QUEEN'S BENCH DIVISION
Strand, London, WC2A 2LL
B e f o r e :
| VIOLET HACKETT
|- and -
|(1) CROWN PROSECUTION SERVICE
(2) DAVID HACKETT
James Fletcher (instructed by The Proceeds of Crime Unit of the Crown Prosecution Service) for the First Defendant
Martin Evans (instructed by Sternberg Reed) for the Second Defendant
Hearing dates: 12, 13 and 14 April 2011
Crown Copyright ©
MR JUSTICE SILBER:
II. The Chronology
III. The Issues
IV. The Witnesses
V. The Source of the Cash Deposited in Nationwide by the Claimant
"Enquiries are ongoing to identify other journeys by the [second] defendant on which he was not intercepted by Customs officers".
VI. Presumed Undue influence
"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".
"60. It is plain from his speech that he was using the phrase "a transaction which calls for explanation" as shorthand for the formula in Allcard v Skinner."
That "formula" was, the transaction must be one which is "not to be reasonably accounted for on the grounds of friendship, relationship, charity or other ordinary motives on which ordinary men act".
i) Was there a relationship between the claimant and the second defendant such that a potential claim of presumed undue influence arises? The burden is on the claimant to establish this relationship;
ii) If there is such a relationship, is there a transaction arising out of the relationship that calls for evidence of the free exercise of the will of the claimant as a result of full, free and informed thought? The burden is on the claimant to prove the existence of such a transaction; and
iii) If there is such a transaction that requires evidence of the full exercise of the will of the claimant as a result of full, free and informed thought, then can the CPS (as the party seeking to counter the inference of undue influence) discharge the evidential burden and provide a satisfactory explanation?
(ii) Was there a relationship of presumed influence between the claimant and the second defendant such that a potential claim of presumed undue influence arises?
(iii) Is there a transaction arising out of the relationship between the claimant and the second defendant that calls for evidence of the free exercise of the will of the claimant as a result of full, free and informed thought?
(iv) Can the CPS (as the party seeking to counter the inference of undue influence) discharge the evidential burden and provide a satisfactory explanation for the transfer so that the presumption in favour of undue influence can be rebutted?
"61. If that is shown, as Lord Nicholls said, the presumption of undue influence applies, that is to say, the court will presume that the transaction was procured by undue influence exercised by one party over the other, in other words by the abuse by the one of the position of influence that he has over the other. In such a case it is then up to the one party to prove that the transaction was not procured by an abuse of his position of influence but was rather the free exercise of the will of the other party as a result of full, free and informed thought. Lord Nicholls' phrase "in the absence of satisfactory explanation" in paragraph 14 of Etridge refers to the dominant party satisfying this burden of showing that the transaction was not procured by undue influence. Full understanding of the transaction is of course necessary but by no means sufficient, because the problem is lack of independence, not lack of understanding. As was said by Buxton LJ in Turkey v. Awadh EWCA Civ 382 at paragraph 15:
'He would normally discharge that burden - as, for instance, now at least occurs in husband and wife cases - by showing that the Defendant entered into the matter with his will fully unconstrained, usually with the benefit of independent legal advice'".
"65… approached the case on the basis that it would be sufficient for Mr Smith to show that there was a reasonable explanation for the transaction or that it was not manifestly to Miss Cooper's disadvantage….
66. It seems to me that the judge asked himself the wrong question at this stage of the analysis. He did not consider whether Mr Smith had discharged the burden of proving that Miss Cooper entered into the transaction of her own free will, independently of, and not in any way as a result of, the influence that Mr Smith was in a position to exercise over her".
"20…Although undue influence is sometimes described as an 'equitable wrong' or even as a species of equitable fraud, the basis of the court's intervention is not the commission of a dishonest or wrongful act by the defendant, but that, as a matter of public policy, the presumed influence arising from the relationship of trust and confidence should not operate to the disadvantage of the victim, if the transaction is not satisfactorily explained by ordinary motives: Allcard v. Skinner (1887) 36 Ch D 145 at 171. The court scrutinises the circumstances in which the transaction, under which benefits were conferred on the recipient, took place and the nature of the continuing relationship between the parties, rather than any specific act or conduct on the part of the recipient. The court may set a transaction aside, even though the actions and conduct of the person who benefits from it could not be criticised as wrongful."
"20… Proof 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."
"..of course, the mere fact that legal advice is obtained cannot suffice, unless it is proper to infer that it must have led to a decision based upon full, free and informed thought".
a) Where independent advice is given "it must be given with knowledge of all relevant circumstances and must be such as a competent and honest advisor would have given if acting solely in the interests of the donor" (per Lord Hailsham LC in Inche Noriah v Shalik Allie Bin Omar  AC 127, 135-136);
b) It is unlikely that this requirement will be satisfied if the person allegedly receiving the advice is together with the person who is regarded as exerting the alleged undue influence. "Lord Browne-Wilkinson stressed the need for the wife to be seen and communicated with separately from her husband. This was clearly appropriate since, if the purpose is to satisfy oneself that the wife is acting freely in knowledge of the true facts, an interview in the presence of the husband is unlikely to achieve this objective if she has been improperly influenced by him. Lord Browne-Wilkinson concluded that the requirement of a personal interview did not impose such an additional administrative burden as to make the bank's position unworkable". (per Lord Hobhouse in Etridge );
c) It is important that the independent person gives advice so that the recipient of that advice is able to reach a decision knowing the nature and the consequence of what they are being asked to do. "All that is necessary is that some independent person, free from any taint of the relationship, or of the consideration of interest which would affect the act, should put clearly before the person what are the nature and the consequences of the act. It is for adult persons of competent mind to decide whether they will do an act, and I do not think that independent and competent advice means independent and competent approval. It simply means that the advice shall be removed entirely from the suspected atmosphere; and that from the clear language of an independent mind, they should know precisely what they are doing." per Fletcher Moulton LJ In Re Comber, Coomber v Coomber  1 CH 723, 730 approved by Lord Nicholls in Etridge ;
d) "Advice will not be independent if the solicitor is acting for both the claimant and the defendant" (Smith v Cooper ); and that
e) If the advice is inadequate, it may not rebut the presumption see Inche Noriah (supra) where the solicitor was not fully aware of the circumstances surrounding the transaction;
Re: Mrs Violet Hackett and Mrs Copsley, who are both deaf, and Mr Hackett
4 October 2004
Would have preferred to see client without Mr Hackett present, but unfortunately was very very difficult as both her and Mrs Copsley are profoundly deaf and they would, it would appear, only speak via Mr Hackett properly. I explained whilst directing my comments to Mrs Copsley and Mrs Hackett, and they discussed matters between them, but again being profoundly deaf it was very difficult to make out what they were saying. Mr Hackett translated for me, and when he translated back the replies he did not twist the words nor make them different to those which I had used. I believe it is probably of her own free will however I am not entirely satisfied that she is fully capable of making this decision even though she was aware and did listen to me and did nod at the appropriate moments when I explained the situation.
1. Explained loss of asset. By transferring loses asset, loses control, and loses the possibility of raising future capital by home equity release.
2. Mentioned IHT liability, definition 7 years and the tapering of this.
3. Mentioned care costs, and explained the policy of local authority's care costs and the like and explained that bottom line of it was if local authority felt that transfer was done to put beyond care, they could take action. Mr Hackett confirms that he is the sole carer of Mrs Hackett, no other party, so I would imagine that this is not a major cause for concern. He is not worried nor is she worried, but obviously I made it clear that there is this possibility.
Queried over mental capacity and sensed that she understood, but as going to put everything in writing cannot really do much more.
4. Queried over duress. Did not seem to be any duress, and she seemed perfectly happy, Mrs Copsley also seemed perfectly happy. Slight concern when impression given that Mrs Hackett was not too happy, but thinks this was more to do with circumstances and her being here than the transfer. At no point did she query the transfer, make any comment, nor look to Mr Hackett before answering my questions.
Said we would draw up documentation, send, in light of fact client wishes for it as soon as possible, and wishes to complete by Saturday as client goes away on Saturday.
a) Mr Stevens acted for both the claimant and the second defendant in arranging the transfer of title from the claimant to the second defendant. This totally undermines the idea that the claimant with all her difficulties received independent advice which was essential if this claimant was to be emancipated;
b) His attendance note does not show that the claimant was emancipated in the sense of being given the options open to her bearing in mind that in the presumed undue influence case of Pesticcio v Hart (supra) the claim was upheld where the solicitor failed the test explained by Mummery LJ (with my emphasis added) that "23…It is necessary for the court to be satisfied that the advice and explanation by, for example, a solicitor, was relevant and effective to free the donor from the impairment of the influence on his free will and to give him the necessary independence of judgment and freedom to make choices with a full appreciation of what he was doing". This test entails the claimant being told of the options so as to have the freedom to make the "choices" with a full appreciation of what she was doing and there is no evidence that she was provided with choices such as reserving the right to receive the rents from the house after it was transferred to the second defendant;
c) He could not give advice on all the relevant circumstances as there is no evidence in the attendance note or in the letter that he knew of a number of very material circumstances, such as what other assets the claimant owned other than his statement in the letter that the house was "your sole major asset", what the valuation was of those assets, what income she received and from what sources, what her costs of living were, how much income would be lost to her from transferring the property to the second defendant and so depriving her of the legal right to the rent, whether there were any potential charge to inheritance tax to the claimant's estate as he did not have any information to see whether her assets might exceed the threshold for IHT then in force of £263,000. So Mr. Stevens did not have in the words of Lord Hailsham "knowledge of all relevant circumstances."
d) The continuous presence at the meeting of the second defendant, who was the person who was the source of the presumed undue influence when the advice was given at the only meeting which Mr. Stevens had with the claimant conflicts with the general rule that the person, who would be the subject of the presumed undue influence (who in this case was the claimant) should be seen separately from the source of the presumed undue influence, who in this case was the second defendant. In my view, the vulnerability of the claimant as an elderly illiterate person meant that it was essential that she was seen alone before Mr. Stevens could have been satisfied that the claimant had genuinely decided to transfer the house as a result of full, free and informed thought. Unfortunately, this was not done;
e) The fact that at that meeting Mr. Stevens could not communicate with the claimant but had to rely on the second defendant because in the words of Mr Stevens "Mr Hackett translated for me". This meant that it is at best uncertain as to whether the claimant when transferring the house, was emancipated from the second defendant's presumed undue influence;
f) The words emphasised in the attendance note set out in paragraph 76 above (such as "I am not entirely satisfied that she is fully capable of making this decision")show that even Mr. Stevens was not satisfied that the claimant understood what the implications were of proceeding with the transfer of the house to the second defendant; and that
g) The advice in the letter of 6 October could not have led to a decision based on "full, free and informed thought" because the claimant could not read the letter and it was going to be read to her if at all, by the second defendant. Mr. Stevens took no steps to ensure that the claimant had the letter read to her in a way in which she could understand it. The evidence of the second defendant set out in paragraphs 78 and 88 indicate that the terms of the letter were not read to the claimant. Bearing in mind that the onus of proof was on the CPS, I am not satisfied that the claimant had this letter read to her.
VII. Non Est Factum
"As to persons who are illiterate, or blind, or lacking in understanding, the law is in a dilemma. On the one hand, the law is traditionally, and rightly, ready to relieve them against hardship and imposition. On the other hand, regard has to be paid to the position of innocent third parties who cannot be expected, and often would have no means, to know the condition or status of the signer. I do not think that a defined solution can be provided for all cases. The law ought, in my opinion, to give relief if satisfied that consent was truly lacking but will require of signers even in this class that they act responsibly and carefully according to their circumstances in putting their signature to legal documents."
"I then simply put the document in front of her sign and returned it to the solicitor. That was a transfer of the cottage from my mother's name into my name I did not explain the terms of the letter or the document to my mother. There was no money paid for the transfer".
"There must be a heavy burden of proof on the person who seeks to invoke this remedy. He must prove all the circumstances necessary to justify it is being granted to him, and that necessarily involves his proving that he took all reasonable precautions in the circumstances" (per Lord Reid in the Saunders case at page 1016).