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Macklin v Dowsett [2004] EWCA Civ 904

Undue influence; option agreement; elements of undue influence

[276 words)

Facts

Dowsett was in a dire financial situation. He had a bungalow that was condemned by the local authority. He was able to obtain planning for the building of a new bungalow in the old one’s place – however, construction had to commence within 5 years of the issue of the planning permission. Some time later, the demolition was carried out on his old bungalow, following which he lived in a caravan. Acting upon legal advice, Dowsett eventually sold his land to the Macklins upon the condition that he could continue to live there rent-free until the end of his life. Shortly before its expiry, the Macklins started preliminary works in order to save the planning permission. Dowsett entered into another contract, according to which he had to build the new bungalow within the next 3 years or otherwise his land would have to be surrendered in return for only £5,000.

Issue

Dowsett claimed that he had financial problems as a consequence of which he was in a significantly weaker bargaining position than the Macklins. The Macklins were aware of his situation so Dowsett could have easily been exploited. The first instance judge rejected Dowsett’s view.

Held

Holding in favour of Dowsett, the Court of Appeal was of the view that a relationship of ascendancy and dependency existed between the parties, and this raised a presumption of undue influence. Even in the absence of any wrongdoing, it is possible for a transaction to be so manifestly disadvantageous to the transferor, that this fact alone can evidence an ascendancy/dependency situation. Consequently, undue influence was established and the Court was able to intervene to set aside the second agreement.


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