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posted 17 May 2001 in Volume 6 Issue 4
Case reports…
By Julia A. Abrey partner Withers
William H J Corbett v Bond Pearce (a Firm) (2001) (Court of Appeal) Lawtel 11 April 2001
In Corbett v Newey (1996) (a probate action) the invalidity of the last will of Nancie Trasawna had been declared (Mr Corbett was the administrator of the estate). The will if valid would have provided for the division of Miss Trasawna’s estate between her two great nephews. Following the declaration of invalidity the costs of the probate action brought by Mr Corbett were ordered to be paid from the estate which then fell to be divided equally between Mr Corbett and his sister. The same time as the probate action the two great nephews had commenced proceedings against Bond Pearce (the solicitors who prepared the will) for negligence. Following the decision in the probate action the negligence proceedings were compromised and a sum of damages paid the sum being calculated by reference to the amount of the net residuary estate although with no allowance for the costs of the probate action. As part of the preliminary issues considered in the negligence action Eady J held that solicitors were liable to the estate in either contract or negligence in respect of both the cost of probate action and any loss directly caused by the probate action and that these two findings did not depend on whether the residuary estate was sufficient after the deduction of debts and legacies to leave a net balance available for distribution to Mr Corbett and his sister. The solicitors appealed.
The Court of Appeal allowed the appeal holding that Eady J in considering whether the solicitors could be liable to the estate in either contract or negligence had failed to give sufficient consideration to identifying the scope of the duty of care owed by the solicitors and in particular whether the alleged duty of care owed to the estate was a duty in respect of the kind of loss which had actually been suffered. The court then considered the terms of the solicitors’ retainer with Miss Trasawna and held that it was clear that the kind of damage against which they had a duty to keep her harmless was the loss which might be suffered by those interested in her estate if proper effect was not given to her testimentary intentions. Although the court held that the solicitors owed duties both in contract (to Miss Trasawna) and in tort (to the nephews) these duties were complimentary to each other and it therefore followed that the solicitors could not be liable both to the great nephews and to the estate in respect of the same costs. They were therefore not liable to the estate (as well as to the great nephews) for the costs of the probate action or for any other loss directly caused by the probate action.
Jose Manuel Pitta de Lacerda Aroso v Coutts & Co (2001) (Chancery Division) Lawtel 30 March 2001
The case concerned a bank account held in the joint names of the deceased (who was the father of the claimant) and a third party (C). The claimant alleged that the bank had wrongfully paid out the proceeds of the account to C following the death of his father. The deceased was domiciled and resident in Portugal (but he spoke English). He had opened an account with the bank in 1974 in his sole name. It was an investment account containing cash and securities which at that time were managed under a separate investment management agreement with an independent firm of investment advisors. The bank mandate was altered from time to time by the deceased so that various members of his family could be added and removed as co signatories although the account always remained in his sole name. Following a very significant family disagreement in 1990 the deceased became estranged from his children and as a result deleted his daughter as a signatory to the account and added C in her place. Shortly thereafter he closed the account and opened a new investment account in joint names of himself and C; the mandate provided for them to act as co-signatories. The bank argued that the form of the mandate (which expressly provided for the surviving joint account holder to inherit the whole account when the other holder died) had been explained to the deceased both in English and Portuguese at a meeting with one of the bank’s officers and that the deceased had appeared to understand the terms of the account. The investment management agreement relating to the new account provided that it should be held by the bank for the deceased and C as beneficial joint tenants. As a result following the death of the deceased the bank paid out the money to C on his direction. The deceased’s son contended that the assets had been held by the deceased and C on resulting trust for the deceased only and that the payment out was therefore in breach of trust.
Lawrence Collins J held that the starting point in the case was the fact that all the cash and securities in the joint account had derived from the deceased alone. In this situation a presumption arose that the deceased and C had held the assets on resulting trust for the deceased. The presumption was however rebuttable upon proof of an intention on the part of the deceased that C was to take the assets beneficially on his death. The court was satisfied that various evidential issues showed such an intention. Firstly the terms of the mandate were absolutely clear as were the terms of the investment management agreement which referred to the deceased and C as being beneficial joint tenants. In addition the evidence concerning what had happened at the deceased’s meeting with the bank was uncontradicted and the change from a sole to a joint account arose following a family row. Finally there was nothing in the deceased’s subsequent conduct which was inconsistent with an intention to confer a beneficial interest on C.
Re D W S deceased (2000) (Court of Appeal) 3WLR 1910
This was an interesting Court of Appeal decision concerning the effect of a beneficiary under an intestacy disclaiming or being disqualified from taking their interest.
At first instance Blackburne J had held that the claimant (T) was not entitled to inherit the estate of his late grandparents (Mr and Mrs S) both of whom had died intestate. T had claimed inheritance on the basis that Mr and Mrs S had been murdered by their only child R T’s father. R (who would therefore have inherited on intestacy) was therefore prevented from doing so as a matter of public policy. T claimed to be solely entitled as to his grandparent’s estates as the only grandchild. The defendants were the siblings of the grandparents and contended that T could not inherit as the issue of a child could only take if that child had pre-deceased the intestate. Blackburne J agreed and held that T was not entitled to inherit as his father had not pre-deceased him. T appealed. The appeal was dismissed; the court holding unanimously that the provisions of Section 47 (1) of the Administration of Estates Act 1925 were clear and unambiguous and the issue of a child of an intestate could only take if the parent had pre-deceased.
Interestingly however although the Court was quite clear that T did not inherit there was a difference of opinion as to whether either Mr and Mrs S’s siblings or the Crown would benefit as a result of R’s disqualification from taking his interest. The difference of opinion turned on the construction of section 46 (1) of the Administration of Estates Act 1925. Section 47 (2) provides that unless issue attained “an absolute vested interest” then an intestate is treated as leaving no issue. The majority of the Court of Appeal held that Section 46 (1) (v) was to be read as if it contained the words “capable of taking” and thus the siblings of the grandparents inherited. Sedley L J disagreed. He held that if the court found Section 47 unambiguous that it should apply the same literal construction to Section 46. As a result as R did leave issue no subsequent category of beneficiary could inherit and that therefore the estate would pass bona vacantia to the Crown.
Mrs Julia A Abrey Partner Withers
