Hart & Anor v Burbidge & Anor [2014] EWCA Civ 992

[2014] EWCA Civ 992Case No A3/2013/2285; A3/2013/2286; A3/2013/2284 and A3/2013/2287
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
SIR WILLIAM BLACKBURNE
HC11C00559 AND HC11C00751
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate Tuesday 22 nd July 2014
Before
LORD JUSTICE RICHARDSLADY JUSTICE BLACKLORD JUSTICE VOS
Between
KENNETH CHARLES HARTClaimants/ RespondentsPAUL ROGER HARTRespondentSUSAN ANNE BURBIDGEDefendants/ AppellantsBRIAN JEFFERY BURBIDGEAppellantARTHUR KENNETH GERALD SAMWAYSClaimants/ RespondentsGRAHAM DOUGLAS SAMWAYSRespondentCHRISTINE MARGARET GARLINGERespondentPETER KENNETH HARTRespondentLEWIS ROGER HARTRespondentGEMMA LOUISE HARTRespondentSUSAN ANNE BURBIDGEDefendants/ AppellantsBRIAN JEFFERY BURBIDGEAppellantKENNETH CHARLES HARTAppellantPAUL ROGER HARTAppellant
(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 Paul Emerson (instructed by Blanchards Bailey LLP) for Susan Anne Burbidge and Brian Jeffery BurbidgeMr Charles Auld (instructed by Withy King LLP) for Kenneth Charles Hart and Paul Roger Hart, and for the Samways claimantsHearing Hearing dates: 8 th and 9 th July 2014
Judgment

Introduction

[1]These appeals are from the judgment of Sir William Blackburne, sitting as a deputy judge of the Chancery Division, delivered on 12th June 2013 in two actions that Master Moncaster ordered to be tried together on 24th August 2011. The judge held that Mrs Susan Anne Burbidge (“Mrs Burbidge”) had been guilty of presumed undue influence over her mother Mrs Phyllis Hart, who was born on 29th July 1922 and died on 7th November 2008 aged 86 (the “deceased”). The undue influence related to three related transactions between February and October 2008: the sale of two properties at 7 and 43 Beacon Park Road, Upton, Poole (“No 7” and “No 43”), the net proceeds of which were transferred to Mrs Burbidge and her husband, Mr Brian Jeffery Burbidge (“Mr Burbidge”), and the transfer of some £290,000 from the deceased’s account at the Teachers Building Society to Mr and Mrs Burbidge. These transactions were referred to by the judge as the “impugned transactions”. I propose to adopt the same terminology. The impugned transactions produced a total of some £700,000 in the hands of Mr and Mrs Burbidge, which they used to purchase a property at Little Manor Farm (“Little Manor”), intended to be used as a home for them and the deceased. As things turned out, however, the deceased fell ill and died after only a few days at Little Manor.[2]The claims were brought by various beneficiaries under the deceased’s will. The first claim was brought by Mrs Burbidge’s two elder brothers, Mr Kenneth Hart (“Mr Ken Hart”) and Mr Paul Hart (“Mr Paul Hart”) (together the “Hart claimants” or the “Harts”), and the second claim was brought by the deceased’s three youngest surviving siblings, Mr Arthur Samways, Mr Graham Samways, and Mrs Christine Garlinge, together with Mr Ken Hart’s son, Peter Hart, and Mr Paul Hart’s two children, Lewis Hart and Gemma Hart (all of whom I shall refer to together as the “Samways claimants”).[3]The judge ordered that the parties should be put back in the position that they would have been in, had the impugned transactions not occurred. The deceased’s last will had made specific legacies of No 7 to the Hart claimants, and of No 43 to the Samways claimants. As a result of the sales of these properties, these gifts were adeemed. The judge’s order was aimed at requiring Mr and Mrs Burbidge to reimburse the deceased’s estate with the sums necessary to put the claimants in the position they would have been in(a) had these gifts taken effect in accordance with the deceased’s will, and(b) had the gift of £290,000 also not been made.[4]The appeals raise issues of fact relating to the alleged undue influence itself, and the appropriateness of the restoration orders to which I have referred, in addition to issues arising from the judge’s order for costs, and a question of procedure as to whether permission was, or ought to have been, granted to bring this appeal out of time. In the course of the hearing, the court granted the appellants permission to argue the costs points, which had been included in the skeleton supporting the application for permission to appeal, but not in the grounds of appeal themselves.[5]In order to understand the issues, it is first necessary to set out some of the rather complex chronological factual background, but I should pay tribute at the outset to the judge’s lucid presentation of these facts. It has made our task much easier. What follows should be regarded as nothing more than an essential summary.

Chronological background

[6]On 4th January 2005, the deceased’s husband Ernest Hart died after a marriage lasting more than 60 years.[7]On 15th February 2006, the deceased made a will leaving some small legacies, and directing a sale of No 7 and No 43 and providing for the net sale proceeds to be shared between the Harts, free of inheritance tax, and leaving the residue to be shared equally between Mrs Burbidge and the Harts. Also on 15th February 2006, the deceased entered in to a deed of variation of her deceased husband’s will, gave an industrial property at Unit 15, Sunrise Business Park, Blandford (“Unit 15”) worth some £275,000 to Mr and Mrs Burbidge and released them from debts of some £44,000. As the judge found (paragraph 69) the deceased received detailed advice in relation to these transactions, the documentation was carefully explained, and there were several face to face meetings with Mr Gary Pick of Dickinson Manser, the deceased’s solicitor (“Mr Pick”). He commented that this was “in marked contrast to the course of events which accompanied the impugned transactions”.[8]On 3rd August 2006, the Harts were told at a family meeting that Unit 15 had been given to Mr and Mrs Burbidge. The judge found that they were upset and annoyed (paragraph 71).[9]At Christmas 2006, the deceased sent Mrs Burbidge a note saying “Sue thank you for looking [after] my affairs, I don’t know how I would have got on without you”.[10]On 13th March 2007, Mr Pick visited the deceased at No 7 (with Mrs Burbidge present) to take instructions for her new will. He recorded that the deceased “had clearly come out of herself since the death of her husband and she was quite strong in her views”, and that she “was really quite hurt because she had little or no contact now from Ken or Paul” and “the people who had been good to her were her brothers and sisters …”. She told Mr Pick that she wanted to change the disposition of No 43 so as to leave it to her surviving siblings and grandchildren, and to leave the residue of her estate to Mrs Burbidge. Mr Pick advised that, in view of the proposed changed disposition in respect of No 43, the residue should be left equally amongst her children.[11]On 26th April 2007, the deceased made her last will (the “2007 will”), leaving No 43 to her Samways siblings (the first 3 claimants in the Samways claim, together with the deceased’s twin sister, Ms Ada Samways (universally known as “Joan”)) together with any of her grandchildren living at the date of her death, leaving No 7 to the Harts, and the residue to be divided equally between the Harts and Mrs Burbidge. She executed the 2007 will having seen Mr Pick alone in the absence of Mrs Burbidge.[12]In July 2007, the deceased expressed a wish to move in with Mr and Mrs Burbidge. They looked for a house to enable this to happen, since their own property at Lytchett Matravers was apparently unsuitable for this purpose. They eventually saw Little Manor. The judge found that there was no reason to doubt that the deceased was very keen, once she had seen it, to live at Little Manor and “to this end, [to] make the necessary monies available to enable this to happen”.[13]On 13th February 2008, the deceased and Mr and Mrs Burbidge met Mr Pick to discuss the proposed purchase of Little Manor. The judge found Mr Pick’s note of this meeting (as with all the other meetings) to be accurate. In essence, it recorded the deceased’s dissatisfaction with the Harts and the fact that Mr and Mrs Burbidge did everything for her. It said that Mr and Mrs Burbidge wished to buy Little Manor, though it would be financed by the sale of Mr and Mrs Burbidge’s property (worth some £280,000), the sales of No 7 and No 43, and the deceased’s cash of £290,000 (the judge found that this last suggestion emanated from Mrs Burbidge). The note recorded that Mrs Burbidge “would want to honour payments to Ken and Paul, brothers and sisters and grandchildren [in the 2007 will] for the amount received for the sale of [No 7 and No 43]”. It continued:
“[Mr Pick] confirmed that if the new property was just purchased in [Mr and Mrs Burbidge’s] name this would not be practical. The only way to secure it would be, for example, for the property to be bought so that [Mr and Mrs Burbidge] owned say, 50% and [the deceased] owned 50% as tenants in common”
. Mr Pick confirmed this advice in writing on 14th February 2008. The judge found that there was no reason to doubt the deceased’s disenchantment with the Harts, her determination to let Mrs Burbidge have the £290,000 or her wish to join Mr and Mrs Burbidge in buying Little Manor (paragraph 80). The judge found that the deceased had not said at this meeting that she did not wish to be on the title to Little Manor or that she feared that, if she were, the Harts might get their hands on the property. Finally, in relation to this meeting, the judge accepted Mr Pick’s evidence that the need to change the 2007 will had been raised by him as something that would be appropriate if the matter proceeded as was then proposed; there was no indication that the deceased wished to change her will there and then (paragraph 81).[14]A few days after the meeting and Mr Pick’s follow up letter, in February 2008, Mrs Burbidge telephoned Mr Pick to say that his letter (which advised that Little Manor should be put in joint names) basically confirmed the agreement which they had reached, but that there were “one or two small points … but nothing fundamental”, and that she would let him know when anything changed or sales had been agreed. Mr Pick’s firm dealt with Mrs Burbidge as the person looking after the deceased’s affairs in relation to the sales of No 7 and No 43.[15]On 21st February 2008, the deceased transferred the sum of £290,000 from her account at the Teachers Building Society to a joint account in the name of Mr and Mrs Burbidge as a gift.[16]In March 2008, Mr Paul Hart became aware of the proposed transactions. The judge found that he made two visits to the deceased in which he badgered her and recorded his conversations with her (paragraphs 85-6). The judge also found that Mrs Burbidge had made out to Mr Paul Hart that the new property would be put partly in the deceased’s name, and that Mr and Mrs Burbidge’s property was to be sold. Neither occurred in fact. We were shown these transcripts in the course of argument. It was noteworthy that the deceased repeatedly said that she was “sick to death” of the discussion about the properties and inheritance, but also that it was her understanding, as she put it, that “they’re gonna have my name on the doings”, in reference to the purchase of Little Manor.[17]On 8th May 2008, the deceased and Mrs Burbidge again saw Mr Pick. Again, he made a detailed note. The details of what was actually proposed were explained to Mr Pick, except that it was said that each of the deceased and Mr and Mrs Burbidge would have a 50% interest in the new property. Mr Pick recorded that it did not “sit comfortably with him” making substantially greater provision for one of three children, even though one did everything and the others did little or nothing. However, he wrote that the deceased had come out of herself after her husband had died and she did get on well with Mrs Burbidge and “one could see that it made sense for her to live with them”.[18]On 12th May 2008, the deceased rang Mr Pick’s office in advance of a meeting with Mr Paul Hart to tell Mr Pick not to mention the “Teachers monies” (i.e. the £290,000 gift) to Mr Paul Hart. Mr Pick’s note of the meeting records that he met both the Harts, who expressed their concern about Mrs Burbidge’s influence over their mother, and said that Mrs Burbidge dominated her mother’s life and was feathering her own nest. They told Mr Pick that they had always been advised that they would split No 7 and No 43 in return for Mrs Burbidge having had Unit 15. Mr Pick told the Harts that he could only advise the deceased, that his firm felt that she was firm in her views, and that she was perfectly capable of making decisions with the assets she had at her disposal. Mr Pick informed the Harts about the intended transaction and that the deceased would own half of the new property.[19]On 14th May 2008, Mr Pick wrote what the judge described as an important letter to the deceased setting out his obvious unhappiness with what she was proposing. He recorded the essential elements of his meeting with the Harts, and said that they were concerned to ensure that if a new property were purchased on a 50/50 basis, that Mr and Mrs Burbidge actually put in their 50%. Mr Pick said he too wanted them to do so, and expressed concern that the deceased would effectively be putting in all the monies. He did not think that was a good, fair or equitable idea “but the decision at the end of the day will naturally be yours”. He advised the deceased to take a larger percentage of the new property, as she was effectively giving them a gift of a further £350,000 on top of Unit 15. He said she was burning her bridges. He asked if this is what her husband would have wanted, and suggested being perfectly open with the Harts, and holding a round table meeting.[20]Finally on the 20th May 2008, there was a telephone conversation between the deceased, Mr Pick and Mrs Burbidge in which, as the judge found (paragraph 96), Mrs Burbidge shouted and was angry and aggressive because she felt that Mr Pick was taking the Harts’s side. The deceased said she would make whatever decisions she wanted, and Mr Pick asked Mrs Burbidge to get her solicitors (Blanchards) to write to him with their proposals. They did not do so, but he chased up his request with a letter to the deceased on 27th August 2008. Mr Pick’s conveyancing department continued to be involved in the sales of No 7 and No 43, but not in relation to the purchase of Little Manor. On 3rd June 2008, Mr and Mrs Burbidge exchanged contracts for the purchase of Little Manor.[21]On 6th June 2008, the deceased sold No 7 for £249,500 and transferred the net proceeds of the sale of some £244,000 to Mr and Mrs Burbidge. On 8th August 2008, the deceased sold No 43 for £170,000 and transferred the net proceeds of the sale of £166,345 to Mr and Mrs Burbidge. Mr and Mrs Burbidge contended that these payments were loans (said to total £410,000) from the deceased to them, but it was accepted that there was no documentation except an unsigned memorandum of acknowledgement, produced after the deceased’s death. That document referred to a loan of £400,000 (not £410,000), showed that no interest was payable on the loan, and that the loan was not repayable during the deceased’s lifetime, but only within one year of her death.[22]As the judge found, the deceased lived with Mr and Mrs Burbidge in their house at Lytchett Matravers between the beginning of June 2008 and early October 2008.[23]On 7th September 2008, the judge found that Mrs Burbidge drafted and typed out a significant letter for the deceased to sign and send to Mr Pick (in answer to his chaser of 27th August 2008) which she did (paragraph 100). The letter said that the deceased was living with Mr and Mrs Burbidge, but said dishonestly (on the part of Mrs Burbidge) that their solicitors had confirmed that they would be writing to Mr Pick (concerning the purchase of Little Manor), when in fact they had not been asked to do so. The judge found that Mrs Burbidge’s motive can only have been to avoid involving Mr Pick in the investment of the sale proceeds of No 7 and No 43 in the purchase of Little Manor, and that the only plausible reason for keeping Mr Pick out of the way was to prevent him advising the deceased on the need to structure the purchase of Little Manor so as to protect her interests. The judge also held, in a critical part of his reasoning, that it was not unreasonable to suppose that either the deceased was actively misled by Mrs Burbidge about the true position, or she was accustomed to leaving matters concerned with property and finance to Mrs Burbidge to deal with and was happy to sign what Mrs Burbidge put in front of her (paragraph 101). The judge found that the letter was drafted with an eye to a trouble-free completion of the purchase of Little Manor.[24]On 6th October 2008, Mr and Mrs Burbidge duly completed the purchase of Little Manor for £700,000. The purchase was funded entirely by the monies they had received from the deceased, but the property was placed into the sole names of Mr and Mrs Burbidge. On 7th October 2008, the deceased and her twin sister, Ms Joan Samways, moved in to Little Manor. They were visited almost daily by Mr and Mrs Burbidge. But a few days later, the deceased fell ill and went into hospital.[25]On 7th November 2008, the deceased died, followed a month later by her twin sister. The deceased left assets of £51,000, a liability of £24,000 for capital gains tax on No 43 and the undocumented promise by Mr and Mrs Burbidge to repay her the proceeds of sale of No 7 and No 43 totalling £410,000.[26]The deceased’s death caused Mr and Mrs Burbidge to change their plans, and on 15th July 2009 they sold Little Manor for £595,000, from which they paid £410,000 to the executor of the deceased by way of repayment of the loan.[27]On 4th August 2009, probate of the deceased’s 2007 will was granted to Mr Pick. If no adjustments were to be made to the distribution of the estate, the judge held that Mrs Burbidge and the Harts would each receive approximately £70,000 from the deceased’s residuary estate.[28]In March 2011, the two sets of proceedings were issued. On 12th June 2013, the judge handed down judgment after an 8-day trial that took place between the 26th February and 13th March 2013, and the judge granted no extension of time for making any application for permission to appeal. After the judgment was delivered, Mr and Mrs Burbidge ceased to be represented on about 19th July 2013, though they put in submissions that had apparently been drafted for them by lawyers for the ‘consequentials’ hearing that eventually took place before the judge on 23rd July 2013. Mr and Mrs Burbidge did not attend and were not represented at that hearing.[29]23rd July 2013 was the date of the judge’s eventual order. It declared that the impugned transactions were procured by the undue influence of Mrs Burbidge over the deceased, and that Mr and Mrs Burbidge were to compensate the claimants for the monetary value that they would have received, free of inheritance tax, if respectively No 7 and No 43 had “formed part of the [deceased’s] estate at the date of her death and had been sold and the proceeds of sale of [each] specific gift had been distributed to them”. The order then provided that Mr and Mrs Burbidge were jointly and severally liable to the Hart claimants for a sufficient sum as after tax they would have received by way of residue if the deceased had still had the £290,000 transferred from the Teachers’ Building Society at the date of her death, although such sums were to be paid to the executor of the deceased. Similar orders were made in relation to the proceeds of No 7 and No 43, and the order then set out specific sums of money, amounts of interest, and sums in respect of tax that had to be paid by Mr and Mrs Burbidge to the executor of the deceased’s estate to achieve this effect. In respect of costs, the judge ordered, in outline, that Mr and Mrs Burbidge should pay 95% of the costs of the actions, payments on account, and that they should pay the costs of the executor of the estate of the deceased as a result of the dispute provisionally assessed at £22,090.75. Finally, the judge ordered that Mr and Mrs Burbidge’s application for permission to appeal was out of time, but had it been in time, it would have been refused.[30]On 14th August 2013, Mr and Mrs Burbidge filed their Appellants’ Notices. On 23rd August 2013, the claimants’ solicitors were served with copies of the Appellants’ Notices. On 2nd September 2013, the solicitors acting for all the claimants wrote to the court asking that it note that the applications for permission to appeal were out of time, and saying that they wished to make representations “[i]f the court were minded to consider using its powers under CPR 52.6 retrospectively to extend the time in which the appellants’ notices are to be filed”.[31]On 30th December 2013, Lewison LJ granted Mr and Mrs Burbidge permission to appeal, but did not expressly say that he was extending time for the filing of the Appellants’ Notices.[32]The judge summarised the relevant law on undue influence at paragraphs 37-52 of his careful judgment. He then applied the law to the facts at paragraphs 109-133, and dealt with the appropriate relief at paragraphs 141-144.[33]The judge held that the relationship between Mrs Burbidge and the deceased after her husband’s death was exactly described by “trust and confidence, reliance and dependence”, as those words had been used by Lord Nicholls at paragraph 11 in Royal Bank of Scotland plc v. Etridge (No 2)[2002] 2 A.C. 773 – see paragraphs 111-116.[34]The judge then held at paragraphs 121-123 that the impugned transactions clearly called for an explanation. It is worth citing a part of his reasoning as follows:- “[121] There is no challenge to the gift by [the deceased] to [Mr and Mrs Burbidge] of Unit 15 and the release of the outstanding indebtedness, together worth £319,000. But the fact that they were made and that so soon after [the deceased] made over to [Mr and Mrs Burbidge] all but a small part of the property that remained to her clearly calls for an explanation. This is especially so when the effect of so doing was also to frustrate the specific gifts in favour of her two sons and the Samways parties (and Joan) in a will executed only months earlier, and (unless the £410,000 was repaid) greatly to reduce the value of her residuary estate. [122] The transfer to [Mr and Mrs Burbidge] of the £290,000 in February 2008 took place without [the deceased] obtaining any prior advice. The proposal to use that money and the sale proceeds of Nos 7 and 43 in the purchase of Little Manor was contrary to the advice that Mr Pick gave to her in May 2008. The subsequent application of those monies in that purchase and the manner in which they were applied (in return for no interest in or security over the property) occurred without [the deceased] receiving the advice of any solicitor, whether Mr Pick or someone else, or from any other independent adviser. She was 86 when all of this happened”.[35]The judge then held that the burden shifted to Mrs Burbidge to rebut the presumption of undue influence that arose. He had referred at paragraph 42 of his judgment to paragraph 15 of Buxton LJ’s judgment in Turkey v. Awadh [2005] EWCA Civ 382 in which he had said that “[i]f on the evidence the transaction cannot so be explained - that is to say, the transaction calls for an explanation and that explanation is not forthcoming - the burden then shifts to the Claimant to show that in fact, and despite the terms and nature of the agreement, he did not in truth abuse the position that he held”. Despite having referred to this passage, the judge did not ask himself whether a satisfactory explanation for the impugned transactions had been forthcoming before moving to consider whether Mr and Mrs Burbidge had rebutted the presumption of undue influence that he held had arisen.[36]In paragraphs 124-133, he held that Mrs Burbidge had failed to rebut that presumption, so that the claim succeeded. He was not persuaded on the evidence that the deceased was acting fully independently of the undue influence, or that she really understood:
“the many letters that went out under her signature … what interest if any she would be acquiring in Little Manor and generally what rights she should have or should consider having to secure her interests in the monies she was transferring to [Mr and Mrs Burbidge] … [nor whether the deceased] intended by her actions to deprive her two sons and the others of the legacies given to them by the 2007 Will …”
. The judge was not persuaded that the deceased had any satisfactory independent advice, nor that Mrs Burbidge had given any coherent explanation as to why the deceased’s name was not on the title to Little Manor or as to why there was no documentation as to the loan of the proceeds of sale of No 7 and No 43.[37]As regards relief, the judge held that there could be no grounds for setting aside the various sales to third parties, but that the deceased’s estate should be put, as I have already said, in the position it would have been had there been no undue influence.[38]The judge held Mr Burbidge liable for the same sums as Mrs Burbidge as one who had been unjustly enriched by the undue influence, but not as a constructive trustee. He said that Mr Burbidge “shared equally with Susan in the benefits which resulted from Susan’s undue influence over her mother with full knowledge of the fact that the two of them were in a relationship of influence”.

Grounds of Appeal

[39]Mr and Mrs Burbidge’s grounds of appeal, as explained in oral argument, may be briefly summarised as follows:- i) The judge was wrong to find that Mr Burbidge was liable in unjust enrichment, since the only allegation that was pleaded was that he was a constructive trustee, which the judge rejected. ii) The judge ought not to have made any findings about quantum since the parties had agreed that further submissions on quantum would be made after judgment. iii) The judge was wrong to hold that the sales of No 7 and No 43 and the gift of £290,000 disadvantaged the deceased, when in fact they were to her advantage in a falling market and were for her benefit in that she wanted to move in with Mr and Mrs Burbidge. The judge ought to have found that there was a perfectly proper explanation for the impugned transactions, so that the stage at which the burden of proof shifted ought never to have been reached. iv) The judge was wrong to find that Mrs Burbidge had failed to rebut the presumption of undue influence in respect of the gift of £290,000, and should have found that this transaction did not call for any explanation, and had the perfectly proper motivation of keeping the money out of the hands of the Harts, with whom the deceased had fallen out. v) The judge was wrong to find that Mrs Burbidge had failed to rebut the presumption of undue influence in respect of the sales of No 7 and No 43 and the purchase of Little Manor, and should have found that these transactions did not call for any explanation, because the deceased was desperate to live with Mrs Burbidge and avoid the unpleasant attentions of the Harts. vi) The judge approached quantum in the wrong way, ignoring the facts that(i) the deceased intended to change her will to exclude the Harts,(ii) the Harts had behaved in such a way as equity would not assist them, and(iii) the deceased was better protected by a loan agreement than by an interest in Little Manor. In addition, the judge ought not to have used the sale proceeds of No 7 and No 43 in the calculation of appropriate compensation, because, if there had been no undue influence, those properties would have been sold later after the deceased died for less money. vii) The judge was wrong to order that Mr and Mrs Burbidge should pay as much as 95% of the claimants’ costs, and ought not to have required them to pay the costs of the non-party executor.[40]By their Respondents’ Notice, all the claimants applied to set aside the grant of permission to appeal on the grounds that the Appellants’ Notices were filed 6 weeks late, and the skeleton argument was misleading. On 15th May 2013, Lewison LJ declined to set aside the permission to appeal, and adjourned the question of an extension of time to the full appeal. The claimants argued that an extension of time ought not to have been granted because the dicta of Brooke LJ at paragraph 21 in Sayers v. Clarke Walker [2002] 3 All ER 490 required the court to have regard to the criteria for the grant of relief from sanctions under CPR Part 3.9 when considering such an extension.

Ground 1: Claims against Mr Burbidge

[41]Mr Burbidge contends that the judge ignored the pleaded and agreed issues between the parties as to Mr Burbidge’s liability. He says that the claimants pleaded that Mr Burbidge was a constructive trustee as a result of his presumed knowledge of the undue influence and his intention to benefit from it, and that the parties agreed that the judge should decide whether Mr Burbidge had “the requisite knowledge for the purposes of being a knowing recipient of the £290,000 gift and the sale proceeds” of No 7 and No 43.[42]In fact, however, the pleaded case against Mr Burbidge was that he was(i) a person intended by Mrs Burbidge to benefit from the transactions,(ii) to be attributed with knowledge of the undue influence, and(iii) liable to account for the benefits received. Moreover, the judge held, as I have said, that Mr Burbidge shared equally with Mrs Burbidge in the benefits which resulted from her undue influence over her mother with full knowledge of the fact of the relationship of influence. As a result, he held that Mr Burbidge was also obliged to restore the deceased’s estate to the position it would have been in had the impugned transactions not occurred.[43]I take the view that Mr Burbidge’s argument is flawed, because the judge merely stated at the end of his judgment that he considered that the juridical basis of the grant of relief in respect of transactions impugned by undue influence was unjust enrichment. In my judgment, he was right. That is perhaps demonstrated by the fact that the learned editors of Goff & Jones on the Law of Unjust Enrichment 8th edition, 2011, have seen fit to include an entire Chapter (11) on “Undue Influence and Unconscionable Bargains”. Pleadings should generally include facts not law, and the court is not always constrained by the legal issues that the parties agree for determination. Here, the judge found, in effect, that the criteria for a claim in unjust enrichment were made out against Mr Burbidge, in that he had been enriched at the expense of the claimants, and that that enrichment was unjust. A change of position defence was not advanced.[44]At one stage, Mr Paul Emerson, counsel for Mr and Mrs Burbidge, suggested that there was no basis for the judge’s finding that Mr Burbidge knew of the relationship of influence. I can fully understand why he did not pursue that argument on the facts, since the judge had ample grounds for reaching the conclusion as to knowledge that he did. It is to be noted, however, that no argument was addressed as to whether lack of knowledge would anyway have been a defence to an unjust enrichment claim against Mr Burbidge. The point can await decision in a case in which it arises directly.

Ground 2: Deciding quantum without argument

[45]Mr and Mrs Burbidge argue that there was an agreement between the parties that quantum would be the subject of further argument after judgment. But that agreement was not, on their own admission, accepted by all counsel at the trial. Ms Rosanna Foskett, who appeared for the Samway claimants before the judge (but not before us), told the judge that quantum was not addressed in detail “but that’s not on the basis to my recollection of any understanding that it would be hived off or specifically not dealt with”.[46]In my judgment, there is no basis to conclude that the judge was wrong to consider the relief that was appropriate alongside liability in his main judgment.

Ground 3: Did the impugned transactions require an explanation?

[47]The main contention under this ground of appeal is that the judge treated all three transactions as part of a single process rather than considering each in turn. In essence, it is said that the gift of the £290,000 was quite separate from the sales of No 7 and No 43 and the purchase of Little Manor. The gift of £290,000 did not require an explanation and was “readily explicable by the relationship of the parties” (see paragraph 21 of Lord Nicholls’s speech in Etridge). It was said that the deceased had no need of the money, wanted to change her will to exclude the Harts, and to make the gift to Mrs Burbidge. The deceased had the benefit of legal advice at the time, and decided to make the gift anyway.[48]In my judgment, this point is misconceived. Whilst it is true that the gift of £290,000 was made in February 2008 before the sales of No 7 and No 43 were certain to take place, that does not mean that it was to be regarded in isolation. The reasons advanced for the gift in Mr Pick’s note of the 13th February 2008 meeting were because the deceased wanted Mrs Burbidge to have the money, but also to finance the intended purchase of Little Manor. Mr Pick did not advise the deceased to make the gift. He recorded that “there was nothing we could say to stop her doing it or make her change her mind”. It was nothing to do with any desire by the deceased to change the 2007 will as the judge recorded at paragraph 81. Indeed, Mr Pick’s reduced concern at that stage was only occasioned by his understanding that her contribution to Little Manor would be reflected in the title. Looked at in the round, the judge was entirely justified in finding that the gift of £290,000 called for an explanation. Disposing of almost the entirety of the deceased’s cash by way of gift would seem obviously to call for an explanation, since it deprived the deceased of security, an income, and the ability to live alone. It was not readily explicable by the relationship between the deceased and Mrs Burbidge, nor by the fact that she was fed up with the Harts.[49]As regards the transfer of the proceeds of No 7 and No 43, those transactions are said to have been advantageous to the deceased since the sales were made before the market fell still further, and she was protected by the loan agreement from her asset value falling by taking a share in Little Manor. This again takes a blinkered view of the exercise upon which the judge was engaged. It was only with the benefit of hindsight that the sales of No 7 and No 43 could be regarded as having been made at an advantageous time. Nobody knew at the time that the market would fall further. The terms of the so called loan to Mr and Mrs Burbidge were massively disadvantageous to the deceased as the judge found. No interest was payable, and the loan was not repayable until after the deceased’s death. In short, these transactions called for an explanation on any basis. The deceased was giving up almost the entirety of her income in return for a place to stay with Mr and Mrs Burbidge that might or might not prove satisfactory. She would have had no money to pay for medical attention or care facilities should she have needed them in the future. The fact that the deceased was not to take a share in Little Manor made the whole arrangement even more disadvantageous to the deceased, which was why Mr Pick was so keen to point out the need for her interest to be secured, and why he was eventually cut out of the loop by the dishonesty of Mrs Burbidge. Again the transactions were not readily explicable by the relationship between the deceased and Mrs Burbidge, nor by the fact that she was fed up with the Harts.[50]The next question is whether the judge ought to have considered whether there was a reasonable explanation for the impugned transactions, before moving to consider the rebuttal of the presumption, in accordance with the dicta of Buxton LJ in Turkey v. Awadh to which I have already referred. It is possible to understand why, on the facts of Turkey v. Awadh, both Buxton and Chadwick LJJ thought that the “transaction, looked at as a whole, [could] be explained in terms other than those of undue influence” (see paragraph 20 of Buxton LJ). What they were saying, in effect, was that the exercise of identifying whether the transaction called for an explanation also involved determining whether it was “readily explicable by the relationship of the parties” (in the words of Lord Nicholls at paragraph 21 in Etridge) or “explained by reference to the ordinary motives by which people are accustomed to act” (in the words of Lord Scott in Etridge at paragraph 220). Put another way, if the transaction called for an explanation and a reasonable explanation was available which did not involve undue influence, then the court was justified in not proceeding to the reversal of the burden of proof or the rebuttal of the presumption that would otherwise arise.[51]In this case, no such reasonable explanation was available. For the reasons I have given, the impugned transactions all called for an explanation, and the explanations offered called clearly into question whether or not the transactions were indeed the product of the relationship of influence that had already been established. Accordingly, the judge was right to move to consider whether the presumption had been rebutted.

Ground 4: Rebuttal of the presumption in respect of the gift of £290,000

[52]Here again it is said that the judge did not properly consider the individual circumstances of the gift of £290,000 separately from the entire transaction that later occurred. For the reasons that I have given, I think he was justified in treating all the impugned transactions together. As he said in paragraph 126 of his judgment:
“through no fault of Mr Pick, no independent advice was given to [the deceased] about whether it was in her best interests or even sensible to transfer to [Mr and Mrs Burbidge] over 90% of her estate”
. The deceased did not need to do so in order to live with Mr and Mrs Burbidge. She did not need to do so in order to change her will to reduce the inheritance of the Harts, whose conduct had upset her.[53]The truth, as the judge found, was that the gift of £290,000 together with the other impugned transactions left the deceased with no fall back position if living with Mr and Mrs Burbidge did not work out and with no income apart from her state pension and minimal interest.[54]The problem for Mr and Mrs Burbidge is that the judge was right to think that no coherent explanation was offered as to why the deceased was not given an interest in Little Manor, even though she had paid for it in its entirety, and why there was no formal loan agreement secured on the property and repayable on normal terms during her lifetime. The judge was right to think that the fact that the deceased might have “come out of herself” since her husband died did not mean that she was acting wholly independently of Mrs Burbidge’s influence in entering into these unnecessary and inappropriate transactions. The gift of £290,000 was just the start, but had to be seen as part of an entire process.[55]In my judgment, the judge was right to find that Mrs Burbidge had failed to rebut the presumption of undue influence in relation to the gift of £290,000.[56]Under this head, Mr and Mrs Burbidge argue that the judge ought to have concluded that the sales of No 7 and No 43, the loan agreement as to the proceeds and the purchase of Little Manor were transactions that the deceased much desired and entered into of her own free will. She wanted to free herself of the unwelcome attentions of the Harts, she wanted to live at Little Manor with Mr and Mrs Burbidge, and she was a strong woman who knew her own mind.[57]Largely for the reasons I have already given, the judge’s reasoning on this aspect of the case is, in my judgment overwhelming. He found that the deceased did not understand that she was in the process of giving away her entire wealth without any security, that she would be without income or capital if living with Mr and Mrs Burbidge did not work out, and she was deprived of proper legal advice by the dishonest device instigated and executed by Mrs Burbidge.[58]The sales of No 7 and No 43 were not advantageous to the deceased, because the proceeds were loaned to Mr and Mrs Burbidge on such disadvantageous terms, and the replacement property was put in their names. In my judgment, the judge was right to find that the presumption that these transactions were brought about by the influence of Mrs Burbidge was not rebutted.

Ground 6: The relief granted

[59]The first issue here is said to be the effect of the new will that the deceased had wished to make once she had moved in to Little Manor to exclude the Harts. Taking that into account, the judge ought not to have made an order that sought to put the Harts back into the position they would have been in had the 2007 will taken its natural course. There is, in my judgment, no merit in this contention, since the judge found that the deceased had no immediate desire to make a new will. Indeed, the suggestion to do so was Mr Pick’s and was made in order to restore the balance if the transactions went ahead.[60]The second issue raised is as to whether the judge, in granting relief, ought to have made an allowance for the bad conduct of the Harts towards their mother. Whilst it is clear that the deceased was very upset by her sons’ conduct towards her, I cannot see that this could or should have affected the relief that the judge granted. The deceased could have changed her will, but chose not to do so. The judge was required to provide the proper relief for the undue influence that he had found to have occurred in respect of the impugned transactions. That is what he did, and he was correct to do so.[61]The third issue concerns the suggestion that the deceased was better protected by a loan agreement than by an interest in Little Manor in a falling market. As I have said, this argument operates only with the benefit of hindsight. Nobody knew that the market would continue to fall, nor when the deceased would die. Moreover, even if the deceased might have been better protected by a properly secured loan agreement to Mr and Mrs Burbidge with the loan repayable on demand, she was certainly far worse off with the informal undocumented arrangement she actually received.[62]Finally under this ground of appeal, Mr and Mrs Burbidge complain again that all the claimants were better off as a result of No 7 and No 43 having been sold before the continuing fall in the market. The judge compensated the claimants on the basis of the sale proceeds of No 7 and No 43, which were sold in mid-2008, whereas he had also held that, absent undue influence, the properties would have been sold in the course of the administration of the deceased’s estate in 2009, when the values would have fallen (though no expert evidence was available as to the precise values of No 7 and No 43 at that time).[63]Mr Charles Auld, counsel for the claimants, submits in response to this point that it was up to Mr and Mrs Burbidge to adduce evidence of the values of No 7 and No 43 had they been sold later, and that in the absence of such evidence, the judge was justified in taking the same values. He also pointed to the fact that the properties were sold at the lower end of the +/- 5% range of values that the expert had given, and that it had been the Harts’ position that at least No 7 might have been retained by them in specie, had the legacy in their favour taken effect.[64]In my judgment, there was a prima facie inconsistency between the judge deciding that the properties would, absent the undue influence, have been sold during the executor’s year, and then compensating the claimants on the basis of the values at which they were sold about a year earlier, particularly as the evidence before the court was that the market generally fell in that period by around 10-15%. The problem, however, is that the judge was totally alive to the valuation issues having heard considerable expert evidence and seen a lengthy report. He had seen 2 graphs of house price indices in the relevant area showing the low point in the market at about February 2009, with houses rising again to mid to late 2008 values by late 2009. The deceased died in November 2008. The properties could have been sold within the executor’s year in November 2009. It is a matter of pure speculation to say that they would have been sold for less than they were in mid-2008. The evidence that the judge did have, in my judgment, justified him in concluding that it was reasonable to take the actual sale prices, which were anyway admittedly on the low side, as the values at which the properties would have been sold after the deceased died.

Ground 7: Costs

[65]The first point in relation to the costs relates to the judge’s assessment that Mr and Mrs Burbidge should pay 95% of both sets of claimants’ costs. They argue that this evaluation failed to take proper account under CPR Part 44.2 (as it now is) of the fact that the claimants lost significant claims for(a) actual undue influence(b) breach of fiduciary duty, and(c) breach of common law duties. In my judgment, however, the judge was best placed to make this assessment. He said expressly in his costs decision that he did not think that the costs had been materially increased by these allegations. Moreover, he did make an allowance of 5% for the unnecessary expert evidence. I do not think that this court can second guess the decision of an experienced judge who sat through the entire trial on this kind of question. He must know best how much time was actually taken up with the failed legal issues. The decision as to the percentage of costs was, in my judgment, one he was entitled to make.[66]In relation to the executor’s costs, Mr Emerson submitted that the executor had not asked for his costs and had not enforced the order. But, as Mr Auld pointed out, that was because he had simply taken his costs from the estate of the deceased, thus reducing the inheritance of the Hart claimants. I cannot see why the judge was not entitled to hold, as he did, that the executor’s costs incurred as a result of this litigation, should be borne by Mr and Mrs Burbidge. They were a direct result of the undue influence that he found proved and the litigation that Mr and Mrs Burbidge have lost.

Should the grant of permission to appeal be set aside?

[67]It was implicit in Lewison LJ’s grant of permission to appeal that he also granted the necessary extensions of time requested in the Appellants’ Notices. The members of the court expressed a unanimous view in the course of argument that they too would have extended time for the filing of the Appellants’ Notices had they been granting permission to appeal on paper. This expression of opinion did not dissuade Mr Auld from pursuing this aspect of his Respondents’ Notice, because he said that confusion existed as to whether the dictum in Sayers v. Clarke Walker, to which I have referred, remains good law after the change in the provisions of CPR Part 3.9 in April 2013, and the very recent decision in Denton v TH White Limited [2014] EWCA Civ 906. In my judgment, it cannot any longer be right to say that the court should have regard to the lengthy list of factors in the old CPR Part 3.9(1) when considering whether to grant permission to extend time for the filing of an Appellant’s Notice. It would be inappropriate, however, to comment in the absence of full argument, on whether the new approach to applications for relief from sanctions set out in Denton is properly to be regarded as relevant to an extension of time in these circumstances. That too must await another case. I can say, however, that the court in Denton sought to discourage satellite litigation of all kinds, and to encourage parties to agree to reasonable requests for extensions under the new CPR Part 3.8(4). In this case, the delay was justified since Mr and Mrs Burbidge needed time to consider the complex order actually made by the judge on 23rd July 2013 in drafting their Grounds of Appeal. Lewison LJ must be taken to have considered that point. In my judgment, there are no grounds to set aside the extension of time he granted.

Conclusions and disposal

[68]For the reasons I have sought shortly to explain, the judge was in my judgment entirely justified in the findings he made and the relief he granted. I was, at one stage, somewhat concerned by the fact that the executor was never made a party to the proceedings, since the bulk of the relief granted involved payments being made to him. Since the point is technical and was not taken by any party, and the executor plainly knew of these proceedings and did not wish to participate, I do not think the point can vitiate the entirely appropriate orders that the judge made.[69]In the circumstances, I would refuse to set aside the permission to extend time for the Appellants’ Notices that was granted by Lewison LJ, and dismiss the appeal.[70]I agree.[71]I also agree.

Cited in 4 later judgments