Lynn Drakeford v Russell Cotton and Another
| Jurisdiction | England & Wales |
| Judge | Mr Justice Morgan |
| Judgment Date | 25 May 2012 |
| Neutral Citation | [2012] EWHC 1414 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: 1BM30205 |
| Date | 25 May 2012 |
[2012] EWHC 1414 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Birmingham Civil Justice Centre
33 Bull Street
Birmingham B4 6DS
Mr Justice Morgan
Case No: 1BM30205
Mr Mark Diggle (instructed by Straw & Pearce) for the Claimant
Mrs Nicola Preston (instructed on Public Access) for the Defendants
Hearing dates: 15 th, 16 th and 17 th May 2012
Introduction
The three parties to this dispute are two sisters and a brother. They are the children of Mr Ernest Cotton and Mrs Mary Cotton. Ernest Cotton died on 7 th February 2008, in his early 80s, and his wife, Mary Cotton, died on 7 th August 2008, aged around 75. The three siblings are the Claimant (Mrs Lynn Drakeford), the First Defendant (Mr Russell Cotton) and the Second Defendant (Mrs Michelle Stain). The Claimant is the eldest, the First Defendant is next and the Second Defendant is the youngest sibling.
The principal issue in the case is whether the monies in two building society accounts, which were in the joint names of Mrs Mary Cotton and Mrs Stain prior to Mrs Cotton's death on 7 th August 2008, formed part of her estate (so that they are to be distributed under the terms of her will to the three siblings in equal shares) or whether an arrangement was made prior to her death whereby the money in those accounts was held in such a way that it passed to Mrs Stain by survivorship and did not form part of Mrs Cotton's estate. Mrs Drakeford contends for the former of these alternatives. Mrs Stain contends for the second. She is supported in this stance by her brother, Mr Russell Cotton, even though it would be in his own financial interests to contend for the former alternative.
There is a further issue as to a residential property, 19 Berkswell Road, Coventry. This was the home of Mr and Mrs Cotton senior and was originally the family home of all the parties to this dispute. Pursuant to the terms of an earlier deed of settlement, the property was held, after the death of Mrs Cotton on 7 th August 2008, by the three parties to this dispute on trust for themselves. The property was let and rental income was received and certain expenses were incurred. There is now an issue as to the amount of those expenses.
The third and last issue relates to the extent of the jewellery owned by Mrs Cotton at the time of her death. It is agreed that all such jewellery forms part of her estate. The Claimant alleges that the Defendants or one of them have taken certain items of jewellery. This allegation is denied and I am asked to determine this dispute.
Unfortunately, the parties to this dispute have fallen out very badly. I heard a considerable amount of evidence as to what caused the rift in the family and the period during which it continued. I was also given detailed evidence as to the relationship between Ernest and Mary Cotton and their three children. Much of that evidence was disputed. In the course of this judgment, I will make any necessary findings of fact on those matters. It will not be necessary to go into much of the detail of the evidence and it is probably better that I do not perpetuate in this judgment the many bitter things which have been said in the course of the hearing.
Mr Diggle appeared on behalf of Mrs Drakeford and Mrs Preston appeared on behalf of Mrs Stain and Mr Russell Cotton.
The events of 1997
In 1997, Ernest and Mary Cotton won about £107,000 on the National Lottery. They evidently took some legal advice as to how they should order their affairs in the light of this substantial win. The first thing they did was to make their wills. Mrs Cotton's will was in evidence. Ernest Cotton's will is not available but the evidence was that his will mirrored that of his wife. Her will was dated 16 th May 1997. It provided that if her husband survived her, then her estate would pass to him. If her husband did not survive her, then she appointed her three children as the executors and trustees of her will and left her estate on trust for them in equal shares. The will did not make any provision for personal chattels, such as jewellery. As stated above, Ernest Cotton did die before Mrs Cotton. Although Mrs Cotton did wish, in the period from July to August 2008, to make a new will (in the way I will later describe) she died without having made any further will. Thus, the 1997 will is her effective last will.
On 7 th August 1997, Ernest Cotton entered into a deed which created a settlement. The initial property which was the subject of the settlement was the sum of £10. By that deed, Ernest Cotton appointed himself and his three children as the original trustees of the settlement. The settlement was stated to be irrevocable. The principal trust created by the settlement required the trustees to hold the trust property for the benefit of discretionary beneficiaries, who were Ernest Cotton, Mary Cotton and Ernest Cotton's children and grandchildren. The settlement also provided for a further trust which was to apply from the date of the death of Ernest Cotton or of Mary Cotton, whichever should be the later. Under this further trust, the trust property was to be held on trust for the three children of the settlor (i.e. the parties to the present dispute) in equal shares. On the same day as he created the settlement, Ernest Cotton transferred his property at 19 Berkswell Road, Coventry to the trustees of the settlement. That property thereafter formed the only asset of any substance in the settlement. Ernest and Mary Cotton continued to live at 19 Berkswell Road for the remainder of their lives. When Mrs Cotton died on 7 th August 2008, the property was, pursuant to the terms of the settlement, held by the parties to this dispute on trust for themselves in equal shares.
The building society accounts
Over the years, Ernest and Mary Cotton had a number of accounts with the Coventry Building Society. It seems likely that most of the money in those accounts came from the lottery win in 1997. It is not necessary to describe the various accounts which they held over the years. It is sufficient to refer to the two accounts which they held in 2008 before Ernest Cotton died on 7 th February 2008.
The accounts were numbered 67240412 and 550603255. The accounts were of different types but it is convenient to describe these accounts by reference to the way in which they were operated by the account holders at all material times. The first account was operated as a deposit account and the second account was operated as a current account. I will refer to these accounts as the deposit account and the current account, respectively. The deposit account did not have a passbook but the current account did have a passbook.
Immediately prior to Ernest Cotton's death on 7 th February 2008, both accounts were in the joint names of Ernest and Mary Cotton. I was not given any evidence as to the circumstances in which those accounts were opened in joint names or were transferred into joint names. At his death, the sums in the accounts were £49,186.98 and £2,622.08. It is accepted that immediately following Ernest Cotton's death, the money in the accounts was owned legally and beneficially by Mrs Cotton.
On 14 th February 2008, Mrs Cotton went with her daughter Mrs Stain to the building society's branch in Coventry and transferred the two accounts into the joint names of Mrs Cotton and Mrs Stain. I was not given any evidence as to the terms and conditions which applied as between the building society and the account holders. The passbook for the current account stated that the number of signatures required (presumably for a withdrawal) was one.
Although this was not accepted at all material times, by the end of the trial it came to be accepted that the effect of the accounts being transferred into joint names on 14 th February 2008 was that the accounts were held by the joint account holders on trust for Mrs Cotton alone. In other words, the fact that Mrs Stain was a joint account holder did not at that stage give her any beneficial interest in the money in the accounts. The Defendants say that this position changed as a result of certain statements made by Mrs Cotton to Mrs Stain and others in the middle of June 2008. The Defendants say that the position following those statements was that the joint account holders held the money in the accounts on trust for Mrs Stain alone, or on trusts under which both Mrs Cotton and Mrs Stain were beneficiaries. It will be necessary to describe in greater detail in due course, what are said to the precise beneficial interests held by Mrs Cotton and Mrs Stain in the latter event.
Between 7 th February 2008 and Mrs Cotton's death on 7 th August 2008, the movements in the deposit account were as follows. Interest was added monthly to the account. Immediately after interest was added to the deposit account, the net amount of the interest after tax was transferred (presumably pursuant to an automatic instruction to that effect) to the current account. In the period from 7 th February 2008 to 7 th August 2008, there was no other payment into or withdrawal from the deposit account. Thus on 7 th August 2008, the balance of the deposit account was again £49,186.98, the same as the balance on 7 th February 2008. Following Mrs Cotton's death, Mrs Stain made a withdrawal of £25,000 on 8 th September 2008 and then on 12 th September 2008, she withdrew the final balance of £24,232.21 and closed the account. The two sums referred to (totalling £49,232.01) were paid into an account numbered 944894352, apparently at the Coventry Building Society. Mrs Stain told me in her evidence that she did not know what that account was and she had no records relating to it.
Between 7 th February 2008 and Mrs...
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