Costello v Costello
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE DILLON,LORD JUSTICE LEGGATT,LORD JUSTICE HENRY |
| Judgment Date | 03 March 1994 |
| Judgment citation (vLex) | [1994] EWCA Civ J0303-5 |
| Docket Number | No. CCRTF 93/0293/C |
| Court | Court of Appeal (Civil Division) |
| Date | 03 March 1994 |
[1994] EWCA Civ J0303-5
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
(ON APPEAL FROM MAYOR'S & CITY OF LONDON COURT)
(Assistant Recorder Ross-Martin)
Before Lord Justice Dillon Lord Justice Leggatt and Lord Justice Henry
No. CCRTF 93/0293/C
MR. R. REED QC and MISS W. FISHER-GORDON (instructed by Messrs. Janet Ali, London) appeared on behalf of the Appellant.
MR. G. WILLIAMS QC and MR. A. GLENNIE (instructed by Messrs. E. Edwards Son & Noice, London) appeared on behalf of the Respondent.
This is an appeal by leave granted by Kennedy LJ by the defendant in the action, Mrs. Francis Audrey Costello ("Mrs. Costello") against a decision of Mr. Assistant Recorder Ross-Martin made in the Mayor and City of London Court on 19th October 1992.
The respondent to the appeal is Mr. Barry Thomas Costello, the plaintiff in the action, who is a son of
Mrs. Costello and her husband (now deceased) Mr. William Charles Costello.
The proceedings concern a property known as number 16 Bournemead Avenue, Northolt, in the London Borough of Ealing. Mr. William Charles Costello and Mrs. Costello occupied that property for very many years as council tenants. They got the opportunity of buying the freehold of the house at a very much reduced price under the 'right to buy' policy, because of their long occupation, and they did so. The reduced price of £18,500 was provided by Mr. Barry Costello. The purchase was completed by transfer of the 7th April 1986, made between the Council of the London Borough of Ealing, of the one part, and Mr. William Charles Costello and Mrs. Costello of the other part. It appears that Mr. Barry Costello was working overseas at the time of the completion of that purchase and he was concerned to take steps to protect his interest.
Accordingly, a deed was prepared by solicitors which was executed on 10th December 1986. It was made between Mr. and Mrs. Costello, of the one part, and Mr. Barry Costello of the other part. It provides in the operative part as follows.
"1) Mr. and Mrs. Costello hereby declare that they hold the said property or the net proceeds of sale thereof in trust for Mr. Barry Costello absolutely and Mr. and Mrs. Costello agree that they will at the request and cost of Mr. Barry Costello given at any time enter into an executed Transfer of the said property to such person or persons at such time or times in such manner or otherwise deal with the same as he shall direct or appoint and will at all times execute and do all such documents acts and things as may be necessary to procure the appropriate registration or entry in the Land Register to give effect to any such dealing but subject always to the rights granted by clause (2) hereof.
2) For so long as Mr. and Mrs. Costello shall desire Mr. Barry Costello will permit Mr. and Mrs. Costello to occupy the said property for the remainder of their lifetime free of rent and without any interruption or disturbance by Mr. Barry Costello or any person or persons claiming under or in trust for him.
3) Mr. and Mrs. Costello covenant with Mr. Barry Costello that they will indemnify and keep indemnified Mr. Costello and his estate and effects against
(a) the cost of keeping the property and the contents thereof insured against fire and the usual comprehensive risks to the value thereof
(b) to pay all rates taxes and gas electricity telephone and other charges and outgoings payable in respect of the property
(c) the cost of keeping the said property in good repair and condition".
Mr. William Charles Costello has died, but Mrs. Costello is still living. It is not in doubt that clause (2) was intended to permit Mr. and Mrs. Costello, or the survivor, to occupy the property. There is no question of it having been a mere joint lives right of occupation.
Unfortunately troubles have to some extent arisen between Mrs. Costello and Mr. Barry Costello. They are irrelevant to the question of the effect of that deed, but explain no doubt why the parties are not agreed on what the effect of the deed is. It is said for Mr. Barry Costello that clause (2) gives Mrs. Costello a mere licence, not conferring any interest in the property, to occupy the property for the remainder of her life rent free. Mr. Barry Costello says he has no intention whatsoever to seek to determine that licence, but he requires the property to be transferred into his sole name under clause (1).
It is said for Mrs. Costello that the effect of giving her a right to occupy the property for the remainder of her life is to make her the tenant for life of the property for the purposes of the Settled Land Act 1925, with the consequence, which was no doubt not envisaged at the time the deed was entered into, that she would be entitled to sell the property as tenant for life, the proceeds would be received by trustees who would be able to apply the proceeds in buying a different property in which Mrs. Costello would have a like right of occupation for life.
As I see it, the question really depends on the validity or otherwise of what was said in this Court in the case of Bannister v. Bannister [1948] 2 AER 133. I will come to that in a moment. It is pertinent, however, to refer to the definition in the Settled Land Act 1925 of what constitutes a settlement.
Section 1 provides that:
"Any deed, will, agreement for a settlement or other agreement Act of Parliament or other instrument, or any number of instruments, under or by virtue of which any land stands for the time being…",
and then so far as material,
"(i) limited in trust for any persons by way of succession …
creates or is for the purposes of this Act a settlement".
That wording followed the wording in the 1882 Settled Land Act, and under that Act it was held in the case of
Re Simpson [1913] 1 Ch. 277 , where there had been a specific bequest in a will of the testator's dwelling house known as 'Fairlawn', situate in Westbourne Road, Edgbaston, in trust to permit his widow to occupy the same during her life if she shall so long continue his widow, with a declaration that from and after the decease or second marriage of his wife the dwelling house should fall into and form part of his personal estate, that the property was settled land and she was the tenant for life.
That was also the case in Re. Patten [1929] 2 Ch. 276, where a testator desired in his will that his Aunt Phyllis Patten should have the use of 44 First Avenue, Hove, and his furniture free of cost for her occupation during her life or so long as she may require them but without the power to sublet the same or any part thereof. On the termination of her occupation the house was to be sold and the proceeds to be distributed as set out in his will. She was the tenant for life for the purposes of the Settled Land Act, and the restriction on her power of subletting was consequently void because under the Settled Land Act the requirements of the Act override inconsistent provisions in the document which created the settlement.
Both Simpson and Patten received approval in this court in Re. Aberconway [1953] Ch. 648.
Here we have got this wording which, to my mind, is indistinguishable from the wording in the cases I have just mentioned. We have got the clear intimation at the end of clause (1) of the deed of 10th December 1986 that the absolute right of Mr. Barry Costello under clause (1) was subject always to the rights granted to Mrs. Costello by clause (2). That being the general background, I can turn to the case of Bannister v. Bannister. That was decided by a court consisting of Scott, and Asquith LJJ and Jenkins J. The judgment of the Court was delivered by Scott LJ, but I have no doubt that the references to matters concerned with the Settled Land Act owe a great deal to the high authority of Jenkins J. The facts I can take from the head note.
"On the plaintiff's oral undertaking that the defendant would be allowed to live in a cottage rent free for as long as she desired, the defendant agreed to sell to him that and an adjacent cottage. The plaintiff's undertaking was not included in the formal conveyance. Subsequently, with the defendant's consent, the plaintiff occupied the whole of the first-named cottage with the exception of one room, which the defendant continued to occupy. In an action for the recovery of possession of that room the plaintiff claimed that the defendant had been occupying it as a tenant at will and that her tenancy at will had been duly determined by notice to quit. The defendant counterclaimed for a declaration that the plaintiff held the cottage in trust for her for her life.
Held that the oral undertaking given by the plaintiff created a life interest in the cottage in favour of the defendant, determinable on the defendant ceasing to live in it".
That of course is parallel to Re Simpson and Re Patten. In the judgment of Scott LJ reference is made to the words of the oral agreement which had been found. At 136A he says:
"Similar words in deeds and wills have frequently been held to create a life interest determinable (apart from the special considerations introduced by the Settled Land Act 1925) on the beneficiary ceasing to occupy the premises".
He refers to Re Carne's Settled Estates [1899] 1 Ch. 324 and Re Boyer's Settled Estates [1916] 2 CH 404.
He then says:
"In our view, that is the meaning which should, in the circumstances of the present case, be placed on the words of the oral undertaking found by the learned county court judge to have been given by the plaintiff".
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