Baxter v Todd

A constructive trust may arise where co-owners agree that a transfer of legal title will not alter their beneficial interests and the transferring party relies on that agreement to his detriment. The reliance need not consist of conduct ordinarily expected only of a landowner where the parties’ common intention is expressly agreed.

Equity will not ordinarily refuse to enforce the resulting rights on broad grounds of public morality. Any refusal based on illegality or public policy must be justified by the relevant policy considerations and must be proportionate.

A will is not invalid for undue influence merely because the testator is seriously ill or exposed to adverse statements. Coercion or fraud must have caused the testamentary dispositions. Knowledge and approval may be established despite drafting imperfections where the arrangements remain workable and accord with the testator’s intentions.

The claimant, Sean Baxter, claimed beneficial ownership of the former matrimonial home and related Turkish properties. The legal title to the home had been transferred into his late wife Gul’s sole name in 2005 to facilitate the family’s move to alternative council accommodation. He contended that the transfer was not intended to change their beneficial ownership and that a constructive trust preserved their former beneficial joint tenancy.

He also challenged Gul’s 2016 will, alleging actual undue influence by her sister, Gulcan Todd, and their mother, and alternatively want of knowledge and approval. Gulcan defended the will and was a named executor. The court had to determine the beneficial ownership of the properties, whether equitable relief should be refused on illegality or public-policy grounds, and whether the will was valid.

1. Beneficial ownership. The Flat had originally been held by Gul and Mr Baxter as beneficial joint tenants. The 2005 transfer into Gul’s sole name was made pursuant to their continuing agreement that it would not alter their beneficial ownership. Mr Baxter relied on that agreement by transferring his legal interest to Gul, thereby placing his beneficial and legal rights at risk.
2. Applying the reasoning in Gissing v Gissing [1971] AC 886, it would have been inequitable and unconscionable for Gul or her estate to resile from the agreement. The constructive trust arose immediately on transfer, and the beneficial joint tenancy continued. At Gul’s death, survivorship vested the entire beneficial interest in Mr Baxter. The same conclusion applied to the Rental Property, acquired with borrowing secured on the Flat. The Summer House, acquired before the transfer, was also beneficially owned by Mr Baxter under the parties’ agreed position.
3. Illegality and public morality. The court accepted the public interest in transparent social-housing allocation but found no demonstrated lie or specific illegality. Following the approach in Patel v Mirza [2017] AC 467, refusal to enforce the constructive trust would not protect the relevant policy and would be wholly disproportionate. The claim was unlike Tinsley v Milligan [1994] 1 AC 140, where property arrangements were used to obtain a fraudulent financial benefit. The declarations as to beneficial ownership were therefore made.
4. Validity of the will. Actual undue influence required coercion, in the sense that Gul’s will was overborne, or fraud. Although adverse allegations were probably made to Gul, the evidence showed that her dispositions were caused by her determined wish to protect her daughter, not by those allegations. Her strong character, clear instructions and dealings with her solicitor supported that conclusion. The challenge on undue influence failed, consistently with the approach identified in Edwards v Edwards [2007] WTLR 1387.
5. The professionally prepared and properly executed will carried a presumption of knowledge and approval. The provisions concerning mortgage payments and termination of occupation were capable of being operated with sensible co-operation and did not establish that Gul would have rejected the will had she understood its precise effect. The will was pronounced in favour of.
6. The court expressly made no ruling on whether Gulcan was suitable to act as executor, but recorded serious concerns about her obstructive conduct. That observation was intended to assist any tribunal subsequently determining that issue.