High Court of Ireland Decisions

1. Laurence Farrell deceased died on the 7th January, 1999. Letters of administration intestate to his estate issued to the Defendant, his sister, on the 11th April, 2000. The deceased left him surviving and entitled to share in his estate the Defendant as to one half thereof and the Plaintiffs, the children of a deceased brother of the deceased, as to one half thereof between them. The sole asset of the deceased, for all practical purposes, is the lands comprised in Folio 436 of the Register County Dublin comprising 7.226 hectares or 17.8 acres. There is a cottage on the lands which if not derelict has outlived its useful life and also some farm buildings.

2. On the 19th October, 2000 pursuant to Section 55 of the Succession Act 1965 the Defendant duly gave notice of her intention to appropriate to herself in satisfaction of her entitlement in the estate part of the lands comprised in Folio 436 of the Register County Dublin containing in area 3.5 acres (the appropriated lands) upon which the cottage and farm buildings were sited. The remainder of the lands some 14.3 acres (the unappropriated lands) would then be available to satisfy the entitlement of the Plaintiffs subject however to the discharge of the liabilities of the estate. Correspondence was admitted and from this it appears that the assets other than lands amount to £1,376.96 and that the liabilities are estimated at £45,426.96. I gleaned this information from a letter dated 3rd May, 2000. In that letter the Defendant made a proposal that the lands be divided and that the Defendant and the Plaintiffs each discharge one half of the net liabilities. The division of the lands proposed corresponds with that in the notice under Section 55 of the Succession Act 1965: the notice is however silent as to the payment of the estate’s liabilities. I am concerned with the notice and must have regard only to the same. On the basis of the notice the estate will be distributed as follows:-

3. To the Defendant 3.5 acres

4. To the Plaintiffs the proceeds of sale of 14.3 acres less the net liabilities of the estate estimated at £44,050.00.

5. The liabilities do not take account of the costs of this action. I must leave them out of consideration as the action had not been instituted at the date of the notice. I note however, that some or all of those costs may fall to be paid out of the estate.

6. The Plaintiffs in this action claimed a number of reliefs but at the hearing all save one were abandoned: the relief pursued at the hearing was an order pursuant to the Succession Act 1965 Section 55(3) prohibiting the appropriation.

7. The Succession Act 1965 Section 55 insofar as it is relevant to these proceedings provides as follows:-

8. The first issue to arise is whether the Plaintiffs have complied with Section 55(3) which requires a party within six weeks from the service of a notice on him to apply to the Court to prohibit the application. The special indorsement of claim to the special summons seeks to invoke subsection (3) in the following terms which the Defendant claims are inadequate:-

9. The Special Summons was issued within six months of the service of the notice. While these reliefs do not follow the wording of Section 55(3) it must have been quite clear to the Defendant that relief under the subsection is what is in issue. All the more so is the case when regard is had to the Grounding Affidavit and to paragraph 8 thereof in particular which reads as follows:-

10. I am satisfied that the Defendant was at all times aware of the relief sought and the basis upon which it is being sought. I am satisfied that the Special Summons is a sufficient invocation of Section 56(3).

11. The second matter to arise is this, if the land should be sold the Defendant would incur a heavy liability to Capital Acquisitions Tax: if she should apportion part of the lands in specie to herself, she would be entitled to agricultural relief. Assuming the value of her inheritance to be in the amount of £300,000 and the lands are sold in the course of administration her capital Acquisition Tax liability would be £96,040.01 while on a distribution to her in specie the liability would be £711.75. I do not consider this to be a factor to which I should have regard: I must look at the pre-tax benefit to the parties for the purposes of Section 55: see Hickey & Company -v- Roches Stores Limited (1980) ILRM 107. If a distribution in specie would benefit all parties however, it may be that the instance of taxation would be relevant.

12. Finally it was urged upon me that the Defendant has an attachment to the appropriated lands which have been the family home for some 300 years. I accept that this is relevant to bona fides and I have regard to it.

13. Section 55 gives little explicit guidance to the Court as to the approach to be taken on an application pursuant to Section 55. The Supreme Court considered this in

14. On this application I have had the evidence of two reputable and highly experienced valuers. They agree that the appropriated lands would be regarded as being likely to have planning permission granted in respect thereof for a substantial dwelling and so are highly saleable being in a much sought after location. Mr. Ganly for the Plaintiff valued the same at two thirds the value of the whole, the unappropriated lands having a value of one third thereof. In his opinion a sale in one lot would yield a greater return than a sale in two lots. The former would yield £750,000. However, his evidence is that agricultural land in this location would fetch between £20,000 and £25,000 per acre: this puts a value on the lands not appropriated as between £280,000 and £350,000. These lands have virtually no prospect of ever receiving planning permission being zoned GB (commonly called “ Green Belt ”). Taking his evidence as a whole I believe its effect to be as follows:-

15. Mr. Lennox for the Defendants is of opinion that the entire holding sold as one lot would not produce a better return. It is too large for a single dwelling and a smaller area, ideally circa 3 acres, sold as a potential site as one lot and the remainder sold as agricultural land with a prospect of planning permission albeit slim as a second lot would produce the best result. Each lot would command £300,000 in his opinion.

16. Thus there is a difference in professional opinion as to whether the best return could be obtained by a sale in one or two lots and also as to the relative values of the appropriated and unappropriated lands.

17. As to the first matter Section 55 empowers a personal representative to employ a qualified valuer. The Defendant did this and she is entitled to take his advice and act upon it, not alone as to values but also as to the manner in which that value may be optimised. The standard of care expected of her is that of a trustee, namely that of a prudent man of business in the conduct of his own affairs. While the opinion of the Plaintiff’s valuer Mr. Ganly differs from the advice of Mr. Lennox, this alone would not justify the Court in interfering to prevent the Defendant acting bona fide on the advice which she has obtained.

18. Accordingly I move on to consider whether there is as the Defendant contends substantial equally and value between the appropriated and unappropriated lands. As I read Section 55 the onus is on the Plaintiff to satisfy me on the balance of probabilities that there is not. As to the respective values I prefer the evidence of Mr. Ganly. The unappropriated lands are unattractive for a number of reasons:-

19. Valuation is not an exact science: this is clear from the conflicting firmly held views of the two valuers who have given evidence. On that evidence I find that the proportionate values of the appropriated land and the unappropriated land is in the ratio 55:45. Thus on Mr. Ganly’s evidence a sale in one lot at £750,000 would result in the Plaintiffs and the Defendant realising £337,500 and £412,500 respectively, an inequality of £75,000. On Mr. Lennox’s evidence allowing that a sale in two lots would achieve a total of £600,000, that not being less than a sale in one lot would achieve, the Plaintiffs would receive £270,000 and the Defendant £330,000 an inequality of £60,000.

20. The matter does not end there however. The parties agree and I accept that on this application I may only make or refuse to make an order prohibiting the proposed appropriation. I have no jurisdiction to modify the same. I must take the notice in the terms in which it is given. Upon this basis the inequality will be compounded as in its terms the notice requires the liabilities of the estate to be borne by the Plaintiffs. I may not have regard to the correspondence in which it was envisaged that the Defendant would bear one half the liabilities of the estate. Having regard to the foregoing regardless of whether the valuation of Mr. Ganly or Mr. Lennox is accepted a material discrepancy exists. I accept the bona fides of the Defendant. I accept that she acted on the advice of a highly qualified and reputable valuer and was fully justified in so doing. She is in the position of a trustee and notwithstanding that she was exercising her statutory entitlement in her own favour she conscientiously carried out her duties as befits a trustee. As I said valuation is not an exact science and the guide prices and option results published week after week are evidence of this. Certainty in such matters can only be achieved in the sales room. Accordingly my findings in no way reflect on the bona fides of the Defendant or on the expertise of her valuer.

21. I find that the appropriation proposed would be inequitable and would unduly benefit the Defendant and accordingly I propose to made an Order prohibiting the same.