David Walter Bird v Lantern Recovery LLP
| Jurisdiction | England & Wales |
| Judge | Gerald |
| Judgment Date | 19 May 2021 |
| Neutral Citation | [2021] EWHC 1379 (Ch) |
| Date | 19 May 2021 |
| Docket Number | Claim number: BL-2018-001821 |
| Court | Chancery Division |
[2021] EWHC 1379 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURT
BUSINESS LIST
His Honour Judge Gerald
Sitting as a judge of the High Court
Claim number: BL-2018-001821
Mr T.J.B. Dumont QC for the Claimants (instructed by Gosschalks LLP)
Mr Thomas Roe QC and Ms Clara Johnson for the Defendants (instructed by Duffield Harrison LLP)
Introduction
The Claimant solicitors of Crane & Staples are the executors of the estate of the late Sheila Jessie Coleman who died unexpectedly on 20 th May 2015 aged 81 in Spain where she had lived since 2012 leaving her last will dated 13 th October 2014 dealing with her English estate and her Spanish will dated 21 st April 2015 for her Spanish estate. She was survived by her two children Lynn Engledew, then aged 62, and her two children Jos and Mac, then aged 40 and 37 respectively, and her son the Fourth Defendant (“Ray”) then aged 58 and his three children Craig, the Sixth Defendant, Lee, the Fifth Defendant, and Ryan then aged 40, 38 and 33 respectively.
Mother survived her husband of 53 years Joseph Henry Coleman by just under ten years. He died on 25 th October 2005 aged 75 also unexpectedly after a short illness. By his last will dated 31 st March 2004 he left his one-third shares in the family businesses colloquially referred to as “Lantern” to Ray and a specific legacy of the prevailing £275,000 nil-rate band (“NRB”) to Lynn, the residue being bequeathed to mother who, together with David Taylor, were appointed co-executors. By the time of father's death, Lynn and Ray's relationship was fraught, not having spoken to each other since 1999 when Lynn left the family business to set up her ow business having joined it in around 1986.
Because much of father's liquid assets were held jointly with mother so devolved to her by survivorship and the Lantern shares took priority over Lynn's gift, it then appeared that there was only sufficient to pay Lynn £20,000 of her bequest, leaving £255,000 unpaid. This caused great upset to Lynn, ultimately causing or contributing to her three-year estrangement from mother (September 2010 to September 2013) during which time there was no, or virtually no, contact with Lynn's family save for a meeting in the Salisbury Hotel in Hertford in November 2010 albeit that mother continued to send Christmas and birthday cards and cheques, which were not encashed, notwithstanding that at one point Lynn was cut out of her English will.
By her last English will, mother gifted her one-third shares in Lantern to Ray, her residuary estate passing to Lynn having gifted £5,000 to each of her five grandchildren. By her last Spanish will, she left her Spanish estate, principally the flat in Estepona which she had owned with father and had been used for many years for family holidays and where she had moved in 2012 to live with her new partner Norman White, to Lynn having by previous wills gifted it equally to Ray and Lynn.
In the last five years of mother's life, at a time when largely in Spain, estranged from Lynn leaving Ray to look after her English financial affairs having put him on her bank mandate shortly before leaving and to whom her mail was re-directed (December 2011), she sold her former matrimonial home Kingsdale for approximately £1.2 million, £1 million of which was loaned via Ray to Lantern, the other £220,000 being withdrawn by Ray using his mandate and paid into Lantern's bank account. Also in those last five years, mother is said to have waived £847,200 dividends from Lantern.
In October 2014, by which time she was reconciled with Lynn, mother instructed new solicitor Eileen Ismay to draw up her last will, telling her she was owed £1 million or thereabouts by Ray, or Lantern which she self-evidently expected what was left on her death would go to Lynn as residuary beneficiary, and had received no dividends. She made no mention of owing Ray or Lantern any money, and before issuance of these proceedings Ray had written confirming that mother owed nothing.
Instead of righting her conscience by “re-inheriting” her daughter by her last will, Ray's evidence is that mother was lying to her solicitors to appease and conceal from Lynn that she had gifted £543,500 of the £1 million loan to purchase a new home for his son Lee and had previously given £300,000 (borrowing £150,000 from himself) to purchase a new home for his other son Craig. Contrary to what he had previously confirmed, it is pleaded that mother in fact died owing himself £627,000 so that once the various liabilities are set off against each other, she, or her estate, owes Ray and Lantern £94,700 as counterclaimed plus £95,600 rent repayment to Ray from Blanche Lane – striking, or strange, given that just before she died Ray, or Lantern, was about to transfer £350,000 for her to buy a new flat in Spain.
Where an albeit vital, spritely but elderly lady is said to have gifted such large amounts of money and waived equally large amounts of dividends to benefit one side of the family whose paterfamilias was looking after her affairs in absentia whilst for some of the time estranged from the other dis-benefitted side and is now said to be her major creditor, the court will naturally look with a jealous eye at what is said to have occurred, always bearing in mind that the estrangement might itself be the motivator of such munificence. All the more so where, despite allegations to the contrary, there is no evidence that mother at any stage received independent advice, or any professional advice, in relation to any of the transactions in issue.
The jealousness of the gaze is intensified by the absence of any evidence of discussion or advice that the £150,000 allegedly owed to Ray be deducted from the £1 million she lent; that the £722,600 (£627,000 plus £95,600) allegedly owed and now counterclaimed for be repaid out of her £847,200 dividends in a tax efficient or other way. In stark contrast, £855,050 dividends declared for and accreted to his children and ex-wife Corinne or their trust were used to pay off their loan accounts in a tax efficient way. There was, therefor, a striking asymmetry between the financial treatment of Ray's family and that afforded to mother, the business-founder and thirty-year owner, mostly in the last five years of her life aged 76 to 81 whilst abroad having entrusted her affairs to Ray.
This reveals the central illogic, or flaw, in the Defendants', or Ray's case. If what is now pleaded is true, mother gifted £300,000 for Craig, £543,500 for Lee and £847,200 for Ray's family indirectly via their Lantern shareholdings as she racked up £722,600 debts to Ray. Meanwhile, Ray, ostensibly looking after mother's financial affairs, orchestrated repayment of his children's loan accounts from the £855,050 dividends without like treatment for mother. Thus, on Ray's own pleaded case, the interests of his family were preferred to those of mother, she dying unaware that she owed her son any money. Had the £350,000 for the new flat been transferred to her that, on Ray's case, presumably would have been added to her indebtedness to Ray or Lantern.
The Claimants also claim that at the time of father's death, he (and mother) were entitled to equal ownership of land at Blanche Lane, which was treated as sold for £1 million after his death and credited to Ray's LRS loan account, and also £164,836 loaned to purchase earlier properties for Craig and Lee in 1997 and 2001 based upon documentation elicited during administration.
Central issues
The essential issues for determination are:
Father's estate
a. Was Blanche Lane owned beneficially three-ways or by Ray absolutely?
b. Was the £164,836 loaned to buy homes for Craig and Lee in 1997 and 2001 beneficially owned by father or by Ray absolutely?
Life-time loans or gifts by mother
c. Did mother lend £150,000 to buy Craig's new home in 2007; or gift £300,000, borrowing £150,000 from Ray: if so, should it be set aside by Ray's undue influence?
d. Did mother lend £1 million at 8.5% in 2012; did she gift £543,500 to buy Lee's new home: if so, should it be set aside by Ray's undue influence?
Mother's waiver of £847,200 dividends
e. Did mother's 22 nd August 2011 waiver cover £113,400 dividends declared on 29 th March 2011?
f. Did mother sign 7 th September 2012 waiver of dividends declared on that day?
g. Did mother authorise Craig (or Ray) to sign 20 th December 2013 waiver of £88,400 dividends declared on that day?
h. Should all or any of the valid waivers be set aside by Ray's undue influence?
Counterclaim
i. What, if any, sums are due on the counterclaims?
Notwithstanding the number of witnesses called by both sides and the volume of documents, the answers to these questions depend almost entirely upon the credibility of Ray because it was he who was principally involved in the transactions, Lynn knowing nothing or virtually nothing about any of them by reason of estrangement and non-involvement with Lantern affairs through whose bank accounts the money passed. Documentary evidence is of little assistance, because it is inconsistent, contradictory, sometimes incomprehensible and oft times demonstrably false, designed to satisfy HMRC for tax purposes but not reflecting actualité.
Summary conclusions
Mother lent £150,000 to the 1997 Settlement trustees and £1 million to Lantern at 8.5% which, together with the £220,000 taken from her RBS account, fall to be repaid (the Claimants confining their interest on the £300,000 part of the loan to 4.75%). The Claimants have failed to establish beneficial ownership in Blanche Lane or of the £164,836 loans.
There has...
To continue reading
Request your trial