Rooney v Cardona
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE ROBERT WALKER,LORD JUSTICE MANTELL,LORD JUSTICE SWINTON THOMAS |
| Judgment Date | 09 February 1999 |
| Judgment citation (vLex) | [1999] EWCA Civ J0209-2 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | FC3 98/7760/2 |
| Date | 09 February 1999 |
[1999] EWCA Civ J0209-2
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM ST ALBANS COUNTY COURT
(HIS HONOUR JUDGE COOKE)
Royal Courts of Justice
Strand, London WC2 2LL
Lord Justice Swinton Thomas
Lord Justice Mantell
Lord Justice Robert Walker
FC3 98/7760/2
CCRTI 98/1150/2
MR JOHN MCLINDEN (Instructed by Messrs Pictons, St. Albans, Herts, AL1 1NG) appeared on behalf of the Appellant
MR PHILIP MARSHALL (Instructed by Kingsford Stacey & Blackwell, London, WC2A 3UB) appeared on behalf of the Second and Third Respondents
This is an appeal with the leave of the Judge from an order of His Honour Judge Cooke made on 6 August 1998 varying an order of District Judge Hewetson-Brown made on 1 May 1998. The District Judge's order answered (at least in part) four questions which had been directed to be heard as preliminary issues in an action by the trustee in bankruptcy of Mr Robert Daniel Cardona ("Mr Cardona") against (as first defendant) Mr Cardona's adult son, who is resident in New York; (as second and third defendants) Black Horse Life Assurance Company Ltd ("Black Horse Life") and Black Horse Financial Services Group Ltd, two companies in the Lloyds Bank group (I will refer to those two companies together as "Black Horse", as if they were a single company); and (as fourth defendant) Lloyds Bank plc ("Lloyds").
The action was started in the Chancery Division of the High Court against Mr Cardona's son alone. Later it was transferred to the St Albans County Court and the other defendants were added. Mr Cardona's son has taken no part in the proceedings and Mr Cardona himself has absconded to the United States of America.
As does unfortunately sometimes happen, the four questions directed to be heard as preliminary issues can be seen, with hindsight, not to have been the most helpful route to analysing the real issues in the case, which arises out of the payment of policy moneys by Black Horse to Mr Cardona at a time when he was an undischarged bankrupt. I shall set out the facts, which are for present purposes and with one important exception largely undisputed, before I come on to the preliminary issues, the proceedings below and the course which this appeal has taken.
In 1992, when Mr Cardona was 62 and his wife Mrs Gloria Antoinette Therese Cardona was 58, they effected a policy with the second defendant, Black Horse Life. The policy was called a low cost mortgage plan but the policy itself was not charged as a security. The grantees were Mr and Mrs Cardona. The lives assured were Mr and Mrs Cardona. The basic sum assured was £60,000, though subject to some fairly complex provisions about unit-linking which I need not go into. There was a monthly premium of £453.60. The maturity date was 24 August 2002 (exactly ten years from the commencement of the policy) when the lives assured, if both living, would have attained the ages of 72 and 68 respectively. Death benefit (£60,000 or the bid price of the allocated units, if greater) was payable on the death before the maturity date of the first to die of the two lives assured. Maturity benefit (the bid price of the units allocated) was payable on the maturity date if both lives assured survived until then. The appropriate benefit was payable "to the Grantee(s) or the person(s) otherwise entitled" subject to proof of their entitlement.
I should also note —for reasons which will become apparent —that the policy did not contain any express declaration of trust, or indeed any reference to the policy being held for the benefit of anyone. It simply named Mr and Mrs Cardona as grantees. Nor did the policy contain any reference to the Married Women's Property Act 1882 ("the 1882 Act").
On 24 October 1995 Mr Cardona was adjudicated bankrupt on the petition of the Inland Revenue. On 22 November 1995 notice of his bankruptcy was published in the London Gazette. On 30 January 1996 the plaintiff Mr Gerard Rooney, an insolvency practitioner, was appointed as his trustee in bankruptcy.
On 8 June 1996 Mrs Cardona made a will leaving her entire estate to her son, the first defendant. She appointed Mr Cardona and a Mr Cave as her executors. She died in hospital on 23 July 1996. Her will was proved by Mr Cardona on 6 September 1996, power being reserved to the other executor. There is no evidence that Mr Cave has either formally renounced probate or taken any step in the administration of Mrs Cardona's estate.
Within a short time of his wife's death Mr Cardona contacted Black Horse's office at Chatham with a view to obtaining the policy moneys. On 8 August (having already, it seems, made contact on the telephone) he sent to Black Horse a death certificate. He stated in his letter that he could not find the policy but that he would sign a form about that. He signed a form of indemnity and declaration on 21 August 1996 and a form of discharge on the following day. In the form of indemnity and declaration he declared that he was legally entitled to the policy and that to the best of his knowledge it had not been assigned, mortgaged, settled, deposited, charged or otherwise dealt with. On 22 August he sent these forms to Black Horse, which on 29 August 1996 sent him a cheque for £60.789.41 (the odd sum representing a refund of one premium paid since Mrs Cardona's death, and some interest). The trustee in bankruptcy's amended particulars of claim allege that Mr Cardona paid the cheque into an account in his own name at the Harpenden branch of the fourth defendant, Lloyds, and that payments were made from that account to the first defendant in New York.
I must now mention the disputed issue of fact which is referred to in the preliminary issues (although it does not have to be decided as part of them). The amended particulars of claim plead that at all material times Black Horse knew or was deemed to know of Mr Cardona's bankruptcy, by reason of (i) the notice in the London Gazette; (ii) a letter dated 12 December 1995 which the trustee in bankruptcy sent to Black Horse, naming Mr Cardona and giving the policy number almost correctly (the trustee in bankruptcy referred to K 305434 instead of K 30543H) ; and (iii) a telephone call on 14 February 1996 between the trustee in bankruptcy's partner and a Black Horse employee.
I must now come to the preliminary issues. They have, I fear, sent this case off on a track which might, were the issues to be fully explored, prove to be a blind alley. The preliminary issues were, with some small changes in terminology, as follows :-
1. If [Mr Cardona] was the sole beneficiary of the policy …was the receipt of Mr Cardona, as [his wife's] legal personal representative, a valid discharge [for] the proceeds of the policy against the trustee in bankruptcy pursuant to section 11 of the [1882 Act] assuming the only possible notice of the bankruptcy was the Gazette notice of 22 November 1995 ?
2. Would the answer to the previous question be different if Black Horse had [actual notice as pleaded] ?
3. Did the proceeds of the policy devolve on Mr Cardona as after-acquired property for the purposes of section 307 of the Insolvency Act 1986 ?
4. Would the answer to 1 and 2 be any different if Black Horse had no notice of the capacity in which Mr Cardona gave the receipt ?
Both sides agree (and are plainly right in agreeing) that the Judge gave the correct answer —No —to question 3. But the other three questions are based on an agreed but questionable premise, that is that the policy was effected under s. 11 of the 1882 Act and was subject to the special provisions as to trusteeship contained in that section.
That is the basis on which the preliminary issues were argued both before the District Judge and before Judge Cooke. It is also the basis on which the trustee in bankruptcy's notice of appeal was prepared. Notice of an application to amend the notice of appeal was given only a few days before the hearing, and the application was vigorously opposed on behalf of Black Horse. This court is reluctant to decide issues based on premises which may be mistaken. But in this case the preliminary issues had already been so fully debated, and the application to amend was made so late, that this court declined to grant leave to amend, and has considered the appeal on the same basis as that on which the preliminary issues were framed and argued in both lower courts.
Until little more than a century ago the common law did not permit a married woman to own any property whatsoever. It became the property of her husband. When a measure of reform was proposed in 1856 one Member of Parliament protested, "If a woman had not full confidence in a man, let her refrain from marrying him". The attitude of the common law was mitigated for the wealthier classes by rules of equity providing for separate uses and restraints on anticipation, but it was not until the 1882 Act that Parliament made far-reaching changes, going beyond more tentative reforms in the Married Women's Property Act 1870. The results of most of the changes are so now familiar that statutory authority for them is seldom needed, but section 11 (relating to life policies) and section 17 (providing for summary disposal of disputes about matrimonial property) are still of practical importance. In the case of section 11 that is partly for reasons connected with a quirk of estate duty legislation, now repealed.
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