England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE GUILDFORD COUNTY COURT
HHJ REID QC
Claim No. 8EP01285

		Royal Courts of Justice Strand, London, WC2A 2LL
		10/12/2010

Lord Justice Mummery :

Mutual wills: the issues

1. This appeal turns on whether the evidence justified the finding of the trial judge that an oral agreement for mutual wills was made and acted upon. HHJ Reid QC found that, following a second marriage in November 1985, Edwin Densham-Smith (Denny) and Laura Densham-Smith, formerly Fry (Laura) made an oral agreement for mutual wills. He also found that they in fact executed mutual wills pursuant to that agreement: that, on Denny's death in 1989, an irrevocable trust took effect; and that, on Laura's death over 15 years later in 2005, the trust was binding on her estate.
2. Under that trust Denny's son by his first marriage, the respondent Martin Densham-Smith (Martin), who was born in 1952, is entitled to an equal ½ share of Laura's net estate. The other ½ share goes to Laura's son by her first marriage, the appellant Jonathan Fry (Jonathan), who was born in 1959. Jonathan is the sole executor and residuary beneficiary under the last of three non-mutual wills made by Laura after Denny's death. Jonathan appeals against the judge's findings contending that they were not supported by the evidence and that Martin is not entitled to any share in Laura's estate.
3. In Olins v. Walters [2008] EWCA Civ 782, [2009] Ch 212 at paragraphs 38 and 39 and in Charles v. Fraser [2010] EWHC 2154 (Ch) at paragraph 59 the expanding case law on mutual wills is discussed. Two of the controlling conditions matter in this case: the evidence must establish (a) a prior agreement by the testators to make mutual wills intending their agreement to become irrevocable on the death of the first to die and (b) the making of the mutual wills pursuant to the agreement: Birch v. Curtis [2002] EWHC 1158 (Ch), [2003] 2 FLR 847 at paragraph 75 and Theobald on Wills (16^th ed -2001) at paragraph 2-11. If the testators fail to execute mutual wills pursuant to their agreement, that agreement does not become irrevocable on the death of the first to die: Healey v. Brown [2002] EWHC 1405 (Ch), (2002) 19 EG 147, at paragraph 8. It has been said that the evidence required for an "express agreement not to revoke the wills" (Re Goodchild [1997] 1 WLR 1216 at page 1225H) must be "certain and unequivocal" (Re Oldham [1925] Ch 75 at page 87), or "clear and satisfactory" (Re Cleaver [1981] 1 WLR 939 at page 948A), so as to satisfy the court that, on the balance of probabilities, such an agreement was made. In Birch v. Curtis [2002] 2 FLR 847 at page 866, a case in which there was no express evidence of a mutual wills agreement, Rimer J said that he was unable to draw the inference that there was any such agreement. An agreement will not be implied simply from the fact that the testators made similar wills.
4. Martin's case is that the evidence established that Denny and Laura orally agreed to make testamentary dispositions of their estates to each other and then, on the death of the survivor, to each of their respective sons, Martin and Jonathan, in equal shares. Martin says that their intention was that those agreed dispositions, so far as the surviving testator was concerned, were to become irrevocable. Secondly, Martin contends that the evidence also established that Denny and Laura each made a mutual will pursuant to that agreement.
5. In Jonathan's proceedings for a declaration that Martin has no interest in Laura's estate HHJ Reid QC held that Martin had established his case for mutual wills. He dismissed Jonathan's claim and on 22 February 2010 he made an order declaring that Jonathan holds ½ of Laura's net estate on trust for Martin absolutely. The net value of the estate is about £454,600, of which £400,000 represents the proceeds of sale of a house in 48 Tilt Road, Cobham, Surrey (Tilt Road) bought by Laura and her former husband, John Fry, in 1956. On their divorce in 1985 Tilt Road was transferred into Laura's sole name. Half of the estate (amounting to about £227,000) is retained by Jonathan's solicitors pending the final resolution of the proceedings.
6. The judge granted Jonathan permission to appeal on the issue whether, following Denny's death in 1989, Laura was bound to leave ½ of her estate to Martin. None of the three wills that she made after Denny's death left anything to Martin. Under her last will Laura left practically everything to Jonathan.

Background facts

7. Much of the judge's detailed and careful judgment covers two unsuccessful heads of counterclaim that Martin does not pursue on appeal. Martin did not help his case at trial by advancing counterclaims based on a secret trust and on a tripartite agreement. In rejecting them the judge noted the animosity between the parties and concluded that their mutual antipathy clouded their recollection so that "neither was a particularly satisfactory witness."
8. The judge dismissed Martin's claim that there was a secret trust under the will of a first cousin once removed (Phyllis Wood), that his mother Kathleen was a secret trustee for him and that that trust was the source of the funds for the purchase of Fern Cottage, Normandy, Surrey by Denny and Kathleen in 1972. Denny became sole owner of Fern Cottage on Kathleen's death in 1978. After marrying Laura in November 1985 Denny lived with her in Tilt Road. In March 1986 he sold Fern Cottage, shortly before making his last will. The net proceeds were about £50,000, which were approximately the value of Tilt Road at that time. Denny then made a will leaving his estate to Laura, but, if she predeceased him, to Martin and Jonathan in equal shares. As for the alleged secret trust of Fern Cottage the judge was not persuaded that Phyllis Wood ever sought to create one in Martin's favour or that his mother Kathleen ever accepted such a trust.
9. Nor was the judge persuaded of a tripartite agreement between Martin, Denny and Laura that Denny and Laura would make mutual wills under which each of them would leave their estate to the other and the survivor would leave half of the estate to each of him and Jonathan.
10. However, the judge held that Denny and Laura made a binding bipartite mutual wills agreement. He said that he was

"66 … satisfied on the balance of probabilities that Laura and Denny did enter into an agreement for the making of mutual wills effectively in the terms (mutatis mutandis) of Denny's last will. If there was such an agreement it seems to me that it must have been intended to have legal effect and not to be merely an unenforceable family arrangement. On the balance of probabilities I also find that Laura had executed such a will before Denny executed his final will and that this will was destroyed at the time when Laura made her home made will after Denny's death."

11. The judge explained that the effect of his findings was that, once Denny died in 1989 and Laura accepted the benefit of the mutual wills agreement (though she never took out a grant of probate to his will) that arrangement between them became irrevocable and Martin was entitled to ½ of Laura's estate, despite her last will in 2001 leaving her residuary estate to Jonathan.

Mutual wills: the evidence

12. A notable feature of the case highlighted in Mr Norris's submissions on behalf of Jonathan is the absence in evidence of a mutual will by Laura, or of a copy or draft of, or of any instructions for, such a will pursuant to the terms of the oral agreement found by the judge. The only wills made by Laura that have been produced were three wills made by Laura after Denny's death: a home made will dated 3 June 1994; and further wills dated April 1999 and 23 April 2001. Martin does not feature in any of them. His mutual wills claim can only succeed on the basis of wills made by both Denny and Laura in Denny's lifetime pursuant to a mutual wills agreement intended to be irrevocable by the survivor. On what evidence was the judge able to base findings that a mutual wills agreement was made and that Laura made a mutual will pursuant to it before Denny's death?
13. In a key paragraph towards the end of his judgment the judge listed four factors which he said, taken together, satisfied him of the agreement to make mutual wills. Before quoting from that paragraph I should first refer to uncontroversial background facts, findings of fact and items of evidence mentioned by the judge in other parts of his judgment and to facts appearing from documents in evidence. In assessing the validity of the inferences made by the judge all of that material is relevant.
14. First, this was a second marriage of a couple in their 60s: Denny was then 69 and Laura was 62.
15. Secondly, both of them owned houses at the time of their marriage: following her divorce from her first husband Laura owned Tilt Road, which became the new matrimonial home, and Denny owned Fern Cottage, a property of similar value, which he sold soon after his second marriage and just before he made his last will relied on by his son as a mutual will.
16. Thirdly, they each had a son by a previous marriage: Martin, who was 33 at the time of the remarriage of his father, and Jonathan, who was 26 at the time of the remarriage of his mother. Martin had a good relationship with Denny and Laura. Jonathan disliked Denny, whom he only met on a few occasions. The dislike was mutual. There was antipathy between Martin and Jonathan.
17. Fourthly, as observed by the judge (paragraph 39), if there were no such mutual wills agreement between Laura and Denny, the result might be that everything left by Denny would go to Jonathan, whom he barely knew and did not like, to the exclusion of his own son Martin. Further, if, instead of making provision for each other, Laura left all her estate to Jonathan and Denny left all his estate to Martin, a problem might well arise as to how provision was to be made for the survivor of the couple, regarding, for example, the survivor's continued occupation of the matrimonial home at Tilt Road.
18. Fifthly, on 9 April 1986 Denny made a will leaving the whole of his estate to Laura if she should survive him or, in default thereof, to Martin and Jonathan in equal shares. The will was drafted by Mundays, a firm of solicitors with an office in Esher. Denny told Mundays, according to their file note, that "Wife has new will (after marriage)." Denny's will contained no reference to it being one of two mutual wills and there is nothing in Mundays' file to suggest that the topic of mutual wills was ever touched on. Laura was not a client of Mundays.
19. Sixthly, the judge accepted Martin's oral evidence of his belief, based on what he had been told by Laura and Denny, that they had entered into an agreement when they got married that he would get one half of Tilt Road when the survivor died and that they had executed mutual wills. In telephone calls by Martin on 5 and 13 December 2003 Laura appeared to accept that she had made a will under which Martin would benefit. By that time she had cut him out, but asserted that she had re-instated him.
20. Seventhly, Martin acted in Laura's lifetime on his belief as to provision for him under mutual wills. On 22 January 2004, over a year before Laura died, Martin entered a restriction on the title to Tilt Road on the basis of allegations that when Denny died Laura held the property in trust on behalf of Jonathan and him.
21. Eighthly, Laura wrote a letter early in 2004 to John Fry, her ex-husband, stating that "the house is left to him [Jonathan] but Martin will have to share." (The letter was never sent.)
22. Against that background the judge listed the four factors that satisfied him of a mutual wills agreement. They were that:-

"65. …

a) Denny told Mundays she had executed a will after their marriage. It is difficult to accept that Denny would have been mistaken about so basic a point. It is equally difficult to accept that his new wife would have been engaged in what was in effect a dishonest scheme to ensure that her son could benefit at the expense of her new husband's son.

b) Martin's apparent persistent belief that there was some form of binding arrangement that he would receive half of what was left, deriving (as I infer from the evidence) from what he was told by his father and Laura. Martin's over-egging of the pudding by his talk of tripartite contracts does not, in my judgment, detract from the underlying fact that he was told he would get half the house and half what was left.

c) The terms of Laura's unsent letter to her ex-husband: "the house is left to him [Jonathan] but Martin will have to share…"

d) The contents of the telephone calls of 5 and 13 December 2003. Even allowing for what can be perceived as the unpleasant bullying of an old woman by a determined and self-seeking idler, it is notable that Laura appears to accept that she had made a will under which Martin would benefit and that she had then cut him out. She then falsely asserted that she had reinstated him. It is difficult to believe that she would have responded to him as she did if there had never been any agreement that he was to get a half share under her will and if there had never been any such will in his favour."

Appellant's submissions

23. Mr Paul Norris, appearing for Jonathan, forcefully submits that the order of the judge was wrong. It should, he said, be set aside on the grounds that the judge (a) applied the wrong legal test for a mutual wills agreement; (b) was not justified in law in finding that Laura and Denny had made a mutual wills agreement; and (c) ought to have held that Laura had never made a will pursuant to such an agreement which would become irrevocable upon the death of the first to die.
24. Mr Norris submits that the cases lay down that the agreement to make mutual wills must be clear, unambiguous and binding in law; that the agreement must be in existence when the wills are made; and that it must include an express term that the will of the surviving testator should become irrevocable on the death of the first testator.
25. The judge, he submits, failed to apply the legal requirements correctly. There was no evidence or finding as to when and where the agreement was made. On his findings Denny and Laura had not made their wills at the same time and they had not used the same solicitors. The judge failed to explain why, if there was a binding agreement, they did not make their wills at the same time. There was no direct evidence that Laura had made a mutual will in agreed terms following the marriage either before Denny made his will or before he died. The judge failed to explain how it came about that, on his findings, Denny's will was drafted in identical or substantially identical terms to that of Laura. It was mere speculation for the judge to say that the terms of Denny's will suggested an agreement that, on the death of the survivor, what was left should be divided equally between Martin and Jonathan.
26. Mr Norris submits that the particular factors listed by the judge did not support his findings that an agreement for mutual wills was made or that Laura had made a mutual will before Denny's death. It was not even part of Martin's pleaded case in his counterclaim or in his witness statement that Laura had ever made such a will, even though the judge accepted Martin's evidence that he believed that there was some sort of binding arrangement made by Denny and Laura. The judge should have found that Denny told Mundays nothing about any agreement made between him and Laura about mutual wills. If the matter had been discussed by Denny with Mundays, they would have asked to see Laura's will to ensure that its terms were accurately reflected in their drafting of Denny's will and would have recorded the discussion in an attendance note or in correspondence and would have included in Denny's will a statement to the effect that it was intended to be one of a pair of mutual wills.
27. As for Mundays' attendance note "Wife has new will (after marriage)" relied on by Martin and by the judge, it was produced to the court on the second day of the trial after all the oral evidence had been given. The statement gave no indication of the contents of Laura's will and it ought to have been inferred that, if she did make such a will, it was not pursuant to a mutual wills agreement. There was no evidence that Denny or Mundays had ever seen such a will, or any will made by Laura.
28. Mr Norris submits that the judge, having rejected for lack of particularity Martin's evidence that there was a tripartite agreement, should on the same grounds have discounted the credibility of Martin's evidence relating to his belief about a bipartite agreement. Mr Norris also criticises the judge's reliance on the unsent letter written to her former husband at a time when there were concerns about Laura's mental health. The telephone conversations between Martin and Laura in December 2003 had to be seen in the context of the unpleasant bullying manner adopted by Martin in them and the fact that the will discussed in them could only have been Laura's 2001 will.

Discussion and conclusion

29. In my judgment, Mr Norris correctly insists on Jonathan's behalf that the court must examine carefully the evidence on which the judge based his finding that Laura made a mutual will pursuant to an oral mutual wills agreement with Denny.
30. Under the wills that have been produced in evidence, the position is that Laura inherited Denny's entire estate under his 1986 will, that Jonathan inherits Laura's residuary estate under her 2001 will and that Martin takes no benefit under either will. This illustrates the anomalous character of the doctrine of mutual wills: if and when it applies, absolute beneficial testamentary dispositions, such as those in favour of Laura in Denny's will and in favour of Jonathan in Laura's will, do not take effect in accordance with their terms. The surviving party of a claimed mutual wills agreement is able to make further wills, but cannot, after the death of the first to die, effectively revoke dispositions already made in the mutual will. That irrevocable result can only be produced by an agreement made and acted on with that intention.
31. That possibility in this case was, in my view, sufficiently raised in the pleadings to entitle Martin to argue for and for the judge to find that this was a case of mutual wills: see paragraphs 10, 11, 12 and 16 of Martin's counterclaim, the prayer for relief and paragraph 22 of Martin's witness statement of 1 June 2009. The substantive question for the judge and for this court is whether the evidence is sufficiently clear and satisfactory to establish mutual wills.
32. Direct evidence is not available on the two critical points in Martin's claim: the existence of a mutual wills agreement between Denny and Laura and the execution of a will by Laura pursuant to it. No will, or copy will, or instructions for a will relied on as the mutual will made by Laura during Denny's lifetime has been produced. There is no indication in Denny's professionally drafted will or in the solicitor's attendance note that it is a mutual will.
33. The deficiency of direct evidence and the piecemeal nature of the evidence relied on by the judge for his conclusion do not, in my view, defeat Martin's claim or undermine the judgment. It is, of course, unfortunate that Denny's personal and financial papers were unavailable as direct evidence. However, evidence can be evaluated by a court and facts can be perceived and proved by the process of drawing reasonable and probable inferences from other facts, such as primary facts specifically found, undisputed events and uncontroversial circumstances surrounding them. All of those matters may be safe points of departure for the judicial process of drawing inferences that can lead to an evidentially satisfactory conclusion.
34. This very experienced judge was able to evaluate and assemble items of evidence into a convincing picture and explanation of the situation of the two families and the options about inheritance and wills available to Denny and Laura on their marriage in 1985. The probabilities are that they would both make wills providing not only for each other on the death of the first to die but also for each son. Ideally, Denny and Laura should have both gone to solicitors with instructions that led to the drafting and execution of wills recording a mutual wills agreement. Instead, an untidy situation has arisen, which has unfortunately aggravated existing ill-feeling within a family and has cost a great deal of money to sort out.
35. The judge cannot be accused of adopting an uncritical approach to Martin's counterclaims. Following a detailed examination of the evidence he was not persuaded to find for Martin on his counterclaims based on a secret trust and a tripartite agreement. His critical powers did not desert him when he came to consider the mutual wills claim based on a bilateral agreement. He paid careful attention to the evaluation of the available evidence in respect of Martin's counterclaim.
36. I think that the judge both made, and satisfactorily explained how he made, reasonable and proper inferences from the facts, events and circumstances summarised earlier in this judgment about what was probably agreed to be done and probably done by Denny and Laura about the disposition of their estates to each other and to their respective sons.
37. In his detailed critique of the evidence (and the lack of it) Mr Norris paints a picture of a sparsely documented case based on unreliable oral evidence about events of almost 25 years ago involving two principal parties now both dead. Retrospective critical analysis is, of course, a necessary part of the process of evaluating the evidence and deciding what has been proved on the balance of probabilities. The critical process should not, however, deflect the court from the incontrovertible fact that, at the heart of the case, there was a testamentary predicament which was more likely to have been addressed than ignored by this elderly couple, each with a son from a previous marriage with prospects of inheritance of their parent's assets. The probabilities are that they discussed the situation and reached an agreement along the lines alleged by Martin for the re-ordering of their affairs following the marriage. To me the judge's findings on what was probably agreed and done have the ring of truth. They are based on reliable and satisfactory evidence given by Martin, which the judge was entitled to accept, even though he did not accept other aspects of his evidence; on the timing and contents of Denny's last will; on Mundays' note of what they were told by Denny about Laura making a will on their marriage; and on Laura's unsent letter and her telephone conversations with Martin.
38. The result is a sound judgment which has not strayed beyond the boundaries of solid evidence into the realms of surmise and speculation. This court should not interfere with it. It does not contain any misdirection of law nor can it be said that that the key findings are contradicted or unsupported by evidence; or that they are based on inferences so improbable that no reasonable judge could have made them. The decision is naturally a disappointment to Jonathan, but he has not demonstrated that it is wrong.

Result

39. I would dismiss the appeal.

Lady Justice Smith:

40. I agree

Lord Justice Wilson:

41. I also agree.