Supreme Court dismisses appeal against High Court setting aside gifts due to undue influence by nephew.

THE SUPREME COURT

[Appeal No: 215/2013]

Denham C.J.

O’Donnell J.

MacMenamin J.

Between/

M.C. (A WARD OF COURT SUING BY HER COMMITTEE MARGARET MOLONY) AND MARGARET MOLONY

Plaintiffs/Respondents

and

F.C. AND J.H. AND J.H. T/A H BROTHERS

Defendants/Appellants

Judgment of Mr. Justice John MacMenamin delivered the 30th day of July, 2013.

1. This is an appeal against a judgment and order of the High Court (Feeney J.) delivered on the 17th May, 2013. In that judgment,

the High Court declared that F.C., a nephew of M.C., a Ward of Court, exercised undue influence over his aunt, and that alleged gifts

from her to him, amounting to in excess of €900,000 should be set aside.

The Supreme Court as a court of appeal

2. In view of the way the appeal proceeded, it is necessary to re-iterate the role of this Court and the effect of the legal authorities

which govern this Court in the appeal process.

3. Article 34.4.1 of the Constitution provides that the Supreme Court is the Court of Final Appeal. This Court exercises an appellate

jurisdiction from the High Court. The jurisdiction of this Court on such appeals is addressed in the case of Hay v O’Grady [1992] I.R.

210. This Court does not engage in a complete re-hearing of a case on appeal. It proceeds rather on the facts as found by the trial

judge and his inferences based on these facts. As Hay v O’Grady makes clear, if the findings of fact made by a trial judge are

supported by credible evidence, then this Court is bound by those findings, even if there is apparently weighty evidence to the

contrary. This Court will only interfere with findings of the High Court where findings of primary fact are not supported by evidence, or

cannot in all reason be supported by the evidence (see also Pernod Ricard and Comrie plc v Fyffes plc (Unreported, The Supreme

Court, 11th November 1988)). Furthermore, in Hay v O’Grady, McCarthy J. pointed out that an appellate court will be slow to

substitute its own inference of fact for that of the trial judge, where such inference depends upon on oral evidence or recollection of

fact. In drawing of inferences from circumstantial evidence, an appellate tribunal is, of course, in as good a position as the trial judge

(see also O’Connor v Dublin Bus [2003] 4 I.R. 459; Quinn (A Minor) v Mid Western Health Board and Another [2005] 4 I.R. 1).

4. It is necessary to re-iterate that these basic principles as the appeal, presented by F.C., the first named defendant in person,

appeared to be premised on the assumption that there were some segments of evidence before the High Court judge which should

have lead him to a different conclusion. The questions are whether the findings of fact are based on evidence; and whether

inferences are correctly and factually drawn. Moreover, the Court would point out that the main evidence in defence of this claim

came from F.C. himself. The trial judge rejected this evidence as being entirely unreliable on a range of the fundamental issues in the

case.

The facts as found by the High Court

5. M.C. is a Ward of Court, so declared by order of the High Court, dated the 4th November, 2009. She was born on the 18th May,

1925, and is a widow without child, grandchild or other direct descendant. By order of the 27th January, 2010, Margaret McGreevy

was appointed Committee of the person and of the estate of M.C. By further order, dated the 12th April, 2010, Margaret Molony, the

second named plaintiff, was substituted as Committee of the estate and person of M.C.

6. F.C., the first named appellant, is M.C.’s nephew. As a child, he formed a close relationship with M.C. He spent some periods with

her. When F.C. became an adult, he visited his aunt on a regular basis.

7. The second and third named appellants are brothers who live in the same county as F.C. They own a business hiring out

agricultural machinery. F.C. is said to work in that business.

8. On the 25th February, 2006, when M.C. was residing alone in Dublin, she became unwell. She was admitted to hospital. At that

time, she had no close relations in Dublin but had a number of relations in her own native county, including F.C. Contemporaneous

hospital records show she was admitted to hospital in Dublin with a history of intermittent confusion, amidst neighbours’ concerns

about her welfare. She remained in hospital until the 26th April, 2006.

9. Prior to her discharge, M.C. was adamant that she wanted to go home to her house in Dublin. A family meeting took place. There, a

plan was devised that M.C. would instead return to her native county and live there with M.K., who was F.C.’s partner. For

approximately the next four years, she lived at various different locations either under F.C.’s supervision, or actually living with him

under the one roof. On the 11th March, 2010, she was admitted to a nursing home, where she now continues to reside.

10. In circumstances which are described below, M.C.’s house in Dublin was sold yielding a net balance of €2,717,313.05. Some of

these monies were used to purchase a house in her native county. On the 2nd May, 2008, the balance of €1,938,453.40 was

transferred into M.C.’s account. The trial judge found that from the 16th May, 2008, until the 14th May, 2009, eight withdrawals took

place from that account. The largest withdrawal, some €500,000, was made on the 14th April, 2009. By then, over €400,000 was

transferred, either into F.C.’s sole account, or joint accounts in the names of F.C. and M.C. In total, therefore, some €900,000 was

transferred to accounts over which F.C. exercised effective control.

11. As outlined later, a substantial part of the monies were placed in a machinery hire business where F.C. worked with the second

and third named appellants. In order to justify this disposal of the monies, F.C. claimed that in 2006, he had made a “gentleman’s

agreement” with J.H., the second named appellant, that funds would be provided to purchase machinery for the business, and that

F.C. would be given a wage as soon as the business was built up. J.H. and F.C. were to hold joint ownership of the machinery, and if

the business did not prosper, the machinery would be returned to F.C.’s sole ownership. The trial judge rejected the appellant’s

evidence that, while of full capacity, his aunt knew of, or agreed to this very unusual and unprofitable arrangement.

Evidence and findings on the capacity of the Ward

12. A range of expert evidence was available from social workers, consultant psychiatrists and other doctors regarding M.C.’s state of

mind prior to, and during, the period that these transactions took place (2006 - 2009). The judge heard medical evidence from Dr.

Niall Gormley, a consultant psychiatrist; Nurse Molony, Dr. Patrick Geoffrey O’Donoghue, a consultant psychiatrist; Ann Kelly, an

occupational therapist, and Carsten Kohl, a social worker attached to the Protection Service for Older Persons in the county in

question. This evidence established to the judge’s satisfaction that on admission to hospital on the 25th February, 2006, M.C. was

already fragile, vulnerable, and suffering from the early stages of dementia.

13. The trial judge found on the evidence that, during 2007 and 2008, M.C.’s cognitive impairment progressed from mild to moderate.

The Court concluded that, at no time during 2008 or 2009 did M.C. have the capacity to engage in complex financial transactions,

even though she did retain some capacity to deal with day to day affairs. At the hearing, F.C. produced taped phone calls between

himself and his aunt. It might be thought this was a very strange thing to do unless there was some reason for it. F.C.’s ostensible

reason for doing this was to demonstrate that his aunt retained full decision making capacity. The judge, in fact, held that these

tapes demonstrated precisely the opposite; that M.C. was a person manifesting moderate dementia with a significant inability to

communicate in a logical and coherent manner.

The High Court’s findings on F.C. as a witness

14. The defence of the claims hinged on F.C.’s credibility. The judge found him to be an entirely unreliable witness. He concluded that

his testimony was inconsistent, and that, when information and documents became available which demonstrated his initial evidence

was incorrect, the appellant demonstrated a willingness to change his evidence without regard to the truth. The judge concluded that

his evidence was “so unreliable and so inconsistent and shifting that I concluded that I was able to place little reliance on F.C.’s

willingness to truthfully account for his dealings with his aunt’s monies”.

The law on undue influence

15. The learned trial judge had regard to the decision of this Court in Carroll v Carroll [1999] 4 I.R. 241. In Carroll, Denham J. outlined

two classes of transaction which may be set aside on the grounds of undue influence. The first of these is where the court is

satisfied that the gift(s) was the result of influence expressly used by the donee for that purpose; the second, where the relations

between the donor and donee, at, or shortly before the execution of the gift(s), were such as to raise a presumption that the donee

had influence over the donor. Feeney J. held the transactions in question here fell into the second class.

16. He quoted Denham J. in Carroll to the following effect:

“In such a case the Court sets aside the voluntary gift, unless it is proved in fact the gift was a spontaneous act of the

donor acting under circumstances which enabled him to exercise an independent will and which justifies the Court in

holding that the gift was the result of a free exercise of the donor’s will”.

The learned trial judge also referred to Reg. (Proctor) v Hutton [1978] N.I. 139; Inche Noriah v Shaik Allie Bin Omar [1929] A.C. 127;

and Allcard v Skinner [1887] 36 Ch.D. 145.

17. Once a relationship giving rise to a presumption of undue influence is established, and where it has been shown in evidence that a

donee has received a substantial benefit, the law provides the onus then lies on the donee to establish that the gift or transaction

resulted from the free exercise of the donor’s will. That onus can be discharged by evidence showing the gift was the independent

and well understood act of a person in a position to exercise free judgment. The Court held that the appellant had failed to discharge

that onus.

The sale of M.C.’s Dublin property

18. The trial judge concluded on the evidence that when M.C. decided to put her house on the market, she was dependent on her

nephew and that the house was sold at F.C.’s instigation and as a result of pressure from him. This conclusion was in part based on

his conclusion that the nephew had taken part in preparing a forged letter. This letter purported to come from a “welfare inspector” in

the Department of Social Welfare. F.C. claimed this forged letter was his aunt’s idea. His testimony at the trial was that he merely

assisted in its preparation in that he obtained blank note paper from the Department of Social and Family Affairs. One can only

describe as bizarre F.C.’s claim, made both to this Court and the High Court, that the letter was dictated or prepared by M.C. as part

of a plan to ward off other family members who, F.C. claimed, were pressuring M.C to act in some manner against her, but in fact the

nephew’s, interest. The judge concluded that the appellant’s explanation was concocted. The forged letter conveyed that, absent

M.C.’s agreement to selling the house, the State would take possession of it and would be responsible for selling it. The closing

paragraph said that an Inspector from the Department of Social and Family Affairs would be making a visit to F.C. and his aunt. The

trial judge unsurprisingly concluded that the clear intent behind this letter was to put pressure on M.C. to sell, where the very

existence and phraseology of the letter showed the aunt’s reluctance to do so. The trial judge held that F.C. also engaged in the

preparation and completion of other forged correspondence necessary for the sale of the house. The effect of the sale was, of

course, to realise the value of the aunt’s property into liquid cash.

The High Court’s findings on the financial transactions

19. The judge concluded that the circumstances in which M.C. resided, after coming out of hospital in Dublin 2006, created a

situation where influence was readily acquired. He determined that the influence arose through disparities of age, mental and physical

capacities between M.C. and F.C.

20. The High Court was satisfied from the evidence, that the large sums of money which had been removed from the bank account

between May 2008 to April 2009 were as a result of F.C.’s express influence. He concluded that F.C. had sought to exercise control

and dominion over M.C., and to ensure that she acted in accordance with his wishes and for his benefit. He found support for his

findings by what he found were F.C.’s dishonest and misleading dealings with Mrs. Wardlaw, his aunt’s solicitor, and his clear steps to

bring about the sale of the Dublin property. The judge had regard, too, to the fact that F.C. attempted to have property which M.C.

bought in her native county placed in their joint names.

21. The High Court concluded that there was no credible evidence that M.C. had received any legal or financial advice from the date

that the sum of €1,938,453.41 was lodged to her bank, up to and after the final withdrawal of €500,000 on 14th April 2009. He

concluded that F.C. gave false testimony in relation to the purchase of two properties in Poland. At one point in the hearing when

seeking to explain this attempted concealment of part of the money in Poland, F.C. accepted that part, at least, of his evidence on

the issue was “rubbish”.

22. The High Court held that the capacity of F.C. to influence M.C. to his benefit without regard to her genuine wellbeing, was best

illustrated by the circumstances surrounding the final withdrawal of €500,000 in April 2009. This took place at a time when F.C. was

aware an imminent psychiatric examination was due to be carried out on his aunt to assess her mental capacity. The judge held F.C.

was involved in the cancellation of an initial appointment for the assessment, which had been due to take place just a matter of days

after the withdrawal. He concluded that, to proceed with the withdrawal of €500,000, representing almost a third of M.C.’s remaining

funds, when such funds were used by F.C. for a number of transactions for his own benefit, led inexorably to the conclusion that this

withdrawal was as a result of influence used by F.C. for the purposes of obtaining such funds.

23. The trial judge found that €322,560 of the money was invested in the machinery hire business. All this money came from M.C.’s

bank account. He also found that €215,000 was transferred from the same source to accounts in Poland under the control of F.C. and

a Polish national, I.S. The trial judge found that F.C. transferred this money in order to ensure it would be invested in property there

and not be available for repayment in the event of M.C. being taken into wardship.

The appellant’s submissions on appeal

24. In this appeal, F.C. made submissions on behalf of all three appellants. The other appellants adopted his submissions. The

appellant essentially sought to revisit the findings of fact of the trial judge and the inferences drawn from them. He continued to

assert that, at the time of the transactions, M.C. had full capacity to engage in financial transactions of this type, and that all times

he had merely acted in accordance with his aunt’s wishes. He sought to lay emphasis on short excerpts from the evidence when the

broader picture conveyed a different impression.

25. At the appeal, F.C. mistakenly claimed that M.C. had actually received independent financial advice on the purchase of

investments and shares. The person to whom reference was made during the appeal did not testify, ostensibly on the grounds of

illness, despite the trial taking place in two blocs in October and December 2012. F.C. attempted again to offer explanations for his

role in the forged letter and trying to hide the money in Polish properties. He sought to lay some blame on Mrs. Eleanor Wardlaw,

M.C.’s solicitor, who, the trial judge, held was a careful, honest and credible witness. Finally, he claimed that M.C.’s constitutional

rights to autonomy had been seriously violated and desecrated. The appellant had no locus standi to make such a claim. The

appellant’s misconceptions on the role of this Court have been explained. There was ample evidence before the High Court judge for

him to reach his conclusions.

Conclusions

26. The High Court’s findings here were highly dependent on factual context and his view of the nature and quality of the evidence.

This Court is entirely satisfied that the High Court judgment was correct in fact and law. The findings of fact were founded on

credible, weighty, testimony; the inferences drawn were based on clear, supporting evidence. The judge was well-entitled to hold

that the appellant had not discharged the evidential onus of showing the gift was the independent and well understood act of a

person in a position to exercise free judgment.

27. The appellants herein have failed to raise any substantial grounds of appeal. In the circumstances, this appeal will be dismissed.

This Court affirms all the orders of the High Court, inter alia, setting aside the alleged gifts, and declaring that the monies and

property bought therewith remain the property of the Ward of Court.