Summary

A transfer of property to the first respondent had not been set aside on the grounds of undue influence, misrepresentation or lack of capacity owing to the drunkenness of the appellant, since the evidence had not supported those findings, and solicitors acting for the latter during the transfer had not been in breach of their duty to him as he had been properly advised and had understood the transaction.

Facts

The claimant transferor (B) claimed that property transferred to the first defendant (C), and the second defendant (X), and the subsequent proceeds of its sale were held by C on constructive or resulting trust. C claimed that the third defendant firm of solicitors (N) was in breach of duty in its conduct during the transfer of the property to C. B lived and worked on the property, which included a scrap yard and store, a bungalow, and a motor vehicle workshop. It passed to C, B's sister, by way of transfer and for consideration, although it was common ground that C had paid no money. It was then sold by her to a developer for a sum substantially more than the consideration sum. B alleged that the transfer of the property between himself and C had resulted from misrepresentation, undue influence, unfair dealing and lack of capacity due to his drunkenness. B contended that (1) the transfer had been at a substantial undervalue, that he was unwell, alcoholic and reliant on his sister for financial advice. He argued that C had told him that she would act as custodian of the property during a neighbour dispute that B had, and that B would remain the owner and remain in occupation. C disputed the claim in its entirety, claiming that B had had the benefit of legal advice from N; (2) N had been negligent by reason of a conflict of interest as it had also acted for the developer who bought the property, so that the duty to advise B went beyond the usual duty to ensure that he understood the transaction and was free from improper influence.

Held

(1) On the evidence B was not drunk during any of the discussions relating to the litigation concerning the neighbour dispute or the transfer of the property to C. In particular, he was not drunk on the day that the transfer was completed. Any suggestion that C and X had conspired in relation to the neighbour litigation or the transfer of the property was rejected. The allegations of undue influence must fail, as there was no evidence that C had put any pressure on B to enter into the transaction. Further, on the facts, C had never told B that she was to be a custodian of the property, and it was clear that the nature of the transaction had been explained to B and that he understood it. However, the intention between the parties was that B should have a life interest in the land. C had been entitled to sell the property, but if she did, the life interest was transferred to the proceeds of sale, out of which she would acquire alternative living accommodation for B and, if possible, a site from which he could trade or the income to provide him with a pension. B had acted to his detriment by entering into the agreement and transferring the property on the basis of that common understanding and, accordingly, a proprietary estoppel or constructive trust arose. (2) On the facts B had understood N's advice and was keen to continue. In all the circumstances, N was not under an additional duty to advise B not to enter into the transaction. The allegation that N had been in breach of duty by failing to disclose that it was acting for the developer was rejected. It would have made no difference had it been disclosed to B, since he was aware that the property had development and ransom value. (3) All the claims failed save that there was a constructive trust or proprietary estoppel, or both, giving B a life interest in the proceeds of sale.

Judgment for defendants.