Burton v Walters

A clear trial judge’s finding that a party entered a transaction freely and without undue influence is difficult to challenge on an application for permission to appeal where the proposed appeal essentially reargues the facts. In construing an agreement for deferred consideration, a provision requiring interest to be paid every three months from completion may require interest to run from completion, notwithstanding reference to the amount outstanding. The agreement must be read as a whole.

The applicant sought permission to appeal a judgment of His Honour Judge Coltart, sitting in the Brighton County Court on 29 June 2015. The underlying proceedings concerned possession of the applicant’s family home and enforcement of loan notes arising from the sale of a sausage-making business. The applicant and her husband had charged the home as security for debts arising from the sale.

The proposed appeal concerned alleged undue influence by the applicant’s husband and the proper construction of the agreement’s interest provisions. The applicant argued that the evidential burden shifted after establishing a relationship of trust and that interest was payable only when deferred instalments became due.

1. Permission refused. Neither proposed ground had a realistic prospect of success.
2. On undue influence, the trial judge had not expressly set out each stage of the analysis in the manner proposed by the applicant. Nevertheless, his ultimate finding was clear. Having considered the witness statements and the oral evidence of the applicant and her husband, he was satisfied that she entered into the charge freely and was not subject to undue influence. The proposed appeal was, in substance, an attempt to challenge clear findings of fact. Such an appeal faced a virtually impossible hurdle. The trial judge had also been aware of the applicant’s position concerning legal representation and was better placed than the Court of Appeal to assess whether it caused her disadvantage.
3. The argument concerning interest depended on construction of the agreement. Clause 3.4 provided for deferred consideration of £225,000 to be satisfied by loan notes. Part 2 of schedule 2 made £125,000 payable two years after completion and £100,000 payable three years after completion. Clause 3.5 provided for interest at 5 per cent per annum on the deferred consideration, payable every three months from completion in arrears.
4. Read as a whole, clause 3.5 required interest to be paid from completion on the deferred consideration. The reference to the amount outstanding did not postpone the commencement of interest until the principal sums became payable under schedule 2. The same construction had been adopted by the trial judge and by Christopher Clarke LJ when refusing permission to appeal.

The renewed application for permission to appeal was refused.

• Court of Appeal (Civil Division): On 15 June 2016, Lady Justice Hallett refused the renewed application for permission to appeal in [2016] EWCA Civ 675.
• County Court sitting at Brighton: His Honour Judge Coltart delivered judgment on 29 June 2015, rejecting the undue-influence case and construing the agreement as requiring interest from completion.