Re Shephard. Shephard v Cartwright
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE DENNING,LORD JUSTICE ROMER |
| Judgment Date | 01 July 1953 |
| Judgment citation (vLex) | [1953] EWCA Civ J0701-1 |
| Docket Number | 1951 S. No. 2626. |
| Court | Court of Appeal |
| Date | 01 July 1953 |
Re Shephard, deceased
[1953] EWCA Civ J0701-1
The Master of the Rolls
(Sir Raymond Evershed)
Lord Justice Denning, and
Lord Justice Romer
In The Supreme Court of Judicature
Court of Appeal
Counsel for the Appellants: The Hon. B. L. BATHURST, Q.C., and MR VICTOR COHEN, instructed by Messrs Douglas & Co.
Counsel for the Respondents: MR ARTHUR de MULLIGAN, instructed by Messrs MacDonnell.
Counsel for Mr Philip Edward Shephard, Junior: SIR LYNN
UNGOED-THOMAS, Q.C., and MR S. B. ALLCOCK, instructed by Mr Sidney Pearlman.
The questions which the Court is called upon to determine on this appeal are those asked by the three Inquiries numbered 5, 7 and 10 in the Order for general administration made in this action on the 12th January, 1953. They are questions of great complexity and difficulty, and I find it, therefore, useful to set out at the beginning of my judgment the three Inquiries. They are: "5. An Inquiry whether any and which of the children of the Testator derived or received from the Testator in his lifetime any and what sums of money or other estates or property in the nature of advancements. 7. An Inquiry whether the Plaintiff Richard David Shephard is entitled to a first charge or any charge on 580 shares of £1 each in Woodside Park Garden Suburb, Limited, standing in the Testator's name at the date of his death to secure the sum of Twenty-three thousand nine hundred and sixty pounds eight shillings and nine pence or some other and what sum. 10. An Inquiry whether subject to what may be found upon the Inquiry numbered 14 the Plaintiff Winifred Maud Cartwright is entitled to all or any and if so which of the 450 shares of £1 each in Philip Edward Shephard Estates, Limited, registered in the name of the Testator at his death."
As will later appear, the Inquiries numbered 7 and 10 are relatively of a subsidiary character. The main debate has been upon the first Inquiry numbered 5 in relation to the two Plaintiffs in the action, for their elder brother, the party attending these proceedings, has made no claim in this action, though there are in fact circumstances available to him comparable to those upon which the Plaintiffs polied. But, in my judgment, the real question involved in the appeal is in truth distinct from Inquiry No. 5 and is not necessarily solved by an answer to it.
I have already said that the Order of the 12th January, 1953, was an Order for general administration. The history of the litigation has not been uneventful – it was the subject of comment in the opening paragraphs of the judgment of Mr Justice Harman; but it is essential to bear in mind that the Writ in the present proceedings was issued on the 19th June, 1951, and that the two Plaintiffs thereby claimed to be entitled as creditors of the estate of the Testator, Philip Edward Shephard, who was their father, for very large sums of money, together far more than sufficient to exhaust entirely the assets in the hands of the executors. Mr Justice Herman, therefore, having ordered amendment of the proceedings so as to entitle them "In the Matter of the Testator's Estate", made the Order I have mentioned in the form appropriate to a creditor's administration suit and thereafter proceeded to deal (inter alia) with the three Inquiries as though they had been adjourned direct to him in open Court before certificate.
I have mentioned these matters before referring to any detail because it is, in my judgment, necessary to state and to emphasise that the Plaintiffs in the action claim as creditors (between them for the sum of over £100,000, the claim of the first Plaintiff being approximately double that of the second) of their father's estate. They say that their father's estate owes to them this large sum of money; and so asserting it is plain that the onus lies heavily upon them to prove their case.
How, then, do they claim that the debt arises? They answer: Out of certain dealings or transactions in the years 1934 and 1935. The Testator died in 1949, and there is no question but that the claims were made for the first time after his death. Prima facie, therefore the Limitation Act, 1939, must in any event provide a completeanswer to any common law claim in debt or for money had and received. But it is the case of the Plaintiffs that the dealings in 1934 and 1935 were dealings by the Testator with moneys which, because they were the proceeds of absolute and unconditional gifts previously made to the Plaintiffs by the Testator himself, were, to the Testator's knowledge, the Plaintiffs' moneys, and for the use of, or dealings with, which the Plaintiffs had given to the Testator no, or no valid, authority. If this allegation is well founded, then the Limitation Act is not available to the executors. The Testator must be regarded on this basis as a trustee to whose hands trust moneys will have come. The Plaintiffs were even prepared to contend, if necessary, that the Testator must be held to have acted in concealed fraud of the Plaintiffs and so to have deprived himself and his estate of any defence under the Limitation Act. For this purpose they relied on the case of Beaman v. A.R.T.S., Ltd., reported in 1949 1 All England Reports at page 465. As the Plaintiffs in their evidence stated that their father was a man of scrupulous honour, I propose to say no more upon this last contention than to hold that on the facts of the case it is, in my opinion, insupportable.
It is clear from what I have said that it is an essential foundation to their claim for the Plaintiffs to prove the gifts to which I have referred. For, unless such gifts are established, then the subject-matter of the Testator's dealings in 1934 and 1935 was not the Plaintiffs' property at all, and their claim fails in limine. The significance of the Fifth Inquiry directed by the learned Judge thus appears. It is also made apparent in what respect the present case differs so greatly (as the Judge observed) from the more usual case where the question, aye or no, of an advancement by a parent to a child falls to be determined. In the more usual case the questionarises whether some item of property found to be legally vested in a child is beneficially the child's own property. In this case the subject of the alleged gifts, namely shares in certain private companies, was undoubtedly so vested originally – in, or shortly after, the year 1929; but it was so vested in circumstances and on conditions such that the Testator was always able to exercise (as he did) unlimited control over the disposition of the shares and also over the whole of their proceeds of sale in 1934 (which proceeds in May of that year were placed to the credit of deposit accounts with Barolays Bank, Ltd., in the Plaintiffs' respective names.) This control was exercised in various ways by the Testator for the benefit of his family, including himself; and in so far as certain of the proceeds of sale were ultimately utilised by the Testator in creating benefits of a different character for the two Plaintiffs, they have been prepared to give credit accordingly, on the footing that to that extent the Testator has been able to discharge himself from the obligation which (they say) rested upon him to account to them strictly for the whole of the original proceeds. It is part of the Plaintiffs' case that they never knew anything whatever about the existence of the property, that is, the shares in the private companies, or about the vesting of it in their names or the placing in their names upon deposit account of the proceeds of the realisation of the shares until one or other of the Defendants told them about these matters after their father's death. This ignorance is indeed remarkable, for each of the Plaintiffs signed Powers of Attorney and other documents in relation to the shares alleged to have been given to them and in relation to their proceeds of realisation, including directions to Barelay's Bank to honour cheques drawn by their father on their respective deposit accounts to the credit of which there was at onetime, as they say quite unknown to them, over £200,000. The directions or authorities to the Bank are short and simple documents. It is plainly understandable that their execution might have been forgotten after a period of nearly 20 years, but it is not easy to comprehend how any reasonably intelligent or educated human being could have executed such documents without becoming aware of their nature; and neither Plaintiff has denied execution or raised a plea of non est factum in regard to any of the documents which he or she executed. I assume, however, that the learned Judge accepted the testimony of the Plaintiffs that they were in fact at all times wholly ignorant of the character of the documents which they were content to sign without observation or inquiry, though I observe that he described their respective Affidavits as "very uncandid documents."
It may therefore be that the Judge was right in his view that once the gifts were proved everything else followed in the Plaintiffs' favour – if the Judge meant thereby gifts absolute and unqualified. It is the fact that when the first Plaintiff executed the various documents put before him by his father he was but 20 years old, though he was of full age when the Bank acted on the authority which the first Plaintiff had executed (upon the evidence, without any further reference to him) and permitted his father to withdraw large sums, on one occasion over £70,000, from the first Plaintiff's account. If those sums withdrawn were, in the eye of the law, trust moneys in the Testator's hands, it is not easy to see how, in the circumstances and on the facts which I think Mr Justice Harman found, the Testator ever discharged himself in respect of them. The second Plaintiff is, however, to my mind, in much greater...
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