Audrey Sheila Flowers (formerly Audrey Sheila Scavella) and another v Bria Scavella and 2 others

Lord BriggsAND

This appeal from the Court of Appeal of The Bahamas raises a question of construction (or perhaps application) of section 65 of the Probate and Administration of Estates Act 2011 (“the 2011 Act”) which, under the heading “Charges on property of deceased to be out of property charged” provides as follows:

“Where a person dies possessed of, or entitled to, or under a general power of appointment by his will disposes of, an interest in property, which at the time of his death is charged with the payment of money, whether by way of legal mortgage, equitable charge or otherwise (including a lien for unpaid purchase money), and the deceased has not by will, deed or other document signified a contrary or other intention, the interest so charged shall, as between the different persons claiming through the deceased, be primarily liable for the payment of the charge and every part of the said interest, according to its value, shall bear a proportionate part of the charge on the whole thereof.”

The question for decision is whether this provision applies to real property held by two beneficial joint tenants, one of whom dies and, as a result, the survivor becomes the sole owner of the property. It happens that in this case the first to die was intestate, which raises the additional question whether section 65 has any application to the administration of an intestate estate. For reasons which will appear, the Board has not found it necessary to decide the additional question.

The question which we do have to decide is a pure question of law, and it has been treated by the parties and the courts below as determinative of this litigation. The answer to the question is not at all fact-sensitive, so the facts can be shortly described.

William Graham Scavella (“William”) died intestate on 19 November 2012, leaving his former wife Gina Scavella (“Gina”), their two children Bria and Erin, and his second wife Audrey Flowers, formerly Scavella (“Audrey”). Under the statutory trusts governing the devolution of property of intestate deceased persons in The Bahamas, Audrey was entitled to half his net estate after payment of all debts and expenses, while Bria and Erin were entitled between them to the other half.

Prior to his death, William and Audrey lived together in a house known as No 1. Harold Heights, New Providence, Bahamas (“the Property”) which they owned as beneficial joint tenants. In September 2011 William and Audrey borrowed $540,000 from the Finance Corporation of The Bahamas Ltd (“FCB”) secured upon the Property. It was an instalment mortgage but the capital amount was almost entirely outstanding when William died.

Audrey obtained a grant of administration to William's estate in May 2013. Since as surviving beneficial joint tenant Audrey became the sole beneficial owner of the Property by survivorship upon William's death, no part of the Property passed into his estate. Apart from some chattels and a modest credit in a bank account, the main asset in his estate was a life insurance policy which was eventually realised in August 2013 by Audrey, acting as his personal representative, for $165,000. The life insurance policy was a benefit accruing to William from his employment. It had no connection with the mortgage loan and was not charged to FCB as security for its repayment.

Audrey paid a substantial part of the proceeds of the policy to FCB in reduction of the mortgage debt. In October 2017 Bria, Erin (by her mother Gina as next friend) and Gina in her own right began proceedings against Audrey in the Supreme Court of The Bahamas seeking an account of her administration of William's estate. By the time of trial the main issue between the parties (and the only issue on appeal) was whether section 65 required the Property (or Audrey's interest in it) to be primarily liable for the mortgage to FCB, in exoneration of the estate, so that Audrey had been wrong to use the proceeds of the policy, or any other assets of the estate, for the reduction of the mortgage debt.

Following trial in October 2018 Keith Thompson J found in favour of Gina and her children, in a reserved judgment given in January 2019. On Audrey's appeal the Court of Appeal (Sir Michael Barnett P, Evans and Bethell JJA) reversed the trial judge, in a reserved judgment given in May 2022. In the opinion of the Court of Appeal section 65 had no application as between the beneficiaries in the estate of the first to die and the survivor of two beneficial joint tenants of any real property. Further the court decided that section 65 had no application to an intestate estate. Gina and her children have appealed to the Privy Council, arguing that both those conclusions of the Court of Appeal were wrong.

It was frankly acknowledged by Ms Krystal Rolle KC for the appellants that, if either of the conclusions of the Court of Appeal was correct, then the appeal must necessarily fail. The Board has reached a clear conclusion that the Court of Appeal was right in its answer to the first (“joint tenancy”) question. It is therefore unnecessary for the Board to answer the second, more difficult, (“intestacy”) question.

Section 65 reproduces section 35 of the Administration of Estates Act 1925 (UK) (“the 1925 Act”), save for the omission of an immaterial reference to entailed estates. In a helpful and well-researched piece of legal historical scholarship Ms Rolle demonstrated that the origin of section 35, and hence of section 65, lay in section 1 of the Real Estate Charges Act 1854 (17 & 18 Vict, c 113) (“the 1854 Act”), which provided that:

“When any Person shall, after the Thirty-first of December One thousand eight hundred and fifty-four, die seised of or entitled to any Estate or Interest in any Land or other Hereditaments which shall at the Time of his Death be charged with the Payment of any Sum or Sums of Money by way of Mortgage, and such Person shall not, by his Will or Deed or other Document, have signified any contrary or other Intention, the Heir or Devisee to whom such Land or Hereditaments shall descend or be devised shall not be entitled to have the Mortgage Debt discharged or satisfied out of the Personal Estate or any other Real Estate of such Person, but the Land or Hereditaments so charged shall, as between the different Persons claiming through or under the deceased Person, be primarily liable to the Payment of all Mortgage Debts with which the same shall be charged, every Part thereof, according to its Value, bearing a proportionate Part of the Mortgage Debts charged on the whole thereof: Provided always, that nothing herein contained shall affect or diminish any Right of the Mortgagee on such Lands or Hereditaments to obtain full Payment or Satisfaction of his Mortgage Debt…”

By reference to the speech of Lord St Leonards, introducing the Bill in the House of Lords, Ms Rolle demonstrated that its purpose had been to ameliorate an injustice caused by the rules as to primogeniture (the attempted repeal of which had earlier been defeated) which applied on intestacy whereby the mortgage debts incurred by the owner of real estate were thrown upon those beneficiaries entitled to personalty, in exoneration of the successor to the realty. In short, the eldest son had the mortgages on his father's landed estate (which he inherited) discharged at the expense of his siblings, who only stood to inherit personalty.

It is apparent from the replacement of section 1 of the 1854 Act by section 35 of the 1925 Act that, besides a modernisation of the language, the provision for charges on property to be paid primarily out of the property charged was extended to cover all forms of property. The rules of primogeniture were belatedly abolished by the 1925 Act, and section 35 is a provision that has a life of its own, separate from its original purpose in the amelioration of the injustices of primogeniture. Ms Rolle fairly observed that its purpose should still be understood as the alleviation of injustice arising from casting the burden of property charges elsewhere than upon the charged property concerned, but the precise identification of the scope and extent of that purpose has to be gathered from the statutory language, read in its context.

The immediate context for the construction of section 65 of the 2011 Act is not of course English public policy or English law, but the policy and law of The Bahamas. Furthermore, there is no body of binding (or other) authority upon section 35 of the 1925 Act that could lead simply to its adoption as governing the meaning of section 65, on the basis of the use of identical statutory language. There is no Bahamian statutory predecessor to section 65, but the policy context is not materially different, because The Bahamas did not, at least by 2011, include primogeniture as part of its law.

Of primary importance in getting to the answer to the joint tenancy question is the concurrence between English and Bahamian law as to the nature and meaning of co-ownership of property as beneficial joint tenants. It was common ground between counsel that there is such a concurrence. As will appear there are also telling indicators in Bahamian legislation about the succession to property upon death that this is so.

As is well-known, at least by lawyers, the survivor of two beneficial joint tenants of property...