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Dispute resolution


In some circumstances, it is possible for alleged gifts to be overturned. In order to do so a detailed analysis of the circumstances leading up to the alleged gift will need to be examined.

In the case of Scott v Bridge & Others, the court considered whether three transactions stated by the recipients to be gifts were in fact gifts.

The law

Under English law, a gift is the voluntary and immediate transfer of property from one person (the donor) to another (the donee). In order for a gift to be valid three elements must be met to be legally effective:

  • The intention of the donor to give the gift to the donee;
  • The delivery of the gift to the donee; and
  • The acceptance of the gift.

 

The claim

The claimant, Mrs Lorina Scott issued proceedings in relation to various gifts allegedly made by her to family members.

Her claim comprised three parts:

  1. A property known as 1 Southgate in Barnsley which was occupied by the parents of Lorina’s former daughter-in-law, Charlotte as local authority tenants.Lorina contended that in 2016 when Charlotte's parents exercised a right to buy the property, she paid the remainder of the purchase price after deduction of the statutory discount. Those monies, she asserted, were not intended to be a gift or a loan. She contended that it was the parties’ implied, inferred or imputed intention that she and Charlotte’s parents should each have a beneficial interest in the property proportionate to their respective contributions to its purchase, namely the 50% statutory discount attributable to Charlotte's parents and the cash payment by Lorina for the balance of the purchase price.
  2. The property in which she lived, 13 Lacy Street, Pontefract. Lorina inherited this property from her late parents. In 2016 the property was transferred to Charlotte’s son from a previous relationship, Zeus. Lorina did not recall signing any purported transfer of the property to Zeus, but she did recall signing a document which Charlotte had led her to believe would transfer the property from her deceased parents to her. The licensed conveyancer instructed to deal with the transfer did not meet or take any instructions from Lorina, all instructions being taken from Charlotte and the witness on the transfer document was someone with an address local to Charlotte and who Lorina did not know and had not met. Lorina contended that she did not intend to gift this property to Zeus and sought an order to transfer title of the property back to her.
  3. Lorina’s bank account with First Direct. Lorina had given Charlotte authority to access this account for Lorina’s benefit. However, during the period September 2016 to April 2018 some £94,600 was transferred from her account to an account in the name of Zeus. Lorina stated that she did not intend to give these monies to Zeus and sought the return of them.

 

The defence

Charlotte and Zeus contested the proceedings. They asserted that the purhcase moneies in respect of the property at 1 Southgate were intended to be a gift to Zeus and that the legal and beneficial interest in the property vested in them absolutely.

In relation to 13 Lacy Street, they contended that Charlotte gave instructions to the licensed conveyancer with the knowledge of, or authority from, Lorina. They claimed Lorina had decided to give the property to Zeus immediately although she would continue to reside in it until her death.

As to Lorina’s bank account, they accepted that the transfers had been made but said that, save as regards one payment for £1,700 on 5th April 2018, they were all made with Lorina's authority. The payments were transferred into two accounts in Zeus's name. However, one of these accounts was operated by David,Lorina’s son, and also Charlotte's former husband, as his business account and they maintained that Lorina was aware this account was in reality David’s account. As to the other account, they stated that the sums transferred thereto were intended to be by way of an advance inheritance for Zeus.

Further of the monies transferred to that account, some £40,000 had been lent to David, although by the time of the trial £15,000 had been repaid by him. David, who was joined as a defendant to the proceedings, denied receiving any loan monies, although he did admit that he operated the other account as his business account.

 

What did the court find?

Having heard oral evidence from Lorina and all the defendants, the judge made the following findings of fact.

In relation to 1 Southgate, the judge considered that whilst Lorina had advanced monies as regards the purchase price she had no intention of doing so on the basis that these monies were a gift to Charlotte’s parents or indeed, Zeus, although she had in mind that in doing so she would be in a position in the future to benefit her grandchildren, including for this purpose Zeus. Accordingly, the judge found that she intended to invest in the property, that is to acquire a share in it to enable her to be in a position to leave her share for the benefit of all her grandchildren, including Zeus. However, he equally considered that Charlotte’s parents believed that Lorina was making a gift, not to them but to Zeus (and Charlotte's other son with David, Nathaniel) and thus their intention was that she should not have any interest in the property.

As to 13 Lacy Street, the judge considered it necessary to take into account the fact that Mr Saunders, the witness to the transfer document had not been called for the purposes of giving evidence. The judge heard that Lorina’s solicitors had attempted to trace him and obtain evidence from him regarding the circumstances in relation to the signature of the transfer document but Charlotte & Zeus had done little if anything to obtain evidence from him. This failure on the part of the defendants to even attempt to obtain Mr Saunders’ evidence was, in the judge’s view, something that he must take into account when considering Lorina’s allegation that she did not sign the transfer document as against their allegations that she did. On the evidence before him, the judge found that Lorina did not execute the transfer as alleged by them. However, he did find that Lorina had executed the transfer document with the intention of transferring the property to her own name, the property still being registered in the names of her late parents.

This left the transfers from Lorina’s bank account. The judge accepted Lorina’s evidence that she did not instruct the transfers to be made and that she did not see any bank statements at the time. In reaching his conclusions, the judge took into account various factors including the fact that she was physically unable to deal with her own financial affairs and the inherent improbability of a loving grandmother preferring one “grandchild” over the others. Having regard to the same, the judge found that Lorina did not authorise the transfers to Zeus and had no intention of gifting these monies to him. He also found that Charlotte and David both knew Lorina had not authorised the transfers and that she did not know about them until after they had separated and when David then decided to tell his mother about the transfers.  

The judge was satisfied that Charlotte and David agreed between themselves that these transferred would be made. As for Zeus, in whose name the bank accounts to which the transfers had been made were opened, the judge considered he knew much less of what was going on than his mother and step-father but at the same time, he knew very well that something was up and that he should say nothing. He was on notice, but made no enquiries.

These transfers amounted to just under £90,000. This left a balance of about £6,000 in respect of which the judge was unable to make a finding one way or the other.

 

Judgment

Having regard to the findings and the law, the court made the following judgments as regards the three heads of claim:

In respect of 1 Southgate, having held that Lorina did not intend to make a gift of the purchase price to anyone but instead intended to invest in the property for a half share that she could then in due course give or leave to her grandchildren, the court held there was no valid gift in respect of these monies.

In the circumstances, the judge made an award that Lorina be entitled to repayment of money.

As to the property at Lacy Street, again having held that Lorina did not intend to divest herself of the property at all, the court held the transfer of the same to Zeus could not amount to a valid gift. Accordingly, the court made an order that the registry be rectified so as to show Lorina as being the proprietor of the property for the future, there plainly having been a mistake in registering Zeus as the proprietor of the property.

In relation to the bank transfers, as there was no authority on the part of Lorina to make these account transfers. The court awarded judgment in her favour as regards the sum of £89,500. The judge relied on the principles of unjust enrichment in order to do so, namely finding that Zeus had been unjustly enriched at the expense of Lorina in circumstances which the law considered to be unjust.

 

Conclusion

This case demonstrates the importance of ensuring that both donor and donee to any transaction involving an alleged gift both know, understand and agree that the property in question is intended to be a gift, that the donor is intending to divest themselves of the property and that the recipient accepts the gift. If there is not full knowledge and intent from all parties there is a real risk that the gift will be found not be a gift at all.

 

How we help

How we can help? If you need to seek legal advice with regards to a probate claim, our team of experts are ready to assist you. Get in touch today on [email protected] . Alternatively, read more on protecting and preserving your wealth with our wills, trusts, and probate team.


Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.

 

Get in touch

If you have any questions relating to this article or have any legal disputes you would like to discuss, please contact our dispute resolutions team.

[email protected]
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