Catherine Armstrong v Catherine Armstrong
| Jurisdiction | England & Wales |
| Judge | Paul Matthews |
| Judgment Date | 23 August 2019 |
| Neutral Citation | [2019] EWHC 2259 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: E31BS377 |
| Date | 23 August 2019 |
[2019] EWHC 2259 (Ch)
HHJ Paul Matthews
(sitting as a Judge of the High Court)
Case No: E31BS377
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS IN BRISTOL
PROPERTY TRUSTS AND PROBATE LIST (ChD)
Bristol Civil Justice Centre
2 Redcliff Street, Bristol, BS1 6GR
Nicholas Pointon (instructed by Clarke Willmott LLP) for the Claimant, First and Second Defendants
Hearing dates: 2 August 2019
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
This is my judgment on a claim brought under Part 8 of the CPR, the claim form having been issued on 27 December 2018. The details of claim accompanying the claim form and incorporated within it show that the claimant seeks declaratory relief (in effect, the determination of questions of construction) or alternatively rectification, in relation to written documents constituting trusts of two different life assurance policies, made in 2005 and 2007 respectively. I call these the “2005 trust” and the “2007 trust” respectively. The claimant is the surviving trustee of one of the trusts, and a trustee with her sister, the second defendant, of the other. They are also the default beneficiaries of the 2005 trust, and claim to be the default beneficiaries of the 2007 trust. Their parents, Leonard and Mary White, created the 2005 trust, and Mrs White alone created the 2007 trust. They are both now dead.
Curiously, the claimant is also the first defendant to this claim, thus appearing on both sides of the record. I was told that this was done because she has two capacities, both trustee and beneficiary. (This is odd because, as I say later, it appears that the second defendant is a trustee of one of the trusts.) However that may be, the claimant in her capacity as first defendant has not filed an acknowledgement of service, although the second defendant has (via the same solicitors as the claimant). That acknowledgement indicates that the second defendant does not intend to contest the claim. Although the second defendant was present in person at the hearing, in practice the claimant's counsel was representing both sides. This is undoubtedly friendly litigation. I record that, before the claim was issued, HMRC were invited to say whether they wished to be named or joined as parties or to be heard on the claim. They replied to say that they did not wish to take part in the proceedings but wished the court to be referred to various decisions concerned with rectification. I was so referred. I will return below to the question of the irregular constitution of these proceedings.
Evidence
The claim was originally supported by (i) a witness statement dated 23 July 2018 with exhibits, by the claimant, and (ii) a witness statement dated 11 April 2018 by Andreas Pretorius, who advised Mr and Mrs White at the time of the making of the second trust in question. Unfortunately, neither witness statement complied with the rules governing the form of such statements, and in particular CPR Practice Direction 32, paragraph 18.1. An odd feature of the witness statement of Mr Pretorius was that he said he had read the claimant's witness statement and agreed with it, even though it was made some three months after his own. This was explained to me as an intended reference to a draft of the claimant's witness statement.
When I considered the papers in this claim at an earlier stage, I formed the view that there were some difficulties with the evidence. The claimant's witness statement is quite full, but she was not involved in any way with the creation of either trust, and can give no significant evidence about what happened at that time. Mr Pretorius in his statement (which was very short, running to 5 paragraphs in total) gave only very general and limited evidence about the circumstances of the creation of the 2007 trust, and in particular about the intentions of Mrs White at that time. He was not involved as a financial adviser to Mr and Mrs White in 2005, and could give no evidence as to the creation of the earlier trust. The person who did advise Mr and Mrs White at that time has since retired and been lost sight of. Moreover, the company of financial advisers for which both of them worked was taken over in 2009 and the business subsequently moved back to the United States. That means that it has not been possible to find any files relating to these transactions.
Essentially, the only evidence available consists of the documents which Mr and Mrs White themselves had and which had been passed on to the claimant, and what Mr Pretorius can remember. It is for this reason that I directed that Mr Pretorius attend at the hearing of the claim to be examined on his witness statement. He also amplified some of the matters referred to in his statement, and added some new material. I record here that he was a clear and straightforward witness, and did not try to say any more than he could remember of events now more than ten years ago. I am satisfied he was telling the truth and trying to assist the court, and I accept what he says.
Other potentially relevant matters, which might have been covered in the evidence originally filed, were not in fact so covered. This includes evidence about the members of the family (in particular if there were any other siblings), whether Mr and Mrs White had any responsibility towards other family members or friends, and whether either or both of Mr and Mrs White made wills, if so who benefited under them, and, if they did not make any, who would be entitled on their intestacy. At the hearing, this lack of evidence was resolved by a direction that a further witness statement addressing these issues be filed, as indeed it was.
The claimant's second witness statement is dated 14 August 2019, and was filed at court the same day. It gives details of family members, the testamentary provision made by both Mr and Mrs White, and also exhibits a further letter from Clarke Willmott to Mrs White dated 10 January 2014. I have taken account of this further evidence, and will refer to it in due course.
Constitution of the claim
At the hearing I also raised the question of the constitution of the claim, as mentioned above. It is clear on the authorities that a person who has more than one capacity, such as trustee and beneficiary, should be joined as a party to litigation once only, and on a single side of the record. Thus, in Neale v Turton (1827) 4 Bing 149, where one member of a partnership drew a bill of exchange on that partnership (including himself), which was accepted, and then sought to sue the whole partnership (including himself) on it, Best CJ said (at 151):
“There is no principle by which a man can be at the same time Plaintiff and Defendant.”
And, in Hardie & Lane Ltd v Chiltern [1928] 1 KB 663, CA, a claim was brought against members of an association, three of whom were mentioned twice over, being sued first on their own behalf and second on behalf of all the other members of the association. Sargant LJ said (at 699):
“I desire to add, though the matter is perhaps one of form rather than substance, that it is incorrect to make any individual the defendant twice over because he happens to fill two capacities or has two different interests. The case often arises in actions in relation to trusts and the practice to the contrary is, in my experience, invariable.”
At the hearing of this claim I therefore ordered that the claimant be removed as first defendant, so the position was regularised, as was done by Rimer J in Allnutt v Wilding [2006] EWHC 1905 (Ch), [4]. If a trusteeship had needed to be transferred to a third party to resolve the difficulty, then that could have been ordered too, as Maugham J did in Re Phillips [1931] WN 131; and see also Public Trustee v Guaranty Trust [1980] 2 SCR 931, 115 DLR (3d) 513, SCC. The double appearance of the claimant did not cause any particular difficulty in this case, but in other cases practical questions may arise, such as, for example, double legal representation, set-off and enforcement, and so it is well to avoid the problem in the first place.
The terms of the trusts
I turn now to the terms of the 2005 and 2007 trusts, and the issues which have been raised in this claim. Each of the trusts involved a life insurance policy granted by Legal and General Assurance Society Ltd. It appears that each policy was granted on the joint lives of Mr and Mrs White. However, in the case of the 2005 trust, the policy appears to have been applied for by, and granted to, Mr and Mrs White together, whereas in the case of the 2007 trust, it appears to have been applied for by, and granted to, Mrs White alone. The first trust document operated as a declaration of trust, so Mr and Mrs White were the first trustees. However, on 6 January 2006 their two daughters (the claimant and the second defendant) were appointed as additional trustees. In the case of the 2007 trust, it appears that Mr White and the claimant were appointed as additional trustees at the time that the declaration of trust was signed by Mrs White.
The 2005 trust
The original trust provisions for the 2005 trust are contained in what was evidently a booklet of four pages, of which the first is simply a cover page. It bears the title “Trust Schedule Including Trust Provisions For With Profit Bonds and Investment Bonds”. The second page (which faces the third page in the booklet) contains at the top some “Important Notes for the Customer”. These are not part of the trusts. On the rest of the page is text headed “Trust Provisions – Non-Statutory Flexible Trust”.
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