England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
LEEDS DISTRICT REGISTRY

		Thursday 1 December 2005

1.Introduction

1. This is an unfortunate family dispute. It arises out of the distribution of the estate of Leonard Clapham who died on 26^th March 2003. Leonard Clapham had 2 daughters - Carol Barraclough and Marilyn Mell. Carol Barraclough had 2 daughters - Fiona Fenney and Louise Needham. Marilyn Mell had been married twice and had 3 children.

2. In 1986 Leonard Clapham made a Will. It will be necessary to refer to its terms in detail later in this judgment. There are, however, 2 clauses that are relevant to the issues that I have to decide. By clause 5 he left the residue of his estate to his 2 daughter in equal shares. However there was a proviso that if either of the daughters predeceased him leaving children the children would take their mother's share. To any lawyer with any experience of wills it was a perfectly standard and unexceptional clause. There was also a trustee exemption clause in wide terms. In effect it made a trustee liable for breach of duty for his own personal acts where he knew that the relevant acts were wrongful or where he had no belief that the act was right and did not care if it was wrong.

3. In 1995 Carol Barraclough remarried Alan Barraclough. Alan Barraclough had 2 sons of his own.

4. In 1999 Marilyn Mell had matrimonial problems. It is not necessary for me to go into them in detail. As part of the divorce settlement with her husband she had to pay him £20,000. As a result of the £20,000 her husband abandoned any claim he might have had to the matrimonial home. The £20,000 was paid by Leonard Clapham. Marilyn Mell describes this payment as a gift. There is no evidence that Leonard Clapham told Marilyn Mell that he wanted it or any part of it back or that it formed part of her entitlement under his will. Shortly after paying the £20,000 he told Carol Barraclough about it. Thereafter he signed a document prepared by Carol Barraclough which said in terms that the £20,000 would be deducted from her settlement under the will. Marilyn Mell says that she knew nothing of this document.

5. On 26^th March 2003 Leonard Clapham died. Probate of his estate was granted to Marilyn Mell on 19^th June 2003 with power reserved to the other executor (Carol Barraclough). There is some debate as to the extent of the assets in the estate. It is, however, common ground that the principal asset was the matrimonial home - 95 Brecks Lane, Kirk Sandall Doncaster.

6. Sometime in late September 2003 Marilyn Mell and Carol Barraclough attended the offices of Taylor Bracewell and instructed Mike Halliwell – now a consultant in that firm – to act on their behalf in the sale. Amongst the documents provided to Mike Halliwell was Leonard Clapham's will. Thus Mike Halliwell was fully aware that the proceeds were to be divided between Carol Barraclough and Marilyn Mell.

7. Regrettably 95 Brecks Lane, Kirk Sandall Doncaster took nearly a year to sell. It is not necessary to go into the reasons for the delay. Contracts were not exchanged till 26^th May 2004. The contract was not completed till 4^th June 2004.

8. Meanwhile on 22^nd March 2004 Carol Barraclough died unexpectedly and intestate. She did not have a large estate (even including her prospective share of her father's estate). In the result it is common ground that under the intestacy of all her estate passed to Alan Barraclough. It is now common ground that on the true construction of Leonard Clapham's will Carol Barraclough obtained a vested interest in one half of his estate and that half interest passed to Alan Barraclough on her death. In the result neither Louise Needham nor Fiona Fenney were entitled to any part of their mother's estate.

9. Marilyn Mell asserts that she read the will again after the death of her sister. She says that she believed that on its true construction Carol Barraclough's share passed to her 2 daughters - Louise Needham and Fiona Fenney. She did not take legal advice.

10. On 8^th June 2004 following completion of the sale of 95 Brecks Lane and a discussion between Marilyn Mell and Mike Halliwell's secretary the whole of the net proceeds of sale amounting to £138,097 were paid to Marilyn Mell. She paid them into her bank account.

11. On 17^th June 2004 Marilyn Mell visited the home of Louise Needham with her daughter Nicole Butler. There is a conflict of evidence as to what was said at the meeting. At the meeting Marilyn Mell wrote out and gave to Louise Needham 2 cheques for £32,000. One was made payable to Fiona Fenney and the other to Louise Needham. Marilyn Mell's case is that it was out of the moneys she had received and represented what she believed to be part of their entitlement under Leonard Clapham's estate. Louise Needham was in fact well aware that she had no entitlement to any part of the estate. She says that in the conversation Marilyn Mell made it clear that it was not part of the estate and was a personal gift by Marilyn Mell to each of her nieces.

12. On 22^nd June 2004 solicitors acting for Alan Barraclough wrote to Marilyn Mell demanding his share of the £138,097 together with the £20,000 that had been paid to her back in 1999. Marilyn Mell received the letter on 23^rd June and (after taking belated advice) took steps to get the money from her nieces. She visited them both that day and told them she needed the money back as a result of the letter she had received.

13. Louise Needham gave her a cheque for £32,000 but countermanded it the following day before it could be honoured. Louise Needham says that she only gave her aunt the cheque because her aunt told her she would replace it within a short time when she had sorted matters out with Alan Barraclough.

14. Fiona Fenney has simply refused to return the money.

15. Marilyn Mell has not sought to make good her mistake. She has kept her share of the proceeds of sale of 95 Brecks Lane, Kirk Sandall Doncaster and paid nothing to Alan Barraclough.

16. Alan Barraclough has issued proceedings against Marilyn Mell. He makes 3 allegations. First he complains of the misapplication of £64,000 of trust money to Fiona Fenney and Louise Needham. Marilyn Mell admits that the money was misapplied. She also admits she was negligent. She seeks to avoid liability by reason of the Trustee exemption clause. Alan Barraclough contends that in the circumstances of this case she cannot rely on it. Second he complains that she has not given credit for the £20,000. Marilyn Mell contends that she does not have to give credit for this sum. She contends that it was intended as an outright gift and that she can rebut any presumption to the contrary. Finally he complains that Marilyn Mell as an executor of Leonard Clapham's estate has failed properly to account for the assets in the estate. It was not possible to deal with this allegation in the 2 days allotted for the trial. In any event the taking of an account is a matter more properly dealt with by a District Judge.

    2.Representation

17. Alan Barraclough has been represented by Roger Birch; Marilyn Mell by Andrew Prestwich, Fiona Fenney and Louise Needham by Mr Jarand. All Counsel produced skeleton arguments for which I am grateful.

    3.Witnesses

18. Three witnesses were called on behalf of Alan Barraclough - Alan Barraclough, himself, Mike Halliwell of Taylor Bracewell and his Secretary – Miss Shillitoe. Mike Halliwell and his Secretary were called primarily in relation to conversations that took place between them and Marilyn Mell at the time of the distribution of the proceeds of sale.

19. Three witnesses were called on behalf of Marilyn Mell - Marilyn Mell herself, Mr Williams – the Senior Partner in the firm of Dawson & Burgess, and her daughter Nicola Burton. Mr Williams was called to give evidence as to the advice given to Marilyn Mell on 23 June 2004 when she received the letter from Atherton Godfrey. Nicola Burton was called to give evidence as to the conversations between her mother and Louise Needham when the cheques for £32,000 were handed over.

20. Three witnesses were called on behalf of Fiona Fenney and Louise Needham - Fiona Fenney and Louise Needham themselves and Gary Needham. Gary Needham was called to corroborate Louise Needham's version of the conversation that took place when the cheques for £32,000 were handed over.

    4. The Facts

21. I have set out the core facts in the introduction to this judgment. There are, however, a number of areas where it is necessary to set out in the facts in more detail before attempting to resolve the conflicts of evidence that arise.

    4.1 Background

    Alan Barraclough

22. Alan Barraclough is 61 years old. As already noted he married Carol Barraclough on 12^th August 1995. Both had been married before. He had 2 sons by his previous marriage.

23. He met Marilyn Mell though his wife in 1993 or 1994. Although there were no problems at first the relationship did not last. Both Alan Barraclough and Marilyn Mell told me in evidence that they did not like each other. In his witness statement Alan Barraclough puts this down to the fact that Marilyn Mell was devious over her parents' money and also would not pay for a clock that he repaired. It is not necessary for me to make any finding on the cause of the animosity.

    Marilyn Mell

24. Marilyn Mell is 57 years old. She has been married twice. She has 2 daughters – Nicola aged 33 and Danielle aged 30 – and a son Paul – now aged 21. Paul has just left Hull University. He has a number of debts as a result of the student loans he took out. Although they are not immediately repayable they amounted to £9,000 in 2004 and £14,000 when he left Hull this year. Her relations with her children are good and she told me that she would have made gifts to her children – in particular her son Paul – before considering making gifts to her nieces.

25. Marilyn Mell worked from 1990 for Pearl Assurance in Doncaster. She was a sales representative for about 3 years. She was promoted to be Sales Manager and moved to Pontefract where she remained for about 4 years. As a sales manager she was in charge of about 6 other representatives. She was obviously well acquainted with Pearl's products and the financial implications of taking out pensions. She did not however spend much of her time studying complex legal documents such as wills.

26. After about 3 years the regulations changed and Marilyn Mell could not remain as Sales Manager unless she passed exams. She failed the first exam two or three times and gave up. She collected premiums for Pearl for a year or two and then became a Personal Assistant to a firm of builders. In 2001 she gave up work to look after her parents.

    The family feud

27. In paragraphs 4 and 5 of her witness statement Louise Needham sets out in brief the disagreements between her side of the family and that of Marilyn Mell. As I have noted Marilyn Mell had left work to look after her parents. Initially both parents lived at her home. In December 2002 Mrs Clapham died. After her death Leonard Clapham was resident for a short period at a residential home. There was a disagreement between Carol Barraclough and Marilyn Mell as to whether he ought to stay in the home . He did not. For a time he lived with Marilyn Mell. After that he went back to 95 Brecks Lane where he was seen and cared for on a daily basis either by Carol Barraclough or Marilyn Mell.

28. Marilyn Mell had a power of attorney in respect of her father's financial affairs. There was further friction between the 2 sisters in relation to this. Carol Barraclough felt that Marilyn Mell did not disclose what was happening to their father's money and suspected her of misapplying it for her own benefit.

29. One result of this was that there was little or no communication between Marilyn Mell and her nieces. Indeed Fiona Fenney told me that she had not spoken to her aunt for over 3 years.

    4.2 The 1999 gift

30. According to Marilyn Mell her marriage to her second husband was traumatic. She says that he had a drink problem and was violent. She describes the marriage as being unhappy. She discussed her problems with her parents and her father asked what it would take to get rid of him.

31. The divorce proceedings took about a year. Each side had solicitors. Marilyn Mell instructed Dawson and Burgess. Although the matrimonial home was in the sole name of Marilyn Mell she was advised that he might end up being awarded an interest in it. In the result Marilyn Mell agreed to pay her husband £20,000 in satisfaction of all his claims. He was ordered to pay maintenance for their son Paul.

32. Marilyn Mell accepts that the £20,000 was provided by her father. She believes that she received it in about May 1999. She said that he never mentioned repayment of the money to her at any time nor that she would have to take it into account in the distribution of his estate. She was aware of the terms of his will as she had seen it. Indeed she had taken Leonard Clapham to the offices of the solicitors when it was made.

33. Alan Barraclough's evidence was substantially based on what he had been told by his wife - Carol Barraclough. He did however say that there was one occasion when Leonard Clapham mentioned that he had given £20,000 to Marilyn Mell to help her in her divorce settlement.

34. According to Alan Barraclough both Carol Barraclough and her mother protested that this was not fair. In the result a document was drawn up by Carol Barraclough and signed by Leonard Clapham, Carol Barraclough and her mother. Carol Barraclough brought the document home and it was carefully preserved in the Davenport in the sitting room. It was seen by Alan Barraclough and also by Louise Needham.

35. It is not wholly clear when the document was drawn up. Alan Barraclough seemed to think that it was about 2 months after the gift and I am prepared to accept that it was drawn up in about July 1999. It was not contemporaneous with the gift.

36. Marilyn Mell says that she had no idea of the existence of the document. There is no reason to doubt this evidence. Alan Barraclough and Louise Needham said that they did not discuss it with Marilyn Mell and there is no evidence that Carol Barraclough discussed it.

37. The document is in the following form:

    28 MAY 1999

    HEREBY LET IT BE KNOWN THAT ON THIS DAY MARIAN MELL HAD £20,000 FROM HER PARENTS AND THAT THE SAID AMOUNT WILL BE DEDUCTED FROM HER SETTLEMENT OF THE WILL ON MY PARENTS DEATH – PLUS INTEREST THAT WOULD HAVE BEEN EARNED

    C BARRACLOUGH

    L CLAPHAM

    L CLAPHAM

38. In paragraph 23 of his skeleton argument Mr Prestwich raises a number of points on this document. I hope he will forgive me if I do not lengthen this judgment by setting them out in full. Many of his points do not, in my judgment arise for determination.

39. As it is clear that the document was not contemporaneous with the gift its relevance goes to the issue of whether the gift was in fact a portion and, if so, whether Marilyn Mell can rebut the presumption against double portions.

    4.3 Relevant terms of Leonard Clapham's Will

40. The Will was made on 27^th June 1986. It was professionally prepared and was properly witnessed by a solicitor and a clerk. No question arises as to its validity. Marilyn Mell took her father to the offices of the solicitor but was not present when it was made.

41. For the purpose of this case the only relevant clauses are clauses 5 and 6(10) which provide:

    Clause 5

    I GIVE DEVISE AND BEQUEATH the whole of my real estate and personal estate not heretofore otherwise disposed of unto my Trustees upon trust to sell ………… UPON TRUST for such of them my said daughters as shall survive me and if more than one in equal shares absolutely PROVIDED ALWAYS that if either of them my said daughters shall predecease me leaving a child or children living at my death and who shall attain or who shall have attained the age of 21 years then such child or children shall take and if more than one then equally between them the share or shares in my Residuary estate that his her or their mother would have taken had she or they attained a vested interest

    Clause 6(10)

    No trustee of these trusts shall be liable for any loss whatsoever caused by any breach of duty on the part of himself or any other person unless the same shall have happened through his own personal act done by him either with the knowledge that it was wrongful or without any belief that it was rightful and not caring whether or not it was wrongful.

    4.4 Death of Leonard Clapham

42. Leonard Clapham died on 26^th March 2003. Probate of the Will was granted to Marilyn Mell on 19^th June 2003. Power was reserved to Carol Barraclough.

43. Marilyn Mell said that she had read the will and was aware that the estate was to be equally divided between herself and Carol Barraclough. They both agreed to place 95 Brecks Lane on the market. They both agreed to consult Taylor Bracewell in respect of the sale. She says they both visited Taylor Bracewell and gave instructions to Mike Halliwell.

44. According to Marilyn Mell there was no mention of the document relating to the £20,000 at that stage.

    4.5 Death of Carol Barraclough

45. Carol Barraclough died on 22^nd March 2004 intestate. 95 Brecks Lane had not been sold as at the date of her death.

46. Following her death various members of her family consulted Mike Halliwell. On 1^st April 2004 he was consulted by Alan Barraclough. Alan Barraclough had with him the document relating to the £20,000. Mike Halliwell has a short file note of the meeting. Alan Barraclough made it clear that if and in so far as the additional £20,000 was received it was to be divided between Fiona Fenney and Louise Needham. Mike Halliwell also advised Alan Barraclough on the effect of Carol Barraclough's death on Leonard Clapham's estate.

47. According to his file note he advised that the residue was to be divided equally between Marilyn Mell and Carol Barraclough's estate. He has no recollection of advising further that it passed to Alan Barraclough but he accepts that he may have.

48. Louise Needham also spoke to Mike Halliwell within a matter of days of her mother's death. He has no file note of this conversation but he remembered that she had called. Louise Needham says that he asked about the size of her mother's estate. He then advised her that it would appear that under the rules of intestacy the whole estate passed to Alan Barraclough. Thus she was well aware from an early date that the whole of her mother's share of the proceeds of 95 Brecks Lane would pass to Alan Barraclough. She passed that information on to her sister - Fiona Fenney.

49. There were a number of conversations between Alan Barraclough and his stepdaughters. There are differences in the recollection as to precisely what was said. Alan Barraclough thinks he had about 2 conversations with each of them. Both Fiona Fenney and Louise Needham think there were rather more.

50. According to Alan Barraclough they were both very upset following their mother's death. They both – in effect – asked him to forego his interest in the estate in their favour. They told him that the money did not belong to his 2 sons but it belonged to them (i.e. Fiona Fenney and Louise Needham). Alan Barraclough did not accept this argument or the suggestion that he forego his entitlement. He did, however, say that when he died that his estate would be divided 4 ways and that they would each receive a quarter share.

51. He also said that there was some discussion about the £20,000. He made it clear that if it was received from Marilyn Mell then it would be divided equally between Louise Needham and Fiona Fenney.

52. Fiona Fenney and Louise Needham agree that Alan Barraclough said that he would divide his estate 4 ways and also that there was a discussion with him about the £20,000 along the lines he suggests. However they both deny that they asked him to forego his interest in the estate and to give them a half share when he received it.

53. I prefer the evidence of Alan Barraclough on this issue. His evidence was clear and supported by Mike Halliwell's file note. Furthermore there was a later conversation when Louise Needham refers to Alan Barraclough as "not changing his mind". That seems to me to be consistent with his having been asked to distribute the money and refusing.

    4.6 The completion of the sale of 95 Brecks Lane

54. The sale of 95 Brecks Lane was completed on 4^th June 2004. The net proceeds of sale amounted to £138,097.72 were received by Taylor Bracewell on that day. On 8^th June 2004 Mike Halliwell instructed his secretary to contact Marilyn Mell to discover if she wanted him to distribute the proceeds. He did not speak to Marilyn Mell himself. He did not advise her expressly as to the effect of the will.

55. Miss Shillitoe spoke to Marilyn Mell twice – once on the telephone and the other time when she came to the offices of Taylor Bracewell to collect the cheque. Miss Shillitoe asked Marilyn Mell whether she wanted Taylor Bracewell to distribute the money. Marilyn Mell made it clear that she would do it herself. Miss Shillitoe was aware that Alan Barraclough was involved and entitled to half the estate following the death of his wife. When Marilyn Mell came to collect the money she asked Marilyn Mell whether she would be contacting Alan Barraclough ? Marilyn Mell clearly understood that to be a suggestion that Alan Barraclough was entitled to some of the money because she said "It's got nothing to do with Alan Barraclough. It is going to my two nieces".

56. Marilyn Mell accepts that a conversation along these lines took place. She however thinks it may have been during the telephone conversation. It makes no difference who is right on this point.

57. A cheque for £138,097.92 was handed to Marilyn Mell. On 9^th June 2004 the cheque was paid in to Marilyn Mell' s Current Plus Account with NatWest.

58. On 14^th June 2004 Alan Barraclough wrote to Mike Halliwell (21A) asking him why he was not entitled to his wife's share of the estate and asking him not to distribute the proceeds until he had sought legal advice. Mike Halliwell answered the letter on 16^th June. In effect he explained that he had suggested that he would divide the net proceeds of sale but that Marilyn Mell had said she would do it herself. He said that Alan Barraclough would have to look to Marilyn Mell for his half share.

    4.7 The distribution of the £64,000

59. There are considerable differences between the accounts of Marilyn Mell and Louise Needham in relation to the payment of the 2 cheques of £32,000. As those differences are central to the defences of Fiona Fenny and Louise Needham it will be necessary to set them out in a little detail.

    The initial meeting at "T Max"

60. It is common ground that Louise Needham met Marilyn Mell in TK Max. The meeting was at the end of May shortly before Louise Needham went on holiday with her family. It was thus before completion of the sale of 95 Brecks Lane.

61. Louise Needham left her husband and went over to talk to Marilyn Mell. It is common ground that during the conversation Marilyn Mell told Louise Needham that she was going to bring her some money. Louise Needham goes on to say that she told Marilyn Mell that she did not want her money and that Marilyn Mell replied that she (Marilyn Mell) wanted to bring her (Louise Needham) some. Louise Needham describes herself as perplexed by the conversation. She says that she had no idea how much she would receive but assumed that Marilyn Mell felt guilty about the fact that she would not receive any part of the £20,000.

62. Marilyn Mell denies that Louise Needham ever said that she did not want any of her money but has no clear recollection of how the conversation continued.

    The meeting at Louise Needham's house on 17^th June 2004

63. As noted there are disputes as to what was said at this meeting. It is common ground that Louise Needham, Gary Needham, Nicole Butler and Marilyn Mell were present. There are disputes as to how much of the time Gary Needham was present. Mr and Mrs Needham have 2 young children. Marilyn Mell suggests that Mr Needham was in and out during the meeting looking after the children.

64. Louise Needham's version of events is set out in detail in her witness statement. After the initial pleasantries Marilyn Mell announced that she was going to give her a cheque. She proceeded to write out 2 cheques. When Louise Needham saw that they were for £32,000 she was taken aback. She says said that she did not want her aunt's money. She was told it was a gift from Marilyn Mell. She says she specifically asked whether it was from the sale of the bungalow and whether Alan Barraclough had instructed her to do this. [When she gave evidence Louise Needham said she asked whether Alan Barraclough had changed his mind]. Marilyn Mell replied that it was nothing to do with Alan Barraclough or the estate. She went on to say that it was a gift from her money and she wanted Louise Needham to have it.

65. When he gave evidence Gary Needham corroborated his wife's account. In particular he stood by her version of the conversation. He stood by paragraph 6 of his witness statement where he said that Marilyn Mell had said that it was a gift from her and that it was nothing to do with the estate.

66. Marilyn Mell's version is also contained in her witness statement. She says she decided to give both cheques to Louise Needham because she was not on speaking terms with Fiona Fenney. She says that when she saw Louise Needham she told her that she had come to give her some money. Louise Needham was surprised and delighted. She did not say that she did not want any of my money. She did ask where the money had come from. She did ask whether Alan Barraclough had had a change of heart and whether she had spoken to Alan Barraclough. Marilyn Mell replied that it had nothing to do with Alan Barraclough. At no stage did Marilyn Mell say that it was a personal gift from her. She thinks she made it clear that it came from the sale of 95 Brecks Lane and that Louise Needham must have appreciated that.

67. Marilyn Mell says that there is no way that she would have dreamed of giving £64,000 of her own money to her nieces. She has 3 children of her own and would certainly have given the money to them in preference.

68. Nicole Burton confirms her mother's version of events. In particular she confirms that it was her mother's understanding that in the events that had happened that Fiona Fenney and Louise Needham were entitled under the will. In particular she says that at no time did Marilyn Mell say it was a personal gift from her. She also made the point that there was a further discussion about Alan Barraclough after the cheques were handed over. The discussion centred on the fact that as the sale had taken so long it meant that Alan Barraclough would not receive any part of the estate.

69. Following the meeting Louise Needham contacted her sister Fiona Fenney. According to Fiona Fenny she was told that the cheque was a gift from Marilyn Mell. As a result she went round to Marilyn Mell with some flowers to thank her. According to Fiona Fenny she asked why the money had been given to Louise Needham and herself. Marilyn Mell said "why not". Marilyn Mell has no recollection of this conversation.

70. In any event the 2 cheques were immediately paid into the bank and honoured on presentation.

    4.8. The request for the return of the money.

71. On receipt of the letter from Mike Halliwell Alan Barraclough discovered the amount of money that had been paid to Marilyn Mell. He noted the amount on his copy of the letter.

72. He immediately consulted new solicitors - Atherton Godfrey. On 22^nd June 2004 Atherton Godfrey wrote to Marilyn Mell. The letter makes the point that Alan Barraclough was entitled to half of Leonard Clapham's estate. It referred to the net sale proceeds of £138,097.72 and to the £20,000 given to Marilyn Mell on 28^th May 1999. It accordingly demanded payment of £79,048.86 within 7 days.

73. Marilyn Mell received the letter on 23^rd June 2004. The precise chronology of what happened when Marilyn Mell is impossible to determine. There are different versions as to when events happened. In the end I do not think it important to determine exactly when things happened.

    At some stage during the day Marilyn Mell phoned Atherton Godfrey. The file note (239) suggests that it was 2.10 p.m but that is difficult to reconcile with other events on that day. In any event the file note records Marilyn Mell as saying that Alan Barraclough was not entitled to the money. In the events that had happened the money was to go the children and they have had it already.

    At some stage of the day Marilyn Mell visited Dawson & Burgess and consulted the senior partner Mr Williams. He only saw Marilyn Mell briefly. After taking instructions and seeing the will he advised her that she had distributed the estate to the nieces in error. In effect he advised that Atherton Godfrey were correct. It was his impression that Marilyn Mell had honestly believed that her nieces were entitled to the monies and that she appeared to be distraught at the news that he had given her. He describes her as shocked and upset.

    At some stage of the day Marilyn Mell visited Louise Needham. It is common ground that Marilyn Mell was very upset when she visited her. She was in tears. It is common ground that Louise Needham hugged her in an attempt to comfort her. There is a difference in recollection as to the conversation that followed.

    1) Marilyn Mell says that she told Louise Needham that she had misinterpreted the will. She told that the money she had given her should have gone to Alan Barraclough. Louise Needham said "Is that all ? I thought someone else had died.". In any event Marilyn Mell asked for the cheque back. Louise Needham immediately agreed and wrote out a cheque for £32,000 which she handed to Marilyn Mell. At no stage did she offer to return the following week with another cheque for Louise Needham. She did not need the monies for cash flow purposes as she had the balance of the purchase price in her bank.

    2) Louise Needham does not think that Marilyn Mell said she had made a mistake. She says that she had received a letter from Alan Barraclough's solicitor. She said she had to send him a cheque. In her witness statement she refers to a figure of £57,000 but it is not clear where this comes from. In any event Marilyn Mell offered to come back next week with another cheque when she had paid Alan Barraclough. Louise Needham felt it was appropriate to write out a cheque for £32,000 – so she did so.

    At some stage during the day Marilyn Mell saw Fiona Fenney. It was at The Star Inn at Barnby Dunn. Fiona Fenny thinks it was at about 12.30 pm. Marilyn Mell thinks it was after she had seen Louise Needham. In any event it is common ground that Marilyn Mell was agitated. Fiona Fenney does not think she was in tears. They went either to the other side of the room or to a separate room. Marilyn Mell explained that she had a solicitor's letter and that she needed the money back immediately. Fiona Fenney thought it inappropriate to be discussing this whilst she was at lunch with her friends. Accordingly she told her to come and see her that evening. Marilyn Mell called again that evening but Fiona Fenney was out.

    At some stage during the day Louise Needham spoke to Fiona Fenney on the phone and discussed the position. According to Louise Needham her sister said indicated that Marilyn Mell had not said that she would return the cheque in a few days.

74. The following day Fiona Fenney informed Marilyn Mell that she would not return the money. In her view a gift is a gift and cannot be returned once given. Louise Needham also saw Marilyn Mell. She informed her that she had countermanded the cheque.

75. Further attempts to obtain the return of the moneys have failed.

    5. Liability of Fiona Fenney and Louise Needham

    5.1. The law.

76. There is little or no difference between the submissions of Mr Prestwich and Mr Jarand in relation to the law. If Marilyn Mell made the payment to the nieces on the basis that she was distributing the estate of Leonard Clapham Mr Jarand concedes that the payments would be recoverable on the basis that were made under a mistake. It matters not whether the mistake was one of law or fact.

77. If the payments were a personal gift from Marilyn Mell to the nieces the monies are not recoverable. As Fiona Fenney put in the course of her evidence "once a gift always a gift".

78. Mr Jarand referred me to a passage in Goff and Jones – The Law of Restitution at paragraph 4-022. Mr Jarand did not seek to suggest that there was any estoppel or change of position by the nieces. As Marilyn Mell sought the return of the monies within 6 days of the original payment this was not surprising.

79. Mr Prestwich suggested that there was an additional cause of action against Louise Needham on the basis of the dishonoured cheque. He accepted (with some judicial encouragement) that this in fact added little to the restitutionary claim. In particular he accepted that if the original payments were gifts there was no consideration for the cheque signed by Louise Needham.

80. Accordingly I have to decide the factual question of whether the payments were made by Marilyn Mell as gifts of her own money or as part of the estate of Leonard Clapham in the belief that the nieces were beneficiaries of the estate.

    5.2 Were the payments gifts?

81. Before considering the critical meeting at Louise Needham's home on the evening of 17^th June 2004 it is right to note that the circumstantial evidence strongly supports Marilyn Mell's version of events:

    There was a rift between Carol Barraclough's side of the family and Marilyn Mell's side of the family. That rift meant that Marilyn Mell had not spoken to Fiona Fenney for 3 years before the payment. She did not even talk to her when the payment was made.

    Marilyn Mell had every reason to make gifts to her children in preference to her nieces. There is no evidence that she was on bad terms with any of her children. She appears to have been on good terms with them. Her son was still being educated and – like many students – had a student loan to repay.

    No real reason has been suggested why Marilyn Mell should wish to make a gift to her nieces.

    The size of the payments is such as to lead one to suspect that they were not gifts. In Allcard v Skinner Lindley LJ – in relation to the question of undue influence – said:

    'But if the gift is so large as not to be reasonably accounted for on the ground of friendship, relationship, charity, or other ordinary motives on which ordinary men act, the burden is upon the donee to support the gift.' (See (1887) 36 Ch D 145 at 185,

    There is no suggestion of any undue influence here. However payments of £32,000 to two estranged nieces when Marilyn Mell had other more obvious objects of potential bounty do in my view are not to be reasonably accounted for on the ground of friendship, relationship, charity, or other ordinary motives on which ordinary men act

    The evidence of Mr Williams and Miss Shillitoe coupled with the genuine efforts of Marilyn Mell to obtain the return of the monies when she received the letter from Atherton Godfrey all corroborate the evidence of Marilyn Mell that she made a mistake. Mr Williams in particular referred to her shock when he told the true effect of the clause.

82. I therefore approach the meeting of 17^th June 2004 with the view that Marilyn Mell's account is far more probable than that of Louise Needham and that the result canvassed by Louise Needham is highly unlikely.

83. Mr Jarand submitted that I should accept Louise Needham's account. He relied on the fact the payment was only £64,000 whereas the net proceeds of sale amounted to £138,097. The payment was thus less than half of the proceeds of sale. Mr Jarand submitted that if Marilyn Mell had intended to distribute the estate she would have described the payment as a part payment or informed her nieces that there was more to come. There is no evidence she did this. Hence Mr Jarand submits the payments must be gifts.

84. I cannot accept that argument. In my view there are a number of quite plausible reasons why Marilyn Mell might not have mentioned at the time that the payments were in part satisfaction of the nieces' entitlement. It by no means follows that the payments were gifts.

85. In the result I have little hesitation in preferring the evidence of Marilyn Mell and her daughter to that of Louise Needham and her husband. I do not think that Marilyn Mell ever said that the moneys were personal gifts from her. I also find that the payments were made by Marilyn Mell under the misapprehension that Fiona Fenney and Louise Needham were entitled to their mother's share of Leonard Clapham's estate.

86. It follows that the moneys are repayable with interest from 23^rd June 2005 when Marilyn Mell requested repayment.

    6. Liability of Marilyn Mell to Alan Barraclough.

87. If the nieces repay the £64,000 together with interest this question may be largely irrelevant. It will be relevant if one or other of the nieces fails to repay in accordance with the order of the Court. It may also be relevant on the question of costs.

88. It is, of course, common ground that Fiona Fenney and Louise Needham were not beneficiaries of Leonard Clapham's estate. It follows, in my view that Marilyn Mell was acting in breach of trust in paying them £64,000. The first question to be determined is whether Marilyn Mell should be excused liability for the breach either by virtue of clause 6(10) of the will or section 61 of the Trustee Act 1925. If she is to be excused a further question arises as to the effect of the breach of trust on Alan Barraclough's entitlement to his share of Leonard Clapham's estate.

    6.1. The law on Trustee Exemption Clauses

89. This is an area of law ripe for reform. It has been considered by the Law Commission on 2 occasions – 1992 and 2003. The current state of the law was criticised by Millett LJ (as he then was) in Armitage v Nurse. It is however common ground that I have to apply the law as it now is rather than as Millett LJ and the Law commission would like it to be.

90. In the 2003 Consultation Paper the Law Commission described the current law in the following terms:

    In 1998 in Armitage v Nurse the Court of Appeal dispelled all doubts as to the validity of trustee exemption clauses which exclude liability for ordinary or even gross negligence. The court held that a clause … cold exclude the trustee from liability for loss and damage to the trust property "no matter how indolent, imprudent, lacking in diligence, negligent or wilful he may have been, so long as he had not acted dishonestly". It is now settled law that trustee exemption clauses can validly exempt trustees from liability for breaches of trust except fraud.

    In each case the court must construe the words of the exemption clause in light of the conduct complained and decide whether liability has been excluded by the terms of the clause. In carrying out this exercise the clause must be construed fairly according to the natural meaning of the words used.

    6.2. Clause 6(10)

91. It will be recalled that clause 6(10) excludes liability for loss

    unless the same shall have happened through his own personal act done by him either with the knowledge that it was wrongful or without any belief that it was rightful and not caring whether or not it was wrongful.

92. In the case there is no doubt that the payment of the £64,000 was Marilyn Mell's own personal act. I have to ask myself therefore whether:

    Marilyn Mell knew that the payment to the nieces was wrong and not in accordance with Leonard Clapham's will or

    Marilyn Mell did not believe that it was correct to pay the £64,000 to the nieces and did not care whether it was or was not wrong.

93. On any view the payment to the nieces was negligent. The clause is a standard clause. On a careful reading it is not difficult to understand. The words "predecease me" are not difficult to understand. It was open to Marilyn Mell to seek advice as to the meaning of the clause. She had at least 2 warnings that her construction might be wrong. Miss Shillitoe specifically raised the question of paying Alan Barraclough his share; Louise Needham asked if Alan Barraclough had changed his mind. On each occasion Marilyn Mell brusquely said it had nothing to do with Alan Barraclough. If it were necessary to do so I would categorise Marilyn Mell's negligence as "gross".

94. Furthermore Marilyn Mell did not like Alan Barraclough. Her interpretation of the will was one she was happy to come to.

95. I had the benefit of seeing Marilyn Mell give evidence over a substantial part of a day. As I have explained in the previous section there is considerable corroboration for the fact that she made a mistake. Her reaction when told by Mr Williams the true position and her immediate efforts to get the money back all support this.

96. I am thus quite satisfied that Marilyn Mell did not know that the payment was wrong. More difficult is the question of whether she was "reckless" in the sense required by the clause. Despite the fact that she did not like Alan Barraclough I am in the end satisfied that she did positively believe that it was correct to pay the £64,000 to the nieces.

97. In those circumstances I have come to the conclusion that Marilyn Mell is within the terms of the exemption clause and is not liable to Alan Barraclough for breach of trust.

98. That conclusion makes it unnecessary for me to consider section 61 of the Trustee Act. If I had had to do so I would unhesitatingly have refused to grant relief to Marilyn Mell. Her conduct was in my view grossly negligent. Whilst I think she has acted honestly I do not think she has acted reasonably. Nor do I think she ought fairly to be excused for the breach of trust.

    6.3. Effect of the breach of trust.

99. It has been assumed that if Marilyn Mell is within the terms of clause 6(10) she is not liable to Alan Barraclough for any part of the £64,000 that was wrongly paid away. With the greatest of respect to those who hold that view I profoundly disagree.

100. As already noted on 9^th June 2004 Marilyn Mell paid the proceeds of sale into a Current plus account in her name. The account had a nil balance before the moneys were paid in (336).

101. On 17^th June 2004 she paid £64,000 to strangers to the estate. She is not personally liable for the breach of trust because of the trustee exemption clause. The effect of that payment is to reduce the trust assets by £64,000. Ignoring for the moment any other assets, liabilities or permissible deductions that reduces the trust assets from £138,097 to £74,097. Alan Barraclough is entitled to one half of that sum or £37,048.50. If and in so far as Alan Barraclough has not been paid that sum Marilyn Mell is liable to account for it. Furthermore clause 6(10) does not assist Marilyn Mell in relation to this. In so far as Marilyn Mell has received more than the £37,048.50 she is an overpaid beneficiary and liable to account to Alan Barraclough.

102. Another way of looking at this analysis is that as a result of Marilyn Mell's breach of trust the estate has lost £64,000. Whilst Marilyn Mell is not liable as trustee for that loss it should fall on the residuary beneficiaries equally. In other words both she and Alan Barraclough have to bear £32.000 of the loss. At the moment it appears to be view of Marilyn Mell that the whole of the loss falls on Alan Barraclough.

     7. Double Portions

     7.1 The Law

103. The law relating to double portions is summarised in Williams, Mortimer and Sunnucks on Executors, Administrators and Probate^[1]. Mr Birch and Mr Prestwich also referred me to the decision of Lindsay J in Lindsay J in Re Cameron^[2]. As I understand the position it may be summarised thus:

     A portion is something given by a parent to establish the child in life or make provision for him or her. Whether a gift was a portion depended upon the intention of the donor. It is not a term of art.

     If both a gift by will to a donee and a later gift inter vivos by the testator to the same donee are (to use expressions used in various authorities) "pure bounty," "spontaneous bounty" or "mere gifts" then the latter gift will not be taken to be a substitute, wholly or in part, for the former and the donee will thus be able to take both. In the absence of special considerations such gifts will be taken to be "pure bounty" or "mere gifts:" An example of a special consideration sufficient to deny the gift the character of "pure bounty" is where a gift by will has a particular purpose identified in the will itself. The language used in the will may show that the gift is intended, for example, to meet a particular moral obligation: In re Pollock; Pollock v. Worrall (1885) 28 Ch.D. 552, 556. Another type of special consideration is found in the case where the language of the gift is neutral as to its purpose but where the totality of the circumstances surrounding the gift, as shown by admissible evidence, is such as to suggest that the gift was a "portion." A portion can be given by will or inter vivos.

     There has come to be developed, as a matter of judge-made law, a rule or presumption against double portions, a rebuttable presumption that the donor did not intend to give two portions to the same donee and that where he had made two gifts, both having the characteristics of a portion, then the latter would be presumed, absent contrary indication in admissible evidence, to be wholly or in part in substitute for, and thus to adeem, the former. The rule is intended to implement the presumed intention of the giver: Pym v. Lockyer, 5 My. & Cr. 29, 34-35. The rule has been explained in comparatively modern times in In re Vaux [1939] Ch. 465, 481-482 by Sir Wilfrid Greene M.R.:

     "The rule against double portions rests upon two hypotheses: first of all, that under the will the testator has provided a portion and, secondly, that by the gift inter vivos which is said to operate in ademption of that portion either wholly or pro tanto, he has again conferred a portion. The conception is that the testator having in his will given to his children that portion of the estate which he decides to give to them, when after making his will he confers upon a child a gift of such a nature as to amount to a portion, then he is not to be presumed to have intended that that child should have both, the gift inter vivos being taken as being on account of the portion given by the will. When the word 'portion' is used in reference to the gift inter vivos, it has a qualitative significance, in this sense, that it is not every gift inter vivos that will cause the rule to come into operation. If a testator gives to a child as pure bounty and by way merely of a present a sum of money, that will not have the character to cause the rule to come into operation. Similarly there may be various reasons why the testator should give property to a child. He may wish to free him from some embarrassment, or something of that kind. In cases of that sort upon the facts a gift may not be a portion at all, in which case, of course, the rule does not apply."

104. I accordingly have to ask myself whether the gift of £20,000 to Marilyn Mell in May 1999 was a portion. If it was a portion I have to ask further whether the presumption against double portions is rebutted.

     7.2. Was the gift a portion?

105. In my view – in the context of this family – a gift of £20,000 to Marilyn Mell was substantial. It also made substantial provision for her in that it enabled her to buy off her second husband's interest in the matrimonial home.

106. It follows that the gift was at first sight a portion. This seems to be supported by the document signed by Leonard Clapham in July 1999. It is true – as Mr Prestwich points out – that it is not contemporaneous; it is equally true that it was drawn up by Carol Barraclough and that little is known of the circumstances in which it was signed.

107. It was, however signed both by Leonard Clapham and his wife and was signed within 2 months of the gift. It is to my mind some evidence of Leonard Clapham's intention at the time. It supports the view that the gift was intended as a portion.

108. I therefore conclude that the gift was a portion.

     7.3 Is the presumption rebutted?

109. Mr Prestwich makes the point that there is no evidence that Marilyn Mell knew of the document or that her father intended the gift of £20,000 to be taken into account. He submits that the fact that she did not know about it goes a long way to rebutting the presumption. He makes the point that if Leonard Clapham had wanted to ensure that the £20,000 was brought into account he could have made a codicil.

110. It is clear from the authorities cited by Lindsay J that it is not necessary for the donor to communicate his intention to the donee. Thus the fact that it was not discussed does not of itself rebut the presumption.

111. The burden is on Marilyn Mell to rebut the presumption and there is very little she can put forward to do so. Furthermore the document signed by Leonard Clapham only 2 months after the gift is, to my mind evidence that he intended the £20,000 to be treated as a portion and to be taken into account in the distribution of his estate.

112. In my view the presumption has not been rebutted.

     7.4 Conclusion

113. In my view the rule against double portions applies and Marilyn Mell is obliged to bring into account the £20,000 she received from her father in 1999.

     8. Conclusion

114. In my view:

     Louise Needham and Fiona Fenney are each liable to repay the £32,000 with interest to Marilyn Mell as executor of Leonard Clapham's estate.

     Marilyn Mell is excused from her breach of trust by virtue of clause 6(10). However she remained liable to account to Alan Barraclough for half of the residuary estate (after taking into account the loss caused by her breach of trust). She has palpably failed to do this.

     The rule against double portions applies to the £20,000 received by Marilyn Mell in 1999. She must bring it into account in calculating her entitlement under Leonard Clapham's estate.

     The estate accounts will have to be re-drawn to take into account the above findings. Directions will have to be given in respect of other matters but they must be clearly identified. There is, for example little or no evidence that Marilyn Mell has effectively stolen £80,000 from the estate. This is a case where the costs are no doubt large. The parties should be encouraged to attempt to resolve any further differences by alternative dispute resolution rather than by further expensive litigation. In any event Alan Barraclough should appreciate that if it turns out that the accounts provided are sufficient he may find himself paying the whole of the costs of the account.

     JOHN BEHRENS