Hayim & Ors v Couch

A declaration of right without a trial is governed by a rule of practice, not law. The court may grant declaratory relief where refusing it would deny the claimant the fullest justice available. The practice is less restrictive under the Civil Procedure Rules. Where parties agree, or agree not to oppose, declarations as part of a bona fide commercial compromise, the court should consider whether the claim is seriously arguable, whether the declarations would probably have been necessary if the claim succeeded at trial, and whether third parties may be adversely affected. Satisfaction of those conditions may justify declarations without a trial, but consent alone does not make them inevitable.

The proceedings concerned transfers of shares in a property company by Delilah Gerda Pratt to Jeanne Regina Couch. Mrs Pratt alleged undue influence and, alternatively, that she lacked capacity. After Mrs Pratt’s death, her executors and the administratrix of the estate pursued the claims. The parties agreed terms resolving the dispute and asked the court to make declarations that the transfers were void, together with consequential relief, without a trial. Mrs Couch did not oppose the application. The central issue was whether the court should grant declarations of right on the basis of the agreement and the available evidence.

1. Applicable practice. The court held that the practice against granting declarations without a trial is not an immutable rule of law. It should not be followed where doing so would deny the claimant the fullest justice to which the claimant is entitled. The practice has become less restrictive since the Civil Procedure Rules replaced the Rules of the Supreme Court.
2. Effect of a commercial compromise. A bona fide commercial agreement to avoid a trial is a significant consideration. It does not, however, require the court automatically to grant the agreed declarations. The court should be satisfied that:
   • the compromised claim is seriously arguable;
   • if the claim succeeded at trial, the declarations would probably be necessary to do justice; and
   • the declarations are unlikely to have adverse repercussions for third parties.
3. Application. The lack-of-capacity claim was seriously arguable, having regard to the pleaded case, the statement of truth, the value of the transactions, the absence of independent legal advice, Mrs Pratt’s age and grief, her lack of involvement in the business, and the terms of Mrs Couch’s letter. If the claim had succeeded at trial, declaratory relief would probably have been the appropriate remedy. No adverse consequence for a third party was apparent.
4. The court therefore granted the declarations sought concerning the invalidity of the share transfers and related matters. The remaining consequential, enforcement and costs provisions could be made in accordance with the parties’ agreement.