England and Wales Court of Appeal (Civil Division) Decisions

IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM LEEDS DISTRICT REGISTRY
(HIS HONOUR JUDGE BEHRENS)

		Royal Courts of Justice Strand, London, WC2A 2LL
		15th January 2013

Lord Justice Mummery:

1. This is a renewed application for permission to appeal. The application is made by Mr Alper Riza QC on behalf of the applicant, and the decision which they wish to appeal is that made by HHJ Behrens, who gave two judgments on 31 May 2012. Leave is sought to appeal against both of them. One was a judgment, which was by that date in draft, containing the judge's conclusions on the facts and law arising out of a trial of claims that property belonged to the claimants, even though it was in the name of the deceased. The judge gave a second judgment on the same day, because, when he was about to hand down the judgment based on the trial, Mr Riza QC appeared on behalf of some of the defendants in order to object to the handing down of the judgment. The judge proceeded to hand down the judgment. He also refused the application for permission to appeal. As permission to appeal was required, an application was then made to this court. That was first of all dealt with by Arden LJ, who refused both to grant permission to appeal and refused to grant a stay. She set out five reasons why she had taken that course. I will return to her reasons in a moment, because they have been used as the basis of the written and oral submissions made by Mr Riza in support of his renewed application.
2. Before I go to those reasons it is necessary to say a little about how the case came to court. The Testator, who died on 23 November 2009, had made a will on 17 February that year appointing Lloyds Bank to be the Executor of his will. He left a substantial Estate valued at over £2.7 million, mainly consisting of properties in Newcastle, or in the Newcastle area. Those properties were in his name. But claims were made to beneficial interests in those properties by the deceased's wife, who is the first claimant, and by a son living in England, who is the second claimant. But the deceased had other family members, the defendants, mostly living in Pakistan. The proceedings first came about under the Inheritance Family Provision legislation, in which claims were made by the widow and the son in England that more provision should have been made for them out of the estate. An issue then arose as to whether the properties in the name of the deceased were his 100 per cent beneficially, or whether the claimants had beneficial interests. It is obvious that before any claim can be dealt with under the dealt with under the Family Provision legislation, it first of all has to be decided what property was in the Estate of the deceased. It is not possible to make provision out of his Estate without first deciding what is in it. And so an issue was directed which was tried by HHJ Behrens as to these properties. At the trial he heard evidence, and he accepted evidence, made findings of fact, applied the law relating to resulting and constructive trusts and proprietary estoppel to the facts and the correctness of that challenge by Mr Riza. He then made a rather complicated order, which is challenged in this proposed appeal. The essential part of the order is that he made a declaration that certain properties were held on trust as to half for the first claimant, as a beneficial tenant in common, and as to the other half as part of the deceased's Estate. He also made an order in relation to the second claimant, a proprietary estoppel claim, saying that the second claimant was entitled to be treated as if, under the deceased will of 17 February 2009, they had been specifically devised, bequeathed or otherwise given to him 75 per cent of all the deceased's share and interest in equity of the properties, which were then listed in a schedule.
3. Now Mr Riza wishes to appeal against that order, and he does so on a number of grounds which were advanced to the trial judge. I will first of all deal with the reasons why the judge refused permission. He said this:

"1. [The second to sixth defendants] did not attend the trial as they were in Pakistan. They filed evidence and [the sixth defendant] submitted written submissions. They were not represented at the trial although they had been represented earlier in the proceedings. There was no application to adjourn the trial though an earlier application by one of the Defendants had been refused by Judge Langan QC.

2. [The first defendant that is Lloyds Bank, the Executors] did not attend the trial as it was neutral.

3. Following submissions which lasted for more than a day I reserved judgment. I circulated a draft judgment to the parties containing my conclusions on the issues.

4. At the hearing for the handing down of the judgment [the second to sixth defendants] appeared by Leading Counsel [that was Mr Riza] and invited me not to hand down my down. He asserted that there was no level playing field in that his clients did not appear at the trial and were not represented. In the result the evidence of [the first and second claimants] was not tested by cross-examination. He also complained that [the first defendant] should have taken a more active role [that is the Executor] on behalf of the estate. In effect he invited me to abort the trial and order a rehearing. He did not offer to pay the costs wasted. He submitted that the costs would be paid by [the first defendant, the bank].

5. I refused the application. I did not think it came within a reasonable distance of the Barrel enterprise jurisdiction. Furthermore as a matter of discretion for reasons that I gave I refused the application.

6. I do not think the Court of Appeal will interfere with the exercise of my discretion."

4. It is obvious from what I have read out that parts of those reasons related to the second judgment he gave, which set out the reasons why he was not going to try the case again.
5. A detailed skeleton argument was put before Arden LJ. I have read that, as she had to. She gave five reasons why permission to appeal should not be given. She said:

"1. The main criticisms of the judge's judgment relate to his findings of fact. These were based on oral evidence; the Court of Appeal rarely interferes with such findings, and no reason is given why the Court of Appeal should, consistent with those principles, do so in the present case.

2. The relief given by the judge was related to the equity which she found established, and that that was the test they had to apply. The other factors relied on by the appellants were not relevant.

3. No authority was given for the proposition that the Executor should not remain neutral, an approach which the first defendant took with the approval of the court.

4. The judge was entitled to take the view that the evidence as to why the appellants were not present or represented at the trial was not satisfactory, since it lay within their hands to take advice in advance of the trial and whether they should be present.

5. There is no evidence in support of the application for a stay, and there appears to be no urgency. If it is desired to proceed with that matter, it can be dealt with on a renewed application."

6. Very helpfully, Mr Riza has made his submissions by reference to the particular reasons which were given by Arden LJ for refusing the application, and that is a convenient way for dealing with this matter. The essence of what he said was this: yes, Arden LJ is perfectly right, as one would expect, in saying that it was difficult to persuade this court to interfere with findings of fact. But, he submitted, there were limitations to this. First, he was not simply appealing against findings of fact, he was taking objections to the application of the principles of trusts and proprietary estoppel to the facts that had been found. Mr Riza described what the judge had done in this case as involving a huge extension of the principle of proprietary estoppel. Then he said, well, there are findings of fact and there are findings of fact. In a normal case, and the reason why the Court of Appeal would not interfere with findings of fact was because the judge had seen what only the evidence given in-chief; he had seen that evidence tested in cross-examination, and that exercise is not repeated on an appeal, and so the Court of Appeal is not in such a good position as the trial judge to second guess what he has found as fact. Those considerations, Mr Riza said, do not apply in this case, because the findings of fact were made by the judge on the uncontested evidence of the claimants. So there should be a trial, at which there is an opportunity to challenge their evidence.
7. Next, he said that in these kinds of cases what the claimants have to produce is convincing evidence, and this could not be convincing or proof of their claim, in the absence of cross-examination putting it under the microscope. He put it another way, and said that in these cases the court must not be gullible or naive. And certainly, he is right in saying, as appears from some of the authorities that have been referred to, that this is a controversial jurisdiction in which people, relying on oral promises, and sometimes on conduct that is not very well evidenced by real evidence such as documentary evidence, advance claims against someone who is dead and is not in a position to contest or contradict what they said.
8. Mr Riza then moved to criticise, in particular, the position of the bank in this case. He cited the case of Re Galloway, a decision of Sir Robert Megarry, Vice Chancellor, in [1982] 1 WLR 756, for the proposition that it is the duty of an Executor to protect the estate of the deceased against adverse claims. It was a breach of the duty in this case for the bank as executor simply to adopt a neutral attitude and absent itself in the trial and do nothing to investigate the claims that were being made against the estate that they had been appointed to administer and done nothing to contest them. He said that the bank was, therefore, in breach of its duty. It should have contested claims which, he said, were being made by people described by Mr Riza as "strangers" or "predators" in this matter. He recognised they were members of the deceased's family; those terms were used in relation to people who were not named as beneficiaries in the will, but were coming along to make adverse claims against the deceased's Estate. The neutrality point had impinged upon the judge's decision. His decision was open to criticism, because it had been made without a proper trial; it had not been made by the judge having heard the contested evidence properly examined and cross-examined upon. He also made other points of detail in relation to the law of proprietary estoppel, and he made points on some of the factual aspects of the case, indicating for example that the claimants had already, in particular the wife, obtained assets during her lifetime.
9. Now the question I have to ask is: is there a real prospect of this appeal succeeding? I am afraid Mr Riza's clients will be disappointed to know that I am of the same view as Arden LJ about this. The case must have a real prospect of succeeding in showing that the judge's decision was wrong. It is a question of criticising the judgment by saying that findings of fact were made without evidence, or that the law was misunderstood, or that the law, though properly understood, was not properly applied to the case. What has happened in this case is not really a ground for criticising the judge, it is a ground for criticising the parties. If parties absent themselves from a case, that is they just do not turn up to give evidence, or they do not have a representative to make their points against the claims, even if they do not lead any positive evidence, and nobody turns up to contest the evidence that has been given, the judge is entitled to accept the evidence. The judge is entitled to accept evidence which is given to him on affirmation or on oath and is not contested. There is no criticism of the judge that it was not contested; it is a matter for the parties who fight out the case before the judge.
10. Secondly, I do not think there are any grounds for saying that the judge's decision was wrong, because the bank had decided not contest the case. In my long experience of these matters, the Executors, in situations where there are rival claims to property as to whether it is part of the Estate or not, often do not take an active part. There are good reasons for this. The Executor is appointed to distribute the Estate. If there is an issue as to what is the Estate and what is not, that is a matter to be fought out by the rival claimants, who each seek to establish a beneficial right to it. The Executor is not seeking to claim any beneficial rights in it. The Executor is simply there to distribute what Estate there is, in accordance with the terms of the will. There are cases in which Executors do contest the matter. Sometimes there are cases where the Executor is also a beneficiary; there are also cases where the Executor is not a beneficiary, but the Executor is doubtful about the claims being advanced, and the course usually taken by Executors in those cases is the course that was taken in Galloway, and that is to go to the Chancery Court under the jurisdiction in Re Beddoes and ask the court what they should do, so that a ruling can be given either that they should contest the claim or that they should accede to the claim. In that case, the Executor gets the protection of a court order. It protects them against subsequent criticisms being made either that they wasted assets of the Estate on legal costs in contesting claims that they should have conceded, or that they had dissipated assets of the Estate by conceding claims to someone, who really has not established them. So there are Beddoes cases where it is properly taken by the Executor to the Chancery Court to say, "What should I do?" It may be, "I am the only person who seems to be around who can contest this, but it does not seem to me to be a very good case. What should I do?" And the court may say, and I have done it in Beddoes cases, "You should go and examine this case, make more investigations". Or it may say, on the basis of what it is shown by way of evidence and opinion, "This is a complete waste of time to contest this. This is clearly a valid claim, and you should concede it rather than spend money contesting it". That is all within Beddoes; Beddoes did not come into this case. It was a family inheritance case, in which a prior preliminary issue arose as to whether all these properties were part of the deceased's Estate, as belonging to him in his name and belonging to him beneficially, or whether his wife and children living in this country with him had beneficial interests or proprietary estoppel interests.
11. In my view, for the reasons given by Arden LJ, there was nothing wrong with the decision of the judge, and if there was not wrong with it, the appeal will fail, and there is no point in granting permission for it. It would just mean that further money is spent and further court time is taken in dealing with a hopeless appeal. I am afraid this appeal is hopeless for the reasons I have given and therefore I refuse permission.

Order: Application refused.