Hitesh Kumar Gandesha v Narendra Maganlal Gandesha
| Jurisdiction | England & Wales |
| Judge | Mrs Justice Andrews |
| Judgment Date | 02 July 2020 |
| Neutral Citation | [2020] EWHC 1743 (QB) |
| Docket Number | Appeal No: QA-2019-011327 |
| Court | Queen's Bench Division |
| Date | 02 July 2020 |
[2020] EWHC 1743 (QB)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ON APPEAL FROM THE COUNTY COURT AT CENTRAL LONDON
HH Judge Wulwik
Claim No E10CL333
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mrs Justice Andrews DBE
Appeal No: QA-2019-011327
Mr Richard Power (instructed by Thirsk Winton LLP) for the Appellants
Ms Hermione Rose Williams (instructed by Dominic Levent) for the Respondents
Hearing date: 24 June 2020
Approved Judgment
INTRODUCTION
This is an appeal against part of the order of HH Judge Wulwik dated 25 October 2019 refusing the Appellants' application for an order for the sale of a substantial freehold property at 22 Northumberland Avenue, Wanstead, London E12 5HD (“the Property”) under section 14 of the Trusts of Land and Appointment of Trustees Act 1996 (“ TOLATA”), and a claim for occupation rent. The order was made on delivery of judgment following a 7-day trial in the Central London County Court.
TOLATA contains the following relevant provisions:
Section 14
(1) Any person who is a trustee of land or has an interest in property subject to a trust of land may make an application to the court for an order under this section.
(2) On an application for an order under this section the court may make any such order —
(a) relating to the exercise by the trustee of any of their functions (including an order relieving them of any obligation to obtain the consent of, or to consult, any person in connection with the exercise of any of their functions)…
Section 15
(1) The matters to which the court is to have regard in determining an application for an order under section 14 include —
(a) the intentions of the person or persons (if any) who created the trust,
(b) the purposes for which the property subject to the trust is held,
(c) the welfare of any minor who occupies or might reasonably be expected to occupy any land subject to the trust as his home, and
(d) the interests of any secured creditor of any beneficiary.
The discretion of the Court under s.14 is a wide one, and when exercising it, it is entitled to take into consideration any circumstances that it considers relevant besides those to which it is obliged to have regard under s.15(1).
An appeal court will rarely interfere with the exercise of judicial discretion, especially where the judge has had regard to any mandatory statutory considerations and is apprised of all the relevant facts. In the present case, however, it is contended by the Appellants that the judge erred in his construction of the relevant Declaration of Trust, and this led him to exercise his discretion on a fundamentally erroneous basis. For the reasons that will appear, I have concluded that a failure to construe the Declaration of Trust as a whole, and by proper reference to its underlying purposes, regrettably led the judge into error, and that the correct approach leads to a very different result.
FACTUAL BACKGROUND
The Appellants, Hitesh Kumar Gandesha and Jayesh Maganlal Gandesha, are the younger brothers of the first and second Respondents, Narendra Maganlal Gandesha and Sailaskumar (“Sailas”) Gandesha. The third and fourth Respondents, Amit and Vinesh Gandesha, are the sons of a fifth brother, Surendra Maganlal Gandesha, the second eldest, who sadly died on 13 April 2018, and they represent his estate. For ease of reference I shall follow the practice of HH Judge Wulwik and, without intending any disrespect, refer to each of these individuals by their first names.
At the onset of this judgment I must pay tribute to HH Judge Wulwik for the clarity of his detailed exposition of this unfortunate family dispute. Since this appeal largely turns on the construction of the Declaration of Trust in respect of the Property which was signed by the five Gandesha brothers in June 2015, it is unnecessary for me to repeat that level of detail here. The following summary will suffice.
The Property, a 14 bedroomed freehold house on a large plot, was purchased in February 1991 for £350,000 and initially registered in the names of Jayesh and Surendra. It was common ground that it has always been held in trust for all five brothers equally, and at the pre-trial review HH Judge Gerald granted a declaration by consent that the four surviving brothers and the estate of Surendra own the Property on trust for themselves as tenants in common in equal shares of 20%. In April 2019 it was valued by a joint expert at £1.9 million.
Although, unlike their older brothers, Jayesh and Hitesh made no financial contribution to the £100,000 deposit for the Property, they did make regular contributions to the £250,000 mortgage, which was converted from an interest-only to a full repayment mortgage, and paid off in March 2011. They also contributed to the outgoings on the Property (including the premiums on endowment policies taken out by Jayesh and Surendra as security for the mortgage).
It was intended from the outset that the Property should be a home for all the brothers and their families and for their late mother and father, who died in 1997 and 2000 respectively. Until what the judge euphemistically described as “the family rift” in 2016, the five brothers and their families lived together in harmony in the Property for many years. At one time there were 23 members of the family living there. In 1996 and 1998 there were attempts to formalise these arrangements, in that draft deeds of trust were prepared, but these were never signed.
After the mortgage was paid off, there was increasing concern among those brothers whose names were not on the title to the Property to ensure that their rights and those of their families were protected. Surendra's son Amit took the lead in dealing with the preparation of the Declaration of Trust that was executed in June 2015. It appears from correspondence between Amit and his uncles Hitesh and Jayesh at around that time, that Hitesh and Jayesh were concerned about the prospect of one of the brothers (or his estate) attempting to force the sale of the property against the wishes of the others.
The solicitors who were instructed came up with different proposals to meet that concern. They said that they could add a clause to state that the Property is not to be sold until the death of the last brother, or a provision that on the death of one brother, his share would automatically revert to the remaining brothers. They explained that a clause preventing the sale of the house until the last brother passes away “ would protect the brothers as well as all spouses and children in the event of one of the brothers passing away and their spouse/children wanting their share from the property.”
In the event, the Declaration of Trust was executed in the following terms:
“(1) The Parties hereto DECLARE that they hold the property UPON TRUST to sell the same with power to postpone the sale and all the proceeds of sale (after deducting therefrom the costs of sale) and the net rents and profits until sale UPON TRUST for the Parties as tenants in common in the following proportions:
(a) as to the balance to divide the same:
a. as to 20% for Surendra Gandesha absolutely
b. as to 20% for Jayesh Maganlal Gandesha absolutely
c. as to 20% for Hitesh Kumar Gandesha absolutely
d. as to 20% for Narendra Kumar Maganlal Gandesha absolutely
e. as to 20% for Sailaskumar Gandesha absolutely.
(2) The Parties hereby declare that they have purchased the Property as a home for all of the 5 brothers in clause 1 (a) above and for their respective families and during such period as it shall be the home for all of those persons.
(3) The Property is to be kept in good and substantial repair by the Parties jointly who agree to pay equally for the general maintenance, upkeep and for the usual outgoings of the Property.
(4) (a) The Parties hereby declare that the Property shall not be sold whilst any of the Parties remain alive except if all the Parties that remain alive agree unanimously in writing to the sale of the Property.
…
(c) no sole party or their family shall have a right to demand that the Property be sold.
(6) for the avoidance of doubt, the Parties hereby reserve the right to transfer their share of the Property onto whomsoever they wish.”
In August 2015, following the signing of the Declaration of Trust, the Property was registered in the names of Jayesh, Hitesh, Surendra and Sailas on trust for all five brothers equally as tenants in common. The reason why the eldest brother Narendra's name does not appear is that only four names could be noted on the title to the Property.
Tensions between Narendra and Surendra on the one hand, and Jayesh and Hitesh on the other, which had been growing for some time, came to the fore in the spring of 2016, chiefly as a result of proposals to raise finance for one of the family businesses, Milestar Ltd (“Milestar”). Hitesh was responsible for the day to day management of Milestar, which trades both as a dispensing chemist and pharmacy, and as a perfume retailer and wholesaler. He wanted the company to extend its overdraft by £1 million to enable it to finance some £660,000 of orders that it had taken at the NEC spring fair, but the bank was seeking additional security in the form of...
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