Watler v Solomon

• Jurisdiction: Cayman Islands
• Judge: (Smellie, C.J.)
• Judgment Date: 28 April 2014
• Court: Grand Court (Cayman Islands)
• Date: 28 April 2014

Grand Court, Civil Division

(Smellie, C.J.)

WATLER (as personal representative of Estate of THOMPSON)

and

SOLOMON

J. Kennedy for the plaintiff;

D. Murray for the defendant.

Cases cited:

(1) Allcard v. SkinnerELR(1887), 36 Ch. D. 145; [1886–90] All E.R. Rep. 90, applied.

(2) Aroso v. Coutts & Co.UNK[2002] 1 All E.R. (Comm) 241; [2001] W.T.L.R. 797, referred to.

(3) Bank of Credit & Comm. Intl. S.A. v. Aboody, [1990] 1 Q.B. 923; [1992] 4 All E.R. 955, referred to.

(4) Calverley v. GreenUNK(1984), 155 CLR 242; 59 ALJR 111; 56 ALR 483, referred to.

(5) Ebanks v. Clarke, 1992–93 CILR 33, referred to.

(6) Fowkes v. PascoeELR(1875), L.R. 10 Ch. App. 343, referred to.

(7) Hoddinott v. Hoddinott, [1949] 2 K.B. 406; (1949), 65 TLR 266, referred to.

(8) Lohia v. Lohia, [2001] EWCA Civ 1691, referred to.

(9) Pearson v. Cayman Natl. Bank Ltd., 2000 CILR 246, referred to.

(10) Royal Bank of Scotland plc v. Etridge (No. 2), [1998] 4 All E.R. 705; [1998] 2 FLR 843; [1998] 3 F.C.R. 675; (1998), 31 H.L.R. 575; [1998] Fam. Law 665; further proceedings, [2002] 2 A.C. 773; [2001] 3 W.L.R. 1021; [2001] 4 All E.R. 449; [2002] 1 Lloyd”s Rep. 343, applied.

(11) Sillett v. Meek, [2009] W.T.L.R. 1065; (2007), 10 ITELR 617; [2007] EWHC 1169 (Ch.), referred to.

(12) Simpson v. Simpson, [1992] 1 FLR 601; [1989] Fam. Law. 20, referred to.

Contract-undue influence-presumptions-presumption arises if transferor places trust and confidence in recipient regarding management of financial affairs and enters into transaction which requires explanation-doctrine not limited to special relationships or abuse of trust and confidence-not required to prove actual undue influence for particular transaction-may rebut presumption if shows transaction not procured through undue influence

Contract-undue influence-presumptions-presumption rebutted if recipient shows transaction made with free will on ground of friendship, relationship or charity and transferor fully understood implications-likely that no undue influence if transferor received comprehensive, independent legal advice and issued written instructions to attorney

The plaintiff brought an action on behalf of the deceased”s estate for a declaration that certain transfers made by the deceased had been made under the defendant”s undue influence and should therefore be set aside, and that a resulting trust arose in her favour over the deceased”s assets.

The deceased had four children but was not married to their mother. As he was a sailor, he had frequently been at sea for long periods of time and was not registered on their birth certificates. The plaintiff and her brother alleged that, despite this, the deceased had had a good relationship with his children, although they admitted that they had grown apart after they had grown up and did not see him as frequently as when they were young. They maintained, however, that they had still had a good relationship as adults and that they had never known of any relationship between the deceased and the defendant-although, when cross-examined, they were uncertain about the exact state of their father”s health at various points in time and the arrangements that had been made for his treatment. Their evidence was supported by M, who stated that the deceased had had a very close relationship with his children; that he had disliked and mistrusted the defendant; that the defendant had played no role in the deceased”s life until shortly before he had died; and that she had been responsible for taking care of his chores and helping him with his banking. She was unable, however, to give information about the illnesses which had lead to the deceased”s death.

The defendant was the son of the deceased”s friend and the nephew of the deceased”s girlfriend. The defendant alleged that, when he was young, the deceased had acted as a godfather figure to him and, as the defendant grew up, they had developed a strong friendship. The defendant and his family all claimed that they were unaware that the deceased had had children-further, the defendant”s sister-in-law alleged that, when asked whether he had any children, the deceased had claimed that the defendant ‘was his “children.”’ The defendant alleged that, as part of their friendship, he took a primary role in assisting the deceased with his medical care and financial matters, including (a) arranging for a housekeeper and, when full-time care was required, a live-in carer to look after the deceased; (b) travelling with the deceased to the United States for diagnosis and treatment of his illnesses; (c) paying bills and running errands; and (d) generally helping the deceased in his old age.

In 1993, the defendant was added as a joint account holder to one of the deceased”s bank accounts. He was subsequently added as a joint account holder to the deceased”s remaining accounts, which he alleged had been done to allow him to assist the deceased with his financial matters and because the deceased wished that, when he died, any amounts remaining would pass to the defendant. In 2009, a week after having added the defendant to his remaining accounts, the deceased also arranged for the transfer of his home to the defendant. When doing so, he received full legal advice (without the presence of the defendant) and issued instructions to his attorney in both written and spoken form. The transfer was executed at the deceased”s house in exchange for a peppercorn and was witnessed by the deceased”s housekeeper. Both his attorney and his housekeeper attested to the deceased”s state of mind, claiming that he was perfectly lucid and that he appeared at all times to know what he was doing and to be acting on his own initiative.

Shortly after the house was transferred, the deceased discovered that he was terminally ill. The plaintiff claimed that, after she had discovered that her father was ill and that he had transferred his house to the defendant, she obtained a guardianship order over the deceased to ensure that he was properly cared for. Having done so, she attended the deceased”s house with the police and medical personnel and required that he be taken to hospital (although this was a different hospital to the one which he had visited with the defendant to receive his regular treatment). She alleged that this was done because of her concern that he was not receiving proper care, although the paramedics did not find that this was the case. Further, the plaintiff was unable to answer most of the questions asked about the deceased”s health, which were mostly answered by his carer. The deceased died shortly afterwards.

The plaintiff submitted that the deceased had been subject to undue influence from the defendant. The deceased had been particularly vulnerable due to his age and state of health and was frail, incompetent and prone to undue influence. Although he had appeared fit, this was because the defendant had hidden his true state by filling the key positions around

the deceased. He had further hidden the deceased”s vulnerability by arranging for the execution of the documents for the transfer of the deceased”s house to be completed at his home rather than in the attorney”s office. This vulnerability gave rise to a presumption of undue influence which the defendant had not rebutted. Moreover, the house had not been transferred for valuable consideration. There was therefore a presumption that it was not intended that the house should be a gift and should be held on a resulting trust for the plaintiff”s benefit. She further submitted that the defendant held the contents of the bank accounts on a resulting trust. The defendant had only been added to the accounts to make it more convenient for him to assist the deceased and therefore there had been no intention to make an absolute gift.

The defendant submitted in reply that there had been no undue influence. The deceased had been fully aware of the legal and factual effects of his actions and had wished to transfer the property out of his love and affection for the defendant. Although the defendant had profited from the arrangement, this had not been its purpose and the deceased had actively wished the defendant to retain his assets after his death. Further, the court should reject the plaintiff”s version of events. It was clear that there was genuine love and affection between the defendant and the deceased, as shown by their close relationship throughout the defendant”s life, particularly as this was a closer relationship than the one between the deceased and his biological children. A presumption of undue influence could not, therefore, arise.

Held, dismissing the application:

(1) The plaintiff was unable to show that there had been actual undue influence. This would have required her to show evidence of the actual interactions between the defendant and the deceased and was incompatible with her submissions that no such meaningful interactions had occurred. This did not, however, prevent the plaintiff from alleging that there was presumed undue influence. This presumption arose if there was proof that the deceased had placed trust and confidence in the defendant in relation to the management of his financial affairs and that there was a transaction which called for explanation. The defendant would be required to show that the transaction had not been procured through undue influence, even if the plaintiff had not shown that any undue influence had arisen in relation to that particular transaction. This would usually arise when the nature of the relationship between the deceased and the defendant was such that one party acquired influence over another who was vulnerable or dependent (e.g. lawyer and client, doctor and patient or parent and child), but was not limited to cases of special relationships or abuse of trust and confidence (paras. 18–20; paras. 24–27).

(2) The plaintiff had failed to show that the presumption of...