De Wind v Wedge

The Claimant and the Defendant in this action are the two children of the late Mrs Elsie Wedge (“Mrs Wedge”) who died intestate on 8 August 2001. The action concerns the proceeds of sale of a house at 5 Faverdale Road, Darlington (“the Property”) which Mrs Wedge and her late husband bought on 28 November 1980 and which was registered in their names as legal and beneficial joint tenants under title number DU38332.

Mr Wedge died in 1982 leaving Mrs Wedge as the sole legal and beneficial owner by survivorship.

In May 1992 she moved with her sister, Mrs Olga Dixon, to live in a property known as Whinhill at Balnain in Inverness-shire, which the Defendant had purchased in March of that year for £45,000 and which had been registered in his sole name. This was a planned move which seems to have been part of a wider arrangement under which the Defendant also sold his house at Cleve View, North Cawton, North Yorkshire with a view to moving into what had previously been a holiday home (Inshalla) in Balnain situated opposite to Whinhill. His move to Scotland took place slightly later. The Defendant sold his house in August 1992 and moved temporarily into the Property. In July his mother had granted him a general power of attorney to enable him to sell the Property and on 25 February 1993 it was sold by him as her attorney for £56,000. The sale was handled by a solicitor (Mr Trevor Hirst) who on completion paid the net proceeds of sale (£54,818) to the Defendant on the basis of instructions which he said he received from Mrs Wedge.

In October 1993 Mrs Wedge and her sister decided to leave Whinhill and returned to live in Mrs Dixon’s house in Darlington where Mrs Wedge remained until her death in 2001. Prior to then (in July 1993) the Defendant and his wife Mrs Claire Wedge had sold Inshalla for £44,000 and purchased a larger house nearby for about £150,000. In March 1996 Whinhill was sold for £58,000.

Following her mother’s death Mrs de Wind instructed solicitors who wrote to the Defendant asking about the proceeds of sale of Whinhill and about an earlier loan of £11,000 which Mrs Wedge was alleged to have made to the Defendant back in 1982. No real response was received from the Defendant’s solicitors (Trevor Hirst and Co.) to the query about the proceeds of sale and on 22 January 2002 the Claimant’s solicitors threatened to take out letters of administration to Mrs Wedge’s estate and to apply for legal aid in order to commence proceedings for the recovery of the money. Eventually on 23 March 2007, the Claimant applied for and obtained a grant of letters of administration to her mother’s estate.

She has now commenced these proceedings seeking an account from the Defendant in respect of the proceeds of the sale of the Property, for which she claims the Defendant remains accountable as his mother’s attorney having received them on completion of the transaction. He alleges in his amended defence that his mother made a gift to him of the proceeds of sale and that he is therefore under no continuing duty to account for them. His case is that his mother had discovered that in 1988 he had lent his sister some £85,000 which had not been repaid and that she had borrowed a further £62,000 from her aunt (Mrs Nancy Cooper). This, it is said had annoyed and upset Mrs Wedge and she decided to redress the balance by giving to the Defendant the proceeds of sale of the property.

The Claimant denies the allegation of the gift. Her evidence is that Mrs Wedge believed or was led to believe by the Defendant that Whinhill had been purchased for about £57,000 and was to belong to her. She therefore understood and intended that the net proceeds from the Property would reimburse the Defendant for what he had had to pay for Whinhill on her behalf. She also alleges that if any gift was made it should be set aside on grounds of undue influence. It is not pleaded that the Defendant exerted actual undue influence on Mrs Wedge, although if the evidence I have just referred to is correct, he plainly did. The Claimant relies on what used to be referred to as presumed undue influence arising from what is said to have been the relationship of trust and confidence which subsisted between them. The value of the property clearly represented Mrs Wedge’s major capital asset and it is said that she received no independent advice sufficient to free her from the presumption of influence which arose from the fact that she made a gift of that asset to someone in whom she reposed trust and confidence and who owed her a fiduciary duty to act in her best interests.

The Defendant’s case is that Mrs Wedge had the benefit of advice from the solicitor (Mr Hirst) who acted on the sale of the Property and that there was in any event no undue influence involved.

The law on undue influence represents merely one aspect of the jurisdiction traditionally exercised by courts of equity to prevent abuses in relationships where one party has either placed trust and confidence in the other or is at least vulnerable to being taken advantage of in relation to his or her property or affairs. It is for this reason that the burden has historically been placed on those in a fiduciary position to prove affirmatively that their conduct was in the interests of the person to whom the duty was owed rather than requiring the beneficiary or principal to establish the breach of duty. The position was explained by Nourse LJ in Goldsworthy v Brickell [1987] 1 Ch 378 at page 400G as follows:

“…Undue influence is of two kinds: (1) express or, as it is nowadays more usually known, actual undue influence, and (2) that which in certain circumstances is presumed from a confidential relationship; by which in this context is meant a relationship wherein one party has ceded such a degree of trust and confidence as to require the other, on grounds of public policy, to show that it has not been betrayed or abused. In cases where there is no confidential relationship actual undue influence must be proved. In cases where there is such a relationship it is sometimes alleged, but need not be proved and may never have occurred. Occasionally, even where there is no direct evidence of influence, it is found that there is both a confidential relationship and actual undue influence: cf. In re Craig, decd. [1971] Ch 95 .…”

As he then goes on to explain, there are certain relationships where the presumption of undue influence is readily made: obvious examples are solicitor and client and doctor and patient. This is because these relationships are presumed to be ones of trust and confidence and therefore fiduciary in nature. In other cases the fiduciary nature of the relationship has to be established by evidence but once established will then give rise to a presumption of undue influence depending on the nature and size of the transaction under consideration. Nourse LJ refers to this at page 401 C – H:

“…Because they have occasioned little or no debate on this appeal, three further general observations may be briefly made. First, it is not every relationship of trust and confidence to which the presumption applies. No generalisation is possible beyond the definition already attempted. Secondly, with relationships to which it does apply the presumption is not perfected and remains inoperative until the party who has ceded the trust and confidence makes a gift so large, or enters into a transaction so improvident, as not to be reasonably accounted for on the ground of friendship, relationship, charity or other ordinary motives on which ordinary men act. Although influence might have been presumed beforehand, it is only then that it is presumed to have been undue. Thirdly, in a case where the presumption has come into operation the gift or transaction will be set aside, unless it is proved to have been the spontaneous act of the donor or grantor acting in circumstances which enable him to exercise an independent will and which justify the court in holding that the gift or transaction was the result of a free exercise of his will. …”

Presumptions as legal principles can take many forms and in Royal Bank of Scotland plc v Etridge [2002] 2 AC 773 the House of Lords took the opportunity to examine and explain the law on this subject. Two passages in the speech of Lord Nicholls deserve quotation. The first concerns the type of relationship or situation in which the possibility of undue influence may occur. In paragraphs 10 – 12 of his speech he said this:

“10 The law has long recognised the need to prevent abuse of influence in these "relationship" cases despite the absence of evidence of overt acts of persuasive conduct. The types of relationship, such as parent and child, in which this principle falls to be applied cannot be listed exhaustively. Relationships are infinitely various. Sir Guenter Treitel QC has rightly noted that the question is whether one party has reposed sufficient trust and confidence in the other, rather than whether the relationship between the parties belongs to a particular type: see Treitel, The Law of Contract, 10th ed (1999), pp 380-381. For example, the relation of banker and customer will not normally meet this criterion, but exceptionally it may: see National Westminster Bank plc v Morgan [1985] AC 686, 707-709.

11 Even this test is not comprehensive. The principle is not confined to cases of abuse of trust and confidence. It also includes, for instance, cases where a vulnerable person has been exploited. Indeed, there is no single touchstone for determining whether the principle is applicable. Several expressions have been used in an endeavour to encapsulate the essence: trust and confidence, reliance, dependence or vulnerability on the one hand and ascendancy, domination or control on the other. None of these descriptions is perfect. None is all embracing. Each has its proper place.

12 In CIBC Mortgages plc v Pitt [1994] 1 AC 200 your Lordships' House decided that in cases of undue influence disadvantage is not a necessary ingredient of the cause of action. It is not essential that the transaction should be disadvantageous to the pressurised or influenced person, either in financial terms or in any other way. However, in the nature of things, questions of undue influence will not usually arise, and the exercise of undue influence is unlikely to occur, where the transaction is innocuous. The issue is likely to arise only when, in some respect, the transaction was disadvantageous either from the outset or as matters turned out.”

He then turned to the question of burden of proof and what the so-called presumptions of undue influence amount to in this context:

“…

13 Whether a transaction was brought about by the exercise of undue influence is a question of fact. Here, as elsewhere, the general principle is that he who asserts a wrong has been committed must prove it. The burden of proving an allegation of undue influence rests upon the person who claims to have been wronged. This is the general rule. The evidence required to discharge the burden of proof depends on the nature of the alleged undue influence, the personality of the parties, their relationship, the extent to which the transaction cannot readily be accounted for by the ordinary motives of ordinary persons in that relationship, and all the circumstances of the case.

14 Proof that the complainant placed trust and confidence in the other party in relation to the management of the complainant's financial affairs, coupled with a transaction which calls for explanation, will normally be sufficient, failing satisfactory evidence to the contrary, to discharge the burden of proof. On proof of these two matters the stage is set for the court to infer that, in the absence of a satisfactory explanation, the transaction can only have been procured by undue influence. In other words, proof of these two facts is prima facie evidence that the defendant abused the influence he acquired in the parties' relationship. He preferred his own interests. He did not behave fairly to the other. So the evidential burden then shifts to him. It is for him to produce evidence to counter the inference which otherwise should be drawn.

….

16 Generations of equity lawyers have conventionally described this situation as one in which a presumption of undue influence arises. This use of the term "presumption" is descriptive of a shift in the evidential onus on a question of fact. When a plaintiff succeeds by this route he does so because he has succeeded in establishing a case of undue influence. The court has drawn appropriate inferences of fact upon a balanced consideration of the whole of the evidence at the end of a trial in which the burden of proof rested upon the plaintiff. The use, in the course of the trial, of the forensic tool of a shift in the evidential burden of proof should not be permitted to obscure the overall position. These cases are the equitable counterpart of common law cases where the principle of res ipsa loquitur is invoked. There is a rebuttable evidential presumption of undue influence.

17The availability of this forensic tool in cases founded on abuse of influence arising from the parties' relationship has led to this type of case sometimes being labelled "presumed undue influence". This is by way of contrast with cases involving actual pressure or the like, which are labelled "actual undue influence": see Bank of Credit and Commerce International SA v Aboody [1990] 1 QB 923, 953, and Royal Bank of Scotland plc v Etridge (No 2) [1998] 4 All ER 705, 711-712, paras 5-7. This usage can be a little confusing. In many cases where a plaintiff has claimed that the defendant abused the influence he acquired in a relationship of trust and confidence the plaintiff has succeeded by recourse to the rebuttable evidential presumption. But this need not be so. Such a plaintiff may succeed even where this presumption is not available to him; for instance, where the impugned transaction was not one which called for an explanation.

18 The evidential presumption discussed above is to be distinguished sharply from a different form of presumption which arises in some cases. The law has adopted a sternly protective attitude towards certain types of relationship in which one party acquires influence over another who is vulnerable and dependent and where, moreover, substantial gifts by the influenced or vulnerable person are not normally to be expected. Examples of relationships within this special class are parent and child, guardian and ward, trustee and beneficiary, solicitor and client, and medical adviser and patient. In these cases the law presumes, irrebuttably, that one party had influence over the other. The complainant need not prove he actually reposed trust and confidence in the other party. It is sufficient for him to prove the existence of the type of relationship.

…

Manifest Disadvantage

21 As already noted, there are two prerequisites to the evidential shift in the burden of proof from the complainant to the other party. First, that the complainant reposed trust and confidence in the other party, or the other party acquired ascendancy over the complainant. Second, that the transaction is not readily explicable by the relationship of the parties.

22 Lindley LJ summarised this second prerequisite in the leading authority of Allcard v Skinner 36 Ch D 145, where the donor parted with almost all her property. Lindley LJ pointed out that where a gift of a small amount is made to a person standing in a confidential relationship to the donor, some proof of the exercise of the influence of the donee must be given. The mere existence of the influence is not enough. He continued, at p 185 "But if the gift is so large as not to be reasonably accounted for on the ground of friendship, relationship, charity, or other ordinary motives on which ordinary men act, the burden is upon the donee to support the gift." In Bank of Montreal v Stuart [1911] AC 120, 137 Lord Macnaghten used the phrase "immoderate and irrational" to describe this concept.

23The need for this second prerequisite has recently been questioned: see Nourse LJ in Barclays Bank plc v Coleman [2001] QB, 20, 30-32, one of the cases under appeal before your Lordships' House. Mr Sher invited your Lordships to depart from the decision of the House on this point in National Westminster Bank plc v Morgan [1985] AC 686.

24My Lords, this is not an invitation I would accept. The second prerequisite, as expressed by Lindley LJ, is good sense. It is a necessary limitation upon the width of the first prerequisite. It would be absurd for the law to presume that every gift by a child to a parent, or every transaction between a client and his solicitor or between a patient and his doctor, was brought about by undue influence unless the contrary is affirmatively proved. Such a presumption would be too far-reaching. The law would be out of touch with everyday life if the presumption were to apply to every Christmas or birthday gift by a child to a parent, or to an agreement whereby a client or patient agrees to be responsible for the reasonable fees of his legal or medical adviser. The law would be rightly open to ridicule, for transactions such as these are unexceptionable. They do not suggest that something may be amiss. So something more is needed before the law reverses the burden of proof, something which calls for an explanation. When that something more is present, the greater the disadvantage to the vulnerable person, the more cogent must be the explanation before the presumption will be regarded as rebutted.

…”

In this case we are not dealing with one of the categories of relationship where influence is irrebuttably presumed. This is a case where the burden is on the Claimant to establish the necessary relationship of trust and confidence and the other primary facts surrounding the transaction from which the inference of undue influence can be drawn. The task of the Court is to set this against the Defendant’s explanation of the transaction and to decide whether he has rebutted any inferences that might otherwise be made.

In the present case the Claimant rightly emphasizes the size of the gift, but as Lord Nicholls explained in the passage (at paragraph 13) I have quoted, this is only one of several factors which have to be taken into account and balanced against the other relevant material. Ultimately what has to be shown (to use the words of the Court of Appeal in Allcard v Skinner (1887)36 ChD 145 at page 171 is that:

“…the gift was the spontaneous act of the donor acting under circumstances which enabled him to exercise an independent will and which justifies the Court in holding that the gift was the result of a free exercise of the donor’s will.”

The events with which this action is concerned took place more than fifteen years ago and there is little in the way of contemporaneous documentary evidence beyond the documents of title relating to the various property transactions and the subsequent correspondence between solicitors leading up to the issue of the claim. The key allegations all depend upon the recollection and oral testimony of the parties and other witnesses.

As already mentioned, the pleaded claim rests upon the denial of any intention on the part of Mrs Wedge to make a gift of the proceeds of the sale of the Property to the Defendant and an allegation of presumed undue influence. There can be no doubt that the Defendant as his mother’s attorney was in a fiduciary relationship with her, at least in relation to those aspects of her affairs which he handled and he concedes as much in his second witness statement. He says that she gave him the power of attorney because she trusted him to carry out the sale of her Property for her and that in general she trusted him to the exclusion of the Claimant. The reason for this was, he says, that the Claimant had already extracted large sums of money from him and other members of the family such as her aunt, Mrs Cooper, and she wanted both to redress the balance and protect herself from future demands for cash from her daughter.

An important part of the background therefore is the Claimant’s financial history and the circumstances in which she came to receive monies from her family in this way. In about 1978 she left England and went to live in Spain with Mr Paul De Wind who had been her tennis coach. At the time she was married to Mr Neil Hunton. They subsequently divorced. The Claimant never married Mr De Wind although she has taken his name, but they have lived together for thirty years and have two children.

In the 1980s she and Mr De Wind set up a business running a tennis centre in Marbella. In April 1988 the Defendant paid to her the sum of £70,000 which the Claimant says was an investment by him in the business. He says that it was a personal loan which in fact totalled about £85,000. £15,000 of this was either borrowed by him (£13,000) on a loan account or provided from his own resources (£2,000) in order to pay off one of his sister’s creditors: a Mr Jimmy Weaver. The Defendant says that he gave Mr Weaver the £15,000 in cash from his business after paying the loan into his bank account. The Claimant denies that she owed Mr Weaver any money or that the Defendant paid money to him, but she accepts that she did receive the £70,000 into her account for use in her business. In the end it probably does not matter whether the sum provided by her brother was £70,000 or £85,000. On any view it was a substantial amount of money.

The Spanish business was not a success. The Claimant and Mr De Wind either rented or purchased a second tennis complex which in 1999 was destroyed in a serious flood and was not insured. The Claimant said that as a result she lost the business and with it the £70,000. She says that she subsequently paid to the Defendant £20,000 with help from a business partner, but the balance has not been repaid or recovered.

The Defendant gives a very different account of the circumstances in which the money came to be paid. His wife said that he was rung up by his sister in 1988 who said that she was desperate for cash. She got the impression that she was under considerable pressure from business or other associates in Marbella who might even use violence to obtain payment of what they claimed was due to them. The Defendant was concerned about her safety and wellbeing and provided the money.

There is no direct evidence to indicate the precise circumstances in which the £70,000 was paid and the Claimant was unable to give a coherent account of what she had done with the money or precisely how and why her business interests came to an end. I found Mrs Claire Wedge to be a convincing witness and I accept that the money was lent to the Claimant by the Defendant to meet her financial liabilities whatever they may have been. The terms on which the £70,000 was advanced were not documented and the monies were paid to Mrs De Wind personally. Neither party suggests the money was a gift and the manner and circumstances of its payment point to it being a loan rather than some form of investment. Again, the precise legal position is unimportant. The reality was that the Defendant had advanced at least £70,000 to the Claimant in connection with her business and she had lost his money with no return.

Mrs De Wind says that she came back to England in 1992 destitute. Her business interests in Spain had all failed and she had no source of income. It was during this time that she obtained money from her aunt, Mrs Cooper, who provided in all about £62,000. Much of this was apparently advanced to the Claimant while she was still in Spain but her aunt continued to make small payments to her when she was back in England. On 23 April 1994 she gave her aunt a written IOU for £62,000 in order, she said, to get her family off her aunt’s back. They had all been critical of what Mrs Cooper had done to help the Claimant. But notwithstanding the IOU the money has not been repaid.

It was put to Mrs De Wind that she had also borrowed substantial sums from other family members and friends. These included her aunt, Mrs Dixon; a Mr Foster Garton (whom she is said to owe £80,000); and a Mr Michael Herman (to whom it is said she owes a further £200,000). These further loans are not documented or supported by evidence from these individuals and the Claimant denies receiving them. But from the facts that are admitted it is clear that she was in a parlous financial state from the late 1980s onwards and that this never really changed throughout the period with which this action is concerned. Mrs Cooper was not repaid. The Defendant did receive £20,000 but this was paid to him by Mr Garton. Mr Herman was also an investor in the Spanish business and has lost money although the amount is in dispute. The Claimant returned to England and went to live in Mrs Dixon’s house with Mr De Wind and their two children. She says that she was not working and depended on housing and other benefits. She paid no rent and could provide no financial assistance to Mrs Wedge or Mrs Dixon.

During the time she lived in Mrs Dixon’s house (which was from 1992 to 1996 with a break of a few months between late 1993 and early 1994) she also ran up very large telephone bills (sometimes as much as £1500 per quarter) ringing contacts in all parts of the world in an attempt (she said) to start up some new kind of business. These expensive telephone calls produced nothing in return but imposed very considerable financial burdens on Mrs Dixon and the other members of the family (like the Defendant) who helped to pay what was due. Mrs De Wind said that Mrs Dixon accepted this because she (Mrs De Wind) had in the past paid for trips to Spain for her mother and aunt and it was a way of paying her back. There is no evidence to support this and I do not accept her evidence. It seems to me highly improbable that the cost of accommodating Mrs Dixon on her visits to Spain came anywhere near to the cost of the telephone calls but most of them post date the sale of the Property in 1992 and their relevance to the alleged gift of the proceeds of sale is therefore probably only marginal.

The key issue in this case is what attitude Mrs Wedge had to the Claimant’s impecuniosity and her dependence on and borrowings from members of the family. It is beyond dispute that the Claimant had obtained what for them must have been very substantial sums of money and was unlikely ever to repay what she had borrowed.

By the time that the Claimant returned from Spain there were already plans for her to move and live in Scotland. On 19 March 1992 the Defendant had purchased Whinhill as a home for his mother and his aunt although the Property was purchased in his name. They moved there about six weeks later in May 1992. Although Mrs Wedge had her own home at 5 Faverdale Road, she was apparently unable to live alone since her husband’s death and her sister, Mrs Dixon, lived in the house for about five days a week returning to her own home only at weekends. This meant that her house was available to accommodate Mrs De Wind and her family when they returned from Spain. It was always envisaged that Mrs Dixon would accompany Mrs Wedge on her move to Scotland so that from May 1992 the Claimant and her family had Mrs Dixon’s house to themselves.

The move to Scotland is on the face of it puzzling. Mrs Wedge was a long established resident of Darlington and had no obvious ties with Scotland. The only connection with Inverness-shire was that her son had a holiday home there. His evidence is that the move was part of a scheme devised by or at least involving the Claimant under which everyone would move to Scotland and the Claimant would open a hotel there which would enable her to repay what she owed to the Defendant and others. He said that he had had to borrow additional monies to cover the cost of the purchase of his house at Cleve View as a result of the Claimant’s failure to repay the £85,000 loan and that eventually he was forced to sell the house in order to reduce his borrowings. It was about this time that the Claimant came up with the scheme for everyone to move to Scotland and for her to buy and manage a hotel. The Defendant says that he was given the task of looking at possible hotels to buy and found one called the Tower of Lethendy near Stanley in Perthshire. His sister was going to run the hotel and he was to manage the fishing. The Claimant arranged for financiers and other business associates to visit the hotel with a view to persuading them to invest in the project. She had no money of her own to put into the business but hoped, he said, to raise the necessary finance from third parties.

Mr Wedge said that this project continued until 1993 although ultimately it was not possible to obtain sufficient investment for the purchase to go ahead. But according to his evidence the purchase of Whinhill was not discussed with his sister and seems to have been the result of a decision by Mrs Wedge that she wanted to be in Scotland if both her children and their families were going to be living there. It seems therefore to have been in anticipation of the Tower of Lethendy project rather than as part of it. The Defendant was informed in December 1991 that the then owners of Whinhill wished to sell and took the opportunity of purchasing their house given its proximity to Inshalla.

The Defendant sold his house in England in August 1992 and moved into his mother’s house at 5 Faverdale Road. The sale of the Property was completed on 25 February 1993 and the net proceeds of sale were paid to the Defendant. He and his family then moved to Inshalla.

The Claimant says that the plan to buy a hotel in Scotland had come to an end by 1992 prior to her mother’s move to Scotland. I doubt that. It seems to me unlikely that Mrs Wedge and her sister would have agreed to leave their homes in Darlington and move to Scotland unless it was part of some larger ongoing scheme but it is common ground that by October 1993 the plan was at an end and the two sisters returned to Mrs Dixon’s house in Darlington where they remained until Mrs Wedge’s death. Mrs Dixon died in 2007.

Although pleaded in terms of presumed undue influence the Claimant’s case in evidence is in fact (as mentioned earlier) one of actual undue influence or misrepresentation. She says that her mother believed that the bungalow called Whinhill had been purchased in her name and had cost about £57,000. She is said to have expressed some disappointment about the property saying that it was not worth the £57,000 paid for it. When it was put to Mrs De Wind that her mother must have known that the house was not hers because the Property was yet to be sold she accepted that. But she said that her mother thought that Whinhill was to be her home and was told by the Defendant that he had paid £57,000. When the property was sold she allowed the Defendant to keep the proceeds of sale in the belief that she was repaying him for his purchase of Whinhill on her behalf.

This evidence has I think to be treated with some caution. It is common ground that Mrs Wedge knew that the Property had been sold in May 1993 and told Mr Hirst that he should pay the net proceeds of sale to her son. The only issue is as to the basis upon which they were paid to him. Her instructions to the solicitor that the Defendant should keep the proceeds of sale from the Property is capable of only three possible explanations: a gift; a payment to the Defendant to reimburse him for the cost of buying Whinhill for or on behalf of his mother; or a loan. Neither side contends for the third alternative. I am therefore left in terms of the evidence with a straight conflict between the evidence of Mr Hirst and Mr and Mrs Wedge on the one hand that Mrs Wedge Senior intended to make a gift of the sale proceeds to her son and the Claimant’s evidence on the other that Mrs Wedge thought she was making delayed payment or repayment of the cost of acquiring Whinhill as her home.

Mr Hirst says that he had acted as the Defendant’s solicitor prior to 1992 but had not acted for Mrs Wedge. He is an experienced conveyancing solicitor and his firm prepared the power of attorney to enable the Defendant to give instructions on the sale on behalf of his mother. Notwithstanding this, he was anxious to stress (and I accept) that he identified and regarded Mrs Wedge as his client and ascertained that she was happy to give her son a power of attorney for this purpose.

Once the Property had been sold a completion statement was sent to the Defendant at his business address in Darlington. It does not include an item for Mr Hirst’s fees. He said that he charged for his work but may have been paid directly by the Defendant. In the end nothing turns on this. The sale was a straightforward transaction until after completion when the Defendant rang him to say that his mother wanted him to receive the proceeds of sale. He said that the Defendant seemed almost embarrassed about it and he indicated that he would need to talk to his mother to obtain her confirmation about this. In what he believes was a subsequent telephone conversation she gave it. Mr Hirst said that she was adamant that her son was to have the money. He told her in terms that once the money had been paid over she would not be able to change her mind and re-claim it but she insisted that it be paid to her son. At no point did she suggest that it was some kind of re-imbursement for her son’s purchase of Whinhill. She gave no reasons for her decision and Mr Hirst does not appear to have asked her for any.

Mr Hirst said that he was satisfied as a result of this conversation that Mrs Wedge understood the implications of the gift but still wanted to transfer the money to her son. He asked her to confirm her instructions in writing which she did. The letter does not survive because it was destroyed with the conveyancing file prior to these proceedings.

The accuracy of Mr Hirst’s recollection of his conversation with Mrs Wedge was not seriously challenged and I accept his evidence. He was obviously faced with the difficulty that his client was in Scotland but he acted in a proper and conscientious manner in attempting to verify her instructions and I have no doubt that he was instructed by her to pay the proceeds of sale to her son as a gift. I shall deal later with the question whether Mr Hirst’s intervention was sufficient to counter any possible undue influence.

This evidence is obviously inconsistent with the Claimant’s account that her mother intended the monies as a repayment for the cost of Whinhill unless she also intended that this property should belong to her son free of any claims by her notwithstanding the reimbursement of the purchase price. The alternative and theoretical possibility is that she said one thing to her son and another to her daughter, but all the witnesses spoke of her as a straightforward, clear speaking individual and such behaviour would on the evidence have been totally out of character.

The reality therefore is that I have to choose between two conflicting accounts of what she intended in 1992 and I have no real hesitation in preferring the evidence of a gift. Mr Hirst’s evidence was not challenged as untruthful and I am satisfied that it represents an honest recollection of the conversation he had with Mrs Wedge. As such, it provides corroboration of the evidence of the Defendant and his wife, both of whom gave their own accounts of Mrs Wedge’s insistence that her son should have the money.

It is clear from the evidence that the Defendant was very close to his mother. By the time that his father died the Claimant was living in Spain. The Defendant continued to live with his mother for about two years and after that, visited her every day on his way to and from work. He owned a garage business in Darlington which seems to have provided him and his wife with a reasonable income but they became financially stretched by a combination of the purchase of their house at Cleve View and the loss of the £70,000 paid to the Claimant.

As set out earlier in this judgment their decision to clear their debts and to move temporarily to their holiday home in Scotland was primarily to resolve these financial difficulties but it tied in with the plan to acquire the hotel and I am quite satisfied that this project was still in existence when the Defendant and his mother moved to Scotland in 1992 and 1993.

The benefits from the sale of Cleve View are of course reduced by the cost of the purchase of Whinhill which involved an increase in the Defendant’s overdraft at Barclays Bank. By May 1992 Mrs Wedge and Mrs Dixon were living there and the Defendant and his wife were preparing to move. By the time the Property was sold in February 1993 Mrs Wedge knew not only that her son had bought Whinhill at his own expense but also that he had not been repaid the money he had lent to his sister. This information was originally withheld from her by the Defendant but his wife said that the stress caused by his financial worries had made him ill and she had told his mother about the £85,000 when asked for the reason and that of this only £20,000 had been repaid.

The Defendant was unable to recall how long before the sale of the Property his mother knew about the £85,000 or for that matter, the money borrowed by the Claimant from Mrs Cooper. His wife said that her mother-in-law had offered to give the Property to the Defendant prior to 1992 when she was still unaware of the loan but he had been unwilling to accept it. However, once she was aware of the outstanding monies and the Property was about to be sold she told the Defendant that she wanted him to have the proceeds of sale and that he should tell Mr Hirst to pay them to him. The Defendant said that his mother was adamant that he should have the money. The suggestion came from her. She said that if she kept the proceeds and was subsequently persuaded to give the money to the Claimant, it would simply be frittered away. She wanted the Defendant to have it while it was still there. He denied that his mother was ever told or believed that Whinhill belonged to her and that the proceeds of sale from the Property were to be some form of reimbursement for the cost of Whinhill.

Mrs Claire Wedge gave evidence to much the same effect. She said that her mother-in-law was very independent and strong minded. They did not want to take her money and did not do so lightly. But she was insistent. When asked how she would manage financially she said that she had her pension and would always have a roof over her head. Eventually they accepted what she was offering.

I consider the Defendant and his wife to be honest witnesses and I accept their evidence on these matters. I do not believe that the Defendant misled his mother about the purchase price of Whinhill or led her to believe that she was in some way paying for that house. Nor do I believe that Mrs Wedge Senior ever considered that Whinhill did belong to her. The Claimant said in evidence that her mother was anxious to see Whinhill sold after she moved back to Darlington so that she could be repaid the money she had given to the Defendant but that he asked for time to pay due to his financial difficulties. She was also said to have written letters to her son asking for the outstanding money to be paid. But this evidence is contradicted by a friend and former neighbour of Mrs Wedge; Mr James Day. He confirmed that Mrs Wedge had told him while she was still living in the Property that she was worried about the money which the Claimant had borrowed from the Defendant. He said that he continued to visit Mrs Wedge both when she lived at Whinhill and after she moved back from Scotland and that she never complained about money. The only complaints he heard came from Mrs Dixon which were about the size of her telephone bills.

Another witness, Mr Neil Hunton (the Claimant’s former husband), who kept in touch with Mrs Wedge said that she told him she had given the Defendant the money from the Property but that her son gave her lump sums to help pay telephone and other bills. At no time did she express regrets or concerns about having given him the money. Although the Claimant left Mr Hunton to go to live in Spain that is now thirty years ago and I found Mr Hunton to be a straightforward and honest witness whose evidence I can accept.

I prefer this evidence to that of the Claimant. Her recollection that her mother paid over the proceeds of sale of the Property in the belief that she was reimbursing the Defendant for the purchase of Whinhill does not feature in the original correspondence in 2001 and is, in my judgment, an afterthought. There is no evidence (documentary or otherwise) from any other witness that Mrs Wedge regarded Whinhill as a property purchased on her behalf or as giving her a claim to reimbursement of the proceeds of sale of the Property. But the most compelling evidence is that of Mr Hirst who spoke to Mrs Wedge at the time of the sale and was told in terms that she wished to give the proceeds to her son. I am therefore satisfied that Mrs Wedge did make a gift of the proceeds of sale to the Defendant in the circumstances he explained and that unless the gift was the product of undue influence he has no duty to account for the money.

My rejection of the Claimant’s evidence about the circumstances surrounding the gift means that there is no positive evidence from her to support her case on undue influence. She can only rely (as she does in her pleaded case) on a presumption arising from the relationship between the Defendant and his mother and the size and nature of the gift.

As explained earlier, I accept that the relationship between mother and son was at the material time (and probably at all times) one of trust and confidence in the sense that Mrs Wedge relied upon the Defendant for support and trusted him to carry out her wishes and act in her best interests. This was not, however, a formalised relationship such as might exist between a solicitor and client or in some other professional relationship. Mrs Wedge trusted and relied on the Defendant as her son and he gave her the support due to her as his mother. In this sense their relationship was one hopes no different from any other between mother and son.

Over and above this, the Claimant relies on the grant of the power of attorney. This undoubtedly did impose upon the Defendant as a matter of law fiduciary duties in respect of the handling of the sale and its proceeds. But in terms of undue influence it does not add to the likelihood of such having occurred. The power of attorney was no more than a tool which enabled the Defendant to manage the sale of the Property on his mother’s behalf. It was symptomatic of their relationship rather than the source of it.

It is also really beyond dispute that if taken in isolation the gift to the Defendant of the proceeds of sale of the Property was substantial. It was Mrs Wedge’s only capital asset and had the effect of depriving her of the ability to buy another property of her own or of maintaining her financial independence. From then on she depended on her sister for a home and on her pension and gifts of money from her family for her income. On one view therefore it was both risky and unwise or perhaps to use the language of some of the cases manifestly disadvantageous.

The next question is whether the combination of these factors is sufficient (absent anything else) to raise a presumption of undue influence. The test adopted by Lord Nicholls from the judgment of Lindley J in Allcard v Skinner is whether the gift is so large as not to be reasonably accounted for on the grounds of friendship or relationship. There must be something which calls for an explanation and as Lord Nicholls pointed out (at paragraph 24) the greater the disadvantage the more cogent the explanation must be.

It seems to me that without investigating the precise circumstances in which the gift was made a transfer of almost the totality of Mrs Wedge’s property at the age of 72 to her son would call for an explanation and I am prepared to accept that on this bare statement of the facts the presumption of undue influence is engaged. But the consequence is to throw the evidential burden upon the Defendant of showing that the gift made by his mother was the result of a genuine exercise of free will on her part and for this purpose I have to weigh up all the relevant evidence to determine whether the presumption of undue influence is rebutted. This includes (as Lord Nicholls indicated in paragraph 13 of his speech in Etridge):

“the personality of the parties, their relationship, the extent to which the transaction cannot readily be accounted for by the ordinary motives of ordinary persons in that relationship, and all the circumstances of the case.”

One obvious way of proving that the donor was free of any undue influence is to show that she had the benefit of independent legal advice in relation to the very transaction which is sought to be impugned. In paragraph 20 of his speech in Etridge Lord Nicholls described the weight which can be attached to such evidence as follows:

“20Proof that the complainant received advice from a third party before entering into the impugned transaction is one of the matters a court takes into account when weighing all the evidence. The weight, or importance, to be attached to such advice depends on all the circumstances. In the normal course, advice from a solicitor or other outside adviser can be expected to bring home to a complainant a proper understanding of what he or she is about to do. But a person may understand fully the implications of a proposed transaction, for instance, a substantial gift, and yet still be acting under the undue influence of another. Proof of outside advice does not, of itself, necessarily show that the subsequent completion of the transaction was free from the exercise of undue influence. Whether it will be proper to infer that outside advice had an emancipating effect, so that the transaction was not brought about by the exercise of undue influence, is a question of fact to be decided having regard to all the evidence in the case.”

The giving of such advice is not therefore conclusive but in this case its quality is also criticized. Miss Temple submitted that Mr Hirst was not independent (he was also the Defendant’s solicitor); did not meet Mrs Wedge; failed to explain to her alternative methods of benefiting her son without giving up her capital (e.g. a will in his favour); and failed to examine with her the reasons why she wanted to make the gift and what its consequences would be for her in economic terms. Some of these criticisms are, I think, well founded. It seems to me that for Mrs Wedge to have received truly independent advice she should have consulted a solicitor who had no connection with her son. Similarly, it is correct that Mr Hirst did not conduct an extensive analysis of the potential consequences for Mrs Wedge of giving away the proceeds of sale of her house. But this is not an action for negligence against Mr Hirst nor was he asked to give Mrs Wedge advice as such. He asked to speak to her to satisfy himself that she did in fact wish to give the proceeds of sale to her son and his evidence is relevant to that issue.

It seems to me that the rather limited nature of his interview with Mrs Wedge would not have freed her from the undue influence of her son if she was in fact subject to such influence at the time. For the reasons given by Lord Nicholls, legal advice may not emancipate the donor even if it has the effect of making the person in question understand the legal effect and consequences of the transaction. The value and relevance of Mr Hirst’s evidence therefore lies in what assistance it can give me as to whether Mrs Wedge was in fact subject to her son’s influence at the time.

Miss Temple set out a number of particular factors which she said tended to confirm the likelihood of Mrs Wedge having been subject to the influence of the Defendant when making the gift. Mrs Wedge was living in her son’s property at the time; was dependant on him for her housing and assistance; received no independent advice about the gift; stood to lose her entire capital and with it her financial independence; and was physically frail and vulnerable. The Defendant was, she said, in need of money and had a dominant personality. There was she submitted no real evidence to show that Mrs Wedge acted or was capable of acting independently of her son and the nature of the gift suggested that she did not do so.

These are important points but I think they overstate the strength of the Claimant’s case. All the evidence indicates that Mrs Wedge (although a diabetic and in her 70’s) was a strong personality well able to understand the effect of what she was doing and her reasons for doing it. There is no doubt at all that she was prone to loneliness following the death of her husband but she found company initially with her son and thereafter with her sister. Mrs Dixon was her constant companion both before the move to Scotland and for the remainder of her life after they returned to Darlington. There is no indication in the evidence of those who met her in this period (e.g. Mr Day) that she subsequently regretted the gift to her son or was unable to manage on the basis of her pension, gifts of money from her son and the hospitality of her sister. It was not a life of luxury but in my judgment that was not a concern for Mrs Wedge. She was comfortable in her sister’s home and it seems to me inconceivable that she would not have discussed with Mrs Dixon the gift of the money to the Defendant and her ability to continue to live with her sister for the foreseeable future prior to the gift.

The evidence is also that the idea of the gift came from Mrs Wedge. That was the evidence of both the Defendant and his wife. In a case such as this, I have to treat their evidence with obvious caution, but I regard them as witnesses whose evidence I can accept.

There is also evidence of a motive or explanation for the gift. Mrs Wedge was by 1993 aware of the money advanced by the Defendant to the Claimant and Mrs De Wind’s failure to repay it. It was said that Mrs Wedge did not have the whole story and that the money was an investment in a business in which the Claimant also suffered financial loss. As already explained, I do not accept that it was an investment as opposed to a loan but the fact is that Mrs De Wind chose to inflict her own financial difficulties on her entire family which on the evidence has caused a sense of bitterness and resentment amongst many of them. It seems that Mrs Wedge regarded the financial losses suffered by the Defendant as justifying the gift to him of the proceeds of sale of the Property. That was a decision which she made (whether rightly or wrongly) which was occasioned by an outside event and provides an explanation for her actions independently of the alleged influence of her son.

Even taking into account the factors relied upon by Miss Temple, I am not satisfied in this case that undue influence on the part of the Defendant has been established as the cause of the gift. This is not a case in which the Court has to assess the probability of undue influence simply on the basis of a bare outline of the nature of the transaction and the type of relationship which subsisted between mother and son. I have heard detailed evidence from the parties and other witnesses as to the sort of person Mrs Wedge was, her circumstances and feelings at the time of the gift and her conduct thereafter. There is in fact no positive evidence that she was under the influence of her son and the explanation for the payment given by the Claimant is one which I have rejected. I am satisfied on the basis of the evidence I have had including that of the Defendant and his wife that Mrs Wedge decided of her own volition to make a gift of the proceeds of sale to the Defendant and that she did not make this decision as a result of any influence or persuasion which he brought to bear. Her decision to give him the money was a response to the financial position brought about by his loan to the Claimant and her genuine concerns about the Claimant’s borrowings was of course on my findings a product of the concern which she naturally had for the wellbeing of her son. But that is not undue influence.

For these reasons the action will be dismissed.