Michael Walden v Brian Norman Atkins (sued as Executor of the Estate of Dennis Walden)
| Jurisdiction | England & Wales |
| Judge | HHJ Simon Barker QC |
| Judgment Date | 23 May 2013 |
| Neutral Citation | [2013] EWHC 1387 (Ch) |
| Docket Number | Case No: 1BM30581 |
| Court | Chancery Division |
| Date | 23 May 2013 |
[2013] EWHC 1387 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BIRMINGHAM DISTRICT REGISTRY
Birmingham Civil Justice Centre
The Priory Courts
33 Bull Street
Birmingham
B4 6DS
HHJ Simon Barker QC
(Sitting as a Judge of the High Court)
Case No: 1BM30581
Mr Glenn Willetts instructed by Harrisons Solicitors appeared for the Claimant
Mr Paul Burton instructed by Brindley Twist Tafft & James appeared for the Defendant
Hearing dates: 30 April – 1 May 2013 and 23 May 2013
Introduction
30 April 2013 was to be the first day of a four day trial to determine (1) whether Mr Michael Walden ("C") had a beneficial interest in the property at 16 Farm Road, Leamington Spa ("16 Farm") and, if so, the extent of C's beneficial interest, and (2) whether, in addition or alternatively, C is entitled to be repaid a loan in the sum of £8,000 ("the Loan") together with interest from 29 January 2010.
C's interest in 16 Farm was said to result from its purchase on 5 October 1993 by Dennis Walden ("DW") using the proceeds of sale of another property, 37 Archery Road, Leamington Spa ("37 Archery"), in which C claimed to be beneficially interested, subject to the life interests of DW and DW's twin brother, Maurice Walden ("MW"), both of whom are now dead.
However, the skeleton argument lodged on behalf of Mr Brian Atkins ("D") by Mr Paul Burton, D's counsel, raised two preliminary points, each of which was said to be a complete answer to MW's case even on his own evidence.
In the event, and having regard to the overriding objective, I acceded to Mr Burton's application in respect of one of the two points and, notwithstanding the fact that it was raised very late and, even then, only by reference in Mr Burton's skeleton argument, ruled that it should be argued as a preliminary issue; I directed that that issue be argued on 1 May 2013 and that the trial be adjourned to recommence on 28 May 2013, subject, of course, to the outcome of the preliminary issue.
Before turning to the preliminary issue, I should outline the relevant facts, which are not entirely straightforward, and the way in which C formulates his claim.
Outline of the facts and C's pleaded case
DW and MW were C's uncles, although C had been brought up as their younger brother. When employed, DW and MW had been in low paid employment; C, on the other hand, had enjoyed a degree of success in business on his own account. In 1971, he had purchased 37 Archery from Edith Walden ("EW"), who had raised C as her youngest child, albeit that she was in fact his grandmother, on terms that EW would continue to live at 37 Archery rent free, and, if they so wished, DW and MW could reside at 37 Archery with their mother.
On C's case, in 1975, he considered that his interest in 37 Archery, then valued as a freehold property at £15,000, was potentially vulnerable to his obligations under business loans and in order "to provide a degree of security for … himself and his own children" 1 he orally agreed to sell and transfer 37 Archery to DW and MW on the following terms ("the 1975 Agreement") :
(1) C would transfer 37 Archery to DW and MW;
(2) the price would be £15,000;
(3) DW and MW would pay such sum as they could afford to raise by mortgaging 37 Archery and legal fees totalling £500 (in the event a total of £7,500 was raised by mortgage and paid to meet these obligations);
(4) the balance of the price (in the event £8,000) would be an interest free loan repayable on the death of the survivor of DW and MW; and,
(5) 37 Archery would be held by DW and MW on trust as follows : (i) DW and MW would hold 37 Archery on trust for C subject to their own life interest therein; (ii) on the death of the first of DW and MW to die, the survivor would continue to have a life interest in 37 Archery; (iii) on the death of the survivor of DW and MW, 37 Archery, or any property representing the same, would be held on trust for C absolutely and, in default, for his three daughters in equal shares;
(iv) 37 Archery was not to be sold or leased without C's prior agreement; and, (v) C would pay for the maintenance of 37 Archery Road.
Further, DW and MW each agreed to provide in their wills for the title to 37 Archery to pass first to the survivor of them and thereafter to C and, in default, to his three daughters equally.
The 1975 Agreement was implemented on 19 January 1976 by the transfer of 37 Archery to DW and MW and payment as outlined above was funded by a building society mortgage loan secured on 37 Archery.
By the Particulars of Claim ("P/C"), C alleges that, in 1977 (sic), and in performance of the 1975 Agreement and/or in reliance on the 1975 Agreement, [C] suffered detriment (1) by giving up his own absolute beneficial interest in 37 Archery for substantially less than its then value; and, (2) by taking on the burden of paying for the maintenance of 37 Archery, an instance of which occurred when C paid for the property to be re-roofed.
On 30 January 1978, the 1975 Agreement was recorded in writing ("the 1978 Agreement"). By the P/C, C relies on the 1978 Agreement as an express declaration of trust for the purposes of s.53(1)(b) of the Law of Property Act 1925. C's solicitor caused a restriction to be entered on the proprietorship register in respect of C's interest under the 1978 Agreement.
On 12 March1981, MW died leaving a will executed 10 days earlier by which C was appointed executor but which was silent as to 37 Archery and MW's residuary estate. C and DW agreed to "update" the 1978 Agreement to reflect the fact that MW had died, but otherwise to adhere to the terms of the 1978 Agreement, which, C alleges, they then did ("the 1981 Agreement"). The original of the 1981 Agreement has been lost and no copy is available.
On C's case, relations between C and DW deteriorated in 1992; in July 1993, DW caused the restriction to be removed; in September 1993, DW sold 37 Archery; and, in October 1993, DW purchased 16 Farm, funding the purchase from the net proceeds of 37 Archery. D accepts that, as from 1992, C became "alienated" from his wider family.
On 6 August 1997, DW executed a will devising 16 Farm to D and making no provision for C or, in default, his daughters. C's pleaded case is that this constituted a breach of trust and/or a breach of one or more of the 1975, 1978 and/or 1981 Agreements.
DW died on 29 January 2010.
Although not referred to in the pleadings, it is common ground that C was adjudged bankrupt on 12 June 1992.
C's formulation of his claim
By the P/C C's claim is put in the alternative as follows :
"It is averred that, pursuant to the 1975 Agreement and/or the 1978 Agreement and/or the 1981 Agreement, [C] is entitled to the entire beneficial interest in [16 Farm] : … under an expressly declared trust; and/or under an implied trust as a result of the aforementioned agreements whereby [DW] agreed to leave [37 Archery] (and any property representing the same) to [C] in his will.
Further or alternatively, it is averred that it is unconscionable for [D] to deny that [C] was entitled to a beneficial interest in [37 Archery] and any property now representing the same. [C] is therefore entitled under an equitable estoppel and/or a constructive trust arising as a result of an express, alternatively an inferred, common intention between [C] and [DW] (and formerly [MW])".
D's preliminary issue
At paragraph 22 of his skeleton argument on behalf of D, Mr Burton puts in issue C's locus or standing to pursue the claim.
Through Mr Burton, D asserts that C's interest in 37 Archery/16 Farm became subject to the official receiver's ("OR") control upon the making of the bankruptcy order and vested in C's trustee in bankruptcy on appointment; that, in consequence, C was divested of such equitable interest as he had in 37 Archery/16 Farm; and, further, that any such interest will not have re-vested in C on his discharge from bankruptcy.
Mr Burton relies on C's P/C as verified by a statement of truth that C believes the facts stated in the P/C to be true.
For present purposes it is not necessary to know why the point raised as a preliminary issue has been taken at such a late stage. I note from D's witness statement, which is dated 21 June 2012, that D was then aware of C's bankruptcy. Mr Burton has assured me that there is a good explanation why this point was not raised earlier; depending on my decision, D's explanation may be relevant to costs.
Mr Glenn Willetts, C's counsel, contends that C's claimed interest is based upon a cause of action in equitable estoppel alternatively a remedial constructive trust and, for reasons which he developed in argument, is not caught by the provisions of the Insolvency Act 1986 (" IA 1986"), and therefore did not vest in C's trustee.
The purpose of this preliminary issue hearing is to decide a point of law on facts alleged by C and assumed for present purposes to be true. If C raises an answer to the preliminary issue which appears to be realistically arguable, the case should proceed to a full trial.
IA 1986 provisions
S.287(1) IA 1986 provides that, between the making of a bankruptcy order and the vesting of the bankrupt's estate in a trustee, the OR is the receiver and manager of the bankrupt's estate.
By s.306(1) IA 1986, a bankrupt's estate vests in the trustee immediately upon the latter's appointment taking effect or, in the case of the OR, on his becoming trustee. Vesting is by operation of law, and no conveyance, assignment or transfer is required ( s.306(2) IA 1986).
A bankrupt's estate is defined at s.283 IA 1986. Subsection (1) sets out a general definition which is subject to exclusions and...
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