Williams v Williams & Anor [2003] EWHC 742 (Ch)

Case No HC0002494[2003] EWHC 742 (Ch)Date 27 February 2003
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Before
KEVIN GARNETTQC SITTING AS A DEPUTY JUDGE OF THE HIGH COURT
Between
JOHN CHARLES WILLIAMSClaimant(a patient acting by his litigation friend,Claimantthe Official Solicitor to the Supreme Court)ClaimantGEORGE WILLIAMSDefendantMARION WILLIAMSDefendant
Miss Tracey Angus, instructed by Ferguson Bricknell for ClaimantMr Martin Strutt, instructed by Alfred Truman for Defendant
JudgmentIntroduction
[1]The claimant (‘John’) is the brother of the first defendant (‘George’). The second defendant (‘Marion’) is George’s wife. Until 1986, John lived with his mother, Mrs Williams, in her house at 198 Buckingham Crescent in Bicester. George and his wife also lived in Bicester, in council accommodation. Mrs Williams died in July 1986. It turned out that Mrs Williams left Buckingham Crescent to John in her will. In early 1987, after some discussion between the parties and their respective solicitors, George and his wife moved into Buckingham Crescent with John. One of the things which had been discussed in relation to this was that George would acquire a share in Buckingham Crescent. These discussions culminated in a Deed of Gift of 4th December 1987, by which John conveyed 198 Buckingham Crescent to himself, George and Marion, to hold on trust for sale for them as tenants in common in the shares 50:25:25 respectively.[2]In this action, John seeks a declaration that the gift is void or, in the alternative, an order setting aside the Deed of Gift. The grounds on which he does so are that he lacked the mental capacity to make such a gift, alternatively that it was procured by the undue influence of George and Marion. In the event that this part of the claim does not succeed, he asks for an order for the sale of the property under Trusts of Land and Appointment of Trustees Act 1996. During the course of the hearing it was agreed that this claim, if it arose, should be adjourned so as to enable the court to have up to date information about the parties’ respective circumstances. The parties[3]Throughout his life John, who was born in 1933, has suffered from significant intellectual impairment. I shall describe his condition in more detail in due course. He made a short witness statement but in the event was too ill to give evidence. I also heard from George, who was a bluff, honest witness, struggling to recall events some 15 or 16 years ago. In some respects, his evidence was completely at variance with the contemporaneous documentary evidence and he stoutly, even perversely, refused to accept the possibility that he was mistaken. He clearly was mistaken, but I do not take badly against him for this. It does mean, however, that his memory of events is seriously at fault. Marion made a witness statement confirming the contents of George’s witness statement but in the event was not called. The only other witness as to contemporaneous events was Mr Donaghy, a partner in the firm of Bowerman & Partners, who were John’s solicitors at the time. Not surprisingly perhaps, he had no recollection of the events at the time, and was only able to say what might have happened.[4]I also heard evidence from Ms Judith Samuel, a Consultant Clinical Psychologist, and from Dr Anwar El-Komy, a consultant psychiatrist, called by John, and George and Marion, respectively. This evidence was partly of fact and partly expert. Neither had seen John at the relevant times, and their evidence dealt with John’s mental health as observed by them in recent years. In the event, there was no real disagreement between them. The facts - introduction[5]Both parties accepted, very realistically, that the contemporaneous documents are the best starting point for deciding what actually happened, and no point was taken about their admissibility. The documents consist of some materials from the Social Services who became involved at the time and, more significantly, from Bowermans’ file. The conclusions which I have come to, based on these documents and the other evidence in the case, necessarily imply some criticism in the way this matter was handled by Bowermans. As I have indicated, the matter relates to events which took place over 15 years ago about which Mr Donaghy, for quite understandable reasons, has no recollection. I am conscious, therefore, of the potential sense of grievance which may be felt about these conclusions, given that if the dispute had arisen nearer the time it might have been possible for witnesses to be called who had some actual recollection of the events in question. Nevertheless, I have had to reach a conclusion about what, on the balance of probabilities, happened.[6]Unless it is clear from the context otherwise, what follows are my findings of fact. John[7]Until his mother’s death, John had lived with his parents all his life. His father had died in about 1970 and from then on he lived with his mother, first in Weymouth and then at Buckingham Gate, which his mother had bought in 1980. Perhaps because of his mental disability, he was a fairly solitary man. He had no close friends outside his immediate family, which was itself a small circle consisting of his mother, George and Marion and their son. There was one other brother, Kenny, but he lived in Bournemouth, and was not particularly close to his two brothers. John had no interests which took him into the company of others. He could ride a motor bike, which was something which gave him pleasure, and he liked stripping the bike down and putting it back together. He was fond of carpentry and used to spend much of his time pottering around in the outside shed. He was quite capable of going out and buying things for himself, although his mother used to keep his money for him, and count it out with him before he went out. He had had at least two fairly basic jobs, although by 1986 he was no longer in work and was in receipt of Supplementary Benefit. John was clearly very dependent on his mother around the house, for his cooking, cleaning and washing, and no doubt for company. Mrs Williams’ death[8]As I have said, Mrs Williams died on 2nd July 1986. This was unexpected and John was clearly hit very hard by this and, as George described it in his evidence, he withdrew into himself rather than grieve openly.[9]An immediate concern was the house in Buckingham Crescent. So far as was known, Mrs Williams had left no will and so it looked as though the house would have to be sold and the proceeds divided three ways, something that Kenny was likely to want to happen. George had spoken to a solicitor (Mr Duckworth of Alfred Truman & Son) to establish the position (and who was in due course instructed to handle the administration of the estate) .George and Marion were clearly worried about John, and contacted Oxfordshire County Council Social Services as early as 7th July 1986. They told Social Services that they were concerned with John’s housing needs and that John was unable to deal with his own affairs, being ‘backward’ and unable to read or write. It seemed that John wanted to move out of the house and was looking to Marion to replace his mother’s role. It was left that John should be encouraged to come in and see Social Services.[10]Mr Bob Price was allocated as John’s social worker. He spoke about John’s housing needs with John’s GP, who thought that John would not be capable of looking after himself. Mr Price saw John on the 27th August. John was able to explain what had happened in relation to his mother, and said that he would like to move into Council accommodation. As to this, he had had a letter from the Council from which it appeared, when Mr Price read it, that John would be very low on the housing list. Otherwise, John appeared to Mr Price to be coping reasonably well, doing his own shopping and cleaning, and cooking simple meals for himself. George and Marion were giving him support, whether going round to see him or having him over for Sunday lunch. In general, it is clear that both Mr Price and George were surprised about how well John was coping. John’s life was nevertheless a solitary one, his only reason to leave the house being to go shopping or see his brother and his wife. Over these and later visits, John struck Mr Price as a friendly, easy-going man who enjoyed a simple life.[11]Mr Price saw John again on 4th September, when things were much as before. John said that George and Marion had offered to let him live with them in the short term. By October, John had made up his mind that this is what he wanted to do. When, however, Mr Price went to see George and Marion on 20th October, it became clear that this was not realistic, as their house was not big enough. Another possibility then emerged, which was that if Kenny was not in a hurry for the Buckingham Crescent to be sold, George and Marion might move in there. This avenue was blocked off when Kenny refused to agree to any delay in the sale and indeed began to press for his share of the estate. The temperature was beginning to rise and George’s solicitor, Mr Duckworth, who had been handling the administration of the estate, saw a potential conflict emerging and asked that John be separately represented. Mr Price spoke to John about this and, at his request, agreed to find him a solicitor. This he duly did, and on 61h November Mr Martin James of Bowermans agreed to act for John. Mr James was a litigation partner within the firm and perhaps because of that the file contains good attendance notes by him. He was not called as a witness but his attendance note of 6th November records that he was told by Mr Price that John was of very low intelligence, and that he could not read or write. Letters could be sent to him at his home address, however, where “someone” would read them to him (presumably George) .[12]On 13th November Mr James went to see John to take instructions. He found that John was a very simple man who found it difficult to understand even the most basic questions. John was nevertheless able to give Mr James a coherent account of his situation. Mrs Williams’ will is found; the Deed of Gift[13]Events took a dramatic turn shortly afterwards, when on about 17th November George and Marion discovered Mrs Williams’ will, by which Buckingham Crescent was left to John. They immediately told Mr Duckworth and Social Services. This event of course entirely altered the situation so far as John’s housing needs were concerned. George’s account of what then happened was confusing. He said that John had been to stay for Christmas and had been reluctant to go home afterwards. John said he was lonely and asked George and Marion to come and live with him and, implicitly no doubt, help look after him. George’s evidence was that he and Marion were reluctant to move from their secure council accommodation without getting some security at Buckingham Crescent. They also had a right to buy the council property although could not afford to do so at the time because George was unemployed. He says that when he explained this to John, John said that he should come onto the title deeds. George said that he could not afford to buy a share, to which John’s response was that he was not expecting George to pay. This was all discussed during the course of a number of conversations.[14]The timing of this conversation or conversations cannot be right because immediately after the will was found it is clear that John and George were talking about George and Marion coming to live with John. George had clearly spoken to Mr Duckworth about this by 18th November, and on 4th December John himself had telephoned Mr James asking for “clearance” for George to come and live with him. Subsequent correspondence in December is also inconsistent with George’s account.[15]I cannot at this remove resolve the question of precisely who suggested what to whom, or indeed precisely what was said between the parties, but in the end I do not consider that it matters. I am satisfied that John wanted George and Marion to move in for the reasons that George stated in evidence. I am satisfied that George would not have been prepared to leave their council accommodation without some form of security, and that he told John of this and that John agreed to George coming onto the title deeds. Whether he properly understood the proposal, however, is a different matter.[16]Mr James saw John again at the beginning of December, when John told him that George and Marion were probably going to move in with him. To Mr James, however, John was confused about precisely what was going to happen and Mr James could not obtain clear instructions from him. Mr James therefore wrote to Mr Duckworth on 8th December to find out what was going on. He said:
“Our client has recently been in to see us and he seems somewhat confused about the present position. We understand that your client may be intending to move in with our client and we would be obliged if you would confirm exactly what the present position is. We do not quite understand the nature of the present problem and if you have any idea from your client, perhaps you would be good enough to let us know.”
[17]George had clearly spoken to Mr Duckworth about the plan to move in and been given advice by him in relation to George and Marion’s long-term security. This is apparent because on 6th December Mr Duckworth telephoned Mr James in response to his letter of 8th December. Mr James’ attendance note records that he was told that George and his family intended to move into Buckingham Gate. George was going to invest money on improvements to the property and Mr Duckworth wanted their investment protected by making them joint owners in some proportions to be agreed. Mr James said he would take instructions and explain the position fully to John. Mr Duckworth confirmed this in a letter to Mr James on 16th December.[18]Mr James asked John to come in to discuss the proposal. In the event, George and John came in together to see Mr James on 22nd December and Mr James saw them both and made a detailed attendance note. It is worth quoting in full:
“Interview with John Williams and his brother George. They confirmed to me that there is an agreement. George and his family are going to move in to the property although a date has not been fixed. He [i.e. George] tells me that he’s not going to do any substantial work on the house, it’s just simply a question of painting and decorating. John is in fact spending most of his time with George’s family in their Council house. He is quite happy for George and his family to move in with him and he thinks that it is fair that George and his wife should go on the title deeds. I did explain to them that they could hold the property as tenants in common in different proportions. They were unaware of this and clearly hadn’t thought about it. George is only concerned about his own security because obviously they are giving up a Council house and it would be difficult to get back on the list if anything were to happen. I explained that they could hold the property in equal shares or in whatever shares they wanted. They didn’t make any decision at the meeting but I said that they should discuss this over Christmas and then George can instruct his Solicitor accordingly. John seemed to fully understand what was going on and I specifically asked him if he did understand and also that he was happy with the arrangements. It was quite clear to me that he was happy. It was agreed that I would write to Trumans to tell them about the agreement and we can then deal with the conveyancing part of the transaction.”
[19]I will have something more to say about this meeting but it is obviously of note that George was present throughout. Given John’s mental disability, there is nothing necessarily sinister about the fact: George readily admitted in cross-examination that John would have needed some help in getting through a “legal” meeting.[20]On 23rd December, Mr James wrote to Mr Duckworth confirming what he had been told and saying that John was quite happy that George and his wife should appear on the title deeds. Mr James suggested that the property should be held as tenants in common and asked Mr Duckworth to take George’s instructions on what proportions would be appropriate.[21]Mr Duckworth apparently duly received instructions from George because on 5th January 1987 he wrote to Mr James saying “We understand that our Clients have agreed with yours that the property should be owned as to one half by your Client and as to the other half by our Clients. We agree your suggestion that the property should be held as tenants in common.” He enclosed the title deeds and said that he would let Mr James have a draft conveyance in due course. Apart from George’s general evidence, which I have referred to in paragraph 13, there was no other evidence of what passed between George and John between 23rd December and 5th January, in particular any discussion relating to the shares in which they should hold the property .[22]For reasons that are not apparent, the conveyancing side of matters then came to a halt. In the New Year Mr James had probably passed the file over to Mr Donaghy, who had obtained probate on John’s behalf and was also now dealing with the outstanding matters relating to the administration of Mrs Williams’ estate. Meanwhile, George and his family moved into Buckingham Crescent some time in February 1987.[23]Matters came to life again in July 1987. Another solicitor had taken over the file from Mr Duckworth at Alfred Truman & Son, and this person wrote to Bowermans on 10th July saying that they understood John was agreeable to the transfer of the property and asking for return of the title deeds so that they could draft a conveyance. For his part, Mr Donaghy had outstanding queries with Trumans relating to certain assets which he understood had been collected in by them and he merely responded to Trumans’ letter by asking for replies to these queries. It is apparent that Mr Donaghy also wrote to John on 15th July although no copy of this letter has survived. From a subsequent letter of his, it seems likely that Mr Donaghy was reporting on his exchange with Trumans and asking for instructions in relation to the property .[24]On 20th July George telephoned Mr Donaghy’s secretary, Mr Donaghy being away, and said that it had been agreed that the property was to be divided 50:50 between John and George, and raising various questions as to the whereabouts of some outstanding assets. When Mr Donaghy returned he wrote to John on 27th July, saying that he had received a telephone message from George which he did not quite follow. He said that the message had been to enquire about the outstanding assets but that “since there seems to be some confusion as to what remains to be done I would suggest that we meet as soon as possible to discuss this.” He asked John to get in touch to make an appointment.[25]I pause in the narrative to say something about Mr Donaghy’s knowledge of John. It is a fair inference from the letters which Mr Donaghy sent to John that he was unaware that John could not read. Mr Donaghy very frankly accepted that he would not have written to John in the terms which he did had he known of this fact. From this it is a fair inference that he had not read through the file which had come to him from Mr James, and thus had not read the attendance note from which this fact would have been apparent, nor, it follows, the attendance note which said that John was a very simple man who found it difficult to understand even the most basic questions. Again, Mr Donaghy very frankly accepted that this must have been the case, although at the same time making the point that if John’s intellectual ability was limited in the way in which it is suggested to have been, this must have become apparent to him in the course of his dealings with John. I will return to this.[26]It follows that, unknown to Mr Donaghy, he was sending letters to John which he could not read, and sending them to Buckingham Crescent where George was now living, so that, as I find, they were opened by George and read to John by him. Again, there is nothing necessarily sinister about this.[27]No doubt in response to Mr Donaghy’s letter of 27th July, John came in to see Mr Donaghy on 30th July. He was accompanied by George. Mr Donaghy made a short attendance note of the meeting, which reads as follows:
“Attending Messrs. Williams. Handed me attached note. Wish to transfer property into joint names. No consideration.”
The note has not survived. It is likely that it was something which George had written out to bring to the meeting.[28]Nothing further seems to have happened until September, when Mr Donaghy sent a draft of the Deed of Gift to Trumans for approval. At the same time he wrote to John telling him what he had done.[29]Mr Donaghy had drafted the deed so as to transfer the property into the joint names of John and George. George’s solicitor, presumably having taken instructions from George, asked that the transfer be in the joint names of John, George and Marion. Mr Donaghy wrote to John on 14tb October asking for instructions. There is no attendance note of instructions being received but from a later letter it looks as though Mr Donaghy did have a meeting with John when he received instructions. On 3rd November Mr Donaghy wrote to Trumans saying that he had now received instructions to do as George asked and enclosed a draft. The draft was approved and on 26th November the engrossment was sent to Trumans for execution by George and Marion. Trumans returned it having been executed by George and Marion on 27th November. Their signatures were witnessed by their solicitor at Trumans. The deed was then executed by John, and his signature witnessed by Mr Donaghy. There is no letter or note on the file asking John to come in to execute the deed, and no attendance note dealing with the execution itself or any advice given to John on this occasion. I infer that it took place on 4th December 1987, this being the manuscript date on the deed, no doubt having been added by Mr Donaghy.[30]I find that George and Marion executed the deed at Trumans’ offices and John executed it at Bowerman’s offices. George’s general evidence about his attending a meeting or meetings with John and Mr Donaghy was rather confused, but he does recall one meeting which he and Marion attended at which Mr Donaghy sat down with John, at the other side of the room from the two of them, and said to John, more than once, “You do realise what you are giving up?”, to which John replied, “Yes”. It seems likely, and I so find, that it was at the 4th December meeting that this exchange occurred, George and Marion presumably having brought John in to Bowermans’ offices.[31]The provisions of the deed are as follows:a. In consideration of his natural love and affection for George and Marion, John conveyed the property to himself, George and Marion to be held by them on trust for sale;b. George and Marion covenanted with John that they would observe certain covenants to which the land was subject;c. The parties declared that they held the proceeds of sale on trust for John, George and Marion in the proportions 50:25:25 respectively;d. The trustees were to have certain standard form powers to deal with the property.[32]As to what happened at the meeting, I have already made a finding that Mr Donaghy asked John on 4th December whether he realised what he was giving up. Mr Donaghy, without being able to remember what advice he in fact gave to John, said that he would have explained to him that he was giving away half his property so that after completion he would only own half, the other half being owned by George and Marion, and that he would not be able to get that half back. He said he would have explained that George and Marion were taking on a liability for the covenants to which the property was subject but that he would not have said anything about the effect or implications of the trust for sale. He would have asked John to repeat what he had said to be sure he understood. His general evidence was that in relation to any significant transaction his practice was to make an attendance note. He was sure he would have made an attendance note if had gone through the matter with John as he said he would have done. Subsequent events[33]I can deal with subsequent events briefly. Relations between the parties were not always easy. It was part of the arrangement that after they moved in George and Marion would do the cooking, cleaning and washing for everyone. Although Marion was willing to do his washing, John would not put it out on a regular basis, and there were also problems about changing his bed linen. In October 1987 Social Services became involved again and drew up a document which everybody signed setting out each party’s responsibilities around the house. In about 1989, John effectively withdrew into his own room and did his own cooking. Relationships were strained. Ultimately, in 1998, John suddenly walked out of the house, eventually returning to Weymouth, as George and Marion later found out, where he now lives.[34]The present position of the parties is that John lives alone in a house partly owned by a local housing association and partly owned by him, this having being purchased with the aid of a mortgage, the instalments on which are paid by means of housing benefit. He leads an independent life in which he has the support of the local Social Services. He regularly attends a day centre. He has established a relationship with a lady who also attends the day centre. His physical health has declined and he has also developed certain fixed delusional beliefs.[35]George and Marion have remained living in Buckingham Crescent. George is now 62 and Marion is 60. He is in poor health and in receipt of incapacity benefit. They are both unemployed. The expert evidence[36]Turning now to the expert evidence, John was seen by Ms Samuel twice in June 1998. John was referred to her for an assessment of his cognitive functioning and for an opinion as to his capacity to enter into an arrangement by which he transferred a half share of his house to his brother and sister in law. Ms Samuel carried out various standard tests to evaluate John’s mental capacity. She did not discuss the Deed of Gift itself with him. In December 2002 John was also seen by Dr El-Komy with a view to his preparing a report for the purposes of this action. In fact Dr El-Komy was already familiar with John, having been his Consultant Psychiatrist since November 2001. In this capacity he also had access to various earlier reports about John. John was aware of the litigation and it seems that before his meeting with Dr El-Komy he had had a long session with his social worker to prepare him for it. There was no evidence as to what this consisted of. John came to the meeting with Dr El-Komy with his social worker. John told Dr El-Komy that after his mother’s death he had spent a lot of time with his brother and used to visit him for Sunday lunch. He said that he had been lonely and had invited his brother and family to live with him. He said that he had understood his brother’s reservation about giving up his council house and his wish to have some security. He remembered that it was his brother who had found their mother’s will and that in signing the deed he had had the help of his solicitor. who explained the meaning of it. Dr El-Komy did not repeat any of the tests conducted by Ms Samuels, and accepted them as accurate.[37]In the end there was no real dispute between Ms Samuel and Dr El-Komy, apart from slight differences of emphasis. I can summarise their findings and opinions as follows:a. John generally responded to the interviews well, and was cooperative. He spoke reasonably clearly and could be understood.b. He had “learning disabilities”, which for this purpose means “significant sub- average intellectual functioning, with concurrent deficits or impairments in present adaptive functioning”, these having had their onset before the age of 18 years.c. On a widely accepted test of intellectual ability, he had an IQ of about 65, which put him in the lowest classification of scores (“Learning Disabilities/Mental Handicap”), a group consisting of about 2.2% of the population. His IQ corresponds to significant, rather than severe, intellectual impairment.d. Tested against his ability to select a picture card to match a word which he had been given, his equivalent age was between 6 years 5 months and 8 years 1 month.e. In a reading test, he was able to recognise only such words as “on”, “you” and “the”. His equivalent reading age was 5 years old and he was functionally illiterate in a more extreme way than might have been predicted from his IQ alone.f. On an arithmetic test, he could do simple addition but not subtraction. His equivalent age was 6 years 2 months.g. He knew that half of £1 was 50p but not what half of £10 or £100 was. He knew that he had “50%” of the house and that his brother and sister-in-law had “25%” each but could not really explain what “per cent” meant. As to this, Ms Samuel said that he probably did understand the concept of a “half” but his difficulty was in grasping the concept of large quantities (such as £100). He would probably be able to understand that a house was a valuable thing, and what half a house signified, although not the monetary value of it.h. He could write his name very slowly and shakily (as is apparent from his signature on the deed).i. On a behavioural memory test, he was reasonably well orientated in time and place. He was able to say correctly what was the year, month, day of the week, the town he was in, his age, the year he was born and the name of the current prime minister, but not the name of the building he was in nor the name of the President of the USA.j. In relation to a test to evaluate his commonsense reasoning and his ability to exercise judgment in social situations, he was told a short story and then asked questions about it, at increasing levels of complexity. His responses indicated an average age of 7 years 9 months, with a difficulty in being to able to find reasons or explanations for the acts of others. He had difficulty in changing his train of thought and seeing issues from more than his own point of view, even after prompting.k. His condition in 1986 and 1987 had not been materially different.l. Persons with such a disability tend to be acquiescent, that is they are likely to yield to suggestion from a person in a position of power in relation to himself if this occurs via affirmative questions (suggesting the answer yes), leading questions (requiring only the answer yes or no) or alternative questions (requiring only a choice between two suggested answers) .[38]This evidence is confirmed by George. He said that John had difficulty with “backwards and forwards” conversation as opposed to a “yes and no” type of conversation, which he found easy. I have already referred to George’s evidence that John would have needed help to get through a “legal” meeting. George also said that if a solicitor were to ask John whether he agreed to something, he would be likely to say yes.[39]The overall conclusion was that John would have been able to understand what was involved in such a transaction, but only if the provisions had been explained and repeated to him in plain English. Ms Samuel thought that such sessions would need to take place over many hours. I did not understand Dr El-Komy to disagree with this. He said it would have been a lengthy process to explain the matter to John, requiring an extensive explanation. Both agreed that it would have been necessary to ask John to say in his own words what was involved in order to test his understanding. Capacity: the law[40]The starting point is Re Beaney [1978] 1 W.L.R. 770. Mr Martin Nourse Q.C., as he then was, sitting as a Deputy Judge of the High Court, said that the principle to be extracted from Ball v. Mannin (1829) 3 Bli. N.S. 1,22 was:
“... in each case whether the person concerned is capable of understanding what he does by executing the deed in question when its general purport has been fully explained to him.”
As to the degree or extent of understanding required, he summarised the position as follows (p.774):
“The degree or extent of understanding required in respect of any instrument is relative to the particular transaction which it is to effect. In the case of a will the degree required is always high. In the case of a contract, a deed made for consideration or a gift inter vivos, whether by deed or otherwise, the degree required varies with the circumstances of the transaction. Thus, at one extreme, if the subject matter and value of the gift are trivial in relation to the donor’s other assets a low degree of understanding will suffice. But, at the other extreme, if its effect is to dispose of the donor’s only asset of value and thus, for practical purposes to pre-empt the devolution of his estate under his will or in his intestacy, then the degree of understanding required is as high as that required for a will, and the donor must understand the claims of all potential donees and the extent of the property to be disposed of.”
[41]In Re K [1988] Ch 310, which was concerned with the capacity to execute an enduring power of attorney under the Enduring Powers of Attorney Act 1985, Hoffman J put it this way, at page 313:
“The Act does not specify the mental capacity needed to execute an enduring power and the answer must therefore be found in the common law. It is well established that capacity to perform a juristic act exists when the person who purported to do the act had at the time the mental capacity, with the assistance of such explanation as he may have been given, to understand the nature and effect of that particular transaction: see In re Beaney, decd. [1978] 1 WLR 770. In principle, therefore, an understanding of the nature and effect of the power was sufficient for its validity.”
[42]Basing himself on the above passage from In Re Beaney at page 774, Mr Strutt, who appeared for George and Marion, submitted that it was only necessary in the present case for John to have understood(a) the claims of all potential donees and(b) the extent of his property. I cannot accept this. In Re Beaney does not state that these are the only requirements, rather that these are additional requirements in the extreme type of case referred to. It must also be remembered that In Re Beaney was concerned with an outright transfer of property. In the present case, the gift was a gift into joint names on trust for sale as tenants in common, and thus a transaction by which John gave away a portion of his property but which affected the remaining portion, and which had continuing implications for John, not least as to what might happen if the parties fell out and one of them wished to sell the property. As In Re Beaney itself makes clear, the donor must understand the general purport of the deed. An indication of the kind of understanding required can be found in Re K, where Hoffman J. said, at page 316, admittedly dealing with the understanding required to effect an enduring power of attorney:
“ ...I should say something about what is meant by understanding the nature and effect of the power. What degree of understanding is involved? Plainly one cannot expect that the donor should have been able to pass an examination on the provisions of the Act. At the other extreme, I do not think that it would be sufficient if he realised only that it gave [the donee] power to look after his property. [Counsel] helpfully summarised the matters which the donor should have understood in order that he can be said to have understood the nature and effect of the power. First, (if such be the terms of the power) that the attorney will be able to assume complete authority over the donor’s affairs. Secondly, (if such be the terms of the power) that the attorney will in general be able to do anything with the donor’s property which he himself could have done. Thirdly, that the authority will continue if the donor should be or become mentally incapable. Fourthly, that if he should be or become mentally incapable, the power will be irrevocable without confirmation by the court.”
[43]In my judgment, therefore, in order for this gift to have been valid John must have been capable of having an understanding of the general nature and effect of a gift of this kind, and thus not just that he was giving away half of his property but also of what were the general implications of becoming a joint owner by way of a tenant in common. Since Buckingham Crescent was his only asset of any substantial value, he must also have had an understanding of the claims of all potential donees and the extent of the property he was disposing of.[44]In relation to the burden of proof, Miss Angus, who appeared for John, submitted that a prima facie case of lack of capacity having been raised, the evidential burden of proof then shifted to George and Marion to satisfy the court that John in fact had capacity. In my judgment, this normally sterile kind of point has some significance in this case for two reasons. First, the evidence is that John would only have understood the nature of the transaction if he had had it carefully explained to him. Unless, on the balance of probabilities, he had such an explanation, the gift will fail. Who has the burden of establishing the point? Second, the evidence about what advice John actually received is, to put it no higher, unsatisfactory .[45]For what is worth, and despite the deprecation of resort to concepts of shifting burdens of proof in cases of the present kind by Sir Christopher Staughton in Re W [2001] Ch 601, I accept Miss Angus’ submission. It seems common sense and has the support of Rimer J. in The Special Trustees for Great Ormond Street Hospital for Children v. Rushin (19th April 2000, unreported). There, he had found that the donor was suffering from Alzheimer’s disease. He then said:
“having found, as I have, that by 1996 [the donor] was suffering from a material degree of dementia occasioned by Alzheimer’s disease, I consider that the burden of proving that [she] had the requisite degree of capacity shifted to [the defendants] .”
Conclusions on capacity[46]Mr Strutt has emphasised a number of matters. He pointed out that this was a transaction that had had a lengthy gestation, and that there was thus ample time for John to become accustomed to the idea and thus form the necessary intention. John had also had at least five face to face meetings or conversations with either Mr James or Mr Donaghy at which the matter was discussed and at which John indicated his willingness to the proposal. In addition, George and Marion were not only natural objects of his bounty but indeed the only persons with any real claim on him, and John must have been aware of this. I accept all this, as I do the fact that in all the circumstances there is nothing inherently irrational about the gift.[47]There nevertheless remain real concerns about what happened. It is notable that in the course of Mr James’ dealings with the matter, most of the impetus appears to have been coming from George’s side. Thus Mr James could not obtain clear instructions from John on 8th December and had to refer to Mr Duckworth to find out what was going on. Having been put in the picture by Mr Duckworth, Mr James saw John again on 22nd December but George was also present on this occasion, and it seems likely that much of the input came from George, although no doubt John indicated his consent. Then when it came to deciding on the respective shares it was left to Mr Duckworth to make the proposal that these should be 50:50. By the time Mr Donaghy came on the scene in the summer, all this was therefore already decided. It was George who told Mr Donaghy that the shares were to be 50:50, and although this was no doubt confirmed by John at the meeting which took place on 30th July, George was also present. If one asks why George was present at these meetings, the natural explanation, which is consistent with the evidence and which does not require the attribution of any sinister motives, is that John needed help since he was not good at “open” or “backwards and forwards” conversation, and George was the natural person to help him.[48]The central issue remains whether John was provided with the kind of explanation which would have enabled him properly to understand the transaction. It would be possible to decide this case on the basis that the defendants have not discharged the burden of proof on this issue, simply because there is so little evidence about what John was told. I would go further, however, and say that on the balance of probabilities in my judgment John was not given an adequate explanation and so did not have a proper understanding. I say this for the following reasons:a. I suspect that when Mr Donaghy took over the matter and became involved with the transfer, he understood that the matter was one which had already been agreed and thus one which he may not have gone into in such detail with John as he might have done had he had the conduct of the matter from the outset.b. Whether or not this is correct, Mr Donaghy was unaware of certain crucial matters. He was unaware that John could not read. I also find that he was unaware of the extent of John’s disability. I find that he had not read Mr James’ file note of 13th November. Nor do I think that the extent of John’s disability became apparent to him as a result of the meetings he had with him. His first meeting with John was the one at which George was present and at which I infer George provided whatever information was sought. John was clearly a pleasant, easy-going man and without probing him it is possible that this is something Mr Donaghy could have missed, particularly if the questions asked of him were ‘closed’ rather than ‘open’ questions.c. If Mr Donaghy had been aware of the extent of John’s disability, I am sure he would have taken more extensive steps to establish John’s understanding, and made a better record of what he had done. The fact that he did not make such a record is an indication that he did not fully appreciate the position.d. In any event, given the evidence of Ms Samuel and Dr El-Komy of what would have been required to give John a proper understanding, it is reasonably clear even on the basis of the evidence of what Mr Donaghy actually did, and of what he said he would have done, that John was not given the kind of explanation which he .needed. Such an explanation would obviously have been very unusual in the context of a solicitor’s everyday practice, and likely to have been noted. I do not doubt that on the three occasions that Mr Donaghy saw John, he formed the impression, as a result of the questions which he asked, that John was in agreement with what was being proposed. I am also quite prepared to accept that either at the execution of the deed, or perhaps at the meeting of 30th July, or possibly at both, Mr Donaghy explained the general effect of the transaction in terms that he says he would have done. But this would have come nowhere near the steps which Ms Samuel and Dr El-Komy say would have been required to bring home the matter to him.e. Although the case does not turn on this point alone, it is apparent that Mr Donaghy did not give any explanation as to the implications of the property being owned by beneficial tenants in common, a matter which in my judgment John would have needed to have had a general appreciation of in order to understand the transaction as a whole.[49]In saying this I have not ignored the fact that John must have some understanding of the transaction from his exchanges with Mr James, and indeed George, and his disability was not such that he would not necessarily have forgotten these things later on. Nevertheless, Mr James had not given John the kind of explanation which would have been required. Undue influence[50]In the circumstances, it is not necessary to deal at any length with this issue. Both Miss Angus and Mr Strutt are agreed that following the decision of the House of Lords in Royal Bank of Scotland plc v. Ettridge (No.2) [2002] 2 A.C. 773, there is no relevant distinction to be made between a plea of unconscionable bargain and undue influence, and this case can be approached as one of alleged undue influence. Given the evidence and my conclusions about John’s capacity I find this issue rather artificial but nevertheless my conclusions are as follows:a. John reposed a high degree of trust and confidence in George in relation to his affairs. Not only was he clearly vulnerable because of his learning disability, but John had recently lost his mother, with whom he clearly had a close relationship, and had turned to George (and Marion) for company and support, the only remaining persons with whom he had any kind of close relationship. That he clearly needed support is shown, for example, by what George told the Social Services immediately after his mother’s death. An indication of John’s level of trust and confidence is the fact that he wanted either to move in to live with George and Marion or, later, for them to come and live with him, in both cases to give him company and to help look after him. Another indication is the fact that George accompanied John to meetings with both Mr James and Mr Donaghy. Although I do not doubt that, as George said in evidence, John had a stubborn streak, I do not doubt either that John would have been much influenced by anything George suggested or asked.b. The transaction was plainly to John’s disadvantage, such as to require evidence to rebut a presumption that it was procured by George’s undue influence. John gave up half of all he owned, and lost a measure of control of the other half, in return only for assurances of support and company.c. In my judgment, the burden of showing that the gift was not procured by undue influence is not discharged. I accept that when all the facts are examined, there is a good explanation for the gift from John’s point of view, that is, apart from the one that it was procured by George’s undue influence. The explanation is that he wanted to live with George and Marion and for them to provide him with company and support. The fact that he had just been left the house by his mother enabled him to achieve this object. I also accept that he was independently advised, and that advice would have brought home to an ordinary person the implications of what he was doing. It is necessary, however, to show not only that John’s decision was properly informed but also that it was free of George’s influence. On both counts, given all the circumstances and the evidence of what would have been required to bring the general implications of the transaction home to John, these matters have not been proved.

Relief

[51]Mr Strutt advances two reasons for my not granting the relief sought, or for my granting relief in a modified form.[52]First, he says that, assuming that George and Marion acted in good faith, there is a general defence of change of position. For this proposition the only authority he relied on was Gough & Jones, The Law of Restitution, 6th ed., at paras. 11-014 and 25-018.[53]I accept that George and Marion gave up their secure council accommodation in reliance on the fact that they would have a share in Buckingham Crescent. I also accept that George and Marion acted in good faith. After all, it was they who had come forward with Mrs Williams’ will as soon as they found it. They did not behave unfairly to John and were entitled to assume that since John had his own solicitor everything would be handled properly. They were doing something which they understood John wanted, although no doubt they too were more than happy with what John was doing since they were acquiring a half share in Buckingham Crescent.[54]Although I have considerable sympathy with the position in which George and Marion now find themselves, the passages cited from Gough and Jones have nothing to do with the case of a gift which is void for want of capacity, and are not authority for the submission. I therefore reject it.[55]The second submission proceeds on the basis that the effect of John’s lack of capacity is that the gift is voidable, not void, so that equity can shape the form of relief to suit the circumstances of the case. Mr Strutt says that the gift should only be set aside on terms that George and Marion be allowed to remain in the property paying an occupation rent (which would be payable out of their Housing Benefit).[56]I do not accept that the gift is voidable. It is void. See In re Beaney and The Special Trustees for Great Ormond Street Hospital for Children v. Rushin at para. 24. In any event, I would not have been inclined to make an order in the form which Mr Strutt suggests. The suggestion would mean that John would have no access to a capital asset which is in truth his. The fact also is that George and Marion have had the benefit of rent-free accommodation for 16 years.[57]I will hear Counsel on the form of order.

Cited in 1 later judgment