Keeling v Keeling & anr [2018] WTLR 173

Analysis

Ellen Exler died intestate at the age of 91 on 12 November 2012 (the Deceased). Her residuary estate passed on her intestacy to her surviving brothers, Stephen Keeling (Stephen), Frank Keeling (Frank), and to the children of her late sister, Lilian Walker, in equal 1/3 shares. Virtually the whole value of the estate was represented by the Deceased’s home, Hadley House. A grant of letters of administration was issued to Stephen alone on 22 March 2013. On 27 March 2013 Owen Kenny, solicitors instructed to act in the administration of the estate, wrote to the beneficiaries, other than Stephen, claiming that Hadley House was not an asset of the estate on the basis that it had been given by the Deceased to Stephen as a deathbed gift. Stephen subsequently purported, in his capacity as personal representative, to assent Hadley House to himself and his wife, following which the property was registered in their joint names.

A General Power of Attorney was entered into by the Deceased in Stephen’s favour on 12 September 2013 (the GPA). There was medical evidence that, on 24 July 2012, the Deceased did not have capacity to manage her financial affairs.

Frank, by a litigation friend, commenced proceedings claiming various heads of relief including: (a) an order setting aside the alleged deathbed gift; (b) a declaration that Hadley House was held on the statutory trusts arising on the Deceased’s intestacy; (c) an order replacing Stephen as personal representative; (d) an order for accounts in Stephen’s capacity as personal representative, and in relation to his dealings under the GPA on the basis that the power was ineffective due to the Deceased’s incapacity.

Held:

1. 1) The Court of Appeal in King v Dubrey [2016] Ch 221 had held that there were three clear requirements to constitute a valid deathbed gift:
   1. a) The donor contemplates his impending death;
   2. b) The donor makes a gift which will only take effect if and when his contemplated death occurs. Until then the donor has the right to revoke the gift; and
   3. c) The donor delivers dominion over the subject matter of the gift to the recipient.
2. 2) The claim that there had been a deathbed gift was hopeless. The legal validity of a deathbed gift represented an exceptional principle, the requirements of which, even on Stephen’s case, the facts came nowhere close to satisfying.
3. 3) In his witness statement Stephen claimed that the Deceased had, in May 2012, stated that she had the title deeds to Hadley House in a box, and she wanted Stephen and his wife to have them. The Judge did not accept that the Deceased had ever made such a statement. A number of inconsistent versions of the alleged deathbed gift had been given. There was no mention of such a gift until Owen Kenny’s letter of 27 March 2013. Nor did the Deceased tell anyone, including two solicitors taking testamentary instructions from her, about the gift in the months before she died. Stephen had told one of those solicitors that he thought the Deceased would favour him in a will. That comment was entirely inconsistent with an understanding by Stephen that Hadley House had already been given to him. Stephen told the same solicitor that he had the deeds and shortly thereafter gave them to the solicitor for safekeeping. There was no suggestion that they were given for any other purpose.
4. 4) Even if the conversation alleged by Stephen had taken place in May 2012, the requirements of a deathbed gift were plainly not satisfied. In May 2012 the Deceased had suffered a heart attack, but was not hospitalised. She survived for a further six months. She did not in May 2012 “have good reason to anticipate death from an identified cause”. In any event, any “contemplated” death in May did not occur: the Deceased recovered so any gift would have lapsed.
5. 5) In the light of the Judge’s findings of fact, there was no need to consider whether the “dominion” issue was satisfied, nor whether the Deceased had capacity to give such a significant gift.
6. 6) Stephen should not have been permitted to act as sole personal representative, when his interests were diametrically opposed to those of the beneficiaries, given the obvious conflict.
7. 7) Stephen had profited from the estate, having stated in evidence that he had rented out Hadley House. All necessary accounts were directed from Stephen from the period when he became personal representative.
8. 8) The mental incapacity of a principal has the effect of terminating the actual authority of his agent. A power can no longer be exercised if the donor has lost the mental capacity to be a principal. On the basis of the medical evidence, the Deceased did not have capacity to deal with her financial affairs from 12 September 2013 when the GPA was executed, and Stephen could not be in a better position under the GPA. There was no Lasting Power of Attorney. However, it was not proportionate or necessary to order an account of Stephen’s dealings under the GPA as there was no evidence to suggest that this was used other than to pay the Deceased’s legitimate bills and expenses.

JUDGMENT Hollander J: [1] Ellen Exler (“Ellen”) was born on 6 December 1920. She had four siblings: Lillian Walker (“Lillian”), the claimant (“Frank”), Ernie, and the first defendant (“Stephen”). [2] In 1980, Ellen and her husband, Tom Exler, purchased Hadley House, Claypit Lane, Westhampnett, Chichester (“Hadley House”). Title to Hadley House remained unregistered throughout Ellen’s life and she kept …

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