England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CENTRAL LONDON COUNTY COURT
(His Honour Judge Dean QC)

		Royal Courts of Justice Strand London WC2 Friday, 8th February 2002

1. LORD JUSTICE WARD: This is an application for permission to appeal against the order of His Honour Judge Dean QC, sitting at the Central London County Court on 1st August 2001. He dismissed the application which had been made by the claimant, Mrs Arora. That application was in perfunctory terms: she sought a declaration that the legal charge be declared null and void. The legal charge, we now know, was granted in consideration of £140,000 and it was a charge over her home in favour of her daughter.
2. This is an unseemly family squabble between, on the one hand, a mother, Mrs Arora, a widow, and her son Narinder (of whom the judge formed the most unfavourable impression) and, on the other hand, the respondent, her daughter Anita. In a judgment which ran to 64 pages the judge made it clear that he was left in no doubt whatever, by whatever standard it would be appropriate to judge the case. The principal issues which seem to have been debated before him - certainly when the case was opened, without the benefit of any pleadings at all - was whether or not the daughter had lent her mother any money at all; and, as it was put in the skeleton argument submitted to the judge at the beginning of the trial:

"Did the claimant execute the charge in order to protect the property by putting it beyond the reach of Narinder or to secure the alleged debt to the defendant?

This trial lasted six days. In the closing submissions of counsel there was a further suggestion that there was a relationship of trust and confidence between mother and daughter and that there was therefore a presumption of undue influence against the daughter, this being a manifestly disadvantageous transaction.

The judge made the clearest possible findings of fact. They come under attack, well made by Mr Edwards, who has said everything one could possibly say. He has the disadvantage that he did not appear in the court below. He attacks the judge's findings that the daughter did in fact provide two tranches of money, £30,000 and £10,000, to assist the mother in the purchase of this property in, I think, 1980 or 1981. The daughter's case was that the money was given to her by her father whilst he was still alive. She hid it under the carpets to keep it from the grasping claws of her greedy brother, who was a man not averse to physical violence and who put pressure on everybody to help him service his frequent debts. The finding of the judge comes under attack because it is submitted that it was improbable that that money could have been made available by father to daughter, or that she would have hidden it under the carpet instead of putting it in the bank, or that so much could have been advanced.

There is no prospect, in my judgment, of successfully challenging those findings of fact because they were firmly made by a judge who heard the case for six days and who was in no doubt at the end of it. He was amply satisfied that the daughter's evidence was correct in substance. He dealt with the money quite explicitly in his judgment. He acknowledged, at p.12 of his judgment, the challenges that were made to it. He rejected the submission made to him that the evidence was beyond belief. He found that he had to have regard to the culture of the household, which was "cash rich". There may have been fiscal or taxation reasons for the willingness to deal in cash. He said (at p.21 of his judgment):

"She had hidden the cash about the house, particularly under carpets. She was cross-examined as to the details of where the carpets were and so on and minor discrepancies between her evidence in her statements were seized upon but they do not impress me."

3. He concluded (at p.61):

"I agree that Mrs Singh's account of money being given [by] her father and hiding it under carpet and the like between 1973 and 1978 looks improbable to professional Western eyes. But there is a strong cultural element here. ... I can perfectly understand, having heard Mrs Anita Singh, that her father would be concerned to protect her being his only unmarried daughter left, and not wishing her to be at the tender mercies of her brother.

In my judgment Mrs Singh's evidence was substantially correct."

4. There are other minor challenges made to the probabilities: for example, that this was not referred to by the mother in a will of 1984 and that there was no evidence to justify how the loan had grown from £40,000 to the £140,000 eventually secured. But the submission, in my judgment, wholly fails to take into account what is well established law. For that proposition one needs, perhaps, to cite only one passage from the judgment of Lord Sumner in Owners of Steamship Singleton Abbey [1927] AC 16 at p.47:

"... not to have seen the witnesses puts appellate judges in a permanent position of disadvantage as against the trial judge, and, unless it can be shown that he has failed to use or has palpably misused his advantage, the higher Court ought not to take the responsibility of reversing conclusions so arrived at, merely on the result of their own comparisons and criticisms of the witnesses and of their own view of the probabilities of the case. The course of the trial and the whole substance of the judgment must be looked at, and the matter does not depend on the question whether a witness has been cross-examined to credit or has been pronounced by the judge in terms to be unworthy of it. If his estimate of the man forms any substantial part of the reasons for his judgment the trial judge's conclusions of fact should, as I understand the decisions, be let alone. In The Julia (1) Lord Kingsdown says: `They, who require this Board, under such circumstances, to reverse a decision of the Court below upon a point of this description, undertake a task of great and almost insuperable difficulty. ... We must, in order to reverse, not merely entertain doubts whether the judgment below is right, but be convinced that it is wrong.'"

5. Lady Justice Arden, in refusing permission, gave detailed reasons why the findings of fact were beyond appeal. The sustained attempt by Mr Edwards to persuade us otherwise fails miserably, but that is not because of the lack of his argument before us: it is because the judge was uniquely well placed and he did use the advantage he had. He believed the defendant. He had supporting evidence from Mrs Seehra and Miss Jervis, both of whom made mention of monies passing from daughter to mother. There was ample evidence before him. All attacks on the judgment and findings of fact fail.
6. Mr Edwards does, however, attractively develop an argument that the judge failed fully to understand and give effect to the ordinary principles of undue influence, especially as they have been explained by Royal Bank of Scotland v Etridge (No 2) [2001] 4 All ER 449. He submits that there clearly was a relationship of trust and confidence between mother and daughter; that the transaction was manifestly to the mother's disadvantage; therefore, undue influence has to be presumed and the burden shifts on to the daughter to disprove it. That argument seems to have been touched upon below, albeit not as well developed as Mr Edwards persuasively puts it to us today.
7. The judge - as an example of how different the case being presented to him was from the one that has been presented to us - referred to "the ingenious legal principles put forward to support this claim". Each and every one he rejected and, one notes and gives emphasis to, he rejected on the facts. As to undue influence, he said (at p.64):

"There was no undue influence applied by Mrs Singh. Although Mr Symons' [the mother's solicitor's] care for Mrs Arora was something considerably less than adequate, I am satisfied, principally by the evidence of Mrs Jarvis (sic) and Mrs Seehra, that she knew perfectly well what she was doing. She wanted to do it and if she was subject to any undue pressure or influence, unconscionable behaviour or anything else, that was coming not from Mrs Singh but from Narinder."

8. I must examine that in a little more detail. At the time this charge was executed the mother, who is a Punjabi-speaking lady with no sufficient knowledge of English and who is certainly illiterate in the English language, was taken to see a solicitor, a Mr Symons. The judge was rightly critical of the advice he gave his client, the mother. It was contained in a letter that he wrote her, which is recited at pp.24-26 of the judgment. It contains this passage: "If however you feel that you wish to give your daughter a simple charge over your property so that she can demand from you the sum of £140,000 I have prepared such a charge which is enclosed. This is on the basis that at any time your daughter can demand the property and that you should repay this to her."
9. The judge characterised that letter as insufficiently containing reference to the effect of failure to pay the £140,000 one month after demand. He said that it did not seek to explain that failure to comply with the demand could result in the loss of the house altogether if Anita sought to enforce the charge. That perhaps did put the advice high. It may be that the sentence I have read could have been understood to inform the mother sufficiently of the effect of the charge.
10. This letter was, on the solicitor's advice, read to the mother by a Punjabi-speaking lady, Mrs Seehra. The judge was highly impressed with Mrs Seehra, much more so than with either of the solicitors who appeared and gave evidence to him. Mrs Seehra's evidence to the judge, which he accepted, included this:

"[Mrs Seehra's] opinion was that Mrs Arora wished to grant the charge in favour of Anita in order to frustrate Narinder. Also she formed the clear impression that Mrs Arora wished to repay money to Anita which she had borrowed and that she thought the charge was the best way of achieving both these objects. Mrs Seehra believed that Mrs Arora was fully aware of what she was involved in when she signed the draft charge."

11. The judge accepted her evidence without any hesitation at all, describing her as:

"... the most convincing oral witness who gave evidence in this case, bar none, including the two solicitors ..."

12. He said:

"Her evidence is virtually determinative in this case".

13. He went on, however, to deal with the charge. He said (at p.35): "The charge was signed without Mrs Arora receiving proper independent advice. But I am satisfied from Mrs Seehra's evidence that Mrs Arora fully understood what she was about. She wanted to sign the document. She wanted to sign it for two reasons: (1) to frustrate Narinder's designs on the property, (2) because, as she told Mrs Seehra in terms, she owed money to Mrs Singh, and she wished as it were to kill the two birds with one stone."
14. His conclusion was:

"Mrs Arora's evidence was given in a hesitant and in my judgment unwilling way. For most of it she could hardly be heard at all. ... She gave the impression of a frail person speaking words that effectively had been put into her mouth."

15. I interpose that the whole judgment is redolent of the fact that Narinder was putting words into her mouth.

"She had seized on four points, (1) that Anita had never given her money, and (2) that she had agreed to have the property back within two weeks. That is an improbable suggestion. To have gone through the exercise of executing a charge merely for a period of two weeks does not make any sort of sense even to a confused lady like Mrs Arora. ...

The evidence established that Mrs Arora was in fear and, I suspect, still is in fear of Narinder. She was under considerable pressure to procure the charge in favour of the Habib Bank at Narinder's assistance (sic) on 183 The Drive. She was perfectly willing to grant the charge in favour of Mrs Singh for two reasons: she wanted to put the property beyond Narinder's reach, not for two weeks, but permanently, I am quite satisfied, and because she recognised that years ago Anita had made a contribution to the purchase of 183 The Drive."

16. One must not overlook the mother's own evidence. This passage from the judgment will suffice:

"Mrs Arora's own case is that she was being put under pressure by Narinder to charge 183 The Drive as security to the Habib Bank for advances to be made to Narinder. It is common ground between the two parties, Mrs Arora and her daughter Anita, that she was anxious to frustrate any attempt by Narinder to acquire a charge in favour of himself for securing his own debts. Mrs Arora said that she was so anxious to do this that she was willing to enter into a transaction with Anita in order to prevent Narinder getting his clutches on the property."

17. That, I repeat, was said by the judge to be common ground: that she was so anxious to do this that she was willing to enter into a transaction with Anita in order to prevent Narinder getting his clutches on the property.
18. In the light of those findings of fact, which are unassailable on appeal, wherein lies the force of Mr Edwards' submissions on undue influence? Assume for a moment that there was trust and confidence reposed. The next question is whether this was "manifestly disadvantageous", in the old terminology now disapproved of by their Lordships in Etridge (No 2). The test suggested now is that advanced by Lord Scarman in Morgan's case, which I can recite as follows: the need for evidence that the transaction itself was wrongful in that it constituted an advantage taken of a person subjected to the influence which, failing proof to the contrary, was explicable only on the basis that undue influence had been exercised to procure it. In this case, the only explanation being undue influence, the explanation accepted by the judge was that the mother willingly agreed to put her property out of her son's reach by conferring a charge in favour of her daughter, and it was common ground that she was willing to do so.
19. There is, I accept, force in Mr Edwards' submission that, looking at the witness statement of Mrs Seehra, the case might have been run very differently. He draws our attention to the fact that in that witness statement Mrs Seehra says this:

"Mr Symons [the solicitor] wanted to be sure that Mrs Arora knew exactly what she was doing. Mrs Arora was very worried because she did not want to be thrown out of her own home and she also wanted to grant the Legal Charge to Anita because she owed money to her. She felt that the legal charge was the best way to sort out both of these problems, namely, preventing her son from selling the property and ensuring that Mrs Singh would get the money she was owed."

20. Mr Edwards' point, which is well made, is that in fact she was incurring the very risk she was anxious to avoid. But I cannot accept that the judge was unaware of what he had to be satisfied of, namely that she knew, as the product of her own free will, that she was giving a charge to her daughter to put the property out of Narinder's clutches. This was one of the main purposes of the exercise, the other being to secure money that was earlier borrowed.
21. In my judgment the attempt to allege undue influence fails on the facts. The judge was entitled to conclude that there was no undue influence; that the mother trusted the daughter, fully understanding that the preferable course for her to take was to trust the daughter rather than to succumb to improper pressure from her son. Her purpose was achieved in a way that she understood sufficiently for the judge to be justified in his conclusion that her claim to set aside the charge should be dismissed.
22. I therefore dismiss this application.
23. LORD JUSTICE MANCE: I agree with the entirety of the reasons and conclusions expressed by Lord Justice Ward. I add only a few comments on the particular subject of undue influence.
24. I start by accepting that trust must have been reposed by Mrs Arora in Mrs Singh, although Mrs Singh lived separately in 1998, while Mrs Arora was living with her son Narinder. On the judge's findings, Mrs Arora did not, however, trust Narinder, with whom she lived, although she was clearly under his influence. She knew that he would get at any asset which she retained, including her home, particularly by way of charging the same, if he could, to his bankers. On the judge's findings, Mrs Arora decided in these circumstances (in her own words to Miss Jervis at the Land Registry) to give her daughter £140,000 and to register a charge in favour of Mrs Singh on that basis. The £140,000 was, on the judge's findings, which I agree cannot seriously be challenged, also related to the fact that there existed an old outstanding loan of £40,000 dating back to the original purchase of the house in about 1982. That, on the judge's findings, was probably updated to £140,000 by reference to the perceived market value of the house in 1998, so as to leave nothing for Narinder.
25. Is that transaction liable to be set aside for undue influence? An unsatisfactory absence of pleadings means that there was no indication that that was an issue prior to trial and it did not feature in the claimant's opening skeleton. However, the course of the evidence evidently led it to emerge and it appeared formally in a final closing submission on law. However, there Mrs Arora's case was put solely by reference to the unlikelihood of her wanting freely to give a charge for £140,000. It was said that that was unlikely whether or not there had been a £40,000 loan. The emphasis now before us by Mr Edwards has been expanded to include other matters, particularly a submission that there were other suggested ways in which the property might more beneficially have been kept out of Narinder's way without recognition of indebtedness of £140,000 or exposure by a charge of the property to cover that sum.
26. The judge rejected unequivocally the case of undue influence put before him, in the passage which my Lord has read - and, of course, he did not consider the further points now raised before us. That seems to me to be the first hurdle to any grant of permission to appeal. The judge accepted that there was no adequate independent legal advice, but he nevertheless held that there was no undue influence in the light of Mrs Arora's statements to Miss Jervis and Mrs Seehra's evidence, which my Lord has recounted. I see no real prospect of this court reaching any alternative conclusion, even taking into account the wider submissions which Mr Edwards has developed.
27. Taking the test in Royal Bank of Scotland v Etridge (No 2) [2001] 4 All ER 449, I do not consider that the transaction was, or can be said now to be, either prima facie or in the light of the other evidence called and the judge's findings, "explicable only on the basis that it was procured by the exercise of undue influence". On the contrary, it seems to me a very explicable transaction if, and because, Mrs Arora trusted Anita Singh but did not trust Narinder. Narinder's influence, as found by the judge (and, according to the judgment, it was manifested by the proceedings themselves), was so strong that it would have extracted any asset from Mrs Arora which she had retained. That would have gone to secure his bank's indebtedness, and Mrs Arora would have been at very positive risk of losing her home to a third party if she had retained any such interest. That is so, in my judgment, whether the interest was legal or purely beneficial. She preferred to preclude this by giving Mrs Singh a charge for a £140,000 outlet. I find that an explicable transaction and I would refuse permission to appeal.
Order: application for permission to appeal dismissed.