Burnard v Burnard & Ors

Abbreviations

For the purpose of this judgment I shall adopt the following abbreviations. No discourtesy is intended by referring to the members of the Burnard family by their Christian names.

Introduction

Goff died on 15^th September 2007 at the age of 76. Stella was Goff’s second wife. She had known Goff since 1980. They cohabited from 1985 and married in December 1994.

Graham, Paul and Daniel are Goff’s sons by his first marriage to Patricia. Pauline is married to Paul. Heather is Graham’s wife. She is also Stella’s daughter by her first marriage.

During the 1970s and 1980s Goff practised as a chartered accountant in Whitley Bay. During this time he or companies in which he had an interest built up a significant portfolio of investment properties in the area. They included 27 29, 31 and 31A Station Road Whitley Bay and 31 King Street, Penrith. The Companies with which this case is concerned comprise Grangeway, Properties and Rhapsody.

Rhapsody is a company registered in the USA. It is the owner of Malva Rosea, a property in the Algarve where Stella and Goff lived from about 1998 until 2007. Until 1^st September 2007 the shares in Rhapsody were held by Goff and Stella as beneficial joint tenants. Until the first day of the trial it was contended that on 1^st September 2007 Goff had transferred his interest in Rhapsody to his 3 sons. However those allegations were effectively abandoned on the first day of the trial with the result that it is now common ground that Stella is the sole beneficial owner of the shares in Rhapsody either by the doctrine of survivorship or under Goff’s will. It is not necessary for me to resolve the route by which she acquired Goff’s shares.

Goff’s last will is dated 4^th September 2007. By clause 1 he appointed Stella and the partners of a firm of solicitors to be his executors. By clause 2 he gave free of tax his shares in Properties to his 3 sons in equal shares. By clause 3 he gave his residuary estate to Stella. [There were a number of provisions dealing with the position if any of his sons or Stella did not survive him but it is not necessary to refer to them]. There is no challenge to the execution of the will. However Goff’s sons contend that it contains a mistake in that clause 2 should have referred to Grangeway and not Properties. Accordingly they seek rectification of the will under section 20 of the 1982 Act. The principal (but not the only) defence to the claim for rectification is that it is out of time. Probate of Goff’s will was granted to Stella on 29^th December 2008. The claim for rectification was not made until 22^nd December 2010 – nearly 18 months out of time. In the alternative (at the court’s suggestion) they contend that as a matter of construction the Court should interpret clause 2 of the will as if the reference to Properties had been a reference to Grangeway.

In these proceedings Stella seeks reasonable provision out of Goff’s estate under section 2 of the 1975 Act. It too was made out of time and permission is required for it to be pursued. In order to determine the proceedings it is plainly necessary to determine what assets form part of the estate, the effect of clause 2 of the will and, the extent of the estate’s and Stella’s interest in Grangeway. On 27^th March 2013 DJ Saffman (as he then was) made an order for the determination of these issues as preliminary issues. The order sets out in detail the nature of the preliminary issues. It is not necessary in this introduction to repeat them. They may however be summarised.

I have summarised the issues in relation to the rectification and construction of the will. It is common ground that Goff had no interest in Properties. If, therefore, clause 2 is treated as referring to Properties the whole estate (including Goff’s interest in Grangeway) passes to Stella.

31 Station Road was transferred to Grangeway in 1989. In 1990 there was a lease of the ground floor to Stella for 999 years at a peppercorn rent. In 1991 Grangeway transferred 31 Station Road back to Goff. In September 1993 Goff executed a Declaration of Trust declaring that he held 31 Station Road on trust for Grangeway. On 14^th September 2007 Goff is said to have executed a transfer of 31 Station Road in favour of Paul. In February 2008 Stella assigned the lease of the ground floor to Paul.

The issues relate to the 1993 Declaration of Trust and the September 2007 Transfer. Stella does not accept that either is genuine. If Goff did indeed sign the 2007 Transfer she challenges it on the ground of capacity and undue influence. If it is a valid document she points out that it refers to a consideration which has not been paid.

The sons assert that both documents are valid and enforceable. Insofar as the 2007 Transfer referred to consideration this was a mistake as it was never intended that any money should change hands.

Photographs show that 25, 27 and 29 Station Road are physically connected as detached properties. In 1978 Goff became the registered proprietor of 29 Station Road whilst 25 and 25A were registered in the name of Grangeway. It appears that 27 Station Road was unregistered.

In 2001 Goff and Grangeway let the upper floors of 25 and 27 and the whole of 29 Station Road to the Newcastle Mental Health Service Trust. The lease asserts that 27 Station Road is owned by Goff.

In the 1993 Declaration of Trust Goff declared that he held 27 and 29 Station Road on trust for Grangeway.

As set out above, Stella challenges the validity of the Declaration of Trust.

There is little documentation with regard to 31 King Street in that the original title deeds have gone missing. In 2009 Grangeway was registered as proprietor with possessory title.

Almost all of the documents that exist support the suggestion that the property was owned by Grangeway rather than Goff. This documentation includes the registration of charges in 1985 and 1989 at Companies House and a number of applications for planning permission by Grangeway rather than by Goff. There are however a number of documents which suggest that it may have been owned by Goff.

Stella contends that 31 King Street belonged to Goff and has applied to alter the register. She relies on circumstantial evidence in support of her case.

It was common ground that Grangeway was controlled by Goff. It was clear that Goff and the other directors did not comply with their statutory duties in relation to the keeping of statutory books. Thus there is no proper register of Members. Furthermore with one or two exceptions there were no board meetings or minutes recording the change of shareholders and no share transfers when shares were said to be transferred. Goff did, however complete the annual return for most of the years between 1985 and 2007.

There are 10,000 issued shares in Grangeway. As an appendix to this judgment I have set out the information contained in the Annual Returns in relation to the ownership of these shares. It will be necessary to refer to some of the entries in more detail later in this judgment.

It is common ground that on 17^th July 1993 Goff transferred 4,000 shares in Grangeway to Stella. The entry in the annual return is supported by a stock transfer form signed by Goff. The shareholding is not recorded in the statutory books.

It is contended by the Defendants that on 1^st July 1998 Stella transferred the 4,000 shares back to Goff. This transfer is supported only by the annual return for 2000 signed by Goff and subsequent returns. There is no stock transfer form. Stella denies that she ever signed any stock transfer form and accordingly contends that she remains the owner of 40% of Grangeway. I am in effect asked to infer that Stella transferred her 4,000 shares from the entries in the annual returns and from a number of conversations between Stella and Hay & Kilner (the solicitors acting for the estate) at around the time of the death of Goff or shortly afterwards.

The other dispute relates to the validity of 3 stock transfer forms said to have been executed by Goff on 23^rd August 2007. In the light of the expert handwriting evidence it is common ground that the signature of Goff on these forms has been forged. Thus it is not now contended that they were valid.

Brief chronology

Goff was born on 15 April 1931. He married Patricia on 29 November 1960. He was 29 some 3 years older than her. They had 3 sons – Graham, Paul and Daniel. Goff was an accountant practising in Whitley Bay. He also acquired a number of properties either in his own name or in the name of Grangeway.

Stella met Goff in about 1980. At that time she was operating a garment factory employing about 100 staff and she retained Goff to help her in her business.

Stella said that Goff’s relationship with Patricia came to an end in about 1981/2. Her relationship with her first husband came to an end in 1984. At about that time she moved out of the matrimonial home with Heather and rented a flat from Goff. In 1985 Stella and Heather moved into a flat in Whitley Bay with Goff and cohabitation began. In 1986 Goff bought Marbury House, a large house in Gosforth, Newcastle.

Divorce proceedings between Goff and Patricia commenced in May 1992. The ancillary relief proceedings commenced in July 1992 and were long and acrimonious. It is not necessary to set them out in any detail. I was shown the transcript of a judgment of DJ Holloway dated 19 February 1997 when faced with applications from Goff and Patricia. He noted that the costs were upwards of £200,000. In the course of his judgment the DJ described Goff as “devious, wily and cynical”. He urged the parties to find some form of compromise and reminded them of what happened in Bleak House.

Both Stella and Goff suffered from ill health. In paragraphs 22 and 23 of her first witness statement Stella describes her medical problems. It was as a result of these problems that Stella purchased the ground floor of 31 Station Road.

Goff’s medical problems are described in paragraphs 35 to 36 of Stella’s witness statement. In 1993/4 he suffered from high blood pressure and angina. He had major heart surgery including 5 by passes. He did not recover as well as he ought to have.

In December 1994 Stella and Goff were married. From about this time Stella and Goff gradually spent more time in Portugal. In February 1998 Rhapsody was incorporated and Malva Rosea – the property in Portugal – was purchased. Thereafter Goff and Stella emigrated to Portugal. It was their intention to live off the income from the properties.

According to Stella Goff’s 3 sons took over the accountancy business. In so far as the properties needed management the day to day management was carried out by Paul or Graham. Goff continued to be responsible for the annual returns of Grangeway. It is relevant to the share issue that Graham was adjudged bankrupt in April 1999 and Paul in August 2000. At the beginning of the hearing I was informed that Graham was adjudged bankrupt for a second time in April 2013. As a result I granted permission for the claim against him to proceed.

Sometime in 2005 Goff met Mr Tahir. Mr Tahir was a tax advisor with experience in offshore taxation. He was a friend and business associate of Graham. The purpose of the meeting was to discuss the property owned by himself and Stella in Portugal. It was not a formal meeting as Goff was unwilling to pay for the advice. After this meeting Mr Tahir met Goff from time to time, often at a restaurant in Jesmond. It was, according to Mr Tahir, at one of these meetings in 2005 or 2006 that Goff handed to Mr Tahir a copy of the 1993 Declaration of Trust. Mr Tahir retained the copy on file until he handed it to Hadaway & Hadaway (the Defendants’ solicitors) on 1^st July 2009.

In June 2007 Goff was diagnosed with terminal bowel cancer. Shortly afterwards Stella and Goff returned to the United Kingdom. It is plain both from Stella’s evidence and from that of Mr Sim (a partner in the firm of Hay & Kilner) that he was anxious to put his affairs in order before he died.

As a result there were a number of meetings with Hay & Kilner, and with Mr Tahir before he died. Goff executed his last will on 4^th September 2007.

It is plain from the medical notes summarised in Dr Barker’s report that between 12^th July 2007 and 14^th September 2007 Goff spent time at St Benedict’s Hospice and Sunderland Royal Hospital. The precise dates are unclear. According to Stella during this period Goff and Stella went back to Portugal for a period of about 10 days. In August 2007 the share transfer forms in respect of Grangeway were said to have been executed by Goff and countersigned by his 3 sons.

Between 4 p.m and 5 p.m on 14^th September 2007 Goff was discharged from hospital and went to Graham’s House – Morton House, Woodstone Village. He arrived about an hour later. He was seen by Dr Hubbard shortly after he arrived at Morton House. Some time after that he is said to have executed the Transfer of 31 Station Road in favour of Paul.

Goff died the following day. Following his death there were a number of meetings with various persons at Hay & Kilner which are said to throw some light on the issues which need to be resolved.

Grangeway

Grangeway was incorporated on 8^th September 1965 under the name Graham’s Garage (North Shields) Limited. As its name suggests its principal object was that of a garage and filling station. Its objects did include the acquisition and disposal of property. The original share capital was £100. It is a private company within the meaning of the 1948 Act. Its Articles incorporated Part II of Table A with a number of exceptions. It is not necessary to refer to them in detail. It is, to be noted that Art 7 restricts transfers of shares to persons not already members unless the existing members are offered the right to purchase.

It is not clear when the Company changed its name to Grangeway, when Goff became involved or when it increased its share capital to £10,000. The Company records were not kept up to date.

Thus the obligation to keep a register of members (s 144 Companies Act 1985) was not complied with. There was no register of members. Equally the obligation to keep minutes of the proceedings of general meetings (s 382 Companies Act 1985) was not complied with. There are no minutes of any meeting of members. Equally there are no minutes of any directors’ meetings.

When they gave evidence both Graham and Paul stated that Grangeway was treated by Goff as his own Company. There were no board or other meetings. As far as they were aware there were no share transfer forms when shares were transferred to or from them.

Goff did, however, comply with the obligation to file annual returns. I have helpfully been provided with almost all the annual returns between 1986 and 2010. On the final day of the hearing Mr Tee provided me with a very helpful Schedule setting out almost all of the information contained in the annual returns. I have gratefully incorporated that Schedule (with some minor amendments) as an Appendix to this judgment.

A number of comments can be made about the information:

All of the Annual Returns up until the return for 2007 were completed by Goff. Later returns were completed by Graham.

As noted in the Schedule some of the information for the period after July 2007 is taken from other documents filed at Companies House.

With the exception of the disputed transfers of 23 August 2007 only two stock transfer forms have been produced:

Thus there are no stock transfer forms for any of Goff’s transfers to his sons in 1993, or Graham and Paul to Goff and Daniel in 1998/1999 (shortly before their bankruptcies). Indeed both Graham and Paul confirmed that no transfer forms were executed.

There is no stock transfer form for the transfer of Stella’s 4,000 shares on 1^st July 1998. When she gave evidence Stella was adamant that she had not transferred her shares.

If Stella had transferred her 4,000 shares and Paul had transferred his 1,000 shares on 1^st July 1998 those facts ought to have been recorded in the 1999 Annual Return. However the 1999 Annual Return records “There was no changes in the period”.

The book held by Grangeway contains only one undated record of the shareholders. It shows Goff holding 5,000 shares, Patricia holding 2,000 and each of the sons holding 1,000. It is thus consistent with the position as shown in the Annual Returns between 1986 and the alleged transfers of 900 shares by Goff to his 3 sons on 15^th April 1992.

When they gave evidence Graham and Paul said they had no knowledge of any shareholding by Stella. The effect of their evidence was that it was a matter that was dealt with by Goff.

There are a number of file notes exhibited by Ms McCaslin which are said to throw some light on the position. Some of these occurred before Goff died and some after.

In a telephone conversation on 20^th August 2007 Stella is said to have said that Goff had 70% of the shares and the boys had the remaining 30% between them. She also said that she would be willing to take an interest in her lifetime and then pass it to the boys on her death.

At a meeting on 21^st August 2007 between Stella, Goff and Ms McCaslin Goff is said to have said that he wanted the shares to pass to his sons but to provide an income for Stella for her life. Ms McCaslin advised that it was not practical for the Company shares to be in trust.

At a meeting on 29^th August 2007 Goff is said to have said that he would like his sons to sign a contract agreeing to pay the income from Grangeway to Stella for her life.

On 3^rd September 2007 Ms McCaslin prepared a file note for a colleague Mr Hughes. In it she made the point that Goff was giving his shares to his sons but that there was an agreement that the sons would pay the dividend income to Stella for the next 10 years.

On 4^th September 2007 Ms McCaslin attended Goff at Graham’s home to execute the will. Goff said he did not want to leave the shares in trust and wanted to give them to the boys. Ms McCaslin pointed out the risks involved.

On 11^th September 2007 Stella spoke to Ms McCaslin. In the conversation she said that the agreement was that the boys would pay her £20,000 per year for 10 years.

Graham confirmed as accurate an internal email sent by Mr Hughes to Ms McCaslin on 25^th September 2007 which included:

According to the Form 288b filed at Companies House Stella resigned as Secretary of 22^nd August 2007. Stella denied any such resignation occurred. It was not in fact the Defendants’ case that she had resigned. Graham and Paul alleged that she had been removed on that day. In evidence Paul said that there was a board meeting between Daniel and Goff at which she was removed. When Graham gave evidence he confirmed that this was what had happened but went on to say that he did not know about it at the time. He did not know when he was appointed as Secretary.

The disputed transfers took place the following day, the 23^rd August 2007. There are 3 stock transfer forms one for each of Graham, Paul and Daniel. Each purports to be signed by Goff and the recipient of the shares. The transfers purport to transfer 3,334, 3,333 and 1,333 of Goff’s shares in Grangeway to Graham, Paul and Daniel respectively.

The joint handwriting experts (Dr Giles and Ms Myers) are agreed that there is strong positive evidence to support the view that Goff’s signature on these forms is not genuine.

Graham and Paul gave identical evidence in respect of the transfer forms. They assert that they visited their father in hospital on 23^rd August 2007. He told them he was giving them the shares. He presented them with the stock transfer forms already signed by him and invited them to sign the forms to acknowledge the receipt. Goff then kept the transfer forms. Both Graham and Paul denied forging their father’s signature on the forms.

According to Paul they were discovered sometime after Goff’s death possibly in Morton House. In any event someone sent the forms off to Companies House. They were returned by Companies House and given to Hay & Kilner in January 2008.

Properties

There is very little evidence relating to Properties. It was common ground between the parties that Goff had never had any interest either as a director, shareholder, employee or investor in Properties.

There is an undated file note by Oliver Hughes which was probably made shortly before the will was drafted in early September 2007. It reads:

The Will

As noted above Goff’s will was executed on 4^th September 2007. There is no challenge to Goff’s testamentary capacity or as to the formalities of execution. Under clause 1 he appoints Stella and the partners in Hay & Kilner as his executors. Under clause 3 (in the events that have happened) he gives the residuary estate to Stella.

Clause 2 provides (so far as relevant):

During the course of the hearing I invited submissions as to whether as a matter of construction the reference to GRANGEWAY PROPERTIES LIMITED should be interpreted as a reference to GRANGEWAY (CONTRACTORS) LIMITED.

In her closing submissions Miss Temple referred me to a number of authorities including the very recent decision of the Supreme Court in Marley v Rawlings [2014] UKSC 2.

Lord Neuberger explained the modern approach to the construction of wills in paragraphs 17 to 26 of his speech. I shall not lengthen this judgment by setting it all out. However paragraphs 19, 23 to 26 summarise his conclusions:

In my view this will is ambiguous in the light of surrounding circumstances. In particular the reference to my shares in GRANGEWAY PROPERTIES LIMITED is ambiguous in the light of the fact that Goff never held shares in that Company. In those circumstances extrinsic evidence is admissible (including evidence of his intention) as to what he meant. It is, to my mind quite clear that he intended to refer to GRANGEWAY (CONTRACTORS) LIMITED. The reference to Properties was plainly a mistake and should be interpreted as a reference to Grangeway.

It is right to record that in his closing submissions Mr Tee did not advance any arguments against Miss Temple’s submissions on construction.

In those circumstances it is not necessary to consider the claim for rectification and the question of extension of time. It is, however right to record first that, especially in the light of the decision in Marley there would appear to be a powerful argument that there was here a clerical error in naming the wrong Company. In view of the fact that the Claimant needs an extension of time to proceed with her claim under the 1975 it is, at the moment, difficult to envisage circumstances where time would be extended for her claim and not for the rectification counterclaim.

31 Station Road

Apart from the 1993 Declaration of Trust and the 2007 Transfer the documents of title are uncontroversial.

On 11^th August 1989 31 Station Road was transferred to Grangeway for £39,000. the ground floor comprised a shop and was referred to as 31 Station Road, The first floor comprised office premises and is referred to as 31A Station Road.

On 4^th September 1990 Grangeway let the ground floor shop to Stella for a term of 999 years at a peppercorn rent and a premium of £52,250. In evidence Stella confirmed that the premium was in fact paid. Stella ran a coffee shop known as Zucci’s from the premises. Goff ran his accountancy practice from the office premises upstairs (31A).

On 31^st May 1991 Grangeway transferred 31 Station Road to Goff for £44,000. There is no evidence as to whether this sum was actually paid. Stella said she assumed it was.

After Goff’s death in 2008 Stella assigned the benefit of the 999 year lease of 31 Station Road to Paul and his wife Pauline for £77,500.

In reliance, no doubt, on the controversial 2007 Transfer Paul (and his wife Pauline) were registered as proprietors of 31 Station Road on 11^th January 2008. Although they created a charge in favour of NatWest Bank plc that charge has now been redeemed.

The 1993 Declaration of Trust did not emerge until 2009 when Mr Tahir delivered it to Hadaway & Hadaway. It is dated 3^rd September 1993. It was submitted for adjudication in that it bears a 50p stamp dated 23^rd September 1993. It purports to be signed and delivered as a Deed. It is signed by Goff. Both handwriting experts confirm that there is very strong evidence that the signature is genuine. It appears to be witnessed by Goff’s brother Granville and Mr Wilkinson.

In the Deed Goff is defined as the Donor, Grangeway as the Donee. 3 properties are mentioned – 27, 29 and 31A Station Road. They are not defined as “the Property”. However in the body of the Deed Goff declared that he holds the Property in trust for the Donee.

There is white space between the 3 properties and the declaration of trust. The 50p stamp has been placed in the white space.

As already noted Mr Tahir stated that he was given the Declaration of Trust sometime between 2005 and 2006.

Mr Wilkinson, one of the witnesses to the Declaration of Trust gave evidence. Goff was his accountant. He had a recollection of being in his garage when Goff and his brother asking him to witness a document. He remembered witnessing a document and confirmed that it was his signature on the Declaration of Trust. He also confirmed that he had witnessed a number of documents for Goff and that he lived at the address referred to in the Declaration of Trust between 1987 and 1996.

Stella was deeply suspicious of the Declaration of Trust as it had appeared late in the proceedings and was not referred to before 2009. She made the point that Mr Tahir and Mr Wilkinson were friends of Graham’s and she asserted that Granville had fallen out with his brother and would not have witnessed such a document.

Mr Tee criticised the Declaration of Trust. He submitted that it was not drafted by a solicitor. He pointed that there was no definition of the word “property”. He submitted that Mr Tahir and Mr Wilkinson were unreliable witnesses. He drew my attention to a number of subsequent documents which are said to be inconsistent with the Declaration of Trust.

If, contrary to his primary submission, the Declaration of Trust was validly executed he submitted it was a sham. He referred me to paragraphs 4-19 – 4-20 of the 18^th Edition of Lewin on Trusts. He referred me to the case of Minwalla v Minwalla [2005] 1 FLR 771, a decision of Singer J that has been the subject of some criticism.

In order to establish a sham it must be established that there was an intention not to create a trust but to give a false impression to third parties and ultimately the Court. Subsequent acts of the parties in disregarding the acts are admissible.

As already noted Mr Tee relies on a number of documents in support of his submissions:

In December 1994 Patricia obtained a charging order absolute in respect of 27 Station Road in respect of a judgment obtained against Goff in the divorce proceedings

In his judgment in 1997 District Judge Holloway referred to 27/29 Station Road as being in Goff’s personal ownership.

In paragraph 3(g) of a will dated 2^nd June 1995 he gave to Stella a life interest in 27/29 Station Road.

There are, however, a number of other acts which point in the other direction. These include:

As well as recording the shareholders prior to 1992 the Company Book records property held by Grangeway as at 31^st August 1998. This includes 27, 29 and 31 Station Road.

The rents from 27/29 Station Road were paid into an account in Portugal in the name of Grangeway until the beginning of 2007.

Amongst the papers given to Mr Tahir at the two meetings in July 2007 were two documents one typed (presumably by Goff) and the other in Goff’s hand writing. Both of these documents refer to 27 and 29 belonging to Grangeway (although it described it wrongly as Properties) and 31A as belonging to Goff.

The fact that Goff gave the Declaration of Trust to Mr Tahir is an indication that Goff intended it to be relied on.

It is common ground that sometime on 14^th September 2007 Graham telephoned Mr Sim, a partner at Hay & Kilner, and instructed him to prepare a Transfer of 31 Station Road to Paul. Graham informed Mr Sim that the value was £110,000.

According to Paul his father was intending to give 31 Station Road to him on the basis that he (Paul) would buy out the interest of Graham and Daniel. It is Paul’s case that the mortgage subsequently raised on 31 Station Road was used for that purpose.

It is Graham and Paul’s case that the document should have been drafted as a gift. However Mr Sim misunderstood his instructions. He drafted a TR1 which contained a receipt in the following terms:

It is common ground that the TR1 as prepared by Mr Sim was sent by taxi to Morton House. There is however an acute conflict of evidence as to whether the Transfer was ever executed by Goff.

It will be recalled that Goff was only discharged from hospital in the late afternoon of 14^th September and died the following day.

The document appears to be signed both by Goff and by Paul. In each case the signature appears to be witnessed by Mrs Moorhead, a friend of Stella’s daughter, Heather.

Stella refutes that Goff ever signed the TR1. In her Statutory Declaration, her witness statement and in oral evidence she said that Goff did not sign the TR1. She said that he was virtually unconscious from the time he arrived at Morton House. She said that she did not leave his bedside from the time he arrived until late that night so that he could not have signed it. She denied that Mrs Moorhead was ever at Morton House. She suggested that there had been a disagreement between Goff and Mrs Moorhead when Mrs Moorhead visited them with Heather in Portugal.

Much of this evidence was challenged by a significant amount of other evidence. There were a number of witnesses who vouched for Mrs Moorhead’s presence at Morton House that evening. This included Heather, Graham, Paul, Mrs Moorhead herself and Mr Lawrence a business associate of Graham who visited at a time when Mrs Moorhead was present.

There is a short letter from Dr Hubbard who visited Goff after his return from the hospice. He says:

Both Mrs Moorhead and Heather explained that Mrs Moorhead had driven up from near Huddersfield because Mrs Moorhead felt Heather needed support. They had spoken earlier that day and Mrs Moorhead had set off mid afternoon. The journey took 1¾ hours. She arrived about 5.30 and was there for about 2 hours.

Mrs Moorhead described the circumstances in which the TR1 was signed in some detail. She saw Stella who was in the kitchen. She said her concern was to be with Heather. In any event she went upstairs to Goff’s room to take Paul a cup of tea. She spoke to Goff. He looked alright to her. So she said I’ll bet you are glad to be home. Goff asked her to sign the TR1. He just said “Lal, you can do this for me”. She had witnessed documents signed by him before and agreed. She saw him sign. She said he had no problems. She described him as turning and leaning on the table next to the bed to sign it. She confirmed that both he and Paul signed the TR1. She appended her signature, name and address as a witness.

According to Paul there was very little conversation about the TR1 before it was signed. Goff told him it was to do with the office. According to Graham Goff asked if the transfer had arrived but there was no detailed discussion of its contents.

The handwriting experts agree that it is inconclusive whether Goff signed the TR1.

As already noted Mr Tee challenges the execution of the TR1. If Goff signed it he challenges Goff’s capacity to sign and asserts it was procured by undue influence.

27/29 Station Road

It is possible to deal with these properties quite shortly. It is not in dispute that Goff became the registered proprietor of 29 Station Road on 26^th January 1978. Furthermore in a lease dated 8^th October 2001 Goff was described as the owner of 27 Station Road. The title deeds for 27 Station Road are lost.

Thus the beneficial ownership of 27/29 Station Road depends entirely on the validity or otherwise of the 1993 Declaration of Trust. I have set out above the matters relevant to that issue.

31 King Street

There is no relevant oral testimony in relation to 31 King Street, Penrith. The original title deeds are missing. Grangeway was registered with possessory title on 22^nd January 2009.

A number of documents have been found which support this conclusion:

An invoice dated 10^th April 1984 from the vendors’ solicitors to the vendor which described Grangeway as the Purchaser.

A Form 395 sent to Companies House in July 1985 in respect of a charge created by Grangeway on 31 King Street on 15^th July 1985.

A similar form in respect of another charge created in August 1989.

Various planning applications in the name of Grangeway. These include

In her Statutory Declaration dated 16^th April 2009 Stella exhibited a small number of documents said to support the conclusion that 31 King Street belonged to Goff

An invoice dated 12^th October 1998 addressed to Goff from Reeds Rains for £334.88 in respect of introducing a tenant for 31 King Street.

A receipt issued by Reeds Rains to Goff for the £334.88. The date is illegible.

A similar invoice dated 2^nd September 1996 for £230.

A letter dated 14^th September 2007.

Although no issue turns on the validity of this letter a number of disputes relate to it and it is relevant to the credibility of both Stella and Graham.

The letter is dated 14^th September 2007. It is typed and purports to be signed by Goff. It is addressed to Colin (Mr Sim). It purports to instruct Mr Sim to transfer to Stella a list of properties said to be in Goff’s sole name or in the joint names of Stella and Goff. The list includes 3 properties in Station Road (12, 14 and 26), the property in King Street, Penrith and 3 properties in Jesmond.

The handwriting experts consider it to be inconclusive whether the letter was signed by Goff.

There is no direct evidence that Goff signed the letter. None of the witnesses present in the evening of 14^th September 2007 suggest that Goff signed it.

Stella asserts that she witnessed Graham type the letter and forge Goff’s signature at 10.30 a.m on 20^th September 2007. She says he typed it in his office at Morton House. She was not given a copy of the letter. She says she walked out of the room because as the executrix of Goff’s will she did not want to witness such an act.

In her witness statement Stella had given the date as 24^th September 2007. She said that Graham told her that the purpose of the letter was to save Capital Gains Tax.

Graham denied that he had typed the letter or forged his father’s signature. He said it had been typed up for his father but he did not know who typed it.

Someone delivered the letter with the disputed signature to Hay & Kilner. There is an email dated 25^th September from Ms McCaslin to Mr Sim which includes:

It is common ground that the TR1 was the disputed TR1 of 14^th September 2007. Graham denies that the letter was the letter of 14/9/2007. He could not remember whether he did hand any letter to Ms McCaslin. Mr Sim could not at this stage remember what the letter was.

Even though Stella denies receiving a copy of the letter Ms McCaslin has a file note dated 31^st March 2008 where Stella referred to the letter. Stella denied that the file note was accurate. There is a further file note dated 15^th April 2008 of a conversation between Ms McCaslin and Mr Groombridge. Mr Groombridge said he had a copy of the letter. Furthermore one of the documents in the bundle is an unsigned copy of the letter with Mr Groombridge’s handwriting on it. Despite this Stella denied that she had ever had a copy of the letter or that she had provided a copy to Mr Groombridge. No explanation was offered as to how Mr Groombridge obtained the unsigned copy of the letter.

The assessment of the witnesses.

I regret that I did not find any of the three principal witnesses as reliable. I did not feel I could attach weight to their evidence unless it was corroborated by other reliable evidence. All of the other witnesses who gave evidence before me appeared to be honest doing their best to assist the court.

Stella’s evidence of the events of 14^th September 2007 was inconsistent with that of Heather, Mrs Moorhead, Mr Lawrence and Dr Hubbard. Stella described Goff’s condition on return from hospital as being virtually unconscious and under the influence of sedatives. This is in contrast with Dr Hubbard’s evidence summarised above.

Whilst Stella was quite prepared to allege that all of her family, Mrs Moorhead, Mr Lawrence and Mr Tahir were lying and conspiring to pervert the course of justice it is inherently unlikely that the non family members would have done so. They had no financial interest in doing so.

It is inherently unlikely that Stella would have spent every minute from the time they arrived at Morton House on 14^th September 2007 to the late evening by his side.

Stella’s evidence was inconsistent with a significant number of contemporaneous file notes made by Ms McCaslin. It is inherently unlikely that Ms McCaslin would have made as many mistakes as suggested by Stella.

Stella’s evidence in relation to the letter of 14^th September 2007 was unsatisfactory. She was unable to explain how Mr Groombridge obtained a copy or the existence of an unsigned copy. To my mind the only explanation is that she did indeed have a copy and provided it to Mr Groombridge.

Graham and Paul’s explanations of the execution of the stock transfer forms dated 23^rd August 2007 is wholly unbelievable. It is not in dispute before me that someone has forged Goff’s signature on the forms. It is to my mind unbelievable that Goff would have presented forms on which his signature had been forged to Graham and Paul for their signature.

It is the more unbelievable when put into the context of the events that happened at about that time in relation to the shares. It will be recalled that Goff discussed with Ms McCaslin the possibility of leaving the shares to his sons on the basis that they paid the income to Stella for 10 years. On 4^th September 2007 Goff executed the will leaving the shares to his 3 sons. If he had already transferred the shares to his sons I would have expected him to have informed Ms McCaslin. If he had done this the provisions in the will would have been different.

It is also notable that Mr Hughes understanding of what Graham told him on 25^th September 2007 is different from the effect of the transfers.

I am driven to the conclusion that the transfers were forged by one or other of the sons on an unknown date. All 3 of the sons were aware of the forgery.

Graham’s evidence in relation to the letter of 14^th September 2007 is also unsatisfactory. It seems to me that Graham did hand the signed copy of the letter to Ms McCaslin on 24^th September 2007. It will be recalled that the letter was addressed to Mr Sim. Graham accepted that he handed over the TR1 on 24^th September 2007. He was not able to suggest any other letter he might have handed to Ms McCaslin. It is clear that the signed letter was on Hay & Kilner’s file. To my mind the most likely explanation is that, for whatever reason, Graham did create the letter and did forge his father’s signature on it at some time between 15^th September 2007 and 24^th September 2007. Stella was aware of the forgery and at some was provided with a copy.

Mrs Moorhead was an impressive witness. She did not exaggerate. Her recollection of the events of 14^th September 2007 was good and consistent with that of Heather. She was not in court when Heather gave evidence. She had no reason to lie. The suggestion that she had conspired to pervert the course of justice by purporting to witness the signatures of Paul and Goff on the TR1 when she had not done so seemed to me to be highly improbable.

I have no hesitation in accepting her evidence as reliable.

The importance of Mr Tahir’s evidence related to the documents he produced to Hadaway & Hadaway in 2009. These included the 1993 Declaration of Trust which he said he received in 2005/2006 and the documents he was given by Goff in July 2007.

I have no difficulty in accepting that he did indeed receive the documents from Goff when he said he did. Equally I do not accept that any of the documents were in any way altered whilst in Mr Tahir’s possession.

I have already indicated that I considered the other witnesses to be honest. Both Heather and Mr Lawrence corroborated Mrs Moorhead’s presence on 14^th September 2007. Mr Lawrence, in particular, had no reason to lie.

Ms McCaslin did not give live evidence. She is now in Australia and the application for her to give evidence via Skype was made very late and was refused on the first day of the trial. However her contemporaneous file notes have been of considerable assistance. Unsurprisingly neither side has suggested any form of impropriety against Ms McCaslin. In so far as they challenge the file notes it is on the basis that she was mistaken.

Conclusions

I am satisfied on the balance of probabilities that the Declaration of Trust was duly executed on 3^rd September 1993. It was plainly submitted to the Stamp Office on 23^rd September 1993 shows it must have been executed before that. Mr Wilkinson corroborates that he did indeed witness its execution.

Whilst the original has not been found there is no reason to believe that the document given to Mr Tahir in 2005/2006 was not a true copy of the original. The location of the stamp indicates that there was a gap in the document. There is no basis for suggesting that anyone tampered with the document after it came into Mr Tahir’s possession. No-one has suggested any reason why anyone should have tampered with it before.

I accordingly hold that the document was validly executed.

In order to establish that the trust is a sham Stella must establish that Goff had no intention in 1993 that 27, 29 and 31A Station Road were held on trust for Grangeway. [See the discussion in paragraphs 53 to 55 of Minwalla v Minwalla 7 ITELR 457]

There is no direct evidence of Goff’s intention in 1993. The existence of the Declaration of Trust was only discovered by Stella when Mr Tahir produced it. Thus she is forced to rely on subsequent acts to establish Goff’s intention.

Earlier in this judgment I have set out the documents relied on by Mr Tee and the factors that point in the other direction. As is clear from the passage in Lewin to which I was referred (paragraph 4-19) it takes extreme circumstances for a court to declare a trust a sham.

It is to be noted that two of the three documents relied on by Mr Tee were not created by Goff. In the end I agree with Miss Temple that the evidence provided by subsequent acts is at its highest equivocal. It does not satisfy me that Goff had no intention in 1993 that the Declaration of Trust did not mean what it said. It follows that I reject the claim that the Declaration of Trust was a sham.

As set out above I accept the evidence of Mrs Moorhead. It follows from this that I accept that the TR1 was signed by Goff in the circumstances described by her on 14^th September 2007. I accept that she witnessed his signature.

I turn to the question of capacity. There is no suggestion that Goff lacked capacity to execute a Deed at any time earlier than September 2007. It is to be noted from Ms McCaslin’s file notes that Goff attended meetings on 21^st August 2007, 29^th August 2007 and executed his will in Ms McCaslin’s presence on 4^th September 2007. He was seen by Dr Hubbard on the evening of 14^th September 2007. As noted he was described as “mentally alert”. Dr Hubbard believed he was capable of making decisions. Dr Barker has considered the medical records and is not able to find sufficient grounds to state that Goff did not have the capacity to execute the transfer.

There is no fixed standard of mental capacity required for all transactions. What is required is that the party in question should have a general understanding of the nature of the transaction [See Chitty on Contracts Vol 1 paragraph 8-070]. In his skeleton argument Mr Tee referred me to a well-known passage from the judgment of Nourse J in Re Beaney [1970] 1 WLR 770

The TR1 related in substance to the office from which his sons or at least Paul traded. It is plain from the documents that Goff handed to Mr Tahir, that Goff believed that he was the beneficial owner. [It may be that he had forgotten about the Declaration of Trust]. In all the circumstances I am satisfied that Goff understood that the effect of the TR1 was to transfer ownership to Paul. Stella has not satisfied me that Goff lacked capacity.

The law relating to undue influence is set out in RBS v Etridge [2002] AC 773. I shall not lengthen this judgment by citing extensively from that case. Reference should be made to the speech of Lord Nicholls.

In my view the allegation of undue influence by Paul fails for the following reasons:

There is no evidence of actual undue influence or improper pressure by Paul. All of the evidence points to Goff managing his own affairs until his death.

There is no evidence that Goff reposed trust and confidence in Paul in relation to his financial affairs [see paragraph 14 of Lord Nicholls’ speech]

In my view this is not a transaction which calls for an explanation within Lindley LJ’s explanation in Allcard v Skinner 36 Ch D 145, 185. It is the gift by a dying man of the office from which he had traded to his son who had taken over the business.

I am quite satisfied that Goff did not intend to sell 31 Station Road to Paul for £110,000 and that the TR1 as drafted by Mr Sim and executed by Goff and Paul was not what the parties intended. In my view Goff intended to give 31 Station Road to Paul.

Nevertheless the TR1 contains the statement that Goff had received from Paul the sum of £110,000.

Stella seeks to argue that as the £110,000 was never paid the estate is now entitled to claim it from Paul.

As I am satisfied that there was never any intention or agreement that the £110,000 would be paid by Paul it is difficult to see the legal basis for the claim. There was no enforceable contract prior to the execution of the TR1.

Furthermore in the light of the very recent decision of the Privy Council in Prime Sight v Lavarello [2014] 2 WLR 84 I agree with Miss Temple that Stella is estopped from claiming the £110,000. [See in particular paragraphs 28 – 47 of the judgment of the Board given by Lord Toulson where there is a full discussion of the relevant principles and the relevant authorities. I shall not lengthen this judgment by repeating what is there set out].

In the result both the Declaration of Trust and the TR1 were valid documents. It follows that Goff held 31A Station Road on trust for Grangeway.

Although the TR1 is a valid document, I have heard no argument as to the effect of the TR1 in the light of the valid Declaration of Trust. Equally I have heard no argument on the question of whether the effect of registration of title in favour of Paul and Pauline overrides any interest that Grangeway may have had in 31A Station Road. I accordingly express no view on either of these questions.

In the light of my conclusions on the Declaration of Trust Goff held 27/29 Station Road on trust for Grangeway.

In my view the contemporaneous documentary evidence overwhelmingly supports the view that Grangeway purchased 31 King Street in 1984 and has been properly registered in the name of Grangeway. The invoices from Reeds Rains are of very little weight when compared with the documents relied on by Grangeway.

I am surprised that Stella added to the cost of the trial by persisting in a claim to this property.

In the light of concessions made by Miss Temple at the beginning of the trial the shares in Rhapsody (and thus the ownership of Malva Rosea) pass to Stella by survivorship.

It is a pity that the concessions were not made earlier.

The crucial question for me to decide is whether Stella transferred her 4,000 shares back to Goff on 1^st July 1998. She denies that she executed any transfer but for reasons set out above I do not accept Stella as a reliable witness. Accordingly her denial is not conclusive. Furthermore Ms McCaslin’s file note of a telephone conversation on 20^th August 2007 suggests that Stella did not mention her shareholding on that occasion. However what Stella is said to have said did not in fact reflect the shareholdings recorded in the annual return. According to the annual return there were only 2 shareholders – Goff (8,000) and Daniel (2,000).

I am satisfied that Goff believed that he held all the shares in Grangeway other than those held by his sons. However I do not regard that as being conclusive either.

To my mind there are a number of problems with the annual returns:

the evidence of Graham and Paul that Goff treated Grangeway as his other self and paid no attention to the requirements of the Companies Act. Thus there was a failure to keep an up to date register of members. There was a failure to hold meetings in accordance with the Act. This included board meetings and general meetings of shareholders.

A number of share transactions were recorded in the annual returns where no stock transfer forms were executed. These include the alleged transfers in 1993, 1998 and 1999.

If Stella had indeed transferred her shares on 1^st July 1998 it should have been mentioned in the 1999 Annual Return.

Despite the able submissions of Miss Temple I am not persuaded that I can treat on the annual returns as reliable. In those circumstances and in the absence of any reliable evidence that Stella transferred the 4,000 shares back to Goff, I accept the evidence of Stella that she did not execute a stock transfer form transferring her 4,000 shares in Grangeway. It follows that she still remains a shareholder.

As I have indicated I am satisfied that Goff believed that he owned all the shares in Grangeway other than those owned by his sons. He intended by his will to leave all those shares to his sons. Plainly the effect of my conclusions is that 4,000 shares remain with Stella.

In the light of the fact that Stella is the residuary beneficiary it is possible that the equitable doctrine of election comes into play in this somewhat unusual situation. However I have heard no argument about it and express no concluded view.

Plea

It is self evident that this judgment is not the end of the case. Apart from the fact that it only deals with part of the Inheritance Claim it leaves a number of matters unanswered.

In 1998 when the divorce proceedings were before DJ Holloway he urged the parties to compromise and commented on the vast amount of costs that had been spent by the parties. The costs involved in this litigation must also be vast. Substantial more costs will have to be spent to determine the outstanding issues. I can only repeat the plea made by DJ Holloway that the parties should now attempt to put their heads together and reach some sensible solution. Otherwise the whole estate will vanish in costs.

Finally I would like to express my gratitude to Counsel for their clear and helpful submissions in a by no means straightforward case and for guiding me through a mass of documents which had been collated in such a way that any compliance with the Chancery Guide was coincidental.