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
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.
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
The Will was made on 27th 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.
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
Leonard Clapham died on 26th March
2003. Probate of the Will was granted to Marilyn Mell on 19th June
2003. Power was reserved to Carol Barraclough.
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.
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
Carol Barraclough died on 22nd March
2004 intestate. 95 Brecks Lane had not been sold as at the date of her death.
Following her death various members of her family
consulted Mike Halliwell. On 1st 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.
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.
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.
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.
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.
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.
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.
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
The sale of 95 Brecks Lane was completed on
4th June 2004. The net proceeds of sale amounted to £138,097.72
were received by Taylor Bracewell on that day. On 8th 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.
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".
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.
A cheque for £138,097.92 was handed to Marilyn
Mell. On 9th June 2004 the cheque was paid in to Marilyn Mell' s
Current Plus Account with NatWest.
On 14th 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 16th
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
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"
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.
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.
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 17th June
2004
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.
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.
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.
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.
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.
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.
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.
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.
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.
He immediately consulted new solicitors - Atherton
Godfrey. On 22nd 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 28th May 1999. It
accordingly demanded payment of £79,048.86 within 7 days.
Marilyn Mell received the letter on
23rd 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.
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.
Further attempts to obtain the return of the
moneys have failed.
5. Liability of Fiona Fenney and Louise
Needham
5.1. The law.
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.
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".
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.
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.
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?
Before considering the critical meeting at Louise
Needham's home on the evening of 17th 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.
I therefore approach the meeting of
17th 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.
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.
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.
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.
It follows that the moneys are repayable with
interest from 23rd June 2005 when Marilyn Mell requested repayment.
6. Liability of Marilyn Mell to Alan
Barraclough.
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.
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
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.
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)
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.
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.
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".
Furthermore Marilyn Mell did not like Alan
Barraclough. Her interpretation of the will was one she was happy to come to.
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.
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.
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.
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.
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.
As already noted on 9th 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).
On 17th 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.
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
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."
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?
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.
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.
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.
I therefore conclude that the gift was a
portion.
7.3 Is the presumption rebutted?
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.
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.
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.
In my view the presumption has not been
rebutted.
7.4 Conclusion
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
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
