Archive for the ‘presumed undue influence’ Category

Family home in joint names and wife’s failure to transfer her interest to her husband in accordance with a consent order

November 4, 2017

In Chu Tsan Leung v Leung Mee Ling Amy ([2017] HKEC 2347) H and W were married. Title to the family home was in joint names. W left the family and in the subsequent matrimonial proceedings agreed to transfer her entire interest in the property to H. This agreement was incorporated in a consent order. W did not execute a deed to give effect to the order.

W was subsequently declared bankrupt. The Trustee in Bankruptcy claimed that W’s interest in the property remained an asset of hers. H sought a declaration that W did not have any beneficial interest in the property.

The Trustees in Bankruptcy argued that the consent order was procured through the exercise of undue influence by H and his solicitors. They argued that there was a presumption of undue influence on the facts of the case. This failed.

The evidence pointed away from the idea that the wife reposed trust and confidence in her husband at the time of signing the consent order. Nor was there anything unconscionable or manifestly disadvantageous to W when the context was properly considered: H, a construction worker, had been left to take care of two young children on his own.

It did not help W’s case for her to argue that she did not have full knowledge and understanding of the documents that she had signed. A person who signs a legal document he or she is bound by the act of signature (Bank of China (Hong Kong) Ltd v Fung Chin Kan and Ming Shiu Chung v Ming Shiu Sum).

H became the sole beneficial owner of the property from the moment of the decree absolute.

H argued, in the alternative, that he had always been the sole beneficial owner of the property since he alone had provided all of the purchase money and mortgage payments. This claim failed. Since title was in joint names, it was for H to show that she had no equitable interest. H was unable to do so.

Michael Lower

 

 

Undue influence: what is the next stage once the presumption of undue influence has arisen?

April 7, 2014

In Hammond v Osborn ( [2002] EWCA Civ 885) O took care of P (an elderly neighbour) out of kindness and compassion. He gave her GBP300,000 (the value of his investments). Part of the money was used to buy a house. Title was in F’s name (O’s son) but he held it on trust for her. The result was that P lost over 90% of his assets and became prospectively liable for a large tax bill which he would not have been able to meet out of his remaining assets. O did not explain this to P, she merely asked him whether he was sure he wanted to make the gift. P later died intestate. The gift to O was challenged by H, the administratrix of P’s estate.

The relationship and the transaction were such as to give rise to the presumption of undue influence. The question was whether the presumption could be rebutted by showing that the transaction was the result of  the exercise of independent exercise of P’s free will. Had the gift been made only after full, free and informed thought about it? ([25]).

P had not received advice as to the nature and effect of the transaction from an independent, qualified person. In fact, he had not received any advice at all, even from O.

‘Even if it is correct to say that Mrs Osborn’s conduct was unimpeachable and that there was nothing sinister in it, that would be no answer to an application of the presumption …  the court does not interfere on the ground that any wrongful act has in fact been committed by the donee but on the ground of public policy, which requires it to be affirmatively established that the donor’s trust and confidence in the donee has not been betrayed or abused.’  (per Sir Martin Nourse at  32).

Ward LJ emphasised that in cases of presumed undue influence, the courts interefere on the grounds of public policy and not because there is any finding that there has been actual undue influence. The next stage of the inquiry, once the presumption has arisen, is to consider whether  the party to whom the burden has shifted can show that the transaction was the result of full, free and informed thought. This will usually be done by showing that the necessary independent advice was given. Here there was a total absence of independent advice ([50]).

A survey of the circumstances in which the decison was made and of its consequences for P did nothing to rebut the presumption of undue influence. The presumption had not been rebutted and the gift was set aside.

Michael Lower