Howell Evans v David Rees Lloyd

Heather Viljoen looks at a case about agricultural holdings and gifting

In this case, the court considered an application to set aside gifts on the ground that they were "unconscionable transactions" or made under "presumed undue influence".

The donor, Wynne Evans, spent his entire working life - from age 14 until his death at 79 - serving a farm owned by David and Elizabeth Lloyd. In 1985, Wynne inherited two agricultural holdings from his eldest brother, which he farmed as a single unit with the Lloyds' farm. In 1996, he gifted the holdings to the Lloyds.

By then, he was retired and concerned about the condition of the farmhouse on the land (which, at age 70, he had no desire to renovate on his own account) and that recourse would be had to the land for nursing home fees. The Lloyds renovated the house and a barn on the land, and sold them. They continued to farm the rest of the agricultural holdings until Wynne's death in 2006.

The claimants in the case were Wynne's sole surviving brother, Howell Evans, and Howell's attorneys. Their point was whether the gifts by Wynne to the Lloyds were unconscionable transactions or had been procured by the Lloyds' undue influence over Wynne.

In broad terms, for a transaction to be set aside as an unconscionable transaction, it must have been made by a "poor" or "ignorant" person at a considerable undervalue. In addition, the conduct of the stronger party must have been "unconscionable" in the sense that they had imposed objectionable terms in a morally reprehensible manner.

To raise the presumption of undue influence between parties, for example, X and Y, the claimant must establish the existence of a relationship under which Y put trust and confidence in X, and that the transaction in question was one that cannot be readily explained, for example, by the relationship between the parties.

Mutual trust

The judge considered the relationship Wynne had with the Lloyds in some detail, noting that it was characterised by mutual love and trust. Also, Wynne depended on the Lloyds for his accommodation, food and transport '¨and by age 70 was not able to live independently.

However, it was held that these matters did not establish "dependence" in the sense required under the doctrine of undue influence. Instead, the main issue was whether there was independence of will. Although the nature of the transactions in the case (gifts of practically all Wynne's property) might be highly unusual, in the circumstances they could be accounted for in terms of normal human motivation.

It was readily understandable that, because of the strong family bond with the Lloyds, and "as a farmer through and through", Wynne wanted the agricultural holdings to go the Lloyds rather than to his family, who were not farmers.

A lack of interest in wealth might be rare, but it neither indicated a lack of independent will nor that a gift cannot adequately be explained by ordinary human motives. The court accordingly found that Wynne's gifts were voluntary and made on his own initiative, without "the suggestion or bidding of the [Lloyds], who… made no attempt to influence or direct his will".

As to the submission that the gifts were unconscionable transactions, the judge accepted that Wynne may have been "poor" and "ignorant" in the required sense, and that the gifts were disadvantageous to him, as they divested him of nearly all his assets and were not strictly necessary. However, there was no reasonable basis in fact to find that the Lloyds had acted with sufficient moral culpability to justify the claim and both were dismissed.'¨

See Howell Evans & others v David Rees Lloyd and another [2013] EWHC 1725 (Ch)'¨

Heather Viljoen is a solicitor at Michelmores

She writes regular case updates for Private Client Adviser