Analysis
The deceased, Mr Bob Iles (D) acquired the disputed land and other land which formed part of the Forge Industrial Estate (the Forge) in Darlington over a period of time.
In 1983 D and his wife, the defendant, Mrs Margaret Iles (W) signed a declaration of trust declaring that they held a parcel of land at the Forge in favour of the claimant, their daughter Rebecca (R) upon her attaining 21 years of age. In 1988 the council compulsorily purchased all land held by D and W at the Forge, which included this parcel of land. Following lengthy negotiations, there was an exchange of land and D retained part of this parcel and acquired a further area of land at the Forge. A coherent block of land within the family holdings at the Forge identical in area to the original 1983 trust land was identified by a surveyor that could serve as a new replacement trust holding for R. Under cover of a letter dated 27 November 1989 this was identified on a plan (the disputed land). In 1992, D instructed solicitors to simplify the titles to the areas of land at the Forge and to create a new declaration of trust for R over replacement land he owned and the retained parcel. The 1992 declaration of trust was back-dated and signed by D and W who were by then joint owners of the land. They declared that they held land described in the schedule in favour of R upon her attaining 25 years of age. Unfortunately, the declaration was incomplete as there was no schedule showing the land in question. D told R and others (including the tenants of the disputed land at the Forge) that he had made provision for her by setting aside land at the Forge for her, which would be hers at 25. He died on 5 April 2000. Following his death, W treated this disputed land at the Forge as belonging to her (together with other land there that D had left to her absolutely) and collected and retained the rents from all of it. In 2004, just before R turned 25, R reminded W that from her 25th birthday she was entitled to some of the rents from the disputed land at the Forge. W started paying her £200 per month saying that this was all she could afford and R did not object to this at that time.
In 2008, R found a copy of the 1992 declaration with a plan attached to it by a paperclip in a drawer at the family home. R and W fell out shortly after this over an unrelated matter. R obtained legal advice on the declaration and through a solicitor, asked W to account to her for the rents she was entitled to. W replied that she was not aware of any entitlement, despite being sent a copy of the 1992 declaration and claimed that she did not know what she had signed and that D had never explained that the disputed land was held for R. R brought a claim for breach of trust against W and for the rents from the disputed land from D’s death until the present, less the amounts she had already received.
Held
R was entitled to a declaration that the disputed land was held on trust by W for R absolutely, to an order for its transfer to her, an account in respect of rents received and receivable by W in respect of the disputed land from April 2004 and to payment of the amount in the escrow account into which the rents were, by agreement, paid from or shortly after the commencement of the claim [49].
Once the 1992 declaration of trust had been executed and backdated, it plainly supplied the trusts on which (at least) the central part was transferred, but they were different from the 1983 trusts. To the extent that the 1992 declaration of trust purported to declare different trusts of the rest of the disputed land, it was ineffective. R was only 13 in April 1992. No approval of any variation was sought from the court nor was there any power to re-settle in the 1983 declaration of trust. Assuming that there never was any schedule to the 1992 declaration of trust, its recitals made clear what the intended subject matter of the trusts intended to be declared was. The only property at the Forge held by D and W as trustees as a result of their holdings prior to 1989, the 1989 and 1992 deeds of exchange was the disputed land. Thus, from 1992 D and W held the disputed land until D’s death on trust for R [25] and thereafter legal title (as trustee) passed to W not as part of D’s residuary estate, but by survivorship. There was a valid trust that continued with W as sole trustee after D’s death.
W’s claim that she did not know about land being held for R at 25 was not acceptable since there was evidence from witnesses including R that W herself had told them about R’s entitlement at 25. Nor would W have signed documents over the years without any knowledge, however vague, of their contents. However, W did not know that the trust in favour of R required her to accumulate and pay to or keep for R rents arising from the disputed land before R’s 25th birthday. All W knew was that, from then on, parts of the rents arising from the Forge, which she thought had passed to her on D’s death, were to be paid to R [38].
W was liable to account to R for rents received from tenants of the disputed land from 2004, when R reached 25 years of age, but was entitled to relief under section 61 in respect of the period between her husband’s death and 2004 [47]. In relation to the later period, when W acknowledged that she knew of R’s entitlement and that it arose under a trust, it was incumbent upon her to ascertain, if she did not know, the precise basis of R’s entitlement, if necessary by asking the family’s long-term solicitors, for which purpose it was her duty to show them the copy of the 1992 declaration of trust which she had at her home. It was not the act of a reasonable trustee simply to give R that part of the rent which she thought she could afford. By contrast, during the earlier period, W knew only that R had a forthcoming entitlement on reaching 25. She had been allowed to think that she had inherited the disputed land from D as part of his residuary estate, and it was just about reasonable for her to do nothing by way of accounting for rents, or by way of enquiring more precisely as to the nature of R’s forthcoming entitlement, prior to R reaching 25 [48].
JUDGMENT MR JUSTICE BRIGGS: Introduction – the issues [1] This judgment resolves preliminary issues in a claim for breach of trust by Rebecca Iles against her mother Margaret Iles, relating to land in Darlington forming part of the Forge Industrial Estate (the Forge). It is common ground that, following the death of Robert Iles, the …Continue reading "Iles v Iles [2012] EWHC 919 (Ch)"