Thomas and Agnes Carvel Foundation v Carvel and another
| Jurisdiction | England & Wales |
| Judge | MR JUSTICE LEWISON,Mr Justice Lewison |
| Judgment Date | 11 June 2007 |
| Neutral Citation | [2007] EWHC 1314 (Ch) |
| Docket Number | Case No: HC06C03337 |
| Court | Chancery Division |
| Date | 11 June 2007 |
[2007] EWHC 1314 (Ch)
Mr Justice Lewison
Case No: HC06C03337
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Mr Francis Barlow QC (instructed by Herbert Smith LLP) for the Claimant
Mr Michael Gibbon (instructed by Penningtons) for the First Defendant
Mr Jeremy Dable for the Second Defendant
Hearing dates: 23, 24 May 2007
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
THE HONOURABLE MR JUSTICE LEWISON
| Introduction | 2 |
| The underlying facts | 2 |
| The law | 5 |
| Jurisdiction | 5 |
| Discretion | 12 |
| Application to set aside | 15 |
Introduction
The Claimant, The Thomas and Agnes Carvel Foundation, seeks a summary order (a) replacing the First Defendant, Pamela Carvel, currently sole personal representative of Agnes Carvel deceased, with a neutral, independent professional person pursuant to section 50 of the Administration of Justice Act 1985 or section 1 of the Judicial Trustees Act 1896; and (b) setting aside orders obtained by Pamela Carvel in the Chancery Division for the payment to her of over £8 million out of Agnes Carvel's estate. Mr Francis Barlow QC appears for the claimant. Mr Michael Gibbon appears for Pamela Carvel and Mr Jeremy Dable for the second defendant, which is the named residuary beneficiary under Agnes Carvel's last will.
The underlying facts are not in any real dispute; and I take the narrative largely from Mr Barlow's full and helpful written argument.
The underlying facts
The late Thomas Carvel (“Thomas”) made a large fortune in the ice cream business in the USA. He died in 1990, and his wife Agnes Carvel (“Agnes”), died in 1998. Thomas and Agnes had no children. Pamela Carvel (“Pamela”) was Thomas' niece and Agnes' niece by marriage.
On 13 February 1988 Thomas and Agnes executed mutual, mirror-image wills. By her 1988 Will (the “1988 Will”) Agnes left her estate on trust for Thomas if surviving for life with remainder on trust for The Thomas and Agnes Carvel Foundation (the “Foundation”). Thomas' 1988 Will was in similar form. The Foundation is a not-for-profit corporation incorporated in 1976 in the State of New York. By a simultaneous agreement (the “Reciprocal Will Agreement”) Thomas and Agnes agreed that during their joint lives they would make no gratuitous transfers of property nor alter the provisions of their 1988 Wills without the consent of the other and that the survivor would make no such gratuitous transfers or alterations. Thomas died on 21 st October 1990. His 1988 Will was admitted to probate in New York by the Surrogate's Court of the State of New York, County of Westchester; and seven executors, including Agnes and Pamela, were appointed to administer his estate. The Surrogate's Court is the court of probate for the State of New York.
Following Thomas' death, Agnes, in the belief that her 1988 Will had been lost, made a further will on 21 November 1990 (the “1990 Will”). Apart from the omission of the life interest in favour of Thomas the terms of Agnes' 1990 Will were essentially identical with those of the 1988 Will. It, too, left Agnes' residuary estate to the Foundation. On 22 April 1991 Agnes created a revocable trust known as “The Agnes Carvel 1991 Trust” (the “1991 Trust”) under which Agnes took a life interest in the trust fund with remainder on her death upon trust to pay her funeral and administration expenses and debts and subject thereto upon trust for the Foundation or some other charitable trust or corporation to be created by the Trustees. Agnes subsequently transferred property of substantial value to the 1991 Trust.
On 7 July 1995 Agnes made a new will (the “1995 Will”) revoking all former wills, appointing Pamela her sole executrix and bequeathing her residuary estate to the Second Defendant Carvel Foundation, Inc. (“Carvel-Florida”). Carvel-Florida is a not-for-profit corporation which was incorporated in Florida by Pamela and Agnes on the same day as the 1995 Will was executed. Pamela was a founding director of Carvel-Florida and following Agnes' death in 1998 became the registered agent and thus the person primarily responsible for accepting service of process on behalf of the corporation. Pamela resigned from both positions in March 2003.
In March 1995 Pamela and Agnes moved to London. The circumstances in which they did so are contentious, but do not matter on this application. Agnes died in London on 4 August 1998. On 2 October 1998 Pamela obtained probate of the 1995 Will from the Principal Probate Registry. The terms of the grant show that in applying for probate Pamela adopted the “excepted estates” procedure. Under the prevailing regulations (The Capital Transfer Tax (Delivery of Accounts) Regulations 1981 as amended) this procedure was available in a case where (among other things):
(1) the deceased died domiciled in the United Kingdom;
(2) the value of that person's estate was wholly attributable to property passing under his will or intestacy (or under a nomination taking effect on death or by survivorship);
(3) not more than £50,000 represented value attributable to property situated outside the jurisdiction; and
(4) the gross value of the estate (including chargeable transfers) did not exceed £200,000.
In order to obtain probate Pamela swore an oath that the conditions were satisfied. She says that she believed they were. I am not in a position to find that she is not telling the truth; although her belief, if true, was naïve. The effect of the regulations is that, in cases to which they applied, it was not necessary to provide an account to the Inland Revenue.
In August 1998, within days of Agnes' death, the Foundation instituted proceedings in the Westchester Surrogate's Court to enforce the Reciprocal Will Agreement and to avoid certain pre-death transactions alleged to have been shams and also alleged to have been effected with Pamela's connivance in violation of that agreement.
Agnes' estate was represented in those proceedings by Leonard Ross, a New York attorney. According to a witness statement that he subsequently made, he had been designated by Pamela as an ancillary administrator; and his appointment as ancillary administrator was accepted by the Westchester Surrogate's Court on 18 August 1999. Under New York law Pamela, as a foreign fiduciary, could not represent the estate in New York. However, Pamela was a party to the action in two capacities: in her personal capacity and as Trustee of the Realities Trust, an entity to which property had been transferred and to which the Foundation claimed title by virtue of the Reciprocal Will Agreement. These proceedings culminated in a Decision After Trial dated 1 April 2002 given by Surrogate Scarpino. I will return to what the Surrogate decided in due course; but in summary he held (i) that the Reciprocal Will Agreement was valid and enforceable, (ii) that the execution of the 1990 Will and the 1991 Trust were not breaches of the Reciprocal Will Agreement, (iii) that the execution of the 1995 Will “contravenes the estate plan created in 1988 and clearly constitutes a total breach, of the Reciprocal Agreement” (iv) that the Foundation was entitled to receive the assets of Agnes' estate subject to the payment of reasonable debts and administration expenses and (v) that the Foundation was entitled to a transfer of those assets that had been transferred to the Realities Trust. The Surrogate's decision was embodied in a decree dated 8 July 2002 and was affirmed by the Appellate Division of the Supreme Court of New York.
On 13 June 2003 Pamela in her personal capacity, and acting as a litigant in person, issued a Claim Form in the Chancery Division of the High Court in England against herself as sole defendant in her capacity “as Executor of the Estate of Agnes Carvel” claiming the sum of £6,640,897.79 together with accrued interest of £1,148,827.90 and continuing interest at the daily rate of £1,455.54 until payment. The claim was based on three categories of expense:
i) Sums which Pamela said she had incurred on behalf of Agnes during her lifetime;
ii) Debts which Agnes had contracted but had not paid; and
iii) Sums which Pamela had incurred as Agnes' personal representative and in respect of which she claimed to be entitled to indemnity from the estate.
By Order dated 24 th July 2003 Deputy Master Behrens ordered Carvel-Florida to be joined as a defendant in place of Pamela. By Order dated 8 th January 2004 Deputy Master Weir ordered Carvel-Florida, on its own admission of the full amount of the sum claimed, to pay to Pamela the sum of £8,085,095.51 together with £800 costs. Carvel-Florida's admission of liability was signed by Pamela's mother Linda Carvel. By order dated 6 May 2004 Master Price amended Deputy Master Weir's Order by providing that the sum of £8,085,095.51 be paid from Agnes' estate upon Carvel-Florida “as residuary beneficiary appointed to represent the said estate” consenting to the Order. The Chancery proceedings were issued and the Chancery order obtained after the Surrogate's decision and decree declaring that the Reciprocal Will Agreement was enforceable, that the 1995 Will was a “total breach” of that Agreement and that the Foundation was entitled to receive Agnes' estate; and after the Surrogate had ordered the fiduciaries of Agnes' estate to perform her contract.
On 14 th April 2005 Pamela petitioned the Florida Circuit Court for the County of Broward, a court with no previous experience of the Carvel estate litigation, for an order...
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