[2002] EWHC 883 (Ch)
IN THE SUPREME COURT OF JUDICATURE
CHANCERY DIVISION
Monday, 13th May 2002
Before:
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Between:
Claimant
-and-
Defendant
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Michael Waterworth (instructed by Stafford Jones) for the claimant.
David Watkinson (instructed by Christian Fisher) for the defendant.
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1. In 1994 the defendant, Mr Bashir, purchased his council flat in Central London at a discount under the ‘right to buy’ scheme introduced by the Housing Act 1985. The purchase price and further sums of money were provided by the claimant, Dr Singla. There was plainly an arrangement of some sort between them, and as part of it Mr Bashir executed a declaration of trust drafted by a solicitor, Mr Wade, whereby he declared that he held the flat on trust for Dr Singla. According to Dr Singla part of the arrangement was that nothing further was to happen for three years, because if Mr Bashir made a conveyance of the flat within three years he would have to repay the discount to the Council. But Dr Singla’s case is that after the three years the flat was to become his in every sense. However, Mr Bashir stayed in occupation and refused to cooperate in transferring the legal title to Dr Singla. By these proceedings Dr Singla seeks to enforce his rights under the declaration of trust. The principal reliefs which he claims are a declaration that Mr Bashir holds the legal title to the flat on trust for him absolutely, and an order for Mr Bashir to transfer the legal title to him.
2. Mr Bashir advanced several defences at the stage of pleadings, but by the time of closing submissions to me only three were significantly relied on. One was that, under the oral arrangement which had been made, Dr Singla owed him a good deal more money than Dr Singla had paid him. The other two defences were that the declaration of trust and the agreement pursuant to which it was alleged by Dr Singla to have been made should be set aside, under one argument on grounds of undue influence, and under the other argument on grounds that it was an unconscionable bargain. A number of other issues were raised in the arguments. I will mention them at appropriate stages in this judgment, but the three defences which I have described are the major matters which require decision.
3. For the reasons which I will explain in the course of this judgment, I consider that Dr Singla succeeds, and is entitled to the relief which he requests. In my view Mr Bashir’s first defence (that Dr Singla owes him a lot more money) fails on the facts. It does appear that there is a small further amount to be paid, but much less than Mr Bashir asserts. The second and third arguments also fail. In my view the declaration of trust is valid and enforceable. I do not accept that it falls to be set aside, either on grounds of undue influence or on the ground that it was improperly procured as a result of an unconscionable bargain.
4. I record that Mr Waterworth of counsel appeared for Dr Singla, and Mr Watkinson of counsel appeared for Mr Bashir.
5. Dr Singla is Indian by origin. He came to this country in (I think) 1979. He is a medical doctor, and for some years he has been a general practitioner in Ebbw Vale, South Wales. He gave evidence clearly and cogently. His memory of the events was quite good, as one would expect because it was a unique transaction for him, and the sort of thing which he would be likely to remember. In my view he came over as a clear and honest witness. He was cross-examined at some length by Mr Watkinson, but his evidence remained unshaken. Mr Watkinson, fairly and appropriately in my opinion, did not suggest that Dr Singla was a dishonest or unreliable witness.
6. Before I turn to consider Mr Bashir, it is convenient to mention here that there is another Dr Singla involved in the case. He is Dr Raj Singla. He is not related to the claimant in this case, but the two were friends in 1994. Dr Raj Singla had come to this country from Germany at some time in 1993. He is no longer in the country. I do not know where he is, and there was no evidence from him in the trial.
7. Mr Bashir also comes originally from India, but I have to say that he was not a good witness at all. He had difficulties which Dr Singla did not face. Dr Singla is a cultivated and articulate professional man, totally at home in British society. Mr Bashir is very different. He has very little education. He cannot read or write. Although he has lived in England since 1965 his command of English is poor. He gave evidence through an interpreter. He is now 66 years old, and because of ill health he has not worked for something like 20 years. When he was working he was a kitchen porter and washer-up in Indian restaurants. It is easier for me to make these kinds of observations than it might otherwise have been because Mr Bashir has proclaimed them himself. A general line in the witness statements which were prepared for him and which he signed (he can just sign his name, but I do not think that he can write anything beyond that) is that he was uneducated and totally dominated by persons, like Dr Singla, from more privileged sectors of society.
8. In such circumstances I am acutely conscious that I must make generous allowances for the handicaps which Mr Bashir faces as a witness but Dr Singla does not. Even making every effort to do that, I find myself constrained to say that I simply cannot accept Mr Bashir as a reliable witness in any way. It is not just that, even with the help of the interpreter, he was inarticulate in his descriptions and explanations, or that he often misunderstood questions which were painstakingly explained to him. A more fundamental problem was that, on matter after matter, there were large and irreconcilable differences between things that he said in his witness statements and what he said in oral evidence when cross-examined about the same subjects. Further, his oral evidence was erratic in all sorts of ways. What he said on a topic at one stage was quite often totally contradicted by what he said on the same topic at a later stage.
9. I give a few examples. In Mr Bashir’s pleaded defence a plea of non est factum was advanced: the plea was that Mr Bashir did not understand what he was doing when he executed the declaration of trust and other documents. There was a lot about this, or directed towards it, in the witness statement. Part of it was an allegation that the execution of the documents was preceded by Mr Bashir having been driven to South Wales by Dr Singla and his friend Dr Raj Singla, but that he had been told by them before he got into the car that they were taking him to the seaside for an outing. In his oral evidence there was no hint of this. It was clear that, when he was driven to South Wales, he knew where he was going, and he also knew that the purpose was for the signing of some documents about the flat. In his witness statement he said that he had had a very serious alcohol problem. He had stopped drinking now, but he was still drinking heavily in 1994, when the documents were executed. In his oral evidence he first said that he had stopped drinking in 1993, at around the time of a visit to India. This was already contrary to his witness statement. Later, when he was shown extracts from his medical records, he accepted that he had stopped drinking in 1990. In 1996 he briefly instructed a firm of solicitors called Osbornes. When legal issues revived four years later Osbornes wrote further letters stating that they were instructed by him. One item of instructions which they said he had given to them was that he had no bank accounts in India. (Part of Dr Singla’s case was that, at the request of Mr Bashir, he had in 1994 paid several thousands of pounds - or the rupee equivalents -to an Indian bank account of Mr Bashir.) In fact it is now quite certain that Mr Bashir has always had several bank accounts in India. He must have known that. In cross-examination on this he first said that he did not instruct Osbornes in 2000 at all, and that the last time that they acted for him was in 1996. This simply must have been wrong, but Mr Bashir adhered to it for a long time. Indeed, I do not think that he ever gave any account of how Osbornes came to write what they did when he must have been the source of the information, and the information was plainly wrong. I could give more examples of the same sort of thing in Mr Bashir’s evidence, but I will leave it at the examples which I have given so far. I will not beat about the bush: Mr Bashir’s evidence was all over the place.
10. I accept that a lot of this must have resulted from confusion on Mr Bashir’s part. I accept also that his witness statement must have been drafted for him by his solicitors, and they may have understood him to have said something which he did not intend to say. However, there must be limits to how far I can make allowances for that sort of thing. For example, how can his solicitors have got hold of the idea that Dr Singla and Dr Raj Singla told him that they were taking him out for a day at the seaside except by being told it by Mr Bashir? It is not the sort of thing which his solicitors may have surmised to be likely and asked him to confirm.
11. The upshot of all of this is that I have to conclude that, unless Mr Bashir’s evidence on any important point is confirmed by documents or by other oral evidence which can safely be regarded as reliable, I cannot rely on either his witness statement or his oral evidence (the oral evidence in any event being as often as not different from what he said in his witness statement). I am acutely conscious of the danger of producing a decision which could be castigated as showing that there is one law for the educated and articulate and a different law for the uneducated and inarticulate. But what can I do about it? Dr Singla was a good witness and, as it seemed to me, an honest witness. Mr Bashir was not a good witness at all. Even though (as I suspect was often the reality) Mr Bashir may have been confused rather than dishonest I still cannot see how I can, out of an effort to make allowances for Mr Bashir’s inadequacies, extract some elements from his confused and shifting evidence and allow them to prevail over the entirely satisfactory evidence given by Dr Singla.
12. There were three other witnesses, of less importance than Dr Singla and Mr Bashir. One was Mr Wade, the solicitor who drafted the declaration of trust and other documents, and at whose offices they were executed. I shall say something about the contents of his evidence in the next section of this judgment. The other two witnesses were officers of Camden Council, who were called on behalf of Mr Bashir to support his case that he could not understand English. I think that this evidence was intended to support the pleaded defence of non est factum, but that defence has been dropped by Mr Watkinson. If it matters, I believe that the position as regards Mr Bashir and the English language is as follows. He cannot read or write a word of English. I did not hear him attempt to say anything in English, and I suspect that he can barely speak in the language at all. However, I also think that, if English speakers take the trouble to explain something to him carefully and slowly (as a social worker would, and as a solicitor also would), he is capable, given time and quite a lot of repetition, of understanding the gist of what he is being told. That does not necessarily mean that the understanding stays with him for long, and I think that in this case there may have been several matters on which Mr Bashir had a reasonably accurate understanding at one stage, but as respects which he now believes something entirely different from what he understood then.
13. The effect of the foregoing paragraphs is that, when I come in the next section of this judgment to give an account of the facts, I will in general accept the account given to me by Dr Singla in preference to the account, or, more accurately in many respects, the varied accounts, given to me by Mr Bashir.
14. The flat is Flat 6 Wimbledon Buildings, 10 Newton Street, London WC2. It is between Holborn and Covent Garden. It is a small ground floor flat with one bedroom. The freeholder was Camden Council. Mr Bashir had been a council tenant of Camden for some years, and he was entitled under the Housing Act to buy the flat at a discount. On the figures as the matter turned out, Camden valued the flat before the discount at £52,500; Mr Bashir, given the number of years that he had been a council tenant, was entitled to buy at a discount of 68%, so the price was £16,800.
15. It is not clear how the opportunity to buy the flat came to Mr Bashir’s knowledge, or how the process was initiated. The first formal step under the statutory scheme is the service by the tenant of a notice on the council (Housing Act 1985 s.122). I do not know what happened about that in the present case, and what I am about to say now is mostly surmise. It is unlikely that Mr Bashir knew that he had the right to buy, or that, if he did, he would on his own initiative have started the process going by serving a notice on the council. However, in the second part of 1993 Dr Raj Singla, who had quite recently come from Germany, was a lodger in Mr Bashir’s flat. My surmise is that he used to open Mr Bashir’s mail for him and read it to him, and that on this matter he opened a letter from Camden informing tenants like Mr Bashir that they had the right to buy. I do not think that Mr Bashir would have wanted to buy the flat to keep for himself. He says as much in his witness statement, which in this respect seems likely to be correct, and he adds that he did not have the money to buy, even at the discounted price. But Dr Raj Singla was a friend of Dr Singla and thought that Dr Singla might be interested in acquiring the flat as an investment. Dr Singla says in his witness statement that he was telephoned by Dr Raj Singla and told that the flat was being offered to Mr Bashir under the right to buy scheme. Dr Singla did not know Mr Bashir at all (an important point when I come to the legal arguments about undue influence). Dr Raj Singla put them in contact, and Dr Singla arranged to come to London and meet Mr Bashir. He came to the flat in around November 1993, and his evidence is that he reached a verbal agreement with Mr Bashir, of which the key elements were as follows.
(i) He would provide the price for Mr Bashir to purchase the flat from Camden. He would also meet all the other expenses of the purchase. The flat would be transferred by Camden to Mr Bashir.
(ii) He would incur expenditure on the property on security grills, decoration and refurbishment. He said that these were items which Mr Bashir wanted.
(iii) He would pay an additional £6,000, some of it in rupees, to Mr Bashir. He understood that Mr Bashir wanted to return to live in India, and that the money would enable him to buy a small property.
(iv) Mr Bashir would remain in the flat for three years, but after that he would transfer the property to Dr Singla and depart - to India, as Dr Singla understood.
16. Something must have been done by someone to start the formal statutory process going with Camden under the Housing Act. There was no evidence about this. I surmise that Dr Raj Singla did it, getting Mr Bashir to write his signature on whatever document Dr Raj Singla prepared. He may have caused this to be done before or after the meeting between Dr Singla and Mr Bashir. By 19 January 1994 the matter had proceeded to the stage of Camden sending to Mr Bashir a formal notice under section 125 of the Act to the effect that he had the right to buy the flat (or more precisely a 125 years lease of the flat) at the discounted price of £16,800.
17. Mr Bashir needed a solicitor to handle the conveyancing aspects of the acquisition from Camden. Further, some form of legal documentation was needed for the transaction between Mr Bashir and Dr Singla. In the event Mr Wade, a solicitor with a practice in Abergavenny (not far from Ebbw Vale, where Dr Singla had his medical practice), acted for both parties. He regarded Mr Bashir as his principal client, but Dr Singla paid all of his fees and disbursements: that was in accordance with the arrangement reached between Dr Singla and Mr Bashir that Dr Singla would pay all the expenses associated with acquiring the flat from Camden. Not all of Mr Wade’s relevant files have survived in full (for reasons which I will not go into, but which were satisfactorily explained in the evidence), but from those which have survived Mr Wade could establish that he had opened a file for Mr Bashir as his client before the end of January 1994. He is convinced that he had a meeting with Mr Bashir in his office in January to explain matters to him. Mr Bashir said that the only time when he went to Wales and met Mr Wade was in March for the signing of documents. I believe that Mr Wade is almost certainly correct on this point. Documents such as an attendance note and his client care letter to Mr Bashir have not survived to vouch for the meeting, but Mr Wade (who was a witness of unquestioned honesty and integrity) said that he would invariably have met a client before commencing to act for him, and that he specifically remembered meeting Mr Bashir to discuss the proposed transaction. He could not recall the details of the discussion, but I will quote some extracts from his witness statement, which I accept.
I can only say that I would have been careful to ensure that the Defendant clearly understood the nature of the transactions. His command of English was not good, but I would not have proceeded to act unless I was certain that he was aware of what was happening. ... I note that the Defendant claims that the first and only occasion that he came to my office was in March 1994, and that, there and then, he signed the documents relating to the transaction without any prior discussion or explanation whatever. I totally reject this, and, to the extent that this suggests some sort of connivance between myself and the Claimant to deceive the Defendant, resent the implication. I would never have acted in that unprofessional and even arguably dishonest manner.
It has been suggested that I ought to have arranged for the Defendant to be advised by an independent solicitor. In the light of subsequent developments, I have to agree. However, it was made absolutely clear to me from the very first that the Defendant did not wish to have a separate solicitor, and that both he and the Claimant regarded this as an unnecessary additional expense. So far as I was concerned the whole transaction was obviously to the benefit of the Defendant, who could not otherwise have made the purchase nor returned to India.
18. There were two strands to the legal work on which Mr Wade was engaged between January and March. One was the conveyancing for the grant of the long lease of the flat by Camden to Mr Bashir. There was quite a lot of work to be done on this, but it was relatively straightforward, and I need not give any details of it. On 11 February 1994 Mr Wade wrote quite a long letter to Mr Bashir, reporting on what was happening with Camden, enclosing various documents for information, and summarising the draft lease which Camden had sent. Mr Bashir would not have understood the letter unless someone read it to him, but to write it was a proper item of client-care on the part of Mr Wade.
19. The other strand to the legal work was the preparation of three documents to protect Dr Singla’s position under his oral agreement with Mr Bashir. Mr Wade cannot now remember whether he knew the details of Dr Singla’s entire arrangement with Mr Bashir. He obviously knew that Dr Singla was providing the whole of the purchase price for the flat and was intended to become the full owner after three years. I am not sure whether he knew that Dr Singla was paying a further amount to Mr Bashir, some of it being paid to an account in India, but I think that he probably knew of this in outline. He did not attempt to draft a formal agreement which covered everything which, on Dr Singla’s case, was agreed between Dr Singla and Mr Bashir. He did draft three documents, as follows.
(i) The declaration of trust to which I have referred earlier and which is the foundation of Dr Singla’s claim. It was expressed to be supplemental to a transfer of even date of the flat from Camden to Mr Bashir, and by the operative part of the document Mr Bashir declared that he held the flat on trust for Dr Singla.
(ii) A deed of gift with the date left blank. It was made between Mr Bashir and Dr Singla, and by it Mr Bashir was expressed to convey the flat to Dr Singla. This document was intended to be signed at the time of the transaction with Camden but to be left undated until three years after the transfer of the flat from Camden to Mr Bashir. After the three years the plan was that the deed would be dated, and thereby brought into effect.
(iii) A will of Mr Bashir, intended to cover the contingency of his dying within the three years. As drafted it left the whole of Mr Bashir’s estate to Dr Singla, whenever Mr Bashir died. In my opinion the will was drafted unreasonably widely, but nothing turns on this criticism of the documents. I should record that Mr Wade said in evidence that he would certainly have discussed the contents of the will with Mr Bashir before drafting it.
20. On 7 or 8 March 1994 Dr Singla and Dr Raj Singla drove Mr Bashir to South Wales. This was the occasion as respects which Mr Bashir’s witness statement said that he was effectively kidnapped, having been falsely told that he was being taken out for a day at the seaside, but as respects which Mr Bashir’s oral evidence was completely different. I find that Mr Bashir knew that he was being taken to Wales for the purpose of signing documents relating to the flat. On 8 March Mr Bashir and Dr Singla, probably with Dr Raj Singla also in attendance, went to Mr Wade’s office to execute the documents, which they did. Mr Wade did not specifically remember this occasion, although there is no doubt that it happened. He said that, on the basis of his invariable practice, he was confident that he explained to Mr Bashir what he was signing, and that Mr Bashir understood it at the time. Dr Singla remembers the occasion. He told me that Mr Wade spent at least half an hour with Mr Bashir, explaining the documents to him and speaking very carefully and slowly while doing so. On 9 March Mr Wade wrote to Mr Bashir enclosing a copy of the will, and confirming the other documents which Mr Bashir had signed at Mr Wade’s office the previous day. He wrote in relation to the declaration of trust: ‘A Deed of Trust in favour of Dr Singla, because of the fact that he provided the purchase price. This Deed of Trust confirms that you hold the flat as Trustee for him, so he is in truth the owner.’
21. The other matter to record about the documents is that the agreement with Camden, which had been one of the documents signed by Mr Bashir at Mr Wade’s office, was formally exchanged between Mr Wade (as Mr Bashir’s solicitor) and Camden’s solicitors on 21 March 1994. The declaration of trust had been left undated when Mr Bashir signed it on 8 March. Mr Wade, entirely properly, inserted the date of 21 March in it, and it thereby came into effect.
22. Mr Bashir stayed in the flat, and indeed he is there still. Dr Singla spent something over £3,000 on security bars, repairs, redecoration and the like. He caused a payment in rupees to be made to a bank account of Mr Bashir in India. Mr Bashir had given him the account details. Mr Bashir said that he had not done that, and suggested that Dr Raj Singla must have got the account details by going through Mr Bashir’s papers in a drawer in the flat. Dr Singla also said that he had made two payments totalling £1,300 to Mr Bashir in this country, one of them being a payment of £1,000 in cash. Mr Bashir denies the receipt of the £1,000. On these disputed matters I accept the evidence of Dr Singla. Having heard and seen him give evidence, I believe him. I add two points. First, a sum in rupees certainly arrived in Mr Bashir’s account in India. He says that he did not know where it came from, but I think that he did. Second, it seems that Dr Singla may have miscalculated the rupee/sterling exchange rate, and that the total amount paid by him to Mr Bashir fell slightly short of the £6,000 which, on his evidence which I accept, he had agreed with Mr Bashir to pay.
23. Dr Singla says in his witness statement that he and his wife visited the flat in mid 1995, but Mr Bashir was very cold and rude to them. In March 1996 Dr Singla received a letter from solicitors acting for Mr Bashir (Osbornes, whom I have mentioned earlier: they were the firm whom Mr Bashir instructed that he had no bank accounts in India, whereas in fact he had several). They said in their March 1996 letter that they had instructions to apply to set the declaration of trust aside and that consent to the completion of the deed of gift (which had been visualised for three years after 21 March 1994) was withdrawn. Dr Singla did not reply, and Osbornes did not do anything towards setting aside the declaration of trust. When three years expired after the transfer from Camden Mr Bashir did not vacate the flat. Dr Singla did nothing for quite some time towards securing a transfer of the registered title to himself, and indeed the registered proprietor is still Mr Bashir. Dr Singla has caused a restriction to be placed on the Land Register. He was rather slow in taking steps to enforce the rights which he claims to have, but after one or more solicitor’s letters to Mr Bashir he commenced the present action in December 2000.
24. In Mr Bashir’s pleaded defence one of the points taken was that he never made an agreement with Dr Singla about the flat. However, by the end of his evidence it was, I think, clear that he did make an agreement, and that it was substantially on the lines described by Dr Singla in his evidence. There are, I think, only three aspects on which there continued to be any disputes of significance.
(i) What amount of money did Dr Singla agree to pay directly to Mr Bashir? Dr Singla’s evidence was that it was £6,000, and that he paid it (although, as I have said earlier, he may have slightly underpaid on account of the rupee/sterling exchange rate). Mr Bashir said that he was to be paid £30,000. On this I find in favour of Dr Singla. His memory was clear, as one would expect, and the evidence is clear that, if I disregard the detailed point about the rupee/sterling exchange rate, in March 1994 (the month in which the documents were executed and in which Camden transferred the flat to Mr Bashir) he made to Mr Bashir payments totalling £6,000. It seems to me inherently improbable that he would have agreed to pay £30,000 and then only paid £6,000: he wanted to emerge in three years time as the owner of the flat, not to find himself involved in a contentious dispute with Mr Bashir. I accept that now Mr Bashir has got the figure of £30,000 in his mind, but I believe that by some process or other he has got muddled about this. It is possible that, in the conversations between Dr Singla and Mr Bashir in 1993 and 1994, Dr Singla at some stage said that in total he would be laying out over £30,000 in connection with the flat, and that over time that has come to be thought of by Mr Bashir as a promise that £30,000 in cash would be paid directly to him.
(ii) Was the expenditure of somewhat over £3,000 which Dr Singla laid out on security bars, redecorations, etc, at the flat laid out at Mr Bashir’s request? This may not be a major point, but it could have some influence on the arguments about whether the transaction should be set aside as having been an unconscionable bargain. Mr Bashir said that he did not ask for the various things to be done, but in my opinion he did. It is true that some of them may later have been of some benefit to Dr Singla as well, but I do not think that, for example, Dr Singla would have spent £1,750 in 1994 on putting in security bars or grills for his own benefit after 1997. In any case, I have heard Dr Singla give evidence about this matter, and I believe him.
(iii) In 1997, when three years had elapsed from the transfer from Camden to Mr Bashir, was Mr Bashir obliged to vacate the flat, or was he entitled to stay there rent free as long as he liked? In my opinion he was obliged to vacate. Dr Singla’s evidence was to that effect. Mr Wade said in evidence that, although he did not know, his impression now was that, although the flat had to be transferred to Dr Singla after three years, Mr Bashir could stay on in it if he wanted. Dr Singla said that Mr Wade was mistaken on that point. In my view an agreement that Mr Bashir could stay there indefinitely was improbable, particularly since, as Dr Singla understood the position, the main point of the agreement from Mr Bashir’s point of view was to enable him to retire to India. At one stage in cross-examination Mr Bashir said that he had to vacate after three years, although he retracted that to some extent in re-examination. I acknowledge that I could be wrong on this point, as respects which the evidence is scanty, but, doing the best that I can on it, I consider that the agreement did not include a right on the part of Mr Bashir to stay in residence indefinitely at his own choice.
25. On behalf of Mr Bashir Mr Watkinson has submitted that, if there was an agreement for Dr Singla to become the owner of the flat, it was procured by undue influence on the part of Dr Singla. Therefore the agreement, and in particular the declaration of trust by which Mr Bashir expressly declared that he held the legal title on trust for Dr Singla, should be set aside. In my opinion this argument must fail. My foremost reason is that the type of pre-existing relationship which needs to exist before a transaction can be set aside on grounds of undue influence did not exist in this case. Mr Bashir says that Dr Singla is an educated man whereas he himself (Mr Bashir) is not, and in the circumstances he would just agree to whatever Dr Singla wanted him to agree to. I am far from sure that factually the last point is true: Mr Bashir’s conduct over the time since the three years expired (during which he has stayed put in the flat and resisted all requests by Dr Singla for him to leave) does not suggest that he is unable to resist what the educated Dr Singla asks him to do. But there is in any event a more fundamental point. Until Mr Bashir and Dr Singla met in November 1993, having been introduced by Dr Raj Singla, they did not know each other at all. There was, therefore, no pre-existing relationship between them which could give rise to a presumption of undue influence.
26. The equitable concept of a transaction being liable to be set aside for undue influence requires a pre-existing relationship. The undue influence concept cannot come into play where the relationship begins with the transaction itself (or the negotiations which lead to it). This proposition is in my view clearly confirmed by the judgment of Buxton LJ in Irvani v. Irvani [2000] 1 L1 LR 412, especially at 424. I quote an extract which makes the point about undue influence, and which goes on to make other observations which are also relevant in this case.
Undue influence is concerned with the prior relationship between the contracting parties, and with whether that was the motivation or reason for which the bargain was entered into. Unconscionable bargain is, as its title suggests, concerned with the nature and circumstances of the bargain itself, and can arise without there being any relationship, outside that of the immediate contract, between the parties ...
It is particularly important to keep these distinctions clear, because otherwise there may be a tendency to think that a case that has some elements of undue influence, but is not in law a case of undue influence; and which has some elements of unconscionable bargain, but which is not in law a case of unconscionable bargain; can by the combination of these different and inadequate claims be turned into a case that attracts relief on a vaguer basis of general equity.
27. I rely on the first sentence in the above quotation to establish that, quite apart from other weaknesses in Mr Bashir’s case in so far as it rests on undue influence, that case could not succeed because, until Mr Bashir and Dr Singla met to discuss the possible acquisition of the flat by Dr Singla, there was no prior relationship between them at all. I add in passing, without going into it at length, that there could have been other obstacles to Mr Bashir’s undue influence argument. One arose from the tripartite nature of the wider transaction, in which Camden played a critical role even though it had no knowledge that Dr Singla was also involved. In Mr Bashir’s witness statement there are assertions, which on this aspect seem to me likely to be true, that, without the intervention of Dr Singla, he would not have been interested in the right to buy, and would not have purchased the flat from Camden to keep it for himself. His claim did not involve setting aside the transaction with Camden. His claim was to set aside the transaction between himself and Dr Singla, which would leave him as the owner of the flat. Mr Watkinson accepted that there would have to be some form of equitable accounting under which Mr Bashir would have to reimburse Dr Singla for his financial outlay: without Dr Singla’s money the flat would still be owned by Camden. Even with an element of financial accounting, the order which Mr Watkinson seeks on Mr Bashir’s behalf would go considerably beyond putting Mr Bashir back in the position he would have been in had the alleged undue influence not been exercised. I am far from convinced that the equitable doctrine can be taken to that length.
28. There is a somewhat narrow doctrine of equity under which the court may set aside a transaction on the ground that it was an unconscionable bargain. The cases show that it requires a very strong case before the courts will intervene on this ground. The bargain has to be more than hard, unreasonable or foolish: it must be proved to be unconscionable in the sense that one of the parties has imposed the bargain in a morally reprehensible manner. His behaviour must be characterised by some moral culpability or impropriety. There needs to be unconscientious or extortionate abuse of power. See Lord Templeman in Boustany v. Pigott (1993) 69 P & CR 298 at 303 (cited by Buxton LJ in Irvani v Irvani, supra). In the present case, bearing in mind that Camden had valued the flat at £52,500, I am prepared to accept that on the face of it Dr Singla got the better side of the bargain. However, I am not prepared to say that the case was of the sort where equity will intervene. The evidence did not satisfy me that on the balance of probabilities Dr Singla had behaved in a morally reprehensible manner. He thought that Mr Bashir wanted to return to India (and on the whole I think that that is what Mr Bashir did want in 1993, although he now says that he did not), and the arrangement provided Mr Bashir with funds to do that.
29. Mr Bashir had the opportunity to purchase his flat from Camden at a discount, but he could not have afforded to do it himself, and I doubt that commercial lenders would have been willing to provide the funds for him: he was ageing, in poor health, without employment or prospects of employment, and he could not possibly have serviced a commercial loan. It would have been no benefit to him to purchase the flat and immediately resell it, because on a transfer by him within three years he would have had to pay to Camden the discount of £35,700. To get any money out of his opportunity to buy the flat he needed some sort of forward sale for completion in three years time. That is in essence the agreement which Dr Singla made with him. There was no evidence before me that transactions of that sort were known in the market at the time, or that Mr Bashir could have got better terms elsewhere than he got from Dr Singla. The terms which he got from Dr Singla were not generous, but in the absence of any evidence that Mr Bashir could have done significantly better elsewhere, and that Dr Singla knew that he could have done that, I am not prepared to set the transaction aside on the grounds that it was an unconscionable bargain.
30. I add two points. First, if there was a possible case for setting the transaction aside there would still be the difficulty, to which I referred in connection with undue influence, that Mr Bashir would not simply be restored to where he would have been but for the unconscionable bargain: he would be the owner of the flat, subject only to some form of equitable accounting between himself and Dr Singla. Second I draw attention to the last part of the quotation from Buxton LJ in Irvani v. Irvani, which I set out earlier. If a case cannot be classified as one of undue influence or as one of an unconscionable bargain either, it is not right for the court to intervene on ‘a vaguer basis of general equity.’ I believe that at root that is what I would be doing in this case if I was prepared to decide it in favour of Mr Bashir.
31. Mr Watkinson has advanced an argument under this section, but in my view it does not assist Mr Bashir. Section 2(1) provides:
A contract for the sale or other disposition of an interest in land can only be made in writing and only by incorporating all the terms which the parties have expressly agreed in one document or, where documents are exchanged, in each.
On Dr Singla’s evidence, which I accept, he believed that, when he met Mr Bashir in November 1993, he made a contract for the sale by Mr Bashir to himself of an interest in land (the flat). However, the agreement was made orally, and there was no written record of it. If Dr Singla was suing Mr Bashir to compel performance now of the unwritten contract it is possible that his action would fail because of section 2(1) (though he might still succeed by relying on a constructive trust created by his provision of the whole of the purchase price: see the last part of section 2(5)). However, Dr Singla is not suing to enforce the oral agreement. He is suing to enforce the terms of the declaration of trust which Mr Bashir undoubtedly did execute on March 1994. I have already held that I am not prepared to set the declaration of trust aside. If Mr Bashir had refused to execute the declaration of trust and Dr Singla was trying to compel him to execute it now the case might be different. But as the facts actually are Dr Singla can simply sue on the basis of the declaration of trust, and nothing in section 2 is an obstacle to his doing so. In particular the section does not provide that, if a land contract which would have been unenforceable under section 2(1) has in fact been completed by transfer or by whatever other form of completion is appropriate (in this case by execution of the declaration of trust), the completion is a nullity.
32. Dr Singla claims a declaration that Mr Bashir holds the flat on trust for him absolutely. In my judgment he is entitled to that declaration. He also claims, and also is entitled to, an order that Mr Bashir do transfer the flat to him. He has pleaded an entitlement to an account of monies received by Mr Bashir from lodgers, etc, from 21 March 1997 onwards. In my view Dr Singla has not established a case that Mr Bashir has received any such monies, and I am not prepared to give this form of relief Dr Singla claims an occupational rent from Mr Bashir himself from 21 March 1997 onwards, and in principle is entitled to relief of that nature, although I think that in theory it is not rent as such, but rather damages for trespass (mesne profits) calculated by reference to a notional rent. The parties may be able to agree upon the amount of the damages. If not I shall have to hear further argument about it. In principle it will carry interest.
33. There is one item which should go in the other direction. I mentioned earlier that, because of an error over the rupee/sterling exchange rate, Dr Singla appears not to have paid the full sum of £6,000 which he accepts he was bound to pay. If the parties can agree the amount unpaid it should be payable, with interest, by Dr Singla to Mr Bashir. However, it should be capable of being set off against any damages (mesne profits) payable by Mr Bashir to Dr Singla.
34. I will be grateful if counsel are able to agree upon the form of an order to give effect to this judgment.