Hurst v Green & Ors

Where a debtor seeks to go behind an existing judgment debt, the court applies the stringent test in Dawodu v American Express Bank rather than asking merely whether the debt is genuinely disputed. The debtor must show an arguable basis for concluding that, had the original process been properly conducted, the judgment would probably have been different.

In an actual undue influence case, the burden remains on the claimant to establish that influence was used or must have been used to procure the transaction. Legal or independent legal advice may be relevant, but neither is a precondition to rejecting the claim. Appellate intervention is justified only where the lower judge applied the wrong test or reached a conclusion that was not reasonably open on the evidence.

The respondents obtained judgment against the appellant for sums said to be due under family trusts. The appellant later applied to annul his bankruptcy, alleging that newly disclosed evidence undermined the earlier judgment because his mother had not attended the solicitor’s meeting alleged in the evidence before Master Price.

ICC Judge Prentis considered whether the discrepancy gave rise to an arguable case that the earlier judgment should be set aside or that the appellant had an arguable defence to the bankruptcy petition. He dismissed the application. The appellant appealed to the High Court, challenging the legal test, the evaluation of the evidence, and the treatment of actual and presumed undue influence.

1. Appeal dismissed. The correct question was whether it was realistically arguable that Master Price would have reached the opposite conclusion if the new evidence had been before him. The appellate court was not to conduct its own assessment of whether undue influence would ultimately have been proved.
2. The applicable test was that stated in Dawodu v American Express Bank, namely whether fraud, collusion or miscarriage justified investigating an existing judgment debt in the absence of a successful appeal or application to set it aside. The related principles in Royal Bank of Scotland v Highland Financial Partners LP confirmed the high threshold where fraud is alleged.
3. The error in ICC Judge Prentis’s reference to the solicitor’s attendance note was immaterial. The judge had given several other reasons for rejecting the appellant’s extreme factual inferences. The conclusion remained reasonably open to him.
4. The case was one of actual, not presumed, undue influence. The burden was on the appellant to show that undue influence had been used, or must have been used, to procure execution of the documents. Legal advice, including independent legal advice, was relevant evidence but was not legally required.
5. The evidence showed family discussions, accountancy advice, a meeting with a solicitor, a legitimate tax-planning purpose and no evidence of coercion, deception or exploitation. Following the reasoning associated with Etridge (No 2), the transaction was readily explicable by ordinary family motives and did not, on these facts, call for equitable protection.
6. The appellant could not raise presumed undue influence for the first time on the appeal. The issue had not been argued before the judge, had not been addressed in either lower judgment, and had not been included as a proper ground of appeal.

• High Court (Chancery Division): Appeal from the decision of ICC Judge Prentis dismissing the application relating to the earlier judgment debt. Appeal dismissed.
• Earlier proceedings: Master Price entered judgment for the respondents on 3 August 2016. A bankruptcy order was made on 15 February 2018.