Mulcahy & Keaton v Mulcahy

• Jurisdiction: Ireland
• Judge: Miss Justice Laffoy
• Judgment Date: 06 May 2011
• Neutral Citation: [2011] IEHC 186
• Judgment citation (vLex): [2011] 5 JIC 0601
• Court: High Court
• Date: 06 May 2011

[2011] IEHC 186

THE HIGH COURT

[No. 2901P/2005]

Mulcahy & Keaton v Mulcahy

BETWEEN

ORLAGH MULCAHY AND SUSAN KEATON

PLAINTIFFS

AND

KIERAN MULCAHY

DEFENDANT

MCDERMOTT CONTRACT LAW 2001 PARA 13.12

MCDERMOTT CONTRACT LAW 2001 PARA 13.14

BRITISH AIRWAYS BOARD v TAYLOR 1976 1 WLR 13 1976 1 AER 65

CONTRACTORS BONDING LTD v SNEE 1992 2 NZLR 157

CIBC MORTGAGES PLC v PITT 1994 1 AC 200 1993 3 WLR 802 1993 4 AER 433

GREGG v KIDD 1956 IR 183

CARROLL v CARROLL 1999 4 IR 241 2000 1 ILRM 210 1999/4/699

DELANY EQUITY & THE LAW OF TRUSTS IN IRELAND 4ED 2007 682

CARROLL v CARROLL 1998 2 ILRM 218 1998/3/626

GREALISH v MURPHY 1946 IR 35

DELANY EQUITY & THE LAW OF TRUSTS IN IRELAND 4ED 2007 702

ALEC LOBB (GARAGES) LTD v TOTAL OIL GB LTD 1983 1 WLR 87 1983 1 AER 944

KEATING v KEATING UNREP LAFFOY 24.8.2009 2009/30/7402 2009 IEHC 405

EQUITY LAW

Undue influence

Conveyance of property - Administration of testator's estate - Distribution of deceased parent's estate - Rectification - Whether conveyance should be set aside on grounds procured by misrepresentation, undue influence or duress - Whether actual undue influence - Presumption of undue influence - Whether substantial benefit obtained - Whether conveyance constituted unconscionable bargain or improvident transaction - Laches - Contractors Bonding Ltd v Snee [1992] 2 NZLR 157, Carroll v Carroll [1999] 4 IR 241 and Alec Lobb Ltd v Total Oil [1983] 1 WLR 87 considered - Claim dismissed (2005/2901P - Laffoy J - 6/5/12) [2011] IEHC 186

Mulcahy v Mulcahy

Facts A dispute had arisen between siblings in relation to a property which had been bequeathed to them in a will. Subsequently efforts were made by one the sibling (the defendant) to purchase the interests of his siblings in a particular property. Two of the siblings disposed of their interests (the plaintiffs) but subsequently contended that they had only done so on the basis that certain events were to occur which included that their mother was to live in the property in question along with the defendant. A fourth sibling declined to sell her share in the property. The defendant disputed this evidence that the agreement was conditional. In these proceedings the plaintiffs sought to set aside the conveyances of their shares in the property on the basis that their execution of same was procured by misrepresentation and/or undue influence and/or duress. In the alternative an order was sought to set aside the conveyances on the basis that they otherwise constituted an unconscionable bargain and/or improvident transaction.

Held by Laffoy J in dismissing the claim. It could not be said the defendant had promised to move his family into the premises in question along with this mother. The court was not satisfied that pressure, either emotional or otherwise, was exerted upon the plaintiffs to complete the transactions. Although a presumption of influence could be shown it was not possible to conclude that the defendant had obtained a substantial benefit at the expense of the other parties. The consequences of the conveyances were not overreaching or oppressive.

Reporter: R.F.

1 Judgment of Miss Justice Laffoy delivered on 6th day of May, 2011.

1. The parties

2 2 1.1 The plaintiffs and the defendant are siblings and they are three of the four children of Cathal Mulcahy deceased (the Testator) and Hilda Mulcahy deceased (the Executrix). The children of the Testator and the Executrix, in order of age, are the defendant (Kieran), the second plaintiff (Susan), Anna McDonald (Anna), and the first plaintiff (Orlagh), who is the youngest. The Testator died testate on 25 ^th March, 1982 and probate of his last will, which was dated 25 ^th March, 1982, was granted to his widow, the Executrix, on 14 ^th April, 1983. The Executrix died after these proceedings were commenced on 18 ^th January, 2006.

3 3 1.2 Orlagh was nineteen years of age at the date of the Testator's death. At the time she was studying Fine Arts at third level. Between 1987 and 1997 she lived full-time in London, first studying for a post-graduate qualification at the Slade and, subsequently, working. Anna, who, although she is not a party to these proceedings testified on behalf of the plaintiffs, was finishing third level education when the Testator died. From 1984 onwards she lived outside Ireland, first in South Africa and subsequently in London and from June 2004 in Hong Kong. Although she has retired, she formerly worked as a stockbroker. Susan, who has a Masters Degree in Economics, had left Ireland for the United States of America before her father's death. At all material times she resided in the United States, where for a time she carried on her own retail business and subsequently worked in banking. I am satisfied, having heard their testimony, that each of the daughters of the Testator and the Executrix was capable of understanding the manner in which the estate of the Testator was being administered after the death of the Testator, to the extent to which she was informed of what was happening, which was very limited. Indeed, Anna and Susan, having regard to their education and business experience, in my view, had capacity beyond the norm for a person without legal training to understand what was proposed, and, in general terms, what happened, in relation to the administration of the estate of the Testator, although they would not necessarily have understood the mechanics of a conveyancing transaction. I make those observations because, although this case concerns claims by Susan and Orlagh to have Conveyances of their respective one undivided eight shares of a property which passed under the will of the Testator set aside or rectified, the issues in this case have become wholly enmeshed in the administration of the Testator's estate.

4 4 1.3 The defendant is a chartered accountant by profession. His wife, Rowena Mulcahy (Mrs. Mulcahy) is a solicitor in the firm of Mulcahy Robinson which was originally on record for the defendant in these proceedings.

2. The will of the Testator

5 2 2.1 The will of the Testator, which was incorrectly referred to as "the purported" will in the statement of claim, was made on the day the Testator died, that is to say, 25^th March, 1982. It was drawn up by Mrs. Mulcahy. In it the Testator appointed the Executrix to be sole executrix thereof. He devised the family home to the Executrix for her own absolute use and benefit. He devised the residue of his estate to his four children, Kieran, Susan, Anna and Orlagh, in equal shares for their own absolute use and benefit. It is clear on the evidence that the Testator was aware that he was terminally ill when he made the will. Indeed, prior to making the will he had been arranging his affairs. At the time, inheritances between spouses were not wholly exempt from capital acquisitions tax. If the Testator had devised and bequeathed all his property to the Executrix, a substantial liability to capital acquisitions tax would have arisen. It is common case that the manner in which the Testator disposed of his assets was designed to obviate that eventuality.

6 3 2.2 Following the Testator's death, there was an understanding between the Executrix and her four children that the Executrix would have the benefit of the residuary estate of the Testator for her lifetime. However, there is a conflict on the evidence between Kieran, on the one hand, and his sisters, on the other hand, as to the basis of that understanding. I will return to that conflict, having outlined how the estate of the Testator was administered.

3. Administration of the estate of the Testator

7 2 3.1 An Inland Revenue Affidavit sworn by the Executrix on 17 ^th February, 1983 disclosed that the assets of the Testator had a net value of IR£295,271.29. The family home, which I assume was vested in the Executrix in the course of administration of the estate, because it was subsequently sold by her, was shown as having a value of IR£90,000. The Testator's undivided moiety of the property in dispute in these proceedings, No. 26 Temple Road, Rathmines in the City of Dublin (No. 26), was shown as having a value of IR£90,000. The remainder of the assets comprised primarily cash, shares quoted on the Irish and London Stock Exchanges and life policies.

8 3 3.2 The Testator's title to his interest in No. 26 was derived from a Conveyance dated 14 ^th July, 1981 made between Isaac Elkinson of the one part and the Testator and the Executrix of the other part. While on the face of that conveyance the Testatrix and the Executrix acquired No. 26 in fee simple as joint tenants, it was always accepted by the Executrix that she and the Testator acquired No. 26 as tenants in common and that half a share in the property passed under the residuary clause in the Testator's will, so that each of the residuary beneficiaries, Kieran, Susan, Anna and Orlagh, acquired one undivided eight share in the premises. That is consistent with the execution by the Executrix of an Assent dated 9 ^th January, 1986 (the Assent) in her capacity as personal representative of the Testator assenting to the vesting of "the undivided one half moiety of" the Testator in No. 26 in Kieran, Susan, Anna and Orlagh as tenants in common in equal shares in fee simple. The Assent was registered in the Registry of Deeds on 8 ^th April, 1986. Notwithstanding the execution of the Assent, Mrs. Mulcahy continued to receive the entirety of the rent payable out of No. 26 which, at the time, was subject to a commercial lease and two residential tenancies. That she did so was in accordance with the understanding of the residuary beneficiaries.

9 4 3.3 Notwithstanding that following the death of the Testator the Testatrix was in receipt, with the approbation of the residuary beneficiaries, of the income from the...