(1) Rosemary Lee v (1) Benjamin William Gorwyn Lee
| Jurisdiction | England & Wales |
| Judge | HHJ,Paul Matthews |
| Judgment Date | 05 February 2018 |
| Neutral Citation | [2018] EWHC 149 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: D30BS867 |
| Date | 05 February 2018 |
[2018] EWHC 149 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BRISTOL DISTRICT REGISTRY
Bristol Civil Justice Centre
2 Redcliff Street, Bristol, BS1 6GR
HHJ Paul Matthews
(sitting as a Judge of the High Court)
Case No: D30BS867
Adam Corbin ( Edward Porter, solicitor, on 5 February 2018) (instructed by Michelmores LLP) for the Claimants
The first defendant in person
The second defendant did not appear and was not represented
Hearing dates: 27 November 2017
Introductory
This is my judgment on a claim for rectification of a notice of severance of joint tenancy of certain land dated 31 January 2007. However, that is not how the claim started. The claim form is dated 24 March 2017, when it was issued under part 7 of the CPR, for an order “to rectify the deed of variation dated 22 May 2015”. That claim is amplified by the original particulars of claim dated 21 March 2017.
The family members concerned in this claim are the testator, William Gorwyn Lee, who on 24 January 1976 married the first claimant, Rosemary Lee, and had three children, Benjamin William Gorwyn Lee (“Ben”), Helen Ruth Lee and Rebecca Kim Lee. All the children are now adult. The testator died on 24 October 2013, having made his last will dated 14 September 2011, which was proved in the Bristol District Probate Registry on the 24 September 2014. The claimants are the named executors.
Background
The testator and the first claimant lived at Little Hendra Farm, Looe, Cornwall, which they had bought in October 2002. They owned the property as beneficial joint tenants. It consisted of a farm bungalow and a number of surrounding fields. The whole of the property by the time of the testator's death in fact consisted of three registered titles, CL188508, CL193208, and CL245397. The first of these titles comprised a number of fields, including one known as “Village Field”. The second comprised the farm bungalow and other fields, including two known as “Church Field” and “Borehole Field”. The third title was only created in 2008, in circumstances which I will mention in a moment.
In 2007 the testator and the first claimant made wills in substantially similar terms, drafted by their solicitors. The basic idea was that, on the death of the first to die, the survivor would take the farm bungalow and the three named fields (“Village”, “Church”, and “Borehole”) absolutely, and retain a half share in the remainder of the farm, while the other half would go to their son Ben. On the death of the second to die, Ben would receive the other half, the farm bungalow and the three fields. In order to achieve that, it would first be necessary for the joint tenancy subsisting between the testator and the first claimant in the land which they owned to be severed. Accordingly, a notice of severance was prepared by their solicitors, and signed by the testator and the first claimant. It was dated 31 January 2007. Unfortunately, it referred only to title CL188508. Accordingly, on the face of it the joint tenancy in the remaining parts of the farm remained unsevered.
As to the third registered title, part of the land bought by the testator and the claimant in 2002 was the subject of a conveyancing mix-up, which only came to light in 2005. The land agents concerned had used out of date maps, and as a result part of a field which the testator and the first claimant acquired from the vendor was registered as part of the title to land acquired by other purchasers from the same vendor, a Mr and Mrs Philp. Apparently, Mr and Mrs Philp refused to co-operate in redrawing the boundary. To resolve the problem, an application was made to the Land Registry Adjudicator, by solicitors instructed by the land agents' professional indemnity insurers. I return briefly to this question below, but it seems that the application was compromised. In January 2008 the incorrectly registered part of the field was finally re-registered as belonging to the testator and the first claimant, under a new title, CL 245397.
In 2011, the testator and the first claimant revised their wills, though, in relation to the farm, they made similar provision to 2007. By clause 4 of each will, Ben was entitled to the half share of the testator in the farm, excluding the farm bungalow and the three named fields, and by clause 5 the residuary estate was to go to the surviving spouse, in the event, the first claimant. No change was made to the position regarding severance of joint tenancy, and no specific attention was paid to the land in the third title, created in 2008.
As I have already said, the testator died on 24 October 2014. The notice of severance of 31 January 2007 related only to title CL 188508, and the testator's will of 2011 leaving a half share in the farm could not operate as a severance of the rest ( Carr-Glynn v Frearsons [1999] Ch 236, CA). I record here for completeness that it was not suggested that the wills of the testator and the first claimant were made pursuant to an agreement for mutual wills, which might have operated as a severance: Re Wilford's Estate (1879) 11 Ch D 267.
Accordingly, titles CL 193208 (including the farm bungalow and two of the three named fields) and CL 245397 (the land the subject of the conveyancing mix-up) passed beneficially to the first claimant by survivorship. Ben received only the testator's severed half share of title CL 188508 (except for Village Field). If the notice of severance had related to all the land at the farm, the farm bungalow and the three named fields would have gone to the first claimant under the gift of residue (clause 5), and Ben would have received the testator's half share in the remainder of the farm under the specific gift to him (clause 4).
At the time of the testator's death, he and the first claimant had been considering with their solicitors possible further revisions to their wills, including reducing the land to be excluded from the gift of half the testator's land to Ben (only one named field instead of three). Because of the testator's death, that reduction fell through. However, the solicitors advised the preparation and execution of a (tax-neutral) deed of variation of the estate of the testator. This would have the same effect as a codicil executed by the testator, reducing the excluded land to the farm bungalow alone.
Such a deed was executed by the first claimant and the first defendant on 22 May 2015, within two years of the death, and so was effective for inheritance and capital gains tax purposes (see Inheritance Tax Act 1984, section 142, and Taxation of Chargeable Gains Act 1992, section 62). The intention was that Ben should receive the testator's half share in the three named fields (but the farm bungalow would still be excluded). This was clearly postulated on the basis that the testator and the first claimant had severed their joint tenancy in all the land forming part of the farm. However, since two of the three named fields had passed to the first claimant by survivorship, outside the will, the deed of variation did not achieve its objective. These problems were discovered during the administration, but only after the tax-neutral two-year period since the death had elapsed.
Procedural issues
It appears that, on discovering the problems, the initial idea of the solicitors was to seek to rectify the deed of variation itself. Draft particulars of claim to this end were prepared and sent to HMRC on 13 October 2016. On 1 February 2017, HMRC replied, declining to comment on the draft. On 24 February 2017 the claim form in this claim was issued, with the executors of the will as claimants, and Ben and HMRC as defendants. As I have said, at that stage the claim was one for an order to rectify the deed of variation. Ben of course did not oppose the claim.
HMRC confirmed that it did not object either, but it wished the court's attention to be drawn to certain case law. HMRC also said that it had not been correctly served in accordance with the Crown Proceedings Act 1947, ss 17(3) and 18 (requiring service on the Crown to be effected by serving the solicitor for the appropriate government department). Sensibly, however, it took no point on that. The testator's and the first claimant's daughters, Helen and Rebecca, were not joined, because they had no interest in the land concerned. Beneficially speaking, it was all between the first claimant and Ben.
The matter came before me on 5 July 2017 on a directions hearing listed on the court's own motion. HMRC notified the claimant's solicitors that it would not be attending the hearing. At that stage, the only evidence available to the court was a very short witness statement made the previous day by Edward Porter, a senior associate solicitor at the firm of solicitors which had acted throughout. But Mr Porter was not concerned in any of the events which had led up to the present position, and could give no direct evidence of any of it. At the hearing on 5 July, I commented that the evidence then before me of any mistake was extremely thin, and that, in any event, it seemed to me at least possible that it was the terms of the notice of severance which had caused the problem, rather than the terms of the deed of variation.
I was also concerned that this claim had been brought as a Part 7 claim, although there did not seem to me to be any significant dispute of fact, but there were no relevant witnesses to give evidence. I directed that the matter should proceed as a Part 8 claim, that (notwithstanding the part 8 procedure) the claimant should be permitted to amend the particulars of claim, and directed that further evidence in support of the claim be served, before being listed for...
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