Undue influence and lifetime gifts
Humphreys v Humphreys [2004] WTLR 1425


Ms Humphreys exercised her right to buy her council house in 1989 at a 60% discount. She was 64 and in good health. She had difficulty reading anything complicated and was hard of hearing.


The whole of the purchase price was borrowed from a building society and Dennis, one of her children, assumed responsibility for the mortgage payments. Ms Humphreys executed a trust deed on the same day that the purchase was completed. It provided that the proceeds of any sale would be held for Dennis absolutely, and that any sale required the consent of both parties


Dennis paid the mortgage until 1994 when he ran into financial difficulties. Thereafter, the Department of Social Services paid the interest on the mortgage. Dennis had agreed to keep the property properly maintained but did not do so.


Thirteen years after the purchase, Ms Humphreys asked the court to set aside the trust deed, among other things, on the basis of undue influence.


Mr Justice Rimer held that the presumption of undue influence applied. Ms Humphreys had reposed trust and confidence in Dennis and the terms of the trust deed required explanation.


The burden was on Dennis to prove that Ms Humphreys entered into the transaction with a full understanding of its merits and demerits and of her own free will.


In the circumstances, the judge said that he could only do this if he was able to show that Ms Humphreys had obtained comprehensive and independent legal advice about the transaction. He was not able to do this.


A firm of solicitors had acted on the purchase. Ms Humphreys had attended the offices once to sign the transfer deed. Ms Humphreys said that Dennis and the solicitor had talked to each other and that she had no idea of what was going on. The solicitor could not remember the transaction and had no attendance notes to record what explanation had been given.


The following points arise from the judgment:


  • Importance of proper records. Mr Justice Rimer emphasised the importance of proper records in such cases. He described the lack of attendance notes as 'inexcusable'.



  • No limitation or laches. The judge held that there was no defence under the Limitation Act 1980. So long as undue influence persists, claims can be brought whatever the period since the transaction. However, once the complainant is no longer under the defendant's influence, a claim to set the transaction must be brought within a reasonable time. Failure to do so will be likely to attract a defence based on the equitable doctrine of laches. Ms Humphreys had not had a copy of the trust deed until 1998 and was, therefore, unable to obtain any legal advice until that date. It had taken her four years from 1998 to issue a claim form but in that period rather than acquiescing to the trust deed, she made clear her challenge to it. The additional four years had not resulted in any prejudice to Dennis.



  • The consequences of setting aside the deed. Once the trust deed was set aside, it was necessary to determine the extent of the parties interests in the house without it. On the basis of Oxley v Hiscock [2004] WTLR 709, it was clear that Ms Humphreys held the house on a constructive trust for herself and Dennis. Each was entitled to the share that the court considers fair having regard to the whole course of dealing between them in relation to the house. On these facts, the key factors to take account of were the parties' contributions to the purchase. Therefore, the house was held 60:40, although any mortgage repayments were to come from Dennis's share.



  • Matters to consider in 'assisted' right-to-buy cases. Though not purporting to give a comprehensive list, Mr Justice Rimer mentioned some matters that should be dealt with in such cases: Ms Humphreys was left vulnerable as a result of her reliance on Dennis meeting the mortgage repayments. Where there are several children, it is preferable to see whether any others are willing to assume joint responsibility for the mortgage payments. A forfeiture provision should be included in the trust deed to provide that, on any forced sale of the property by the mortgagee, the person paying the mortgage should forfeit his interest.



    • The trust deed should have included express maintenance and repairing obligations. Consideration should have been given to whether (and, if so, the mechanics whereby) a substitute property might be bought in place of the house. Consideration also needed to be given to the extent to which fairness demanded that Ms Humphreys ought to have retained the benefit of at least part of the discount.


    Living together as husband and wife


    Although there has still been no reported Inheritance Act claim by a homosexual cohabitee, Rent Act cases multiply and are useful in showing the court's likely approach to such claims.


    In Southern Housing Group Ltd v Nutting [2004] EWHC 2982 (CH), [2004] All ER (D) 347 (Dec), Mr Justice Evans-Lombe approved the first-instance decision that two homosexuals were not living together as husband and wife and, therefore, the survivor was not entitled to succeed to an assured tenancy as the 'spouse' of the deceased.


    In Ghaidan v Mendoza [2004] 3 WLR, the House of Lords concluded that the provisions dealing with the succession right of spouses and cohabitees to Rent Act tenancies must be construed, in the light of the coming into force of the Human Rights Act 1998, as applying to homosexual relationships in the same way as heterosexual relationships.


    Therefore, it was clearly possible for this claimant to succeed to the tenancy. However, whether the relationship is heterosexual or homosexual the crucial requirement is that the parties are living together as husband and wife. This requires a 'commitment to permanence' at some point in the relationship. There was no such commitment here.


    Knowledge and approval


    In Shuck v Lovegrove [2005] EWHC 72 Ch, the deceased made a will leaving his estate to Ms L's daughter. He dictated the will to Ms L while in hospital.


    On the instructions of the deceased, Ms L arranged for two people to visit the deceased and witness the will. Despite the fact that Ms L's activities excited suspicion, there was sufficient evidence to establish that the deceased knew and approved the contents of the will.


    Tsunami order


    The Non-Contentious Probate Fees (Indian Ocean Tsunami) Order 2005 provides that probate fees will not be charged where the death occurred as a result of the tsunami on 26 December 2004. Provision is also made for refunds of fees paid between that date and the coming into force of this order.


    By Lesley King, College of Law, London