|Thompson v Foy|
|Decided||20 May 2009|
|Citation(s)|| EWHC 1076 (Ch)|
|Actual occupation, overriding interests, undue influence|
Thompson v Foy  EWHC 1076(Ch) (20 May 2009) is an English land law case concerning the right of a person with an overriding interest in a home and deals with a family arrangement for a house to be a gift transferring from a mother to a daughter and the trust between the two parties that the daughter would pay the mother her sum to buy out her share of the property.
English land law is the law of real property in England and Wales. Because of its heavy historical and social significance, land is usually seen as the most important part of English property law. Ownership of land has its roots in the Anglo-Saxon system of Bookland and in the Anglo-Saxon multiple estate, a feudal system transformed by William the Conqueror and his influx of many new chief landlords after 1066. The modern law's sources derive from the old courts of common law and equity which includes legislation such as the Law of Property Act 1925, the Settled Land Act 1925, the Land Charges Act 1972, the Trusts of Land and Appointment of Trustees Act 1996 and the Land Registration Act 2002, and the European Convention on Human Rights. At its core, English land law involves the acquisition, content and priority of rights and obligations among people with interests in land. Having a property right in land, as opposed to a contractual or some other personal right, matters because it creates privileges over other people's claims, particularly if the land is sold on, the possessor goes insolvent, or when claiming various remedies, like specific performance, in court. Capital taxation, the industrial revolution and reform of the established church has resulted in a shift from predominant ownership by the church and landed gentry to largely agricultural, minority aristocratic ownership. This means today sites for development belong to a complex web of owners able meet market demand-side forces for development, tempered by supply-side forces including the values enshrined in public planning policy to protect green spaces and promote sustainable, locally diverse and socially useful development of land.
A gift, in the law of property, is the voluntary transfer of property from one person to another without full valuable consideration. In order for a gift to be legally effective, three requirements must be met:
"A claim to set aside a deed of family arrangement and deed of gift transferring a property from a mother to her daughter based on undue influence failed where the kind of trust in play between the parties was no more than a trust that a daughter would keep her promise to her mother to pay her a sum to buy out her share, and there had been no actual undue influence and the mother had accepted that she was taking a risk."
Undue influence in English law is a field of contract law and property law whereby a transaction may be set aside if it was procured by the influence exerted by one person on another, such that the transaction cannot "fairly be treated the expression of [that person's] free will".
"In conjoined actions, the court was required to determine issues concerning ownership and beneficial interest in a property, and priority over a registered charge. In the first action, the claimant (T) was the mother of the defendant (F). T, who was a widow, had shared her property with F and her family, and allowed them to build a substantial self-contained extension to live in, paid for by F. T acknowledged that the extension belonged to F. F and her family subsequently expressed an interest in moving to Spain, taking T with them.
At that time, F did not have the money to fund the purchase of a Spanish property unless her part of the value of the property was realised. It was agreed that F would buy out T's share of the property for £200,000 and then mortgage the property and rent it out to cover the mortgage. T would then receive the £200,000 and F would use the excess to purchase a Spanish home. T lent F £20,000 to put a deposit on a Spanish property. F then applied for a buy-to-let mortgage from a company (X) which was the claimant in the second action, wrongly stating that she owned the property at that time. Following repeated requests for reassurance from F, T subsequently transferred the property to F via a deed of family arrangement and deed of gift.
She then decided that she no longer wanted to move to Spain, and began searching instead for her own bungalow. When the mortgage moneys were released to F by X, F informed T that she could not pay her the £200,000 because she had been advised that if T were to die within seven years she would have to pay inheritance tax on her part of the money. F offered T £60,000, with the remainder to be paid in seven years. A dispute then arose between T and F, as a result of which the property was not let out. In consequence, the mortgage was not paid and arrears amounted. X repossessed the property and obtained a money judgment against F.
T claimed to be entitled to set aside the documents by which F came to be registered as proprietor of the property and that her right to do so had priority over the registered charge because it was an overriding interest. It fell to be determined whether (i) F was entitled to any beneficial interest in the property, and the extent of any such interest; (ii) T was entitled to set aside the deed of family arrangements and deed of gift to F on the ground of undue influence; (iii) if T was so entitled, her right to do so was binding on X; (iv) F had repaid to T the sum lent to pay for the deposit on the Spanish property."
F was entitled to a beneficial interest in the property based on proprietary estoppel. There had been a mutual understanding between T and F that if F built an extension it would belong to her. T had failed to establish that F had not acted in reliance on that representation, and F established her claim to ownership of the extension.
(2) Unacceptable conduct amounting to undue influence might arise out of a relationship between two persons where one had acquired over the other a measure of influence or ascendancy, of which the ascendant person took unfair advantage. Whether a transaction had been brought about by undue influence was a question of fact, Royal Bank of Scotland plc v Etridge (No 2)  UKHL 44 ,  2 AC 773 applied. On the evidence, there had not been a complete relationship of trust and confidence between T and F, as T had appreciated that she was taking a risk, although F had promised to pay T the £200,000. The kind of trust in play was no more than a trust that a daughter would keep her promise to her mother.
Royal Bank of Scotland plc v Etridge  UKHL 44 is a leading case relevant for English land law and English contract law on the circumstances under which actual and presumed undue influence can be argued to vitiate consent to a contract.
No presumption of undue influence arose, therefore, and the burden was on T to prove that F had actually used undue influence to procure that the transaction went ahead. The fact that F's promise had been repeatedly and sincerely given did not amount to undue influence. Accordingly, the claim to set aside the deed of family arrangement and the gift of the legal title had to fail.
(3) Even if, contrary to that finding, T had been entitled to set aside the transaction on the ground of undue influence, that would not have affected the registered estate at the date of the charge in favour of X because the claim based on undue influence would not crystallise until F's misappropriation of the mortgage moneys and the equity would not arise until that time. (4) F had not repaid the £20,000 that T had lent to her and it was still owing.
Lewison J said the following
|“||Where actual occupation is replied on as causing the interest to affect the estate, this suggests that there must be actual occupation both at the date of the disposition and also at the time of registration. Paragraph 2 of Schedule 3 begins with the words: "An interest belonging at the time of the disposition to a person in actual occupation". If it had been intended that actual occupation at the time of the disposition was the sole criterion, the phrase would more naturally have read: "An interest belonging to a person in actual occupation at the time of the disposition||”|
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