Thompson v Foy  EWHC 1076 (Ch)
Family; informal agreement; property; undue influence
Thompson permitted her daughter, Foy, to build an extension to Thompson’s home. According to their informal agreement, the extension and its base land would belong Foy. At a later stage, Foy moved to Spain and planned to take her mother, Thompson, with her. She needed money to buy a house in Spain. Foy decided to mortgage the property and then rent it out to cover the mortgage payments. It was agreed that Thompson would be bought out from the mortgage money. Thompson signed a family arrangement deed as well as a gift deed. Eventually, Thompson decided to stay in England and buy another house there. Foy received the mortgage but falsely claimed that the agreed £200,000 should not be paid due to inheritance tax concerns. Instead, Foy offered to pay Thompson £60,000 then and the balance over several years. Foy and Thompson feuded, the property was not let, which led to arrears in the mortgage payment. The bank repossessed the property.
Thompson argued that the family arrangement and gift deeds should be set aside, and Foy should cease to be registered as proprietor based on her undue influence over Thompson. Thompson also claimed to have an overriding interest that was to be prioritised over the bank charge.
The Court held that Foy had a beneficial interest in the extension (as per a proprietary estoppel) as a result of an informal agreement that she would own the extension. Foy relied on this agreement to her detriment. Secondly, as undue influence could not be presumed, Thompson had to prove it. However, Thompson was aware of the transaction’s nature and substance, and she intended to enter into it – even though she was influenced by the buy-out promise. The buy-out was a sincere promise, however, and not undue influence. Events occurring after the signing of the transaction could not aid in the establishment of undue influence. Also, Thompson received independent legal advice before the transaction and was aware of the risks it involved. Thirdly, even if Thompson established undue influence, the bank would not be affected by it as her equity arose only after the misappropriation of funds by Foy.