George Lavelle v 1. Tracy Lavelle 2. Craig Lavelle 3. Jacqueline Lavelle 4. Graham Yeardley
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE JONATHAN PARKER,LORD JUSTICE MAY |
| Judgment Date | 11 February 2004 |
| Neutral Citation | [2004] EWCA Civ 223 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | A3/03/1257 |
| Date | 11 February 2004 |
[2004] EWCA Civ 223
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT
CHANCERY DIVISION
(HIS HONOUR JUDGE HOWARTH)
Royal Courts of Justice
Strand
London, WC2A 2LL
The Master of The Rolls
(Lord Phillips of Worth Matravers)
Lord Justice May
Lord Justice Jonathan Parker
A3/03/1257
MR P CHAISTY QC AND MR M HARPER (instructed by Messrs Addleshaw Goddard, Manchester M2 3AB) appeared on behalf of the Appellants
MR P M CAWSON QC AND MR P BUDWORTH (instructed by Messrs Fruhman Davies Livingstones, Manchester, M3 2WY) Appeared on behalf of the Respondents
LORD PHILLIPS, MR:
Introduction
This is an appeal from the judgment delivered on 21 May 2003 by His Honour Judge Howarth, sitting as a judge of the High Court. That judgment resolved an unhappy family dispute as to the ownership of a flat, Flat 6, Churchill Place, Monton, which is on the outskirts of Manchester ("the flat") .
The claimant, George Lavelle ("George"), purchased the flat in 1997. The solicitors acting for George were MB Cuttle & Co of Sale. On 13 November 1996 they wrote to George advising him that, because of uncertainty about access to the flat, they would not recommend exchanging contracts. On 26 November 1996 they received a reply, which appeared to be signed by George, in the following terms:
"With reference to your letter dated 13 November regarding the above, I wish to confirm that I want to proceed to enter into a legally binding contract for the flat and complete the matter as quickly as possible. The contract and deeds should be in the name of Tracy Lavelle, notwithstanding the difficulties and despite your advice to the contrary I wish for you to exchange contracts and complete the matter on my behalf. Enclosed please find bankers draft for £1l,500."
The solicitors complied with those instructions, and the flat was conveyed into the name of Tracy Lavelle ("Tracy") . She is George's daughter and the first defendant. The issue before the judge related to the nature and effect of this transaction.
It was George's evidence that he was buying the flat for his own use, that he had no knowledge of the letter of 26 November 1996 and that Tracy must either have forged his signature or tricked him into signing it unread. It was Tracy's evidence that she had no recollection of the letter of 26 November, but she accepted that she had typed it. The signature was George's. George had been taking advice about avoiding inheritance tax, and in November 1996 he had told her that he was putting the flat into the name of herself and her brother, Craig Lavelle ("Craig"), the second defendant, in order to save inheritance tax on his estate. Tracy concluded that he had instructed the solicitors to put the flat in her name in order to save inheritance tax. Her case was that the effect of this was to vest the flat in her to hold for the benefit of herself and Craig absolutely.
Craig advanced the same case. In his witness statement he gave the following explanation for what had occurred:
"Whilst we [Craig and his wife] were away the key letter in this litigation was written — the one dated 26 November 1996 from Lavelles (signed by my father) to Cuttles asking that the deeds to the Property should be in Tracy's name. One evening soon after my return (it would have been about the first week in December 1996), he and I drove over to the Property to see how works were progressing. We made the journey in my two-door Mercedes. During that journey, my father said to me that he had heard from the accountants who told him that he could put the flat in our names for Inheritance Tax purposes and that accordingly he told the solicitors to put the Property in Tracy's name. He said that he would have told them to put the Property in both my name and Tracy's name, as it was his wish that it be left to the both of us, but because I was overseas at the time, he told the solicitors only to put it in Tracy's name."
In his oral evidence he added that George said that he was giving the flat to himself and Tracy.
The judge rejected Craig's evidence of the conversation in his Mercedes; equally he rejected George's assertion that Tracy had forged his signature or tricked him into signing the letter of 26 November 1996 in ignorance of its contents.
In the light of these findings the judge went on to consider the effect of the other evidence. His starting point was that, as Tracy was George's daughter, there was a presumption that, in having the flat conveyed into her name, George intended to pass to her the beneficial interest in the flat. He then considered whether there was evidence that rebutted this presumption of advancement. He held that the presumption was comprehensively rebutted by evidence that George was buying the flat for his own use. He gave a declaration that Tracy held the flat upon trust for George.
Mr Chaisty QC, who appeared before us on behalf of Craig and Tracy, challenged the judge's approach and his conclusions. He observed that the only case that George had advanced to explain the conveyance of the flat to Tracy was the allegation that she had forged the letter of 26 November 1996 or tricked him into signing it. As the judge had rejected that allegation, George had no explanation at all for the conveyance to Tracy. Furthermore, he had put forward a false story. In those circumstances the judge should have held that George was not able to rebut the presumption of advancement in favour of Tracy.
Mr Chaisty further submitted that, had the judge made a proper appraisal of the evidence, he would have been driven to the conclusion that George's intention was to make a gift of the flat to Tracy and Craig, reserving no interest to himself. This submission founded critically on the evidence and advice given by accountants on how to avoid inheritance tax. They had advised that inheritance tax on the flat would be avoided if George made a gift of it to Tracy and Craig. Mr Chaisty criticised the judge for failing to address the issue of whether George was aware of this advice. Had he addressed that issue, he would have concluded that George was aware of the advice and that the instructions he gave to his solicitors to convey the flat to Tracy were intended to give effect to it.
Mr Chaisty submitted that the evidence that George was purchasing the flat for his own use was not inconsistent with his making a gift of the flat to Tracy and Craig. He could naturally have assumed that they would have been prepared to permit him to use the flat, as indeed they were.
The Law
I propose at this point to set out in simply terms the law that is relevant in the case. For the most part this is not in dispute.
Intention and presumptions
Where one person, A, transfers the legal title of a property that he owns or purchases to another, B, without receipt of any consideration, the effect will depend on his intention. If he intends to transfer the beneficial interest in the property to B, the transaction will take effect as a gift and A will lose all interest in the property. If he intends to retain the beneficial interest for himself, A will take the legal interest but will hold the property in trust for A.
Normally there will be evidence of the intention with which a transfer is made. Where there is not, the law applies presumptions. Where there is no close relationship between A and B, there will be a presumption that A does not intend to part with the beneficial interest in the property and B will take the legal title under a resultant trust for A. Where, however, there is a close relationship between A and B, such as father and child, a presumption of advancement will apply. The implication will be that A intended to give the beneficial interest in the property to B and the transaction will take effect accordingly.
Some of the older authorities upon which Mr Chaisty relies indicate that the presumption of advancement is not lightly to be displaced by evidence. Chettiar v Chettiar [1962] AC 294 involved a transfer of land from father to son. In giving the advice of the Privy Council, Lord Denning had this to say about the presumption of advancement:
"He [the father] had also to get over the presumption of advancement, for whenever a father transfers property to his son, there is a presumption that he intended it as a gift to his son; and if he wishes to rebut that presumption and to say that he took as trustee for him, he must prove the trust clearly and distinctly, by evidence properly admissible for the purpose, and not leave it to be inferred from slight circumstances: see Shephard v Cartwright [1955] AC 431."
He then dealt with the facts. Lord Denning continued:
"In these circumstances it was essential for the father to put forward a convincing explanation why the transfer took the form it did….."
In Shephard v Cartwright the issue was whether a father, in registering shares in the names of his children, had transferred the beneficial interest in those shares to them. Many years later the father had treated the shares as his own. The question arose as to whether this fact displaced the presumption of advancement. Mr Chaisty particularly relies on this passage from the speech of Viscount Simonds at page 445:
"My Lords, I do not distinguish between the purchase of shares and the acquisition of shares upon allotment, and I think that the law is clear that on the one hand where a man purchases shares and they are registered in the name of a stranger...
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