Williams O. Victoria V E. A. Franklin (1961)
This is an appeal from a decision of Bellamy, J., in which he determined that the respondent E. A. Franklin, was entitled to receive the compensation payable in respect of certain property which had been acquired by the Lagos Executive Development Board under the Town Planning Scheme applicable to Lagos. The property originally belonged to the late Vidal R. Cole and was purchased by him in the year 1929. The respondent in his Statement of Interest claimed that he purchased the property from Vidal R. Cole in 1938, whereas the appellants in their Statement of Interest said that the property formed part of the estate of the late Vidal R. Cole. In the course of argument in the Court below it was submitted on behalf of the present appellants that there was no sale in 1938, but that, if there was, it should be set aside on the ground that there was a breach of the fiduciary duty which the respondent, as a solicitor, owed to the late Vidal R. Cole.
The facts of this case are fully set out in the judgment of the learned Judge, and I would record here only the salient facts. The respondent is a solicitor and was in practice until 1942, when he became a magistrate, from which post he retired in 1953. He was a good friend and a relation of Vidal R. Cole, who was at all material times a blind man. In 1929 Vidal R. Cole purchased the property which forms the subject of the present dispute for a sum of £260.
The respondent at that time acted as solicitor and prepared the conveyance on the instruction of Vidal R. Cole. After the sale the respondent had further dealings with the property and possibly also collected the rents on behalf of Vidal R. Cole. In October 1929 the property was mortgaged as security for a loan of L130 to a Company which was later taken over by the Lagos Building Society. In 1935 the Company sought to exercise its right of sale as the payment of interest was in arrear, but the respondent intervened on behalf of Vidal R. Cole, and the proposed sale by auction was withdrawn. In fact, the respondent at that time paid the arrears of £10-13s-9d and Vidal R. Cole reimbursed him at a later date. In 1938 Vidal R. Cole was again in difficulties over the payment of interest and decided to sell the property with a view to repayment of the loan. The property was put up for auction, but withdrawn as the highest bid was less than £150. The respondent then purchased the property for £150, paying Vidal R. Cole £20 and taking over the mortgage liability. This transaction was known to F. Bola Cole and Sigismund Cole, who were present at the time, and the Building Society was informed of the sale. The reduced value of the property in 1938 as against 1929 was explained by the low value of property at the time and the fact that the building on the property was crumbling.
Vidal R. Cole died at the end of 1938 and the respondent applied, in his capacity as solicitor, on behalf of the then applicant for the administration of the estate, though he himself did not become an administrator. After the sale of 1938, the respondent paid the rates and also the capital repayment and interest on the mortgage. In 1948 the respondent (at a time when he was a magistrate and not in practice) paid off the mortgage debt, and the title deeds were then delivered to him at the request of the administrators of the estate in a letter signed by F Bola Cole, who was one of the persons present at the time of the sale to the respondent in 1938 (see exhibit L). The evidence also shows that in 1941 the respondent applied for permission to repair the property (see exhibit M) and in 1954 the respondent converted the buildings into five shops. No legal conveyance has been executed, but neither the administrators of the estate nor the descendants of the late Vidal R Cole have (prior to this case) sought to set aside the transaction of 1938 or to restrain the respondent from the acts of ownership which he has been exercising for over twenty years.
The learned Trial Judge found that there was a sale to the respondent in 1938, and said that there was no evidence that at or about the time of this sale the relationship of solicitor and client existed between the parties. He found also that a fair price had been paid for the property and that the equitable interest of the respondent had been converted into a legal estate and the rights of the original owner extinguished completely. In these circumstances he held that compensation was payable to the respondent.
I will deal fast with the last ground of appeal argued by learned Counsel, as it is convenient to deal with this first for the purposes of this judgment. This ground of appeal was that there was no proof that a sale took place in 1938, as no receipt for the payment of money was issued or tendered in the case. In my view the absence of a receipt is not conclusive and I agree with the finding of fact by the learned Judge which he stated in these words:
On the evidence before me I am satisfied, and I find as a fact, that the late Vidal R. Cole sold the property on or about 3rd March, 1938, to the first claimant for £150, that the purchase price, as agreed between the parties, was paid by a down payment of £20 and the transfer of the debt owing by the vendor to the Lagos Building Society Limited to the purchaser, and that the first claimant was then let into possession of the property by the vendor. I have no hesitation whatsoever in accepting the first claimant’s evidence. His evidence is supported by the letter dated 3rd March, 1938 from the vendor to the Lagos Building Society Limited (Exhibit ‘P’).
The main ground of appeal argued was that the learned Judge erred in his findings relating to the alleged fiduciary relationship between the parties. Learned Counsel argued that in order to give rise to a fiduciary relationship it must be established that the relationship of solicitor and client existed at the relevant time or that the relationship ought to be presumed to have existed or that a confidential or fiduciary relationship existed or must be presumed to have existed The learned Trial Judge found that the relationship of solicitor and client did not exist at or about the time of the transaction, but learned Counsel argued, rightly in my view, that this is not an end of the matter and one must go on to decide whether a fiduciary relationship must be presumed to have existed at the time of the transaction. The law on this matter is set out in the case of Allison v. Clayhills (1907) 97 L.T, page 709, which was cited by learned Counsel. In that case it was stated that:-
In considering whether in any particular transaction any duty exists such as to bring the ordinary rule into operation, all the circumstances of the individual case must be weighed and examined. Thus, a solicitor may by virtue of his employment acquire a personal ascendancy over a client and this ascendancy may last long after the employment has ceased, and the duty towards the client which arises out of any such ascendancy will last as long as the ascendancy itself can operate. Again, a solicitor may by virtue of his employment acquire special knowledge, and the knowledge so obtained may impose upon him the duty of giving advice or making a full and proper disclosure in any transaction between himself and his client, though such transaction may take place long after the relationship of solicitor and client in its stricter sense had ceased to exist. And there may be other circumstances which may impose a duty on a solicitor, which duty may continue to exist after the relationship of solicitor and client in the strict sense has ceased.
In approving the principle set out above, the Privy Council in the case of MacMaster v. Byrne (1952), 1 All E.R., page 1362 (also cited by learned Counsel) held that it is impossible to define precisely what circumstances will justify the inference that the confidential relationship continues. In my view this must be a question of fact to be decided in the circumstances of each case. Now, what are the circumstances here? The respondent is a solicitor, he acted on behalf of the late Vidal R. Cole when the property was purchased in 1929; he had other dealings with the property and possibly collected the rent on behalf of Vidal R. Cole; he was the close friend and confidant of Vidal R. Cole during the latter’s lifetime, and on his death in 1938 applied for Administration of the estate on behalf of the family. In my view the proper inference to be drawn from these facts is that a fiduciary relationship existed between the respondent and the late Vidal R. Cole at the time of the sale in 1938 and the respondent accordingly owed the duty which arose by virtue of that relationship.
This leads me to a consideration of the duty owed by the respondent. Learned Counsel referred to the case of Wright v. Carter (1903) Ch. 27, where the Court held that there is no objection to a sale by a client to his solicitor, provided that the solicitor can prove: (1) that the client was fully informed; (2) that he had competent independent advice (and from the case it appears that this means legal advice); and (3) that the price paid was a fair one. The principle laid down in this case must now be read in the light of the decision of the Privy Council in the case of MacMaster v. Byrne, where the Judicial Committee held that a solicitor owes a duty of full disclosure but made a reservation on the duty to ensure that the client obtains independent advice, and said that the question whether the facts make independent advice indispensable is a matter for the Trial Judge. In this respect the Judicial Committee approved the following dictum of Parker, J., in Allison v. Clayhills, when he commented on the judgment in Wright v. Carter in so far as the judgment referred to independent advice:
I doubt whether the learned Lord Justice really meant to lay this down as an invariable rule whatever might be the nature of the transact
Other Citation: (1961) LCN/0923(SC)