Hammond v Osborn and Another
| Jurisdiction | England & Wales |
| Judge | Sir Martin Nourse,Lord Justice Keene,Lord Justice Ward |
| Judgment Date | 27 June 2002 |
| Neutral Citation | [2002] EWCA Civ 885 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A2/2001/2448 QBENF |
| Date | 27 June 2002 |
[2002] EWCA Civ 885
Lord Justice Ward
Lord Justice Keene and
Sir Martin Nourse
Case No: A2/2001/2448 QBENF
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (DIVISION)
ON APPEAL FROM QUEEN'S BENCH DIVISION
Mr Justice Mackay
Royal Courts of Justice
Strand,
London, WC2A 2LL
Giles Harrap (instructed by Messrs Whiskers) for the Appellant
Donald McCue (instructed by Messrs Jefferies) for the Respondent
Introduction
The striking feature of this appeal has been the revelation of continuing misconceptions as to the circumstances in which gifts or other transactions will be set aside on the ground of presumed undue influence, a class of case in which, as Cotton LJ observed in Allcard v Skinner (1887) 36 Ch. D. 145, 171:
"the court interferes, not on the ground that any wrongful act has in fact been committed by the donee, but on the ground of public policy, and to prevent the relations which existed between the parties and the influence arising therefrom being abused."
Here it is conceded that there was both a relationship of trust and confidence between donor and donee and a gift so large as together to give rise to the presumption. So the question is whether the presumption is rebutted by proof that the gift was "the spontaneous act of the donor acting under circumstances which enabled him to exercise an independent will and which justifies the court in holding that the gift was the result of a free exercise of the donor's will" (per Cotton LJ, ibid), or, to put it more shortly, whether it is proved that the gift was made by the donor "only after full, free and informed thought about it"; see Zamet v Hyman [1961] 1 WLR 1442, 1446, per Evershed MR.
The background facts
Most of the facts can be taken from the statement of Mr Justice Mackay in the court below. For reasons which will become apparent, they can be stated more briefly than they had to be stated by him. At the beginning of 1998 Dennis William Pritler, a bachelor and retired teacher then aged 72, was living alone at 56 Meadow Road, Loughton in Essex. By that time he had become dependent, so far as physical mobility was concerned, on the help of others, and it was by reason of his condition that at about Easter of that year he met the first defendant, Susan Osborn, who was then living with her husband, Edward James Osborn, at 73, Meadow Road, a short way down and across the road from no.56. They met outside the local Safeways, where Mr Pritler was holding onto the railings and was clearly in distress. The judge said:
"Like a good neighbour, she took him under her wing. She helped him to his home and their relationship expanded from that day. Initially it was confined to her doing his shopping, visiting him, talking to him, taking tea with him and the like."
The second defendant, Lee Francis, is Mrs Osborn's son by an earlier marriage. He was in his late twenties and lived at Rayleigh in Essex, not far from Loughton. He worked for Barclays Bank plc; at the time of the material events as a human resources consultant. Before that, for about two years, he had been the manager of a high street branch. In March 2001 he was promoted to be head of local business management.
In July 1998 Mr Pritler suffered an accident in his house, as a result of which Mrs Osborn found him two days later collapsed under a table in the kitchen. He was taken to Whipps Cross Hospital, Leytonstone, where he remained under observation, being discharged on 26 th October 1998. The judge said:
"Mrs Osborn was a regular visitor while he was in hospital. She told me she became close to him for the first time when she found him in his distressed condition in his house. He expressed evident relief at her arrival, placing his hands together, as she showed me, in an attitude of prayer. Her fondness for him deepened. She regarded herself as standing in the position of a daughter to him."
The judge said that after Mr Pritler's discharge from hospital the relationship between him and Mrs Osborn entered a new and more intense phase. She volunteered to the care authorities to be responsible for giving him two meals a day. On 26 th October, at the suggestion of the care coordinator, Mr Pritler signed a third party mandate authorising Mrs Osborn to draw on his current account at the National Westminster Bank. This she used mainly when he asked her to discharge utility bills and food bills; on occasions she bought him clothes. The cheques drawn were of a relatively small amounts and no complaint is made of them.
The gift
The judge found that it was on Mr Pritler's return from hospital that he first raised with Mrs Osborn the question of making her a gift. He said that he had some savings and would like her to have them. She said nothing in response and the matter was dropped. On two further occasions during the period from the end of October 1998 to the beginning of September 1999 Mr Pritler returned to the question of making her a gift, but Mrs Osborn thought he was just being kind and politely said nothing.
On 7 th September 1999 Mr Pritler had another fall and was again admitted to Whipps Cross Hospital. It appears that he was suffering either from Parkinson's disease or from hydrocephalus, probably the latter. On his admission Mrs Osborn told the care coordinator that he had been unwell over the last few weeks and that she was "concerned re memory loss, double incontinence and tremors". However, the judge thought that he had retained a sufficient percentage of a formidable intellect to form judgments about what he wanted to do. That very evening, in conversation with Mrs Osborn, Mr Pritler reverted to the question of making her a gift. The judge said:
"Again this time, but now more specifically, Dennis said, according to her, that he had certain investments, all of which he wanted to give her. He told her the paper work for all these investments was to be found upstairs in a drawer in his bureau, and that he wanted her to cash them all in and take the money for herself. This time Mrs Osborn acted on his suggestion, and having recovered the paper work she enlisted the help of her son, Lee Francis, who worked for Barclays Bank. He came to her house and went through it with her. Together they established that a very large sum of money was involved."
The amount involved, as it proved, was £297,005. That was the amount transferred to Mrs Osborn by four cheques drawn on Mr Pritler's current account between 4 th and 20 th October 1999 for £33,000, £39,039, £191,966 and £33,000 respectively. All four cheques were written out by Mrs Osborn and drawn in her favour, the first three being signed by Mr Pritler and the fourth by Mrs Osborn under the third party mandate. The amount for which each of the cheques was drawn matched, or nearly matched, proceeds of the realisation (conducted by Mrs Osborn and Mr Francis) of Mr Pritler's investments credited to the account shortly beforehand. Thus on 21 st September there were three credits amounting in the aggregate to £31,362.85, followed by a cheque for £33,000 drawn on 4 th October. On 8 th October there was a credit for £191,966.07 (see further below), followed by a cheque for £191,966 drawn on 13 th October. On 13 th October there was a credit for £39,039, followed by a cheque for £39,039 also drawn on 13 th October. Finally, on 15 th October there was a credit for £32,913.70, followed by a cheque for £33,000 drawn (and signed by Mrs Osborn) on 20 th October.
All four cheques were paid, either immediately or later, into a new 30 day savings account opened by Mrs Osborn at Barclays Bank, Ilford. Until 23 rd February 2000 £292,000 remained in that account. On that date Mrs Osborn transferred £101,000 to Mr Francis and on 3 rd March 2000 she transferred to him a further £5,000. For present purposes, it is unnecessary to trace the moneys further, except to say that in May 2000 Mr Francis used part of the moneys transferred to him to purchase, in his own name, a house for Mrs Osborn in Basildon. It is agreed that Mr Francis holds the house as trustee for Mrs Osborn. It is also accepted that, if Mrs Osborn is liable to refund the moneys, so too is Mr Francis to the extent that he received them.
The effect of the transfer of the £297,005 to Mrs Osborn was that, as at 22 nd October, when the final cheque was presented for payment, Mr Pritler was left with cash in his current account of £5,259.42. He also had a "Diamond" reserve account at the same bank, on which, including a transfer of the balance on his Tessa reserve account (£4,125.02) on 12 th October, there was a credit balance of £22,002.11. He also owned his house valued at about £130,000, and he had an annual income of about £14,000 net, mostly from his teacher's pension. However, it is to be noted that the £297,005 represented nearly 91.6% of his liquid assets. A further consequence of the realisation of his investments was that he became prospectively liable for charges for capital gains tax and higher rate tax amounting to £49,670.92.
The judge found that on no occasion did Mrs Osborn specifically draw to Mr Pritler's attention the size, even in approximate terms, of the gift he was making her. Nor did she draw his attention either to the proportion of his liquid assets that it represented or to the relatively small amount that was left to him. Nor did she discuss with him the possible fiscal consequences of the realisations. Although these important points are not in dispute, it is desirable to set out the material exchanges between the judge and Mrs Osborn during her cross-examination:
"Q. When...
To continue reading
Request your trial
-
Gorjat v Gorjat
...decided that the gift had not been the product of undue influence as a result of the content of the witness statement. 146 Applying Hammond v Osborn [2002] WTLR 1125, the Court of Appeal held that the court would interfere with a transaction in circumstances of presumed undue influence on t......
-
Sally Ann Bateman v Stephen Leslie Overy and Another
...out at the outset of this section the approach which I must adopt. It appears from paragraph 1 of the judgment of Sir Martin Nourse in Hammond v. Osborn [2002] EWCA Civ. 885. Mr Brilliant drew my attention to this decision and took me carefully through the case. At the outset, Sir Martin No......
-
Michele Alexia Canham v Cutty Sark Land Company
...unaware of the fiscal consequences of the gift. These are not incompatible conclusions, as Sir Martin Nourse pointed out in the case of Hammond v Osborne. The fact that the conduct of the person exercising influence is unimpeachable is not by itself an answer to a claim in undue influence, ......
-
The Poulton Family Trust Between: (1) Michele Alexia Canham (2) James Alexander Poulton (3) Nicholas James Poulton (4) James Michael Poulton (5) Daisy Elizabeth Houghton-Poulton Plaintiffs v (1) Cutty Sark Land Company (2) Deborah McMullan Poulton (3) Wilson Malcolm McMullan (4) Christine Jane McMullan (5) Cayman National Trust Company Ltd (6) CNT (Nominees) Ltd Defendants
...unaware of the fiscal consequences of the gift. These are not incompatible conclusions, as Sir Martin Nourse pointed out in the case of Hammond v Osborne. The fact that the conduct of the person exercising influence is unimpeachable is not by itself an answer to a claim in undue influence, ......
-
Under The Influence? A Review Of A Recent Cayman Islands Decision That Finds Care For The Entire Beneficial Class Is The Pivotal Factor In Determining Undue Influence
...Hawes [2013] EWCA Civ 94 8. At para.423 9. At para.349 10. [2002] 2 AC 773 11. At para.437 12. [2003] EWCA 1935 13. Hammond v Osborne [2002] EWCA Civ 885, per Sir Martin Nourse, where the influencer was someone other than the donee. 14. Gouldbourne v Gouldbourne, Civil G0207 of 2014, judgme......
-
VITIATING FACTORS IN CONTRACT LAW — SOME KEY CONCEPTS AND DEVELOPMENTS
...9. For other decisions subsequent to that in Etridge, see eg, McGregor v Michael Taylor & Co[2002] 2 Lloyd’s Rep 468; Hammond v Osborn[2002] EWCA Civ 885; The Times, 18 July 2002 (noted P Birks, (2004) 120 LQR 34 at 36—37 and Karen Scott, “Taking the ‘Undue’ out of Presumed Undue Influence”......
-
EQUITY AND OPPORTUNISM IN THE LAW OF CONTRACT:
...55. 122 See Mitchell v Homfray(1881) 8 QBD 587. 123 See Tito v Waddell (No 2)[1977] Ch 106. 124 See Wright v Carter[1903] 1 Ch 27. 125[2002] EWCA Civ 885. 126 See Royal Bank of Scotland plc v Etridge (No 2)[2002] AC 773 at [22]. 127 See Inche Noriah v Shaik Allie Bin Omar[1929] AC 127 and R......
-
The Relevance of Reverence; Undue Influence Civilian Style
...[2002] 2 A.C. 773, para 18. 126. See R v Attorney-General for England and Wales [2003] All ER 246, para 22. 127. See Hammond v Osborn [2002] EWCA Civ 885 para 25-27, and the reference there to Inche Noria v Shaik Allie Bin Omar [1929] AC 135. 128. See Royal Bank of Scotland v. Etridge (No 2......
-
Undue influence, the elderly and equity release schemes.
...v Stanley [2001] EWCA Civ 1966 and Wright v Cherrytree Finance Ltd [2001] 2 All ER (Comm) 877. (49) See, for example, Hammond v Osborn [2002] EWCA Civ 885, Glanville v Glanville [2002] EWHC 1271 and Meredith v Lackschewitz [2002] EWHC (50) See, for example, Lloyds Bank Ltd v Bundy [1975] QB......