England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
Property Trusts and Probate (ChD)
IN THE ESTATE OF GLADYS DULCIE TOWNSEND DECEASED

		Rolls Building, Fetter Lane' London. EC4A 1NL
		03/05/2018

MASTER SHUMAN:

1. Gladys Dulcie Townsend ("the Deceased") died on 1 July 2003 but her estate has yet to be fully administered. The current dispute principally concerns the construction of a consent order which was approved by Deputy Master Bartlett at a hearing on 2 June 2016 and sealed by the court on 17 June 2016 ("the Order"). The short delay was for the court to be provided with satisfactory evidence of the fitness to act of the agreed substitute personal representative, Peter Brunton of Brunton & Co. Mr Brunton was appointed as personal representative in substitution for the first and second defendants. Mr Brunton is the proposed fourth defendant.
2. There are effectively two applications before me.

i) The first defendant's application notice dated 20 November 2017 seeks the following relief: 1. the lifting of any stay; 2. to join the fourth and fifth defendants as parties; 3. "directions for the resolution by the court of matters of construction relating to the will and the trusts created thereby"; 4. for various orders contained in an attached draft order. The draft order seeks declaratory relief including an indemnity for the first defendant in respect of liabilities said to be incurred whilst she allegedly acted as a trustee or expectant trustee and an order removing the proposed fourth defendant as personal representative.

ii) The proposed fourth defendant's application notice dated 4 January 2018 seeking an order that the first defendant be replaced as trustee of the residuary estate by the proposed fourth defendant. This is consequential on my determination of the first defendant's application and therefore only arises if I accept the first defendant's argument that she remains a trustee under the Deceased's will. The application is supported by a witness statement made by Edward Henderson, solicitor at Lee Bolton Monier-Williams ("LBMW"), dated 4 January 2018. Mr Henderson has also made a statement dated 19 January 2018 in response to the first defendant's application. There is also before me in the hearing bundle an application notice by the fourth defendant dated 18 August 2017, made in possession proceedings between the parties. That application sought relief including a declaration that the Order has vested the property known as 10A St Andrew's Road, London NW9 8DL ("the Property") in the proposed fourth defendant and alternatively that the "defendant" [first and second defendant] be replaced as trustees of the residuary estate by the proposed fourth defendant. The application is supported by a witness statement made by Mr Henderson dated 18 August 2017. This application was dismissed by Deputy Master Nurse on the basis that it was inappropriate for him to determine those issues in the possession proceedings.

3. All parties before me agree that Mr Brunton should be joined as a party to the claim and be made the fourth defendant. I direct that he be joined as fourth defendant. The first defendant also wishes to join Rita Boland as a defendant. She is the remainderman of the Deceased's will trust in respect of real property in Dominica. In a statement dated 21 January 2018 Rita Borland had confirmed that she wishes to be joined as a "party to the application". I direct that she be joined as fifth defendant. Those parties have already been provided with copies of the statements of case and I direct that service of the statements of case on them be dispensed with.
4. The applications came before me on 24 January 2018. Subsequently the proposed fourth defendant's counsel filed further written submissions dated 25 January 2018, mainly to correct points that he had made during the hearing. I directed that the first defendant should have the opportunity to respond and counsel filed his submissions on 29 January 2018.
5. It was common ground between the parties that I should determine the issues of construction and therefore whether the first defendant remained a trustee under the will trusts created by the Deceased's will and was entitled to an indemnity as sought.
6. Under paragraph 8 of the Order all proceedings against the second defendant were stayed. He has played no part in these proceedings and indeed at an earlier point it was accepted by all active parties that he lacked capacity. The second defendant has subsequently died, and his estate has similarly played no part in these proceedings. In so far as it is necessary for me to lift the stay to determine the issues, as the first defendant has sought, I do so. However, the stay is lifted only for the purposes of determining the applications before me.

THE BACKGROUND

7. The Deceased made a will on 28 June 2001 ("the Will"). Under the Will she appointed the first defendant and the second defendant as executors and trustees. The first defendant was a friend of the Deceased and involved with Jenner Armour, the claimant's brother. She is now married to a solicitor, David Heselton ("Heseltons"), who represents her in this matter. Ronald Armour was resident in Dominica and a godchild and cousin of the Deceased. He was the claimant's younger brother and an attorney. He was the second defendant and the claimant says that he was ill for some time and had been exhibiting symptoms of Alzheimer's since 2014^[1]. Since the Order was made the second defendant has died. The parties now refer to the second defendant as the estate of Ronald Armour although there has been no order substituting those representing his estate as the second defendant.
8. The issues in this case concern the following clauses of the Will.

i) Clause 2(b) "The expression "my Trustees" shall where the context admits include such person or persons as shall become an executor or trustee by virtue of this clause and the trustee for the time being of this Will whether original additional or substituted"

ii) Clause 6 "I GIVE my upper floor flat at 30 Rose Street Goodwill Dominica and all the land that goes with it to my trustees upon trust to sell the same (but only with the consent of JACQUELINE DA SILVA during her lifetime) with power to postpone the sale for such period as my trustees shall think fit and to invest or apply the net proceeds of sale in any manner hereby authorised and to pay the income thereof and also the net rents and profits of the property until sale to JACQUELINE DA SILVA during her lifetime and upon her death to JACQUELINE BOLAND PROVIDED THAT so long as the Property shall remain unsold and during the lifetime of JACQUELINE DA SILVA my trustees may permit her to reside in and occupy and enjoy the same PROVIDED THAT she during such period of occupation pays all rates taxes rents and any other outgoings payable in respect of the Property"

iii) Clause 7. "I GIVE my ground floor flat at 30 Rose Street Goodwill Dominica and all the land that goes with it to my Trustees upon trust to sell the same (but only with the consent of HEATHER PENMAN during her lifetime) with power to postpone the sale for such period as my trustees shall think fit and to invest or apply the net proceeds of sale in any manner hereby authorised and to pay the income thereof and also the net rents and profits of the property until sale to HEATHER PENMAN during her lifetime and upon her death to RITA BOLAND PROVIDED THAT so long as the property shall remain unsold and during the lifetime of HEATHER PENMAN my trustees may permit her to reside in and occupy and enjoy the same PROVIDED THAT she during such period of occupation pays all rates taxes rents and any other outgoings payable in respect of the Property"

iv) Clause 8. "MY TRUSTEES shall hold my residuary estate and the income thereof upon trust for JACQUELINE DA SILVA absolutely"

9. The claimant, was the Deceased's cousin and god-daughter. Jacqueline Boland and Rita Boland, the third and fifth defendants respectively, were nieces of the Deceased.
10. The Deceased died on 1 July 2003 domiciled in England and Wales. On 2 November 2004 the first defendant and second defendant obtained a grant of probate. In the first defendant's second statement she states that she tried to obtain a grant of probate in Dominica through the second defendant without success.
11. The claimant in her capacity as residuary beneficiary of the Will commenced a claim on 7 December 2015 seeking to expedite the administration of the Deceased's estate. She applied to remove the first and second defendants as personal representatives of the Deceased's estate and substitute a professional personal representative, Mr Brunton or such other person as the court thinks fit.
12. The Deceased's estate included real property in Dominica and in England. Her principal asset in this jurisdiction was the leasehold interest in the Property which fell into the residuary estate. The Deceased's property in Dominica, the upper and ground floor flats in 30 Rose Street, was severely damaged by Hurricane Maria on 18 September 2017. Apparently 30 Rose Street was uninsured; although the claimant described the Property as needing significant repair in November 2015.^[2]
13. In a letter from the claimant's solicitors, LBMW, dated 15 July 2015 to the third defendant there was a comment that the Deceased's estate had still not been administered. LBMW now acts for Mr Brunton.
14. Underlying this dispute is another dispute about monies said to be due to Emile Armour-Heselton ("Emile"), the son of the first defendant and Jenner, arising out of a shareholding in Armour West Indies Limited and trusts in respect of the estates of Jenner Armour and Emile's grandmother, Margery. This includes a dispute about the funds in a trust described by the parties as the English Trust ("the ETF"). There may still be on-going litigation in Dominica. Whilst this may explain the reason why the Deceased's estate has yet to be administered it is not relevant to the issues before me.

THE ORDER

15. On 2 June 2016 there was a directions hearing before Deputy Master Bartlett. In a note to the court from the first defendant's counsel at that time he recorded that, it was widely acknowledged by all parties that the second defendant was suffering from Alzheimer's disease, lacked capacity and he had played no material part in the proceedings. At paragraph 5 he referred to a draft consent order and that "The 1^st defendant is content to agree to the vast majority of the relief sought by the claimant". In particular she agreed to the following: the appointment of Mr Brunton as personal representative of the Deceased's estate and her removal; to a vesting order in respect of the Property and delivery up of its keys to Mr Brunton; and her removal as trustee for the claimant and Jacqueline Boland of the will trust in respect of the upper floor flat at 30 Rose Street but to remain as trustee of the will trust in respect of the lower floor flat at 30 Rose Street for Heather Penman and Rita Boland. At paragraph 6, she accepted that there had been a breakdown in cooperation between the parties and that this had frustrated the administration of the estate.
16. The Order approved by Deputy Master Bartlett recorded that the second defendant had neither filed an acknowledgement of service nor put in any evidence in response to the claim. The Order recites that it was made with the consent of the claimant and the first defendant. The key paragraphs of the order are:

i) Paragraph 2. Peter Brunton of Brunton & Co (the Replacement Administrator) be appointed personal representative of the Deceased's estate in place of the first and second defendants pursuant to s 50 of the Administration of Justice Act 1985 and the inherent jurisdiction of the Court. This order shall be sealed only upon the claimant's solicitors filing and serving on the first defendant evidence of Mr Brunton's suitability to act as administrator.

ii) Paragraph 4. The Deceased's interest in 10a St Andrews Road, Kingsbury, London NW9 8DL shall vest in the Replacement Administrator for all the estate and interest in that property formally vested in the First and Second defendants as executors of the Deceased's estate.

iii) Paragraph 5. The claimant has permission to apply for further relief in respect of the trusts established by clause 6 of the deceased's will of 28 June 2001 if her claim cannot be resolved by consent and/or in Dominica.

17. Clause 6 of the Will concerned only the upper floor flat at 30 Rose Street and gave the claimant a life interest therein.
18. On 28 July 2016 the fourth defendant was registered as the leasehold owner of the Property, registered under title number NGL797179. On 19 January 2017 the fourth defendant brought a claim for possession against the occupiers of the Property, under claim number D00W1170. In those proceedings the occupiers were represented by Heseltons. The fourth defendant agreed to pay damages to the occupiers in the sum of £4,500 of which £3,000 would be paid on sale and was secured by a charge^[3]. The occupiers agreed to vacate the Property on 10 June 2017. The first defendant paid the occupiers off and had the charge assigned to her.
19. On 11 June 2017 the first defendant went into occupation of the Property asserting that she was entitled to exercise a lien over the Property in respect of monies advanced to the Deceased's estate during her administration and to the claimant which included monies said to have been taken from the ETF. On 16 June 2017 the fourth defendant brought a possession claim against the first defendant, under claim number HC-2017-001789. The claim came before Deputy Master Nurse on 3 October 2017. He ordered the first defendant to give up possession of the Property on or before 17 October 2017, pay use and occupation charges of £3,370.40 continuing at a daily rate of £29.60 from 4 October 2017 until possession is delivered up and pay the fourth defendant's costs of £15,100 ("the possession claim").
20. The first defendant has failed to pay the sums due under the order of Deputy Master Nurse dated 3 October 2017 and a statutory demand has been served on her. I am told that she has sought to set aside this statutory demand. Also, on 12 January 2018 the fourth defendant received a letter from the Land Registry notifying him that the first defendant had applied for a restriction to be entered against the registered title to the Property claiming "to have An interest under a trust created by the will of Gladys Dulcie Townsend (deceased)" so that there could be no disposition of the Property without court order.

THE ISSUES

21. The first defendant in her application contends that on the true construction of the Will and the Order: a) she remained appointed as sole trustee of the trusts created by the Will; b) the property at 30 Rose Street had not been held by the first defendant at any time and remains part of the un-administered estate of the Deceased; and c) she was entitled to be indemnified by the Deceased's estate for liabilities that she had incurred whilst acting as trustee, specifically those incurred in defending the possession claim.
22. Counsel for the first defendant developed the application into three questions: (1) Was the first defendant removed as a trustee of the residuary estate pursuant to the Order? (2) Was the property in Rose Street vested in the first defendant as at September 2017? (3). Is the first defendant entitled to be indemnified by the Deceased's estate in respect of the costs order made against her in separate proceedings?
23. Counsel for the first defendant submits that the relevant test as to construction is, "The Court must decide what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean."^[4] This is a paraphrase of one of the principles of construction summarised by Lord Hoffman in Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, pages 912-913,

"(1) Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract."

1. Was the first defendant removed as a trustee of the residuary estate pursuant to the Order?

24. Counsel for the first defendant submitted that the meaning of paragraph 4 of the Order is unclear but that the most obvious construction is that the leasehold interest in the Property, which vested in the executors prior to the Order, is now to vest in the proposed fourth defendant. He went on to argue however that neither paragraph 4 of the Order nor any other paragraph in the Order addresses the residuary trust created by the Will. His argument proceeds that clause 8 of the will specifically refers to "MY TRUSTEES" and in that context when one reads paragraphs 2 and 4 of the Order they can have no impact on the trusts that are imposed by the Will. In particular paragraph 4 makes no reference to or makes any changes to the trust as provided for in clause 8 of the Will.
25. The context in which this argument is put is that in the claim form the claimant sought an order pursuant to section 50 of the Administration of Justice Act 1985 seeking to replace the first and second defendants with Peter Brunton. She also sought a specific order that in respect of the Property all the estate and interest formally vested in the first and second defendants as executors of the Deceased's estate vest in the replacement administrator. I presume the purpose of this was to simplify the registration of title. Mr Zaiwalla, counsel for the first defendant, goes on to argue that the claim form did not seek an order under section 41 of the Trustee Act 1925 or the court's inherent jurisdiction to remove the trustees. Therefore, he submits the first defendant must have remained as trustee under the Will.
26. In response, and using his terminology, Mr Paget, counsel for the fourth defendant, submits that the effect of the Order was to remove the first defendant from her role in respect of all aspects of the estate save for those as a separate trustee of 30 Rose Street. The first defendant was removed as a personal representative and was therefore removed from all roles under the Will arising out of that status. The authority that the first defendant had over the Property was derived from the Will and when she was replaced as an executor, under section 50 of the Administration of Justice Act 1985 or the court's inherent jurisdiction, any authority over the Property therefore ended.
27. On the death of the Deceased her property situate in England vested in the first defendant and the second defendant, as executors appointed under the Will. The Deceased's assets outside of England did not automatically vest in the first and second defendants. There is no evidence before me that a grant of probate has been obtained in Dominica.
28. Paragraph 2 of the Order specifically appointed the fourth defendant as personal representative in substitution for the first and second defendants pursuant to section 50 of the Administration of Justice Act 1985 or the inherent jurisdiction of the court. The wording of section 50 is material,

"(1) Where an application relating to the estate of a deceased person is made to the High Court under this subsection by or on behalf of a personal representative of the deceased or a beneficiary of the estate, the court may in its discretion—"

(a) appoint a person (in this section called a substituted personal representative) to act as personal representative of the deceased in place of the existing personal representative or representatives of the deceased or any of them; …

(2) Where the court appoints a person to act as a substituted personal representative of a deceased person, then—

(a) if that person is appointed to act with an executor or executors the appointment shall (except for the purpose of including him in any chain of representation) constitute him executor of the deceased as from the date of the appointment; and

(b) in any other case the appointment shall constitute that person administrator of the deceased's estate as from the date of the appointment."

29. The effect of the Order was to constitute the fourth defendant as the administrator of the Deceased's estate from 17 June 2016. The powers of the first and second defendant to act in respect of the Deceased's estate were therefore transferred to the fourth defendant and paragraph 9 of the Order provides for notation of the grant.
30. Clause 2(a) of the Will appointed the first and second defendants,

"(hereinafter called "my Trustees" which expression shall include the trustees for the time being hereof) to be the executors and trustees of this my Will"

The estate would be finally administered when all debts, duties and expenses had been paid and then there would be a beneficial distribution of the net estate. In effect the role of executor would effectively end and the role of trustee of the will trusts commence.

31. It is quite usual for the same persons to be appointed as executors and trustees under a will. Where it is necessary for a section 50 claim to be brought the person bringing the claim does not need to combine this with a pre-emptive application under section 41 of the Trustee Act 1925. If Mr Zaiwalla's analysis was correct, then in a usual case when an estate is fully administered the substituted personal representatives' role would end and the person appointed as executor would then step back in as trustee. Although of course the court has already determined that it would be in the best interests of all the beneficiaries for that person to no longer continue administering the estate.
32. So, in answer to the first question posed by Mr Zaiwalla the fourth defendant was substituted as personal representative in place of the first and second defendants as of 17 June 2016. Upon the estate being fully administered the residuary estate will be distributed. I am told that the only asset in the residuary estate is the Property, certainly in this jurisdiction. In so far as any trust arises in respect of the residuary estate it is the fourth defendant that is trustee of the residuary estate and not the first and second defendants. This is not a matter of construction but simply the effect of the appointment of the fourth defendant as personal representative of the Will in substitution for the first and second defendants.
33. If I am wrong in relation to the effect of section 50 I then turn to the question of construction as contended by Mr Zaiwalla. I have to determine what the Order means and to give the words of the Order their natural and ordinary meaning and to construe them in their context, not only their historical context but also having regard to the object of the Order. See in particular the judgments of Lord Sumption in Sans Souci Limited v VRL Services Limited [2012] UKPC 6 at paragraph 13 and Lord Clarke in JSC BTA Bank v Ablyazov (No. 10) [2015] UKSC 64 at paragraphs 16 to 26.
34. It is useful to bear in mind that the Deceased died on 1 July 2003 and probate was granted to the first and second defendants on 2 November 2004. Some 11 years later the claimant issued a claim because the first and second defendants had failed to complete the administration of the Deceased's estate. I also note that the first defendant consented to the appointment of the fourth defendant as personal representative in substitution for her and the second defendant. She also consented to a specific provision in the Order, paragraph 5, vesting the Property in the fourth defendant. I have already referred to the material provisions of the Will. When I consider the meaning of paragraph 4 of the Order in the context of the rest of the Order, that the Order was by consent and in the factual matrix it is clear that the Order intended that the fourth defendant would replace the first and second defendants as personal representatives. In the context of the Will that meant that upon the final administration of the Deceased's estate the fourth defendant would then hold the residuary estate as trustee for the claimant absolutely.
35. In light of my conclusions I do not consider it necessary to make a declaration in the terms sought by the fourth defendant as to the vesting of the Property. I similarly do not consider it necessary to make an order appointing the fourth defendant as trustee of the residuary estate in place of the first and second defendants. However, I will hear argument on the wording of the order and these points when I hand down judgment.

(2) Was the property in Rose Street vested in the first defendant as at September 2017?

36. I am told by the parties that no grant of probate has been obtained in Dominica. The parties have not addressed me on the legal position in Dominica. I also note that paragraph 5 of the Order provided that the claimant has permission to apply for further relief in respect of the trusts established by clause 6 of the Will (the upper floor flat at 30 Rose Street) in the event that her claim cannot be resolved by consent and/or in Dominica.
37. There are three specific rules set out in Dicey, Morris 7 Collins on The Conflict of Laws, 15^th Edition, volume 2, which are of direct relevance to this issue.

Rule 132. All rights over, or in relation to, an immovable (land) are (subject to the Exception hereinafter mentioned) governed by the law of the country where the immovable is situate (lex situs).

(3) Material or essential validity. Although the cases all concern wills, there can be no doubt that the material or essential validity of a disposition of land is governed by the lex situs. The lex situs means, for an English court dealing with land in England, English domestic law and means, for an English court dealing with land abroad, whatever system of domestic law the lex situs would apply.

Rule 148. The courts of foreign country have jurisdiction to determine the succession to all property of a deceased person which is situated in such country this jurisdiction is unaffected by the domicile of the deceased. Such determination will be followed in England.

Rule 155. The material or essential validity of a will of immovable's or of any particular gift of immovable is contained therein is governed by the law of the country where the immovable is situated (lex situs).

38. The underlying problem is that 30 Rose Street was damaged when Hurricane Maria struck Dominica and I am told was uninsured; although I do not know if 30 Rose Street could be insured for damage caused by a hurricane.
39. Had 30 Rose Street been situated in this jurisdiction then by virtue of the grant of probate it would have vested automatically in the Deceased's personal representatives; section 1 of the Administration of Estates Act 1925. However as 30 Rose Street is situated in Dominica it did not vest in the first and second defendants by virtue of the grant of probate. In Williams, Mortimer & Sunnucks on Executors, Administrators and Probate, 21st Ed, at paragraph 43-32 it is noted that if the deceased died domiciled in England then the grant of administration in England is deemed the principal or primary one. As a rule the English representative has a right to apply to the courts of a foreign country, where there are assets, for an ancillary grant to be made to himself or his attorney.
40. In the absence of legal argument on this issue and specifically addressing the position of the law of Dominica I cannot determine the question of whether the property in Rose Street vested in the first defendant as at September 2017 or not, as contended for by Mr Zaiwalla. If the parties wish to argue this point further then I will need to be satisfied as to the effect of an English grant in Dominica, the significance of not obtaining a grant in Dominica and how the law of Dominica treats real property devolving under a will.

(3) Is the first defendant entitled to be indemnified by the Deceased's estate in respect of the costs order made against her in separate proceedings?

41. It follows from my reasoning in relation to issue 1 that the first defendant is not entitled to an indemnity in respect of the costs order. At no time has she been a trustee of the residuary estate. She is not entitled to an indemnity under clause 12(c) of the Will or otherwise.
42. The fourth defendant was substituted as personal representative for the first and second claimant from 17 June 2016. Actions therefore taken by the first defendant in 2017 in respect of the Property cannot be said to be referable to her previous role of personal representative.
43. The Property forms part of the residuary estate and the claimant is absolutely entitled to the same. I am therefore unclear on what basis the first defendant thought that she should act "in her view to prevent the diminution or even extinguishment of the value of the property which would form the residue of the estate. It was equally D1's right honestly to seek to assert her own right to an indemnity for her potential future liabilities": paragraph 31 of Mr Zaiwalla's skeleton.
44. The first defendant argues that she advanced the sum of £10,000 for the administration of the Deceased's estate, prior to her substitution. If that is the case, then prima facie that is a debt and subject to proof will be dealt with by the fourth defendant in the administration. It does not however give the first defendant a right to take occupation of the Property. Moreover, she had consented to the Order being made which vested the Property in the fourth defendant and was specifically ordered to provide all keys in her possession to the Property to the fourth defendant by 14 July 2016.
45. As I have already stated the first defendant is not entitled to an indemnity as sought.
46. That leaves the outstanding question on the first defendant's application as to whether the fourth defendant should be removed as personal representative. I have not heard argument on this yet. Mr Paget raises the issue of whether the first defendant has any standing to seek this order. If she is a creditor of the Deceased's estate, then I see no reason why in principle she should not do so. Counsel can make submissions about how this part of the first defendant's application is to be dealt with when I hand down judgment.

Note 1   Claimant’s first statement dated 17 November 2015, paragraph 6; disputed by the first defendant, first statement dated 30 May 2016, paragraph 54.    [Back]

Note 2   Claimant’s statement dated 17 November 2015, paragraph 13.    [Back]

Note 3   Mr Heselton’s statement dated 19 January 2018, paragraphs 17 and 18.     [Back]

Note 4   Counsel for the first defendant’s skeleton argument, paragraph 21.    [Back]