Kohn v Wagschal and Ors

JurisdictionEngland & Wales
CourtCourt of Appeal (Civil Division)
JudgeLord Justice Waller,Lord Justice Laws,Lord Justice Gage
Judgment Date24 October 2007
Neutral Citation[2007] EWCA Civ 1022
Date24 October 2007
Docket NumberCase No: A3/2007/0059

[2007] EWCA Civ 1022

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM Queen's Bench Division

Commercial Court

Mr Justice Morison

HC07C01519

Royal Courts of Justice

Strand, London, WC2A 2LL

Before

Lord Justice Waller

Vice President of the Court of Appeal, Civil Division

Lord Justice Laws and

Lord Justice Gage

Case No: A3/2007/0059

Between
Kohn
Respondent
and
Wagschal and Ors
Appellants

Thomas Seymour (instructed by Messrs Greenwood & Co) for the Respondent

Clive Freedman QC and Max Mallin (instructed by Messrs Teacher Stern Selby) for the Appellants

Hearing date: 30 th July 2007

Lord Justice Waller
1

This is an appeal from a decision of Morison J dated 21 st December 2006, whereby he refused an application on the part of the appellant to set aside an order for the enforcement of an arbitration award of the London Beth Din, dated 20 th December 2002.

2

The arbitration giving rise to the award arose out of the financial affairs of Mr I S Kohn, who died intestate on 21 st August 2001. He was twice married. His first wife predeceased him in December 1986, leaving four daughters (including the two appellants) and one son, the respondent. His second wife, whom he married in 1989, Mrs Sarah Beinhorn, had two children from a previous marriage.

3

After the death of I Kohn his daughters, including the appellants, discovered that he had executed certain share transfers in their favour. That gave rise to a dispute between the sisters and the brother as to whether it was the true intention of the deceased to gift the shares in their favour. The share transfers would have indicated that the shares were to be divided 20% to each sister and 20% to the brother. It was, however, the brother's case that there was no intention to transfer the shares in those proportions to the children. It was the brother's case that he, as the heir, was intended to receive the shares, but that he would have a moral obligation resulting in him holding 50% of the shares and the other 50% being held by his sisters. There were four sisters and only two are appellants. One sister, it seems, never wished to challenge her brother's claim. Three sisters did challenge the brother's claim but, having lost before Morison J, only two have brought this appeal.

4

An arbitration agreement was entered into on 6 th March 2002 and one issue submitted to arbitration was the ownership of the shares in the various companies. There was a further arbitration agreement confirming the first and extending the issues to be arbitrated made on 2 nd September 2002.

5

The brother's statement of case asserted that I Kohn never had any intention to gift the shares to his daughters and suggested that the production of the share transfers was in order, amongst other things, to save inheritance tax. In the statement of case put in on behalf of the sisters, they challenged the assertion that their father had no intention to gift the shares. Furthermore, they asserted that, if it was his intention simply to evade tax, that would be something that “as a matter of English law” he was not entitled to do.

6

The Beth Din produced an award in December 2002. That award concluded that, as a matter of Jewish law, the sisters had failed to establish that their father had any intention to make a gift of the shares. The award recognised that it was somewhat perplexing that, if the deceased had intended to save inheritance tax and had intended the shares to be divided 50% between the brother and 50% between the sisters, the deceased had not produced share transfers in those proportions to the relevant persons. The award also clearly concluded that the object of the execution of the share transfers was to evade tax, i.e. to produce documents, which could be shown to the Revenue to persuade the Revenue that the shares were not part of the deceased's estate at his death.

7

The conclusion by paragraph 32 of the award was:—

“We have therefore come to the conclusion that the deceased did not intend at any time for the share transfers actually to effect the transfer of the shares for the benefit of the respondents (the sisters) and the purpose of the share transfers was to avoid tax by the submission of documents that purportedly transferred the shares.”

8

The award concluded that the applicant is:—

“(1) entitled to the deceased's shareholding in the companies and in Erne Investments Ltd and is entitled to the deceased's property at 34 Cranwich Road London N16. (2) the applicant is entitled to an account of monies withdrawn by the respondents from the companies since the deceased's death and payment by the respondents to him any sums found due. (3) The applicant conceded, (paragraph 8), that his father's wishes had been to distribute 50% of his estate between his daughters. This was partially corroborated by Mrs Wagschal (paragraph 19). Whilst this cannot be enforced in Halachah, since a commandment to comply with a deceased's wishes applies only where the money was deposited with a third party, nevertheless we would expect the applicant, to honour his late father's intention.”

9

The sisters did not accept the award. They sought to produce further evidence and place the matter again before the Beth Din. However, the Beth Din, by a further award dated 16 th September 2003, confirmed their previous award and made clear that the brother should comply with his moral obligation.

10

That award was initially accepted by the sisters. Manuscript documents at pages 146, 147 and 148 of the bundle, all, it would appear in October 2003, registered that acceptance.

11

However, the Beth Din had to rule on a further transfer to the son and one sister, which had occurred some years prior to 1 st July 1996. They ruled that transfer effective and that seemed to reignite the attack by the sisters on the award. There are references to a possible appeal to a Beth Din in Jerusalem and clearly the sisters, with the assistance of their lawyers and, still being registered at...

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