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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Brudenell-Bruce v Brudenell-Bruce [2022] EWHC 843 (Ch) (18 February 2022) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2022/843.html Cite as: [2022] EWHC 843 (Ch) |
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BUSINESS AND PROPERTY COURT
OF ENGLAND AND WALES
PROPERTY, TRUSTS AND PROBATE LIST (CHD)
IN THE ESTATE OF:
ROSAMOND JANE COUNTESS OF CARDIGAN
Rolls Building Fetter Lane London, EC4A |
||
B e f o r e :
____________________
LADY CATHERINE ANNA BRUDENELL-BRUCE | Claimant | |
- and - | ||
THOMAS JAMES BRUDENELL-BRUCE, VISCOUNT SAVERNAKE | ||
(as executor/trustee of the estate of Rosamond Jane, Countess of Cardigan, | ||
and personally) | Defendant |
____________________
MR H. MARTIN (instructed by Charles Russell Speechlys LLP) appeared on behalf of Defendant.
Hearing: 16th February 2022
____________________
Crown Copyright ©
If this Transcript is to be reported or published, there is a requirement to ensure that no reporting restriction will be breached. This is particularly important in relation to any case involving a sexual offence, where the victim is guaranteed lifetime anonymity (Sexual Offences (Amendment) Act 1992), or where an order has been made in relation to a young person
THE DEPUTY MASTER:
" I APPOINT my son THE RIGHT HONOURABLE THOMAS JAMES VISCOUNT SAVERNAKE, and my daughter LADY CATHERINE ANNA BRUDENELL-BRUCE, to be my executors and trustee"
Clause 2,
"I GIVE all my property not otherwise disposed of ('my residue') to such child or children of mine as shall survive me if more than one equally but if any child of mine dies before me leaving a child or children then that child or those children shall on obtaining twenty-one take if more than one equally the share of my reside which his her or their parent would otherwise have taken."
However, what lies behind it is not as simple as I will come to.
The background facts
"The essence of the terms of settlement is that the Petitioner will have sole absolute ownership of a property called Leigh Hill House (valued at £1.25 million including stable and paddock) subject to a right of pre-emption in favour of the Trustees."
"Upon the Petitioner receiving a survey of Leigh Hill House which does not cause her to return the matter to Coleridge J in accordance with paragraph G above the Respondent shall transfer forthwith (with the approval and cooperation of the Trustees already given herein above to ensure that he is sole beneficial owner of the same) all his interest in Leigh Hill House (as described above) to the Petitioner, the parties and the Trustees agreeing that, in the event of the Petitioner wishing to sell the property in the future, the Savernake Trustees (and that term shall include not only the present Savernake Trustees but the trustees from time to time of the 1951 Conveyance (described above)) shall have first refusal to purchase the property for the Estate at such price as may be agreed between the Petitioner and the Savernake Trustees or, in default of agreement on the price within 28 days of offer, at such price as shall be assessed as being the value of the property by a valuer agreed between the Petitioner and the Savernake Trustees or, in default of agreement within 14 days of first suggestion, appointed by the President of the Royal Institute of Chartered Surveyors."
"What we need is two probate valuations (which are lower than the market value). So we are getting Carter Jonas to formally value it at £1.2m, and Knight Frank to do the same with an informal valuation. This will leave us a final tax bill of about £350,000. However, with Charles' advice we will be able to reduce this figure."
Then subsequently,
"The advice I've had from several agents is to hang on until the summer and then sell."
Her reply the same day was:
"But why would we want to sell the house now?".
However, it appears that Catherine's financial position worsened and, on 28 January 2014, following an email from Catherine, he said,
"look, I dont want to get into a huge fight about all this. I can see all this is hugely stressful for you and you are upset about it. … I am not blaming you for the sale of the house. I had hoped to keep hold of it until Tottenham was sold, but the fact is that it seems you need the money tied up in it to pursue your career. Correct me if Im wrong. It is not your fault that we need to sell the house. We cant afford to keep it long term…"
And then subsequently,
"The point is that your personal account is backed by your share of the house account. If you run up debts, they are ultimately paid off by the house account."
Catherine replied the same day, saying, amongst many other matters,
"'it seems you need the money tied up in the house to pursue your career.' FALSE. don't twist scenarios, i know where u learnt that. yes,i could choose the option of borrowing against the hou considering I OWN HALF THAT HOUSE. but i also can keep my career separate from the house and pay instalments if it means that you don't get to use the loan as a horrible weapon against me."
".. the only real financial security I have is that house while I try and do my job and make a career, so I'm sure u understand that I don't want to have to sell yet if everyone is advising not to. I think we should take another small loan our to cover the upkeep costs till we know whats going on with the house."
However, six months later, in an email dated 23 January 2015, her position seemed to change, as she said,
"Hi, tommy, i really need to access my half of the house and bit gutted we aren't selilng, before you go on holiday can we sort 5omething out, i am really panicking and should've had my loan or half the house sale. Xx"
But then at some point it seems Catherine agreed with Tom that the property would be retained and that she would receive rent from him for his occupation and the monthly advance that I have mentioned. In the evidence are minutes of a meeting held on 24 October 2016; present at that meeting were Catherine, her husband, Henry, his father and Tom. The heading states, "The purpose of the meeting was to explore Bo and Henry's financial situation." Paragraph 3:
"Leigh House. Tom said that the 2012 value of Leigh House was £1.7m and that Bo owned 50% of the house [£850,000]. His plan was to buy Bo out and keep the house for himself if the trustees agree. The timetable for this was uncertain but likely to be between one to four years.
4. Bo is receiving £20,000PA rent from Tom for his use of Leigh House and £20,000 PA loan against her share of the house. David asked Tom to identify what other current and historic loans BO had received as there did not seem to be clarity on this. A figure of £30,000 was mentioned."
At the bottom of the page it says "Circulation all present". There seems, notwithstanding "Circulation all present", to have been no objection to these minutes.
"Dear Both
…
As you know, there was a moment when Leigh Hill House was on the market and Tom decided he no longer wanted to sell. This upset me, as I would very much like to get on with my life and be separated financially, but Tom, you assured me that I was in a great financial situation with a sympathetic bank allowing overdrafts, and if needed, could borrow against my share of the house via borrowing from Tom/Savernake estate."
Then later,
"I begrudgingly went along with this agreement so Tom could continue living at Leigh Hill and do what he wants in the time he wants, with him renting my legal half off of me. I am also patiently waiting to hear about when exactly Tom will be honouring Mums wish that the house be mine once he inherits. Meanwhile, I am paying rent out which is obviously not ideal.
It now seems I am in a very tricky situation and I would like to hear from someone about how to move forward as soon as possible."
Then finally at the end,
"I urgently need a solution from you guys (Tom??) because when I look at the big picture, I feel like I am being taken for a massive ride, and this is now rather serious and not fair."
Mr Martin submitted in his skeleton that the first evidence of Catherine's wish to terminate the agreement was her solicitor's letter before action on 6 February 2020. Ten minutes before the start of the hearing, Mr Ball apparently handed to Mr Martin a clip of emails which showed a different picture. This was unfortunate as it was, I believe, an unintended ambush. Mr Martin said that I should attach little weight to the emails. I said that all of the emails are to or from Charles Russell Speechly (CRS) and included Tom in them as well. I said to Mr Martin that he could make written submissions by 10 a.m. today if he felt that it was necessary, as he was concerned that the emails could be taken out of context.
"Having now had a chance to review Forster's file and client ledger, I thought that it would be helpful to write to each of you in your capacity as beneficiaries of your mother's estate to highlight what is needed from you both in order to finalise matters.
Leigh Hill House. From a distribution point of view, the situation regarding Leigh Hill House needs to be agreed. We understand from Tom that there was a financial arrangement in place whereby market rent is paid to you, Catherine, in relation to your half share of the property, and the same amount is loaned in relation to Tom's half share. I understand the intention behind this agreement was to equalise the position at a later date using the evidential proceeds of sale."
Going forward, the two of you, as beneficiaries need to agree the position between yourselves and, if, indeed, the property has not been sold, then an alternative arrangement that is acceptable to you both needs to be agreed and formalised."
"Apologies Catherine for the delay in reply.
It is certainly time to resolve the position on Leigh Hill House.
It has dragged on for nearly 7 years and in the meantime its condition has continued to deteriorate. There appear to be a limited number of options.
One is for the present position to continue. This is not acceptable to me. At the moment I am locked into the ownership of a property which I do not live in, which is in a deteriorating state of repair and which also means I cannot buy somewhere of my own to live.
One alternative is for Tom, you to buy me out of my half share of the house. If you are not prepared to do that then I cannot see any other alternative but for us to sell the house just as we attempted to do in 2013 and accepted an offer for it. As Tom changed his mind after that, it is only fair to create a new situation that works for us both."
Then:
"If you want to buy me out of my half share now, I am prepared to wait for a time for the other half, but we need to come to an agreement about how long this goes on for.
…
Thank you Catherine for outlining what needs to be done, I Hope Tom has explained by now that I'm no longer receiving a loan from him (haven't for a year or so) but that the rent for his half of the house is still ongoing."
Then on 1 May CRS prompted Tom and said,
"Dear Tom,
I am conscious that you have been working on the figures needed to arrive at a reconciliation here, but please could you update as to progress. I am sure both you and your sister would like to wind up your mother's estate and move on, so please could I encourage you to respond to your sister about how this might be resolved between you."
On 29 May 2021, CRS emailed Catherine and say,
"We have not spoken for a while; I hope you are keeping well. In terms of the administration of your mother's estate, as we have discussed before, I am waiting for Tom to produce figures showing the movement of funds between both of you and your parents, and a net position that he believes needs to be reconciled in the distribution of the estate. As yet I have not received those figures from him, but am continuing to chase. In the hope of further encouraging Tom to engage with this, I have mentioned the situation to one of the partners here who I know is seeing him in the course of next week. Once I have more news I will of course share it with you.
Catherine replied the same day and said:
"Hi, Gareth,
Thanks for your email. I have had to instruct lawyers … Burges Salmon you should be hearing from them …"
CRS' response was that they thought the instruction by Catherine of her own solicitors, would:
" …act as an added incentive for him to give us something to work with."
"Your client is in breach of his duties under the Administration of Estates Act 1925. Our client is not aware of any legitimate reason for justifying the ongoing delay in the administration of the estate. We require a clear timeframe for the administration of the estate including your client's proposals for the sale of the property on the open market or, alternatively, his purchase of the property.
4. Our client has been extremely patient over the past seven years. She has tolerated your client's occupation of the property on the understanding that your client was dealing with the estate administration. That has not happened. Our client has been reasonable and has tried to resolve matters with her brother without the involvement of lawyers. Regrettably, your client has made it clear to our client that he will only proceed with the administration in his own time. This is clearly not in accordance with his fiduciary duties to the beneficiaries of the estate or his duties as an executor and trustee."
They threatened this application if proposals to conclude the administration are not received.
"We understand that the only assets in the Estate are Leigh Hill House and c£5k in this firm's client account. The current issues are required to be resolved between our respective clients as beneficiaries before there is anything further to do on the administration of the Estate."
Then under the heading "Estate Administration",
"The delay in administering the Estate has been due to the dispute between our clients as beneficiaries to the Estate. In attempts to resolve this dispute, Viscount Savernake has been attempting to consider the complex matrix of income, distributions (including to your client) and liabilities in relation to the Estate and to calculate the allocation of these. However in seeking to do this, he has not been assisted by your client.
We will set out our client's position in detail shortly in the hope that the dispute can then be resolved. To assist with this, we would appreciate you please confirming the following points:
1. Details and value of the items taken by your client (or on her behalf) from Leigh Hill House prior to the Deceased's date of death; and
2. Details and value of the items taken your client (or on her behalf) from Leigh Hill House following the Deceased's date of death."
"We also note your surprising statements that 'there is no positive action required by Viscount Savernake...as Executor' and that you consider that that the current issues are to be resolved between our respective clients is beneficiaries. These statements are not understood.
You have stated that your client has been attempting 'to consider the complex matrix of income, distributions (including to your client) and liabilities in relation to the Estate'. We should be grateful if you would explain how those are not matters which engage your client in his capacity as executor.
Our client is not aware of any dispute between herself and your client as beneficiaries. She is aware that your client has repeatedly given as his excuse for not proceeding with the administration the suggestion that he is trying to calculate an asserted liability between either himself and our client, or the Estate and our client. To characterise this as a 'dispute' appears unrealistic."
After various reminders as to the dispute, CRS say, on 26 February 2020,
"… we are instructed that there is an agreement between our clients that the substantial payments made by our client, and those he has approved from the Savernake estate, by way of loan to your client are to be set off against your client's share of Leigh Hill House (the 'Property'). Our client is now close to finalising the sums he believes your client is liable for and we will, as previously indicated, respond to you shortly in this regard."
Then under "Chattels",
"As part of this exercise, we are considering the chattels owned by the Deceased. It is our client's understanding that your client has in fact removed a large majority of the Deceased's chattels. You are yet to respond to our request … Please now provide this."
There was a clear contrast between this and the emails exchange in April, May and November 2019.
"As stated in our letter of 26 February 2020, Tom and the Savernake estate (via Tom's interest in the Savernake estate) have since this time advanced monies to Catherine (in addition to those made previously lo her). These advances were made, in agreement with the relevant trustees, on the basis that they were a loan and should be set off against Catherine's share of the Estate: specifically, given the value it represents, Catherine's share in the Property. We enclose an email setting out this arrangement.
Catherine has requested that the Property now be sold and the Estate distributed according to the terms of the Will. Tom is in agreement that the administration of the Estate must be finalised and final distributions made as appropriate but requires the monies owed by Catherine lo him be accounted for.
Account
The advances made to and for the benefit of Catherine are numerous and the table below may not constitute a full account of these. We have summarised the various individual items (listed in the schedules enclosed) that we are currently aware of into separate categories·. These are set out below".
Then there is a table and then the headings "Description" and "Value". Descriptions: education £79,000; medical expenditure, £89,000; professional fees, £36,000; general advance and other, £279,000; rent, £100,000; property deposits, £22,000. The total, (excluding interest) £606,392.15.
They concluded by saying,
"Tom agrees that administration of the Estate must be finalised. As we have stated however, the delay in this has been due to Catherine obstructing the resolution of the account between Tom and Catherine. We suggest that the sooner Catherine agrees her liability to Tom the sooner the administration can be finalised. Any application by Catherine to remove Tom as an executor would appear premature prior to such account being resolved. To assist in understanding the Estate assets, we enclose draft Estate accounts prepared by Forsters on 5 August 2014.
"Your mother's death gave rise to a large inheritance tax liability, which was payable on and by her estate. As the most valuable asset was Leigh Hill House, which is illiquid, tax could only be paid by either selling it or borrowing. The tax could be paid in ten equal annual instalments, which is effectively a way of borrowing from HMRC."
And then,
"The outstanding tax was paid by the estate and in line with the arrangement above advanced by the estate to Tom, with half being treated as a loan by him to Beebs. If you do not understand this point please let me know."
Detailed correspondence between solicitors followed. In particular, on 21 April 2021, CRS said,
"Plainly, the chief remaining asset of the Estate is the Property. Your client alleges in her draft witness statement that Carter Jonas gave a market appraisal of the Property in May 2020 of £1.85 million. No evidence of this valuation has been provided. Further it is common ground that our client resides in the Property and he has no knowledge of Carter Jonas having attended in May 2020. We are unclear therefore how the figure has been arrived at."
Then at 1.2,
"Our client thinks it important however that a valuation of the Property is now arranged in order to facilitate the settling of matters. He has approached Dominic Birkmyre at Carter Jonas and Nick Loweth at Knight Frank in the capacity as executor, all of whom are prepared to carry out a valuation of the Property. Given the continued and aggressive threat of litigation by your client he is keen to for her to agree a valuation of the Property. Please therefore provide this by return."
A few pages on, it says,
"We would reiterate that our client is willing to engage in mediation that combines all of the issues at hand. The account between our clients that has delayed finalising the administration of the estate should be resolved at the same time as any mediation regarding' her claim against him in his capacity as executor."
That mediation took place very recently, but was unfortunately unsuccessful. These proceedings were then issued on about 27 April 2021.
"With that in mind and in an effort to expedite the resolution of matters and the move to a mediation, our client makes the following proposal to your client, subject to contract:
1 That a valuation of Leigh Hill House is obtained (as above) and our clients seek to agree on the value of your client's interest in the property.
2 Our client buys your client's interest at the agreed value, with the purchase price to be payable as follows.
3 Our clients shall seek to agree the sum owing by your client or failing agreement the sum shall be determined by the court. Upon either of these eventualities, the sum owing by your client in accordance with the agreement or determination shall be deducted from the value of your client's interest in the property and the balance paid to your client in 90 days."
They continued by saying,
"However, regardless of those concerns, he considers the Report comprehensive and reputable, and proposes relying upon it as a valuation of the Property for the purposes of the mechanism for realising your client's interest as set out in our 12 October 2021 letter.
A sale to our client would save the usual costs of sale being agents costs of c£30,600 (being 1.5% of the sale price plus VAT) and legal costs of approximately £4,500-£5,000 plus VAT. This would reduce the net proceeds of sale to £1,663,400.
We have discussed the position with the Trustees of the Savernake Estate and they would agree not to exercise any right of pre-emption in relation to any sale of the Property that may exist in relation to a transfer to our client."
Then they set out the valuation and then,
"On agreement to the above, we would propose that the Property be transferred to our client, £382,508.52 be transferred to your client and the balance of £224,074.14 await final determination of the Account Claim"
The Law
"i. It is unnecessary for the court to find wrongdoing or fault on the part of the personal representatives. The guiding principle is whether the administration of the estate is being carried out properly. Put another way, when looking at the welfare of the beneficiaries, is it in their best interests to replace one or more of the personal representatives?
ii. If there is wrongdoing or fault and it is material such as to endanger the estate the court is very likely to exercise its powers under section 50. If, however, there may be some proper criticism of the personal representatives, but it is minor and will not affect the administration of the estate or its assets, it may well not be necessary to exercise the power.
iii. The wishes of the testator, as reflected in the will, concerning the identity of the personal representatives is a factor to take into account.
iv. The wishes of the beneficiaries may also be relevant. I would add, however, that the beneficiaries, or some of them, have no right to demand replacement and the court has to make a balanced judgment taking a broad view about what is in the interests of the beneficiaries as a whole. This is particularly important where, as here, there are competing points of view.
v. The court needs to consider whether, in the absence of significant wrongdoing or fault, it has become impossible or difficult for the personal representatives to complete the administration of the estate or administer the will trusts. The court must review what has been done to administer the estate and what remains to be done. A breakdown of the relationship between some or all of the beneficiaries and the personal representatives will not without more justify their replacement. If, however, the breakdown of relations makes the task of the personal representatives difficult or impossible, replacement may be the only option.
vi. The additional cost of replacing some or all of the personal representatives, particularly where it is proposed to appoint professional persons, is a material consideration. The size of estate and the scope and cost of the work which will be needed will have to be considered."
"it has great importance and sentimental value to me, as it did to my mother, as a family home and as a Savernake Estate property which remains in family hands."
Mr Ball emphasises that the parties only entitlement as beneficiaries to have the proper administration carried into effect, including a sale of the property, a principle he submits commenced in Lord Sudeley v The Attorney General 1897 AC 11.
"A trustee is not disabled from purchasing the trust property if:
…
(2) the purchase is made in circumstances where the trustee has not placed himself in a position of conflict of interest and duty but has been placed in that position by the settlor or the terms of the trust; or
…
(4) the purchase is made with the concurrence of the beneficiaries, all being of full age and capacity, after a full and proper disclosure has been made to them; or
(5) the purchase is made with the sanction of the court."
"Turning next to possible conflicts of interest, Mr Kershaw has expressed a concern that it might be in the interests of Mrs Micklethwaite and Mrs Barlow for High Greave Farm to be valued at a low figure because they might themselves wish to acquire some or all of the land. Mr Barlow had a short answer to this, that neither Mrs Micklethwaite nor Mrs Barlow is interested in buying any part of the High Greave Farm. Issues remain, though, in relation to the Summerfield flats, in particular because of the possibility of these being transferred to Mrs Micklethwaite or Mrs Barlow in specie.
26. However, Mr Child accepted that Mrs Micklethwaite and Mrs Barlow had not chosen to put themselves in a position of conflict but had been placed there by their mother. Mr Barlow, moreover, argued that any conflicts which might arise could be satisfactorily managed. If needs be, paragraph 9(2)(c) of the STEP standard provisions could be used; alternatively, an application could be made to the court. Mr Child's response to the latter suggestion was that the appointment of an independent person in place of the existing executors would obviate the need for any application to the court, but that is not necessarily so. It is by no means inconceivable that, in the present case, such a person would himself conclude that it was appropriate to apply to the court. In any case, I do not think that the potential conflicts of interest are such as to require the removal of the defendants as executors. I would add that I agree with Mr Barlow that there must often be a possibility of similar conflicts of interest where family members are executors."
"On behalf of the Defendant, much weight was placed by Mr Smith on the self-dealing rule. There was in the present case a conflict or potential conflict between the interest of the Claimant as intending purchaser and his position as executor. It was in my view unwise that the Claimant initially sought and obtained the Defendant's agreement to a sale at the probate valuation. That was done at a time before either the Claimant or the Defendant had legal advice."
"38. On an application of this type, by an executor or trustee seeking permission to purchase, the court must be satisfied that the proposal is fairly made. Where it is not possible for a trustee to obtain the consent of all beneficiaries because some are children or unborn, the court expects to have before it evidence from a surveyor or valuer instructed independently of the purchasing trustee: see Lewin on Trusts 19th edition para 20-141. In the case of two adult beneficiaries who cannot agree over price, that exact model does not work and the executor beneficiary faced with this difficulty is in my view acting fairly and properly in accordance with his duties by obtaining a valuation report from a fully qualified valuer who is instructed to give his report on the same basis as an expert witness for the court."
Submissions
"We have discussed the position with the Trustees of the Savernake Estate and they would agree not to exercise any right of pre-emption in relation to any sale of the Property that may exist in relation to a transfer to our client."
Discussion
Decision
(1) I cannot and should not take into account that I have not seen nor heard of;
(2) There are two separate issues here, the account claim and the removal claim. The removal claim was linked with the account claim simply because, under the overriding objective, it makes sense to determine all that is in dispute between the same parties. But they are two separate matters.
(3) Any such without prejudice correspondence will be looked at, if necessary, in due course on the account claim.
(4) It seems to me that the defendant must be in part the author of his own misfortune by attempting to rely upon such correspondence that I have not seen. I am not going to have the position of a successful party adversely affected, because I have not seen and I cannot see the correspondence.
(5) If I am wrong as to that, appropriate adjustments can be made, if necessary, upon sight of the correspondence upon conclusion of the proceedings or by agreement.