Schwebel v Schwebel
| Jurisdiction | England & Wales |
| Judge | Mr Justice Akenhead |
| Judgment Date | 16 December 2010 |
| Neutral Citation | [2010] EWHC 3280 (TCC) |
| Docket Number | Case No: HT-10–170 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 16 December 2010 |
[2010] EWHC 3280 (TCC)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
TECHNOLOGY AND CONSTRUCTION COURT
Before: Mr Justice Akenhead
Case No: HT-10–170
Justin Rushbrooke (instructed by Taylor Vinters) for the Claimant
Juliette Levy (instructed by Lorells) for the Defendant
Hearing date: 3 December 2010
Mr Justice Akenhead:
Mordechai Meir Schwebel (“MMS”) died on 10 September 2006 leaving a widow, two sons, the Claimant, Aaron Yitzchock Schwebel (“AY”), the Defendant Wolf Schwebel (“Zev”) and two daughters. MMS was very keen to avoid UK inheritance tax and over a number of years transferred a number of properties to members of his family. After his death, the two sons fell out with each other with AY claiming that various properties held or owned by Zev were held on trust for amongst others him. They agreed, by a written agreement dated 25 June 2009 to refer their disputes to the Beth Din, the Court of the Chief Rabbi, in London. Following substantive hearings towards the end of 2009, the Beth Din produced its Award dated 14 April 2010, the decision being broadly in favour of Zev but finding that in respect of one property, 26, Cross Street, London N1 AY was entitled beneficially to one sixth of it.
AY seeks permission to appeal under Section 69 of the Arbitration Act 1996 on questions of law raised on the face of the Award and also under Section 68 with regard to what is said to be serious irregularity. It might be thought by some that this is not obviously normal TCC business relating as it does to inheritance and tax matters. However, the parties entrusted the resolution of these court proceedings to the TCC as a court which is experienced in dealing with arbitration matters and with certain property disputes.
The Factual Background
The bulk of this chapter of the judgement comes from the Beth Din's Award and does not, as such, represent findings of fact made by this Court. There were a number of properties which came to be considered by the Beth Din. These were:
(a) 26, Cross Street: MMS had acquired this property in 1969. By 1984 it was in the joint names of MMS and Zev. By January 1989, it was in the name only of Zev.
(b) 282, Station Road, Westcliff-on-Sea, Essex: this was originally owned by MMS, then transferred to Zev, and then to AY and finally back to Zev.
(c) Castlewood Road, London N16: this was next door to AY's own home which as from 1994 was in the name of Zev.
(d) 20 and 20A Crabton Road, Bournemouth: these properties were owned by Zev but were bought by AY from him in 2008.
(e) 28, St Kilda's Road, London N16: this was MMS’ and his wife's matrimonial home which was transferred to Zev and there was no trust or ownership issue about this transfer before the Beth Din.
Three weeks before his death a meeting (the “Chody meeting”) was held at MMS’ home on 20 August 2006. This was attended by him, his wife, his two sons and Mr Chody, who was an expert in trust and tax matters and who knew MMS well, albeit that he had never acted for MMS in a professional capacity. It has always been accepted that MMS was of sound mind at the time of the Chody meeting. There was some, probably immaterial, difference as to whether this meeting had been set up by Mrs Schwebel. Mr Chody prepared a note of the meeting which was circulated after the meeting and was intended to be signed by MMS who actually did not sign it. The note says:
“1. Mr Schwebel explained that he had disposed of all his assets in his lifetime in the hope that this would relieve his family from inheritance tax problems.
Mr Chody pointed out that in order to be effective for inheritance tax purposes all gifts must be without any benefit being retained or enjoyed by the donor from the gifted property after the transfer. [Zev] explained that the transfer of property to him had not been gifts but sales at market value. Mr Chody explained that in those circumstances we need not be concerned about any benefits obtained.
2. Mr Schwebel explained that although he had purchased properties as residences for his other children after their marriages he had not done the same for [Zev]. It was, therefore, his wish that 28, St Kilda's Road shall go to [Zev] and not to any of the other children.
3. The property at Cross Street had been the property from which Mr Schwebel had carried on business for many years. In the last 5 or 6 years, however, there had been very little business and Mr Schwebel with the help and advice of [Zev] had been trying to turn the property into an income producing investment.
Mr Schwebel would like the property to be retained as an investment for the family and that it should be owned by Mrs Schwebel senior, [Zev] and [AY] in equal shares as beneficial joint owners subject to the following conditions:
1. All decisions relating to the property and the income derived therefrom should be by majority.
2. Mr Schwebel would like his 2 daughters to have some benefit from the income of the property but only at the discretion of the majority of the 3 owners.
3. The disposal of property should only take place with the agreement of all 3 owners. Similarly no individual owner should be able to dispose of his or her share in the property except with the agreement of the other two owners.
I hereby confirm that the above correctly sets out the discussion at the above mentioned meeting and correctly represents my wishes.”
Following the demise of MMS, and the two brothers having fallen out in respect at least of the first four properties listed above, the matter was referred to arbitration at the Beth Din.
The Arbitration Agreement
The Beth Din is a rabbinical court to which people of the Jewish faith can have access for the resolution of certain types of dispute. It is not part of the Courts system of England and Wales but parties who use the Beth Din can sign an arbitration agreement to which the Arbitration Act 1996 applies. In this case both AY and Zev signed such an agreement and relevant terms of it are:
“1. The Beth Din will consist of three Dayanim [judges], unless the parties agree to the substitution of a single Dayan;
2. The Beth Din's rules of procedure are those of Jewish law;
9. The Beth Din shall decide the matter under Jewish law, or incorporating such other laws as Jewish law deems appropriate.”
The Arbitration and the Award
There were three hearings, the first being essentially a procedural hearing on 25 June 2009. There is some controversy between the parties as to what may have been said or done but that seems to me to be immaterial to the issues which I have to decide.
There were two hearing days on 18 November and 10 December 2009. Each party was represented by a Rabbinical Advocate who each summarised his client's case and a number of witnesses were called including Mrs Schwebel (the parties’ mother), AY and Zev, Mr Chody, the two sisters and their husbands. It is clear that they were questioned, sometimes closely by the Advocates and also by the tribunal. The transcripts of these two days’ hearings exceed 500 pages, albeit in large type on more than double spacing. There has been no suggestion that the parties were prevented from putting their case. Following these hearings, the Beth Din invited the parties to send in written submissions. Zev's Advocate, Mr Tesler, did send in such submissions and in his witness statement said that AY's Advocate, Mr Strom, did not; that was not challenged by any witness statement before this Court, but I was told orally that Mr Strom did produce submissions. Again, nothing turns on that since both parties were clearly given the opportunity to present any final submissions which they wanted. It would be by all accounts an understatement to say that the hearings were “keenly” contested; there were allegations in particular by AY that in effect or in reality Zev was lying and that he and MMS had engaged in what might possibly be inheritance tax evasion.
The Award dated 14 April 2010 and signed by the three “Dayanim” runs to nine pages. In Paragraph 2, they summarise the general contentions, namely AY's to the effect that MMS transferred all his assets (cash, shares and real property) into Zev's name intending that he should hold them for his parents and that he should make payments from these assets at MMS’ direction, and Zev's contentions that he held nothing for his father, that the transfers to him were all gifts or were purchased for good consideration, that MMS did not trust AY and his sisters and their husbands due to a history of them squandering investments and of inter-family business disputes and that he had had to inject cash sums frequently into his father's business. AY was supported by his sisters and Zev by his mother. The Dayanim noted that under the Jewish Religious Law “any statement made at the hearing by Mrs Schwebel, her sons, daughters and sons-in-law are not regarded as evidence.” They go on to review and make certain findings about the Chody meeting, confirming in Paragraph 5 that with regard to the matrimonial home MMS explains at that meeting that he had purchased residential properties for his other children after their marriages but had not done the same for Zev and it was his wish that “it should go to Zev”; they record that this was not challenged by AY. Paragraph 6 makes certain findings:
“However, with regard to Cross Street, the Deceased apparently acknowledged that his business had hardly functioned for the last five or six years and that with the help of his son, Zev, he was trying to turn the property into an income producing investment. He expressed the wish that this property should be retained as an investment for the family, to be owned jointly by his wife, Zev and AY in equal shares as beneficial...
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