Summary

A transaction whereby a farm worker transferred two agricultural holdings to the proprietors of a farm where he had lived all his working life had not been procured by undue influence and was not an unconscionable transaction. The farm worker regarded the proprietors as members of his family and had taken the decision to transfer the holdings freely and independently. The court also determined that the doctrine of unconscionable transactions applied to gifts.

Facts

The claimants (H, B and E) claimed rescission of gifts which the deceased (W) had made to the defendants (D and L). D counterclaimed for an order that W's lost will should be admitted to probate.

W was a farmer who had spent his entire working life in the service of the proprietors of a farm. Most recently, the proprietors had been D and his wife, L. Before that, the farm was owned by D's parents and grandparents. W had resided on the farm with the family from the age of 14 until his death, aged 79. In 1985, W inherited two nearby agricultural holdings, which he farmed as one unit with the farm. In 1996, W made a gift of the holdings to D and L. By then he was retired and apparently wanted them to renovate the deteriorating farmhouse and wanted to avoid the land being used to cover his future nursing home costs. D and L renovated the house and barn and sold them, together with some further land. They continued to farm the rest of the land. D died in 2006. H was W's sole surviving brother and was entitled to W's estate if he had died intestate. H was infirm and unable to manage his own affairs. B was H's cousin and E was his wife. B and E held a power of attorney for H and were sole beneficiaries of his will. There was an issue about whether W had died intestate. A will had been drafted in 1985, but no executed will could be found. D and L claimed that the executed will had been lost.

H, B and E submitted that the gifts had been procured by D and L's undue influence over W. Alternatively, they argued that they were unconscionable transactions. D and L argued that the doctrine of unconscionable transactions did not extend to gifts.

Held

(1) The transactions had not been procured by undue influence. It had not been established that the relationship between W and D and L was of the requisite quality of trust and confidence, or dependency or ascendancy. D and L regarded W as part of their family and he regarded them as his family. He depended on them for his accommodation, food and transport and, by the age of 70, was not equipped to live independently. However, those matters did not establish dependence in the relevant sense. The doctrine of undue influence was directed to the question of independence of will. D and L were thoroughly decent people. There was no evidence that they managed W's finances or told him how to manage them. By the time of the gift in 2006, W was 70 years old and had ceased to be an employee five years previously. He had remained at the farm because he was to all intents and purposes a family member. A case in undue influence would have to be put on the basis that W's own judgement was controlled by his perception of what was expected of him by them. However, D and L had not created a relationship of ascendancy over W, Royal Bank of Scotland Plc v Etridge (No.2) [2001] UKHL 44, [2002] 2 A.C. 773 considered (see paras 54-60 of judgment). The transactions could be explained by reference to the ordinary motives by which people were accustomed to act, Etridge applied. It was readily understandable that W wished the smallholdings to go to D and L, both because of family bond and because he wanted them to remain with farmers. That conclusion was not affected by the fact that the gift was made during W's lifetime rather than by will. W had no interest in owning property or having wealth and did not want to either leave the farm or farm the holdings independently. It was understandable that, although he did not want to see the holdings become dilapidated, he had no interest in renovating them himself (paras 61-68). The evidential burden had not shifted to D and L to show that the gift was not procured by undue influence, but even if it had, it had been discharged. W had received some limited legal advice which sufficed to confirm that he had exercised his will freely and independently (paras 69-74). (2) The court was not aware of any authority for the proposition that the doctrine of unconscionable transactions did not apply to gifts. The views expressed in Langton v Langton [1995] 2 F.L.R. 890 were obiter, Langton considered. The origins of the doctrine in the equitable jurisdiction ought not to determine its present limits and had not done so. To exclude gifts from the scope of the doctrine was to make its application turn on form over substance, which was to be avoided in an equitable jurisdiction. The doctrine had been applied to gifts without inconvenience in other jurisdictions (paras 51-52). H, B and E could not succeed on the ground of unconscionable transaction. No finding of fact could reasonably be made to support a finding that D and L had acted with sufficient moral culpability (paras 75-76). (3) There was no evidence that the will had been executed. It was possible that it had been executed and lost, but far more likely that a draft was prepared on W's instructions, but never executed (paras 85-90).

Claim dismissed, counterclaim dismissed