Analysis
The claim related to the estate of Mr Bhusate who died on 28 April 1990. His first wife (Mrs Bhusate) had died in 1971. The 1st to 5th defendants were Mr Bhusate’s children by his marriage to Mrs Bhusate. The claimant was his third wife. The 6th defendant was the only child of Mr Bhusate and the claimant.
Mr Bhusate died intestate. Letters of administration were granted to the claimant and the 1st defendant on 12 August 1991. The estate principally comprised a property in London where the claimant and Mr Bhusate lived (the property). The property remained registered in Mr Bhusate’s name 28 years after his death.
The claimant brought a claim claiming: (1) she was now the sole beneficial owner of the property; (2) in the alternative, she and the defendants became equitable co-owners of the property; and (3) in the further alternative, that she was entitled, as against Mr Bhusate’s estate, to her statutory legacy and a capitalised life interest, plus interest 6% per annum since the date of Mr Bhusate’s death.
In support of her claim to be the sole beneficial owner of the property, the claimant advanced two alternative claims based on the same facts (cases 1 and 2).
Case 1 was that the claimant had become the sole beneficial owner by reason of her entitlement on the intestacy of Mr Bhusate to a statutory legacy of £75,000 with interest thereon at 6% per annum, and a life interest in one half of the balance of the estate (capitalised by notice to the 1st defendant in March 1992). In September 1990 she and the 6th defendant became the sole occupants of the property, without any suggestion after 1993 from the defendants that she should pay for her occupation. The property was marketed for sale between June 1992 and August 1994. The sole offer received was £120,000 in May 1994 (in fact £135,000 as revealed by subsequent disclosure). The claimant was content for the sale to proceed, but the defendants took the view that a sale would be disadvantageous. Had the sale proceeded in 1994, the claimant would have been entitled to the entirety of the equity in the property pursuant to her entitlement in Mr Bhusate’s estate including accrued interest.
Case 2 was that the claimant was the sole beneficial owner by a resulting trust, or alternatively, a constructive trust, based on the common intentions of the parties. The claimant claimed that she had maintained and repaired the property without any assistance from the 1st to 5th defendants. She also claimed that assurances and representations had been made by one or more of the 1st to 5th defendants to the 6th defendant that the claimant might live in the property for so long as she wished, that the property might fall down for all they cared, and that they were content to transfer any interest they might have to the 6th defendant without compensation.
Case 3 was that the claimant was the joint beneficial owner of the property with the defendants, and that her joint interest crystallised in 1994 by the creation of either a resulting trust, or constructive trust based on the common intention of the parties.
The 6th defendant admitted the facts the claimant relied on and supported cases 1 and 2 and, on one reading of his defence, also case 3. In a Part 20 claim, he put forward another variation: that he was the joint owner of the property with the claimant to the exclusion of his siblings, either by dint of a common intention constructive trust or by the operation of proprietary estoppel. In the further alternative, he sought an order for an account against the 1st to 5th defendants relating to the expenditure he had incurred in maintaining the property. However, these claims were not to be pursued in the event that his mother’s claim to be the sole beneficial owner failed.
The 2nd to 5th defendants applied to strike out part of the claimant’s claim and the 6th defendant’s defence and counterclaim pursuant to CPR 3.3(2)(a) on the grounds that they disclosed no reasonable grounds for bringing a claim. Alternatively, they applied for summary judgment pursuant to CPR 24.2. They also applied under s50 of the Administration of Justice Act 1985 for the removal of the claimant and the 1st defendant as administrators, and proposed that a solicitor be appointed.
Held:
- 1) In respect of case 1, it was not open to the claimant, based on the facts she relied on, to assert that the beneficiaries obtained choate interests in the property by 1994 or any other date. The estate remained unadministered. There had not been an appropriation or an assent. The proposals which might have led to appropriation or assent stalled in the mid-1990s and were not taken forward. An equitable assent had not been pleaded. Even if there had been an appropriation or an assent, the rule against self-dealing would defeat an attempt to vest the property in the claimant. The claimant would have taken for herself the property at a time market prices were very low, whereas the value of the property would have increased rapidly from the mid-1990s onwards. The rule against self-dealing will not be departed from lightly. There were no circumstances which might lead to the self-dealing rule being disapplied.
- 2) In respect of cases 2 and 3, the claimant relied on the same facts as forming the basis from which different inferences might be drawn about the intentions of the parties. On the one hand, the claimant claimed to be entitled to the entire beneficial interest, but she also claimed that she and the 6th defendant were joint beneficial owners. She further claimed that the interests of the 1st to 5th defendants became fixed in 1994, and that only the claimant and the 6th defendant should have the benefit of increases in value since that date. It was difficult to see, however, how the pleaded facts could support both a trust under which the claimant was the sole beneficial owner and a trust under which she held a beneficial interest with the 1st to 5th defendants, let alone one in which the interest of some parties were frozen, leaving her and the 6th defendant to benefit from substantial increases in value. The facts relied upon to support these cases did not sit together. It was impossible for the claimant to say, on the one hand, that she subscribed to a common intention that she held the sole beneficial interest, but on the other hand to say the common intention was entirely different. She had to put forward one case or the other. The claimant was not entitled to put forward inconsistent claims which relied on different common intentions.
- 3) In respect of both cases 2 and 3, there was no basis for concluding that a resulting trust arose in favour of the claimant. It was not her case that she had contributed to the purchase of the property, or that there was a failed disposition of a beneficial interest therein.
- 4) In respect of cases 2 and 3, common intention constructive trusts could not be imputed. They might only be inferred. A common intention constructive trust was unsustainable on the facts put forward by the claimant. Jones v Kernott did not assist the claimant. In the domestic sharing context, there might be little difficulty finding that the parties intended the beneficial interests be shared, and the court will then impute any intention about the shares in which the beneficial interest were held. There was, however, no basis for applying this approach to a wider context where (i) there was an intestacy and (ii) no common intention about the beneficial interest might be inferred from facts that predated the deceased’s death. The starting point was that there was an intestacy, with the sole beneficial interest being that of Mr Bhusate at the date of his death, which passed to the administrators of his estate. No common intention about beneficial interest could be inferred from facts that predated Mr Bhusate’s death. There was no reason, in principle, why a person in the claimant’s position could not say that the estate or an asset within it was held on the basis of a common intention constructive trust that relied upon an agreement (whether oral or written). However, that was not how the claimant’s case was put forward and, in any event, there were no facts upon which such an agreement could be found.
- 5) Case 1 was unsustainable based on the facts pleaded and in law. It should be struck out, or summary judgment entered against the claimant. Cases 2 and 3 should also be struck out. In the alternative, summary judgment would be granted in favour of the 2nd to 5th defendants.
- 6) The claimant’s claim to her statutory legacy and capitalised life interest was statute barred by virtue of s22(a) of the Limitation Act 1980 which provided that, subject to s21(1) and (2) of that Act, no action in respect of any claim to the personal estate of a deceased person or to any share or interest in any such estate (whether under a will or intestacy) shall be brought after the expiration of 12 years from the date on which the right to receive the share or interest accrued. Section 21(1) did not assist the claimant. She was not a beneficiary under a trust because the estate had not been administered. Furthermore, even if time does not run against a beneficiary under s22(a) until the residuary estate could be ascertained, the claimant was not a residuary legatee. Her claim was to an entitlement to a statutory legacy and a capitalised life interest and was not a claim to the residue.
- 7) In respect of the 6th defendant’s claim, he was not entitled to support the claimant’s claim and to agree the facts that she relied on (including the various common intentions she asserted) and then put forward a case that contradicted hers. He could not equivocate his case. His claim to have a beneficial interest in the property would be struck out. His claim is based on a common intention resulting trust, proprietary estoppel, and for an account, would also be struck out, or summary judgment entered.
- 8) The claimant and 1st defendant would be removed as administrators as it was plain that there had been a singular failure on their part to fulfil their duties. It did not matter that their failure to act properly may have been due to ignorance or poor advice. Furthermore, in the light of the orders made on the application to strike out the claim, or for summary judgment, it would be impossible for the claimant to remain in office. It was undesirable that a relatively small estate should be burdened with the fees of a professional administrator. However, in reality, professional advice would be needed in any event if the claimant and 1st defendant were to remain in office, and so the legal additional costs would not be substantial.
Continue reading "Bhusate v Patel & ors [2019] WTLR 393"