Beech & Anor v Birmingham City Council [2014] EWCA Civ 830

[2014] EWCA Civ 830Case No A2/2013/0912IN THE HIGH COURT OF JUSTICE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEENS BENCH DIVISION
IBM72724
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate Tuesday 17 th June 2014
Before
THE CHANCELLOR OF THE HIGH COURTLORD JUSTICE UNDERHILLLORD JUSTICE BRIGGS
Between
(1) JANET BEECH (SUED AS JANET HOWELL)Appellants(2) MICHAEL BEECHAppellantBIRMINGHAM CITY COUNCILRespondent
(Transcript of the Handed Down Judgment ofWordWave International LimitedA Merrill Communications Company165 Fleet Street, London EC4A 2DYTel No: 020 7404 1400, Fax No: 020 7831 8838Official Shorthand Writers to the Court)
Mr Stephen Cottle (instructed by Eric Bowes & Co) for AppellantsMr Jonathan Manning and Miss Amy Knight (instructed by Birmingham City Council Legal Services) for Respondents
Hearing Hearing dates : 11th June 2014JudgmentThe Chancellor (Sir Terence Etherton):
[1]This is an appeal from the order of Mr Justice Keith dated 15 March 2013 by which he gave judgment for Birmingham City Council (“the Council”) on its claim for possession of 31 Tilshead Close, Druids Heath, Birmingham (“the Property”).[2]The appellants, who are the defendants to the proceedings, have been in occupation of the Property since November 2007 but they have never been tenants of the Council. They initially moved there in order to enable the first appellant (who the Judge called and so I shall call “Mrs Howell”) to look after her mother Mrs Rita Warren, who at that time occupied the Property under a secure tenancy. Mrs Warren moved permanently to a residential care home in December 2009 where she subsequently died. A great many issues were raised by way of defence to the claim for possession but there are only two grounds of appeal, both of which revolve around a notice to quit signed and given by Mrs Warren when she was resident in the care home.[3]The appellants contend, firstly, that the Judge ought to have found that the notice to quit signed by Mrs Warren must be presumed to have been procured by the undue influence of one of the Council’s employees. They contend, secondly, that the Judge ought to have held that the Council’s decision to bring possession proceedings in respect of the Property in reliance on the notice to quit was unlawful because a formal assessment of Mrs Warren’s mental capacity to sign and serve the notice to quit had not been made before it was signed and given by her. It is said that the failure to conduct such a formal assessment was contrary to the statutory code of practice (“the Code”) issued pursuant to section 42(1)(a) of the Mental Capacity Act 2005 (“MCA”) and so having the consequence under MCA section 42(5) that the possession proceedings must be dismissed.

The factual background

[4]The Property is a semi-detached house with three bedrooms. It is owned by the Council. In 1967 the Council let the Property on a joint tenancy to Mrs Warren and her husband Norman. Their tenancy became a secure tenancy under the Housing Act 1980.[5]Mr Warren died in June 1994. On his death Mrs Warren succeeded to the tenancy for the purposes of the Housing Act 1985 (“the 1985 Act”). Under the statutory scheme there could be no further succession to the tenancy under the 1985 Act on Mrs Warren’s death.[6]Mrs Howell, who was one of Mrs Warren’s daughters, went to live in the Property in November 2007 initially to look after her mother. She moved there with the second appellant, Michael Beech, with whom she was then living and whom she subsequently married.[7]At some point Mr Beech began to put pressure on Mrs Howell for them to move out if suitable accommodation was offered to them by the Council. Mr Beech and Mrs Howell rejected as unsuitable a number of properties offered by the Council. There came a time when Mrs Howell’s preferred option was to remain at the Property. She asked the local housing officer responsible for properties on the estate on which the Property was situated and then his successor, Kevin Pumphrey, whether her name could be added to the tenancy. He told her that was not possible. Mr Pumphrey also told her that such a request had to be made by the tenant but no such request was made by Mrs Warren.[8]In October 2009 Mrs Warren went into hospital. In December 2009 she was discharged to a residential care home, Abbey Park House (“Abbey Park”). On 12 January 2010 the neighbourhood officer for the estate, Mr Pete Goodwin, sent Mr Pumphrey an email informing him that Mrs Warren had moved into Abbey Park and would not be returning to the Property, and he asked for the Property to be transferred to Mrs Howell and Mr Beech.[9]On 19 February 2010 Mr Pumphrey visited Mrs Warren in Abbey Park. During that visit Mrs Warren signed a notice to quit in which she gave up her tenancy of the property with effect from 22 March 2010 (“the Notice to Quit”). Mrs Howell was informed of that. She was also told that she would have to move out of the Property by then.[10]Mrs Howell and Mr Beech did not move out. Instead, they requested the Council to grant a tenancy of the Property to them under the Council’s procedure for granting tenancies to lodgers left in properties vacated by the tenant. The Council rejected that request in July 2010. The reasons given were that the Property was a three bedroom "parlour type" house (that is to say, it had a dining room as well as a living room) and Mrs Howell and Mr Beech were therefore under-occupying a desirable house and, furthermore, neither Mrs Howell nor Mr Beech had had any legal right to the tenancy as they were not "successors". Following a request by Mrs Howell and Mr Beech for a review of that decision, in September 2010 the Council confirmed its decision.

The proceedings

[11]The proceedings were commenced in the Birmingham County Court on 17 August 2011 with a simple claim form for possession and short particulars of claim. The appellants’ amended defence and counterclaim raised a number of issues. They are not altogether clear or easy to follow in identifying precisely each of the defences relied upon.[12]The matters relied upon by way of defence appear to be as follows:(1) Mrs Howell was entitled to succeed to Mrs Warren’s secure tenancy on Mrs Warren’s death;(2) if the provisions of Part IV of the 1985 Act precluded Mrs Howell from being qualified to succeed, those provisions are contrary to Article 8 and Article 14 of the European Convention on Human Rights (“the Convention”) and accordingly Mrs Warren’s secure tenancy will have vested in Mrs Howell by virtue of section 89 of the 1985 Act and that cannot be brought to an end except by obtaining an order from the court in accordance with sections 82 to 84 of the 1985 Act;(3) the Notice to Quit was void and of no effect because Mrs Warren lacked mental capacity;(4) Mrs Warren suffered from cognitive impairment and it was unconscionable to obtain the Notice to Quit in the circumstances;(5) the obtaining of the Notice to Quit breached Article 8 of the Convention;(6) the appellants have a public law defence because the Council’s decision to rely upon the Notice to Quit and to commence the possession claim and to continue with it in light of the matters relied upon on by the appellants are pursuant to an unlawful decision: the decision was unlawful because the Council’s conduct has been unreasonable, disproportionate and unconscionable and it was both unlawful of the Council to refuse to grant a tenancy of the Property to the Appellants and it would be disproportionate to make a possession order. The appellants counterclaimed (1) a declaration of incompatibility on the ground that section 88(1) (b) or (e) of the 1985 Act is incompatible with the Appellants’ rights under Article 8 of the Convention, and (2) a declaration that since either 25June 1994 or 9 September 2009 Mrs Howell has been the secure tenant by succession of the Property.[13]In view of the number and complexity of issues raised in the appellants’ amended defence and counterclaim the proceedings were transferred to the Queen’s Bench Division. Three days were set aside for the trial which took place before Mr Justice Keith in the Birmingham Civil Justice Centre on 28 to 30 November 2012. That period proved to be seriously inadequate. It was sufficient only for the evidence to be called. There was no further oral hearing. Both sides made substantial written closing submissions. In addition, in response to successive requests by the Judge for assistance on various points, the parties made additional written submissions and filed additional witness statements on a further 6 days between December 2012 and February 2013. The Judge handed down a detailed 24 page judgment on 15 March 2013 in which he dismissed all the defences and the counterclaim. The Judge’s judgment[14]So far as relevant to the issues on this appeal the findings and reasoning of the Judge in this judgment were as follows.[15]In paragraph [26] of his judgment the Judge recorded that the appellants were no longer pursuing the allegation that Mrs Warren did not have the mental capacity to give up her tenancy because they were unable to discharge the burden on them of proving lack of mental capacity. The Judge nevertheless went on to consider Mrs Warren’s mental state because the appellants’ counsel, Mr Stephen Cottle, had submitted that Mrs Warren’s “capacity issues” were relevant to other issues, including undue influence and unconscionable conduct.[16]Under the heading “Mrs Warren’s mental state” the Judge said that there were two relevant reports on Mrs Warren. The first was a report dated 11 March 2008 prepared by a consultant in old age psychiatry. Mrs Warren was then 81 years old. The report stated that Mr Warren was suffering from mild depression and mild dementia. She scored 25 out of a possible 30 points on the MMSE test. The Judge said that he knew from previous cases that a score of 25 or more indicates a normal level of cognitive functioning. She displayed slight psychomotor retardation and was unable to follow instructions, but there were "no abnormalities of thought, perceptions or beliefs".[17]The other report was a social work assessment carried out on 27 October 2009 by the community care team while Mrs Warren was in hospital. It referred to the assessment of an occupational therapist that Mrs Warren had mild cognitive impairment. The focus of the report was whether Mrs Warren should go to a residential care home, and in that context one of the doctors said that in his opinion Mrs Warren had the capacity to decide where she wanted to go on her discharge from hospital.[18]The Judge observed (in paragraph [28]) that neither report suggested that her ability to make decisions was so impaired as to call into question her mental capacity.[19]The Judge also referred to the following evidence on this issue of Mrs Pat Bannister, the manager of Abbey Park. She thought that Mrs Warren was not capable of managing her financial affairs, which no doubt was why her other daughter Ann looked after that side of things. She could forget things which she had been told quite recently. She was aware of where she was, and she knew what she wanted. She was capable of making decisions about everyday things in her life, such as what she wanted for lunch, but the various options needed to be spelled out to her. She was able to converse with other residents and members of staff.[20]The Judge set out the legal requirements for mental capacity (in paragraph [30]) and said that, in the light of all the evidence, he could well understand why it was no longer contended that Mrs Warren lacked the mental capacity to give up the tenancy.[21]The Judge then turned to the issue of undue influence and unconscionable behaviour. He began by stating that Mr Pumphrey had visited Mrs Warren in 2009 to tell her that Mrs Howell had been asking for Mrs Howell’s name to be added to the tenancy.[22]Having heard from Mr Goodwin that Mrs Warren had moved to Abbey Park and that she would not be returning to the Property Mr Pumphrey decided to visit Mrs Warren in order to ascertain for himself whether or not Mrs Warren would be returning to the Property. He sought advice from the Elderly Services Section of the Council's Department of Social Services about interviewing an elderly tenant who was quite frail and had just come out of hospital.[23]Mr Pumphrey called Mrs Bannister to make an appointment for him to see Mrs Warren. That did not come as a surprise to Mrs Bannister. Mrs Warren's other daughter Ann had told her two or three times that Mrs Warren would be "signing the house over to the Council" and that someone from the Council would be visiting Mrs Warren "to get her to do that". There was no evidence about who had told Ann that. The appointment was fixed for 19 February 2010. Mrs Bannister was expecting Ann to be there. Mrs Bannister called Ann, and Ann told her that she could not make it, but she asked Mrs Bannister to witness her mother's signature. In fact, Mrs Bannister was with Mrs Warren the whole time Mr Pumphrey was with her.[24]Mr Pumphrey did not give a full account in either of his witness statements about his conversation with Mrs Warren. By the end of the conversation Mrs Warren had signed the form used by the Council when one of its tenants gives up their tenancy. The document is headed "Notice to Quit Tenancy". It gives the tenant's name, the tenant's old address and new address, the date when the tenant will be leaving the property or had left it, and the date when the notice to quit is given. It states that the tenant is giving notice to terminate their tenancy and identifies the date when the tenancy will end. The details were filled in by Mr Pumphrey. 22 March 2010 was specified as the date when the tenancy would end. The Notice to Quit was signed by Mrs Warren.[25]At the same time Mr Pumphrey completed a file note. It read as follows "Mrs Warren doesn't have a social worker. Mrs Warren needs 24 hour a day care and cannot return home. Mrs Warren was in hospital for a while. Then released to Abbey Park. Mrs Warren is now at Abbey Park full time. Pat, Head Nurse states that Mrs Warren is fully aware & has no memory issues. Mrs Warren can make decisions for herself."[26]The Judge observed that the file note was signed by Mrs Warren and Mrs Bannister whereas the Notice to Quit was signed by Mrs Warren alone. He said (at paragraph [34]) that was because Mrs Bannister was doing something more than simply witnessing Mrs Warren's signature. She was confirming what she had told Mr Pumphrey about Mrs Warren's mental state and was making sure that Mrs Warren understood what Mr Pumphrey was saying.[27]The Judge said that Mr Pumphrey was incorrect in attributing to Mrs Bannister the view that Mrs Warren had no memory issues. The Judge said that there was no reason to question Mrs Bannister’s view of Mrs Warren’s awareness as recorded in the file note but, in relation to Mrs Warren’s short term memory, Mr Pumphrey and Mrs Bannister “may not have been on quite the same wavelength”.[28]The Judge then summarised as follows the gist of Mr Pumphrey’s evidence as to what he actually said to Mrs Warren:
“I told Mrs Warren that I was there because I'd been told that she was now in the care home full time. I told her that if she was going to stay in the care home full time, she couldn't keep her tenancy, because the tenancy agreement said that she had to live there as her principal home, and she wouldn't be doing that any more. I also told her that by signing the notice to quit Janet wouldn't be able to stay in the house, but that we'd made her several offers of accommodation. I told her that she didn't have to sign the notice to quit, and she could speak to her daughters if she wanted to, but she couldn't keep the tenancy. While I was talking to her, she didn't say anything. She just listened.”
[29]The Judge rejected the suggestion in Mr Pumphrey’s cross-examination that none of that was ever said. The Judge said (at paragraph [36]) that, having seen Mr Pumphrey in the witness box for quite a while, he did not think that Mr Pumphrey was making up that part of his evidence. The Judge found that Mr Pumphrey did not put in the file note what he had said to Mrs Warren because he knew that, if Mrs Warren signed the Notice to Quit, that would bring her tenancy to an end on its expiry. That was why he took the Notice to Quit with him. It was what he usually did in that situation. If she wanted to speak to either of her daughters before signing the Notice to Quit, that was fine by him. That was why he told her that she did not have to sign the Notice to Quit, and that she could speak to her daughters if she wanted to. Indeed, from his point of view, it did not matter whether Mrs Warren signed the Notice to Quit at all. Since she was no longer living at the Property, her tenancy was no longer a secure one, and if she did not sign the Notice to Quit and Mrs Howell did not then move out, proceedings for possession could be brought.[30]The Judge said he was sure that Mr Pumphrey did say something to Mrs Warren along the lines that, if she gave up the Property, Mrs Howell could not live there any more.[31]The Judge referred (in paragraph [39]) to Mrs Bannister’s evidence that nothing gave her cause for concern that Mrs Warren might not have understood what she was being told. The Judge was sure that Mrs Warren would have realised that by signing the Notice to Quit she was giving up the tenancy. He said that she may well have wanted Mrs Howell to be able to stay on at the Property but she thought that because she was now living in the care home, she had to give up her tenancy, and that that meant that Mrs Howell would not be able to live there. The Judge also considered that Mrs Warren may have thought that she had to sign the Notice to Quit.[32]Mrs Warren was not told what would happen if she did not sign the Notice to Quit, namely that the Council would serve its own notice to quit but that because of the additional letter which the Council had to serve on her under its abandoned property procedure it would take at least a week before such a notice to quit could be served. Mrs Warren would not have realised, therefore, that she could refuse to sign the Notice to Quit and, if she did so, she could – in theory at least – be buying a little more time for Mrs Howell to remain in the Property. The Judge rejected any improper motive on Mr Pumphrey's part. He said that he did not believe for one moment that Mr Pumphrey was trying to hide anything from Mrs Warren. The Judge found that Mr Pumphrey genuinely thought that it was enough for him to tell Mrs Warren that she did not have to sign the Notice to Quit, and it did not occur to him to spell out what the effect in the short term of her not doing so might be since in reality it would have no effect at all. That is because Mr Pumphrey knew that Mrs Howell was asking the Council to grant her and Mr Beech a tenancy of the Property. They were allowed to stay there while the Council considered their request. So, had Mrs Warren not signed the Notice to Quit, and had the Council had to rely on a notice to quit of its own once the Council had decided to refuse Mrs Howell's request for a tenancy of the Property, the notice to quit which the Council would then have served would have expired well before August 2011 when the Council commenced the present proceedings. So, in the events which occurred, the fact that Mrs Warren signed the Notice to Quit on 19 February 2010 did not mean that Mrs Howell and Mr Beech had had to leave the Property any sooner than if Mrs Warren had refused to sign it.[33]The Judge rejected (at paragraph [42]) the suggestion in the cross-examination of Mr Pumphrey that he deliberately chose not to speak to Mrs Warren without having spoken to Mrs Howell first and given her the opportunity to be there. The Judge found that Mr Pumphrey was quite content for either or both of Mrs Warren's daughters to be present when he saw Mrs Warren, which was why he had no problem with Mrs Bannister telephoning Ann when he got to Abbey Park. The Judge said that Mr Pumphrey thought that, since Mrs Warren was the tenant, she was the person he had to speak to rather than one of her daughters but that did not mean that he did not want either of them there when he did so.[34]The Judge also rejected (in paragraph [44]) the criticism of Mr Pumphrey that he told Mrs Warren that she could not keep the tenancy because the tenancy agreement said that she had to live in the Property as her principal home. The position was that she had lost security of tenure as a result of moving into Abbey Park and would not have been able to keep her tenancy if the Council chose to take back the Property.[35]The Judge then turned to consider whether on these facts Mrs Warren's willingness to sign the Notice to Quit was procured in circumstances amounting to undue influence or unconscionable behaviour on the part of Mr Pumphrey. The Judge noted that Ann had made no complaint about Mr Pumphrey; Mrs Howell was not present when the Notice to Quit was signed and could not therefore say what was said; Mrs Bannister was not worried by anything which happened in her presence; and Mrs Warren herself was not disadvantaged in any way by the Notice to Quit she signed. If anyone was disadvantaged, it was Mrs Howell. The Judge said that was the context in which the allegations of undue influence and unconscionable behaviour had to be considered.[36]The Judge referred to, and quoted, the speech of Lord Nicholls in Royal Bank of Scotland Plc v Etridge (No. 2) [2001] UKHL 44, [2002] AC 773 (“Etridge”), at [8], [9] and [14] on the law of undue influence. The Judge said he had not identified any actual improper pressure or coercion on Mr Pumphrey’s part to get Mrs Warren to sign the Notice to Quit.[37]Turning to presumed undue influence, the Judge said the burden of proof was on Mrs Howell and Mr Beech to establish that Mrs Warren placed trust and confidence in Mr Pumphrey and that the signing of the Notice to Quit was not readily explicable in the ordinary way.

The Judge then expressed his conclusion on this head of defence (in paragraph [48]) follows:

“The relationship between Mrs Warren and Mr Pumphrey was not the sort of relationship which the law recognises as giving rise to an irrebuttable presumption of a relationship of trust and confidence. I did not understand Mr Cottle to contend otherwise. So was their relationship one in which Mrs Warren nevertheless placed trust and confidence in Mr Pumphrey? Although they had met on an earlier occasion, the relationship between them was simply that of council official and council tenant. She was entitled to expect that he would deal honestly with her, and she may have thought that he would tell her everything she needed to know in order to make an informed decision about whether to sign the notice to quit. But I do not think that that meant that their relationship was one in which it could be said that she placed trust and confidence in him. Having said that, even if it was, there was no question of Mr Pumphrey deliberately keeping quiet about the consequences of Mrs Warren signing the notice to quit, let alone doing that so that the Council would be able to get Mrs Howell and Mr Beech out of the property sooner than they otherwise would have been able to. That also explains why Mrs Warren's willingness to sign the notice to quit could not be said to have been procured by unconscionable behaviour on the part of Mr Pumphrey. For his behaviour to have been unconscionable, Mr Pumphrey had to be regarded as having taken advantage of Mrs Warren's age and ignorance of the consequences of signing the notice to quit to get her to do something which no well-advised person would have done. Mr Pumphrey did not do that.”
[39]The Judge also held (in paragraph [49]) that there was no unconscionable conduct or an unconscious use of power on the part of Mr Pumphrey in the sense of him trying to take advantage of Mrs Warren.[40]The Judge accordingly concluded (at paragraph [50]) that the Notice to Quit was validly signed by Mrs Warren, and the effect of it was that Mrs Warren gave up her tenancy with effect from 22 March 2010.[41]The Judge then turned to the other defences. He addressed these under the headings: “The claim for possession: the public law challenge”; “The claim for possession: the human rights challenge”; and “The compatibility of the statutory scheme with Mrs Howell’s human rights”.[42]Under the first of those headings the Judge considered and rejected a defence to the claim for possession on one or more of the following three grounds:(1) the information given to Mrs Howell while here mother was still living at the Property that her name could not be added to the tenancy was mistaken;(2) when Mr Pumphrey had been told that Mrs Warren had moved into Abbey Park he should have discussed the future of Mrs Warren’s tenancy of the Property with Mrs Howell before asking Mrs Warren to sign the Notice to Quit;(3) the decision of the Council not to grant Mrs Howell and Mr Beech a tenancy failed properly to take into account their personal circumstances and the impact of their leaving the Property on the community as well as taking into account irrelevant considerations and wrongly treating another consideration as decisive when it was not.[43]Under the “human rights challenge” heading the Judge considered and rejected the appellants’ contention that an order for possession would be a disproportionate means of achieving the Council’s legitimate objective of allocating properties of the size of the Property only to those who truly need them. The Judge said (in paragraph [67]) that the defence did not even cross the threshold of being seriously arguable.[44]Under the third of the headings I have mentioned the Judge considered and rejected the appellants’ argument that the statutory scheme for succeeding to public sector tenancies on the death of the tenant is inconsistent with Mrs Howell’s human rights under Article 8 and Article 14 of the Convention.[45]For all those reasons the Judge gave judgment for the Council on its claim for possession and dismissed the counterclaim.

The appeal

[46]Mr Cottle has made extensive written and oral submissions on behalf of the appellants. I do not propose to set them out in detail here. The following is no more than a brief outline. Undue influence[47]The appellants do not challenge the Judge’s finding that there was no improper pressure or coercion on Mrs Warren to sign the Notice to Quit and his rejection of the appellants’ claim that there was actual undue influence. They challenge the Judge’s finding that there was no presumption of undue influence arising from the nature of the relationship between Mr Pumphrey and Mrs Warren and the nature of the transaction. They say that it is plain that the Judge did not properly evaluate either.[48]Mr Cottle’s arguments can be summarised as follows. Mr Pumphrey was a professional person who was on notice that Mrs Warren might have capacity issues. There was a relationship of ascendancy and dependency. The personality of Mrs Warren, the relationship between a housing officer and a mentally frail and elderly resident at a care home whose tenancy the Council wanted to bring to an end combine to demonstrate sufficient proof of a relationship of presumed undue influence. Mrs Warren was not told that there was no advantage to her in signing the notice if the rent was being met; that the Council would ask Mrs Howell and Mr Beech to vacate within the period of the notice; that if they failed to do so then they would be evicted; and that they would not have to leave within the period of the notice if she did not sign. Furthermore, the Judge was wrong to regard it as significant that Mr Pumphrey did not deliberately keep quiet about the consequences of Mrs Warren signing the Notice to Quit because neither disadvantage nor wrongdoing is a precondition of a presumption of undue influence.[49]The appellants argue that onthe evidence, properly analysed, having given rise to a presumption of undue influence, the Judge never went on to consider whether that presumption was rebutted by evidence of the free exercise of Mrs Warren’s will and her fully informed and free consent.[50]Mr Cottle cited and referred to a host of authorities on this part of the appeal including Allcard v Skinner [1887]35 Ch.D 145, Benmax v Austin Motors Ltd [1950] AC 370, Mathew v Bobbin [1981] 41 P & CR 1, Barclays Bank v O'Brien [1994] 1 AC 180, Etridge, Hammond v Osborn [2002] EWCA Civ 885, Niersmans v Pesticcio [2004] EWCA Civ 372, Macklin v Dowsett [2004] EWCA Civ 904, Lindsay v Wood [2006] EWHC 2895 (QB), and Smith v Cooper [2010] EWCA Civ 722. Public law defence[51]The appellants contend that the Council, in breach of the Code, wrongly failed to procure a formal assessment of Mrs Warren’s mental capacity before obtaining and deciding to rely on the Notice to Quit, and accordingly the appellants have a public law defence to these possession proceedings.[52]The argument is that the Code required the Council to consider, before asking Mrs Warren to sign the Notice to Quit, whether she had an impairment affecting the way her mind or brain worked. This was because the decision whether or not to sign the Notice to Quit was a significant one, the Council, and Mr Pumphrey in particular, were aware of doubts about Mrs Warren’s capacity, and the re-possession of the Property from Mrs Howell and Mr Beech was controversial.[53]The appellants further contend that MCA section 42(5) requires the Court to take into account the Council’s failure to require such an assessment but the Judge did not do so.[54]The appellants contend that the public law defence arises because the Council, in resolving to take possession proceedings in reliance on the Notice to Quit, failed to take into account or sufficiently into account its omission to comply with a statutory requirement or at any event to take precautionary steps which Parliament considered it ought to take as a matter of public policy for the support and protection of vulnerable people.[55]On this part of the case, Mr Cottle referred to ReKey [2010] 1 WLR 2020 and the Mental Capacity Act Manual by Richard Jones (5th ed). Discussion

Undue influence

[56]It is common ground that the principles of the law of undue influence, so far as relevant to the present case, are to be found in Etridge, particularly in the speeches of Lord Nicholls and Lord Scott. They are as follows.[57]There are broadly two situations that come within the law relating to undue influence, that is to say two situations in which undue influence is proved: Bankof Credit and Commerce International SA v Aboody [1990] 1 QB 923, 953, Etridge at paras. [8], [151], [152]. The first comprises overt acts of improper pressure or coercion such as unlawful threats. This is usually called actual or express undue influence. The second arises out of a 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: Etridge para [8]. In such a case, the evidential burden is thrown on the ascendant party to counter the inference that the transaction was procured by that party’s undue influence. The undue influence in that situation is usually called presumed undue influence.[58]As I have said, this appeal is not concerned with actual undue influence because there is no challenge to the Judge’s finding that there was no improper pressure or coercion on Mrs Warren to sign the Notice to Quit. This appeal is concerned only with presumed undue influence, to which the following comments apply.[59]The relationship between two individuals may be such that, without more, one of them is disposed to agree a course of action proposed by the other. Typically this occurs where one person places trust in another to look after their affairs and interests, and the latter betrays that trust by preferring their own interests. It is a matter of evidence whether one party has reposed sufficient trust and confidence in the other to give rise to a presumption of undue influence. The principle is not confined, however, to cases of abuse of trust and confidence. It also includes, for example, cases where a vulnerable person has been exploited: Etridge at para. [11].[60]It is not essential to the cause of action that the transaction should be disadvantageous to the pressured or influenced person, either in financial terms or in any other way. If undue influence is proved, the victim’s right to have the transaction set aside will not depend upon the disadvantageous quality of the transaction. In the nature of things, however, the issue of undue influence is likely to arise only when, in some respect, the transaction was disadvantageous either from the outset or as matters turned out: Etridge paras. [12] and [155]. Furthermore, in every case the nature of the impugned transaction will be material: Etridge para. [155].[61]The burden of proving an allegation of undue influence rests on the person who asserts it. The onus is on the person alleging undue influence to prove in the first instance sufficient facts to give rise to the presumption: Etridge paras [13] and [154]. The evidence required to discharge that onus depends on the nature of the alleged undue influence, the personality of the parties, their relationship, the extent to which the transaction cannot readily be accounted for by the ordinary motives of ordinary persons in that relationship, and all the circumstances of the case: Etridge at paras [13] and [158].[62]Proof that the complainant placed trust and confidence in the other party in relation to the management of the complainant’s affairs, coupled with a transaction which calls for explanation, will normally be sufficient, failing satisfactory evidence to the contrary, to discharge the burden of proof and so cast on the other party the evidential burden to counter the suggestion that they abused their influence and preferred their own interests and did not behave fairly: Etridge para [14]. The weight of the presumption, and so the weight of the evidence needed to rebut it, will vary from case to case and will depend on the particular nature of the relationship and on the particular nature of the impugned transaction: Etridge paras [24] and [152].[63]In some cases there is an irrebuttable presumption that one party has influence over another, such as a parent and child, trustee and beneficiary, solicitor and client, and medical adviser and patient: Etridge para [18]. The present is not such a case.[64]Despite the extensive written and oral submissions of Mr Cottle, I consider that the appeal against the Judge’s finding that there is no presumption of undue influence in the present case borders on the unarguable.[65]The relationship between Mr Pumphrey and Mrs Warren at the date the Notice to Quit was signed and given was that of landlord’s agent and tenant under a contractual periodic tenancy. That is not inherently a relationship of trust and confidence in an equitable sense or indeed any sense. The relationship is a contractual and property relationship under which each party has separate and distinct rights and obligations in relation to the other.[66]There was nothing in the history of the personal relationship between Mr Pumphrey and Mrs Warren prior to the signing and giving of the Notice to Quit to have made that relationship one of trust and confidence. Mr Pumphrey had visited Mrs Warren at the Property once before in 2009 to tell her that Mrs Howell had been asking for her name to be added to the tenancy.[67]Mrs Warren had the mental capacity to give the Notice to Quit. The appellants conceded by the end of the trial that they were unable to discharge the burden on them of proving the contrary: MCA section 1(1). Mr Cottle appeared to suggest at one point in his oral submissions that there is a material difference between, on the one hand, an inability to discharge the burden of proving that Mrs Warren did not have mental capacity and, on the other hand, affirmative evidence that she did have mental capacity. If he intended to make any such suggestion as being relevant to the facts of the present case, I reject it. I would add that it seems clear to me that, had the concession not been made as to the inability of the appellants to prove that Mrs Warren did not have mental capacity, the Judge would have made a finding on the evidence to that effect.[68]Mr Cottle emphasised the physical frailty of Mrs Warren, who was elderly, had suffered a number of strokes and had undergone an operation in hospital. In addition, Mr Cottle submitted that, even though Mrs Warren had mental capacity, the Council was on notice at the time the Notice to Quit was given that there was a doubt about her mental capacity. He relied particularly on the social work report dated 27 October 2009 which referred to her short term memory and mild cognitive impairment. He also relied on Mr Pumphrey’s file note following the meeting with Mrs Warren on 19 February 2010 and the fact that Mr Pumphrey sought the advice of the Council’s Elderly Services Section of the Social Services’ Department before the meeting with Mrs Warren. The Social work report, however, stated that Mrs Warren was able to understand and communicate, and had the capacity to decide where she wished to go after discharge from hospital. As the Judge found, neither that report nor the earlier report of March 2008 by the consultant in old age psychiatry suggested lack of capacity. The file note signed by Mrs Bannister relating to the meeting on 19 February 2010 did not suggest that she had any concerns. The Judge found as a matter of fact that Mrs Warren understood Mr Pumphrey’s explanation on 19 February 2010 that she could no longer keep her tenancy because she had ceased to live in the Property and that, if she signed the Notice to Quit, Mrs Howell would not be able to remain there any longer.[69]There was nothing therefore to support the appellants’ case that, when Mrs Warren signed and gave the Notice to Quit, the relationship between her and Mr Pumphrey was one of trust and confidence capable of giving rise to a presumption of undue influence.[70]That is the end of the first ground of appeal. In any event, the presumption of undue influence will only arise if there is both a relationship of trust and confidence in relation to the management of the subservient party’s affairs and a transaction which calls for explanation: Allcard v Skinner (1887) 35 Ch D 145 at 185, and Etridge at para. [156]. Mr Cottle contended forcefully that the giving of the Notice to Quit by Mrs Warren was indeed such a transaction. I do not agree. His principal point on this aspect was that there is no obvious reason, other than Mr Pumphrey’s dominating influence, why Mrs Warren would have wanted to give the Notice to Quit without first consulting her daughter Mrs Howell, bearing in mind that the Notice to Quit would have the consequence of requiring Mrs Howell and Mr Beech within a short space of time to leave the Property in which they had been living since 2007 and when they had no alternative residential accommodation. Mr Cottle emphasised, in the same context, that no explanation was given to Mrs Warren of the consequences if she did not give the Notice to Quit.[71]I do not accept that the giving of the Notice to Quit by Mrs Warren was an unusual or unexpected transaction or that, for the purposes of presumed undue influence, it calls for an explanation for any other reason. So far as concerned the interests of the Council, it was guardian of the stock of social housing and was concerned to make the best use of that stock in the public interest. Mrs Warren’s tenancy had ceased to be a secure tenancy because it had ceased to be her home. Mrs Howell was not entitled to succeed to the tenancy under the 1985 Act and nor could it be assigned to her. Mrs Warren had never asked for Mrs Howell’s name to be added to the tenancy. The Council considered that the Property was too large for the needs of Mrs Howell and Mr Beech. The Council was, therefore, entitled to bring the tenancy to an end and to obtain possession and it was perfectly predictable that it would seek to do so.[72]So far as concerned the interests of Mrs Warren, she was never going to return to the Property and the Notice to Quit would bring to an end her continuing liability under the tenancy. As regards her interest in Mrs Howell’s position, any decision on the part of Mrs Warren not to give the Notice to Quit would, as the Judge said (in para [40]) have resulted in no more than a week’s delay until the Council served its own Notice to Quit, which it inevitably would have done.[73]There is, therefore, nothing objectively about the giving of the Notice to Quit which calls for an explanation and which is capable of giving rise to a presumption of undue influence by Mr Pumphrey. I would add, although not strictly necessary or relevant to this issue on undue influence, that there is nothing to indicate that Mrs Warren was in fact concerned about her daughter’s position. The Judge found that Mrs Warren was told by Mr Pumphrey and understood that, by giving the Notice to Quit, she was giving up the tenancy and that Mrs Howell would not be able to continue to live in the Property. Mrs Warren had been told in 2009 by Mr Pumphrey that Mrs Howell wanted her name to be added to the tenancy and that would require a request from Mrs Warren herself but Mrs Warren never made any such request. Further, neither Mr Pumphrey nor Mrs Bannister, both of whom were witnesses at the trial, gave evidence of any concern expressed by Mrs Warren at the meeting on 19 February 2010 about Mrs Howell’s continued occupation of the Property. Nor was there any evidence that Mrs Warren was ever asked by Mrs Howell or Mr Beech after the Notice to Quit was given whether she understood the implications for them of service of the Notice to Quit and would want to ask the Council to allow her to withdraw it. As was obvious, if she had done so, the Council would simply have served another Notice to Quit, following expiry of which the Council would have claimed possession.[74]None of the evidential ingredients capable of giving rise to a presumption of undue influence are to be found in this case. It is not necessary, therefore, to address the appellants’ criticism of the Judge’s failure properly to address the issue of rebuttal of the presumption. It is not necessary, in particular, to address Mr Cottle’s submission that it is not sufficient that Mrs Warren understood what she was told by Mr Pumphrey on 19 February 2010 and that what is critical is whether her decision to give the Notice to Quit was the result of her fully informed, free and independent will.[75]One of the most perplexing aspects of these proceedings and this appeal, bearing in mind the time and public and private resources that have been devoted to it, is precisely what practically it was hoped to achieve by the allegation of undue influence. As I have said and the Judge found, even if the appellants had succeeded on it, the Council would still be free to serve a notice to quit and (subject to the public law defence) the Council would be entitled to possession of the Property because the tenancy ceased to be a secure tenancy when Mrs Warren became permanently resident at Abbey Park. The appellants would be trespassers as against the Council. Indeed, even if the Notice to Quit were invalid, the contractual tenancy has not devolved on them since Mrs Warren died intestate and no administrator has been appointed to her estate. Mr Cottle’s frank explanation, as I understood it, was that the Council would still have to undertake various internal processes before seeking to obtain possession, and other circumstances which have come to pass with the lapse of time, including a deterioration in the health of one or both of the appellants, might place them in a better position to persuade the Council to grant them a new tenancy. The

Public law defence

[76]Despite everything that Mr Cottle has so valiantly submitted, I consider this ground of appeal to be quite hopeless.[77]Neither the MCA nor the Code was mentioned in the amended defence and counterclaim. They were not mentioned in the appellants’ opening skeleton argument at the trial. Although Mr Cottle cross-examined one of the Council’s witnesses (not Mr Pumphrey) on the desirability of a formal assessment of Mrs Warren’s capacity, there was no cross-examination of the Council’s witnesses specifically on the Code or the MCA. They were mentioned for the first time in the appellants’ closing written submissions dated 10 December 2012. The submission that the failure to carry out a formal assessment of Mrs Warren’s capacity made it Wednesbury unreasonable for the Council to rely on the Notice to Quit was not made orally before or at the trial. It was made for the first time in clear terms in paragraph 162 of the 204 paragraphs of the appellants’ written closing submissions filed nearly two weeks after the close of evidence. The Council’s lawyers did not appreciate the precise nature of the argument and therefore did not address it in their written closing submission. I am not at all surprised in those circumstances that the Judge did not refer to that submission in his judgment. It is a good example of the problems which can so easily arise when none of the closing submissions in a complex case are made orally but are all put in a written document.[78]The Judge was entitled to ignore the new submission. It was never formally part of the appellants’ pleaded defence. No evidence was led on it. The appellants never had permission to raise it as a new unpleaded defence. No opportunity was given to the Council at the trial to call oral evidence on the point. I reject Mr Cottle’s submission that the Council is not prejudiced because the defence is a matter of law and no evidence could alter the relevance and applicability of the Code. Mr Cottle drew our attention to and relied upon many provisions in Chapter 3 and Chapter 4 of the Code. It seems to me to be obvious as a matter of basic fairness that the provisions relied upon by the appellants should have been put to the Council’s witnesses in cross-examination and that the Council itself should have had the opportunity to call its own written and oral evidence on the relevance and application of Chapters 3 and 4 of the Code both generally and in this specific case.[79]In any event, the defence is manifestly a bad one.[80]The appellants rely on MCA s. 42(5). That provision is as follows: “If it appears to a court or tribunal conducting any criminal or civil proceedings that—(a) a provision of a code, or(b) a failure to comply with a code, is relevant to a question arising in the proceedings, the provision or failure must be taken into account in deciding the question”.[81]As I have said, Mr Cottle took us to many of the provisions in Chapters 3 and 4 of the Code. The appellants rely particularly on paragraph 4.34 of the Code, which states that an assessment should be carried out when a person’s capacity is in doubt. As I have mentioned earlier, Mr Cottle relied upon a number of matters as evidence that Mrs Warren’s capacity was in doubt at the time she gave the Notice to Quit.[82]The Council does not accept that the Code or MCA section 42(5) has any application to the present case. It is not necessary to decide that issue because it is quite clear that, even if they did and do apply, a public law defence based on Wednesbury unreasonableness would be bound to fail. It is inconceivable that, on a judicial review of the Council’s decision to commence possession proceedings for possession of the Property, the Court would grant a quashing order.[83]Mrs Warren had the mental capacity to give the Notice to Quit. As I have said above, I do not accept that the appellants can in some way undermine that fact by saying that at the trial they were merely unable to discharge the burden of proving that she did not have capacity. There is no evidential basis for any suggestion that a formal assessment at the time the Notice to Quit was given would have disclosed that Mrs Warren did not have the mental capacity to give the Notice to Quit. Further, the Judge found that there was no unconscionable conduct or unconscious use of power on the part of Mr Pumphrey in the sense of his trying to take advantage of Mrs Warren. Mrs Warren ceased to be a secure tenant when the Property ceased to be her home. The Judge found that it was proportionate for the Council to rely on the Notice to Quit and to bring the proceedings to recover possession of the Property, in which the appellants are over-housed for their requirements. It was proportionate of the Council to act in that way as guardian of the housing stock and acting in the public interest.[84]The appellants themselves were never entitled to succeed to Mrs Warren’s statutory tenancy and were not entitled to an assignment of it. They have been refused a contractual tenancy and are trespassers as against the Council.[85]The notion that in such circumstances it was unreasonable of the Council to rely on the Notice to Quit and to take these possession proceedings, with the consequence that the appellants were entitled to remain in the Property because a formal assessment was not carried out on Mrs Warren’s mental capacity when she brought her tenancy to an end, is with all due respect to Mr Cottle, plainly untenable.

Conclusion

[86]For all those reasons I would dismiss this appeal. Lord Justice Underhill[87]I agree. Lord Justice Briggs[88]I also agree.

Cited in 5 later judgments