Turkey v Awadh [2005] EWCA Civ 382
Real property; test for presumed undue influence
Facts
A Saudi Arabian couple purchased a home in London with the help of a mortgage. They rented the house to the wife’s father who lived there with his wife. The young couple occasionally stayed there as well. At a later stage, the young couple agreed with the father that the house would be transferred to the father if he paid approximately £93,000 immediately and discharged the mortgage and other debts and obligations relating to it. The father paid the requested sum and also discharged the mortgage and some debts. He demanded specific performance of the agreement – i.e. he wanted the house to be transferred to him.
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Issue
The young couple argued that the father made several misrepresentations and that the deed should be set aside on the basis of his presumed undue influence on them. The misrepresentation defence failed at trial and was not pursued on appeal.
Held
The Court of Appeal dismissed the appeal. The first limb of presumed undue influence is to prove the existence of a relationship of trust and confidence between the parties. The second requirement is that the transaction, viewed in its context, cannot be explained by the ordinary motives by which people are accustomed to act. Merely describing a transaction as unusual or saying that it calls for an explanation does not by itself shift the burden of proof. If the presumption is raised, it is for the person accused of exercising undue influence to prove that undue influence has not in fact been present. Showing that the person alleging undue influence entered into the transaction with a free and informed will would usually discharge this burden, commonly through evidence of independent advice.
In this particular case, a relationship of trust and confidence was established because the couple had relied on the father to deal with legal and property matters in England. However, the second requirement was not met. The agreement addressed their inability to service the mortgage, provided an immediate cash payment, and left the family’s use of the house unchanged until completion years later. No serious undervalue was established. Those circumstances explained the transaction by ordinary family motives, so the presumption never arose. Although the judge had found that the father could not have rebutted a presumption had it arisen, that question did not determine the outcome. The declaration that the daughter held the leasehold interest on trust for her father was upheld.
