Re Loftus (Deceased); Green and Others v Gaul and Others

JurisdictionEngland & Wales
JudgeLord Justice Chadwick,Lord Justice Thomas,Lord Justice Lloyd
Judgment Date28 July 2006
Neutral Citation[2006] EWCA Civ 1124
Docket NumberCase No: A3/2005/1036
CourtCourt of Appeal (Civil Division)
Date28 July 2006
Between:
Green and Others
Claimants/Respondents
and
Gaul and Others
Defendants/Appellant

[2006] EWCA Civ 1124

Before:

Lord Justice Chadwick

Lord Justice Thomas and

Lord Justice Lloyd

Case No: A3/2005/1036

HC03C00220

IN THE SUPREME COURT OF JUDICATURE

COURT OF APPEAL (CIVIL DIVISION)

ON APPEAL FROM THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

(Mr Justice Lawrence Collins)

Royal Courts of Justice

Strand, London, WC2A 2LL

Mr James Pickering (instructed by Blaser Mills of Park House, London Road, High Wycombe, HP11 1BZ) for the Appellant

Miss Sarah Asplin QC and Miss Kerry Bornman (instructed by Pearson Rowe of 55 St Paul's Square, Birmingham, B3 1QS) for the Respondents

Mr David Brownbill (instructed by Thomas Eggar of Arundel House, 1 Liverpool Gardens, Worthing,) for the administratrix of the estate of Ivor Loftus, deceased, as interested party

Lord Justice Chadwick
1

This is an appeal from an order made on 18 March 2005 by Mr Justice Lawrence Collins in administration proceedings relating to the estate of the late Mr Ivor Andrew Loftus.

2

Mr Loftus died on 11 August 1990, intestate. His wife had predeceased him. There were six children of the marriage, five of whom survived their father. Letters of administration to the estate were granted to the deceased's daughter, Mrs Margaret Gaul, on 10 December 1991. These proceedings were commenced by her three sisters on 20 January 2003. The remaining sibling, Mr Michael Loftus, was joined as the second defendant. He has taken no part in the proceedings.

The claims in the proceedings

3

The proceedings included a claim against the third defendant Mr Dexter Gaul—the son of Mrs Gaul – in respect of property known as the Yard (being land to the south of Headstone Drive, Middlesex) formerly comprised in the estate. The Yard had been the subject of an assent by Mrs Gaul in her own favour in June 1992. Mrs Gaul had transferred the property to her son in August 1999. By the order which he made on 18 March 2005 the judge declared that the Yard was held by the third defendant as trustee for the estate; and he made certain consequential orders for transfer of that property back to the estate and for an account. There is now no appeal on behalf of the third defendant in relation to the Yard.

4

The principal claim in the proceedings was for an order removing Mrs Gaul as personal representative and for the appointment of an independent solicitor in her place. There was an ancillary claim for an order that she deliver to the substituted administrator all documents in her custody and possession relating to the administration of the estate. And there was a claim that she account for the administration of the estate and pay to the substituted administrator such sum as might be found due on the taking of the account. The basis of the claims, as pleaded, was that, "despite being administratrix for nearly eleven years, the First Defendant has failed to provide any or any adequate accounts, failed to complete the administration of the Deceased's estate and failed to make any distributions". Further, it was said, Mrs Gaul had sworn an inventory and account in September 2002 – in response to an order made by the court – which was, to her knowledge, incomplete and incorrect. And, it was said, the inventory and account (although incomplete and incorrect) disclosed that Mrs Gaul had acted in breach of her duties as administratrix and had wasted the assets of the estate. The particulars of breach included the grant to Barclays Bank plc of a charge over the Yard in or about August 1999 and the transfer of the Yard to Mr Dexter Gaul in September 1999 "for no consideration alternatively at an undervalue".

5

The substantive defence advanced on behalf of Mrs Gaul was that there had been a compromise agreement, made between the five siblings on 11 May 1992, under which each was to keep whatever assets derived from the estate which they then respectively controlled. On that basis, it was said, Mrs Gaul was entitled to deal as she wished with the Yard and other assets in the estate which were under her control.

6

6. The compromise agreement was said to have been made on 11 May 1992 informally and immediately following a formal meeting, with solicitors, at which no agreement had been reached. The formal meeting, it was said, had concluded on the basis that "negotiations would continue at a further meeting in late May 1992". Sub-paragraphs (5), (6) and (7) of paragraph 4 of the re-re-amended defence are in these terms:

"(5) Further and in any event, the proposed meeting for late May 1992 (at which it had been envisaged that the negotiations would continue) took place only between the parties' respective professional representatives (either face to face or over the telephone), following which the parties took no further steps and all discussions between the parties in relation to the distribution of the deceased's estate came to an end on the basis of the agreement reached on 11 May 1992 or alternatively on the basis of the provisional agreement reached on that date which thereby became final.

(6) Further or alternatively, by reason of the acquiescence by the claimants and the second defendant in the above state of affairs (and in particular the 9½ year delay between the cessation of negotiations in May 1992 and the raising of any challenge to the first defendant's administration of the deceased's estate in December 2001, and the 12½ year delay between the deceased's death in August 1990 and the issue of the present claim in January 2003) and the first defendant's detrimental reliance in respect of the same, the claimants and the second defendant are now estopped from denying that they gave up any entitlement that they might otherwise have had to those assets then under the control of the first defendant.

(7) Further and in any event, by reason of the matters set out above (and in particular the above delays of 9½ and 12½ years) the claimants ought to be denied relief under the doctrine of laches and/or the Limitation Act 1980, sections 21(3) and 22(a) ."

7

The proceedings came before the judge for trial (over several days) at the end of January 2005. He rejected Mrs Gaul's evidence that there had been a compromise agreement on 11 May 1992 – an agreement made, as she said, in the street outside the solicitors' offices. There is no appeal from that finding of fact.

8

The judge went on to say this, [2005] EWHC 406 (Ch):

"[138] [Mrs Gaul] has raised defences of limitation, laches and estoppel. . . . The argument . . . is as follows. First, from the date of the assent in June 1992 [she] would have held the Yard as trustee and not as personal representative. The relevant limitation period would be 6 years under section 21(3) of the Limitation Act 1980. . . Any claim would therefore have become statute barred by June 1998.

. ..

[140] Second, if she did remain a personal representative, the relevant limitation period would be the 12 year period in section 22(a) . On that basis, the limitation period would have expired on August 10, 2002, which was 12 years after Mr Loftus' death, and five and a half months before the commencement of these proceedings on January 20, 2003.

. ..

[143] [Third], should it be found that no period of limitation applies (whether by reason of section 21(1) or otherwise), then the claim will be barred by laches. . . ."

9

Section 21(3) of the Limitation Act 1980 provides that, subject to the provisions of subsections (1) and (2) of the section, an action by a beneficiary to recover trust property or in respect of any breach of trust, not being an action for which a period of limitation is prescribed by any other provision of this Act, shall not be brought after the expiration of six years from the date on which the right of action accrued. Given that the Yard has been recovered from Mr Dexter Gaul, the question whether Mrs Gaul could have relied on section 21(3) of the 1980 Act does not now arise. It is not the subject of any issue on this appeal.

10

Section 22 of the Limitation Act 1980 is in these terms, so far as material:

"Subject to section 21(1) and (2) of this Act -

(a) no action in respect of any claim to the personal estate of a deceased person or to any share or interest in any such estate (whether under a will or on intestacy) shall be brought after the expiration of twelve years from the date on which the right to receive the share or interest accrued;

(b) . . ."

As the opening words of the section make clear, section 22 of the 1980 Act applies "subject to section 21(1) and (2)". Section 21(1) is in these terms:

"(1) No period of limitation prescribed by this Act shall apply to an action by a beneficiary under a trust, being an action –

(a) in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy; or

(b) to recover from the trustee trust property or the proceeds of trust property in the possession of the trustee, or previously received by the trustee and converted to his use".

It has not been suggested that paragraph (a) of that sub-section has any application in this case. Nor is section 21(2) of the Act said to be in point. The effect of that sub-section is to limit the liability of a trustee who is also a beneficiary – in an action brought against him in reliance on section 21(1) (b) after the end of the six year period prescribed by section 21(3) of the Act – to the excess over his proper share (as beneficiary) in the trust property.

11

The issue before the judge (in relation to the limitation defence) was whether – if section 22(a) of the 1980 Act had any application – the twelve year period under that section began to run against the claimants from the date of...

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