Purchase of property — Purchasers entitled to discounted price under right-to-buy scheme — Purchasers’ son undertaking to pay mortgage — Agreement providing for son to take entire beneficial interest with right for purchasers to occupy for life — Whether presumption of undue influence arising — Claim dismissed
The claimant and her husband successfully applied, under the right-to-buy scheme, to purchase the council house of which they were tenants. Their position as council tenants entitled them to a 60% discount against the market value. They funded the purchase price by a mortgage, and agreed with the defendant, their son, that he should be responsible for the mortgage payments. That agreement was set out in a trust deed, which provided that the defendant would take the entire beneficial interest in the property, although the couple would have the right to live in the property on a rent-free basis for the remainder of their lives.
Following the death of her husband, the claimant applied to have the trust deed set aside on the ground that the transaction had been procured by undue influence on the part of the defendant. She submitted that: (i) the 60% discount should have been treated as an immediate contribution to the purchase price by her and her husband, giving rise to a 60% beneficial interest in their favour by way of resulting trust; (ii) the trust deed was disadvantageous to her and her husband, in that it deprived them of their beneficial interest; (iii) that disadvantage had not been cancelled out by the right to occupy; and (iv) the terms of the trust deed therefore called for an explanation, with the burden being placed upon the defendant to show that he had not used undue influence.
