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England and Wales Court of Appeal (Civil Division) Decisions
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Daniel v Drew  EWCA Civ 507 (06 May 2005)
Cite as:  EWCA Civ 507
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COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
His Hon. Judge Weeks Q.C.
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE BUXTON
MR JUSTICE WILSON
| NICHOLAS GEOFFREY DANIEL
|- and -
|MRS IRENE MARGARET DREW
Smith Bernal Wordwave Limited, 190 Fleet Street
London EC4A 2AG
Tel No: 020 7421 4040, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Ms Penelope Reed (instructed by Messrs Burges Salmon) for the Respondent
Crown Copyright ©
Lord Justice Ward :
The background facts in more detail.
The events leading to Aunt Margaret's "resignation".
"… Given their age" [Aunt Margaret was 85 years old at the time of the trial] "and the fact that the events occurred over two years ago, I do not think that their recollection is wholly reliable. Mrs Drew in particular, towards the end of her evidence, was showing signs of confusion."
As for Nicholas he said:-
"I did not find him a completely credible witness."
"Mr Nicholas Daniel wanted to speak to his aunt about repairs to the farmhouse, and, knowing that his aunt did not wish to see him, he arranged for his mother to visit her first. He did talk to her about the repairs needed to the farmhouse, and he did remind her of her duties as trustee. I do not think that he shouted or threatened her, but he did say that if she did not accept her responsibility the matter would have to be resolved in court.
Mrs Drew intensely disliked any form of confrontation. She was afraid of her nephew, and frightened by the prospect of court. As a way out, she told him, untruthfully, that she thought she had already resigned. Mr Nicholas Daniel seized on this, knowing that it was not true, and asked her to put it in writing. She was cornered and felt unable to refuse. He drafted a short statement of resignation and came back in the afternoon with Mr Panton [a neighbour of Nicholas] and she signed."
"I Mrs I.M. Drew of The Firs Frogham hereby give notice that from this day the 20th February 2002 I resign as Trustee/Landlord of Hyde Farm Hyde Lane Stuckton Fordingbridge Hampshire.
Signed I.M. Drew.
Witnessed Steve Panton."
"Margaret told me that Nick said she would have to resign as a trustee of the farm if she refused to discuss farm matters with him, or he would take her to court. She also told me it had been a very unpleasant experience for her and that Nick threatened her with court action if she did not sign this document."
"Aware that if his cousin, Stephen, or Messrs Burges Salmon had an opportunity to advise Mrs Drew, the resignation would not proceed, Mr Daniel chose not to instruct Wilsons to send another draft to Burges Salmon but asked them to send a copy to himself instead. On the same day, he went to his aunt's cottage twice with the deed. On the first occasion, he was not admitted. On the second occasion he went with Mr Joint and was admitted on his own. He spoke to his aunt for a long time before Mr Gregory intervened.
On his own account, Mrs Drew raised the question of Stephen being appointed trustee in her place. According to Nicholas:
"I then reminded her of what her solicitor, Mr Ricketts of Trethowans, had said to me on the telephone to the effect that the trust deed had apparently provided that in the event of Mrs Drew ceasing to be a trustee she would not be replaced as trustee, and that this provision had been put in the trust deed at Mrs Drew's own request."
Whatever Nicholas may have been told, that advice was incorrect. There was no provision in the assent preventing Stephen's appointment but, as continuing trustees, the other two would, of course, have been in a position to block it. Mrs Drew would therefore have been ill advised to resign without securing agreement as to her successor."
"I was immediately aware of the tension in the room. Margaret was clearly very distressed, looking worried and uncomfortable and, from the redness around her eyes, I thought perhaps close to tears. Although Margaret was obviously upset, I felt I should not intrude in what seemed to be a family affair. I assessed the situation for a few moments and again asked Margaret if there was anything I could do for her. She declined and so I left the house rather worried on her behalf."
"During the meeting Mr Gregory came in and found her distressed but because he thought he ought not to intervene in a family dispute he left. Mr Joint then came in, angry at being kept waiting, and Mrs Drew signed the deed against her better judgment. She undoubtedly knew what she was signing, and intended to sign. However, the question for me is, as Lord Nicholls said: how was that intention procured and was it procured by unacceptable means?"
"If I didn't sign he said we should have to go to court about it. … Two very unsettled nights, I might say. … I told him on the Monday, you like taking people to court don't you, getting up in the witness box ---"
"Mrs Drew told him what she had done and the balloon went up."
They tried to see Nicholas to obtain a copy of the document. Mrs Drew saw the doctor on emergency duty and he found her to be "confused" though she was ordinarily in excellent health and an infrequent attendee at the doctor's surgery. At Stephen's instigation she issued the present proceedings seeking to set aside the deed of retirement dated 25th February 2002 although, as she accepted, she wants to retire from the trusts of the Assent.
"First, Mrs Drew does not want to retire without being replaced by her son or a representative of her son, and her nephews are opposed to that course. Second her retirement may affect the validity of steps taken in the arbitration, and may have costs consequences. Third, Nicholas and Jeremy, without her concurrence, have purported to agree the rent payable by Nicholas, and the validity of that agreement is in issue."
The judge's directions as to the law.
"Undue influence is one of the grounds of relief developed by the Courts of Equity as a court of conscience. The objective is to ensure that the influence of one party over another is not abused."
"Equity extended the reach of the law to other unacceptable forms of persuasion. The law will investigate the manner in which the intention to enter into the transaction was secured; "how the intention was produced"; in the oft repeated words of Lord Eldon as long ago as 1807 (Huguenin v Baseley 14 Ves 273, 300). If the intention was produced by an unacceptable means the law will not permit the transaction to stand. The means used is regarded as an exercise of improper or "undue" influence and hence unacceptable, whenever the consent thus procured ought not fairly to be treated as the expression of a person's free will. It is impossible to be more precise or definite. The circumstances in which one person acquires influence over another, and the manner in which influence may be exercised, vary too widely to permit of any more specific criterion."
"arises out of the 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."
As he explained in paragraph 9:-
"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."
"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."
"The reference to "exploitation of the vulnerable" in paragraph 11 was made in the context of what used to be called "presumed undue influence". Although this is a case, if anything, of express undue influence, I think the reference is relevant because the exploitation of the vulnerable can be regarded as an example of unacceptable conduct where the consent procured ought not fairly to be treated as an expression of a person's free will."
The judge's conclusion.
"Mrs Drew was, in my judgment, a vulnerable person, unversed in business, anxious to avoid confrontation and eager to comply. Nicholas Daniel was younger and according to his aunt did not show her the respect she thought he should. I have heard him give evidence. He has a keen appreciation of his own interests and scant regard for those of others. "Unscrupulous" would be too harsh a description but he is, at the very least, insensitive. Again, in my view, "aggressive" would probably be too harsh and "forceful" might be a better description of his character.
He knew that if his aunt was given the chance to talk to her son or her solicitors the transaction would not proceed as he wished. He deliberately chose not to involve them, but to take advantage of his aunt's naiveté in business matters. In my judgment the means by which her signature was procured is unacceptable. Mrs Drew's consent, obtained in the circumstances that I have described ought not fairly to be treated as an expression of her free will."
The appellant's case.
i) It was necessary for the claimant, Aunt Margaret, to establish that her signatures had been procured by overt acts of improper pressure or coercion and the judge neither found that nor was there evidence to support any such finding.
ii) The judge was wrong to take account of her vulnerability: in doing so he elided actual and presumed undue influence.
iii) Lord Eldon's often quoted words, "The question is, not, whether she knew, what she was doing, had done, or proposed to do, but how the intention was produced", are applicable only in cases of presumed undue influence and so the judge erred in applying them here.
iv) To observe that the court would have to resolve the dispute cannot amount to unlawful or improper pressure.
v) The judge erred in the fact-finding exercise in that (i) he failed to weigh the medical evidence properly (ii) he failed to take into account the contemporaneous note written by the claimant (iii) he was wrong to find that Aunt Margaret was a vulnerable lady (iv) he failed to deal at all with the evidence of Nicholas and Mr Joint that he would leave the deed with her to decide at leisure whether or not to sign it (vi) accordingly, the judge made too great an invasion into the sanctity of understandings reached between individuals simply because one had been persuaded by the other.
Actual undue influence.
"As no Court has ever attempted to define fraud so no Court has ever attempted to define undue influence, which includes one of its many varieties."
His description at page 181 of the first category was this:-
"There are the cases in which there has been some unfair and improper conduct, some coercion from outside, some over-reaching, some form of cheating, and generally, though not always, some personal advantage obtained by a donee placed in some close and confidential relation to the donor."
"The second group consists of cases in which the position of the donor to the donee has been such that it has been the duty of the donee to advise the donor, or even to manage his property for him. In such cases the Court throws upon the donee the burden of proving that he has not abused his position, and of proving that the gift made to him has not been brought about by any undue influence on his part. In this class of cases it has been considered necessary to show that the donor had independent advice, and was removed from the influence of the donee when the gift to him was made. Huguenin v Baseley was a case of this kind. The defendant had not only acquired considerable spiritual influence over the plaintiff, but was entrusted by her with the management of her property. His duty to her was clear, and it was with reference to persons so situated that Lord Eldon used the language so often quoted and so much relied on in this case. He said: "Take it that she (the plaintiff) intended to give it to him (the defendant): it is by no means out of the reach of the principle. The question is, not, whether she knew, what she was doing, had done, or proposed to do, but how the intention was produced: whether all that care and providence was placed round her, as against those, who advised her, which, from their situation in relation with respect to her, they were bound to exert on her behalf." This principle has been constantly recognised and acted upon in the subsequent cases, but in all of them, as in Huguenin v Baseley itself, it was the duty of the donee to advise and take care of the donor. Where there is no such duty the language of Lord Eldon ceases to be applicable."
"Is it that it is right and expedient to save persons from the consequence of their own folly? or is it that it is right and expedient to save them from being victimised by other people? In my opinion the doctrine of undue influence is founded upon the second of these two principles. Courts of Equity have never set aside gifts on the ground of the folly, imprudence, or want of foresight on the part of donors. The Courts have always repudiated any such jurisdiction. Huguenin v Baseley is itself a clear authority to this effect. It would obviously be to encourage folly, recklessness, extravagance and vice if persons could get back property which they foolishly made away with, whether by giving it to charitable institutions or by bestowing it on less worthy objects. On the other hand to protect people from being forced, tricked or misled in any way by others into parting with their property is one of the most legitimate objects of all laws; and the equitable doctrine of undue influence has grown out of and been developed by the necessity of grappling with insidious forms of spiritual tyranny and with the infinite varieties of fraud.
As no Court has ever attempted to define fraud, so no Court has ever attempted to define undue influence, which includes one of its many varieties. The undue influence which Courts of Equity endeavour to defeat is the undue influence of one person over another; not the influence of enthusiasm on the enthusiast who is carried away by it, unless indeed such enthusiasm is itself the result of external undue influence. But the influence of one mind over another is very subtle …"
"Q. You told Mrs Drew, did you not, that if she did not retire and did not come to meetings, the matter would have to go to court?
A. No, I was very careful – if you want to put spin on it, yes, but I was very careful to couch it in terms, which was that if we could not get a conclusion to the matter – i.e. if she wouldn't act as a trustee, she wouldn't retire, she wouldn't go and take legal advice – then we are in a position we can't move forward with the trust and the court will have to resolve the issue."
"Since recourse to law is the remedy for redress provided by the law itself, it is obvious that prima facie a threat to enforce one's legal rights by instituting civil proceedings cannot be an unlawful or wrongful threat." [Emphasis added by me].
"It is not clear whether a threat to institute civil proceedings which is not unlawful in itself could ever constitute duress for present purposes, if it is coupled (for instance) with a wholly unjustified demand, or if it is made in special circumstances (for instance) in which the defendant has a particular fear of the publicity which may follow from a claim. In principle there seems no reason why such a threat should not amount to duress in appropriate circumstances, but for obvious reasons these are likely to be rare."
"Mr Batstone: The thrust of her evidence was that Margaret was alarmed by the prospect of the court having to resolve it.
Judge Weeks: Yes, and that is not unlawful pressure.
Mr Batstone: That is not unlawful pressure, no.
Judge Weeks: On the other hand, it is a factor to be taken into account, is it not?
Mr Batstone: My Lord … well …
Judge Weeks: Even though you may ridiculously say it, it is quite one thing to say between two adults of the same age and the same capacity negotiating, "If you don't do this I will take you to court", it is another thing to say it to an old lady, is it not?
Mr Batstone: Well, my Lord, I cannot dissent from those words your Lordship has just uttered, but it does not fit on the facts of this case, with respect," [and he went on to cite Chitty].
I agree with the judge that in the peculiar circumstances of this case which, make the case rare and exceptional, the impact of the reference to court proceedings was a factor to take into account.
"Mrs Drew was, in my judgment, a vulnerable person, unversed in business, anxious to avoid confrontation and eager to comply."
"Mr Joint then came in, angry at being kept waiting, and Mrs Drew signed the deed against better judgment."
i) Nicholas told Aunt Margaret at their first meeting on 20th that she should either attend the meetings of trustees or retire and that it was not right for her to do neither.
ii) When she said she had already retired he told her to put it in writing.
iii) He returned later that day with the home-made memorandum for her to sign.
iv) He returned on 25th with the deed of retirement saying:-"I reminded her she had already signed a document confirming her retirement."
v) He told her if she ceased to be a trustee she could not be replaced by Stephen or by any independent party.
vi) The whole of this lengthy and distressing meeting on 25th February was capable of being viewed as coercive forcing her to do that which she did not truly desire to do.
i) When Aunt Margaret said she had already resigned, Nicholas seized upon the opportunity to obtain confirmation from her there and then, knowing that what she had said was not true.
ii) He opportunistically exploited the advantage thus presented to him of having her "cornered".
iii) He chose not to involve her solicitors or Stephen in order "to take advantage of his Aunt's naiveté in business matters".
iv) She was "a vulnerable person, unversed in business, anxious to avoid confrontation and eager to comply".
v) He on the other hand had "a keen appreciation of his own interests and scant regard for those of others."
vi) His statement that she could not be replaced as a trustee was an active, and in my view, crucial misrepresentation that it was not open to her to insist on an acceptable successor as a condition of her retirement.
Lord Justice Buxton :
Mr Justice Wilson :