Analysis
The claimants were practising solicitors and trustees of a trust created by the will of John Hine (T) who died on 4 January 1992. T had had four children. Two, Beryl Clowes and John Hine, were the third and fourth defendants. One, Philip Hines, pre-deceased T leaving two children, Judith Barlow and Janet Lomax, the first and second defendants. The fourth, Basil Hine, had survived T but died before the proceedings were issued leaving a widow, Barbara Hine, who was the fifth defendant.
T had been the sole freehold owner of the family farm, Brown Edge Farm. Clause 3 of his will devised his interest in the farm to his wife, the third defendant, and Philip Hines as tenants in common in equal shares. The third defendant’s and Philip Hines’ shares were subject to a proviso that they each pay within nine months of T’s death £15,000 each to Beryl Clowes and Basil Hine (ie both the third defendant and Philip Hines were to pay a total of £30,000). In the event that either failed to satisfy the condition was not satisfied, the defaulting son’s interest would instead go to Beryl Clowes and Basil Hines as tenants in common in equal shares.
The third defendant failed to satisfy the condition, and his interest therefore passed to Beryl Clowes and Basil Hine. Having pre-deceased T, Philip Hines was unable to satisfy the condition, and his children did not satisfy it either. The time for satisfying it expired on 4 October 1992.
On 23 January 1992, solicitors for Philip Hines’ widow (C&H) had written to T’s executors’ solicitors (B&P) asking if her children had any interest in T’s estate, but there was no evidence of any response. The B&P did, however, send C&H a copy of the will under cover of a letter dated 5 July 1993, and on 31 October 1994 wrote to C&H stating their view that Philip Hines’ interest ‘is personal and lapses’. C&H wrote back agreeing that his share had lapsed. Philip Hines’ children were unaware of this correspondence and had no knowledge of the will (which was not made public until probate was granted on 27 April 1995).
The claimants sought directions from the court concerning whether or not the gift to Philip Hines had failed completely (so that the share fell into residue and therefore passed to T’s widow), or whether it only failed due to failure of the condition so that it passed to Beryl Clowes and Basil Hine.
The parties agreed that the first and second defendants had succeeded to Philip Hines’ interest in the farm due to the operation of s33 Wills Act 1837. The first and second defendants, however, argued that they were not bound by the condition, or that alternatively they were relieved from the need to comply with it due to their not knowing about it.
There were also two subsidiary issues. First, the fourth defendant had continued to occupy the farm after T’s widow’s death as the sole surviving partner of the family farming partnership and failed to pay rent. Notice to quit was served on him in December 2003, after which he made a small payment in 2003. He eventually vacated in 2015. The claimants argued that the outstanding rent should be deducted from his share of the estate.
Secondly, the farm had had a milk quota of 472,245 litres, allocated equally between T (as freeholder) and the partnership (as tenant). 75,000 litres were sold in January 1997 for £50,669.85 at a time when T’s widow and the fourth defendant were the partners. The proceeds were used to reduce the partnership overdraft, so that the partnership benefited at the expense of T’s estate. A further sale took place in 1997 or 1998 raising £26,149 which was also used to reduce the overdraft, though it was unclear if this took place before or after the death of T’s widow. If it was after her death, under the terms of the partnership agreement only the fourth defendant would have benefited at the expense of T’s estate. The question arose as to whether the milk quota owned by T’s estate passed to the widow as residuary legatee, or whether it passed under the gift in clause 3 on the basis that the quota was attached to the land.
Held (allowing the claim):
Did s33 Wills Act 1837 apply?
The parties were correct to agree that s33 Wills Act 1837 applied to Philip Hines’ interest in the farm. To displace the provision of s33, it is necessary that the will shows an intention that it should not have effect (applying Hives v Machin [2017] WTLR 983). Any contrary intention must appear by the will and not by reference to some extraneous factor. Thus, the fact that T’s widow’s contemporaneous will did contain a express substitution provision was irrelevant.
Nature of the condition
The condition in cl 3 was properly analysed as a condition subsequent. This was because, if a condition to a testamentary gift is capable of operating as either a condition precedent or condition subsequent, the court will prefer the latter construction (applying re Greenwood [1903] 1 Ch 749).
Did the condition apply to the interests of the first and second defendants obtained by operation of s33 Wills Act 1837?
A substituted beneficiary under s33 Wills Act 1837 is subject to the same contingency as his parent would have been (applying Ling v Ling [2002] WTLR 553). The fact that Ling concerned a class gift was not a good ground to distinguish it. Where a testator intends a gift to be subject to a condition subsequent, and the gift is saved by s33 Wills Act 1837, the ‘clear rationale and effect’ of s33 is to impose the same condition on the substitute beneficiary. A contrary interpretation would be an excessive, intrusive, and unwarranted interference with testamentary freedom. Having regard to the wording of s33, it was difficult to see why the conditions should not apply and it would seem odd for the first and second defendants to take the gift shorn of the condition.
Should compliance with the condition be excused because the first and second defendants were unaware of it until it was too late to satisfy it?
In deciding whether a condition should be disapplied due to impossibility of compliance, the principle to be applied is that stated by Roxburgh J in re Jones [1947] 2 All ER 716 at 718: unless the testator has said so ‘in words plain beyond peradventure’, he should not be taken to intend to allow the omission of trustees to do what he has told them to do to prejudice one beneficiary in favour of another.’ This principle had no application because the trustees were not obliged to inform the beneficiaries of cl 3 or the terms of the conditions. Watson v The National Children’s Home Co [2001] WTLR 1375 was authority for the proposition that where a condition is ‘spent’ (because the subject of the condition no longer exists) the gift takes effect free from the condition, which also did not apply to the present case.
The fact that the first and second defendants had not ‘refused’ or ‘neglected’ to the satisfy the condition was irrelevant given the wording of the gift (distinguishing re Quintin Dick [1926] Ch 992). Ignorance of a condition is no excuse for not fulfilling it (applying Astley v Earl of Essex (1874) LR 18 Eq 290). Neither is a legatee entitled to notice of the condition unless the terms of the condition expressly provide that an interested party is to give him notice (applying re Hodge’s Legacy (1873) LR 16 Eq 92).
Relief from forfeiture
While there was no counterclaim for relief from forfeiture, the court accepted that Simpson v Vickers (1807) 14 Ves Jnr 341, 33 ER 552 is authority for the proposition that there is no power to grant relief from forfeiture under a condition subsequent where there is a gift over to someone other than the person who would take by operation of law.
Deduction of rent from the fourth defendant’s share of the estate
The court agreed to the claimant’s ‘pragmatic approach’ of deducting the fourth defendant’s rent. While the claim to payment of rent was time-barred by s19 Limitation Act 1980, and the claim to mesne profits by s2
Limitation Act 1980, this barred the remedy, not the right. The claimants were therefore entitled to deduct the rent from his share as part of an accounting process.
The milk quota
A milk quota generally attaches to and runs with the land (Harries v Barclays Bank [1997] 2 EGLR 15 applied). This approach applies to a gift of farmland in a will (Crossley v Armour [2008] NiCh 4 applied).
It was for the claimants, in consultation with the beneficiaries, to take a pragmatic view on the prospects of recovering any sums by which the fourth defendant had benefited at the expense of the others.
JUDGMENT HHJ HODGE QC Introduction [1] This is my considered judgment on the trial of a Part 8 Claim issued in London on 17 July 2018 and transferred to Manchester by Order of Master Clark dated 27 January 2019. It raises two interesting and difficult questions on the law of wills: (1) Where issue succeed …Continue reading "Naylor & anr v Barlow & ors [2019] WTLR 981"