Bindra v Chopra
| Jurisdiction | England & Wales |
| Judge | Lord Justice Rimer,Lord Justice Richards,Lady Justice Arden |
| Judgment Date | 19 March 2009 |
| Neutral Citation | [2009] EWCA Civ 203 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: 2008/1968 |
| Date | 19 March 2009 |
[2009] EWCA Civ 203
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Mr Justice Etherton
Lady Justice Arden
Lord Justice Richards and
Lord Justice Rimer
Case No: 2008/1968
Ms Josephine Hayes (instructed by Hugh Cartwright & Amin) for the Appellant, Jennifer Margaret Chopra
Mr Mark Warwick (instructed by Rochman Landau) for the Respondent, Angela Bindra
Hearing date: 27 February 2009
Lord Justice Rimer:
Introduction
This appeal raises a question of construction arising under a declaration of trust made on 19 August 1988. The declaration was one by which the joint owners of a house, held by them upon an express trust for sale, declared their respective beneficial interests as tenants in common in the proceeds of sale. The question of construction is whether, by clause 1, (i) each acquired an absolute interest in his proportion of such proceeds; or (ii) each only acquired a joint lives interest in such proportion, being however an interest destined to be enlarged into an absolute interest upon a sale of the house during their joint lives. The question arises because clause 4 provided that upon the death before sale of either co-owner (as happened), the survivor became entitled to the entirety of the proceeds of sale absolutely. If the clause 1 question is to be answered in the sense of alternative (i), it is agreed that clause 4 operates as a conditional limitation in favour of the survivor that is void as repugnant to the absolute nature of the deceased's clause 1 interest. If, however, it is to be answered in the sense of alternative (ii), then (subject to a further argument that it is a void testamentary disposition), clause 4 operates as a valid remainder to the survivor.
That question, together with others with which we are not concerned, came for decision before Etherton J on the trial of a claim brought by the respondent, Angela Bindra (“Angela”), against the appellant, Jennifer Chopra (“Jennifer”). He regarded the declaration of trust as “on any footing, a most unusual and unhappily drafted document” but held that the clause 1 question was to be answered in the sense of alternative (ii) and that clause 4 was a valid remainder. Jennifer has appealed, with the judge's permission, against that conclusion.
The facts
The first marriage of the late Dr Akash Chopra (“Akash”) ended in divorce in 1986. In 1988 Akash and his sister, Angela, bought a house at 80 Ridge Lane, Watford, Hertfordshire for Akash's occupation. The price was £231,000, to which Akash and Angela made cash contributions of £72,169 and £2,108 respectively. The balance was borrowed from a bank on the security of a charge of the house. Completion of the purchase took place on 19 August 1988, when the house was transferred to Akash and Angela “TO HOLD unto themselves as tenants in common upon the trusts declared by a deed” made on the same day. Akash and Angela were registered at HM Land Registry as joint proprietors of the house in September 1988.
That deed (“the deed”) was the declaration of trust. It recited the transfer of the house to Akash and Angela, the legal charge and their respective cash contributions to the purchase. After then reciting that:
“It has been agreed by Akash and Angela that they shall hold the property jointly as trustees for sale with power to postpone sale and that they shall hold the proceeds of such sale upon trust for themselves as tenants in common.”
the operative parts provided as follows (clauses 1 and 5 include italicised words that it is agreed that the original omitted but have to be read in):
“1. Akash and Angela shall hold the property on trust to sell the same with power to postpone sale unless and until one or both of the parties hereto or persons claiming under him or her or them shall deliver such notice as is hereinafter provided AND upon the sale of the property they shall hold the net proceeds of sale (after deducting thereout the balance of any money due under the said legal charge and the costs incurred in selling the property) on trust for themselves as tenants in common in the proportions hereinafter mentioned.
2. Akash shall be entitled to £72,169.00 of the said net proceeds of sale and Angela shall be entitled to £2,108.00 of the net proceeds of sale.
3. Out of the remaining balance of the net proceeds of sale Akash shall be entitled to [75%] and Angela shall be entitled to the remaining [25%].
4. Upon the death before sale of either Akash or Angela the trustees shall hold the property upon trust for the survivor of Akash or Angela who shall thereupon be entitled to the whole proceeds of sale absolutely.
5. Any party hereto or those claiming under him or her or them may give to the trustees notice in writing requiring the trustees to sell the said property and thereupon the trustees shall use their best endeavours to effect a sale of the said property as soon as circumstances admit.
6. The trustees for the time being of this deed shall have full power to sell mortgage charge lease or otherwise dispose of the property or any part thereof with all the powers in that behalf of an absolute owner.”
Following the purchase, Akash moved into the house and lived there. He later met Jennifer, who moved in with him in 1995. They married in September 2001. Akash made his last will in July 2004, naming Jennifer as his executrix and sole beneficiary. He died in September 2004. Jennifer obtained probate of his will in August 2007. The house was unsold at his death. It was still their matrimonial home.
The house was sold with vacant possession in February 2008 and the net proceeds of £341,846.22 were paid into an interest bearing account pending the outcome of the issues raised by the claim that Angela had commenced against Jennifer in March 2005. Her claim and Jennifer's counterclaim were tried over five days in June 2008 by Etherton J. Angela's claim was that, as the house was unsold at Akash's death, she became absolutely entitled to it and its proceeds of sale under clause 4 of the deed. Jennifer's primary answer was that clause 4 was void as repugnant to the absolute interest in the proceeds given to Akash by clause 1 and that Akash's interest in such proceeds devolved on her under his will. Subject to the repayment to her and Angela respectively of the original cash contributions, she claimed to be entitled to 75% of the balance of the proceeds of sale and accepted that Angela was entitled to the remaining 25%. Etherton J preferred Angela's argument and made a declaration as sought by her.
The judgment below
Etherton J said that his immediate impression was that (subject to the repayment of their respective cash contributions) clause 1 gave Akash and Angela absolute entitlements to the proceeds of sale of the house in the proportions 75/25. If that was right, clause 4 —which purported to shift Akash's absolute interest to Angela —was repugnant to the rights that were incident to that interest and so void. The judge referred to In re Dugdale, Dugdale v. Dugdale (1888) 38 Ch.D. 176, in which Kay J said, at 182:
“I apprehend that this is the test. An incident of the estate given which cannot be directly taken away or prevented by the donor cannot be taken away indirectly by a condition which would cause the estate to revert to the donor, or by a conditional limitation or executory devise which would cause it to shift to another person.”
In coming to his conclusion that that principle did not enable Jennifer to knock out clause 4, the judge had regard also to the well-established principle under which courts should attempt to give an instrument an interpretation that will validate rather than destroy its provisions. Clause 4 was deliberately included in the deed and the court should therefore be slow to favour an interpretation that involves its rejection. The judge referred in that context to the observations of Lord Brougham LC in Langston v. Langston (1834) Cl. & Fin. 194, at 243/244; and also to The Interpretation of Contracts, Lewison, 2007 (para. 7.15), which includes a reference to an observation by Lord Hoffmann in Bank of Credit and Commerce International SA v. Ali [2002] 1 AC 251. Lord Hoffmann was discussing the extent to which the background to a document is admissible for the purpose of its interpretation and said (at 269):
“It is not, for example, confined to the factual background but can include the state of the law (as in cases in which one takes into account thatthe parties are unlikely to have intended to agree to something unlawful or legally ineffective) ….” (Emphasis supplied)
Etherton J's conclusion was that it was possible to, and that he should, interpret the deed in a manner that gave effect to rather than rejected clause 4. He held that the answer lay in interpreting clause 1 as giving Akash and Angela interests in the house and its income during their joint lives or until its earlier sale. Whilst nothing in clause 1 said that expressly, that interpretation was not inconsistent with what it did say expressly. On that basis, clause 4 provided conventionally for cross-remainders after the termination of a life interest and there was no question of its being repugnant to clause 1. The judge rejected Jennifer's alternative argument that clause 4 was a purported testamentary disposition that was void for want...
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REHABILITATING REPUGNANCY? PRESERVING THAT PIECE OF MEDIEVAL LUMBER.
...could not coexist as a matter of strict logic: at 343. An example of this might be the possibility considered in Chopra v Bindra [2009] EWCA Civ 203, which addressed the potential interpretation of a trust for sale of land. Clause 1 of the deed granted A and B beneficial interests in the pr......