Property Transfer To Son Set Aside By High Court
Property transfer to son set aside by High Court
The recent case of Paull v Paull  EWHC 2520 (Ch) involved undue influence and a property transfer from an elderly father to his son.
Neville Paull lived in his property with his partner, Linda. In 2010, when he was 67 years old and considered to be frail and vulnerable, he transferred his home to his son Bradley. Neville argued that he only transferred the property because Bradley would look after it so he and Linda could live there for life.
Bradley stated that Neville wanted to transfer the property to ensure it did not go to Linda’s children, it would not be sold to pay care home fees, and to avoid Inheritance Tax. Neville sought to have the transaction set aside on the grounds that Bradley had unduly influenced him.
In Allcard v Skinner (1887) 36 Ch D 145, Lindley LJ outlined the two requirements for a claim of presumed undue influence: A places trust and confidence in B and is therefore predisposed to follow his direction, and the transaction calls for explanation because it cannot be reasonably accounted for by reference to the nature of A and B’s relationship. The defendant must rebut the presumption of undue influence otherwise the transaction is voidable.
Neville delegated significant control over his documentation to Bradley, Neville said that the transfer of the property was Bradley’s suggestion, and the transaction undoubtedly called for explanation as it deprived Neville and Linda of their sole residence and half of their capital assets.
Bradley had to establish that Neville entered into the transaction freely and independently. He relied on the fact that the solicitor had advised Neville on the consequences of the transfer but the High Court found that the solicitor’s involvement was insufficient to reduce or remove the effects of Bradley’s undue influence. The solicitor was criticised as although he tried to discourage Neville, he did not ensure he understood the consequences of the transfer and that it was irrevocable.
The High Court found that both requirements of the test were satisfied in Neville’s favour and he had therefore been unduly influenced and so it set aside the transfer from Neville to Bradley.
If you are thinking about gifting your property to someone else, such as your son or daughter, you should be very careful about the possible consequences; especially if you continue living there. It could mean that you are seen to be intentionally depriving yourself of assets and you may still have to pay care fees. If you are going to benefit from a gift of property, you should ensure that each of you take independent legal advice.
To discuss any of the issues raised above, please contact a member of the Private Client team on 01384 410410.