Young v Young

• Jurisdiction: Bermuda
• Judgment Date: 31 January 2013
• Date: 31 January 2013
• Docket Number: Civil Jurisdiction 2003 No 439
• Court: Supreme Court (Bermuda)

2013 Bda LR 9

In The Supreme Court of Bermuda

Civil Jurisdiction 2003 No 439

In the matter of the Partition Act 1855 and the Partition Act 1914 and in the matter of an Application by Kingsley Owen Young

Between:

Kingsley Owen Young

Petitioner

and

lionel Hubert Young

Respondent

Mr D Cooper for the Petitioner

Mr R Woolridge for the Respondent

The following cases were referred to in the judgment:

Dunkley v ClarkeBDLR [2004] Bda LR 43

Royal Bank of Scotland plc v EtridgeELR [2002] 2 AC 773

Richardson v TuzoBDLR [2007] Bda LR 1

Paynter v HolderBDLR [1986] Bda LR 10

Hassell v FurbertBDLR [2005] Bda LR 22

Potter v PotterUNK [2004] UKPC 41

Dennis v McDonaldUNK [1982] 1 All ER 590

Partition — Enforceability of sales agreement — Calculation of shares in property — Undue influence — Equitable and contractual delay

JUDGMENT of Kawaley CJ

Introductory

1. The Petitioner and the Respondent are brothers. They acquired the property in dispute (‘the Property’) as tenants in common in equal shares under a conveyance dated September 29, 2000.

2. The Petition in this partition action was presented on October 28, 2003, supported by an even-dated Affidavit, over nine years ago. On June 3, 2004, Warner J (Acting) gave directions for the filing of further evidence by both parties in an Order which contemplated that the present action might be consolidated with a Writ action to be commenced by the Respondent against the Petitioner.

3. The Petitioner's 2^nd Affidavit was sworn on or about June 17, 2004 1 and filed on June 18, 2004. The Respondent's Affidavit in Reply was sworn on September 1, 2004. The Petition seeks an order for sale and a division of proceeds in equal shares.

4. The principal dispute from the outset and at trial was whether the Plaintiff is bound by a sale agreement he admits he signed dated January 11, 2004 and modified on January 14, 2004 according to which he agreed to limit his claim to the sum of $45,000 less the legal costs of transferring his interest in the property to the Respondent (the ‘Sale Agreement’). In 2006 the Property was valued at $900,000; it is now likely worth far less than that.

5. It was common ground at trial that if the Sale Agreement was not enforceable the disparity in contributions made by the parties to the equity in the Property was such that the Respondent was entitled (in net terms) to more than a 50% share in net terms. It was also self-evident that the Respondent never commenced a Writ action

against the Petitioner to enforce the Sale Agreement as appears to have been contemplated by the June 4, 2004 Order.

6. At the end of the trial, it being clear that the financial detail had not been addressed in sufficient detail in evidence, counsel sensibly agreed to seek the Court's determination of two broad issues only:

• i. the enforceability of the Sale Agreement;

• ii. the legal principles according to which the parties' respective shares in the Property ought to be calculated.

Findings: the enforceability of the Sale Agreement

The Agreement

7. Mr Cooper for the Petitioner took no point on the absence of stamp duty being paid on the Agreement. Had the point been taken for the first time at this late stage, Mr Woolridge could fairly have sought an adjournment and paid the requisite duty rendering the Sale Agreement formally admissible.

8. The Agreement witnessed by the parties' sister and signed as of January 14, 2004 provided as follows:

‘January 12, 2003

To Whom It May Concern:

Please be advise [sic] that I Kingsley Owen Young agree to sell my portion of property located at #64 Tribe Road No.5 Paget, PG04, for the sum of $45,000 (Four Five Thousand Dollars) to Lionel Hubert Young.

I further agree that the legal fees and stamp duty incurred in this transaction will be deducted from the above sum. The above payment to be made in installments [sic] on sale of the property in question.’

Consideration

9. In the course of argument I raised with the Petitioner's counsel the question whether there was on the face of the Sale Agreement any consideration. Mr. Cooper suggested that the purchase price met the consideration requirement and Mr Woolridge saw no need to address this issue as I did not press my concerns. Having taken time to reflect upon this point further, this issue merits brief consideration even though, on balance, I am satisfied that the Agreement is not unenforceable for want of consideration.

10. In a final contract for the sale of goods, the purchaser agrees to pay the purchase price in consideration for the seller transferring title to the relevant goods. Under a conveyance of land for valuable consideration, the vendor transfers his interest in the land in consideration for the purchase price paid by the purchaser. An executory contract for the sale of land made in contemplation of a subsequent conveyance is ordinarily made in consideration for the vendor agreeing (conditionally) to sell to the purchaser and no other person and the purchaser not simply agreeing (conditionally) to buy the relevant property. The purchaser also ordinarily tenders a deposit which he will lose if he wrongfully fails to complete the proposed sale. The deposit compensates the vendor from the risk that he might lose the opportunity to sell to a third party during the currency of the sale agreement in the event that the purchaser wrongfully fails to complete the sale.

11. The Sale Agreement, according to the Respondent's implicit case, constituted an agreement restricting the Petitioner's right to dispose of his interest in the Property in return for the Respondent's unconditional commitment to complete the purchase for the agreed price within a reasonable time (in the absence of any express completion date). In my judgment the consideration exchanged consisted of reciprocal unconditional promises to complete the sale within a reasonable time; the purchase price (apparently tendered at a later date) would have been the consideration for the actual conveyance assuming all the express and implied conditions for completion had been satisfied.

Undue influence

12. The Petitioner complained that he concluded the Sale Agreement without seeking legal advice under pressure of criminal proceedings commenced against him which were distressing to his family and created a need for him to rapidly distance himself from any connection with the Property upon which his mother resided. The unusually acute distress caused by his arrest also derived from the fact that at the material time his brother and (now) sister-in-law were senior Corrections and Police officers respectively. In his Skeleton Argument, Mr Cooper submitted simply: ‘Such agreement can be considered to be tainted by undue influence.’

13. The Respondent in his evidence denied explicitly pressuring the Petitioner to sell his share. But he admitted that he drafted the Sale Agreement. It seemed to be common ground that not long before the Sale Agreement was consummated the Petitioner was proposing to acquire the Respondent's interest in the Property. On January 6, 2003 the Petitioner was arrested at his place of employment on suspicion of being concerned in the importation of cannabis in Bermuda and a search warrant was subsequently executed at the family home. The Sale Agreement was initially signed on January 11, 2003, less than a week after the Petitioner's arrest.

14. I find that the Petitioner signed the Sale Agreement under extraordinary circumstances in which he felt morally culpable for jeopardizing the reputation of a respectable family, putting the security of the Property at risk (through possible forfeiture proceedings under the Proceeds of Crime Act 1997 were he to be convicted), distressing his mother and potentially damaging the careers of his sibling and the latter's fiancé. It is impossible to believe that the Respondent, the drafter of the Sale Agreement, did not use these circumstances to encourage the Petitioner to consummate the transaction as quickly as possible. In the event the Petitioner was subsequently cleared of the criminal allegations for which he was arrested.

15. The Petitioner's brother would not have perceived of the pressure he asserted as illegitimate pressure because the Respondent was quite justified in being outraged at the fact the Petitioner had, by accident or design, embroiled the family Property in a highly embarrassing criminal investigation. In any event, the Petitioner himself gave the distinct impression in his oral evidence that he signed the Agreement primarily out of concern for his mother. I am bound to find that the Sale Agreement was not concluded as a result of an ordinary arms' length negotiation. In addition the Petitioner has satisfied me that the Sale Agreement reflected disadvantageous terms in that:

• i. the Petitioner agreed the consideration of $45,000 (gross) based on his contributions to the mortgage alone;

• ii. although the Petitioner contributed approximately 1/6^th to the deposit advanced in connection with the acquisition of the Property, his legal interest was half. According to a September 2003 valuation of the Property, the Petitioner was potentially entitled to 50% share of $420,000;

• iii. even if the Petitioner's equitable interest was only 1/6^th, $70,000 was substantially more than the price agreed under the Sale Agreement.

16. Did these circumstances amount to undue influence? The Bermudian courts do not appear to have extensively considered the scope of the doctrine of undue influence in the contractual context. No authority was cited by either counsel on this point. Riihiluoma J (Acting) on behalf of this Court considered this topic in the context of a summary judgment application involving a different factual matrix in Dunkley v ClarkeBDLR[2004] Bda LR 43 and opined (at page 8) that the relevant law was adequately summarised in Royal Bank of Scotland plc v EtridgeELR[2002] 2 AC...