B2/01/2677
Neutral Citation Number: [2002] EWCA Civ 624
IN THE SUPREME COURT OF JUDICATURE                            
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE TAUNTON COUNTY COURT
(His Honour Judge Darlow)
Royal Courts of Justice
                                    Strand
                                    London WC2
 
                          Monday, 15th April 2002
B e f o r e :

MR JUSTICE SUMNER

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GRAHAM MUMBY

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MRS C. HARDINGHAM
Applicant
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(Computer Aided Transcript of the Stenograph Notes
of Smith Bernal Reporting Limited
190 Fleet Street, London EC4A 2AG
Telephone No: 0207-421 4040
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Official Shorthand Writers to the Court)
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THE APPLICANT appeared in Person.

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J U D G M E N T
1.	MR. JUSTICE SUMNER: This is an application for permission to appeal by Mrs Hardingham, the defendant in the original proceedings, against the judgment of His Honour Judge Darlow, given at the Taunton County Court on 12th November 2001. The claimant, Mr. Mumby, had sought to recover a sum of £60,000, being money lent by him in July 1998 to both Mr. and Mrs Hardingham. The original loan was for a period of four months. There were two subsequent agreements to which both Mr. and Mrs Hardingham were signatories, the first of which capitalised the unpaid interest, and the second secured the debt against Mr. and Mrs Hardingham's home, which is in Devon. By the date of the hearing there was no dispute but that the capital and interest then outstanding totalled £86,032. There had been no repayments.
2.	Mr. Mumby sought to recover that money from Mr. Hardingham. This proved unsuccessful. Mr. Hardingham had been declared bankrupt. Subsequently Mr. Mumby tried to recover his money from Mrs Hardingham. He did so by means of the present claim in the county court. Mrs Hardingham, at the beginning and at the hearing, acted in person. She was represented for a brief period between late October and early November 2001 in circumstances to which I shall come.
3.	By her defence to the claim she raised one issue. She admitted signing the original and the subsequent agreements to which I have referred. Her signature was however obtained by the undue influence of her husband. She failed at the hearing to establish that defence. Accordingly, after a hearing which went into two days, judgment was entered against her. She now seeks permission to appeal to this court.
4.	This court will not grant permission to appeal unless there is a realistic prospect of success at any full hearing; in other words, there is a realistic as opposed to a fanciful prospect of success. Mrs Hardingham, in her appeal notice and before me today, raises a number of points. Firstly, she says that she did not have a fair hearing. This was because of a refusal by public funding to continue to permit her to be represented, with the result that with only three days to go before the hearing, she had to prepare her own case. This, she said, left her hugely disadvantaged. As a result, she was unable successfully to contest the case presented on behalf of Mr. Mumby by counsel and solicitor. Secondly, the judge was wrong to hold that there was no undue influence. Thirdly, witnesses, who could have been called for the hearing and would have assisted her case, could not in the time be organized to be present for that hearing.
5.	In relation to the first issue, namely that of a fair hearing, Mrs Hardingham explained that the case was listed for Monday, 12th November 2001. (It appears that the judgment was given not on 12th November, as it says on the face of it, but on the 13th). On 20th October she been granted full public funding. She had seen a solicitor. He had prepared a statement for her and her husband, though they both now feel that his preparation and the contents of those statements was inadequate. On Thursday, 8th November public funding was withdrawn. It is not clear to me that Mrs Hardingham, even now, knows why that happened. It left her with only three days to prepare the case. She felt that this was insufficient time.
6.	At court His Honour Judge Darlow asked her if she wanted an adjournment, indicating that he was not inviting such an application. In the event, Mrs Hardingham did not ask for an adjournment and accordingly the hearing went on. Mrs Hardingham told me this morning that she only asked a few questions of Mr. Mumby but that she was in the witness-box for about an hour and a half, her husband for a much lesser period. She clearly feels now that at that hearing she was at a major disadvantage. She found the way that she was cross-examined by counsel for Mr. Mumby to be particularly unpleasant, though she accepts that the judge did protect her to an extent.
7.	The parties were given overnight to prepare their final submissions. These were delivered on Tuesday, 13th November, and judgment followed on the same day. I entirely accept that Mrs Hardingham feels a real sense of grievance about the way that such an important hearing for her, her husband and her family went on. But this court cannot investigate why public funding was withdrawn. That is a matter for the body responsible. She was also, I have to note, given the opportunity to apply for an adjournment on the Monday. She did not take it. It may be she sensed that, if she had proceeded with an application for an adjournment, it might not have been successful. I do not know, but she was given the option and, in the event, she accepted that the hearing could go on.
8.	Hearings with counsel on one side and a litigant in person on the other are never easy. They are not easy for the litigant in person who feels, understandably, that they are outgunned, even when they are able to give a perfectly good explanation and to ask sensible and relevant questions of the various witnesses. It is not easy for the court who has to decide issues of fact as was required in this instance. It was not to be expected that Mrs Hardingham would make submissions on the law. But she told me today that she was able to question Mr. Mumby about the crucial meeting which took place on 20th July 1998 when the original agreement was made.
9.	There is nothing that I have seen, either in the papers or been referred to by Mrs Hardingham, which leads me to criticize the judge in any way at all for his conduct of the case. He clearly let the parties have a full say. He understood plainly from his judgment what was in dispute and he gave time overnight for final submissions to be prepared. The withdrawal of public funding is obviously a matter of regret, but it cannot in my judgment influence the question of a fair hearing where no specific allegations are made, other than those to which I have referred. Whilst I well understand Mrs Hardingham's misgivings about the hearing, I have come to the clear decision that there is no prospect of success on that ground available to her today.
10.	On the substantive issue of undue influence the judge found, as I have already indicated, that that was not proved before him. He held that there was no impropriety by Mr. Hardingham and no misuse of a position of influence. Subject to whether he acted upon sound principles of law, those are the essential findings of fact that he made. As will already be obvious, it was on his findings of fact that the whole case depended.
11.	Before I come to that, it is helpful if I say a few words about the background. The Mumbys and the Hardinghams, as I understand it, had been friends for some time. The Hardinghams moved to Devon. Mr. Hardingham wanted to start a business, based, I believe, on printing and design work. He had an opportunity to purchase machinery at an advantageous price, provided that he could provide the necessary finances within a short period of time. It seems that he took the understandable decision that trying to raise the necessary sum from any institution would take longer than the business opportunity would allow. Accordingly, he turned to a friend. Mr. Mumby came to visit. It seems common ground that he went to Mr Hardingham's place of work. It was a business which was at that time owned and run by a limited company. He negotiated with Mr. Hardingham. Subsequently both went to Mr. and Mrs Hardingham's home, as a result of which this agreement was signed.
12.	It is plain that by that time Mr. Mumby, for whatever reasons it may have been, had decided that if he was going to lend money it was not going to be to a limited company but to individuals known to him. That is what happened. Mrs Hardingham's case, as she repeated to me today, was that she knew little, if anything, about the business background to this transaction. She was, to use her expression, hustled into signing the agreement. She did not have time to understand the consequences; she did not receive independent advice. The result has been that not only has the business failed, but Mr. Mumby is now anxious to obtain whatever funds he can out of that which he lent, even if it means that the family home has to be sold in order to achieve it.
13.	Mrs Hardingham also complains that the subsequent two agreements to which I have referred were only signed because of threats by Mr. Mumby that if they were not signed, then he would tell Mr. and Mrs Hardingham's parents. This was something which, understandably, they wished to avoid because of the upset and distress that that would cause. She accepted today that she was of course by then bound by the original agreement. If the enforcement of the original agreement meant that the only way she could raise funds was to sell her home, she could not safeguard it from such action.
14.	I wondered if it would help if Mr. and Mrs Hardingham had an opportunity to read one of the leading speeches in the House of Lords' decision of the Royal Bank of Scotland v Etridge [2001] 3 WLR 1021. I felt that the start of the speech of Lord Nichols of Birkenhead might help them understand the issue of undue influence as it has now been set out. That decision was binding upon the learned judge as it is binding on me. It was of particular value because it gathered together eight similar cases in relation to undue influence. In the course of his speech Lord Nichols demonstrated the balance that the law tries to strike between permitting institutions properly to make loans, even where they are based upon property owned by the husband and wife and allowing sufficient protection to wives who claim that the loan, to which they may well have given their signature, only came about because of undue influence.
15.	I am not sure how helpful my suggestion was, but it may have given them an insight. I appreciate that those of us who are more familiar with reading law reports would find it considerably easier than they did. I cite one paragraph from the speech which is relevant to the present position. Paragraph 30:
“I return to husband and wife cases. I do not think that in the ordinary course a guarantee of the character I have mentioned is to be regarded as a transaction which, failing proof to the contrary, is explicable only on the basis that it has been procured by the exercise of undue influence by the husband. Wives frequently enter into such transactions. There are good and sufficient reasons why they are willing to do so despite the risks involved for them and their families. They may be enthusiastic. They may not. They may be less optimistic than their husbands about the prospects of the husband's businesses. They may be anxious, perhaps exceedingly so, but this is a far cry from saying that such transactions as a class are to be regarded as prima facie evidence of the exercise of undue influence by husbands.” 
16.	I then went through the judgment of His Honour Judge Darlow with Mrs Hardingham in an attempt to enable her to make all the points that she wished to make and to identify those parts of his findings which she disputed.
17.	The judge set out the background. He mentioned a point that again has concerned Mrs Hardingham today, namely that there was some discussion or some mention in the background that Mr. Mumby was trying to obtain interest on his loan by a means that might not be lawful, because it might avoid the payment of income tax. As the judge correctly pointed out, whatever might have been the idea about that, there is no way that any unlawful proposal about the payment of interest could thereby absolve Mr. and Mrs Hardingham from repaying the loan if the loan was a perfectly lawful one. He identified the issue. He set out the background and the various agreements, and in summary form stated clearly the case which Mrs Hardingham was relying upon.
18.	He referred to the case of R v Bank of Scotland which I have just mentioned, and in two short paragraphs summarised the main principles which arise from that decision, a summary which I accept. He pointed out the reasons why Mrs Hardingham had to demonstrate that this was a case of undue influence. Again, I accept that that was correct. He then set out the relevant background but made it clear that in doing so he was making findings of fact.
19.	He described Mrs Hardingham as an articulate and intelligent woman, well able to hold her own in a discussion and with some business experience. Mrs Hardingham understandably feels that that is a back handed compliment because, whilst acknowledging her obvious abilities, it nevertheless meant that too much was expected of her on that occasion. I understand what she means. The learned judge made it plain in his findings that there were a number of matters which she understood before the agreement was signed. They were that her husband was starting a new business, he had a need for money, and Mr. Mumby was a possible source of a loan. But he equally found that she had delegated to her husband everything to do with the business, as is plain is her case before me today.
20.	There was one specific finding with which Mrs Hardingham takes issue. That was the finding that in signing the document she knew the reason why her and her husband's signature was being sought, which was that Mr. Mumby felt that he stood a better chance of recovering the money from them if the business failed to take off. Mrs Hardingham accepts that that is what she said in her final submissions, but she said that the judge misunderstood the position. It was not what she understood at the time. It was something which she learned afterwards as she became more familiar with the whole of the background and the nature of the discussions that Mr. Mumby had had with her husband. I accept that that is a matter that she would seek to argue but, for reasons to which I shall shortly come, I do not think that at the end of the day it makes a difference which I need to pursue.
21.	The judge also found that Mr. Hardingham had at the time huge enthusiasm and trust in the business, something which in the ordinary way no doubt would be contagious within a family. His assertions that the business would be able to repay the money the learned judge put in the category of optimism and hyperbole, something that one would expect a husband to say to a wife in those circumstances. He did not accept in terms what the husband said, namely that his wife was not aware of the agreement's implications. He equally did not accept that she had been hustled into signing it.
22.	As he makes clear in his findings, his assessment of Mrs Hardingham was that she would not have hesitated to say, “Hang on for a minute” or “I do not want to sign this; I need time”, if that is what she had genuinely felt and wanted at the time. She did not do so. Subsequently, he also found that Mr. Hardingham may well have kept his wife ignorant of what was going on, no doubt because, regrettably, the business went rapidly into decline. He concluded that this was, as indeed it plainly is, a very sad case.
23.	It is quite apparent, on the findings made by the judge, that there could be no finding of undue influence. He expressly found against Mrs Hardingham on that. He did so in a whole series of findings, not just one or two, but a whole series throughout this judgment. As I explained to Mrs Hardingham at the beginning of this application, parties can appeal against findings of fact made by judges at first instance, and on occasions successfully. But it is never an easy task for any appellant whose main prospect of success relies solely upon that. In this instance, it was very much a question of the judge taking a view of the parties appearing before him. He did not accept -- and this is crucial -- that Mrs Hardingham's account of that meeting on the morning of 20th July 1998 was correct. He accepted Mr. Mumby's account that they had had a discussion beforehand. It was not something which Mrs Hardingham was hassled or rushed into.
24.	Whilst I have considerable sympathy for the predicament in which Mrs Hardingham is now placed, I see no prospect at all of those essential findings of fact being upset were I to give permission to appeal. The parties should know that I have not only read the judgment but I have read the whole of the papers which were before the judge in this matter. I do not go further into the background because for this application I do not think that it is necessary. I have, however, been anxious to ensure that no point has been left unmentioned and no issue not considered in the course of this very important application. But my clear conclusion is that, were I to give permission to appeal, this appeal would be bound to fail. Regrettably I would not be helping Mrs Hardingham were I to give her an opportunity to incur or become liable to further costs against herself more than that which has been incurred.
25.	Mr. Hardingham has also attended today. I have given him an opportunity to add anything that he wished to do so. I am grateful for the careful and polite way in which this matter has been presented to me, but I regret to say that there is no realistic propsect of a successful appeal against this clear and careful judgment, distressing though I appreciate it is to Mr. and Mrs Hardingham. Accordingly, for the reasons that I have set out shortly, in my judgment I should dismiss this application.
Order: Application refused.