NEUTRAL CITATION NUMBER [2002] EWHC 2758 (Ch)
IN THE SUPREME COURT OF JUDICATURE
CHANCERY DIVISION
Thursday, 19th December 2002
B E F O R E :
BETWEEN:
-and-
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Lawrence Caun (instructed by Ronald Fletcher
Baker) for the claimant.
The first defendant appeared in person, assisted by his representative.
Angus Withington (instructed by Lanyon Bowdler) for the second defendant.
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1. This is a family dispute between father and son, commenced by a claim form issued in April 2001. For brevity, I will refer to the members of the family by their first names. The claimant, the father, is Frank Kuppusami ('Frank'), who appears by Mr Caun. He is 88. He was born and brought up in South Africa. He married his wife, Annamurry in 1939, when he was 25 and she 19. They had four children, two boys and two girls. The eldest is Leo, who was born in 1941 and is now 61. He is the first defendant. He appeared in person, but because he is somewhat unwell, suffers from breathlessness and has recently lost part of his sight, I allowed his son, Mr Dhavarajh Frank, to conduct the case on his behalf. Mr Frank is not a lawyer, but I would wish to pay my tribute to the clarity and ability with which he presented his father's case. Frank's second child was Teddy, who was born in 1942 and died in December 1993. His third child is Patricia, who was born in 1944 and is now 58. His fourth child is Priscilla, who was born in 1947 and is now 55.
2. The dispute is about a house at 4 Ripon Road, Tottenham, N17 ('the house'), which became Frank and Annamurry's home, and to some extent a Kuppusami family home. It has three bedrooms, a living room, bathroom and kitchen. In 1977, Frank and Annamurry entered into a transaction with Leo under which, at least ostensibly, they sold and transferred the house to him. Following that transaction, Frank and Annamurry continued to live in the house. Annamurry died in May 1981, but Frank continued to live there and still does. Frank asserts in this action that Leo holds the house on trust for him pursuant to an arrangement he and Annamurry made with Leo at the time of the sale in 1977 and that the terms of that trust have, since 1985, entitled him to have the house transferred back to him. Frank now seeks to compel such a transfer. Alternatively, he says that the 1977 sale was procured by undue influence which Leo exercised on him and Annamurry.
3. The house is subject to a legal charge in favour of Halifax PLC, currently securing about £57,000. Leo created the charge in 1987. Frank claims that he is not bound by it, on the basis that his right in and from 1985 to have the house re-transferred to him by Leo was an overriding interest to which the Halifax charge was and is subject. Frank's claim is, therefore, for the return of the house free of that charge. Halifax is the second defendant and was represented by Mr Withington.
4. Until the fifth day of the trial, when he abandoned it, Frank was also making a claim for the repayment by Leo of various loans he said he had made to him between 1977 and 1995, the loans being said to total £13,100. That claim, apart from being thoroughly stale, was uncorroborated by any supporting evidence showing that the loans were made. At least part of the claim had an additional element of surprise about it. Frank's pleaded case was that the first slice of the £13,100 was a loan of £2,000 made in about 1977, and he said much the same in his witness statement of 9 September 2002. But his oral evidence was to the effect that he made no such loan at all. It was rather that Leo had somehow (without Frank's authority) simply helped himself to the £2,000 from a building society account that Frank had. Leo denies that he did any such thing, and denies the loan was made. However, as I have said, Frank made a belated decision to abandon the loans claim.
5. I had witness statements and oral evidence from Frank, Priscilla and Leo. I had written hearsay evidence statements from Patricia and her husband Dennis, neither of whom gave oral evidence. The outcome of the case ultimately turns on findings as to disputed fact relating to the terms of the sale of the house in 1977. Because the claim is so stale, there is no longer available much of the documentary material there might have been had Frank brought it more promptly. For example, there would or might have been available the documents relating to the purchase of a business which Leo says he completed in early 1978, but in respect of which there is now no documentation at all. The purchase of that business is relevant to the main issue in the action. In addition, there might have been a good deal more documentation relating to the sale of the house. Stuart Hunt & Co, solicitors, dealt with the sale, but neither side has been able to adduce very much of the documents generated in connection with it, nor has the court had the advantage of evidence from Mr Rhys-Jones of that firm - although it may be that he would have remembered nothing about it. Instead, the court has had to place its main reliance on the disputed evidence of Frank on the one hand, to some extent supported by Priscilla and the untested hearsay statements; and of Leo on the other. The witnesses have had to cast their minds back some 25 years as to what the arrangements were in relation to the sale of the house, and the scope for uncertainty and error is inevitably considerable. In particular, Frank's case receives no corroboration from any documentation.
6. The task the court has been faced with is, therefore, one requiring it to choose between the different evidence of the family members as to what was or was not agreed some 25 years ago and as to the true nature of the 1977 transaction. That is an unsatisfactory basis on which to have to decide an issue such as the present one, but the court has to do the best it can on the basis of the evidence it has. The burden of proof in respect of the issues raised by his claim is on Frank, and so he must make good his case on the balance of probability. It is not for Leo to disprove it. However, I have also had oral evidence from Leo, and in assessing whether Frank's case is established on the probabilities, I consider I can and should take full account of Leo's evidence in endeavouring to ascertain the truth of the case.
7. I turn to the story. On most matters, I found Frank to be an unsatisfactory witness, who showed his short and long-term memory to be unreliable. His oral evidence departed in various respects (some material, some less so) from the case made in his particulars of claim, which he had signed as true on 15 February 2001. When the particulars were put to him in cross-examination, he said he had never seen them before. When it was pointed out that he had signed them as true, he admitted he had and said that his solicitors must have read them to him first, although he could not remember their doing so. Paragraph 1 of his witness statement - signed in September 2002 - described him as being 86, whereas he is 88. He did not notice that. It also contained other errors of recollection that emerged in the course of his evidence, relating to matters that could be checked against documents.
8. The trial involved some exploration of the movements and activities of the Kuppusami family since 1960, in respect of which Frank's written and oral evidence revealed various differences from Leo's evidence. I have no hesitation in preferring Leo's evidence on most of the relatively uncontroversial matters. Of course, Leo has the advantage of relative youth, so that he probably finds it easier to recall matters from long ago than does his father. Leo anyway also showed that he has a clear and orderly mind, and for the most part 1 found his evidence about the course of events to be convincing and reliable. He is a well-educated man. In this respect he, like his siblings, has a considerable advantage over Frank, who is a man of modest education and limited intellect. Frank is, however, literate, although I suspect not very. I would not imagine that reading or writing has occupied much of his time. His late wife, Annamurry, was apparently of like education and intellect, although I find that her capacity to read and write was very limited and that she could only write to sign her name. The evidence showed that the two of them had been able to give their four children rather greater educational opportunities than they had themselves enjoyed, which I have no doubt gave them great pleasure and satisfaction.
9. Frank and Annamurry and their four children are Asians who lived in South Africa until the 1960s. In April 1960, Frank and Leo came to London with a view to starting a new life in the United Kingdom. Frank thought it was in 1962, but I find he was wrong. In itself, that is immaterial, but the year of his arrival in the UK for the start of a new life is one I would have expected him to remember. The rest of the family stayed in South Africa. Frank and Leo lived in a rented flat in Power Square, Bayswater. Frank got a job immediately, and Leo got one about six months later. He earned about £8 to £10 a week. The rent for the flat was about £4.10s, to which Leo said he did not contribute. In about 1964, Leo met June, and he moved in with her nearby, although he retained a key to the Power Square flat and remained a regular visitor to it. June worked as a chemist in Bayswater. During this period, Frank and Leo both opened bank accounts at the same Barclays branch in Bayswater.
10. Frank returned to South Africa in 1966, during which year his two daughters married. He then came back to London with Annamurry and his younger son, Teddy. Priscilla joined them in November 1967, together with her newly born son.
11. In 1968, the family started looking for a home of their own and in due course they found the house. It was bought in the joint names of Frank and Teddy. It cost £5,400, as is shown by a letter of 26 April 1968 from Mr Martin, the solicitor acting on the purchase. In his witness statement, Frank said it had cost £4,500, and he insisted on this despite that evidence to the contrary. I find that his recollection was wrong. He also said in his witness statement that he had bought it in his and Annamurry's joint names, but he was wrong on that too. He said he put down a deposit of £1,000 for it and that he borrowed the balance on mortgage from the Co-Operative Permanent Building Society ('the Co-Op'). The mortgage advance from the Co-Op was £4,400, although it does appear that a £540 deposit was paid, together with a further £545.16s in cash necessary to enable the purchase to be completed and the solicitors' costs paid. Thus a total cash deposit of some £1,085 was provided, which is consistent with Frank's evidence. Leo said that both he and Teddy also contributed to the deposit, but I have my doubts about whether Leo did. If he did, it is surprising that he too was not named on the title deeds. Moreover, the first time he made any reference to the fact that he had made such a contribution was when he gave his oral evidence; and it was not suggested to Frank during his evidence that Leo had made such a contribution. Leo gave some rather unconvincing explanations as to why, unlike Teddy, he was not also a joint owner.
12. Leo's evidence was that, following the purchase of the house, Frank, Annamurry, Teddy, Priscilla and her small son, Leo and June all moved into it. Patricia came over from South Africa in about 1970, her husband Dennis joined her later and the two of them also lived at the house until about 1973, when they moved to Portland Road, London N15. There is a dispute on the evidence as to whether Leo and June ever moved into the house. Leo is adamant that they did, in May 1968, and that they lived there until about the end of 1968 or early 1969, when they moved to a flat in Mill Lane, Hampstead. Priscilla denied that Leo and June ever lived there, although she gave imprecise evidence to the effect that they used to come and go. In his witness statement, Frank said that Leo lived there until 1971, when he moved with June to a flat in Islington of which she had a right of occupation in her capacity as a caretaker. In his oral evidence, however, Frank denied that Leo and June had ever lived at the house at all. I prefer Leo's evidence on this element of dispute, and find that he and June did live at the house during the time he said they did, and that when he moved out it was to Hampstead. Frank is right that Leo and June lived for a time in Islington, but this was not until 1974. Leo said that they made their decision to move out of the house when they did because of Priscilla's antagonism towards June, and I find that Priscilla has always nursed a dislike towards June. Leo's evidence was that after he left the house he still visited it regularly, and I find that he did. There did not appear to be any dispute that he was a regular visitor throughout the 1970s. He said that when he did visit, he would usually see both his parents. His father used to leave very early for work - by about 6.00 am - and would usually retire to bed for the night at about 7.00 pm.
13. By the 1970s Frank was working in a fairly modest capacity as a presser in a dry cleaners, and Teddy worked in a data card factory. Leo had been a machine operator with a Canadian company, PDC, but he had left that job in about 1968. He had then worked for IBM for a time, after which he ran a fish and chip shop in Golders Green. He cut his thumb badly whilst in this job and left it. In January 1970, he started working for London Transport, and became an inspector on the buses. Annamurry worked at Brentford Nylons and also part-time as a machinist in a textile factory.
14. Leo said that, even after leaving the house, he continued as before to contribute to the mortgage repayments. There is no dispute that Teddy contributed to the mortgage repayments. Teddy, of course, was a joint legal owner. It was unclear from Frank's evidence whether the original intention was that Teddy should have a beneficial interest in the house. Frank said that, had he sold the house at a profit, all the family would have shared in it, not just he and Teddy.
15. Leo and June's son, Dhavarajh, was born in 1970, and Leo and June married in April 1971.
16. In about 1972, Teddy became ill. He suffered some form of nervous breakdown and he was unwell for the rest of his life. He did not work full-time again after about 1972, although he did occasional work, including in the business which Leo bought in 1978, to which I shall come.
17. By 1973, Leo had ideas about going into business. He had the idea of buying a newsagent's, confectionery and tobacconist's shop. One document that Frank disclosed is a draft letter prepared by Leo in March 1973. The draft showed the house as being Leo's address, which it was not. It was addressed to a finance house and was proposing the charging of 'my house' (a reference to the house) by way of security for a loan to buy a business. The draft described Leo as having a mortgage of £4,000, a reference to the Co-Op mortgage, and attributed a value of £14,000 to the house. It referred to Leo's proposal to buy a business for £9,000 to £10,000.
18. Leo said that he may have drafted the letter at the house and left it there, which would explain why it was in Frank's disclosure. He said he could have written it in the dining room or upstairs on Frank's desk. He could not recall if he ever sent out a letter in the form of the draft, but said that at about this time he did send out a number of letters to potential sources of finance, whose names he got from the newspapers. He wanted to go into business with a view to bettering himself. This had been the whole idea behind the family's move from South Africa to the United Kingdom. He had had such an idea for some time.
19. The clear inference from the draft is that Leo had the idea of using the house as security for finance for his intended business venture. Leo said he had no particular venture in mind at that stage, but had got the idea of the type of business he might be able to afford from newspapers. He gave some inconsistent evidence as to whether he had had any prior discussion with his parents about using the house as security for a business loan. He said first that he had not had any specific discussion with them about doing so, but said also that his parents had always told him they would stand by him if he chose to go into business, which he understood to mean that they would stand by him in a financial sense. He said he described the house as 'my house' in the draft because he had contributed to part of the deposit and had contributed to the mortgage repayments. He later said that he was sure that, before writing this draft, he had had some discussions with his parents about using the house as security. He said he had discussed his plan with his parents, although the precise nature of his then plan is a little obscure. He said he described the house as being his address because he always has. He recognised that any reply would come to him at the house. However, whatever business plans Leo may have had in 1973, they came to nothing for some years.
20. In July 1974, Frank and Teddy transferred the house into the joint names of Frank and Annamurry, subject to the Co-Op mortgage. Mr Martin, the solicitor who had acted on the purchase in 1968, also handled this. Leo's evidence was that the reason for the transfer of the house into new names was because Teddy was divorced in 1974, and there was a concern at the possibility of a claim being made on the house by his former wife. Leo said it was he who suggested the transfer into the joint names of Frank and Annamurry. I accept Leo's evidence on that.
21. The transaction leading to this action took place in 1977. It was a transaction consisting, on the face of it, of the sale and transfer of the house by Frank and Annamurry to Leo for £13,000, a purchase that Leo financed in large part with a loan on mortgage from the Leeds Permanent Building Society ('the Leeds'). The correspondence starts in July 1977, and the transaction was completed on 17 October 1977 by a transfer of the house to Leo. However, before the transaction got under way, Leo said that, in the company of his parents, he visited many shops that were on the market, and that his reason for taking them along was that he wanted to share everything with them. These would be businesses of which he had obtained particulars. They would all be within a particular price band. It is clear that at this time he had revived his interest in acquiring a business.
22. Turning to the documents, I mention first a letter from Barclays of 13 July 1977 addressed to Frank and Annamurry at the house. It referred to 'a recent meeting' at which it records it was arranged for a charge to be given to Barclays over Frank and Annamurry's joint account with the Alliance Building Society in order to secure a loan to Leo. Barclays pointed out that it needed Annamurry's signature on the charge form, and one inference is that it already had Frank's - and perhaps that Annamurry had not been at the recent meeting - although the position is unclear.
23. Frank's evidence about this was unhelpful. He could remember nothing about it and denied all knowledge of any Alliance Building Society account that he and/or Annamurry may have had. The only building society account he claimed he had ever had was one at a Hove address, although he could not remember its name. It appears that the head office of the Alliance Building Society was at Hove in those days, and so it is probable that the account of which he claimed to have a recollection was in fact the Alliance account. But his evidence was that his account was a sole account, not a joint account, and so nothing really tied up. What seems to be plain, however, is that Frank did have an apparently quite significant meeting at Barclays in July 1977, being a meeting which had a good deal to do with Leo, and probably with his business plans, but which he has now forgotten all about.
24. Leo's evidence about that letter is that at the time he was making arrangements to raise a loan from Barclays to apply towards the acquisition of a business. He said he and his parents had frequent dealings with the Barclays manager, and that he and they would often go to the bank to see him. Leo would usually take them by car, and he also said that, even if the purpose of the visit was purely for his parents to discuss their own affairs, he would usually accompany them. Leo said, however, that as at July 1977 he still had no specific business venture in mind. He said he did not know his parents had a joint account with the Alliance, and was not sure whether he saw this letter at the time. It would seem improbable that, if Barclays was proposing to make a loan to him, they would not also have told him that they required security for the repayment from his parents, but Leo was adamant that he did not know of the matters referred to in the letter. However, just as Frank has forgotten about them, it is possible that Leo has too. Leo did say that no loan from Barclays materialised at the time, and there is no evidence to gainsay that. Although Frank appears to have forgotten about it, the letter does appear to provide some confirmation that Frank and Annamurry knew about Leo's then need or wish to borrow money, and there is no suggestion that he had any need or wish at this stage to borrow money otherwise than for the purpose of acquiring a business. I turn now to the correspondence relating to the sale of the house by Frank and Annamurry to Leo.
25. First, there is a letter dated 8 July 1977 written by Stuart Hunt & Co, solicitors, to Leo. Leo disclosed this letter, or a copy of it, and Frank also disclosed a copy. It records that a Mr Hebrard had given Mr Rhys-Jones of Stuart Hunt a letter of instruction from Leo dated 13 June 1977 and that 'a mortgage application has been submitted to [the Leeds] on your behalf in connection with the purchase of [the house] from your Father at the price of £13,000.' Mr Rhys-Jones asked Leo to contact him to discuss the matter, and enquired where the title deeds were. Leo said that Mr Hebrard worked for Sun Life and Canada Assurance in Wembley and that it was he who had suggested that Leo should instruct Mr Rhys-Jones on the transaction. He said he told his parents that he would be instructing Stuart Hunt. By this stage, Leo had already filled in and submitted an application form for a mortgage advance from the Leeds, which was acknowledged by the Leeds on 8 July 1977. He also paid a £30.30 valuation fee.
26. On 13 July 1977, Mr Rhys-Jones wrote to Frank at the house (again, the letter was in Frank's disclosure). The letter reads:
I understand that you wish us to act for you in the sale of [the house] to your Son Mr L.F. Kuppusami at the price of £13,000.
Would you kindly telephone me to confirm this and meanwhile I have written to the Nationwide Building Society requesting the Title Deeds on loan.
(Nationwide had either taken over, or had merged with, the Co-Op).
27. Leo said that at no point during the transaction did he go and see Stuart Hunt, and nor did his parents. He said the solicitors told him that they would not act if they were faced with any conflict in acting for both sides, and that they also told him that they had telephoned his parents about it. Leo said that, as before, he was always in and out of the house at this time, and that he may have opened letters from Stuart Hunt at the house. He said his practice was never to open letters addressed to his father save in his presence. He said he might have telephoned Stuart Hunt from the house.
28. On 9 August 1977, the Leeds wrote to Leo saying that its valuer had visited and reported on the house. It advised that, if it made a mortgage offer, Leo would have to arrange for a specialist firm to inspect the house for rising damp.
29. On 22 August 1977, Stuart Hunt wrote further to Frank thanking him for returning the completed enquiries before contract (which are not in evidence), and enclosing the contract for signature by Frank and Annamurry. They asked Frank to return the signed contract, which they would then hold until they were ready to exchange contracts. They said that exchange was expected to take place shortly, as they understood that Leo would shortly receive his mortgage offer. There is no dispute that Frank received this letter, which was disclosed by him. Leo said that he either would or might have helped Frank to fill in the answers to the pre-contract inquiries, although if so it would make that part of the transaction fairly absurd. Frank does not recall filling in the form, but I do not find that surprising. On the same day, Stuart Hunt wrote to Leo, also enclosing a contract for him to sign as well as a copy of the enquiries before contract containing Frank's replies (which probably told Leo little he did not know already).
30. Neither signed contract is in evidence, and there is no evidence as to the circumstances in which Frank and Annamurry signed their part. Leo said that he would have gone to the house, where the contract would have been signed, but he said he could not remember being present when his parents signed it. In giving this part of his evidence, he may have been under the mistaken belief that the contract consisted of just one document that all three signed, rather than two separate parts to be signed by his parents and him respectively.
31. On 26 August 1977, the Leeds wrote to Leo offering him an advance of £11,700, to be secured by a charge of the house. The offer reflected that the charge was to be repaid on the maturing of an endowment policy on Leo's life. One of its special conditions was that Leo should obtain vacant possession of the house on completion and should give a declaration that he was in actual physical possession of the whole of it. Of course, there was no question of Leo obtaining such possession. The plan from the outset was that Frank, Annamurry and Teddy would continue to live in the house, and Leo would live elsewhere.
32. The transfer of the house to Leo was executed on 17 October 1977. A copy is in evidence. It is purportedly executed by each of Frank and Annamurry, and their signatures are purportedly witnessed by Dennis George, Patricia's husband. It recited that the price of £13,000 had been received by Frank and Annamurry. Leo was registered as the proprietor of the house on 15 November 1977, and on the same day the Leeds was registered as the proprietor of its charge over it.
33. The next material letter is one of 20 October 1977 from Stuart Hunt to Frank (which Frank disclosed). It confirmed that the sale had been completed on 17 October 1977 and stated that it enclosed the solicitors' cheque for £9,330.14 representing the net proceeds of sale due to Frank. The figure was the sum of (i) the deposit of £1,318.37 Leo had paid and (ii) the net mortgage advance of £11,624.21 made to Leo by the Leeds, less (iii) £3,504.44 required to redeem the Nationwide mortgage and (iv) £108 costs due to Stuart Hunt. Stuart Hunt said they had only received from Leo a total of £12,942.58 (the deposit plus the net advance from Leeds) and they asked Frank whether he could collect the balance of £57.42 still due from Leo direct, or whether he wanted Stuart Hunt to collect it.
34. That letter therefore showed that the sale price for the house was £13,000, and that (on the face of it) Frank received £9,330.14 by way of net proceeds after redeeming the Nationwide mortgage and paying Stuart Hunt's costs. Mr Rhys-Jones also wrote to Leo on the same day, confirming that the sale had been completed on 17 October and pointing out that he owed his father £57.42, adding that it would be best if Leo could pass this money direct to him. The letter shows that the deposit of £1,318.37 which Leo had paid had been the credit balance he had in an account with the Leeds, and Mr Rhys-Jones also asked Leo for payment of his costs of £113.75 and the Land Registry fee of £32.50, which Leo paid on 25 October. Leo's case in a pleading he signed on 31 July 2002 is that he paid the £57.42 to his parents, but in cross-examination he said he could not remember if he had paid it or not, and he accepted that he might not have done.
35. I have not had any evidence about this transaction from anyone from Stuart Hunt. Mr Frank told me that his investigations had revealed that the firm had merged with another firm.
36. Central to the case is the true nature and purpose of this transaction. Frank's evidence on this in his witness statement perhaps suggests that he had played a part in the discussions with Leo about it. He said in paragraph 10:
In about 1977, [Leo] approached my wife and told her that he wanted to go into business and asked to use the equity in [the house], to raise a loan to start a business as a tobacconist at a shop in Tottenham. My wife discussed this proposition with me and there was a certain amount of discussion with [Leo] during which he promised he would transfer the title in [the house] back to us as soon as he had repaid the loan. I trusted [Leo] and felt sure he would repay the loan and give us the property back. I therefore agreed to his proposals.
37. In Frank's oral evidence in chief, it became tolerably clear, however - at least from what he said in the early part of his evidence - that he, Frank, had no discussion about this matter directly with Leo. All the discussions were between Annamurry and Leo, and Frank's evidence as to what passed between them, and the arrangement made with Leo, is based wholly on what he says he had learnt from Annamurry. He said that he agreed with whatever she said. Frank said that he knew that Leo wanted to raise money on the property to buy a tobacconist's and he knew also that the business was in Church Road, Tottenham, which he first visited after Leo had bought it. He said in his witness statement that Leo contacted the solicitors, and that he was only aware that he had done so because 'we received some correspondence.' In his oral evidence in chief, however, he denied receiving any solicitors' correspondence, although I have already indicated the letters he disclosed in the action.
38. Frank was shown a copy of the transfer apparently executed on 17 October 1977. He said Annamurry could not read well but could write her name, and he said he could both read and write but not well. He said he remembered being asked by Leo to sign a document one evening after he had had gone to bed (Frank used to retire for the night at about 7.00 pm, and the visit was probably at about 8.00 pm). He said Leo told him he had fixed up a loan and that he wanted Frank to sign the document. He said the form he signed did not look like the copy transfer, that the signatures on it were not his or Annamurry's and that he did not remember Dennis witnessing his signature. In a statement made in September 2002, which was put in evidence, Dennis denied that he witnessed the signatures. I place no reliance on the evidence disputing the due execution of the transfer. Frank's case is not advanced on the basis that it was not validly executed, and Dennis was not available to be cross-examined.
39. Frank remembered seeing the letter of 20 October 1977 from Stuart Hunt. He said it came as no surprise that it told him that the sale of the house to Leo had been completed. He said he did not open the letter himself, but that Annamurry brought it to him already opened. I understood his evidence to be that Leo had delivered it to her that morning, after Frank had gone to work. He said it contained no cheque, but nor did he expect one. He said that the absence of any cheque worried him, but he did not see Leo to speak to him about it, nor did it occur to him to ring the solicitors and ask them why no cheque was included. In his witness statement, he said about this:
I did not at any time receive any money from [Leo] or anyone else after the transfer nor did I expect any form of consideration from him. Indeed from my perspective, we were transferring our home into his name, in order to enable him to raise the monies necessary to fund his newly founded business and it would have entirely defeated the whole object of enabling him to raise money to start the business if he had had to pay us any money.
40. Those words are obviously not Frank's own words. His command of English is not equal to them. In his oral evidence, he said Leo must have taken the cheque. The essence of his evidence was that Leo received the entire net proceeds although, if so, there are no banking documents in evidence showing how this happened.
41. Leo's evidence about the transaction is that his parents' primary motivation in entering into it was that they wanted to be relieved of the burden of the Co-Op mortgage. Frank would be retiring at 65, in 1979. There was of course no question of Leo obtaining vacant possession of the house on completion of the purchase. He said the plan was that it would remain his parents' home, and also Teddy's, for their respective lives and Leo gave them assurances to that effect. Thus the transaction had an advantage for them. Leo has honoured that promise, and has no wish or intention to renege on it. He never made any attempt to remove any of his parents and Teddy from the property. Now only his father lives there, and Leo acknowledges that he can live there for the remainder of his life.
42. Leo's evidence was, however, that his parents also wanted to assist him in his business venture, although that was not the primary motivation for the sale. He said they in terms talked of using the house to help him fund the purchase of a business. As I shall explain, Leo did buy a business shortly after the completion of the sale of the house: he said it was in February 1978. He said in his oral evidence in chief that his parents provided him with between about £8,500 and £9,000 for that purchase (that was the first time in the litigation he had said so), and that he borrowed the balance from Barclays. He said the Barclays borrowing was unsecured, which seems a little improbable, but that was his evidence. He denied that he ever agreed that he would return the house to them, either when he had paid off the loans for his business or ever. He said that was no part of the transaction. The only collateral promise he ever made was that his parents and Teddy could stay in the house rent-free for life. His case is that the money his parents provided was a gift. He had not previously suggested that they had made such a gift to him, and the suggestion was not put to Frank when he was giving evidence.
43. Priscilla also gave oral evidence about the 1977 transaction. Her evidence in chief was that in about 1977 there were many family discussions at the house about Leo buying a business. She said in her witness statement that:
The subject of needing to mortgage [the house] came up a few months after the subject was first raised, when it was apparent that [Leo] had researched the business he wanted to buy. In the course of a number of discussions, at which I was present, he told my parents that he needed to use [the house] in order to raise some money against the equity in it. I also heard him assure my parents that it was a short term loan and that he would return [the house] to their name as soon as he had paid it off. My clear impression at the time was that [Leo] knew precisely the business he wanted to buy, had made up his mind to purchase it and required my parents' help and assistance in order to do so ... It became clear, that the business [Leo] wanted was a tobacconist shop in the Tottenham area for which he needed around £13,000. He made it clear that if he could use the equity in [the house] to raise the money he would repay it and would re-transfer [the house] back into my parents' names. My parents told me that they had visited the shop before agreeing to the transfer of [the house] into [Leo's] name.
44. During Priscilla's cross-examination, it became clear that most of Leo's alleged conversations on the topic were with Annamurry rather than Frank. Initially, Priscilla thought there was only one such conversation with Frank, but later she said she was not sure. She said she witnessed a few of the conversations, but was not strictly a party to them. She also said that, in saying in her witness statement that Leo had referred to his wish to 'use the equity' in the house, she did not understand what those words meant then, nor did she understand them now, but had remembered these words for 25 years. I did not find Priscilla to be a convincing witness, or an obviously reliable or impartial one.
45. Patricia's written statement on the subject was put in under the Civil Evidence Act 1995, as she was in South Africa, and would remain there until after the trial. She said that Annamurry told her at the time that Leo 'was interested in purchasing a tobacconist shop. She also told me that he wanted a loan from her and my father to buy the shop and in order for the loan to be raised, wanted [the house] to be transferred into his name.' She does not say that it was part of any such arrangement that Leo should at some stage transfer the house back to his parents, but does say that in 1981 her mother told her that she wanted the house transferred back. Patricia admits she was not much concerned with the circumstances of the transfer.
46. Leo says he purchased the tobacconist's business in February 1978, one he says he only found after the completion of the transfer. There are no documents confirming the date of purchase. They have been lost in the passage of time. I have, however, no reason not to accept his evidence about the timing, a date which he would be quite likely to remember, and no-one suggested a different date. The shop was at 42 Church Road, London N17. Leo, June and Dhavarajh moved into a flat over the shop. Frank said he and Annamurry visited the shop after it was bought, not before. I find that Frank and Annamurry did provide Leo with at least between £8,500 and £9,000 towards the purchase (which is what Leo said), and I shall make my finding later as to whether they in fact provided him with more than that. Leo said they did not give it to him by cheque, but by transferring money from Frank's account to his, and he said in cross-examination that he may have been with his parents when they arranged the transfer. He denied that they gave him as much as the full amount of the net proceeds paid to his parents on completion of the sale to him of the house. He denied that the payment was by way of a loan rather than a gift.
47. The shop was relatively successful. By May 1984, Leo was proposing to sell it. He found a purchaser, Mr Patel, who agreed to buy it for £23,000. The sale was completed in early 1985, by which date Leo had repaid in full the money borrowed from the Leeds in 1977 in order to buy the house, and had redeemed the charge over the house. At that point the house was unencumbered by any charge. At some point after this - which Frank puts at some uncertain date in the early 1990s - Leo and Frank had a conversation about the whereabouts of the deeds to the house. Frank says he asked Leo about transferring the house back to him, and it is common ground that Leo told Frank that the deeds were in the bank. Frank says he understood this to mean that the house either had been or was being transferred back into his own name. That is, on the face of it, perhaps a surprising understanding for him to have had, but he is a man of limited education and experience in property matters, and I have no reason not to believe that evidence.
48. In May 1985, Leo and June completed the purchase of a house at 27 Hawthorn Avenue, Palmers Green, London N13. Osmond Gaunt & Rose, solicitors, acted for them on the purchase. The price was £57,500, and they borrowed some £36,500 on mortgage from the Alliance Building Society for the purpose of the purchase. They paid the balance in cash. Leo and June still live there, although in late 1998 or early 1999 they sold and transferred it to their son, Mr Frank.
49. In about 1986, Leo and June decided to buy a sandwich bar called Franco's in Chapel Market, London N1. Its premises were held on a lease with 19 years unexpired, and the price was £90,000. On 30 October 1986, Allied Irish Finance Company Limited ('AIFC') made an offer of a loan of £50,000 towards the purchase price, the repayment to be secured by a first charge over the sandwich bar, a second charge over Hawthorn Avenue and a policy on the lives of Leo and June. No security was either sought by or offered to AIFC over the house.
50. However, Leo and June also applied for a loan from Western Trust & Savings Limited ('WTS') of £45,000, to be secured on the house. In the application form, they stated that the house was their 'Permanent address,' which it was not. The documents show, as would be expected, that WTS engaged a valuer to inspect and value the house for mortgage loan purposes. The valuer certified in his report, which was dated 23 October 1986, that he had inspected the house. He described it as 'owner occupied', with no apparent tenancies, and he valued it at £64,000. On 11 November 1986, WTS made Leo and June an offer of an advance of £44,900 on the security of the house, the repayment term being 20 years and the repayment also being secured by an endowment policy. Leo and June accepted the offer on 20 November 1986. On 16 January 1987, Leo granted a charge over the house to WTS to secure the loan. Although Leo and June had misdescribed their address in their mortgage application to WTS, their correct address (27 Hawthorn Avenue) was given in the legal charge. The charge was registered on 16 February 1987. WTS was subsequently acquired by, or merged with, Birmingham Midshires Mortgage Asset No. 1 Limited ('BMA'), and the charge was registered in the new name on 17 September 1997. BMA was in turn either acquired by or merged with Halifax, which is now registered as the proprietor of the charge.
51. On 27 February 1987, Leo granted a second charge over the house in favour of AIBF. That charge was registered on 30 March 1987. Notice of it was given to WTS on 26 March 1987. By then, the house was securing the repayment of some £95,000. The money owed to AIFB has since been repaid, as has a subsequent charge granted on 22 July 1991 to Barclays, and the only charge still encumbering the house is that in favour of Halifax, which currently secures about £57,000.
52. I find that Frank knew nothing about the creation of these charges at the time they were created, and cannot be said to have consented to their creation.
53. Leo and June got into difficulties with the payment of the mortgage interest due to WTS, and on 3 June 1991 WTS issued a summons in the Edmonton County Court for possession of the house. At the date of the proceedings, the arrears of interest were £9,164.26, and the total amount due to WTS, and secured by its charge, was £54,064.26. A possession order was made, but its execution was fended off by a payment of £6,000 that Leo made on 9 October 1991 towards the arrears. I presume WTS's right to possession was suspended on terms.
54. A WTS attendance note shows that on 8 July 1992 someone from WTS telephoned the house and spoke to Teddy. The note records that Teddy told the inquirer that Leo and June had moved out of the house, and that he was paying an undisclosed amount of rent to Leo. The note records that Teddy was not prepared to tell WTS where Leo was to be found. If a true record of what Teddy said, his statement that Leo and June had moved was somewhat disingenuous. They had not lived there since 1968.
55. In 1993, WTS obtained the issue of a warrant for possession of the house, but in April it agreed to its suspension on the payment of £5,150. Frank was told of the problem, and it was, I find, at this time that he learnt for the first time that Leo had created the WTS charge.
56. On 21 July 1994, WTS telephoned the property again. The call was answered by Betty Kuppusami, Teddy's widow. Teddy had died in December 1993. WTS's note of the conversation records that Betty said that Leo was collecting rent for the house 'off her, however wants her out.' It further records that she said that 'There are 5 rooms which are tenanted. Each person pays £262.00 a month. Leo collects the rent. She gave me the name of Leon Leonard Jones who is the tenant on the ground floor. Somebody calls Steve lives on the top flat. She also confirmed that Leo owns [Franco's Sandwich Bar].' The figure of £262 a month equates to £65.50 a week, the amount of the housing benefit Frank claims (but which Leo denies) he was by then paying Leo.
57. WTS telephoned Leo on the same day. WTS's note recorded that Leo admitted that Betty and Frank lived in the house, and that he eventually also admitted that Leon Jones (but nobody else) lived there. Leo admitted that he received rent for the house of £50 a week. The note records that WTS knew that Leo did not live at the house himself. In his oral evidence, Leo admitted receiving rent for the house from a tenant in 1995 (Mr Jones), but denied he had charged or received rent from anyone else.
58. In 1991, Frank began to receive housing benefit from Haringey Borough Council. He has received such benefit from 30 September 1991 to date, at a rate of £65.50 per week. Frank's case is that this was Leo's idea, who provided him with the forms which he, Frank, then signed. Frank would cash the payments, and says he paid the money over to Leo 'to help him pay the mortgage' (his witness statement does not identify which mortgage, but I understand this to be a reference to the Leeds mortgage, which Frank claims he did not know had already been redeemed). He says he did this until 1999, since when Frank has kept the housing benefit for himself and has applied it in repairing and improving the house. Frank has received a total of approximately £37,000 in housing benefit to which he now admits he was not entitled, although he says he only learnt this in September 2002, when his solicitors so advised him. Leo, for his part, denies he had any part in the obtaining by Frank of housing benefit and also denies ever having received any payment of such benefit from Frank. One or other of father and son is lying about this.
59. On 3 December 1996, Leo wrote a letter of apology to Frank for the stress and anxiety he had caused over the last few years, and explaining what a relief it was that, following the repossession of the shop, he had been able to keep up the mortgage payments on the house and so avoid inflicting eviction on Frank. On 20 January 1998, Leo wrote to Priscilla. He said he believed she was interested in purchasing the house and said that the asking price was the outstanding mortgage plus the two loans secured on it, totalling £72,000. On 22 July 1998, Germain Oliver, solicitors, wrote to 'the Occupiers' of the house saying that they acted for Rees Investments Limited which had a mortgage over the house and that Rees had started possession proceedings for it in the Edmonton County Court against Leo and June. The proceedings were to be heard on 2 September 1998. It appears that Leo managed to resist possession being obtained.
60. On 26 January 2000, Frank's solicitors, Ronald Fletcher Baker, wrote what was in effect a letter before action to Leo, asserting Frank's claim to the house, and asking Leo to confirm that he held it as bare trustee for Frank. On 9 February 2000, and to protect his claim, Frank lodged a caution against dealings with the property.
61. On 15 August 2001, Leo wrote to Frank again. His letter expressed great upset about the bringing of the present claim. Leo explained that he had been turned down for legal aid and that:
The only reason I would have challenged you in court is to keep [the house] as it is, because I don't have any money to redeem the mortgage and transfer the property to you.
He closed his letter by saying:
... June and Dhavarajh don't want any part of [the house] and neither had any inkling to do so. I am willing to endorse any legal agreements you draw up. I have told you before that [the house] was your home and property and I can truthfully say that I had no intention of defrauding you of that. I can honestly say that I had no intention of misleading you when [the house] was transferred to me in 1977 October 17th. My intention was of a good nature because from 1979 I made sure you and Teddy were financially better off than most people. (My emphasis)
62. I have related quite a lot of the story, but the central question is the relatively narrow one as to the terms on which the house was transferred to Leo in 1977. Frank's case, essentially based on what Annamurry told him she had agreed with Leo, was that the arrangement was that the house was to be, and was, transferred to Leo for the sole purpose of enabling him to raise money on its security for the purposes of acquiring a business. Once Leo had repaid that money, he was to transfer the house back to Frank and Annamurry. Leo repaid the money in early 1985, when the Leeds mortgage was discharged, and so he was then in a position to re-transfer the house and should have done so. Instead, he used it, without Frank's permission or knowledge, as security for other business ventures. Frank's case is, therefore, that the house was transferred to Leo for a limited purpose only, and that, subject only to that purpose, Leo at all times held the house on trust, initially for both Frank and Annamurry and now just for Frank. Frank is now entitled to have the trust executed by having the house re-transferred to him unencumbered. He has been so entitled since early 1985. The Halifax mortgage was created in 1987 without his consent or knowledge, and his right to have the house re-transferred was an overriding interest to which the Halifax mortgage was and is subject.
63. Leo’s case has from the outset of this litigation remained a little obscure, and has changed. It is worth looking at his pleaded case. Paragraph 5 of the particulars of claim had pleaded that Leo needed about £13,000 to buy the shop, that he asked his parents if could use the equity in the house to borrow the £13,000, agreeing that once he had repaid the borrowed money, he would re-transfer the house to them. Paragraph 8 had pleaded that no money was paid to the parents on completion of the transfer, the only consideration for the transfer being Leo’s promise to re-transfer the house once he had repaid the loan. In short, Frank’s case was and is that, having redeemed the Nationwide mortgage with the Leeds loan, Leo had used the entirety of the net proceeds of the so-called sale in order to buy the shop. Frank’s pleading makes no complaint of that. That was the whole point of the transaction.
64. In answer to that, Leo’s original defence simply pleaded that he had bought the house from his parents for £13,000 and paid that sum to them, and that the only collateral term agreed was that they could live there for life. The inference from that is that, after the redemption of the Nationwide charge, his parents enjoyed the benefit of net proceeds of some £9,330. There was no suggestion in that pleading that they later gave Leo any part of those proceeds to enable him to buy a business. On that version of events, Leo obtained nothing immediate from the purchase, save the burden of the Leeds mortgage and the prospect of vacant possession of the house after the death of his parents.
65. On 31 May 2002, in response to requests by Frank’s solicitors for information, Leo wrote that, for the purchase of the business in 1978, I received loans from Barclays Bank and this was further supplemented by my own monies (which included money given to me by my parents).' (My emphasis). On 24 July 2002, Master Price made an order permitting Leo to serve an amended defence and, in light of the emphasised words, requiring him to set out his positive case in relation to paragraph 5 of the particulars of claim 'including in particular whether and when any monies derived from the sale of the property were given to [him].'
66. Leo served his amended defence on 31 July 2002. He signed it himself, and the inference is that he had also prepared it, perhaps helped by his son, Mr Frank. It reflected something of a change of case from his original defence. In paragraphs 5 and 6, he pleaded his purchase of the house in 1977, again alleging that the net proceeds of sale after the redemption of the Nationwide mortgage were paid to Frank. He also alleged that he had paid Frank the small balance of £57.42 required to make up the full £13,000 purchase price, although in his oral evidence he accepted he might well not have paid it. Again, the sense of what was pleaded was that the sale of the house by Frank to Leo was a relatively conventional sale, subject to no special terms save the same collateral term as to his parents’ right to live in the house for life.
67. In paragraph 4, however, Leo referred to his subsequent purchase of the shop and pleaded that he '... cannot now recall, after a period almost 25 years, what monies were received from [Frank] to purchase the business in February 1978 but contends that such monies as might or might not have been so received from [Frank] were in the form of a gift, [Leo] being the eldest child of [Frank].' Quite how any money which 'might not have been so received' could have constituted a gift to Leo is obscure but, that aside, the essence of his amended pleading was that Frank may have made a gift to him of a now forgotten amount of money in connection with the purchase of the business, and that the reason for any such gift was because Leo was his eldest child. Leo made no suggestion that Frank had given him a sum equal to virtually the entire net proceeds of sale of the house. The thrust of the case now was, therefore, that this was still essentially an ordinary sale (subject only to the collateral term), but that his parents may subsequently have made some unconnected gift of a forgotten amount to him for the purpose of helping him to buy the shop.
68. However, during his evidence in chief, and for the first time, Leo said that his parents made a gift to him of between £8,500 and £9,000 in connection with the purchase of the shop in February 1978. So although in July 2002 he had forgotten what (if any) money they had given him, he now claimed to remember it to a reasonably precise approximation. He said in cross-examination that he had always remembered that figure, and that he had probably not mentioned it earlier because he had been, or might have been, under a lot of stress, an explanation which I regard as wholly unconvincing. He said the money was given to him some four or five months after obtaining the Leeds mortgage, and after the completion of the sale of the house.
69. I have to say that, whilst I found Leo’s evidence to be generally reliable on the relatively uncontroversial matters explored in evidence, I feel unable to accept his account of the 1977 transaction. His case appears to be that the motive for the sale to him of the house was unconnected with his business ambitions, but was directed to relieving his parents of the burden of the mortgage on the house, and that he paid the full purchase price to his parents (apart perhaps from the £57.42). But it then emerged during his oral evidence that he now claims that, fairly shortly after the completion of the sale, his parents made a gift to him of between £8,500 and £9,000 to enable him to buy the business he bought in February 1978. That amount is, of course, very close to the net proceeds of sale of the house he claims was paid to his parents in October 1977, and I consider that the closeness can be no coincidence. Even if they gave him no more than £8,500 (and Leo does not put it as low as that), that would have represented 91% of the net proceeds; and if it was as much as £9,000, it would have represented 96%.
70. Quite apart from the unsatisfactory way in which it emerged, Leo’s account of what happened appears to me to be an unlikely one. His case is that he bought his parents’ house for £13,000 and paid them the full purchase price; but that they then made him a gift of up to £9,000 to help him with his business purchase. Such a gift would have represented a material part of his parents’ savings and, in practice, represented most of the net proceeds of their sale to him of their main asset, the house. It is in my view improbable that Frank and Annamurry would have wanted to prefer Leo in this way over their other children. Moreover, Leo’s suggestion that the alleged gift was unconnected with the sale that had been completed so shortly before also appears to me to be improbable. Leo had had in mind the purchase of a business for years. As early as 1973 he was planning to use the house as security for borrowings for the purposes of a business, and the evidence satisfied me that the sale of the house to him coincided exactly with his further explorations of a business acquisition.
71. In the result, I find that Leo has portrayed a misleading impression of the true nature of the sale transaction with his parents in 1977. I find that the sole reason for that transaction was to enable Leo to raise money on the security of the house, being money which he and his parents agreed he would use to finance the purchase of a business. I find that his parents in fact made available to him the whole of that money, and that he paid nothing to them at all, although the precise mechanics by which this was achieved are unknown. I find that that was the whole point of the transaction. No-one has suggested that they advanced that money to him by way of loan. Frank’s case is that the substance of the transaction was that Leo was not buying the house outright for himself beneficially, but was borrowing the legal estate in it for a limited purpose, namely that of raising money on it for his proposed business, subject to an express obligation to restore it to Frank once that purpose was fulfilled and the money repaid. For reasons I have already given, the evidence in this case has been very unsatisfactory. But overall, I am satisfied, and I find, that Frank’s case is in line with the probabilities and is established. I accept his evidence that this was the true nature of the arrangement underlying the sale of the house to Leo. Whilst I found Frank’s evidence to be unreliable on a lot of matters, I would expect him to understand and remember the essence of a transaction affecting his main asset which he entered into with his son.
72. How does the matter stand on the law? In my view, the correct analysis of the sale transaction is that it was one under which it was the common intention of all parties that the beneficial interest in the house was not being transferred to Leo. All they intended was that the legal estate should be transferred to him, which he could then charge to the Leeds by way of security for the loan he wanted to raise to buy the shop. Frank and Annamurry were consenting to the creation of that charge, and so would be bound by it. That, however, was the only dealing with the house to which they were consenting, and, subject only to that transaction, it was common ground between them and Leo that they were retaining the beneficial interest in the house. The legal consequence was that, when the house was transferred to Leo, he held it on a resulting trust for Frank and Annamurry, subject to his right to charge it to the Leeds. In theory, Frank and Annamurry could have called for its re-transfer straight away, although any re-transfer would have been subject to the Leeds charge. But once the Leeds charge was redeemed in 1985, Frank was entitled to have the house transferred back to him unencumbered. He had of course benefited by the fact that part of the transaction with Leo included the redemption of the Nationwide charge, of which Leo bore the cost. But I find that it was no part of the agreement that any re-transfer should be subject to a charge in favour of Leo to secure to him the money he had applied in redeeming the Nationwide charge. That aspect of the transaction represented the benefit of the transaction to Frank and Annamurry. The benefit Leo derived from it is obvious. In my view, this way of analysing the transaction finds support in the judgment of the Vice-Chancellor (with which Rix LJ and Sir Swinton Thomas agreed) in Ali v. Khan and Others [2002] EWCA Civ 974. Subject, therefore, to any available defences, I hold that Frank has established his beneficial entitlement to the house, and his right to have it re-transferred to him.
73. If, as I have found, Leo agreed he would re-transfer the house once the Leeds mortgage was repaid, I do not consider that the absence of any writing evidencing such agreement provides a defence. If any point was available to Leo under s.40(1) of the Law of Property Act 1925, he has not pleaded it; and the absence of writing will not defeat Frank’s a claim to establish a resulting trust (see s.53 of the same Act).
74. The position, therefore, is that Leo is, and has been since 1977, in the position of a trustee of the house for Frank, and so time under the Limitation Act 1980 cannot run in his favour against a claim by Frank to recover the trust property (see s.21(1)(b) of that Act). A defence of laches might in theory be available, but the mere passage of time would not enable it to succeed. Leo would have to show that Frank could be said to have so acted as to have waived his claim to the house, or at least that he had so acted that it would not be reasonable to require Leo to re-transfer the house - in short, that it would be 'practically unjust to give a remedy ...' (Lindsay Petroleum Co. v. Hurd (1874) LR 5 PC 221, at 239, 240). I do not consider that there are any facts in this case making it so unreasonable. In particular, I do not consider that Leo has changed his position to his detriment in consequence of any inaction by Frank. Leo raised the Halifax loan in 1987, within just two years of the time when he became under a duty to re-transfer the house to Frank. It is not suggested that Frank knew of, or assented to, the creation of Halifax’s charge. Further, the presumption must be that the loan it secured, and also the other loans Leo obtained on the security of the house, were obtained for Leo’s benefit. And even if - as to which I find it unnecessary to make a finding - Frank collected the housing benefit in the dishonest knowledge that he was not entitled to it, I do not regard that as affording Leo a defence. If Frank was in that respect engaging in any illegality, he does not need to rely on his illegal acts to make good his claim to the house, so that in principle it provides no answer to his claim. Nor can I see that Leo can rely on the point. The highest he seeks to put it is to say that in this particular respect Frank has come to the court with unclean hands. But I do not consider that that can have the effect of denying Frank his proprietary rights. Nor in my view do the facts on which Leo has sought to rely give rise to any defence of estoppel or acquiescence. He has not sought to say that Frank has in some manner unequivocally acknowledged his title as the beneficial owner of the house. In short, I do not consider that there are any defences available to Leo.
75. Mr Caun advanced an alternative case that Leo had exercised actual undue influence over his parents to induce them to enter into the 1977 transaction. He relied on the facts that Leo was better educated and more intelligent than his parents, that the sale transaction was an improvident one, and that there is no suggestion that his parents received any advice about it, let alone independent advice. He submitted that the circumstances were such as to discharge Frank’s burden of proof and to shift to Leo the need to adduce a satisfactory explanation of the transaction. He said he had produced no such explanation, and so the case was made out. Mr Caun relied on a passage from the speech of Lord Nicholls of Birkenhead in Royal Bank of Scotland plc v. Etridge (No. 2) [2001] 3 WLR 1021, at para. 14.
76. I take the view that there is no scope for this alternative case. I have found that the true nature of the 1977 transaction was that for which Frank contends, and on that basis a case based on actual undue influence does not arise.
77. Mr Withington’s submission on behalf of Halifax was that I should decline to find that, following the completion of the 1977 transaction, Leo held the house on trust for his parents. However, he conceded that, were I to conclude that Leo did hold the house on the trust for which Frank contends, then Frank’s right under that trust would override Halifax’s charge and that any transfer to Frank pursuant to his right under that trust would be free of the charge. I do so find, and it follows that Frank is entitled to a re-transfer of the house free of the Halifax charge.
78. Frank’s claim succeeds and the defences of both defendants fail. I will hear the parties on the form of the order.