English and Welsh Courts - Miscellaneous

IN THE LEEDS COUNTY COURT
CHANCERY BUSINESS

		The Court House Oxford Row Leeds LS1 3BG
		13 August 2013

Judge Behrens :

1 Introduction

1. This is a claim by the Claimant, Colette Pearce following the death of her father, John Pearce on 23^rd July 2008. Colette Pearce seeks to challenge a number of transactions made by her father which are said to be subject to the undue influence of the Defendant, Elizabeth Beverley or are otherwise voidable. She also challenges the validity of the will he purported to make on 20^th June 2007.
2. The transactions that are challenged are:

1.. The transfer on 19^th June 2006 of 1 Rose Grove, Luddenfoot, Halifax ("1 Rose Grove") into the joint names of John Pearce and Elizabeth Beverley.

2.. The sale of 1 Rose Grove on 14^th September 2007 with the net sale proceeds of £117,080.33

3.. The Purchase of 23 Turn Lea, Midgley, Halifax ("23 Turn Lea") on 14^th September 2007 into the joint names of John Pearce and Elizabeth Beverley for £124,500. Although the net proceeds of sale of 1 Rose Grove were used to pay in part for the purchase there was in addition a loan of £47,000 from the Leeds Building Society. There was an overall surplus of £48,907.05 arising out of the transaction. This sum was paid into a joint account^[1] in the name of Elizabeth Beverley and John Pearce.

4.. The sale on 31^st August 2007 of 38 Mitchell Street, Sowerby Bridge ("38 Mitchell Street") for £62,000. The net proceeds of sale amounting to £61,415.17 were paid into the joint bank account.

5.. The execution, on 20^th June 2007, by John Pearce of will under which he left his whole estate to Elizabeth Beverley.

6.. The payment on 29^th September 2008 to Elizabeth Beverley of £24,511 being the net proceeds of sale of the Liverpool Victoria ("LV") life policy.

7.. The purchase on 16^th May 2008 by Elizabeth Beverley of 48 Burnley Road , Mytholmroyd ("48 Burnley Road") to Elizabeth Beverley.

8.. The purchase on 24^th August 2010 by Elizabeth Beverley and her husband, Gary Michael Beverley of 1 Hebble Vale Drive, Halifax for £170,000.

3. It is not in dispute that there was a relationship between John Pearce and Elizabeth Beverley from late 2005 to the date when he died. The precise nature of the relationship is less clear as Elizabeth Beverley has been described variously as "partner, ex-partner, friend and carer". It is also not in dispute that John Pearce trusted Elizabeth Beverley with the management of his financial affairs. In summary it is Colette Pearce's case that Elizabeth Beverley abused that trust so that she in effect acquired all his assets at the expense of his daughter and grandchildren.
4. Elizabeth Beverley has acted throughout these proceedings as a litigant in person. In addition she suffers from ill health. Apart from the fact that the legal issues which arise are by no means straightforward this has given rise to problems in relation to disclosure. It has not been alleged that she has completely ignored her disclosure duties but it has been alleged that there have been significant failures to comply with court orders. In the result at a hearing on 7^th May 2013 at which Elizabeth Beverley did not attend Judge Saffman recorded a partial failure to comply with the disclosure obligations and declared that Elizabeth Beverley was debarred from defending the claim and could not take part in the hearing unless the court gave permission. Significant further documentation was produced by Elizabeth Beverley after 7^th May 2013 and further documentation was produced during the course of the trial. In those circumstances I took the view that it would not be in accordance with the overriding objective to prevent Elizabeth Beverley from participating in the trial. I accordingly permitted her to take part but indicated that in so far as disclosure remained incomplete I would draw appropriate inferences. I also indicated that I would take account of the fact that as the material had been disclosed so late there had been no opportunity for Colette Pearce's advisors to amend the claim to deal with it. The best example of this related to the proceeds of the LV policy which is not mentioned in the pleadings but which was only disclosed very shortly before the trial.
5. 12 witnesses were called on behalf of Colette Pearce. A number of members of John Pearce' family were able to paint a picture of John Pearce both before and during his relationship with Elizabeth Beverley. In addition I heard from Mary Mahon, a solicitor practising in Hebden Bridge who was consulted shortly before John Pearce made the will on 20^th June 2007. Only Elizabeth Beverley gave evidence on her own behalf.

2 The facts

2.1 Background

6. John Pearce was born on 8^th November 1943. He married on 24^th November 1962. His daughter, Colette Pearce was born on 1^st February 1963. He worked in the oil industry on oil rigs. It will be necessary to summarise his health problems later in the judgment. By late 2005 he was not a well man.
7. In 1971 John Pearce and his first wife separated and were subsequently divorced. Colette Pearce lived with her father from 1971 to 1972 and from 1977. In 1979 John Pearce purchased 38 Mitchell Street for his daughter to occupy. It is not clear when Colette Pearce moved into 38 Mitchell Street but she has remained there ever since. She has not occupied 38 Mitchell Street rent free. Initially the rent was £10 per week. It was not always collected. In the late 1990's when there was little work on the oil rigs John Pearce increased the rent to £40 per week. Later it was increased to £65 per week. Colette Pearce was for the most part unemployed and this rent was paid out of her housing benefit. According to Colette Pearce her father told her that she would always be able to live there. This evidence was supported by a number of members of the family.
8. Colette Pearce has 3 children – Zoe (d.o.b 17/1/1987), Chelsea (d.o.b 13.5.1991) and Nathan (d.o.b 9/3/2000). There was considerable evidence to the effect that at least until 2006 and probably until 2007 John Pearce and his daughter were extremely close. This was the evidence of Colette Pearce, John Pearce's uncle Billy Pearce and a number of the witnesses who were called on behalf of Colette Pearce. He visited his daughter and grandchildren frequently and took great pleasure being with them all.
9. In 1985 John Pearce started a relationship with Jane Howarth. In 1997 they were married and the marriage subsisted until 2004 when Jane Howarth left John Pearce for a younger man. It is common ground that John Pearce was badly affected by the breakdown of his second marriage. He was lonely and depressed. He spent a lot of time with his daughter in the immediate aftermath of the separation frequently sleeping overnight.
10. Elizabeth Beverley was born in 1957. She had a brief relationship with John Pearce in 1976 when she was 19. According to Elizabeth Beverley it lasted about 6 months. Thereafter she knew him as a friend/acquaintance. She married Garry Beverley and together they had two daughters. In evidence she said the marriage was not happy. She said her husband had depression and was an alcoholic. They jointly owned their matrimonial home.

2.2 The relationship

11. The relationship with which this case is concerned began in the spring of 2005. The details do not matter. According to Elizabeth Beverley she was "working" without a wage at a hairdressing salon when she saw John Pearce. They went for a coffee; John Pearce was distraught as a result of Jane Howarth leaving him; she had problems with her marriage. In any event she left her husband in April 2005 and moved in with John Pearce.
12. As already noted there are varying descriptions of the relationship. Elizabeth Beverley accepted that there was not a sexual relationship between them. In a letter dated 9^th July 2007 from Dr Agarwal (a psychiatrist) who assessed John Pearce on 5^th July 2007 she is described as "a friend" and "ex partner" in the following passage:

His ex-partner whom he met a couple of years ago is still with him as a friend but she will leave him as soon as his property is sold. After that he is planning to move to Sowerby Bridge where he owns his own house. The house is being taken care of by his only daughter who is about 40 years old. Both John and Liz feel that the daughter will not return the house to him The relationship is not good between him and his daughter.

13. As will appear later in this judgment 1 Rose Grove was sold in September 2007 whereupon John Pearce moved into a one bedroom property 23 Turn Lea. Elizabeth Beverley moved back to the matrimonial home with her husband, not as a couple, for about 3 months. After that she moved into rented accommodation for a further 3 month whereupon she moved into 23 Turn Lea.

2.3 The divorce negotiations

14. The financial aspects of the divorce between John Pearce and Jane Howarth were contested. Both sides instructed solicitors. Colette Pearce obtained and introduced in evidence the file of Jane Howarth's solicitors.
15. John Pearce's financial statement dated 18^th October 2005 revealed:

1.. His capital assets comprised a half share in 1 Rose Grove, valued at £195,000 but subject to a mortgage with £32,155 outstanding and an absolute interest in 38 Mitchell Street valued at £76,500 with a mortgage of only £51. He had no significant savings. He had a critical illness policy with LV.

2.. He was in receipt of incapacity benefits and his earning capacity had been substantially reduced Because of his state of health there was a good chance that he would not return to work and would be dependent on state benefits.

16. In a further document dated 20^th December 2005 he stated that Elizabeth Beverley had a health problem, was in receipt of incapacity benefit and disability living allowance. He stated that she had no assets. On any view this was untrue. Elizabeth Beverley had a half share in the matrimonial home she shared with her husband. In addition she had savings from various sources.
17. It is plain (and not in dispute) that Elizabeth Beverley played a significant part in the negotiations from at least September 2005. Thus in September 2005 she rang Jane Howarth offering to buy out her interest in 1 Rose Grove for £50,000.
18. On 31^st January 2006 she attended with John Pearce a Family Dispute Resolution hearing before DDJ Barry. It is plain from the file that the parties nearly reached agreement at that hearing. The negotiations were on the basis that 38 Mitchell Street would be retained but that 1 Rose Grove would be sold. Jane Howarth was seeking 63.8% of the proceeds of sale and at one stage that figure appeared to be agreed. However John Pearce changed his mind and only offered 60%. In the result the FDR was adjourned. Subsequently John Pearce agreed the original figure of 63.8%
19. Shortly afterwards on 6^th February 2006 John Pearce dispensed with the services of his solicitors and allowed Elizabeth Beverley to carry out all the negotiations on his behalf.
20. On 27^th March 2006 she put together a detailed offer based on a remortgage of 1 Rose Grove taking into account various fees which would be incurred if it were sold and work that needed to be done. Basing the offer on the figure of 63.8% she made an offer of £101,117.76. Eventually after much further negotiation the parties settled on a figure of £103,500 and a consent order was drawn up following the hearing on 30^th March 2006.
21. When she gave evidence Elizabeth Beverley accepted that she had acted for John Pearce in the divorce. She accepted that he trusted her implicitly with his financial affairs. However she also said that all of the offers that she made were on the express instructions of John Pearce. Everything was discussed with him before any offers were made.

2.4 John Pearce's health

22. There is no expert report in relation to John Pearce's health or his mental capacity at any time. However Colette Pearce has obtained, as part of her case, the medical records which include the GP records and a number of letters addressed to his GP, Dr Moore by various consultants. It is thus possible to obtain a reasonable picture of his health problems which may be summarised:

1.. In January 2003 he had a heart attack. This kept him off work for some time but by March 2005 he was said to be working full time.

2.. By September 2005 he was suffering from knee joint pain and was given a medical certificate entitling him to be off work. As far as can be seen from the medical reports he did not work again.

3.. He suffered from partial kidney failure. This is first noted in a letter dated 17^th March 2005 where it is described as moderately severe. In a letter dated 22^nd February 2006 it is described as relatively stable. As I understood Elizabeth Beverley's evidence he never actually reached the stage where he had to have dialysis.

4.. In November 2006 he was seen by a neurologist complaining of a difficulty in speaking which had been going on for 12 months. Most of the time his speech became slurred and sometimes he could not find the right words. The neurologist noted "a long standing history of anxiety, depression, degenerative disease and chronic kidney disease" The neurologist considered whether he was suffering from Parkinson's disease but concluded that it was too early to form a diagnosis.

5.. By March 2007 John Pearce had been diagnosed with prostate cancer and was receiving hormone treatment.

6.. On 4^th May 2007 he was seen in the renal clinic at Leeds. Although there was no change in his renal condition the Consultant noted

His behaviour was almost catatonic in clinic, sometimes forgetting his birthday and becoming mute. This made consultation very difficult though I was able to explain to him that I thought he was suffering from a severe depression

7.. Similar his consultant oncologist noted on 10^th May 2007:

I was struck by his blank expressionless face and paucity of movement during the interview. His ex partner was with him in clinic and felt that the symptoms had progressed over recent months. I understand he had a normal brain scan a few months ago. It struck me that he had many of the features of Parkinson's disease.

8.. In July 2007 he was seen by a psychiatrist. The report merits reading in full but includes a number of relevant matters:

His mood started going down from March this year … He mentioned that he forgets things very easily. He does find difficulty understanding things and also in remembering words. …It was evident that he could not express himself very clearly.

… His speech was slow in volume rate and rhythm. The content was appropriate but there was difficulty in understanding things and expressing himself. In terms of cognition he was not orientated to place but he was orientated to time and person. There was some evidence of memory loss both long terms and short term. It was very difficult to complete MMSC as he was unable to concentrate or think on any question. It was difficult to say whether it was due to early dementia or speech difficulty or anxiety.

The psychiatrist concluded he was suffering from adjustment disorder owing to his physical illness and social issues.

9.. By November 2007 he had been diagnosed with Parkinson's disease. In July 2008 he had an accident when he was knocked over by a dog. He was admitted to hospital and did not recover. He died on 28^th July 2008.

2.5 The relations with Colette Pearce

23. As already noted there is considerable evidence supporting the view that there was a close relationship between Colette Pearce and her father until at least late 2005.
24. In her witness statement Colette Pearce suggests that relations started to go wrong after November 2005 when her father came to her daughter's wedding. She describes Elizabeth Beverley as dominating her father from then. Over the next 12 months she saw less and less of her father. When she did manage to see him she formed the view that her father's health was deteriorating and that he was having difficulty in speaking. He had become vague and asked her to leave things as they were.
25. In April 2007 Colette Pearce attempted to involve John Pearce's GP. Dr Moore. The medical notes record:

Collette very worried re her dad mental state and his well being suggest will … together with her dad and then can discuss. Happy with this will phone him tomorrow to discuss and arrange.

26. It is plain from subsequent notes that Dr Moore attempted but failed to arrange a meeting between Colette Pearce and her father.
27. In June 2007 Colette Pearce attended the offices of Social Service. The file note suggests that she expressed concerns about the control Elizabeth Beverley was exercising over his financial affairs.
28. Shortly after this John Pearce formed the view that Colette Pearce was not his daughter. It is not clear why or how he formed that view. I was asked to infer that that it was as a result of something Elizabeth Beverley said or did. There is however no direct evidence of this and it may be evidence of his declining mental health.
29. It is clear that about this time Colette Pearce was asked if she would leave 38 Mitchell Street as John Pearce was selling 1 Rose Grove and needed somewhere to live.
30. During the course of the hearing Elizabeth Beverley produced the detail record from the Social Security file. This contains a number of entries that shed light on the relationship:

1.. A home visit in the presence of Bill Pearce on 24 July 2007. In that meeting Bill said

… confirmed that Liz a good friend and is very supportive and has helped John a lot and takes nothing from him. John's daughter is not happy because John owns the house she lives in and has paid very little rent and now she has been asked if she would consider moving …John is managing at present with a lot of support from Liz …

2.. A telephone call from Elizabeth Beverley dated 7 January 2008 in which Elizabeth Beverley made a number of allegations against Colette Pearce. She accused Colette Pearce of abusing her father and becoming aggressive so that Elizabeth Beverley had to call the police. She also accused Colette Pearce of harassing her father for money.

3.. A telephone call from Elizabeth Beverley dated 3 April 2008 where Elizabeth Beverley made a number of further allegations against Colette Pearce. It is to be noted that John Pearce was described as "vulnerable". Colette Pearce was accused of trying to manipulate him and messing with his head. Elizabeth Beverley accused Colette Pearce of harassing both her and John Pearce.

31. Bill Pearce, John Pearce's eldest brother, gave evidence on behalf of Colette Pearce. He has considerable experience with working with vulnerable adults. When he gave evidence he described how John Pearce was cut off from the rest of the family. He accepted that he may have made the comments recorded in the Social Services Notes but said that they did not represent his view. He said that the needed to be there with John and that he was "stretched to the eyeballs".
32. In his witness statement he expressed the view that Elizabeth Beverley both dominated and manipulated John Pearce. When they were together he did not speak. Some four weeks before he died Bill Pearce remembers John Pearce saying that he was scared of Liz

2.6 The Will

The visit to Ms Mahon

33. Ms Mahon is a solicitor. She is a sole practitioner who has practised in Valley Road, Hebden Bridge for 23 years. She practices in conveyancing, family law, probate and will writing.
34. On 18^th June 2007 Ms Mahon attended John Pearce for the purpose of making a will. He was accompanied by Elizabeth Beverley.
35. There is a conflict of evidence as to what happened at the interview. Ms Mahon did not make a file note of the meeting. She however said she had a clear recollection of it as it was one of the most unusual situations she has been in. She also had the benefit of a file note taken some 21 months later.
36. Elizabeth Beverley informed her that John Pearce was unable to speak for himself but that he wanted to change his will and leave everything to her. Ms Mahon was concerned as to whether John Pearce had the necessary capacity given his inability to speak. She accordingly asked if it would be all right if she contacted his GP. John Pearce nodded his assent. In any event she took the view that he was clearly vulnerable and that speaking to his GP would not prejudice his position.
37. According to Ms Mahon she outlined the issues as she saw them. Those related to John Pearce's capacity and the need to establish that the instructions reflected John Pearce's wishes. At that stage Elizabeth Beverley got angry. Ms Mahon thought that she believed that Ms Mahon was accusing her (Elizabeth Beverley) of wrongdoing. At that stage she stormed out of the office leaving John Pearce with Ms Mahon.
38. In cross-examination Ms Mahon described the meeting as brief lasting much less than half an hour.
39. On 20 June 2007 Ms Mahon spoke to Dr Moore. The medical note reads:

Third party encounter with Mary Mahon solicitor concerned re John's state of mind as was asked to make out a will. John gave his consent for me to talk to her. Explained psych review coming up soon would give more insight. She did not feel he was capable to instruct.

40. Elizabeth Beverley's account of the meeting is different. My note of her cross examination reads

At John's request I made an appointment to see Mary Mahon
I did not do all the talking
I did not say that John Pearce was unable to speak for himself
I did say John Pearce had trouble with his speech and that he wanted to make a will.
I was asked to leave the room which I did – I was told that it would only be 10 - 15 minutes.
She asked to come back after about half an hour
I agree that she then said she was concerned about his capacity to make a will and that she needed John Pearce's permission to consult a doctor.
I looked at her desk and she had already written a foolscap sheet in front of her
The fact that I had been out for 30 minutes – she appeared to be talking over John's head to me.
I therefore knew that John could understand what was being said. I said to John that I would leave him there to make his own decision. It was John's
I left the room for another 10 minutes
He came out and we drove home in the car.
She did not tell me about capacity initially.
I was not angry
I did not say that she was accusing me of doing something untoward
I felt it. I did say I had stage 2 sign language.
I spoke to John and said I will leave you here
It is not the case that I was anxious to get the will made

41. Even though Ms Mahon has no contemporaneous note of what happened I have no hesitation in preferring her evidence to that of Elizabeth Beverley. It is inherently more likely. Ms Mahon is independent and has no reason not to tell the truth. Her evidence is consistent with what she said on 11 March 2009 when she described her recollection as "clear". It is consistent with Dr Moore's medical note. I can think of no reason why Elizabeth Beverley would have been turned out of the room for over half an hour as she says.

2.7 The Will

42. On 20 June 2007 (that is to say 2 days after the visit to Ms Mahon) Mr Gaygan, an employee of The Will Writing Company (WWC) attended John Pearce. Mr Gaygan was not called to give evidence so the circumstances of the meeting could not be tested. However the file has been produced. It contains a number of documents:

A will instruction form

43. This summarises John Pearce's estate. The assets are described as a jointly owned residence valued at £245,000 with a mortgage of £120,000; Additional properties valued at £50,000 and other assets of £11,000.
44. It contains incomplete instructions as to the intended beneficiaries and as to the making of an Enduring Power of Attorney (EPA).

A statement signed by Mr Gaygan

45. In this document Mr Gaygan summarises the information gleaned at the interview. After summarising John Pearce's assets it states that he will not live with Elizabeth Beverley when the sale of 1 Rose Grove is completed. He will live at the house then occupied by his daughter and Elizabeth Beverley will live with a friend.
46. He refers to the prostate cancer but to none of John Pearce's mental problems. He continues:

As a result of his illnesses his speech is slow and sometimes difficult to follow - Elizabeth Beverley was present during the interview and on occasions helped me to understand what he was saying – I am satisfied that she did not unduly influence his ructions in any way even though she is to be the sole beneficiary of his estate, with his brother named as the alt beneficiary

John Pearce is deliberately excluding his daughter as a beneficiary due to a poor relationship with her – in the past it was suggested to John Pearce that Colette Pearce is not actually his daughter (although he has never sought to have any kind of paternity test taken to establish whether she is his daughter or not).

A letter on WWC note paper

47. This letter is apparently signed by John Pearce and witnessed by Mr Gaygan. It states that he has made a deliberate decision to exclude Colette Pearce and Jane Howarth from his will and that the decision has been made whilst of sound mind and without undue pressure from anyone.

The Will

48. The Will is dated 25^th June 2007. It purports to be signed by John Pearce and duly witnessed. It appoints Elizabeth Beverley and Bill Pearce as executors. It leaves the whole estate to Elizabeth Beverley with a gift over to Bill Pearce if she predeceases John Pearce.

The EPA

49. The EPA was executed on 13^th August 2007. It appoints Elizabeth Beverley and Bill Pearce jointly and severally as attorneys for the purpose of the EPA Act 1985.

Elizabeth Beverley's evidence

50. Elizabeth Beverley was cross-examined about the circumstances in which the instructions were taken. She said that John Pearce was not happy with the way he was treated by Ms Mahon and explained this to D Moore when he saw her. He discovered about WWC because he had been given a card from Leeds building Society.
51. She agreed that she was present throughout the interview with Mr Gaygan. She said that if John Pearce said something she would confirm it. She agreed that the day Mr Gaygan came was "a bad day for John Pearce". He had been upset by his meeting with Ms Mahon.
52. John Pearce wanted to leave her his estate because she was the only woman who had helped him to make money by investing £16,000 into 1 Rose Grove.

3 The other transactions

3.1 The transfer of 1 Rose Grove into the joint names of John Pearce and Elizabeth Beverley.

53. It will be recalled that in March 2006 John Pearce agreed to pay Jane Howarth £103,500 in full and final settlement of her claims in the divorce proceedings. It will also be recalled that Elizabeth Beverley carried out the final negotiations on his behalf.
54. At the time of the payment of the settlement figure 1 Rose Grove was valued at £195,000 and subject to a mortgage of £32,558.11. In order to avoid the sale of 1 Rose Grove it was remortgaged for £120,000. However, as can be seen a pre-completion statement there was a shortfall of £16,116.86. These funds were provided by Elizabeth Beverley and 1 Rose Grove was transferred into the joint names of John Pearce and Elizabeth Beverley.
55. Elizabeth Beverley was cross-examined as to whether she had in fact provided the £16,116.86. However the bank statement produced by Elizabeth Beverley shows that she did indeed pay that sum of 16 June 2006 and I am satisfied that she did. It is true that the bank statement also shows a payment in of £32,716 the previous day but there is no reason to believe that that sum came from John Pearce. He disclosed his assets to Jane Howarth in the divorce and there is no account from which the £32,716 could have come.
56. The TR1 dated 19 June 2006 contains an express declaration by John Pearce and Elizabeth Beverley that the property is held as beneficial joint tenants.
57. Looked at from Elizabeth Beverley's point of view this was a very good investment. 1 Rose Grove was valued at £195,000. After deducting the mortgage of £120,000 the equity was worth £75,000, thus her share was worth £37,500. She was thus acquiring an interest worth more than £20,000 more than her investment of £16,116.86.
58. It is clear from Elizabeth Beverley's evidence and from the letters she wrote both to Jane Howarth's solicitors and in relation to this transaction that she is very adept at figures. I have no doubt that she was aware of the advantageous nature of the transaction

3.2 The sale of 1 Rose Grove on 14^th September 2007.

59. By May 2007 it had been decided that 1 Rose Grove should be placed on the market. Its value had increased to £245,000 and it was placed with a sole agent to market it.
60. It is not clear what mortgage payments were made between June 2006 and the date when it was sold on 14^th September 2007. However at that time the amount due on the mortgage was £123,654 so there may well have been arrears. In cross-examination Elizabeth Beverley said that John Pearce's income comprised statutory sick pay, a pension from LV of £140 per month and the rent from 38 Mitchell Street. She said that the mortgage was paid from an account in John Pearce's name at Yorkshire Bank. She used to pay the bills. She said that they agreed to sell 1 Rose Grove because they could not afford the mortgage and the bills.
61. A sale was agreed in June and completed on 14^th September 2007. The net proceeds of sale amounted to £117,080.44

3.3 The Purchase of 23 Turn Lea on 14^th September 2007 into the joint names of John Pearce and Elizabeth Beverley.

62. On 14^th September 2007 23 Turn Lea was transferred into the joint names of John Pearce and Elizabeth Beverley. The TR1 is not in evidence but I infer that it was in the same terms as the TR1 in respect of the purchase of 1 Rose Grove.
63. The purchase price was £124,500 together with a further £3,500 for fixtures and fittings making a total of £128,000. The purchase was funded in part out of the net proceeds of sale of 1 Rose Grove and in part by a secured loan of £47,000 from Leeds Building Society.
64. As the net proceeds of sale of 1 Rose Grove amounted to £117,080 there was a surplus over what was required to fund the purchase. This surplus amounted to £48,907.05. The whole of this surplus was paid into the joint flexible freedom monthly account with the Leeds Building Society.
65. 23 Turn Lea has only 1 bedroom it was occupied initially, at least, by John Pearce alone. In cross-examination Elizabeth Beverley said that when 1 Rose Grove was sold she moved back to live (not as a couple) with her husband. She was there for about 3 months and then moved into rented accommodation for about 3 months. After March 2008 she moved back into 23 Turn Lea.
66. 23 Turn Lea is now occupied by her brother who occupies as an assured shorthold tenant paying £80 per week. According to Elizabeth Beverley the rent has not been paid for some time.

3.4 The sale on 31^st August 2007 of 38 Mitchell Street.

67. It will be recalled 38 Mitchell Street was owned by John Pearce and let to Colette Pearce. By 2007 the rent had increased to £65 per week. For much of the time the rent was funded out of Colette Pearce's housing benefit. However Colette Pearce is now working and paying the rent herself out of her income.
68. It will also be recalled that in about June 2007 John Pearce asked if Colette Pearce would be willing to move so that he could occupy 38 Mitchell Street himself. As the Council were unwilling to rehoused Colette Pearce nothing came of this suggestion.
69. On 31 August 2007 John Pearce sold 38 Mitchell Street, subject to Colette Pearce's tenancy, to Richard and Christopher Gradon for £62,000. On 3 September 2007 the net proceeds of sale amounting to £61,415.17 were also paid into the joint flexible freedom monthly account with the Leeds Building Society.
70. Not surprisingly Elizabeth Beverley was asked about this and the payment of the £48,907.05 in cross examination. She agreed that she was the contact for both sales. She said that both sales represented John Pearce's wishes. She said that whilst they were dealing with 1 Rose Grove it was convenient to deal with 38 Mitchell Street. She said John Pearce trusted her implicitly and the payments into the account were what he wanted. Other than this she could not explain why the monies were not paid into his account. She then said it was a matter of convenience.

3.5 The payment on 29^th September 2008 to Elizabeth Beverley of £24,511 being the net proceeds of the LV life policy.

71. When the trial commenced very little was known about the LV policy. There was at one stage some doubt as to the amount paid in respect of the policy. The position was made clearer as a result of 2 documents produced by Elizabeth Beverley during the course of the hearing. One of these was an authority signed by Elizabeth Beverley to pay her £24,511 in full and final satisfaction of the claims under the policy. In the light of this document I am satisfied that the proceeds did amount to £24,511 and that this sum was paid into Elizabeth Beverley's flexible freedom monthly account with the Leeds Building Society on 29^th September 2008.
72. The second document is a letter dated 2^nd March 2009 from LV addressed to Elizabeth Beverley and designed to explain why the net proceeds were £24,511 and not £29,520 as had been suggested in earlier correspondence. According to that letter the policy commenced on January 1 2006 following amendment of a previous plan taken out in 2002.
73. In the witness statement that she filed on the day before the trial Elizabeth Beverley described herself as "the sole beneficiary again at John's request". I infer that in January 2006 John Pearce nominated Elizabeth Beverley as sole beneficiary. Plainly she was not the sole beneficiary under the original policy taken out in 2002.

3.6 The purchase on 16^th May 2008 by Elizabeth Beverley of 48 Burnley Road

74. On 16^th May 2008 Elizabeth Beverley purchased 48 Burnley Road for £76,000. In her witness statement Elizabeth Beverley states that she and John Pearce decided to purchase the property with a view to renovate it and sell it at a profit. The final intention was to sell 23 Turn Lea and 48 Burnley Road and then put the money together to buy a bungalow for them both to live in.
75. She said that John Pearce agreed that it should be purchased in her sole name to enable her to deal with all matters relating to the property. She described John Pearce and herself as partners and that he trusted her completely.
76. In cross examination she gave a somewhat different explanation. My note reads:

We decided to purchase this property and John said it was better to leave it in my name as he knew what his daughter would be like.

77. Later in the cross-examination she said:

He (John Pearce) did not trust Collette and said he did not want it put into his name.

He said "Pop in your name it does not really matter does it"

78. Elizabeth Beverley agreed that the purchase price of £76,000 came out of the £61,415 and the £43,907 that she had received from the sale of 38 Mitchell Street and 1 Rose Grove.
79. Although no documents have been produced Elizabeth Beverley said that 48 Burnley Road was vacant for 2 years after John Pearce's death. It was then let at a rent of £490 per month. It was vacant for a period of about 6 months and was let some 2 weeks before the trial began to a tenant on an assured shorthold tenancy paying £465 per month.

3.7 The purchase on 24^th August 2010 by Elizabeth Beverley and her husband, Gary Michael Beverley of 1 Hebble Vale Drive.

80. On 24^th August 2010 Elizabeth Beverley and her husband purchased 1 Hebble Vale Drive for £170,000. According to Elizabeth Beverley the whole of the purchase price came from the proceeds of sale of the family home, Albany House which was sold in August 2010 for £230,000.
81. There is no evidence that any part of the purchase price was derived from moneys arising on the sale of any of John Pearce's assets.

4 The Law

4.1 Undue influence

82. The leading case on undue influence is the decision of the House of Lords in RBS v Etridge [2002] 2 AC 773. The case is helpful because it contains a modern discussion by Lord Nicholls of the nature of undue influence. I shall not lengthen this judgment by extensive citation from his speech but in view of the fact that Elizabeth Beverley does not have the benefit of legal representation I shall set out some extracts:
83. In paragraph 8 Lord Nicholls describes two forms of unacceptable conduct. After referring to improper pressure or coercion he said:

8.. … The second form arises out of a relationship between two persons where one has acquired over another a measure of influence, or ascendancy, of which the ascendant person then takes unfair advantage. An example from the nineteenth century, when much of this law developed, is a case where an impoverished father prevailed upon his inexperienced children to charge their reversionary interests under their parents' marriage settlement with payment of his mortgage debts (see Bainbrigge v Browne (1881) 18 Ch D 188).

9.. In cases of this latter nature the influence one person has over another provides scope for misuse without any specific overt acts of persuasion. The relationship between two individuals may be such that, without more, one of them is disposed to agree a course of action proposed by the other. Typically this occurs when one person places trust in another to look after his affairs and interests, and the latter betrays this trust by preferring his own interests. He abuses the influence he has acquired. …

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 edn, 1999) pp 380-381…

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.

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.

22.. Lindley LJ summarised this second prerequisite in the leading authority of Allcard v Skinner (1887) 36 Ch D 145, [1886-90] All ER Rep 90, 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:

'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.' (See (1887) 36 Ch D 145 at 185, [1886-90] All ER Rep 90 at 100-101.)

In Bank of Montreal v Stuart [1911] AC 120 at 137 Lord Macnaghten used the phrase 'immoderate and irrational' to describe this concept.

Rebutting the inference of undue influence

84. In paragraph 14 Lord Nicholls pointed that that if the 2 matters he had discussed were proved the stage would be set for the court to infer undue influence in the absence of a satisfactory explanation. What amounts to a satisfactory explanation is set out in paragraph 8-026 of 32^nd edition of Snell's Equity:

The question of whether a presumption of causation is rebutted [is] a question of fact to be determined on all the evidence. In order to rebut the presumption it is not sufficient to show that C understood what he or she was doing and intended to do it. The problem is not lack of understanding but lack of independence in relation to that transaction.

''The gift or transaction will be set aside, unless it 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.'' [Goldsworthy v Brickell [1987] Ch 378 at 401.

85. In the recent case of Smith v Cooper [2010] EWCA Civ 722 at paragraph 61 the test applied by the Court of Appeal was

[where] 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.

4.2 Wills

Testamentary capacity

86. The law on the testamentary capacity and want of knowledge and approval has been recently summarised by Briggs J (as he then was) in Re Key [2010] EWHC 408. As can be seen he discussed both "The Golden Rule" and the test for testamentary capacity:

7.. The substance of the Golden Rule is that when a solicitor is instructed to prepare a will for an aged testator, or for one who has been seriously ill, he should arrange for a medical practitioner first to satisfy himself as to the capacity and understanding of the testator, and to make a contemporaneous record of his examination and findings: see Kenward v. Adams (1975) Times 29^th November 1975; Re Simpson (1977) 121 SJ 224, in both cases per Templeman J, and subsequently approved in Buckenhan v. Dickinson [2000] WTLR 1083, Hoff v. Atherton [2005] WTLR 99, Cattermole v. Prisk [2006] 1 FLR 697, and in Scammell v. Farmer [2008] EWHC 1100 (Ch), at paragraphs 117 to 123.

8.. Compliance with the Golden Rule does not, of course, operate as a touchstone of the validity of a will, nor does non-compliance demonstrate its invalidity. Its purpose, as has repeatedly been emphasised, is to assist in the avoidance of disputes, or at least in the minimisation of their scope. As the expert evidence in the present case confirms, persons with failing or impaired mental faculties may, for perfectly understandable reasons, seek to conceal what they regard as their embarrassing shortcomings from persons with whom they deal, so that a friend or professional person such as a solicitor may fail to detect defects in mental capacity which would be or become apparent to a trained and experienced medical examiner, to whom a proper description of the legal test for testamentary capacity had first been provided.

93.. There was no significant dispute between counsel as to the relevant legal principles, which are well settled and continue to derive from Banks v. Goodfellow (1870) LR 5QB 549. The testator must be able (1) to understand the nature of his act, i.e. making a will, and its effects (2) to understand the extent of the property of which he is disposing (3) to comprehend and appreciate the claims to which he ought to give effect. He must not be subject to any disorder of mind as shall "poison his affections, pervert his sense of right, or prevent the exercise of his natural faculties".

94.. It was also common ground before me that the Banks v. Goodfellow test for testamentary capacity has not been displaced by the Mental Capacity Act 2005, at least for the purposes of the present case, in which the 2006 Will was made before that Act came into force.

97.. The burden of proof in relation to testamentary capacity is subject to the following rules:

a) While the burden starts with the propounder of a will to establish capacity, where the will is duly executed and appears rational on its face, then the court will presume capacity.

b) In such a case the evidential burden then shifts to the objector to raise a real doubt about capacity.

c) If a real doubt is raised, the evidential burden shifts back to the propounder to establish capacity nonetheless.

See Generally Ledger v. Wootton [2007] EWHC 2599 (Ch) per HHJ Norris QC at paragraph 5.

87. The Will, in this case, was made in June 2007 which is also before the Mental Capacity Act came into force. Thus Briggs J's comments in paragraph 94 apply equally to this case. In any event in Scammell v Farmer [2008] EWHC 1100 (Ch) Stephen Smith QC found that the Mental Capacity Act 2005 did not apply to a challenge to a will on the grounds of lack of capacity.

Knowledge and Approval

88. As noted above the law as to want of knowledge and approval is well settled. It was considered in detail by the Court of Appeal in Fuller v. Strum [2002] 1 WLR 1097, in particular per Chadwick LJ at paragraphs 65 to 72. It was also summarised by Briggs J in Re Key at paragraph:117

i) As with testamentary capacity, due execution of an apparently rational and fair will, will ordinarily satisfy the burden of proof on the propounder, unless there are circumstances which excite the suspicion of the court.

ii) In such a case, the propounder may be required affirmatively to prove knowledge and approval. This is an evidential rather than legal burden.

iii) The standard of proof is, as is in all civil proceedings, that of the balance of probabilities. Nonetheless the task of satisfying that standard will generally vary in proportion to the degree of suspicion engendered by the circumstances.

5 Assessment of Elizabeth Beverley

89. I regret that I did not find Elizabeth Beverley to be a reliable witness. I am aware that Elizabeth Beverley has medical problems and in forming my assessment I have taken those problems into account. The principal reasons for my assessment are:

1.. This is, of course, a case where John Pearce is dead and not in a position to answer or explain the assertions that are made about his wishes. That fact alone means that I must approach Elizabeth Beverley's explanations with considerable caution.

2.. For reasons that I have given and do not repeat I prefer the evidence of Ms Mahon to that of Elizabeth Beverley over the meeting on 18^th June 2007. In my view Elizabeth Beverley's account was untruthful.

3.. The document submitted by John Pearce on 20^th December 2005 in the ancillary relief proceedings untruthfully stated that Elizabeth Beverley had no assets. In evidence Elizabeth Beverley accepted that after September 2005 she was assisting with the proceedings and I have no doubt she was aware and approved the contents of the document.

4.. There were inconsistencies in Elizabeth Beverley's evidence. Perhaps the most glaring example was her explanation for the purchase of 48 Burnley Road which I have set out above.

5.. I had the benefit of seeing Elizabeth Beverley give evidence for over half a day and cross examine the Claimant's witnesses for the best part of 2 days. Whilst allowances have to be made for the fact that she is not legally qualified she found it difficult to concentrate on the questions she was being asked and regularly went off on a tangent to try to make some quite different point.

90. In the result I have come to the conclusion that I cannot rely on Elizabeth Beverley's evidence unless it is corroborated by other independent evidence.

6 The validity of the Will dated 20^th June 2007.

91. I have set out the relevant law in section 4.2 and shall not repeat it.

Capacity

92. I turn first to the question of testamentary capacity. To my mind this is a case where there is "a real doubt about capacity" [See paragraph 97(b) of Re Key]. The doubt arises as a result of the physical and mental problems from which John Pearce was suffering as summarised in section 2.4; in particular the views of the renal consultant and the oncologist in May 2007 give real cause for concern. This is fortified by the views of Ms Mahon who saw John Pearce on 18^th June and her conversation (which I accept) with Dr Moore on 20^th June 2007. It follows that the evidential burden of proving capacity has shifted back to Elizabeth Beverley as the propounder and sole beneficiary under the will.
93. In paragraph 93 of Re Key Briggs J set out the test for capacity. I have real concerns as to whether John Pearce understood the extent of the property he was disposing and whether he comprehended and appreciated the claims of his daughter and 3 grandchildren. His belief that Colette Pearce was not his daughter appears to have been wholly irrational and may well have been the result the mental disorder from which he was suffering. The remarkable change in his attitude to Colette Pearce and her children appears otherwise to be inexplicable.
94. It is true that there are references in the WWC file to a deliberate decision to exclude Colette Pearce. However Elizabeth Beverley was present throughout the interview with Mr Gaygan. There is no information about Mr Gaygan's qualifications to assess John Pearce's capacity. In any event he was not called to give evidence. Furthermore only 2 days before Ms Mahon had expressed doubts about John Pearce's capacity.
95. In the circumstances Elizabeth Beverley has not satisfied me that John Pearce had the capacity to make a will on 20^th June 2007.

Want of knowledge and Approval

96. I take a similar view in relation to "Want of Knowledge and Approval". This is a case where there are circumstances that excite the suspicions of the Court. It is a case where Elizabeth Beverley is the sole beneficiary under the will and was present throughout the interview with Mr Gaygan. It is case where John Pearce was a highly vulnerable adult suffering from mental and physical problems and who had for no good reason completely changed his relationship with his daughter and grandchildren. To my mind these factors engender a high degree of suspicion and there I accordingly a burden on Elizabeth Beverley to prove knowledge and approval affirmatively. She has failed to do this.
97. Accordingly I find that the will dated 20^th June 2007 was not validly executed.

7 Undue Influence.

98. It is not in dispute that John Pearce placed trust and confidence in Elizabeth Beverley in relation to his financial affairs. He permitted her to conduct the negotiations on his behalf in the ancillary relief dispute with Jane Howarth. Such was his trust that he disinstructed the solicitors who were acting for him. On a number of occasions during the course of her evidence Elizabeth Beverley agreed that John Pearce trusted her implicitly. It was Elizabeth Beverley who negotiated the remortgage of 1 Rose Grove, the sale of 1 Rose Grove, the sale of 38 Mitchell Street, and the purchase of 23 Turn Lea.
99. It is equally clear that at least from the end of 2005 John Pearce was infirm and vulnerable. I have summarised the medical evidence earlier in this judgment and will not repeat it. Evidence of his vulnerability was strongly corroborated by Kate Cullen who worked for many years with elderly people as the senior supervisor at the skill centre where Bill Pearce was the manager. She described John Pearce as vulnerable. She said she saw a gradual descent in his health from 2001- he became a shadow of his former self. She said that Elizabeth Beverley would drop him off at the Skill Centre from time to time from about 2006. She said she knew he had Parkinson's; the symptoms were obvious. She would include him in the relatively simple tasks carried out by those at the skill centre. She described Elizabeth Beverley as affectionate, overly affectionate towards John Pearce. John Pearce did not reciprocate. She described him as bewildered and confused. I have no hesitation in accepting this evidence.
100. I am also satisfied that each of the transactions with which I am concerned calls for an explanation as explained by Lord Nicholls in paragraphs 14 and 22 of his speech. As already noted the transfer of 1 Rose Grove into the joint names of John Pearce and Elizabeth Beverley was very much to the financial advantage of Elizabeth Beverley. Although she invested £16,116.86 her share in 1 Rose Grove was worth £37,500. Although it might be said that the transaction prevented an immediate sale of 1 Rose Grove the reality was that in early 2006 John Pearce was unlikely to be able to pay the increased mortgage instalments so that, as in fact happened, it as likely that 1 Rose Grove would have to be sold within a short time.
101. The purchase of 23 Turn Lea can be traced directly from the sale of 1 Rose Grove. Thus if the transfer of 1 Rose Grove was tainted with undue influence and was liable to be set aside then so is the purchase of 23 Turn Lea.
102. There would appear to be no possible justification for sale proceeds of 38 Mitchell Street being paid into a joint account. To my mind this clearly calls for an explanation. It cannot, in my view be reasonably accounted for on the ground of friendship, relationship, charity, or other ordinary motives on which ordinary men act.
103. Elizabeth Beverley accepted that 48 Burnley Road was purchased with the moneys she received from the sale of 1 Rose Grove and 38 Mitchell Street. There would thus in my view be a similar tracing remedy open in respect of 48 Burnley Road.
104. There is little information about how the LV policy came to be written for Elizabeth Beverley's benefit. It is to be noted that it replaced an earlier policy which plainly was not for her benefit. To my mind this transaction too calls for an explanation from Elizabeth Beverley.
105. In those circumstances I am satisfied that the burden of proof has shifted to Elizabeth Beverley to prove that the transfer of 1 Rose Grove into the joint names of John Pearce and Elizabeth Beverley, the payment of the £61,415.17 and £48,907.05 into Elizabeth Beverley's bank account and nomination of Elizabeth Beverley as the beneficiary under the LV policy were the spontaneous acts of John Pearce acting under circumstances which enabled him to exercise an independent will.
106. I find as a fact that she has failed to discharge that burden. Other than the assertion by Elizabeth Beverley that all of these transactions were in accordance with John Pearce's wishes there is no evidence to prove that the transactions were not procured by an abuse of his position of influence but was rather the free exercise of John Pearce's will as a result of full, free and informed thought. I have already commented on my assessment of Elizabeth Beverley as a witness.

8 Conclusion.

107. In the result:

1.. I hold that the will dated 20^th June 2007 was not validly executed by John Pearce. In the absence of any other will I hold that he died intestate. It follows that his estate passes to his daughter.

2.. I hold that the transfer of 1 Rose Grove into the joint names of John Pearce and Elizabeth Beverley was procured by undue influence and was liable to be set aside subject to crediting Elizabeth Beverley with the £16,116.86 in respect of her contribution in March 2006.

3.. I hold that 23 Turn Lea was purchased with the net proceeds of sale of 1 Rose Grove and that the estate of John Pearce have a tracing remedy with the result that 23 Turn Lea is held on trust for the estate. As there was a mortgage of £47,000 questions of equitable accounting may arise in respect of the period since death.

4.. I hold that the payments of £48,907.05, £61,415.17 and £24,511 paid into the joint account were procured by undue influence and the payments were liable to be set aside. It is common ground that the purchase price for 48 Burnley Road of £76,000 was paid out of the fist two of these sums. I accordingly hold that 48 Burnley Road is held on trust for the estate. There may need to be equitable accounting in relation to any outgoings, occupational rent, moneys spent on repairs and rents received.

108. There will clearly need to be a discussion as to the precise form of order after the parties have had time to consider this judgment.

Note 1   This account (No 3836325502) was a Flexible Freedom Account. Based on the documents disclosed by Elizabeth Beverley this account was believed to be an account in Elizabeth Beverley’s sole name. The statement she produced did not mention John Pearce. In cross-examination Elizabeth Beverley did not suggest it was a joint account. However after the end of the evidence and shortly before closing submissions Elizabeth Beverley produced a letter from Leeds Building Society which stated that the account was opened on 30/8/2007 in joint names. John Pearce’s name was deleted after his death.    [Back]