Sydney Lawie v Anthony Paul Lawie and Others
| Jurisdiction | England & Wales |
| Judge | His Honour Judge Birss QC |
| Judgment Date | 26 October 2012 |
| Neutral Citation | [2012] EWHC 2940 (Ch) |
| Court | Chancery Division |
| Docket Number | Case No: HC11C02912 |
| Date | 26 October 2012 |
[2012] EWHC 2940 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Rolls Building
7 Rolls Buildings
London EC4A 1NL
His Honour Judge Birss QC
(Sitting as a judge of the High Court)
Case No: HC11C02912
Martin Collier (instructed by Terrells LLP) for the Claimant
The defendants did not appear and were not represented
Hearing dates: 16th October 2012
This is an action by the surviving settlor seeking to rectify a deed of trust dated 4 March 2006. As executed the trust deed names the settlor's two grandchildren as the sole beneficiaries and there is no scope for adding beneficiaries or varying the entitlement under the trust. The rectification sought would have the effect of adding the settlor's children as additional potential beneficiaries and giving the trustees power to vary the entitlement between all the beneficiaries, as rectified.
The settlors were the claimant, Mr Sydney Lawie and his wife Pauline Lawie. They had two children, the first defendant Anthony and the second defendant Lesley. Lesley married the third defendant Roger Ely. Lesley and Roger's daughter is the fourth defendant Rebecca Ely. Anthony's son is the fifth defendant Jamie Lawie. The trustees were the claimant, Pauline Lawie, Anthony Lawie, Lesley Ely and Roger Ely. Pauline Lawie died on 11 th May 2011. All of the relevant parties are adults. In this judgment I will refer to Mr Sydney Lawie as Mr Lawie and to all the other individuals by their first names.
The facts are as follows. In late 2005 Mr and Mrs Lawie, then aged 81 and 76 respectively, wished to make arrangements to benefit their family. Together with their daughter and son in law, they saw Mr Tollins, a financial planner from the Norwich & Peterborough Building Society in January 2006. After discussion with him they decided that they wanted part of their savings to be held in a Legal & General Portfolio Bond, which was to be held in a flexible trust for their children and grandchildren. The sum to be put into the bond was £100,000, just under half their net assets at the time. Although the principal purpose was to benefit the grandchildren, they wanted the flexibility to be able to make changes in respect of the beneficiaries and their percentage of entitlement. Mr Lawie also felt that there may come a time when he and his wife may need to withdraw some of the moneys for their own benefit and I will return to that point below.
Mr Tollins prepared a report and a draft deed on a Legal & General form. The deed is entitled "Non-statutory flexible trust" and has a number of parts. Part 1 is the declaration of trust and names the grantees (in this case Mr and Mrs Lawie) and the policy to be incorporated. Part 2 names the "Current Beneficiaries" (as executed Rebecca and Jamie) and Part 3 names the "potential Future Beneficiaries". As executed this part of the form is blank. The material provisions are as follows:
I/We desire that the policies named in Part 1 (hereinafter called 'the Policy') be issued to me/us as Grantee(s) and expressed to be upon an irrevocable trust for the benefit of all or such one or more exclusively of the others or other of those named in Part 3 in such shares and in such manner as the Trustees (being at least three in number or a trust corporation) shall in their absolute discretion appoint by deed or deeds revocable or irrevocable and executed at any time or times not later than twenty four months after the date of the life assured (the date of death of the first/last to die in the case of joint lives assured) and in default of appointment or so far as no such appointment shall extend for the benefit of those named in Part 2 in equal shares absolute (unless otherwise stated).
Thus the trust is organised as a discretionary trust for the benefit of those named in Part 3 and in default of appointment for the benefit of those in Part 2. No doubt this is the reason it calls itself a "flexible" trust. However as executed the trust is not flexible at all. As executed, the two grandchildren Rebecca and Jamie are the sole beneficiaries in equal shares and the trustees have no power to change anything.
In February 2010 Mr and Mrs Lawie were considering purchasing a house. Their daughter contacted the Norwich & Peterborough and the lack of flexibility was discovered. A complaint was made to the Norwich & Peterborough. It was investigated by the complaints officer, Mr Pinchbeck. He considered the information provided on the Lawie's behalf and that provided by Mr Tollins. In a letter on 18 th October 2010 Mr Pinchbeck upheld their complaint. His findings included the following:
This desire [to invest in the medium to long term] was driven by the fact that they [Mr and Mrs Lawie] wanted to set up a trust for the benefit of their children and grandchildren and that they would not need access to the funds in any way during the rest of their lifetime.
Mr Pinchbeck confirmed that because Part 3 of the form had been left blank, there was no scope for the trustees to add further beneficiaries over and above the two names in Part 2 (Rebecca and Jamie). An offer to reimburse their legal expenses (up to a limit) was made, together with a payment for distress and inconvenience. They were advised to apply to court for variation or rectification.
The application for rectification was made under CPR Part 8 with the claim form issued on 23rd August 2011. Directions were given for evidence. The evidence consisted of witness statements from Mr Lawie, Lesley and Roger. In addition Anthony and Rebecca wrote letters to the claimant's solicitors, Terrells LLP, making clear they did not oppose the application.
At that stage the rectification sought was to add into Part 3 of the trust deed form the names of: Mr Lawie, Anthony, Lesley, Rebecca and Jamie. The effect of this would be that the trustees would then have the power to make any or all of those persons beneficiaries and to vary their entitlements. The rationale for the inclusion of Mr Lawie was that, at that stage and on the evidence of Mr Lawie, Lesley and Roger the settlors had intended not only that their children and grandchildren could be beneficiaries but that Mr and Mrs Lawie were to be able to benefit potentially as well.
The matter came before Vos J on 26 th July 2012. At that hearing it emerged that a key document was missing from the exhibits to Mr Lawie's witness statement. Exhibit SL2 was supposed to contain a copy of the personal financial report prepared for the Lawies by Mr Tollins. However the exhibit only contained the "Fact Find" document and not the report itself. It was obvious that the report was an important part of the evidence. It was supposed to have been exhibited. The matter was adjourned to allow further evidence to be produced.
The further evidence consisted of short statements from Mr Lawie, Lesley Ely and Roger Ely. Mr Lawie exhibited the missing report, dated 1 st March 2006. While the report firmly supports the application for rectification to add Anthony and Lesley as further potential beneficiaries under the trust, the report also undermines the application to rectify by adding Mr Sydney Lawie's name. The report repeatedly makes statements along the following lines:
You have funds available that you would like to earmark for the benefit of your Children and Grandchildren, as you do not need the funds yourselves.
It may be noted that this is consistent with the passage quoted above from Mr Punchbeck's letter.
In any event, as a result of the further evidence, the application to add Mr Lawie's name was dropped. However the application to add the names of the children, Anthony and Lesley, is maintained. The further statements of Mr Lawie, Lesley Ely and Roger Ely indicate that they do genuinely believe that Mr and Mrs Lawie intended to have access to the Trust as well as the children and grandchildren but they accept that this is not borne out by the documents. They only ever informed the court of their recollection and...
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Dean Ralph v David Ralph
...merely on his evidence that such a clause had been mistakenly excluded (see also the decision of Mr Colin Birss QC in Lawie v. Lawie [2012] EWHC 2940 (Ch), where he rectified a voluntary settlement notwithstanding that it was a voluntary settlement and not the result of a bargain). vi) The......