Taylor v Fairbairn

This case concerns the estate of George Taylor, who died on 10^th June 2004 aged 78. He had 2 daughters, Nichola and Jane, who are (respectively) the Claimant and Defendant before me. They were named as executors and trustees under the deceased’s Will dated 16^th January 2003.

.By his Will the deceased left the whole of his estate on trust “to sell call in and convert into money such parts as do not consist of money but with full power to postpone doing so for as long as they think fit” and to hold the same for his 2 daughters in equal shares. The Will also provided for the standard provisions of the Society of Trust and Estate Practitioners (1^st edition) to apply with the deletion of clause 5 and section 11 of the Trusts of Land and Appointment of Trustees Act 1996. I shall call these standard provisions the STEP provisions.

The STEP provisions provide amongst other things as follows:

“3(2) Management

The Trustees may effect any transaction relating to the management administration or disposition of Trust Property as if they were beneficial owners. In particular:

(a)

The Trustees may repair and maintain Trust Property.

(b)

The Trustees may develop or improve Trust Property.”

The main issue concerns the deceased’s former home at 2, Chadworth Avenue, Dorridge (“the Property”). The issues in summary are:-

The Claimant lives in Spain with her partner Mr Lorman.

The Defendant now lives in Solihull and has two teenage children from a former marriage. At the date of the deceased’s death, she was recently divorced and was living at the Property with her 2 children.

The Defendant moved into the Property on 12^th May 2004. At this time, the deceased was in a nursing home following a series of strokes and it was not known whether he would return, though it was his repeated wish to do so. Sadly, he died the next month.

The Defendant claims to have moved in with the blessing and consent of both her father and the Claimant. This is disputed by the Claimant. I shall now consider the rival versions. First, though, a few words about the witnesses.

The Claimant spoke with great conviction. Unfortunately, I did gain the strong impression that her evidence was coloured by the considerable enmity she felt towards her sister. As to the Defendant, there was no love lost between her and her sister either. However, I do not think she allowed those feelings to colour her evidence to the same extent. Despite that difference, I think they were both trying in the main to help me, though, in the case of the Claimant, she was (perhaps unconsciously) on occasions trying to persuade me of a version of events which she would have preferred rather than that which she actually recalled.

Both sisters exhibited one other tendency. Their recollections of events which occurred at or approaching their father’s death were understandably different and may have been distorted by the emotional impact of their father’s final illness upon each of them. Different things stood out in their minds which the other had either forgotten or never regarded as significant. The reaction of each of them was however to challenge any recollection the other may have had of events which did not form part of their own recall, and to exaggerate the significance of incidents which they did recall. This created the impression that there were significant conflicts of evidence when there may simply have been different recollections of events common to both. I have borne this in mind when evaluating the evidence. Even making due allowance for this tendency, there remain conflicts which I have to resolve, and which cannot easily be explained away as mere differences of recollection.

Mr Lorman, the Claimant’s partner, was of limited help when it came to dealing with what passed between the sisters. I was surprised at this, as he has been understandably close to the Claimant throughout and was present at some discussions, giving evidence about them in his witness statement. I felt that what he claimed to recall was directed towards helping his partner’s case. On one matter (the alleged waiver of a loan mentioned below) his evidence was I find unreliable.

A friend of the deceased, Derek Morris, also gave evidence. His evidence gave some useful insights into the deceased’s thinking. He was however obviously on the Defendant’s side, and I approach his evidence with some caution for that reason. I do not think it would be right to regard him as a wholly independent witness. Nevertheless, I do think he was trying to help me, though the glee with which he relayed what he claimed were the deceased’s disparaging comments about the Claimant and her partner at the golf club was unattractive.

I return then to consider my findings.

The Defendant had in 2003 and 2004 for some time been going through divorce proceedings. She had expected to be awarded (and was awarded) a substantial capital sum, but also had to vacate the matrimonial home by September of 2004. This was known by February 2004.

The deceased was very concerned over the Defendant’s future and discussed it with her, the Claimant and Mr Morris.

In 2003, the deceased had considered the possibility of moving out to Spain. I accept the Defendant’s evidence that she was also considering such a move for herself and her 2 children, though this would not happen until one of her children had finished a GCSE course in the summer of 2004. There was also (I find) serious talk at this time of her lending £100,000 to the Claimant and her partner to enable a basement area of their Spanish property to be converted into a separate residential unit for the deceased’s use. This was hotly contested by the Claimant, who claimed to regard the idea of her sister ever lending any money to her as preposterous. Had the deceased moved to Spain, he would (the Claimant said) have lived with her and Mr Lorman, as they had ample room for him without converting the basement. The Defendant however explained that her father was not an easy man to live with (though she clearly loved him) and would have needed his own space. I found this credible evidence. I also formed the strong impression (both from the Defendant’s evidence and that of Mr Morris) that the deceased was not particularly fond of Mr Lorman. This evidence was corroborated by the admitted failure of Mr Lorman to repay a loan of £20,000, which can hardly have endeared him to the deceased. I therefore think it is likely that the deceased would have preferred his own living quarters in Spain. I prefer the Defendant’s evidence in this respect, and find that the £100,000 loan for the purpose she states was indeed discussed in 2003. She did not have the money then, of course, but she expected to receive something of that order from her divorce (as in fact happened). However, the idea of the deceased moving out to Spain became impracticable following a severe stroke he suffered in January 2004, as a result of which he was no longer in a position to contemplate such a move.

Following that stroke, the 2 sisters (in January 2004) got the deceased to execute a Power of Attorney in their favour. This gave them access to their father’s bank accounts, one of which had approximately £25,600 in it. There was a shortfall of about £800 per month on his income and outgoings, so it was important that the deceased’s money should be available to meet that shortfall. The 2 sisters also considered the possibility of either selling or letting the Property to raise money to pay the outgoings. The idea of selling was dismissed more or less immediately. As regards the letting possibilities, an agent (Hunters) was instructed to consider the rental value. The letting proposal was not in the event proceeded with. According to the Defendant, the Claimant came up with the idea of the Defendant moving in so that she and her children would have a roof over their heads and so that the Property would be available for the deceased should he be able to move back in. She distinctly remembers the point being raised in her kitchen by her sister within a few days of Hunters being asked for advice. The Claimant denies that the suggestion that the Defendant should move in came from her, which happened (she says) without her consent.

For my part, I do not think there was ever a lasting intention to let the Property, though some furniture was moved out in case that should happen and there were (initially at any rate) serious discussions about it. The agents were given the keys but the property never was put on the letting market. The deceased, though in a nursing home, was known to want to come home. The chances of that happening in the immediate future were non-existent. However, his condition was subject to continual assessment, and a return home had not been ruled out. It made sense therefore for the Defendant to move in, both for her own sake and for the deceased’s sake, should he be able to move back. I therefore accept the Defendant’s evidence in this respect, including her recollection that the idea of her moving in originated with the Claimant.

I should not exaggerate the importance to the deceased of the Defendant moving in, as she was working for some of the week and had 2 children to look after. She was in no position to offer constant nursing care. Her father would however be much better provided for with the Defendant there than on his own, should he ever recover sufficiently to enable him to come home.

The Defendant received her lump sum from the divorce (around £200,000) in March 2004. Her plan was to carry out works of maintenance and improvement to the Property both for her and her children and (should he return) her father’s greater comfort. She discussed this with her father. I also find that this was discussed in general terms with the Claimant, who was in England in February and March. The Claimant claims not to remember this, but the Defendant does, and I prefer her evidence in this respect. The Defendant specifically recalls the Claimant suggesting the addition of a conservatory, though this suggestion was not in the event taken up. She also recalls in her witness statement the Claimant being unwilling to sanction modifications to the bathroom to make life easier for the deceased should he return. The fact that these matters were raised shows both that the Claimant knew of the Defendant’s plans to move in, and that the Defendant was considering spending money on the Property, though the extent to which the money to be used would be hers or her father’s (a substantial sum had by arrangement between the sisters been put into an account of the Defendant so that expenses could be met) was not wholly clear. I think the Claimant must have realised that some at least of the works would be paid for by the Defendant, as there simply was not enough cash available to the deceased for works of any substance to be paid for, leaving enough for his nursing care, and the Defendant was known to have secured a substantial divorce settlement.

The deceased was agreeable to the Defendant moving in and undertaking the works and was concerned only with whether or not what she proposed to do was affordable. The Defendant intended to pay for the works (she had just received her divorce settlement) and was able to reassure her father that they could afford them. The fact that the deceased spoke (as on the Defendant’s evidence he did) in terms of whether “we” could afford the works reflects the fact that he regarded this as some sort of joint enterprise.

I should perhaps add, lest I give the impression that the deceased favoured the Defendant, that the evidence is quite clear that he loved both his daughters, and thought it was very important that they should be treated equally during his lifetime and after he was gone. Both daughters knew that their father had left everything to them by his Will equally.

The Claimant’s evidence (supported in this respect by Mr Lorman) is that the Defendant told her some while after Hunters were approached (in April 2004 over the telephone, when the Claimant had returned to Spain) that she intended to move in. She gave the impression that this was the first she knew of the proposal, though I do not think this can be correct. The Claimant says her reply was that this was not affordable as the family needed money to pay the nursing home fees. The Defendant according to the Claimant said she would pay half the rent suggested by Hunters into the Claimant’s bank account. The Claimant says she was shocked by this suggestion and rejected it as this was treating her father as if he was already dead. The Defendant’s evidence is that this conversation simply did not take place.

I find myself unable to accept the Claimant’s and Mr Lorman’s evidence in this respect. The Claimant already knew of the Defendant’s plans to move in and had suggested it herself. There may well have been at some stage (probably much earlier, before the Claimant returned to Spain) some reference to the possibility of the Defendant paying rent, and the idea may have been mooted that half of the rent could be paid to the Claimant. There undoubtedly were concerns too over how the nursing home fees would be met, as the deceased’s available capital would not last indefinitely. However, the idea soon emerged that the Defendant would move in to the Property and carry out works of maintenance and improvement. The deceased agreed that the Defendant would live there rent free. The Claimant must have known this from the discussions to which she was privy in February and March and did not pursue the question of rent further. As to how the nursing home fees would be paid, the Defendant had received her divorce settlement and she told me that she would if necessary have spent every penny on her father. Whilst this was never likely to materialise in practice, I am satisfied that the Defendant would, had it proved necessary, have made her own funds available for her father’s nursing care. As it is, she did make her own funds available for the works which were carried out to the Property.

I should also add that the suggestion (if it was made) that half of the rent could be paid into the Claimant’s account was not in the circumstances as shocking as the Claimant and Mr Lorman made it out to be. The 2 sisters had already had £7,000 each from the deceased’s monies, which they were able to access because of the Power of Attorney they held. The Defendant’s evidence was that this was the Claimant’s idea, as it would help to reduce Inheritance Tax. However that may be, the fact that the sisters proceeded in this way is somewhat at odds with the proposition that the Claimant was shocked by the idea that half of the rent should be paid to her direct. She and her sister had done exactly the same with part of the deceased’s capital.

Both the Claimant and Mr Lorman say that Hunters had advised that the letting value was at least £1600 per month, but no-one from Hunters was called to verify this. The Defendant denies that this figure was the one put forward by Hunters. She says it was a lot less but cannot remember precisely what the figure was. I do not accept that Hunters put a figure of this magnitude forward at that stage, or that this figure represented the true letting value in May 2004. By way of contrast, the expert evidence in this case says that the letting value of the Property (unfurnished) at the material time was £1,250. There is no evidence of any additional rental value attributable to any furniture which was there. Whilst I would assume it had some value, the best of it appears to have been removed (though the evidence does not reveal where) and in the absence of other evidence I regard £1,250 per month as a reliable figure for the letting value of the Property in May 2004 (when the Defendant moved in).

I am satisfied that the Defendant moved in with the deceased’s full consent. I also accept the Defendant’s evidence that the deceased considered changing his will as he did not want Mr Lorman to benefit (which he presumably saw him doing as the Claimant’s partner). The Defendant dissuaded him from that course. What the deceased did do was ask Mr Morris to have a document drawn up recording his wishes. Mr Morris had a document prepared by solicitors. The document when executed was dated 29^th April 2004 and was witnessed by Mr Morris. It came to be known in evidence and argument as the Letter of Wishes. It was in the following terms:

“TO WHOM IT MAY CONCERN

I George Herbert Taylor of 2 Chadworth Avenue Dorridge

State that it is my wish for my daughter Jane Fairbairn and her two sons James and Alastair to live rent free in my property at the above address until such time as Alastair reaches the age of 18 or until such time that an alternative amicable arrangement has been mutually agreed between Jane and my other daughter Nichola”

I am satisfied that the Letter of Wishes accurately records the deceased’s actual wishes. The evidence is that, although frail, he was well able to understand what he was doing. Indeed, all Mr Morris did was have a document drawn up which recorded the wishes that the deceased had, without any prompting, revealed to him. It is nevertheless common ground that the Letter of Wishes has no effect in law. The Defendant only knew about it when Mr Morris told her (on 29^th April) when they were travelling together to the nursing home that he had had it drawn up. Mr Morris read it over to the deceased in her presence and it was signed and witnessed (in triplicate) there and then. The Claimant did not see or know about it until much later (January 2006). Ultimately, the document is irrelevant to anything I have to decide, save to confirm that the deceased consented to the Defendant moving in to the Property.

I also find that there was another (later) telephone conversation on 11^th May 2004 between the 2 sisters on the eve of the Defendant’s moving in, when the Claimant offered to help with the move. The Defendant, who was preparing to move in the next day, observed that it was a bit late to offer help. The Claimant also mentioned the loan of £100,000 and the Defendant told her it was no longer coming, as a move to Spain for the deceased was now out of the question. The Defendant remembers hearing Mr Lorman’s voice in the background and was under the impression that he was orchestrating the call.

I accept the Defendant’s evidence on this point. The telephone conversation made an impact on her as she was struck by the oddity of her sister (then in Spain) offering help with a move the next day. Moreover, the mention of the £100,000 loan was another oddity which stood out in her mind, given that it would obviously not now occur. Both of these oddities might, of course, indicate that the conversation did not take place. However, the Defendant’s evidence was credible on this point while the Claimant’s and Mr Lorman’s was not.

The Claimant did not deal with this telephone conversation in her witness statement, and denied it when it was put to her (though at first she merely said that she could not remember it). She also said that the conversation would not have taken place as the Property was to be let (which must, if the denial of the conversation is to be supported by this observation, mean let to a third party). I have already found that the letting proposal was not pursued, and the Claimant knew this. Moreover, the Claimant’s awareness that the Defendant moved in to the Property as her home is confirmed by the fact that she asked to stay there a month or so later for the funeral, but the Defendant declined this request. Mr Lorman for his part declared the Defendant’s evidence about the telephone conversation to be “nonsense”, but on this aspect of the case I find his evidence was coloured by the strength of his feelings of support for his partner (the Claimant). It may be that neither of them remembered this particular conversation, but the Defendant did, and I believe her.

What this telephone conversation does show is that the Claimant knew that the Defendant was then about to move in to the Property and she neither objected, nor suggested that rent should be paid.

Similarly, after the deceased’s death, the Claimant did not object to the Defendant’s occupation of the Property, nor was rent demanded until the Letter before Action in January 2006. By July 2004, the Claimant’s solicitors were writing to the Defendant about obtaining a grant, and the letters were addressed to her at the Property.

The Defendant had taken possession of the Property on (as I have noted) 12^th May 2004 and immediately undertook works of maintenance and improvement, both before and after her father’s death. She spent approximately £28,000 in total. About £11,500 of this was according to the Defendant spent after his death; the rest before. Most of the work was planned before his death. The works were not sanctioned by the Claimant, though (as I have held) she was aware that some such works were likely to be undertaken, but knew nothing of the details.

I should for the sake of completeness record that after the grant was obtained, both parties recorded in correspondence their respective cases as to the circumstances in which the Defendant moved in to the Property and carried out the works. See, for example, the letter dated 15^th June 2005 from The Wood Glaister Partnership (“Wood Glaister”) to the Claimant’s solicitors, and the reply dated 7^th July 2005. Whilst the Claimant maintained that she at no time consented to the Defendant residing at the Property, or to the works that were carried out, she did not through her solicitors or otherwise seek possession or rent until the letter of 5^th January 2006 to which I have referred.

There was some delay in obtaining a grant, as the sisters endeavoured to agree various matters arising in that connection. No-one has suggested that this gives rise to any cause of action on the part of either sister. Either of them could have applied at any time for a grant in her own name, with power reserved to the other to apply for the like grant. This would not have been very sensible, however, so the sisters did eventually proceed jointly to apply, and the grant was ultimately obtained on 28^th April 2005.

One particular matter arose during the course of applying for the grant which I should mention. Inheritance Tax was due on the deceased’s estate which, if paid in full at the outset, would have to be recouped from the estate, which in practical terms meant (in all probability) from the sale of the Property. The executors did however have the option of paying by instalments, which would result in a charge to interest. The Defendant had ample resources with which to pay the Inheritance Tax in full, and offered to do so, by letter from her solicitors dated 23^rd December 2004, on terms that she would be reimbursed at the earliest opportunity from the estate. The letter continued:

“Presumably [the Claimant] would have no objection to the same on the basis that this would avoid the incurrence of additional interest, but please clarify the position in writing.”

The Claimant declined this offer, insisting instead on the instalment option. The Defendant reluctantly went along with this alternative. Ironically, she ended up paying some of those instalments, with her sister agreeing to her recoupment from the estate. The result was that avoidable interest charges were incurred as a result of the Claimant’s refusal of an interest-free advance.

A copy of the grant was forwarded to the Claimant’s solicitors under cover of a letter from Wood Glaister (who had acted for both executors in obtaining the grant) dated 6^th May 2005. Following the grant, the parties embarked upon discussions concerning the estate and the Property in particular. There were initial skirmishes over Wood Glaister’s fees. Then on 15^th June 2005, Wood Glaister suggested that the parties should jointly obtain a valuation, and suggested 2 valuers. They also stated that the Defendant’s intention was to acquire the Claimant’s interest in the Property subject to affordability.

By a letter dated 22^nd June 2005 to Wood Glaister, the Claimant’s solicitors stated that she wished to instruct agents immediately to obtain valuations with a view to the disposal of the property. They also stated that on receipt of those valuations the Defendant could obviously purchase the Claimant’s interest. They ended by asking Wood Glaister to advise the Defendant that she would be contacted by agents shortly. The agents instructed to advise were in the event neither of the firms previously suggested, but other reputable agents, namely Messrs Hunters. They reported on 14^th July 2005, recommending placing the property on the market at £420,000 and advising that a figure within the region of £405,000 - £410,000 was achievable. Another letter of the same date from Hunters to the Claimant recorded the Claimant’s intention to instruct Hunters to place the Property on the market at £429,950, which was more than Hunters were advising was the appropriate asking price. It does not appear that the Claimant discussed this with the Defendant. It was not agreed between them.

According to a letter dated 25^th July 2005 from the Claimant’s solicitors, the Defendant had by then expressed her unwillingness to proceed and threatened proceedings for her removal as executor.

According to the P.S. to Wood Glaister’s letter of 26^th July 2005, the Defendant’s objection was to the Claimant seeking to instruct Hunters without reference to her. The Defendant wished to instruct one or 2 further agents and then consider which agent ought to be instructed. Wood Glaister said that this was not unreasonable, and I agree. I also do not think it is fair for the Claimant to complain of the Defendant’s declining to market the Property at a price higher than Hunters had recommended. The only proposal from her at that stage was to do just that.

The Claimant did not come back on the suggestion to take further valuation advice. Nor did she suggest marketing the property at the asking price recommended by Hunters. Instead she made an offer through her solicitors to acquire the Defendant’s interest in the Property based upon a valuation of £420,000.

It should be noted that this was not an offer to purchase the Property for £420,000. It was an offer to purchase the Defendant’s interest based on that value. Strictly, the Defendant did not have an interest in the Property as such, as the estate remained unadministered because of the outstanding Inheritance Tax if for no other reason. She had an interest in the unadministered estate.

It was of course no part of the Defendant’s duty as executor to respond in any particular way to an offer to purchase her share. That is something she could accept, or reject, for any reason, as the person beneficially entitled to that share. Had the Claimant offered to purchase the Property for £420,000, the Defendant would, in the light of Hunters’ advice, have prima facie been bound to accept it. But that was not the offer. As moreover the offer (properly understood) related to her share in the unadministered estate, she responded (as she was entitled to do) with a counter-offer which sought to deal with other matters arising in the administration. When that counter-offer was not accepted, she accepted the Claimant’s offer in principle (by her letter dated 25^th September 2005) but this was again conditional on other matters arising in the administration being resolved. The Claimant for her part (by her solicitors’ letter dated 29^th September 2005) insisted that the Property be dealt with as a separate issue, but this was, for the reasons I have given, an erroneous approach, as the offer was not for the Property as such, but related to the Defendant’s share in the Property, which she then only had as a share in the unadministered estate. It was therefore reasonable of the Defendant to try to resolve other matters relating to the administration of the estate at the same time. In any event, there can be no legal basis for suggesting that the Defendant acted in some way in breach of her duty as executor by approaching the Claimant’s offer for her share in the way she did.

A major complaint of the Claimant is that the Defendant refused or failed to progress a sale of the Property with the result that the estate was kept out of its money to its detriment for longer than should have been the case.

My finding is that down to 29^th September 2005 (the Claimant’s rejection of the conditions upon which the Defendant was willing to sell her share) there is no delay that can be laid at the door of the Defendant. She had co-operated in giving agents access, and the reason the Property was not marketed at the price they recommended was the Claimant’s wish to instruct them to market the Property at a higher price, and the ensuing discussions for one sister or another to purchase the other’s share.

Thereafter, matters seem to have gone strangely silent on the issue of sale until the Letter before Action of 5^th January 2006, which unequivocally complained of the failure to sell. This was put on the basis of a breach of the trust for sale imposed by the Will. This may technically be wrong as the Defendant had not yet become a trustee, the estate not having been fully administered. Nevertheless, as executor, she, in common with her sister, was under a duty to realise and administer the estate with all due despatch.

I do consider that the Property should have been sold within a reasonable time of the breakdown in negotiations at the end of September 2005. However, that required the co-operation of both parties and, down to the Letter before Action in January 2006, there is no suggestion that the Claimant was then pressing for a sale. On the contrary, the Defendant by her letter dated 12^th October 2005 to the Claimant’s solicitors asked her sister to contact her to resolve matters, but the Claimant chose not to do so.

Following the letter of 5^th January 2006, I consider that the parties should have proceeded to a sale of the Property on the open market within a reasonable time and that the Defendant was in breach of duty in failing to progress a sale from and after January 2006. A reasonable time for completion of a sale would in my judgment have been 5 months, that is to say by the beginning of June 2006. In reaching this conclusion, I note that when the Defendant unequivocally agreed to marketing the Property by her solicitor’s letter dated 14^th September 2006, a “subject to contract” purchaser was found, at a price of £445,000, and the sale completed on 16^th February 2007. Accordingly, the period of delay for which the Defendant is responsible is a delay of a little over 8 months between June 2006 and February 2007.

It will be noted that the price which was achieved on a sale in February 2007 (£445,000) was significantly higher than the price Hunters advised was achievable 19 months earlier (in July 2005) of £405,000 - £410,000. This reflects the well-known fact that the property market was moving upwards consistently throughout that period (the value in the Inland Revenue account as at the date of death was said to be £380,000). If (as I think it is appropriate to do) I take the mid-range figure of £407,500 as the July 2005 valuation, the rise in value until sale is £37,500. In the absence of other evidence, I consider it appropriate to apportion the increase in value over the period of 19 months (though I can see an argument that it would be fairer to apportion it over the period until the subject to contract offer was made). Apportioned over that 19 month period, the value as at June 2006 (when I have found the Property should have been sold) was in the region of £430,000. This may well be an over-estimate as the apportionment I have applied has been (roughly) the same amount each month, and a straight-line calculation would be weighted slightly more towards the end of that period. This way of approaching the matter is therefore if anything to the Claimant’s advantage. Even on that basis, the result of the delay is that the Property increased in value by £15,000 during the period of delay. It follows that for the Claimant to recover compensation for the estate (or herself) based on that period of delay, damage in excess of £15,000 must be shown. For the reasons which I now mention, the Claimant has not proved anything like that amount of damage over the period in question.

It would strictly speaking be sufficient for me to find that the Claimant has not satisfied the burden on her of showing that the loss to the estate exceeds any increase in value attributable to the period of delay. My rough calculation of the increase in value gives me comfort in reaching that conclusion, but may strictly be unnecessary.

The damage is pleaded under the following heads:

It follows that the Claimant has failed to establish recoverable loss attributable to the delay for which the Defendant is responsible, and her claim under that head must be dismissed.

Her next claim is in respect of an occupation rent. As mentioned, the Defendant accepts that she is liable in respect of the period following the Letter before Action of 5^th January 2006, but not before.

The issue I have to decide therefore is whether the Defendant is liable to pay an occupation rent for all or any of the period between 10^th June 2004 and 5^th January 2006. In my judgment, she is not so liable.

The first basis for this claim is that the Defendant was a trespasser from the outset. It is pleaded that she went into occupation of the Property without the consent or authority of the deceased, and without the consent of the Claimant. I have already found that the initial occupation was fully authorised, so this claim fails. Quite what the consent of the Claimant has to do with the case as regards occupation prior to the deceased’s death is not clear, but she consented anyway, indeed suggested it in the first place. There may have been some passing reference to rent at some stage, but this was not pursued, and the Defendant lawfully went into possession on a rent-free basis. The Claimant knew this and did not dissent. It may be said that she was not in a position to dissent. However, this ignores the factual reality that the important decisions for the deceased were, at least initially after his January 2004 stroke, taken by his daughters, though he was consulted more as his health showed signs of improvement.

It is then said that the licence given by the deceased to occupy the Property was terminated by his death. That is correct in law, but that did not without more make the Defendant a trespasser. Were she a trespasser, she would of course be liable to pay the equivalent of rent as mesne profits. By the date of death, however, the Defendant was in possession. Trespass is an interference with possession, and the situation was similar to that of a tenant holding over after termination of a lease. The tenant remains in possession and a demand for possession (or, its practical equivalent in the present circumstances, rent) is necessary to establish a right in the owner to sue for trespass: see the current edition of Halsbury's Laws of England, TORT (VOLUME 45(2) (REISSUE)), para 508.

The position is similar where a licensee is in possession. In  Lake v. Campbell (1862) 5 L. T. 583, 584, Erle C.J. said in relation to a licensee (an employee whose contract of service carried with it the occupation of a house but whose contract had come to an end):

Williams J. in the same case said:

Each citation demonstrates the need for the defendant (in that case) to demand possession before the plaintiff became a trespasser, even though he had no subsisting right to be there.

The Claimant as executor could have demanded possession or rent at any time, but did not do so until 5^th January 2006. The Defendant can not therefore be regarded as a trespasser before that date. She was the person in unchallenged possession until then. That possession was tolerated and acquiesced in by the Claimant, and initially encouraged. Although that encouragement was before the deceased’s death, and before (therefore) the Claimant had any status as executor, the history before death is relevant in demonstrating that the Claimant knew and approved of the Defendant’s possession, though she did come much later to deny (wrongly) that she had ever agreed to it.

It is said that the Defendant acted in breach of duty as executor by remaining in unauthorised possession of the Property following her father’s death. That seems to mischaracterise her possession. She remained in possession because her sister did nothing to require possession to be given up or payment of an occupation rent, but continued to recognise a state of affairs which she had herself initially suggested. As the Claimant was the only other beneficiary as well as one of the executors, the Defendant’s continued possession was not wrongful as against her, as she acquiesced in and tolerated the state of affairs of which she now complains.

For similar reasons, I cannot regard this as a case where the Defendant has profited from her position as executor. She did not remain in possession because of any power she exercised as executor but because her sister, co-executor and co-beneficiary acquiesced in and tolerated her continued possession.

These conclusions might well be different if the Claimant had taken possession wrongfully as executor, or had there been other beneficiaries who did not acquiesce in the Defendant’s possession, but that was not this case.

Finally on this part of the case, I should record that I was referred to the principles of equitable accounting as between co-owners, as exemplified in cases such as In re Pavlou [1993] 1 W.L.R. 1047 and Byford v Butler [2003] EWHC 1267 (Ch). It is well-established in such a case that the court has a discretion as to when to require one party to pay an occupation rent, which depends on the circumstances. Those cases are of no application here. A co-owner has a right to occupy the property until sale, so the other owner cannot turn him or her into a trespasser simply by the expedient of a demand. Here, the Claimant could have done exactly that, and there is no need to pray in aid principles of equitable accounting, which apply only as a means of adjusting the parties’ shares on a sale. Had the Claimant made an earlier demand, the right to rent (either as an account of profits or as mesne profits) would have arisen as a matter of right. Moreover, the parties’ interests were, as I have said, at the relevant time in the unadministered estate, not as co-owners. They were not beneficiaries under a trust of the residue until after sale. By that time, the Property was necessarily sold.

I accordingly rule that no rent is payable by the Defendant prior to 5^th January 2006.

I now turn to consider the Defendant’s claim for recoupment from the estate for the works she carried out.

As regards the works carried out prior to the deceased’s death, there is no basis for any claim against the estate. The Defendant’s evidence was that she intended to carry out these works at her own expense, and it never occurred to her to ask her father for a contribution. She realised she was improving his property, but that did not matter. She was undertaking the works partly for her own advantage and partly because she loved her father. That is an honourable sentiment, but does not lay the foundation for a claim based on implied contract or unjust enrichment. In my judgment, the claim in respect of works carried out before the deceased’s death fails.

The works carried out after the death are different. Under Clause 3(2) of the STEP provisions, these were works which the Defendant had authority as executor to carry out. I do not imagine the Defendant gave much thought to the question of recoupment at the time, as she was committed to carrying out most of the works in her own mind as the Property needed improving. She was moreover living there, and (it was said) the works cannot be attributed to her character as executor. I do not think any of that matters. The fact is that she continued with the works and was an executor with authority to act in that way. She could have discontinued them. The fact that she was in possession in a personal capacity is irrelevant. Had (for example) she had a Lease and therefore enjoyed possession in a personal capacity (but without having given any repairing covenants) I do not see why works of repair should not be recoverable from the estate by virtue of her authority under the STEP provisions, despite the fact that the estate would not be in possession. The present case is no different in principle. The works were for the benefit of the Property. The evidence is that the enhancement to the value was significantly greater than the cost of the works, though there is a suggestion that the kitchen works may have been overpriced. Given, however, that the enhancement to the value was greater than the cost, I do not think it would be right to disallow the Defendant the right to recoup those costs, if otherwise proved.

The work undertaken after the death is said to have totalled in amount £11,524.72. The kitchen costs are claimed in the sum of £8,000 but I have only seen receipts for £7,000. The estimates totalled £7,600. I accept that additional cash payments were made but do not feel sufficiently confident in the surprisingly round figure of £8,000 in total to allow the whole of the excess over £7,000. Given that the estimates totalled £7,600, I shall allow that sum in total. The evidence is that this work was in fact completed.

An amount is claimed for a Gas Fire in the sum of £2,150. It appears that the Order was placed on 29^th April 2004, and a deposit of £250 paid then. However, the balance was paid in November 2004. The Prep Work was due to begin in May 2004. I am not satisfied that I can regard this as work undertaken after the death, and disallow the whole of the amounts claimed, including the balance of £1,904.50 paid in November 2004.

3 invoices for Toops Tiles are claimed for the month of January 2005 totalling £252.22. These are allowed. All other tile invoices pre-date the death.

Decoration costs of £2,000 are asserted to have been incurred, of which £1,000 are said to be attributable to the period after the deceased’s death. The evidence is that the whole property was redecorated between May and July 2004 at a cost of £2,000. The Property consisted of 4 bedrooms, 2 bathrooms, a large drawing room, kitchen and utility room. I doubt whether the kitchen is included in the total of £2,000 attributed to decoration works, as the kitchen works were still going on in August 2004. However, £2,000 is not an unreasonable amount for the extent of the decorative works, even without the kitchen. There are no receipts, but I do not doubt the work was done. As I have said, £2,000 is a reasonable sum and, given that the work straddled the date of death, it seems reasonable to allow half of that, namely £1,000, as attributable to the period after the deceased’s death.

A repair to the Alarm System was carried out in March 2005 in the sum of £122.20. I allow this in full.

In the result, the Defendant is entitled to recoup from the estate (£7,600 + £252.22 + £1,000 + £122.20) = £8,974.42 (eight thousand, nine hundred and seventy four pounds, forty two pence).

For the avoidance of doubt, the Defendant is also entitled to recoup from the estate mortgage interest that she paid from the date of the deceased’s death, as these were liabilities of the deceased. The fact that I have disallowed the claim for an occupation rent is immaterial to this conclusion.

The Defendant also claims, in her pleadings, the sum of £10,000 from her sister in respect of a loan of £20,000 said to have been made to the Claimant and Mr Lorman, together with interest from the date of the deceased’s death.

Mr Lorman in his witness statement claimed that the deceased waived repayment. I do not accept this evidence. Mr Lorman told me that the money was lent to him (not to the Claimant as well) some 8 years previously (this was 8 years from when he gave evidence in December 2007, so it would be around 1999) for the purpose of a business venture with a Mr Bond. The business venture failed after a year and the £20,000 was lost. 2 years later (in other words, in around 2002) he told the deceased this, who said: “If you’ve got a problem, you’ve got a problem, what can I say?”. Mr Lorman went on to say that the deceased said he should forget about the loan; he would not speak about it any more. The first part of the conversation (ending with “what can I say?”) does not sound like a waiver, more the acceptance of a fait accompli. If the deceased said that it would not be spoken about any more, I do not consider that he was waiving the debt as opposed to choosing not to add to the unpleasantness by harping on about it. However that may be, Mr Lorman did not suggest that there was any consideration for the waiver. In my judgment, the debt was not waived, nor do I accept that the deceased told Mr Lorman to forget it. The deceased never told the Defendant it was waived either, even though he had discussed the Loan with her before it was made, and had explained according to her evidence that half of it would come back to her if he died before it was repaid. Had it been waived, I believe the deceased would have mentioned it to her. Moreover, he discussed it with Mr Morris as an extant loan, albeit something of a bad debt. The Claimant herself was not present at the waiver conversation, though she claimed that her father confirmed its waiver to her. However, I do not think he can have done anything other than confirm the gist of the conversation he had had with Mr Lorman, which is that the loan would not be mentioned.

I also doubt whether the loan was for the purpose of a business venture. The understanding of the Defendant (who discussed it with her father and sister at the time the loan was made) was that the loan was to enable Mr Lorman to complete his villa in Spain. This version gained some support from Mr Morris’ oral evidence, to whom the deceased spoke later. It seems to me much more likely that the deceased would make this loan for the purpose of providing his daughter with somewhere to live (albeit indirectly via Mr Lorman) than for the purpose of a business venture. Either way, the loan was neither repaid nor waived.

The loan is not however claimed against Mr Lorman (who is not a party) but against the Claimant, and then only half is claimed. It is said in the Counterclaim that the terms were varied “to provide that the Claimant would pay to or credit the Defendant with £10,000 in the event of the deceased’s death”. It is not said when this variation occurred. Inferentially, it is at the time of the alleged waiver. In her oral evidence, the Defendant did not support this plea at all and I cannot accept it. She concentrated on what she was told at the time of the loan, though alluding to unspecific discussions at other times.

The Counterclaim also pleads that the original loan of £20,000 was made to both Mr Lorman and the Claimant. I am unable to accept this. Whilst the deceased doubtless saw the Claimant as benefiting from the loan, it was a loan for Mr Lorman’s purposes (be it his villa or his business venture). There is no evidence that it was paid to anyone other than Mr Lorman. Mr Lorman stated expressly in his witness statement (and he was not challenged on this point) that the money was transferred to his bank account directly. He also says that he originally discussed the loan with the deceased alone.

The Defendant’s evidence was unsatisfactory on this point. In her first witness statement, she claimed that the loan was made to the Claimant and Mr Lorman. In her second witness statement, she claimed that the loan was to the Claimant alone. She also stated in her second witness statement that the loan was in the sum of £10,000 (which it was not) and that her father stated that she would receive an additional £20,000 (not £10,000) on his death. When these inconsistencies were put to her, she said the 2^nd witness statement was wrong.

The Defendant’s oral evidence was more consistent with the loan being made to Mr Lorman alone. She says (and I accept) that her father told her and her sister before the loan was made that half would come back to her and half to her sister. This was not a very sensible thing to say if her sister was actually going to owe the money, but is more readily explicable if Mr Lorman was regarded as owing the money, in which case both sisters would benefit equally eventually.

The Claimant’s evidence also was that the loan was made to Mr Lorman alone, and in this respect I accept her evidence. She also made the point (which is a powerful one) that had the deceased wanted some adjustment to be made in the distribution of the estate, he would have made some such provision in his last Will, which was made in 2003, after Mr Lorman defaulted.

On the evidence, therefore, I find that the £20,000 was lent to Mr Lorman, that he has not repaid it, that repayment was never waived, but that as only the Claimant, and not Mr Lorman, is sued in respect of the loan, the counterclaim must in this respect fail.

There is one final point I have to decide. By the Amended Particulars of Claim, served in August 2007, the Claimant complained that between March and June 2004 the Defendant took from the deceased’s bank account cash withdrawals totalling £4,100. This is arithmetically incorrect. The cash withdrawals totalled £4,250, and are admitted. It is said that the Defendant is liable to pay that sum to the Estate.

By her Amended Defence dated 4^th September 2007, the Defendant admits the cash withdrawals (in the correct sum), but denies that she has failed to account. There has indeed been protracted correspondence on the point. The correspondence has dealt with this sum in 2 tranches: £2,400 and £1,850 (totalling £4,250).

As regards the sum of £2,400, I am satisfied that the funeral catering expenses of £407.04 were discharged out of this money, leaving a balance of £1,992.96. By a letter dated 6^th December 2004, Wood Glaister stated that those funds (£1,992.96) were placed in the Defendant’s account and therefore formed part of the deceased’s estate. I shall therefore order an account of what has become of those funds, and payment of any amounts found due. I think this is preferable to an order for damages, as it may be that some of the funds have now been properly disbursed on unrecouped expenses (the first instalment of Inheritance Tax came from the estate’s monies, but I do not know from precisely what source).

As regards the balance of £1,850, the Defendant by a letter dated 14^th January 2005 agreed that this sum be credited to the estate (and therefore debited to her). I shall therefore order that accounts be taken of what is due from the estate to each of the parties respectively, and direct that in the taking of such accounts, the Defendant be debited with the said sum of £1,850.

That concludes the issues with which I have to deal, though there may be consequential matters of interest and costs arising as a result of this judgment, for which, in the absence of agreement, a separate hearing will be necessary.

I very much regret that it was necessary to resolve the issues between the parties by a fully contested hearing. The amounts at stake are relatively small, yet the resolution of the issues has by no means been easy. I very much hope that the parties can now agree the consequences of this judgment and that further litigation will not prove necessary.