Baker & anr v Dunne & ors [2016] EWHC 2318 (Ch)

Analysis

This case involved an application made by the claimants, as trustees of the will trust of the late Jean Montgomery, for Beddoe relief (‘the deceased’). The trustees seek Beddoe relief in respect of implementing an order for possession.

The defendants are the deceased’s three children who are equal beneficiaries under her will trust. The application was opposed by the first defendant, ‘Jonathan’, but supported by the second and third defendants.

The trustees had previously applied for an order for possession against Jonathan and two companies associated with him in respect of the Albert Arms in Esher, Surrey ‘the Albert Arms’), which is the principal asset of the trust (‘the possession proceedings’). Jonathan had been running a business from the Albert Arms on an informal basis without paying rent for three years.

This claim was commenced in 2014, seeking construction concerning the deceased’s will and for directions as to the Albert Arms. Jonathan conceded the construction issue shortly before the hearing and the court granted Beddoe relief to the trustees to issue, and later pursue, the possession proceedings with an indemnity in respect of their costs out of the trust fund. The trustees subsequently obtained the possession order they were seeking following a trial. Jonathan was given limited permission to appeal the possession order but no stay of the order was granted. The trustees were granted Beddoe relief relating to the appeal and obtained an order from the court giving permission to issue a writ of possession. Ultimately Jonathan’s appeal was unsuccessful.

The trustees received unequal advice from a specialist value that the value of the property with Jonathan in occupation on the current basis was nil, whereas the value of the property run as a business without Jonathan in occupation was £2.1m.

Jonathan subsequently provided the trustees with draft particulars of claim for a passing off claim and breach of trust claim. The passing off claim is based on the premise that the consequence of selling the Albert Arms would be that a number of representations would be made relating to the goodwill of Jonathan’s company, which were not true. The breach of trust claim contained a number of allegations, including that they failed to take adequate advice, gave undue weight to the interest of Jonathan’s siblings and introduced barriers to a sale of the property to Jonathan.

The issue in the application for Beddoe relief is how the trustees should realise their interest in Albert Arms and whether the sale should be undertaken with vacant possession.

Held:

1. 1) The claim for breach of trust amounted to a complaint that the trustees have not sold the Albert Arms to Jonathan. However, the offer he put forward did not make arithmetical sense and cannot be relied on. On a sale with vacant possession, Jonathan is entitled to bid along other potential purchasers. Therefore the claim had no substance.
2. 2) The passing off claim also had no substance and no real prospect of success. Such goodwill as it truly personal to Jonathan and his companies will remain his and may be taken with him. Much of the goodwill relating to the business of running a pub at the Albert Arms is adhesive to the property. The right to use the name of the property and the goodwill of the business was given to the Trustees by the will. Thus this is not a case of the Trustees appropriating Jonathan’s goodwill but, rather, claiming it back from the property which he had no right to occupy.
3. 3) Further, the proposed claim, which was not yet issued, was at an extremely late stage of the proceedings after the Trustees had obtained permission to issue a writ of possession. In all the circumstances, the attempt to bring a claim against the Trustees at this stage was an abuse of the court’s process and was not permitted.
4. 4) Therefore the trustees are authorised to proceed to obtain vacant possession of the Albert Arms against any persons in occupation and to sell the property, and are also entitled to an indemnity in respect of their costs from the trust fund.

JUDGMENT CHIEF MASTER MARSH: [1] On 14 July 2016 I heard an application made by the claimants, as trustees of the trust of the will of Jean Montgomery, who died on 6 September 1997, for Beddoe relief. I will refer to the claimants as the trustees. The three defendants are Jean Montgomery’s children who are …

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