Moursi v Doherty29 Aug 2019 // In the press
Partner John Melville-Smith examines the case of Moursi v Doherty.
William Paul Doherty, a 33-year old former cage fighter and convicted fraudster with a professional career that involves separating elderly ladies with dementia from their property and money, knocked on the door of 77-year old Ann Gurney around the end of 2010. He did some minor garden and drainage works for her. It remains unknown how much she ‘paid’ for this.
A little over a year later, she had ‘sold’ Doherty her £280,000 house for £70,000, ‘given’ him jewellery worth at least £60,000 and, by the end of 2013, her cash savings had fallen from around £150,000 – including the purchase monies – to practically nil. Property and cash totalling some £500,000 had gone. Mrs Gurney had recently died and her property, registered in Doherty’s name, was now on the market for £425,000. Such were the known facts when her daughter, Mrs Moursi, consulted me towards the end of 2017.
What could be done? There is no law against selling your property at an undervalue or giving expensive gifts and large quantities of cash to visiting workmen. Challenges on the basis that the ‘victim’ lacked the necessary mental capacity face a high bar and initial indications, supported by medical evidence, were that Mrs Gurney probably did have the necessary level of understanding in 2012.
But a superficial understanding is not always enough and the law provides a secondary basis for challenge, known as undue influence.
Actual undue influence comprises overt acts of improper pressure or coercion such as unlawful threats, of which there was no evidence.
Presumed undue influence arises out of a relationship between two persons where one has acquired a measure of influence, or trust and confidence, of which he then takes unfair advantage by abusing the influence or trust he has acquired in his own interests. Mrs Gurney was old, in the early stages of Alzheimer’s, widowed and had recently lost one of her children to cancer. She was vulnerable to someone seemingly offering her companionship and attention. Doherty had quickly become the central focus of her life: she telephoned him several times every day, believed they were in love and that he intended to marry her, gave him a Rolex watch worth well over £50,000 and trusted him completely on everything.
Whether a transaction was brought about by the exercise of undue influence is a question for the court to determine on the evidence. A key factor it will consider is the extent to which a transaction cannot readily be accounted for by the usual motives of ordinary persons in that relationship. People like Mrs Gurney do not typically sell their houses for a fraction of their value to doorstep odd-job men who have knocked on their door. The transaction was one which called for an explanation – words that go to the heart of the law in this field.
To quote directly from Lord Nicholls in the leading case of Royal Bank of Scotland v Etridge: “Proof that the complainant placed trust and confidence in the other party in relation to the management of the complainant's financial affairs, coupled with a transaction which calls for explanation, will normally be sufficient, failing satisfactory evidence to the contrary, to discharge the burden of proof. On proof of these two matters the stage is set for the court to infer that, in the absence of a satisfactory explanation, the transaction can only have been procured by undue influence. In other words, proof of these two facts is prima facie evidence that the defendant abused the influence he acquired in the parties' relationship. He preferred his own interests. He did not behave fairly to the other. So the evidential burden then shifts to him. It is for him to produce evidence to counter the inference which otherwise should be drawn.”
Could Doherty produce the evidence necessary to explain the transaction?
The most common, and obvious, way of establishing this would have been to prove that Mrs Gurney had independent legal advice. Unfortunately for him, the solicitors who acted for Mrs Gurney in the sale acted also for him in the purchase (in flagrant breach of professional rules) and they provided no advice to her at all, specifically failing to advise her that the transaction was hugely disadvantageous to her.
Further investigations established that the £70,000 purchase monies were derived from the settlement of previous litigation and the sale proceeds of its subject property, formerly owned by one Miss Wilkinson, a 57-year old with early onset dementia, who had ‘sold’ her £375,000 property to Doherty for £49,000. Moreover, there was no evidence that any sums in excess of £12,000 had even been paid: Doherty’s claim was that £20,000 was paid to Miss Wilkinson in cash, and £17,000 was paid in kind through work he carried out on the property, as to both of which there was no evidence. ‘Coincidentally’, Miss Wilkinson had herself ‘applied’ for a £17,000 home improvement loan, which disappeared from her account, destination unknown, as soon as it was credited to it by the lender.
On an application for summary judgment, the High Court set aside the house sale transaction. Of itself this is unusual – applications for summary judgement shortcut the usual court processes and depend upon demonstrating that the other side has no reasonable prospects of success. Courts are very reluctant to give summary judgment therefore in fact-heavy cases where those facts are disputed. As Master Price said in this case: “It is not possible for the court to make findings of fact on contested evidence on an application for summary judgment, unless the facts are common ground or incontrovertible, by evidence which establishes them, or by reason of inherent incredibility. In this context an onus is placed on the defendant insofar as he must, in the language of the old procedure, condescend upon particulars in his evidence in order to show a case which has a real prospect of success at trial. The test is more easily applied in a case in which it is apparent that disclosure and cross-examination will clearly be irrelevant, and the court must not in a case in which those elements have a role to play, anticipate what might happen as a matter of probabilities. The question is not whether the defence is improbable, but whether it lacks any sense of reality or plausibility.”
Doherty had no realistic prospect of success at trial and therefore it was appropriate to undo the transaction now and restore the house to the ownership of Mrs Gurney’s estate.
The judgment may be viewed here.
This article was originally published in Wealth Briefing. You can view the original article here.