David Alan Caldicott v Pamela Yvonne Richards

JurisdictionEngland & Wales
JudgeMrs Justice Falk
Judgment Date03 April 2020
Neutral Citation[2020] EWHC 767 (Ch)
Date03 April 2020
Docket NumberCase No: PT-2018-000499
CourtChancery Division

[2020] EWHC 767 (Ch)

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES

CHANCERY DIVISION

Royal Courts of Justice

Rolls Building, Fetter Lane, EC4A 1NL

Before:

Mrs Justice Falk

Case No: PT-2018-000499

Between:
(1) David Alan Caldicott
(2) Sian Caldicott
(3) David Alexander Caldicott
Claimants
and
(1) Pamela Yvonne Richards
(2) Louise Anne Walker
Defendants

Edward Sawyer (instructed by Placidi & Co) for the Claimants

Thomas Dumont QC (instructed by Hunters Law LLP) for the Defendants

Hearing dates: 10, 11 & 13 March 2020

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.

Mrs Justice Falk Mrs Justice Falk

Introduction

1

This dispute relates to a discretionary trust (the “Trust”) established under the will of Yvonne Caldicott, who died in November 2012. The first claimant, David Caldicott, and the first defendant, now called Pamela Pearson, are Yvonne's children. The second claimant, Sian Caldicott, is David Caldicott's wife, and the third claimant, David Alexander Caldicott, is their adult son. I will refer to the claimants as Mr Caldicott, Mrs Caldicott and David Alexander (to distinguish him from his father, and without intending any disrespect). The discretionary beneficiaries of the Trust comprise a closed class consisting of the three claimants and Mrs Pearson. There are currently two trustees, Mrs Pearson and the second defendant Louise Walker, a partner at Hunters Law LLP (“Hunters”), the solicitors for the defendants.

2

The main asset of Yvonne's residuary estate was an interest in a holiday park on the Isle of Sheppey (the “Holiday Park”). The direct ownership of the Holiday Park is split between two companies, Isle of Sheppey Holiday Village Limited (“IoSHV”) and Wyvern Securities Limited (“Wyvern”), which rent out chalets at the park. At her death Yvonne owned 100% of the shares in Wyvern comprising 100 ordinary shares and 900 preference shares. Wyvern in turn owned 95.8% of the shares in IoSHV. Yvonne also owned 0.2% of IoSHV directly. Mrs Pearson had been a director since 1994, alongside Yvonne. Mrs Pearson's husband was appointed as a second director shortly following Yvonne's death.

3

Under Yvonne's will her residuary estate was split equally between Mrs Pearson and the Trust, and reflecting this each acquired a 50% interest in Wyvern. The dispute arises out of the sale by the Trust of a 15% holding in Wyvern to Mrs Pearson for £204,660 (the “Share Sale”), which resulted in Mrs Pearson holding a 65% interest in Wyvern and the Trust owning 35%. The claimants seek to set aside the transaction as a self-dealing purchase on the basis that fully informed consent was not obtained, and also seek removal of the defendants as trustees.

Background

4

The Holiday Park has been in the family since the 1950s. It formed part of a family business that grew over time to include six holiday camps together with other activities, including property development. Mr Caldicott worked in the business with his father. Mrs Pearson was a solicitor by profession, although she was involved in the family business in a company secretarial role. The business collapsed in circumstances which led to Mrs Pearson losing her home as a result of security granted to lenders. Mr Caldicott also became bankrupt in the early 1980s. The Holiday Park is the only asset of the business that remains in family ownership.

5

The will establishing the Trust was made on 28 February 2012, shortly before Mr Caldicott was declared bankrupt for a second time on 13 March 2012. It replaced an earlier will under which Yvonne had divided her residuary estate equally between her two children. Yvonne left no letter of wishes, but a draft letter of wishes produced for signature by Mrs Pearson in 2013 and addressed to the trustees of the Trust (intended for use in the event of her death) records what her mother had discussed with her, namely that Mr Caldicott should be treated as the primary beneficiary during his lifetime, and in the event of his death the Trust should be held for the benefit of David Alexander for his lifetime and, on his death, should pass to his children in equal shares.

6

Both Mrs Pearson and Mr Caldicott were appointed as executors and trustees, but Mr Caldicott renounced his executorship and disclaimed the trusteeship on 4 January 2013. Mrs Pearson became the sole executor but appointed Mrs Walker as a co-trustee of the Trust on 19 April 2013. Mrs Pearson had been a partner in the private client department at Hunters (a role from which she had retired before 2012), and had previously worked closely with Mrs Walker, who was initially a junior colleague of hers.

7

Following a number of discussions between Mrs Pearson and Mr Caldicott the Share Sale took place in May 2013, using the probate valuation. The undisputed aim of the transaction was to put the Trust in sufficient funds to enable it to lend £200,000 to Mrs Caldicott for the purposes of a new business venture which she would undertake with Mr Caldicott following his discharge from bankruptcy. The loan was interest-free and repayable on demand. It remains outstanding.

8

The defendants appreciated the potential application of the self-dealing rule and sought to obtain the claimants' consent to the transaction pursuant to “disclosure letters” which were sent to each claimant and were countersigned at a meeting at Hunters' offices on 10 May 2013. However, the claimants say that there were material non-disclosures, particularly in relation to an understanding that the trustees would have an option to buy the shares back from Mrs Pearson. Mrs Pearson says there was an “informal” option, but that it was time limited to two years, rather than being exercisable whenever the loan was repaid. The claimants say that they understood that the trustees would have the benefit of an open ended option.

The witness evidence

9

I heard oral evidence from Mr and Mrs Caldicott and from both defendants. Although it had been envisaged that David Alexander would also give oral evidence, this proved not to be possible for reasons that were explained to the court, and his witness statement was admitted as hearsay evidence.

Mr Caldicott

10

On the whole I did not find Mr Caldicott to be a satisfactory witness. Although it is understandable that there would be gaps in his recollection of particular events, I had particular concerns about some aspects and I found some of his evidence to be unreliable, generally preferring the evidence of Mrs Pearson in respect of those matters. I deal with specific points below but, in particular, I did not accept his portrayal of the events leading up to Yvonne's new will being made in February 2012, his evidence relating to the renunciation and disclaimer of his executor and trustee roles, or his evidence relating to the “package” that he claimed his sister had agreed shortly after Yvonne's death. Other evidence, for example about a suggestion that inheritance tax should have been paid in instalments, about his sister's assistance to his family, and about his lack of knowledge about the Trust, was in my view somewhat disingenuous. I also do not accept his evidence that he left entirely to the defendants the description to his wife and son of the Share Sale and related arrangements of which the Share Sale formed part.

Mrs Caldicott

11

Much of Mrs Caldicott's evidence was of fairly limited assistance because key areas of dispute related to matters discussed between Mr Caldicott and Mrs Pearson. However, it was clear that there were discussions between Mr and Mrs Caldicott about the terms of the Share Sale and proposed loan, and that Mrs Caldicott was keen to obtain the loan. The extent to which those discussions covered the details of the option was a matter of some significance, and I deal with that below.

12

It was clear that the relationship between Mrs Caldicott and Mrs Pearson has not been a good one. Mrs Caldicott was perfectly open about that, but it was not to her credit that her evidence was embellished by a description of an incident that occurred at the time of Yvonne's death, which appeared to have very little, if any, relevance and to have been included in an attempt to portray Mrs Pearson in a negative manner. The attempt did not succeed.

13

Mrs Caldicott was also in my view less than fully open in relation to a conversation she had with her son at the time of the meeting that led to the disclosure letters being signed.

David Alexander

14

David Alexander's evidence needs to be treated with some care, because he was not available for cross-examination. His witness statement indicates, and it is not in dispute, that he lives with dyspraxia and can struggle to understand complex language. So far as necessary to my decision, I consider his evidence below.

Mrs Pearson

15

Overall I found Mrs Pearson to be a credible witness, who gave her evidence in a straightforward manner. In general terms, her descriptions of meetings and discussions with her brother were more consistent with contemporaneous documentary evidence and with inherent probabilities than those of her brother. This is subject to a specific issue in relation to the option arrangement, discussed further below, where I was not sufficiently persuaded that Mrs Pearson's own recollection of events was entirely accurate.

Mrs Walker

16

Mrs Walker's recollection of specific events was generally too limited to be of material assistance. The court was, however, significantly assisted by the near contemporaneous attendance notes that Mrs Walker had prepared of meetings and calls, and in one case by her ability to help the court understand her handwritten notes of a meeting that formed the basis of the typed attendance note.

The...

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