Hart & Anor v Burbidge & Anor

In a presumed undue influence case, related transactions should be assessed as a whole where they form one process. A transaction calls for an explanation when its scale and terms are not readily explicable by the relationship or ordinary motives. If no reasonable explanation independent of undue influence is available, the court proceeds to the rebuttal of the presumption.

Transfers of almost all assets without independent advice, security, a property interest or financial fallback are powerful indicators. Relief aims to restore the position absent the transactions. Later intentions to alter a will, beneficiaries’ conduct and hindsight about market values do not reduce that relief. A recipient who was unjustly enriched may be liable even where the pleaded constructive-trust analysis is rejected.

These conjoined appeals arose from two Chancery actions brought by beneficiaries under the deceased’s will. Sir William Blackburne, sitting as a deputy judge, found that the transfer of £290,000, the sale proceeds of two properties and the purchase of Little Manor had been procured by presumed undue influence. He ordered compensation designed to restore the position that would have existed without the transactions and made substantial costs orders.

Mr and Mrs Burbidge challenged the findings of undue influence, the relief and quantum, Mr Burbidge’s liability, the costs orders and the extension of time for appealing. The central issues were whether the transactions called for an explanation, whether the presumption had been rebutted, and whether the relief and procedural orders were properly made.

Vos LJ gave the leading judgment, with Black and Richards LJJ agreeing. The appeals were dismissed.

1. The relationship between Mrs Burbidge and the deceased was one of trust and confidence, reliance and dependence, as described by Lord Nicholls in Royal Bank of Scotland plc v. Etridge (No 2) [2002] 2 A.C. 773. The court held that the inquiry into whether a transaction called for an explanation included asking whether it was readily explicable by the relationship or by ordinary motives. Turkey v. Awadh [2005] EWCA Civ 382 was explained in that way.
2. The £290,000 gift, the transfers of the property sale proceeds and the purchase of Little Manor were properly considered together. They formed one process, notwithstanding that the gift preceded the later transactions.
3. The transactions called for an explanation because they transferred almost the whole of the deceased’s wealth, left her without adequate security, income or fallback position, and were undertaken without independent advice. The absence of a property interest or properly secured loan, together with the dishonest exclusion of the deceased’s solicitor, supported the conclusion that the presumption of undue influence had not been rebutted.
4. Mr Burbidge was liable in unjust enrichment. He had been enriched at the expense of the claimants and the enrichment was unjust. The court was not constrained by the parties’ agreed legal characterisation, and pleadings should generally state facts rather than law. Relief was therefore properly directed to restoring the position that would have existed without the impugned transactions.
5. The deceased’s possible future intention to alter her will, the Harts’ conduct and subsequent market movements did not justify reducing the relief. The judge was entitled to use the actual sale prices in assessing compensation. He was also entitled to order Mr and Mrs Burbidge to pay 95% of the claimants’ costs and the executor’s litigation costs.
6. The grant of permission to appeal implicitly included the necessary extension of time for filing the Appellants’ Notices. The dictum in Sayers v. Clarke Walker [2002] 3 All ER 490, concerning the former list of relief-from-sanctions factors, could no longer govern such an extension. The court left open whether the approach in Denton v TH White Limited [2014] EWCA Civ 906 applied in that context.

1. Court of Appeal (Civil Division): in [2014] EWCA Civ 992, dismissed the appeals, upheld the findings of presumed undue influence and the consequential relief and costs orders, and refused to set aside the extension of time for the Appellants’ Notices.
2. High Court of Justice, Chancery Division: Sir William Blackburne, sitting as a deputy judge, delivered judgment on 12 June 2013 and made consequential orders on 23 July 2013 in the two actions.