Colin Johnston v Natalie Elsie Wackett (in her capacity as executrix of the estate of Lord Sidney Albert Johnston deceased)
| Jurisdiction | England & Wales |
| Judge | Brightwell |
| Judgment Date | 28 January 2022 |
| Neutral Citation | [2022] EWHC 129 (Ch) |
| Docket Number | Case No: PT-2020-000318 |
| Year | 2022 |
| Court | Chancery Division |
[2022] EWHC 129 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
PROPERTY, TRUSTS AND PROBATE LIST (ChD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
DEPUTY MASTER Brightwell
Case No: PT-2020-000318
David Giles (instructed by Brightstone Law LLP) for the Claimant
Romie Tager QC and Maxwell Myers (instructed by Branch Austin LLP) for the Defendant
Hearing dates: 11 and 12 November 2021
Approved Judgment
This Part 8 claim relates to the administration of the estate of the late Sidney Albert Johnston, who died on 27 March 2017.
In earlier proceedings brought under the Inheritance (Provision for Family and Dependants) Act 1975 (“the 1975 Act”) the claimant, Colin Johnston, sought an order for reasonable financial provision from the estate of his late father, Sidney Johnston. Following a trial before Mr Edwin Johnson QC (now Edwin Johnson J) sitting as a Deputy Judge, the claimant was awarded a lump sum of £125,000 from his father's estate, together with an order for costs, including for payment of £50,000 on account of those costs. The Deputy Judge handed down his judgment on 11 December 2019, following a trial between 5 and 12 November 2019 (“the 2019 Judgment”: [2019] EWHC 3353 (Ch)).
The defendant, Natalie Wackett, is Sidney Johnston's granddaughter, being the daughter of Colin's late brother, Gary Johnston. She is the executrix and sole beneficiary of Sidney's estate, according to his last will dated 10 January 2017, to which probate was granted on 28 February 2018.
Like the Deputy Judge in the 2019 Judgment, I will refer to the parties and other family members by their first names, also intending no discourtesy in doing so.
As at the 2019 trial, Colin was represented by Mr Giles, and Natalie by Mr Tager QC and Mr Myers. I have also had the benefit of a note of the oral evidence prepared by Mr Myers, for which I am grateful. As will be apparent, the evidence was of very much narrower scope than that in issue during the 2019 trial.
The issue
The question that now arises is whether the Natalie in her capacity as personal representative can, in the administration of Sidney's estate, deduct or net off from the claimant's 1975 Act award the amount of an unsatisfied costs order dating from 1998 plus interest (in a total sum said to be £116,055.75), under the rule in Cherry v Boultbee (1839) 4 My & C 442. The existence of the costs order, and the reasons why it was unenforced, were considered at the 2019 trial but Natalie's evidence is that she discovered documentation appearing to quantify the liability after a search conducted by her after the 2019 Judgment was handed down.
Colin has brought this claim in substance if not in form under CPR Part 64.2(a), asking the court to determine a question arising in the administration of Sidney's estate, namely whether Natalie was entitled to net off the sum of £116,055.75, leaving him with around £8,900 of the £125,000 awarded to him by the Deputy Judge.
The rule in Cherry v Boultbee was explained by Lord Walker of Gestingthorpe JSC this way in In re Kaupthing Singer & Friedlander Ltd (in administration) (No.2) [2012] 1 AC 804 at [8]:
“The expression ‘the rule in Cherry v Boultbee’ suggests a technical rule of some complexity. Any such impression would be misleading. It is basically a simple technique of netting-off reciprocal monetary obligations, even where there is no room for legal set-off, developed and used by masters in the Court of Chancery in giving directions for the administration of the estates of deceased persons. Complication arises only in a situation of insolvency, where the equitable rule produces a different outcome from that produced by statutory set-off.”
In the context of the administration of an estate, Cozens-Hardy MR described the effect of the rule thus in Turner v Turner [1911] 1 Ch 716 at 719:
“You, the debtor, have in your hands part of the assets of the testator and you cannot claim any part of the assets of the testator, out of which of course your legacy must be paid, without bringing into the estate that portion which is now in your pocket; or, in other words, your legacy must be treated as paid pro tanto out of the assets of the testator which you have in your pocket.”
When an order is made in favour of an applicant under the 1975 Act, it is deemed to have had effect for all purposes as from the deceased's death subject to provisions of the order: 1975 Act, s.19(1). It seems clear, therefore, that such a person, when a lump sum order is made, is treated as a legatee under the will and thus as a beneficiary of the estate. See Re Jennery (deceased) [1967] Ch 280 at 285.
The rule applies even where the debt was statute barred at the time of the testator's death: In Re Akerman [1891] 3 Ch 212 at 221. An order for costs does not become wholly unenforceable by the effect of the Limitation Act 1980. Section 24 of that Act precludes the bringing of any action upon a judgment debt after six years from the date on which it became enforceable, but this does not prevent an application (now under CPR Part 83.2(3)) to extend time for execution under a judgment: see National Westminster Bank plc v Powney [1991] Ch 339.
The 2019 Judgment
In the 2019 Judgment, in making an award of £125,000 in Colin's favour, the Deputy Judge set out in detail his factual findings regarding Colin's circumstances, and the relevant family history. I do not seek to set all that history out again here. For the purposes of this judgment, it suffices to record that Colin and Sidney worked together for many years, but their relationship suffered a permanent rift in 1991. The 2019 Judgment records the following at [132]:
“Taking all the evidence and submissions which I have read and heard into account, and taking all of the documentation before me into account, my principal findings as to the circumstances of Colin's departure from the Car Business and the Property Business, in February 1991, are as follows.
(1) In the period prior to February 1991 there were increasing disagreements between Colin and Sidney over the direction of the Car Business, in respect of which Gary took the side of his father. The position was aggravated by the long standing problems which existed in the relationship Colin had with his parents and, in particular, with Sidney.
(2) Matters came to a head in February 1991 in a heated meeting attended by Colin, Gary, and Sidney at which there were angry exchanges. The upshot of the meeting was that Sidney indicated to Colin that he could leave if he did not like what was happening. Colin, having reached the end of his toleration of the situation, took up that invitation and left.
(3) The situation was not one where it could be said that Colin was responsible for his own departure. Relations had deteriorated so seriously that the only solution was for Colin, on the one side, and Sidney, on the other side, to go their own separate ways. In terms of responsibility for Colin's departure, I do not think that it can be said that Sidney was in the same position as Colin. The serious deterioration in relations which caused the final rift was, at least in substantial part, the result of the long standing problems which existed in the relationship between Colin and his parents and, in particular, between Colin and Sidney. I do not find that Colin was responsible for these long standing problems. I do find that responsibility for these long standing problems rested with Sidney. In this sense at least, Sidney was responsible for Colin's departure.”
In the final section of the 2019 Judgment, the Deputy Judge carefully considered each of the statutory criteria in section 3 of the 1975 Act in determining, for the purposes of section 2, whether the disposition of Sidney's estate effected by his will was not such as to make reasonable financial provision for Colin's maintenance, in all the circumstances of the case.
When considering the size and nature of the estate, the Deputy Judge said the following at [204]:
“The Estate is substantial. This is not a case where the applicant is competing with a beneficiary or beneficiaries for a share of a limited estate. Assuming that the Estate has a net value (after tax) of around £1.4 million, Colin's claim is for less than 10% of that net value. £125,000 [the award for which Colin, at trial, contended] is a substantial sum of money, but relative to the value of the Estate it is not that large.”
The Deputy Judge then considered in some detail the evidence as to the conduct of the parties and Natalie's submission that, having abandoned his father and held to that decision for over 25 years, Colin should not be permitted to re-surface with a claim on the estate. The Deputy Judge concluded at [217], however, that Sidney owed a moral obligation to Colin to make provision for him out of his estate, and that this obligation remained operative as at Sidney's death, and that in terms of conduct the scales came down firmly in favour of Colin, as between Sidney and Colin. Natalie's own exemplary devotion to Sidney did not turn the scales against Colin.
The 2019 Judgment set out the reasons for accepting that £125,000 as a lump sum was the appropriate award, thus constituting financial provision that it was reasonable in all the circumstances of the case for Colin to receive for his maintenance. As to Colin's financial needs and financial obligations and responsibilities, the Deputy Judge at [194] described his current...
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