out in the Carroll case, I am satisfied that, first, the relationship between MC and FC gives rise to the presumption that FC had influence over MC, and, second, once such presumption is established that each of the eight transfers represented a benefit which was obtained by FC and that therefore the onus lies on him to establish that each transfer was a free exercise of MC’s will. It is for FC to provide evidence that each of the transfers was the independent and free exercise of MC’s will and, absent that evidence, the presumption is not rebutted. Such presumption arises in circumstances where the evidence established that by May 2008, MC was reliant upon FC and can be said to have been truly dependent upon him. By that date and for a considerable period prior to that date, MC was in a situation where her day to day existence and welfare was reliant and dependent upon the actions and conduct of FC. The evidence shows that MC was in relation to her day to day existence sustained by FC and dependent upon him. MC was suffering from cognitive and mental incapacity by that time. There was also a clear disparity of age and mental and physical capacity. The entire of the evidence which I heard in relation to MC’s condition and circumstances as of May 2008 are such that she would have been incapable of independent living without the assistance and support of FC. The medical evidence established that MC was in such a condition that she could only continue to reside outside of nursing home type care because FC resided with her and ensured that MC’s personal requirements and safety were provided for. By the date of the first of the eight transactions, MC was incapable of independent living and could not cope by herself.
10.4 The issue of undue influence and the application of the legal principles identified in the Carroll case was considered by Gilligan J. in Prendergast v. Joyce [2009] 3 IR 519. In that case the plaintiff in her capacity as the representative of M.J.’s estate, sought to have certain banking transactions set aside for reasons of undue influence and improvidence. In determining that the transaction should be set aside, Gilligan J. held that the relationship between the donor and the donee in that case was such as to give rise to a presumption that the donee had influence over the donor, and that, in such circumstances, the onus was on the first defendant to establish that the transfers were the free exercise of the donor’s will. The presumption of undue influence identified by Gilligan J. arose from the actual relationship between the donor and the donee at or shortly before the time of the impugned transactions coupled with the circumstances of the parties relevant to the acquisition of a position of influence, including the age, position in life, state of health and other particular vulnerabilities of the donor. At paragraph 40 of his judgment (p. 532) Gilligan J. held:
“40. The categories of relationship to which the presumption applies are neither closed nor rigid (McGonigle v. Black (Unreported, High Court, Barr J., 14th November, 1988)). In McGonigle the presumption applied in the context of a friendship between the lonely and vulnerable donor of the land concerned, who could not cope well without support and had resorted to alcohol abuse, and a friend who lived nearby, who had frequent contact with him and provided him with some home comforts. In the context of the instant case, it is appropriate to recall that the presumption has been applied in the context of a relationship between an aunt and her nephew by marriage (Inche Noriah v. Shaik Allie Bin Omar [1929] AC 127) and even as between a man and his great nephew (Cheese v. Thomas [1994] 1 W.L.R. 129). This is not to suggest that it would apply in all such relationships: leaving aside those categories of relationship which, by their nature, automatically raise the presumption of undue influence, the question of whether the presumption applies depends on the particular circumstances of the case.”
Gilligan J. went on to identify certain circumstances which a court might take into account by reference to the judgment of Budd J. in Gregg v. Kidd [1956] I.R. 183. Those matters included not only the issue of friendship between a lonely and vulnerable donor who could not cope without support and whether the person who benefited from a gift from the donor had frequent contact and provided the donor with home comforts but he also identified that a court should have regard to the disparity of age and of mental or physical incapacity. Indeed, the mere dependence upon the kindness and assistance of another could be a factor. Gilligan J. also identified from the judgment of Budd J. that to bring the principle of undue influence into play, it must be shown that the opportunity for the exercise of the influence or ascendancy on the donor existed, such as where the parties reside together and meet frequently. He also identified the issue of close family relationship and the capacity for such a relationship to create a situation where influence is readily acquired. In this case, there was a close family relationship between MC and FC. The circumstances in which MC resided created a situation where influence was readily acquired. The facts in this case establish that such influence also arose through the disparity of age and mental and physical capacity between MC and FC. By the date of the first gift, MC had significantly impaired mental capacity, was elderly and frail and was dependent upon the kindness and assistance of FC. FC had a continuing opportunity to exercise influence or ascendancy on and over MC and her day to day existence and welfare was dependent upon him. MC was at a serious disadvantage to FC by reason of her diminished mental capacity and the day to day circumstances of her existence.
10.5 Once, as in this case, 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 onus lies on that 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 that the gift was the independent and well understood act of a man or a woman in a position to exercise a free judgment based on information as full as that of the donee. As identified by Denham J. in the Carroll case, the manner in which such presumption may be rebutted relates to two main issues, first, the question of whether independent legal advice has been received, and secondly, whether it can be shown that the decision to make the gift or transfer was a spontaneous and independent act or that the donee acted of his own free will. The first named defendant led no evidence to discharge such presumption. There was no evidence that MC received independent legal advice at the relevant time and such evidence as was available established that for a substantial period leading up to the transactions in question MC had no access to legal advice. There was also no evidence that she received any financial advice. FC gave evidence that MC refused advice to lodge or deposit a certain sum because she disagreed as to the suggested amount of such deposit. However, there was no evidence to support such claim and I heard no evidence as to who gave such advice, what was the advice, how, when and in what circumstances it was given. Absent evidence on these matters, the claim as to the receipt of such advice is of no value in discharging the onus on FC. None of the transactions could be said to have been as a result of MC’s free will given her diminished and mental capacity.
10.6 Insofar as MC had to interact with the bank to facilitate the transfer of funds, the evidence established that the bank went no further than complying with the necessary mechanical or procedural requirements and provided no advice to MC. The Bank merely processed the transactions. Whilst FC gave evidence of statements allegedly made by MC indicating a desire to transfer funds to him, the position is that even if those statements were made, they were made at a time when I am satisfied that she did not have the cognitive capacity to understand such transactions. They were also made in circumstances where undue influence can be deemed to have been exercised. The facts of this case show that FC took advantage of his position and in no way whatsoever sought to provide or ensure that MC had assistance or advice in relation to any of the transactions. Assiduous care should have been taken not to take advantage of the position of MC and FC did not lead any evidence to show that such care was, in fact, taken.
10.7 A separate head of claim made by the plaintiffs is the claim that in the circumstances of this case, the impugned transactions were such that they constitute an improvident or unconscionable bargain and ought to be set aside by order of this Court. As set out above, I am satisfied that in relation to each and every one of the impugned transactions, FC exercised influence over MC at a time when she was dependent upon him and in circumstances where she received no independent legal or financial advice in relation to any of the transactions, She was divested of her funds and in all of the transactions there was no consideration. Gilligan J. in the Prendergast case dealt with the doctrine of improvidence and held that it was not confined to transactions for value and could apply to gifts (see paragraphs 79 – paragraphs 82 at pp. 545 – 547 of the judgment of Gilligan J.). I adopt and apply, as he did, the identification of the jurisdiction in equity to set aside a transfer once three criteria identified by Shanley J. in Carroll v. Carroll [1998] 2 ILRM 218 have been established. Those three criteria are:
1. that one party was at serious disadvantage to another by reason of poverty, ignorance or otherwise, so that circumstances existed of which unfair advantage could be taken;
2. that the transaction was at an undervalue; and
3. that there was a lack of independent legal advice.
All of those three criteria are established in this case. It is clear that MC was at a serious disadvantage to FC owing to her cognitive impairment and her overall circumstances were such as to enable FC to take an unfair advantage of MC and each of the impugned transactions were transactions for no value and there was a lack of any independent legal advice. The evidence in this case discloses a case of improvidence. In arriving at such a conclusion, I am adopting and applying the statement of the law set out in paragraph 80 of the judgment of Gilligan J. in Prendergast v. Joyce (at p. 546) where he held:
“It has also been suggested in a series of cases . . . that to have a transaction set aside for improvidence, it must be established that the defendant acted in a manner which involved some element of moral turpitude. I am satisfied that this proposition does not represent Irish law.”
11.1 I shall now deal with the property the subject matter of these proceedings including the eight payments identified above. The uncontroverted evidence is that the first named defendant received all the money the subject of the eight withdrawals which were paid into accounts, either in his sole name or controlled by him. The evidence identified and traced certain specific purchases or items of expenditure made from such funds. It was also established that a site comprising Folio 54540F, County Wexford, was purchased with the funds. I shall deal with the Polish properties in a separate paragraph. Each of the payments or transfers received by FC were made in circumstances where I am satisfied that such transactions should be set aside on the basis of lack of capacity, undue influence and on the basis of improvidence. I heard evidence from Liam Dowdall, an accountant of Smith & Williamson Freany Limited, in relation to his analysis of the documentary evidence in relation to the transactions and the expenditure made from such funds. I accept Mr. Dowdall’s evidence and his analysis as the most complete, consistent and accurate account of the use to which the funds were made. His evidence was grounded in the available documents. Based upon his analysis, I accept that €937,800 was withdrawn from MC’s bank account. Mr. Dowdall’s analysis identifies the amount expended thereafter, by FC, on his business, plant and machinery, cash withdrawals, credit card payments, third party payments, household expenses, the Polish apartments and loan, land at K and other expenditure which totalled a figure of €944,661.88. That figure is almost €7,000 greater than the sum withdrawn (i.e. €6,861.88) and if one gives allowance to the first named defendant for that figure, and also for the sum which Mr. Dowdall calculated as benefiting MC of €29,420.29, the calculation results in a sum of €36,290.92 and when that figure is deducted from the €937,800, the outcome is €900,009.08. That sum is the total amount in respect of which MC received no benefit. I recognise that the sum attributed to the benefit of MC is a calculation and that it has been prepared on the basis identified in Mr. Dowdall’s report of the 4th October, 2012 and must represent therefore an estimation rather than an actual figure, but I am satisfied that it represents the most realistic figure available to the Court and one upon which I should rely.
11.2 In relation to the purchase of machinery, the defendants rely on a purported agreement described as the gentleman’s agreement to entitle them to retain possession and ownership of the machinery. As indicated earlier in this judgment, I am satisfied that there is no legal basis for such agreement and it follows that the defendants must account to the plaintiffs in respect of all machinery purchased by them. At the time that the funds were transferred and when such funds were expended on the purchase of machinery, the same took place in circumstances and at a time when MC could not truly be said to have consented to such transfers or to such purchases. It is also the case that such transactions were improvident. The evidence led by the defendants in relation to the amount expended on machinery was, to some degree, inconsistent and inaccurate. FC in the income and expenditure account provided by him identified the sum of €417,540, whilst JH produced a document which suggested that the total expenditure was €332,560. That expenditure was confirmed by JH in his oral evidence. Liam Dowdall, the forensic accountant who examined the documentary evidence, identified a figure almost identical to the figure provided in evidence by JH. Mr. Dowdall identified a sum of €322,560 as being expended on machinery which is a figure only €10,000 less than the figure given in evidence by JH. Insofar as there is a discrepancy between those figures, I prefer the evidence of Liam Dowdall, who, during his evidence, dealt with each and every purported discrepancy and ultimately concluded that he could identify a figure of €322,560 as being provided to the machinery and agricultural contracting business carried on by the three defendants. Mr. Dowdall’s evidence established the purchase of machinery to the value of €322,560 and that each and every item of such machinery was purchased from monies withdrawn from MC’s account. There was disputed evidence in relation to one item, namely, a John Deere tractor, but despite the first named defendant’s assertions, no evidence was produced to identify a John Deere tractor as described in the affidavit sworn by Mr. Owens within these proceedings. The machinery with a total value of €322,560 which has been identified by Mr. Dowdall consists of twenty nine items and I list those twenty nine items:
(1) Welgr Baler
(2) Mchale Wrapper
(3) Nissan Navara – motor vehicle
(4) Kuhr Mower 301 serial number 920076
(5) Duetz Fahr 4060 Registration 95KE5813
(6) John Deere 6810 Tractor Registration 01TS3862
(7) JCB Fratrac 155
(8) Richard Western Dung Spreader
(9) Pedrotti Grain Dryer
(10) John Deere 6910 Tractor Registration O1KE10393
(11) Kuhn Hay Tedder model 10601
(12) Claas 3M Front Mower
(13) MF 8937 Loader Registration
(14) Claas Liner Rake
(15) Vacuum Tank
(16) Front PTO Kit
(17) John Deere 6920S Tractor Registration 03WD809
(18) Grain and Silage Trailer
(19) Grass Tedder
(20) Herron HD 20 Dump Trailer
(21) Bridgeway Swath Conditioner
(22) McConnell Hedge cutter PA 8000
(23) George Dwyer Harrow
(24) Gardu de-mount Sprayer
(25) Kuhn Power Harrow
(26) M B Trac 150hp Tractor registration 87C 12803
(27) Chieftain Transport Trailer
(28) Hitachi tracked Digger
(29) Kevereland Plough
The evidence of the second and third named defendants was that they were aware that the funding for the machinery came from MC but sought to defend their entitlement to use and retain possession of such machinery on the basis of the so-called gentleman’s agreement. From that document it is clear that all parties were aware that the machinery had been acquired from monies emanating from the account of MC. I am satisfied that both the second and third named defendants were at all time aware that the money used to purchase each of the items of machinery, came from MC and there is no evidence that either of them took any steps to ensure that MC had received the benefit of any independent advice before proceeding with the purchase of any of the items of machinery. An analysis of the evidence given by the first and second named defendants in respect of the purchase of machinery demonstrates a casual and unplanned process leading to the purchase of various items of machinery. No assessment or projections were made in respect of any of the items of machinery to determine whether or not any item of machinery would generate a profit when used. It is also clear from the evidence that as of the date of the so-called gentleman’s agreement no actual machinery had been identified. It is also the case that the evidence established that even though it was claimed that the purchases of machinery was for the benefit of FC, notwithstanding the considerable sum expended on machinery, that in the three years 2009 to 2011 inclusive, FC benefited by payments that he received from the H brothers’ business in a total sum of less than €10,000. The evidence which I heard and which was confirmed by Mr. Dowdall identified that, notwithstanding the purchase of machinery for the H brothers’ business without any cost to the business, that their business was operating at a loss from 2008 onwards.
11.3 In the light of the findings that I have made, I am satisfied that the plaintiffs are entitled to the declarations which they have sought in relation to each and every item of plant and machinery purchased with and from the funds of MC and that such machinery is held by the defendants upon trust for the plaintiffs. The first named plaintiff, MC, is the beneficial owner of such plant and machinery as it was acquired using her funds and she is entitled to recover such machinery from the defendants. The plaintiffs are entitled to an order that the defendants deliver up all the items of machinery and plant as such machinery and plant is the property of the first named plaintiff, together with all documents of title and registration in respect of each and every item.
11.4 The plaintiffs also seek an order directing the defendants to account for all income which has been earned from the use of, or renting out the said plant and machinery. In the light of the evidence which I heard in relation to the profitability of the H Brothers’ business and, in particular, the fact that it has been loss making since 2008, I am satisfied that it is not in the Ward’s interest to have such an order made, given the costs and expenses involved in completing such account and given the nature and extent of the other reliefs granted to the plaintiffs.
12.1 The first named defendant purchased lands comprising Folio No. 54540F of the Register of Freeholders, County Wexford. In evidence, the first named defendant, FC, acknowledged that he held that property on trust for the Ward. When directly asked whether he, FC, accepted that the site in question was held by him on trust for his aunt, he replied “yes”. In the light of that acknowledgement and in the light of the earlier findings made by me in this judgment in relation to the circumstances in which funds were obtained, it follows that the plaintiffs are entitled to an order directing the first named defendant to take all necessary steps to convey the said property to the plaintiffs. In default of the first named defendant taking such steps, I will consider an application by the plaintiffs pursuant to s. 26(vi) of the Trustee Act 1893 vesting the said lands in the plaintiffs, or, alternatively, for an order pursuant to s. 33 of the said Act appointing a person to convey the land to the plaintiffs and I will give liberty to apply in respect of this matter.
13.1 In these proceedings the plaintiffs also seek possession of the lands and property known as T As. The plaintiffs seek an order directing the first named defendant to deliver up vacant possession of the property of the first named plaintiff, at T A, K, in the County of Wexford, being the property comprised in Folio Nos. 22942F, 43020F and 37422F of the Register, County of Wexford. That dwelling house and the lands adjacent thereto are the property of MC and she resided in that property with FC up until the 10th March, 2010, which is the date upon which she transferred to a residential nursing home. FC has continued to reside in the property and to use the lands. Earlier in this judgment I have dealt with FC’s claim that he has an entitlement to remain on in possession of the house and property on the basis of an agreement that he had with MC. I am satisfied there is no such agreement enforceable at law and that any statement made by MC in relation to FC’s entitlement was limited to his entitlement to remain in possession as long as she was in the premises. Insofar as there is disputed evidence in relation to this matter, I prefer the evidence of Mrs. Wardlaw. There is no dispute that the property has been demanded from the first named defendant and that it was purchased by MC. It is also clear from the evidence of Mrs. Wardlaw that she never received any instructions from MC that the property at T A was ever to be put into the joint names of MC and FC nor was FC ever given any promise by MC that he would receive an interest in the property. FC has failed to establish any intention on the part of MC of conferring any interest in the property or lands on him either in the nature of a life interest or otherwise. It follows that the plaintiffs are entitled to the orders sought directing the first named defendant to deliver up vacant possession of the property of the first named plaintiff at T A, K, in the County of Wexford, being the property comprised in the three folios identified above.
13.2 Certain sums of money are retained in bank account No. 54947355 in the Bank of Ireland in the name of the first named defendant. The evidence of Mr. Dowdall, the forensic accountant, established that those funds are the funds of MC. In the light of the findings made by me, it follows that I should make a declaration that the funds held in that account in the name of the first named defendant are the property of MC and that she is entitled to a declaration to that effect. It follows that the order sought that such funds are to be immediately lodged in Court to the credit of the first named plaintiff should be made.
14.1 The evidence which I heard from the first and second named defendants and the evidence from the forensic accountant identified that there was a significant gap or void in relation to the precise use of funds made from the overall sums withdrawn from MC’s account. In the light of that, the relief sought by the plaintiffs that the defendants should each be required to account to the Court in respect of the expenditure of all monies received by them is an order which I am satisfied should be made. Given that I am satisfied that the funds are properly the property of MC and that the defendants have failed to fully and comprehensively account for the use of such funds, an order requiring them to account for such funds is needed.
15.1 I heard extensive evidence in relation to the acquisition of two apartments in Poland. In relation to those transactions, there was available to me details concerning the transfer of €125,000 into account No. 44173798 in the name of IS on the 26th May, 2009. That transfer took place at a time when FC was aware that MC was awaiting a psychiatric assessment as to her capacity to deal with financial matters. In the two weeks leading up to the 29th May, 2009, there were some eight withdrawals from the savings account of FC which had been put in funds from MC’s bank account. The sum of €250,000 was transferred into FC’s savings account on the 24th April, 2009. One of the eight draw-downs was the sum of €125,000 transferred on the 26th May, 2009, which was in relation to the purchase of properties in Poland. The other seven draw-downs which took place between the 18th May, 2009 and the 29th May, 2009 amounted in total to a sum slightly in excess of €100,000. Those seven withdrawals and transfers, together with the transfer of €125,000 in respect of the Polish properties, resulted in the funds standing in FC’s saving account being significantly diminished over a two week period. The manner, mode and timing of those transactions, when taken together with FC’s knowledge of the imminent psychiatric examination of MC, results in my concluding that the purpose of such withdrawals and transfers was to diminish any sum which would be available for repayment to MC in the event of her being found to be incapable of conducting financial transactions.
15.2 FC’s evidence in relation to the investment in two properties in Poland was inconsistent and changed during the course of his evidence when certain matters were put to him. FC claimed that one apartment was purchased for IS, at the request of MC, and another purchased under a loan arrangement with Ms. S’s mother, BS. That claim is inconsistent with statements made by FC during 2009 to both Carsten Kohl and Mrs. Wardlaw that the Polish properties were brought as an investment for his aunt. Those statements were made much closer in time to the actual investment. They are at variance with FC’s later claim that his aunt instructed him to purchase a property in Poland for IS and to give her parents money to buy an apartment for themselves. The fact that FC demonstrated a willingness to change and alter his account as to the circumstances in which he funded the purchase of the Polish properties, and on whose behalf they were being purchased, identifies his willingness to mislead the Court. On the 9th July, 2009, FC told Mr. Kohl, as confirmed in Mr. Kohl’s contemporaneous note, that in relation to the €500,000 withdrawn in April 2009, that it was invested in (apartments) and that its purpose was to invest it for and to use to provide for MC’s care. At a meeting on the 10th August, 2009 between FC and Mrs. Wardlaw, in Mrs. Wardlaw’s office, also confirmed by a contemporaneous attendance note, FC answered in response to what portion of the €500,000 which had been withdrawn was available, and FC responded by saying that €200,000 had been invested in two apartments in Poland in the joint names of himself and IS and when asked by Mrs. Wardlaw as to whether FC would be agreeable to signing a declaration of trust in favour of MC, he indicated that he would. Mrs. Wardlaw also noted that it was proposed to do up the two properties and to then sell them on and the meeting concluded by it being suggested that any money from the sales would be returned to MC. The position adopted by FC in 2009 is entirely different from what he later swore during these proceedings. It is the case that FC’s evidence as to the actual mechanics of the purchase of one of the two properties and how it was identified and viewed and purchased was inconsistent with his claim that as of May 2009 that property had yet to be purchased. In evidence FC acknowledged that he stayed in the property, yet he claimed that the property had not been purchased by that date. The extent to which FC was prepared to mislead the Court was illustrated by his evidence concerning the use of his credit card in Poland. When faced with evidence of such use and his claim not to have been in Poland at that time, he then claimed his card was used by IS. That evidence lacked credibility and I am satisfied in relation to that and a number of other matters, FC was endeavouring to mislead the Court. That conclusion is also borne out by the evidence that I heard in relation to the banking arrangements concerning the purchase of properties in Poland. That evidence was supported by documentary evidence which was available in court. It is clear from that evidence that in April 2009 arrangements were made to transfer €215,000 to Poland. A transfer of €65,000 was made on the 15th April, 2009 from FC’s current account and thereafter on the 24th April, 2009, a joint account in his name and IS was set up and some four days later €150,000 was transferred to that joint account on the 28th April, 2009. That transfer was from FC’s current account. It is the case that by the end of April 2009, FC had taken steps to ensure that money would be transferred to Poland and I am satisfied that those steps were taken in circumstances where FC was endeavouring to ensure that funds would not be available for repayment in the event that MC was taken into wardship. The inconsistency of the evidence was further borne out by FC’s initial denial that he had ever travelled to Poland and it was not until after the records of his credit card account were put to him, in cross-examination, which demonstrated that the credit card had been used in Poland on the 30th April, 2009, that FC changed his evidence to acknowledge that he had travelled to Poland at that time. In the course of the written submissions, the plaintiffs identified a substantial number of inconsistencies in FC’s evidence in relation to his transactions concerning the Polish properties and I am satisfied that they are accurate and give an illustration of the willingness of FC to alter and change his explanations depending upon what documents were being put to him. The plaintiffs in their submissions claim that the evidence given by FC in relation to the acquisition of apartments in Poland was utterly inconsistent, incredible and unreliable. I am satisfied that that represents a correct analysis of FC’s evidence in relation to the Polish properties. In the light of that finding, and given the absence of any clear, conclusive or definitive evidence in relation to the two Polish properties, I am satisfied that the Court should make an order requiring FC to account in respect of the monies transferred to the joint account of himself and IS (being the €65,000 and €150,000 identified above) and that he fully account to the plaintiffs for those sums and the apartments in Poland and any other assets or monies held by him in Poland either in his own name or in the name of any other party.
16.1 In the light of the findings that I have made in this judgment, I am satisfied that there is no basis for the counterclaim made by the first named defendant. The first named defendant has failed to establish that there is any sum due or owing to him or that there was any agreement between him and MC for the payment by MC of a sum to him representing half of her assets. I am also satisfied that the plaintiffs have correctly and properly pursued this claim against the first named defendant and that the case against him was not a frivolous one nor was it prosecuted in an improper manner nor were the plaintiffs or any of them guilty of any deception or of misleading the Court as claimed. The defendants have put forward no basis for their claim that the Court cannot deal with matters prior to MC being made a Ward. The Court has such jurisdiction and it will exercise it in protecting MC and as a matter of public interest. The first named defendant has failed to establish that any wrong was done to him or that he has suffered any loss or damage as a result of the conduct of these proceedings.
17.1 The first named plaintiff is entitled to a declaration that the first named defendant holds the sum of €900,009.08 withdrawn from the first named plaintiff’s deposit account as property of the first named plaintiff together with interest thereon from the date upon which the first named plaintiff was made a Ward of Court, that is, from the 4th November, 2009. The first named plaintiff is entitled to judgment against the first named defendant for that sum together with the interest accrued thereon. I will also make an order for the accounts and inquiries identified in this judgment. I will hear the parties in relation to any injunctive relief that is required in the light of the orders made. I will also make an order directing the first named defendant deliver up vacant possession of the property of the first named plaintiff at T A, K, comprised in the three folios identified in this judgment. The first named plaintiff is also entitled to a declaration against all three defendants that the plant and machinery identified in this judgment was purchased with funds of the first named plaintiff upon trust for her and a declaration that as the beneficial owner thereof, the first named plaintiff is entitled to recover from all the defendants possession of each and every item of plant and machinery as set out in this judgement together with all documents of title and registration documents relating to such plant and machinery and, if necessary, an order directing all three defendants to deliver up to the plaintiffs all plant and machinery identified in this judgment together with the documents of title and registration. The plaintiffs are also entitled to damages against all three defendants for any loss or diminution in value of the machinery on the sale of such machinery after it is transferred to the plaintiffs and I will hear the parties as to how such damages are to be calculated and the procedure to be followed. The first named plaintiff is also entitled to a declaration that the funds held in account No. 54947355, Bank of Ireland, in the name of the first named defendant, are the property of the first named plaintiff and that such funds should be forthwith lodged in Court to the credit of the first named plaintiff. I will also hear the parties in relation to any further orders that are required in the light of the judgment that I have given. C & anor v C & others [2013] IESC 36 (30 July 2013)
Cite as: [2013] IESC 36
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C & anor v C & others
Neutral Citation: [2013] IESC 36
Supreme Court Record Number: 215/13
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.