Shaw v Finnimore & Anor

Where a recipient claims a substantial payment under an alleged oral agreement, the recipient bears the burden of proving that agreement. If the agreement is not proved, the payment is repayable.

Undue influence may arise where the claimant reposed trust and confidence in the defendant, relied on the defendant in financial matters, and entered into a transaction calling for explanation. Disadvantage is not an essential ingredient. Once the evidential burden shifts, the defendant must rebut the inference that the influence was abused.

Mr Shaw claimed repayment of £643,000 transferred to Miss Finnimore, together with repayment of other sums. Miss Finnimore asserted that the transfer represented her contractual share of the proceeds of sale of land. She also disputed liability for further payments and advances.

The principal issues were whether the alleged profit-sharing agreement existed and, if not, whether the transfer was procured by undue influence. The court also considered liability for other admitted or disputed payments.

1. £643,000 transfer. Miss Finnimore had failed to prove the alleged agreement to share proceeds above £1 million or £1 million net of tax. The evidence showed that the parties had not had the necessary relationship at the alleged date, her accounts of the agreement were materially inconsistent, and there was no contemporary document supporting an agreement of major financial importance. A later oral arrangement concerning any proceeds above £2 million net did not support the agreement pleaded by Miss Finnimore.
2. Since Miss Finnimore accepted that, absent a contractual basis, she had no right to retain the money, the £643,000 was repayable with interest. The court therefore did not need to determine the alternative claims in deceit, misrepresentation, mistake, misappropriation or unconscionable bargain.
3. Undue influence. In the alternative, the relationship satisfied the requirements identified in Royal Bank of Scotland plc v Etridge (No. 2) [2001] 3 WLR 1021. Miss Finnimore exercised real influence or ascendancy over Mr Shaw in financial and tax matters, and he reposed trust and confidence in her. The transaction called for explanation and, absent a contractual obligation, involved manifest disadvantage. The evidential burden therefore shifted to Miss Finnimore, who had not rebutted the inference of abuse. The payment was repayable on this independent ground.
4. Other sums. Miss Finnimore was held liable for £208,450 in admitted advances, £20,000 paid to Miss Guillaume, and approximately £57,600 in further advances, subject to verification and adjustment. The parties were to address interest, the precise form of order, costs and relief against the second defendant if those matters could not be agreed.