Re Goodchild (Deceased) and Another
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE LEGGATT,LORD JUSTICE MORRITT,LORD JUSTICE PHILLIPS |
| Judgment Date | 02 May 1997 |
| Judgment citation (vLex) | [1997] EWCA Civ J0502-5 |
| Docket Number | CHANF 96/0250/B |
| Court | Court of Appeal (Civil Division) |
| Date | 02 May 1997 |
[1997] EWCA Civ J0502-5
Lord Justice Leggat
Lord Justice Morritt
Lord Justice Phillips
CHANF 96/0250/B
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
(MR JUSTICE CARNWATH)
Royal Courts of Justice
Strand
London WC2
MR J SUNNUCKS (Instructed by Messrs Rowe & Maw, London EC4V 6HD London Agents for Messrs Porter Bartlett & Mayo, Somerset BA20 1HH) appeared on behalf of the Appellant
MR J GORDON (Instructed by Messrs Kingsford Stacey, London WC2A 3UB London Agents for Messrs Poole & Co, Somerset, BA20 1TP) appeared on behalf of the Respondent
Friday, 2 May 1997
I trust that I shall not be thought disrespectful if I refer to the members of the Goodchild family, as did the judge, only by their first names. There is no purpose in paraphrasing the facts summarised by the judge at the beginning of the judgment, which he handed down on 13th December 1995. It is reported at [1996] 1 W.L.R. 694. His account, which has not been criticised, began at page 696D:
"The first plaintiff, Gary Goodchild, is the only son of Dennis Goodchild, the testator. The second plaintiff, Margot, is his wife. They married in 1969. The defendant, Enid Goodchild is the second wife of the testator. The testator and his first wife, Joan, had a public house and hotel supply business, Pub and Hotel Supplies Ltd., which they started together in 1966. The business was run from a warehouse on the Pen Mill Trading Estate, Yeovil. Gary was then 22. He joined them in the business soon after. In June 1969 he held one-third of the shares in the business which was run as a partnership, his father having the other two-thirds. In April 1976 (apparently for tax reasons, but also reflecting the parties' views of their respective interests in the business at that time) the shares were reallocated as to four-ninths to Dennis, two-ninths to Joan, and three-ninths to Gary. Joan ceased active involvement in the business in 1984 when she was 60, but remained as a partner until 1 December 1987. Dennis gradually reduced his involvement until he retired in 1987 at the age of 65. By the beginning of 1988 Joan had become ill with the muscle wasting disease from which she subsequently died.
In January 1988 they decided to make simultaneous wills in similar form, in favour of Gary. They were advised by Mr George, a solicitor, in the firm of Messrs Porter Bartlett & Mayo. On 11 February 1988 they executed the wills as drawn up by him. Dennis's will so far as material is in these terms:
'1. I revoke all former wills and codicils made by me. 2. If my wife Joan Edith Goodchild survives me for the space of 28 days then I devise and bequeath all my real and personal estate to her absolutely and appoint her to be the sole executrix of this my will. 3. If my said wife does not survive me for the period aforesaid, then I appoint my son Gary Jack Goodchild and my daughter Margot Alison Goodchild … to be the executors and trustees of this my will and I declare that the following clauses shall take effect.'
Clause 4 gave legacies of £1,000 each to his sister and three brothers. By clause 5 he devised the remainder of his estate after payment of expenses
'upon trust for my said son Gary if he survives me for the space of 28 days and if he does not so survive me then upon trust for each of his children as shall be living at the time of my death on their attaining the age of 21 years and if more than one in equal shares.'
Joan's will was in identical form save that in clause 2 the reference is to her husband, Dennis Goodchild.
Also in January 1988 arrangements were put in hand for the transfer of the business to Gary and his wife. The formal documents were not completed until 15 September 1988. By a partnership deed of that date the existing partners retired as from 31 December 1987, and assigned their interest to the new partners, Gary and Margot, for £200,000. Dennis's share in the Pen Mil property was transferred to Gary for £166,667 (the balance of the £200,000 represented other assets such as plant and stock). By a 'legal charge' it was recorded that Dennis and Joan had lent the amount of £200,000 to Gary and Margot secured on the Pen Mill property, on terms whereby the principal was to be repaid in equal monthly sums of £1,667 over 10 years, no interest being payable so long as repayments were maintained. By a separate declaration of trust, Dennis confirmed that one-third of his share of the Pen Mill property or its proceeds was held in trust for Joan. The plaintiff claims that there was an oral agreement that the repayments would cease, and the loan be discharged, after the death of the mother and father. This is one of the issues in the case. I shall have to look at the circumstances of these legal arrangements in more detail later. Joan died on 14 April 1991. Towards the end of June 1991 Dennis renewed contact with the defendant, Enid, who had been an acquaintance of him and his wife through the Yeovil Bowling Club some years earlier. They began to go out to dinner together and their relationship developed, leading to a holiday together over Christmas that year. On 15 August 1992 they married, Dennis by then being aged 70, and his new wife 61. On 16 November 1992 he made a new will leaving everything to Enid, and named her as executrix. A few months later on 1 January 1993 he died. He left an estate valued at nearly half a million pounds, if the outstanding debt from Gary (which by then stood at something over £120,000) is taken into account.
Mention should also be made of the arrangements in relation to premises at Unit 4, Kingsway Business Centre, Wilton. In about spring 1990 a competing business in Salisbury closed, and Gary decided to take on two former employees from that business and open a new warehouse there. He discussed the plan with his father, who had favoured the idea. The purchase was completed in September 1990, with the assistance of a further loan from Dennis and Joan of £70,200. This was secured by a legal charge on the new premises, in similar form to that made in September 1988. The plan did not prove a success, and in about September 1992 it was decided to sell the property. The warehouse was in due course sold, leaving a balance on the loan, standing now at just over £13,000."
The judge held that the wills of 11th February 1988 were not mutual wills binding on Dennis after Joan's death, because there was no clear agreement that they were to be mutually binding. If they had been, Dennis would not have avoided those obligations by remarrying, since, even if the effect of section 18 of the Wills Act l837 were to produce a revocation of the will by operation of law, the enforceability of any mutual agreement underlying such wills would depend on a floating trust held binding in equity. The judge also held that there was no form of binding agreement or estoppel upon which Gary could rely for the purpose of claiming any benefit under either of the legal charges or otherwise. The judge, however, granted an order under section 2 of the Inheritance (Provision for Family and Dependants) Act 1975 ('the Act of 1975') on the ground that Joan's mistaken belief that the terms of the wills were mutually binding imposed a moral obligation on Dennis. That constituted a special circumstance which exceptionally justified a claim by Gary under the Act of 1975. The parties having failed to arrive at financial arrangements in the light of the judgment, on 16th February 1996 the judge awarded Gary the sum of £185,000 under the Act of 1975.
Against the judge's orders both sides now appeal. Enid appealed first against the award of the lump sum to Gary. He and his wife then cross-appealed on the ground that the judge should have held the wills were mutual wills binding upon Dennis after Joan's death, and that in that context no distinction should be made between an obligation which was only morally binding and an obligation which was legally binding. By Supplementary Notice of Appeal Enid seeks to resurrect the effect of section 18 of the Wills Act l837, but only if it is established that the wills were mutual wills. I shall consider the cross-appeal first.
Mutual Wills
Crucial to this topic is the evidence. The judge attached particular weight to that of three friends of the family, Mrs Fiddy, Mr Cutler and Laura White. Mrs Fiddy was a qualified accountant who acted as such for the business run by her husband and Dennis. The Fiddys had made wills in each other's favour, with the estate going to their son after they had both died. The Goodchilds later told her that they had done the same. But the Fiddys' wills were made at different times and were not expressed to be mutually binding. Mr Cutler similarly told Dennis that he and his wife had made mutually binding wills, and in 1988 Dennis told him that the Goodchilds had done the same. On another occasion Dennis told Mr Cutler that when he died Gary would inherit the whole estate. Mr Cutler understood that Joan and Dennis intended the wills to be mutually binding, with the result that money owed by Gary to his parents for his business would in effect be cancelled after the death of Dennis. But Mr Cutler's will stated that the survivor would be bound, and the wills of himself and his wife were in the same form and contained the words "mutually agreed". Laura White was the Goodchilds' housekeeper between 1986 and 1988. Joan told her that she and her husband had made mutually binding wills leaving everything to Gary, so that his business debts would die with them.
Against this evidence the judge had to set that of...
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