Property transfer - undue influence & unconscionability

[bevans5803]

I have recieved a copy of my grandfathers claim and have appointed a solicitor. They are claiming that my grandfather at the time of the transfer was suffering with a disability because he is of limited intelligence, has a poor education and poor financial understanding. Strange because for years he has lived on his own managed his own affairs, kept all his bills paid up to date and even managed to save a couple of thousand. Social services called on him about 2 years ago and stated he appeared capable of managing his own affairs. At a recent assessment he was described as not suffering with dementia. Does lack of education constitute a disability. (he can read and write). How will they prove he did not understand what he was doing in 1998 when the transfer was carried out. Several of his family members also knew about the transfer and never raised any objections at the time. Any Comments. Nicola.

[Didwot]

Hi Nicola, with the claim form there should be either the Particulars of Claim, or a statement setting out all the facts upon which the otherside rely in establishing the claim. Lacking education does not constitute a disability, but being sufficiently un-intelligent not to be able to deal with ones own affairs would. Youi now have your own lawyers to help you, and I wish you all the luck you need. You will have to get your defence settled pretty quickly, and I hope that you have been able to get the evidence together that I suggested in an earlier answer. You will probably need a barrister, and I would unhesitatingly recommend Scott Allen of 4 New Square, Lincoln's Inn.

[bevans5803]

Thanks again Didwot. I live in South Wales and my solicitors will appoint a decent barrister (hopefully). I am still a little puzzled about how they will prove my grandfather did not know or understand what he was doing at the time of the transfer. They cant judge his level of intelligence in 1998 based how he appears today. Is it for me to prove he did know what he was doing?

Nicola.

[zmudge]

In legalise, "disability" means "an incapacity, in the eyes of the law, to enter into certain transactions". By alleging that lack of education is a disability your opponents have, therefore, expressed their point correctly. In considering it, remember that the onus of proof on them is "on the balance of probabilities" not the more difficult "beyond reasonable doubt". However, it does beg the question in your case of "what, if any, in the eyes of the law, is sufficient education to enter into the sale of a property to a relative ?" Are you able to say (a) how, exactly, is it alleged that you diddled your grandfather, and (b) what is being claimed?

[bevans5803]

Zmudge thanks. They allege the transfer in 1998 was manifestly disadvantagous to him because he transfered the property worth �20,000 in return to be absolved of a �12,500 mortgage debt. After the transfer he rented the property instead for �100.00 a month with a view that when we cleared the mortgage  he could live there rent free.

I should have paid him �7500 for his capital and charged him full rent at �200.00 a month. There would have been no complaints then but of course my Aunt only has eyes for what the property is worth today. (60K)

Their claim is simply to set aside the transfer in 1998 on the grounds of undue influence and unconscionability. They know we paid the mortgage for the last 6 years and have now completely redeemed the mortgage but they don't seem to have considered this. If worse came to worse what would be the outcome. Would we loose all the money we spent on the property.  More thoughts please. Nicola

[zmudge]

If the worst comes to the worst as you ask, Nicola, it is not attractive;
(1) upon being persuaded that you have acted as alleged the Judge will make an Order to set aside the 1998 transfer and restore the title to your grandfather. This will take the Judge about 2 minutes to write on an Order form and the property will be gone from you
(2) you are not entitled to and will not receive even one penny mortgage reimbursement. Your situation is somewhat similar to landlord and tenant where you are the tenant - a tenant may improve the property but when the property reverts to the landlord the improvements go to the landlord at no cost - the landlord did not ask for it. Similarly, you have improved your grandfather's property by removing the mortgage, but he did not ask for it and will get the improvement for nothing
(3) I estimate that it will be at least 8 months before this matter gets to trial, and that it will be a 5 day trial. Including the trial your costs will be not less than �25000 and your opponents costs roughly the same. Loser pays the winners costs, so if you lose you will be down a minimum of �50000, but I can see your actual loss at �70000 quite easily
(4) when they win, but not until and not bound up with the current case, your opponents may well start another action against you for damages. You have no claim or counter-claim against them
(5) of the 5 day trial you must steel yourself for at least 2 days of diabolical cross examination (your grandfather/aunt will not suffer this)
I am sorry to have to finish by saying that this matter could turn even worse because what is alleged is fraud, and your opponents could report this matter - there is nothing to stop a civil case and a criminal prosecution running together.

[Didwot]

Of course if you held a gun to his head, or forged his signature, then you deserve all of the above, and more! However I have not read your questions that way, and am far less pessimistic. Your aunt wil need to show that the transaction was manifestly to your grandfather's disadvantage, which it does not appear to be, and that he was somehow unable to negotiate a fair deal. I trust that you have been able to amass lots of evidence to rebut these points. Good Luck

[zmudge]

It matters not whether you held a gun to his head or tickled his toes and fed him a garibaldi, my points 1-3 above are now a 100% risk for you, 4 about 50% and criminality about 5%. All this carry on about what your aunt has to prove is almost irrelevant - long before this matter reaches trial a directions Judge (you will attend court not less than a dozen times for directions, and probably twice this number) will have Ordered both sides to agree upon the fitness of your grandfather. In point of fact it would not harm you if you admitted the truth now that he is a leek or two short of a potfull when it comes to business, because I am quite sure that on the balance of probabilities this will the basis on which you go to trial. Make no mistake about it, it is you that is on trial, not your grandfather or aunt, and what matters most is how you will answer why did you meddle in your grandfathers affairs in this way, why did you wish to become his landlord, why did you nick the �7500, why did you charge him so much rent, why do you wish to keep the additional increase in value, why have you not voluntarily returned the property to him, what revenge will you exact upon him and 200 other similar questions that will be put to you to show you as thoroughly dishonest. It also must be said that if you wish to pack it in now you will have to return the house to your grandfather as my points 1 & 2 and pay your opponents costs to date which I would not be surprised to find to be around �10000.

[Didwot]

Unconscionable Bargain is an abandoned bye way of the law, and your aunt will need to do some major road works to turn it into a viable track.
I am nowhere near as pessimistic as zmudge.
The manner in which this matter will proceed to court will not involve a dozen directions hearings, let alone two dozen. How on earth could one fit that into an eight month timetable?
There may be a directions and allocation hearing (which you do not need to attend - only your lawyers), but the court may give directions and allocate the case to the multi track without a hearing. A trial date will be set at that stage, and a timetable laid out with the steps both parties and ther advisors will need to take before trial. There may well be a Case Management Conference before the District Judge (or "Master" in London) which the parties do have to attend, but that will be the only occasion that they need to go to court before the trial itself.
Of course it is for your aunt/grandfather to prove their case, not for you to disprove it.
You know the truth of the matter, and do not need to be swayed by the views of others

[bevans5803]

Didwot & Zmudge thanks both for your views. Top guys. I forgot to mention a few things. My Grandfathers other daughter (my mother ) knew about the entire arrangement right from the start and was happy for it to proceed. If they prove my grandfather was indeed of limited intelligence and suffering with a disability would the fact she knew about it and was happy for the transfer to take place help us?. She even signed & witnessed the signatures on the tenancy agreement first set up after the transfer in 1998. My sisters husband works in the tenancy sector and he provided the tenancy agreement. Futher more, prior to my grandfathers purchase of the house from the council we discussed what would happen if he became poorly and required residential care. It was agreed that to avoid local authority action to force the sale of the house it probably was best if the transfer was completed as soon as possible after the restictive sale clause expired (after 3 years). The last thing we wanted would be for him to get sick and then loose the house to pay care fees. Sorry to bombard you again but my solicitor said never to mention this as it would be classed as derevation of assets and the local authority would still come after us. But i feel it is important because if we were to loose the house i would rather loose it to them than have my Aunt get her grubby paws on it. Nicola.

[zmudge]

The voluntary introduction of your mother's involvement in the case will have to be very carefully considered by your barrister. It could so very easily be turned against you by the suggestion that she conspired to benefit you. Let us now look at the matter against onscionability. Certain classes of persons are deemed by law to have a limited ability to contract. Included in this are the mentally infirm - they must be protected from their own bad judgment as well as those who would take advantage of them. Therefore a contract is voidable if the party "by reason of mental illness or defect is unable to act in a reasonable manner in relation to the transaction and the other party has reason to know of this condition." This leads to Unconscionable Contracts. The doctrine of unconscionability permits a court to refuse to enforce a contract it feels is unfair. Unconscionability  includes absence of meaningful choice on the part of one of the parties together with contract terms which are unreasonably favourable to the other party. Three forms of relief are generally available (1) a court may refuse to enforce the entire contract (2) or any part of it, or (3) a court may limit the application of a particular clause to prevent an unconscionable result. Unconscionability is either substantive or procedural. Substantive unconscionability is when contract terms are excessively oppressive or harsh. Procedural unconscionability is the manner in which the term in issue was made a part of the contract, i.e., did the term in question find its way into the contract in a manner that was fair and square? This leads on to duress. The word duress implies feebleness on one side, overpowering strength on the other.

[zmudge]

(cont)
If agreement (for instance, to the sale of the house to you) was induced by an improper or wrongful threat by you of irreparable injury (for instance, that the house would be seized by the council to pay for care costs) that precluded the exercise of his free will and left your grandfather no reasonable alternative, the contract is voidable on application to a court by your grandfather. So, is what is at the heart of this matter that your aunt on behalf of your grandfather is going to tell the court of the unconscionable act that you (and your mother?) with wrongful duress and in full knowledge of his disability persuaded your grandfather that the council
were poised to seize his house to pay for care costs and therefore to sell the house to you on unreasonably favourable terms? 

[Didwot]

I hope that your solicitors are now fully instructed, and have got a decent barrister in tow. I suggest the barrister's opinion be sought as a matter of urgency. We have such lilmited information here that we could be guessing at the answers, rather than giving you reasoned advice.
I would love to know more about the facts alleged in the claim form, but the space allowed will not enable you to give sufficient info. Please get your barrister's advice, and let us know what he says.

[Didwot]

It is high time that your barrister's advice was obtained, and a defence served.
How is it going?

[Didwot]

Hi Nicola Bevans5803 It has been a long time since you posted anything about this matter, and I am interested to learn how you are getting on.