IN THE SUPREME COURT OF JUDICATURE
CHANCERY DIVISION
JUDGE BOWSHER QC SITTING AS A JUDGE OF THE HIGH COURT
Monday, 7th April 2003
Between
-and-
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Stuart Adair (instructed by Metcalfe Maher) for
the claimants.
Tom Braithwaite (instructed by Pearson Maddin) for the first defendant.
Fenner Moeran (instructed by Russell Cooke) for the second defendant.
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1. This action arises out of a sad family quarrel over a small inheritance. The motivation for bringing the action appears to be ill-feeling rather than a desire for material gain. As a result, when I expressed the view at the beginning of the trial that the costs of the trial would be likely to be far in excess of the value of the estate and that no one would benefit except the lawyers, that view appeared to be accepted by the members of the Bar in court but, after a short adjournment, they were unable to persuade their clients to agree to a settlement.
2. It is not apparent on the face of the Particulars of Claim because the prayer claims an account and various other forms of chancery type relief, but this is actually a claim for less than £20,000. If the claimants are right, they are entitled as beneficial owners to the net proceeds of sale of a leasehold maisonette that was sold for £62,000. The father, the testator, had the legal title to the leasehold. The executor sold the maisonette and after paying off the mortgage on the maisonette and paying out certain legacies and expenses sought to distribute the residue between the testator’s two sons (the claimants) and their sister (the second defendant). The claimants rejected a cheque for £13,339.13 offered to each as the one third share of the estate for each and claim the whole net proceeds of the sale of the maisonette- in other words, they claim the one third paid to their sister, £13,339.13. The value of their claims is a little under £7,000 each.
3. I shall refer to the parties by the names used generally in the trial, namely, the claimants as Jim and Bill and the defendants as Mr. Yorke and Madelaine. The deceased parents were Jonathan and Mildred.
4. The claimants are brothers and the second defendant is their sister. The first defendant is the executor of the last Will of their father. The first defendant is not related to the other parties but he was at one time (but not now) living with the second defendant.
5. This is a family dispute as to the leasehold ownership of a maisonette property at 188 Stroud Crescent, London (“the Property”) owned in law by Jonathan, who died on 3 October 1998. Derek Yorke, the First Defendant, is the executor of Jonathan’s last will dated 13 March 1998.
6. The Property was purchased by Jonathan and Mildred in about June, 1987 for £14,750 from the London Borough of Wandsworth under the “right to buy” provisions of Part V of the Housing Act 1985 (see the letter of 2 June 1987 from Messrs Russell Cooke, Potter and Chapman). The discount (which belonged solely to Jonathan and Mildred) was just under two thirds of the Property’s value, the true value of the Property being £40,000.
7. When Jonathan and Mildred were living in the property as tenants they paid the rent without assistance from their children. Jonathan was a retired engineer and they were living off his old age pension and two small pensions from previous employers. They did not have the money with which to take advantage of the “right to buy” provisions and because of their age they could not obtain a loan on mortgage without a guarantor standing behind them. The family was a very close and loving family and Jim and Bill made a proposal to enable Jonathan to obtain a mortgage to take advantage of what has been called the windfall offered by the “right to buy” provisions. The terms of that proposal are hotly in dispute in this action. Had she been in a normal state of health and competence, Madelaine would no doubt have joined in the scheme, but she had recently been through a divorce and had a nervous breakdown as a result and sold her hairdressing business and she had no money: so the arrangements for the purchase of the property were made by her brothers. At that time, Madelaine had come back to live in the property to be cared for by her parents.
8. The £14,750 purchase price was raised by a mortgage obtained from Britannia Building Society. Repayment was guaranteed by Jim. The Mortgage payments were met by Jonathan and Mildred (though there were some defaults). Jim and Bill nevertheless claim that they funded the mortgage by making equivalent payments to Jonathan and Mildred. That is contested.
9. Jim and Bill claim that when the Property was bought, it was agreed that they would pay the mortgage (and possibly some other related expenses), so that Jonathan and Mildred would live in the Property “rent free”. They claim that there was an agreement or an understanding that on their deaths the Property would vest in Jim and Bill. They therefore claim entitlement to the whole of the proceeds of the sale of the Property following Jonathan’s death under a constructive trust, as opposed to the two one third shares that were offered to them.
10. Early in the negotiations for a loan, Britannia Building Society on 28 November, 1986 sent to Jim as the proposed guarantor a form requiring the usual details that would be required of a borrower. The proposed monthly payments over a 25 year period would be £122.07. The covering letter included the following:
I understand you are to be repaying the mortgage by Direct Debit or Standing Order and these forms are enclosed for your completion.
Jim did not in fact pay by direct debit or standing order but left it to his father to make the payments while he says he reimbursed his father for his half by various means and Bill reimbursed his father in cash. When it was put to him in cross-examination that it would have been much simpler to have done what was apparently at first agreed with Britannia Building Society and then get reimbursement as to half from his brother, Jim agreed that it would have been much better to have done it that way but could not or would not give any explanation why the simpler way was not adopted. If the simpler way had been adopted, penalties for late payment would have been avoided and Jim would have had clear proof that he had paid the mortgage instalments. As it is, the evidence that he or his brother paid any of the mortgage payments is woefully deficient. I shall have to return to that later.
11. Mildred died in 1995, and Jonathan continued to live in the Property until November 1996. Because of illness, it was then agreed that he would live for 3 months with each of his children in rotation. He moved to live first with Bill and then Jim before going to live with Madelaine until his death in October 1998. Between November 1996 and October 1998, the Property was rented out, and the mortgage and housing costs were met from the rent.
12. When he went to live with his sons, it became apparent that Jonathan’s financial affairs were in a mess and Jim and his wife went to great efforts to sort them out with great success. Unfortunately, the way that it was done gave Jonathan the impression that he had lost control of his affairs. There was in particular a dispute about a sum of £3,300 removed from his Abbey National account by Jim which Jonathan called misappropriation.
13. When it came to his turn to go to live with Madelaine, she was living with Mr. Yorke. They reorganised his affairs so that Jonathan felt that he had control of them under their guidance. That caused resentment on the part of the brothers and there was at least one unseemly row between Mr. Yorke and Bill. However, Jonathan liked the new arrangement and decided to stay with Madelaine which caused further resentment. To look after her father, Madelaine gave up work (for which she had now become fit again) and it could be said (and indeed Mr. Yorke has said) that her contribution to the family finances was in the form of her loss of earnings. Quite apart from finance, it is agreed by all the family that Jonathan had a soft spot for his daughter and it is clear that her love and affection and full time care were important to an old man in his dying months. During this period, Jonathan gave his daughter money for a holiday, which the brothers considered imprudent, and that was a further source of resentment.
14. Jonathan died on 3 October, 1998 at the age of 82 of prostate cancer with widespread secondary cancers. The Death Certificate states that the informant of the death was Madelaine who was present at the death.
15. Jonathan was not very good with money and the purchase of the property was the biggest transaction he had ever conducted. But there is no suggestion that at any stage he was unable due to senility or illness to understand what he was doing or to conduct his affairs with proper advice.
16. Mildred never made a Will. On her death intestate no one claimed any title to her share of the property other than Jonathan who continued to live in the property.
17. There are two wills of Jonathan put in evidence before me.
18. On 8 August, 1997, Jonathan made what is accepted to have been his first Will. That Will is short and is typed on one sheet of A4 but nonetheless was plainly drawn by a solicitor. Jonathan must have had in mind the disposal of the property.
19. By that Will, Jonathan first appointed his two sons together with his daughter as executors. Jim says that he did not know about that appointment or the terms of the Will, which I find hard to believe. The Will then gave legacies of £500 each to eight grandchildren and one great grandchild. The Will then bequeathed “all the rest and residue of my estate both real and personal” to such of his three children (including Madelaine) as survived him.
20. I regard that Will as totally inconsistent with the case of the claimants. Of course, there is the legalistic argument that if the claimants are right Jonathan did not have any real property to leave at all because there had been an agreement or understanding that the maisonette was beneficially owned by his two sons. But any sensible person, (and by all accounts Jonathan was a sensible person), if he had agreed that his sons should have the maisonette to the exclusion of his daughter, would have said so in his Will and his solicitor would have so advised him. There is no doubt that Jonathan had the legal title to the maisonette and any layman, or indeed any lawyer, would want to specify where that legal title should go - and he did so. He bequeathed the legal title to the real property to his three children, including Madelaine. All three children agreed that he was an honest man and loved his family. If he had not honestly believed that he was entitled to divide the real property between his three children, he would not have done so. Of course, his honest belief may have been wrong and that is what I have to examine.
21. I asked Jim why, if there was an agreement or understanding in 1987 that the maisonette should go to Jim and Bill to the exclusion of Madelaine, he did not ask Jonathan and Mildred at that stage to make Wills to give effect to that agreement or understanding. Beyond saying that it would have been better to have done that, Jim could give no sensible answer. Jim is an intelligent man, a computer aided design engineer. There is no explanation of how it was contemplated that the property would be transferred to Jim and Bill to the exclusion of Madelaine if both Jonathan and Mildred had died intestate between 1987 and 1997 as might well have happened.
22. There was a second Will dated 13 March, 1998. Jim and Bill have said that Jonathan had a change of mind. The second Will shows a change of mind, but it is not the change suggested by Jim and Bill.
23. The second Will was again plainly drafted by a solicitor and it is very short on one sheet of A4. As with the first Will, there were three clauses. The first clause changed the appointment of executors from his three children to appoint Derek Yorke. A wise choice because by this stage it was likely that there might have been some disagreement between the children. The second clause repeated the legacies to the grandchildren and great grandson. The third clause was:
I direct that all the rest and residue of my estate both real and personal not hereby or by any codicil hereto otherwise specifically disposed of shall be sold and converted into money and after payment thereout of my just debts funeral and testamentary expenses be given to such of them my children [named] as survive me and if more than one in equal shares absolutely.
24. Mr. Yorke said in evidence that he was told orally by Jonathan that he wanted the maisonette to be sold outside the family and the cash distributed so that there should be no quarrelling about the use of the maisonette. That was the essential difference between the first Will and the second Will as to clause 3. That was another wise choice. If the property had been left to the three children equally, they would have been unable to agree who should live there or on what terms.
25. In carrying out his duties as executor, Mr Yorke has treated the Property as an asset of the estate and commenced distribution of the estate on this basis. The Property was the only substantial asset owned by Jonathan (if it was owned by him), though there was also some money in a Building Society account. In accordance with the will, Mr Yorke sold the Property in February 1999 and tendered a third of the residuary estate (£13,339.19) to each of the children on 14 October 1999. The brothers rejected this, claiming an entitlement to the whole of the interest in the Property. Madelaine accepted the cheque and now claims to have spent the moneys though part of it is in an ISA that has reduced in value due to the fall in the Stock Market.
26. I shall have to go into the history in much greater detail. Before doing so, I should say something about the issues arising in this case and the law. However, I should say at this stage that much of what the claimants wrote and did is inconsistent with the case they now put forward and for that reason and because I do not accept the vital parts of their oral evidence, I reject their claim.
27. The key issues are:
(1) Whether or not there was an agreement or understanding between Jonathan, Mildred, James and William Driver that the Property would belong to James and William Driver;
(2) Whether or not James and William paid a total of £13,441 in respect of the mortgage repayments in reliance upon this understanding;
(3) Whether or not James and William Driver paid £2,076 towards the services charges, repair costs, insurance premiums and other costs relating to the Property;
(4) Whether or not the Property was held by Jonathan Driver on constructive trust or subject to a proprietary estoppel in favour of James and William Driver;
(5) Whether or not Derek Yorke held the proceeds of the sale of the Property on constructive trust for James and William Driver and whether or not the payment to Madelaine Driver constituted a breach of that trust;
(6) Whether Mr. Yorke should be relieved in whole or in part from liability to pay pursuant to section 61 of the Trustee Act, 1925.
(7) Whether Madelaine has bona fide changed her position since receiving the payment from Derek Yorke.
28. Whether the claim is put in terms of a constructive trust or proprietary estoppel, a fundamental ingredient is that the legal owner of the property has acted unconscionably.
29. Browne-Wilkinson L.J. in Grant v. Edwards [1986] Ch 638, at 656 said:
I suggest that in other cases of this kind [constructive trusts], useful guidance may in the future be obtained from the principles underlying the law of proprietary estoppel which in my judgment are closely akin to those laid down in Gissing v. Gissing [1971] A.C. 886. In both, the claimant must to the knowledge of the legal owner have acted in the belief that the claimant has or will obtain an interest in the property. In both, the claimant must have acted to his or her detriment in reliance on such belief. In both, equity acts on the conscience of the legal owner to prevent him from acting in an unconscionable manner by defeating the common intention. The two principles have been developed separately without cross-fertilisation between them: but they rest on the same foundation and have on all other matters reached the same conclusions.
See also Yaxley v. Gotts [2000] Ch 162 per Robert Walker L.J.
30. What is the relevant conduct of the parties was considered by Lord Bridge in Lloyds Bank plc v. Rosset [1991] 1 AC 107 at 132:
The first and fundamental question which must always be resolved is whether, independently of any inference to be drawn from the conduct of the parties in the course of sharing the house as their home and managing their joint affairs, there has at any time prior to acquisition, or exceptionally at some later date, been any agreement, arrangement or understanding reached between them that the property is to be shared beneficially. The finding of an agreement or arrangement to share in this sense can only, I think, be based on evidence of express discussions between the partners, however imperfectly remembered and however imprecise their terms may have been ...
In sharp contrast with this situation is the very different one where there is no evidence to support a finding of an agreement or arrangement to share, however reasonable it might have been for the parties to reach such an arrangement if they had applied their minds to the question, and where the court must rely entirely on the conduct of the parties both as the basis from which to infer a common intention to share the property beneficially and as the conduct relied on to give rise to a [1331 constructive trust. In this situation direct contributions to the purchase price by the partner who is not the legal owner, whether initially or by payment of mortgage instalments, will readily justify the inference necessary to the creation of a constructive trust. But, as I read the authorities, it is at least extremely doubtful whether anything less will do.
31. In McKenzie v. McKenzie [2003] All ER (D) 155 Robert Hildyard Q.C. sitting as a Deputy Judge said:
77. In any event, as it seems to me, conduct on the part of the contributor that is explicable on a basis other than an expectation of a return by way of beneficial interest will not suffice to give rise to the presumption that is the basis of such a resulting trust. For the same reason, and as in the case of a constructive trust based on inferred common intention, it is unlikely that anything but a contribution of cash (or its equivalent in the eyes of equity) channelled directly towards the initial purchase of the property in question will suffice.
78. The requirement that the contribution(s) relied upon should be direct gives rise to two further issues relevant in this case. The first is whether the exposure to risk that becoming a party to a mortgage entails qualifies as a relevant contribution, and if not, whether payment of instalments so qualifies. The second is whether the advantage of a discount on the purchase price conferred by the right to buy legislation itself qualifies as a relevant contribution. Agreeing to become party to a mortgage and the contribution of the worth of the “right to buy” discount may also be prayed in aid as evidence of an agreement, arrangement or understanding as to beneficial interests.
79. As to becoming party to a mortgage, the liability so contracted as a joint mortgagor on the covenants in the mortgage may, but does not necessarily constitute a qualifying contribution. Nor does it, of itself, constitute evidence of an agreement or understanding that the contributing party should have a beneficial interest referable to the liability or risk thus undertaken: see Carlton v. Goodman [20021 EWCA Civ 545 [Court of Appeal]. A party does not acquire an interest in the trust property simply as a result of covenanting to make or even actually making mortgage repayments: ibid (at para. 22(vii)). The question is whether, as between that party and the other joint owners in law who have undertaken the same liability or risk, it was intended that such party should be responsible for paying, and actually pay, part of the mortgage instalments.
81. In other words, if the parties agree to the contrary, or if it is shown that the Claimant has simply lent his or her name in order to secure the mortgage in advance but without any intention of being liable as between himself or herself and the other mortgagor(s) for repaying instalments, the Claimant will not be considered to have made a relevant contribution. This is notwithstanding having become potentially liable under the mortgage to the lender (mortgagee): Carlton v. Goodman. Indeed, even payment made upon subsequent enforcement of that liability would not constitute a relevant contribution: it would not be a contribution to the purchase price but rather contribution to the discharge of the mortgage liabilities : ibid, at para 2 7 (vii).
82. Similarly, payments made towards mortgage instalments on an occasional basis, or commenced some time after the original acquisition, would not have the requisite direct nexus with the purchase to be treated as a contribution to the purchase price such as to result in the contributor acquiring a commensurate beneficial interest: ibid.
32. A right to buy discount is usually considered to be a contribution to the purchase price by the holders of the discount: Springette v. Defoe (1992) 24 HLR 552.
33. It has to be borne in mind that this is not one of those cases where the testator leaves property outside the blood family. All too often, a widower disinherits his children in favour of a second wife married late in life. That is not this case. The claimants’ case is that the property ought to have been left to two members of the family (the sons) to the exclusion of one member of the family, the much loved daughter, contrary to what was stated in the Will. They have to prove that when he made his two Wills, their father acted unconscionably. They have not criticised their father. Their fire has been directed at Mr. Yorke, who acted in accordance with the second and last Will.
34. When considering arguments about what was expressly or impliedly agreed, it is relevant to the balance of probabilities to consider what would be considered fair and reasonable to a layman. Jonathan was a reasonable and loving father and he would have wanted to do what was reasonable.
35. When Jonathan made his second Will in March 1998, if his sons’ evidence were accepted (and I do not accept it) they had been paying off a 25 year mortgage of 34% of the value of the property for 11 years: that is, even on the view of their evidence most favourable to them, they had paid off less than half of the mortgage on 34% of the property. The sons had the opportunity to pay for the mortgage for only a very few more years before Jonathan was likely to die. As against that, Jonathan had a 66% interest in the property by reason of his discount. (I take the figure of 66% from the Particulars of Claim). I am not for a moment suggesting that Jonathan was aware of the decision in Springette v. Defoe, but people who have lived most of their lives in rented property are acutely aware that the total of what they have paid in rent is more than the property is worth, and Jonathan knew that but for his long occupation there would have been no discount. Even if one considered that his sons had some moral (as opposed to equitable or legal) claim to a share in the property, it would have been plain to Jonathan that he had a moral claim to 66% (representing his discount). So why should it be unconscionable for Jonathan to leave less than his 66% (namely 33%) to his daughter for her love and affection and the rest to his sons? Those considerations are also relevant to the balance of probabilities when considering whether there was an express or implied agreement or understanding between Jonathan and his sons.
36. The Particulars of Claim do not allege any express agreement between Jonathan and his sons at the time of purchase of the property. At the trial, counsel now acting for the claimants said that the case had been badly prepared by others not including himself (as it has) and that defects in the pleading and inadequate disclosure of documents should not be held against the claimants. I find that the normal inferences should be drawn from the pleadings and disclosure of documents. To adopt any other course would be unfair to the defendants. If the claimants wish to complain about the preparation of their case, that is a matter between them and their lawyers. However, I note that the Statement of Truth at the end of the Particulars of Claim was in a form that said that the Defence was true and it was signed by a representative of the claimants’ solicitors. There was no reason why it should not have been signed by both claimants in proper form. Because of the growing tendency of Statements of Truth to be given by solicitors, I think it desirable that the Practice Directions should be amended to require that when a solicitor signs a Statement of Truth he should give reasons why his client cannot sign in person. I am not aware of any reason why the claimants should not have signed the Statement of Truth attached to the Particulars of Claim in this case.
37. The Particulars of Claim alleged that at the time of purchase and for many years thereafter, there was an understanding between the parents and the claimants that the parents would live in the property rent free and that on their deaths that property would vest in the claimants. It was also alleged that after the purchase Jonathan made representations to the claimants to the effect that the property will come to you eventually. Those representations were alleged to have been made after the purchase when the claimants visited Jonathan on Wednesdays on the way to football practice. The claimants allege that on those occasions they made payments to Jonathan to reimburse him for the mortgage payments.
38. It is alleged by the claimants that induced by and in reliance on the understanding and representations the claimants paid all the mortgage instalments between January 1987 and December, 1986 amounting to approximately £13,441.00.
39. I am satisfied that there was an understanding that the property should go to the children of Jonathan and Mildred, that is, to the claimants and their sister. But any understanding or representation that Madelaine should be excluded from the inheritance would have been so startling that, if intended, it would have been expressed in clear terms. There were letters written and they were to a contrary effect.
40. As to the payments towards the mortgage, the evidence is wholly inadequate.
41. I will consider both these matters in more detail.
42. Although paragraph 6 of the Particulars of Claim alleges representations, there was no reference to such representations in the witness statement of Jim. Bill’s witness statement simply said that he agreed with the witness statement of Jim. When asked about that omission from his witness statement, Jim said that as it was in the Particulars of Claim he did not think it necessary to include it in his witness statement. Jim must have told his solicitors about this at some stage otherwise it would not have got into the Particulars of Claim, so this is a matter that can be put down to bad preparation. But neither in the Particulars of Claim nor elsewhere does one find an allegation of a representation clearly stating that the sons would have the property to the exclusion of their sister. I do not read the allegation that a representation was made that “This will come to you eventually” as a statement that the property would come to the two sons to the exclusion of the daughter. The first time that any allegation of representations was made was in a solicitors’ letter dated 13 August, 1999 where the solicitors said of their clients, “The deceased orally confirmed on many occasions that the property would be left to them eventually”. That was nearly a year after Jonathan’s death, it did not state clearly that Madelaine was to have nothing and it came after the two Wills that stated that she should have a share in the real property.
43. For a case such as the claimants’ to carry any weight, it must be pleaded or at least set out in witness statements in sufficient detail “to add verisimilitude to an otherwise bald and unconvincing narrative”. Waite J. in Hammond v. Mitchell [1991] 1 WLR 1127 at 1139 put that proposition at rather greater length:
The primary emphasis accorded by the law in cases of this kind to express discussions between the parties (“however imperfectly remembered and however imprecise their terms”) means that the tenderest exchanges of a common law courtship may assume an unforeseen significance many years later when they are brought under equity’s microscope and subjected to an analysis under which many thousands of pounds of value may be liable to turn on fine questions as to whether the relevant words were spoken in earnest or in dalliance and with or without representational intent. This requires that the express discussions to which the court’s initial inquiries will be addressed should be pleaded in the greatest detail, both as to language and as to circumstance. In the Family Division, where there is no procedure for pleadings or particulars, the degree of particularity with which the relevant discussions are asserted in the claimant’s initial affidavit will be of prime importance for both sides. Prom the claimant’s point of view, failure to achieve particularity at that stage may cause the claim to founder for vagueness at the trial where the affidavit will stand as her evidence in chief, on which she will be unlikely to be allowed to enlarge orally before she is cross-examined on it. From the respondent’s point of view, he must be entitled, in an area of law where the nuances of language are all-important, to know exactly what case he has to meet.
44. Any detailed evidence in this case comes from dates long after the purchase of the property.
45. In 1997, Madelaine, Jonathan and Mr. Yorke were in a pub and they were joined by Jim. At that time they were all friendly. However, later in the evening, Jim started shouting at his father and said, “The property is mine and nothing to do with you” and Jonathan replied, “No, the property is mine and I never said it was yours”.
46. On 9 and 10 December, 1997, Jim wrote two letters to his father in friendly terms about financial affairs but urging him not to get involved with or take advice from Mr. Yorke. Those letters were written after the property had been rented out. In the second letter, Jim wrote that he had withdrawn from his father’s TSB account all the money received in rent “so no misappropriation of funds takes place”. That referred to a withdrawal of £3,300.00 that caused considerable aggravation.
47. On 5 January, 1998, Jonathan replied with a fairly long letter in which he said, among other things,
... my flat is in my name and is my sole property. The proceeds that come from the letting are also mine to clear and run my personal affairs.
Jonathan also demanded the return of the £3,300.00.
48. On 8 January, 1998, Jim replied in conciliatory terms suggesting a family lunch with “No aggro whatsoever” though pointedly suggesting a table booked by Madelaine for four (i.e. Mr. Yorke was not to be invited). In that letter Jim did not dispute Jonathan’s claim to sole ownership of the property.
49. On 14 January, 1998, Jim wrote a long letter to his father, Jonathan. That letter is the fullest statement of the claimants’ case. In that letter, Jim stated that in 1987 there had been an agreement between Jonathan, Mildred, Bill, and Jim. Madelaine was not a party because she had severe financial problems. The agreement was described in the following terms:
It was decided then to purchase Stroud Crescent with Jim acting as guarantor to the loan and Bill and Jim making the monthly repayments. Bill and I agreed also that Mum and yourself would live in the flat for the rest of your lives rent free with the knowledge that at least at the end of the day we would have a flat at our disposal. The acquisition of the flat would at the end of the day benefit the whole family.
Madelaine has never been excluded from this scheme but has to my knowledge never contributed any finances to the mortgage repayments and therefore, in our opinion, has a very limited claim to Stroud Crescent. We agreed that while you were alive and for your own benefit the property would remain in your name and Bill and I had no reason to doubt that eventually in the fullness of time the property would be transferred over to us upon Mum’s and your death.
There are some manuscript notes on that letter, written by Mr. Yorke after discussion with Jonathan. At the end of the passage that I have quoted he wrote, “All three of you”.
50. Nowhere in that letter is there a statement that it was agreed or understood that Madelaine would be excluded from the inheritance of the flat. There is no mention of any agreement. The closest that one gets to an allegation of an understanding is in the words, “Bill and I had no reason to doubt that eventually in the fullness of time the property would be transferred over to us upon Mum’s and your death.” But that is at best a one sided understanding. The allegation of “no reason to doubt” is very different from an allegation that there was an understanding not only on the part of Bill and Jim but also on the part of Mildred and Jonathan. Moreover, the words, “transferred over to us” have to be read in the context of the earlier sentence, “The acquisition of the flat would at the end of the day benefit the whole family”. In cross-examination, Jim sought to explain that the benefit to the whole family would, so far as Madelaine was concerned, mean that she would be able to stay in the flat as a visitor and it was a great benefit to be able to stay in a family flat in London. But since Madelaine’s home was only a few hundred yards from the property, that was a fanciful explanation. In the light of all the evidence that I have heard and read, I have no doubt that the only understanding between the parties was that the property should be a part of the estate to be left to the three children, including Madelaine.
51. Counsel for the claimants suggested in his closing speech that Madelaine had accepted in evidence that there had been an agreement. That was disputed by Mr. Moeran who read the whole of a note of Madelaine’s evidence that accorded with my note. She did not accept that there was an agreement. In any event, the important point was, if there was any agreement or understanding, what were its terms? Madelaine was not a party to any agreement or understanding, though as she very frankly said, she heard what was being discussed between her parents and her brothers. She heard her brothers say that they were paying the mortgage, though the extent to which that was done is disputed. If at any point she had said that her brothers agreed with her parents that the property should be left to the brothers to the exclusion of her, that would have been the collapse of the defence and there would have been no point in continuing the action.
52. On 3 February, 1998, Jonathan wrote a letter to Jim and Bill. That letter is very sad because in the first paragraph he said that it was the last letter he would write to them about his affairs and in the last paragraph said that it was the last letter he would write at all. In the first paragraph, Jonathan welcomed the suggestion that he should repay the money advanced for the mortgage “because to me it puts all my three children on the same level. None of you will have contributed anything at all except that Madelaine has helped me in many other ways just because she is my daughter and not for any gain and she certainly does not deserve any more sarcastic remarks from other sources.” Jonathan then asked for the return of the £3,300 removed from his account. In the pre-penultimate paragraph, Jonathan wrote:
At no time have I ever agreed that my property would be transferred to Bill and yourself. I stress that upon my death my property will be sold. The proceeds will go to my estate and will benefit you all equally.
That statement was never challenged by Jim or Bill in the lifetime of their father.
53. In his oral evidence, Mr. Yorke said, and I accept, that Jonathan, after telling him that he wanted him to be his executor, told him that he wanted the property to be sold and the proceeds distributed equally between his children.
54. After the death of Jonathan, there were more letters, and indeed offers, from the claimants that were totally inconsistent with the case they now put forward.
55. On 6 November, 1998, Barnard Marcus, estate agents, wrote to Mr. Yorke telling him that they had agreed the sale of the property, subject to contract, at a price of £62,000 to someone outside the family. Mr. Yorke was granted probate a few days later, on 12 November, 1998. The claimants complain that they did not know that the property was being put on the market until after the event. At the end of November, Bill approached the solicitors acting for Mr. Yorke with a suggestion that Bill’s son Marlon, would like to buy the property from the estate. But it transpired that what was proposed was not a straightforward sale but something that was contrary to the terms of the Will and contrary to the wishes of the testator expressed in his letter of 3 February, 1998 and orally to Mr. Yorke.
56. On 7 December, 1998, Mr. Yorke’s solicitors wrote to him. It is accepted that there was some confusion in their mind between Bill and Jim, but that does not matter. What was proposed was not that Marlon should buy the property, but that he should buy Madelaine’s interest in the property. The letter stated:
In essence what is proposed is that his son would pay the amount that Mr Driver’s daughter would receive based on the sale of the property at £62,000.00 on the open market. Mr W Driver’s [sic] interest will be preserved in the property.
What was proposed was that Marlon should buy one third of the property and that his father and uncle should retain their thirds. That was contrary to the testator’s wishes, and Mr. Yorke through his solicitors rejected the proposal. That created more resentment.
57. Following that rejection, Bill and Marlon made an offer to Barnard Marcus either £50 or £500 in excess of the offer previously accepted from the outside purchaser. Bill wrote to Mr. Yorke’s solicitors in support of that offer on 17 December, 1998. In that letter he wrote:
As you point out in your letter my father’s wish that all his assets including the flat should be converted into cash and distributed in accordance with the terms of the Will. These wishes we understand will still be met when Marlon my son purchases 188 Stroud Crescent and we can see no problem therefore with him proceeding with the purchase.
You must forgive me for pointing out that having known my father for considerably longer than yourself and Mr. Yorke we are also quite clear of my father’s wishes and indeed he would be overjoyed of Marlon’s proposal to purchase his flat. The flat was after all purchased in the first place for the benefit of the family.
58. The Marlon proposals are inconsistent with the case of the claimants. Firstly, it was proposed that he should buy out Madelaine’s interest. But on the claimants’ case she had no interest to sell. In cross-examination that was described as a “conciliatory proposal”. But if that were so, one would expect that the proposal would at least be in terms that “we do not need to pay anything but this is what we offer ...”. Then the letter of 17 December, 1998 refers to the property as being one of the father’s assets and purchased “for the benefit of the family”, not for two of the family to the exclusion of a third. The letter also urges that the wishes of the father’s Will be adhered to. There was no suggestion at all that there was any reason for departing from the simple terms of the Will.
59. The claimants instructed their present solicitors, Metcalfe & Mather. On 1 March, 1999, those solicitors claimed that their clients were entitled to the net proceeds of the sale of the property “by virtue of an implied trust created by their father and for their benefit in recognition of their funding of the house purchase”. There was no mention of any express agreement or any understanding. A letter of 10 April, 1999 again went no further than alleging an implied trust.
60. By letter of 13 August, 1999, Metcalfe & Mather made the first allegation of a “common understanding”. It was by no means clear from the evidence of the claimants who was to or did pay the service charge, which was about the same amount as the previous rent. By that letter, it was alleged that the mortgage payments were made by direct debit for one year and thereafter by cash and cheques.
61. For any payments to have any relevance to the issues in this case it must be shown firstly that they were payments for the mortgage and not just to help the parents out; and secondly that they were made in reliance on or in relation to an agreement, understanding, or representations to the effect not just that the property was being bought for the benefit of the family but that it was being bought for the benefit of the claimants to the exclusion of Madelaine. I find that there was no such agreement, understanding, or representation and therefore it is not relevant to decide how much was paid by the claimants or with what intention. However, in view of the time taken on the matter, I should say something about it.
62. When Mr. Yorke came to distribute the estate, he knew that Jonathan had legal title to the property and had made a clear settlement by his Will. Mr. Yorke’s attitude quite reasonably was, if anyone claims that the estate should be distributed otherwise than in accordance with the Will, let them prove it. Over a period of many months, no proof was put forward, so he distributed the estate in accordance with the Will.
63. No proof having been put forward to Mr. Yorke, one would have thought that at least before the trial of this action the claimants would have worked out how much they had paid and when and how. Instead, in examination in chief, counsel for the claimants undertook the unenviable task of persuading Jim to extract from Bank Accounts what evidence could be found of payments that might have been made to his father and might have related to the mortgage. I have already commented on the strange mechanics used to make payments. There were a few payments of £61 from Jim’s account that one could readily relate to half of the £122 mortgage payment. Other payments referred to appeared to be random payments that might or might not have gone to Jonathan. It was said that all the payments in the Bank Accounts that had been referred to amounted to a little over £4,000. There was no supporting evidence of the payments allegedly made in cash by Bill. He did provide late in the day some evidence of some payments of cash he made into a Wimbledon Branch of the TSB for the benefit of the account of Jonathan, but it was demonstrated convincingly in cross-examination that those payments were repayments of a loan made by Jonathan to Bill, not payments towards the mortgage. It seems unlikely that Bill would have been able to make payments for the mortgage at a time that he needed a substantial loan from Jonathan.
64. Bill explained his cash payments by saying that at the time he was working for a Betting Shop in Wimbledon and “had access to cash”. His access to cash seems to have dried up, which as he ruefully admitted, explains why he is now a taxi-driver.
65. Two schedules were put before the court, one of them headed, “Mortgage payments by Mr. W.H. Driver and Mr. J. Driver” and both showing a total of £13,441.20 up to January 1997 when the property was let. In the Particulars of Claim it was alleged that that was the sum paid by the claimants for the mortgage instalments. But in cross-examination it was established that those documents were not statements of what was paid to Jonathan for the mortgage but estimates of what would have been required to be paid to the Building Society over that period. At a late stage in the trial, counsel for the claimants sought to put in some cheque stubs that had been found in his instructing solicitor’s briefcase (counsel being attended at that time only by a trainee solicitor) but I declined to look at them and counsel for the defendants preferred not to take up the opportunity to cross-examine on them.
66. In the light of my findings, it does not matter how much if anything was paid towards the mortgage. Probably some payments were made, but not very much has been proved.
67. Since I reject the claim of the claimants, it is not necessary for me to consider either the special defence put forward by Mr. Yorke under section 61 of the Trustee Act, 1925 or the defence put forward by Madelaine that she has bona fide changed her position since receiving the payment of her third from Mr. Yorke.
68. I reject the claim of the claimants and find in favour of the defendants.
69. I thank all counsel for their help. In particular, I wish to make it plain that any criticisms of the preparation of the claimants’ case are not directed at Mr. Stuart Adair who came into the case late and has done his duty well in assisting the court and his clients in difficult circumstances.