Elsie Allen and Keith Hateley as Executors of Winfred Johnson deceased v Her Majesty's Revenue & Customs

This is an appeal by Elsie Allen and Keith Hately, as Executors of Mrs Winifred Johnson, deceased (“the Appellants”) against a determination of the Commissioners of Inland Revenue dated 15 September 2004 in the following terms: “In relation to the deemed disposal for the purposes of inheritance tax on the death of Winifred Johnson on 18 August 2002 that Winifred Johnson was domiciled in the UK at that date”.

The Appellants contend that at the date of her death Winifred Johnson (“Mrs Johnson”) was domiciled in Spain, her domicile of choice – this was so, they contend, notwithstanding that for several years up to the date of her death Mrs Johnson lived in England in order to enjoy the care and support in her illness of her relation Elsie Allen. Her Majesty’s Revenue and Customs (“the Revenue”) contend that before her death Mrs Johnson had abandoned her domicile of choice in Spain so that her domicile of origin in England thereupon revived and that she retained her English domicile until her death.

The issue of Mrs Johnson’s domicile is important in the context of the liability of her estate to inheritance tax: at her death Mrs Johnson owned assets of significant value situated outside the UK. If at her death Mrs Johnson was domiciled in Spain, those assets are not subject to inheritance tax; conversely, if at her death she was domiciled in England, inheritance tax must be paid by her estate in relation to those assets in addition to any such tax payable in relation to her UK sited assets.

There is no significant difference between the parties as to the law in this appeal – essentially I am required to decide on the agreed facts and on the evidence presented at the hearing whether or not at her death Mrs Johnson had abandoned her domicile of choice in Spain – if that is so (but not otherwise) her domicile of origin in England will have revived and England will have been her country of domicile at her death.

It is my decision, in favour of the Appellants, that at her death Mrs Johnson was not domiciled in England. As referred to below, in this appeal it is for the Revenue to establish to the required standard of proof that Mrs Johnson had abandoned her domicile of choice in Spain and it is my decision, for the reasons set out below, that they failed so to do. Accordingly I direct that the determination of the Commissioners of Inland Revenue dated 15 September 2004 as specified in para. 1 above be quashed.

The parties had prepared a statement of agreed facts relating to the circumstances of Mrs Johnson’s life up to the time of her husband’s death in 1996, as set out in paras. 7 to 26 below.

Dramatis Personae

Ms Elsie Allen is married to Geoff Norris, and both live at 18 Linden Road, Newcastle upon Tyne, with their two daughters born in 1983 and 1985. Both daughters now live away from home at university for most of the year.

Ms Elsie Allen’s half sister, Mrs Johnson, was born in Easington, County Durham in 1922. She moved with her father to the United States when she was about 1 year old. Her mother died when she was in the USA and she was looked after in the USA for some time before returning to England when she was about 8. Her father stayed in the USA for a number of years and Mrs Johnson was looked after by her paternal grandmother.

Her father returned to England in 1932 and remarried when Mrs Johnson was in her teens in 1935. There were two further children. The first was Elsie Allen’s brother (Robert) who lives in County Durham, born in 1936 and Elsie Allen was the second, born in 1942. By the time Elsie Allen was born Mrs Johnson was 20 and was working as a nurse. She lived with Elsie Allen and Robert and their parents and in the local hospitals where she worked until she moved to Portsmouth as a member of the WRNS in 1948. She met her husband to be in Portsmouth in 1948 when working there as a nursing sister. They were married on 7^th July 1951 and lived with Mr Johnson’s parents in Solihull while he graduated from university.

Shortly after getting married, in 1953, the couple moved abroad as Mrs Johnson’s husband worked for Shell as an engineer. For the next 30 years Mrs Johnson lived abroad in West Indies, Venezuela, Indonesia, and Nigeria in Shell camps. After one year in Holland they spent 7 years in Trinidad, 5 years in Indonesia, 7 years in Venezuela, a further 3 years in Trinidad and finally 6 years in Nigeria. They never owned or rented any property in the UK.

Mrs Johnson did not work as the wives of Shell workers were not allowed to do so. They had extended leave once every two years, although this changed to once per year later. They always visited the UK during these leave periods and stayed in Birmingham with Mr Johnson’s mother.

They also sometimes used part of their leave for holidays in other countries. They also visited the north-east during these holidays in the UK but never stayed for more than two days. It was a token visit. The father of Elsie Allen and Mrs Johnson died in 1959. Mrs Johnson did not attend the funeral as she was unable to travel from the West Indies where she and her husband were at the time. Mr Johnson senior also died in 1959. In 1978 Elsie Allen’s mother, Mrs Johnson’s step-mother, died. Mr and Mrs Johnson were able to (and did) attend the funeral as they happened to be on leave in the UK at the time although Elsie Allen was unaware of this until she tried to contact them.

In 1982 Mr Johnson retired and they decided to settle in a village, Cabrils, about 20 miles north of Barcelona. They bought a house and took out appropriate residency permits. This is the only house they ever owned. It contained all their possessions, which they brought with them from Nigeria, Mr Johnson’s last place of work. This included all their clothes, jewellery, official papers, furniture, books, extensive music collection, ornaments and Mr Johnson’s tools.

They chose to live in Cabrils because they both were competent Spanish speakers, they had friends of long standing who lived in Spain, some near Barcelona, and the climate of that part of Spain suited them both. A further attraction of Cabrils was that it was not a tourist area; there were no other English people in the area. They did not wish to become part of an expatriate community. They intended to become part of the local Catalan community and did not wish to cut themselves off in a foreigner’s enclave. Mr and Mrs Johnson had acquired a domicile of choice in Spain.

The house they bought in Cabrils needed substantial alteration, a new kitchen and bathroom and the installation of central heating and some fitted furniture. While this was being undertaken by local workmen Mr and Mrs Johnson lived in the small hotel in the village. This period of living in the village and dealing directly with local tradesmen meant that they soon became well-known in the village and the nearby town as the only local English residents.

They were keen to embrace Spanish life and culture and once they moved in to the house Mr and Mrs Johnson got involved in the local residents’ association which looked after the interests of people who owned the houses in the small “urbanisations”. Mrs Johnson also attended craft classes in Barcelona with one of their friends. They both watched Spanish television and read Spanish newspapers, magazines and books. They were both very settled in Cabrils and their time there was the longest time that they spent continuously in any one place.

Mr and Mrs Johnson spent much of their time improving the garden which started out as a steep hillside with few plants and pine trees but became over the years a mature attractive Mediterranean garden with established plants, trees and a complex automatic watering system..

In 1983 Mrs Johnson senior died, after about 5 years in a nursing home. The house in which she lived and its contents had been sold some time shortly after she moved into the nursing home on the instructions of the solicitor who had power of attorney over Mrs Johnson senior’s property. Mrs Johnson’s death effectively terminated their family links with England, apart from visits to Elsie Allen and Geoff Norris. There were no other members of the Johnson family alive and Mrs Johnson had not maintained contact with her step-mother’s side of the family for some time. She had no contact with her step-brother but maintained some contact with an elderly aunt on her father’s side who died in 1993.

Elsie Allen, Geoff Norris and their two daughters visited them in Cabrils as a family at least once every year in Spain from 1984 onwards. Mr and Mrs Johnson visited the UK (and hence Elsie Allen and her family) infrequently. Specifically they visited Elsie Allen and Geoff Norris when their daughters were born respectively in 1983 and 1985. They visited again in 1987 and 1990. They spent holidays on a cruise, visiting and staying with friends, usually in the south of Spain and would also visit some friends in the UK.

In 1994 they spent a week with Elsie Allen and her family, the longest stay they had ever made after the birth of the two daughters. Although this was not made explicit by Mr Johnson one of the purposes of the visit was for them to explore the possibility of them moving to England. Mr Johnson had asked if Elsie Allen and Geoff Norris were likely to be living around Newcastle for the foreseeable future (the answer was yes). They looked at property in a number of locations around Newcastle. They did not spend a lot of time on this and did not discuss it with Elsie Allen and Geoff Norris in any depth.

There were no financial barriers to them moving to the UK but they clearly decided against it and the issue was not raised again. At the time Mr Johnson did not have any health problems.

Mrs Johnson was diagnosed with Parkinson’s Disease in 1975. Her condition was thereafter managed by appropriate medication. She had a minor stroke in 1995 which resulted in a two week stay in a Spanish hospital and from which she went on to make virtually a full recovery at home in Spain over the following six to twelve months. There were some residual problems with speech which occasionally resurfaced at moments of stress or anxiety or tiredness.

At the end of 1996 Mr Johnson died unexpectedly. He was cremated in Barcelona and the Catalan service was attended by almost 100 people from the village or from Barcelona. Elsie Allen and Geoff Norris were the only people from the UK who were there; although a small number of non-Spanish people resident in Spain attended. Mrs Johnson asked Elsie Allen and Geoff Norris to bring her back to stay in their house in Newcastle upon Tyne for a period. Elsie Allen and Geoff Norris agreed to this.

Mr. Johnson’s ashes were brought to the UK where they were interred in his parents’ grave in Lapworth.

Mrs Johnson died on 22 August 2002.

At the hearing of the appeal there were two witnesses for the Appellants: the principal witness was Mr Geoff Norris who gave evidence as to the circumstances of Mrs Johnson’s life from the death of her husband in 1996 until her own death in 2002, during which time she lived with Elsie Allen and her husband, Mr Norris; in addition, there was a witness statement of Mr Norris relating to Mrs Johnson’s house in Spain with an attached valuation report dated 20 February 2003 with a detailed description and plans and photographs of the property and also a valuation; there was also oral evidence from Kirstin Audrey Cook, of Hay & Kilner, Mrs Johnson’s solicitors, relating to the enduring power of attorney executed by Mrs Johnson and, in that context, her mental capacity. The Revenue produced no witnesses, but Mr Twiddy cross-examined Mr Norris. The Revenue submitted as evidence the statement dated 22 May 2003 made by Elsie Allen and Geoff Norris in response to the letter from the Capital Taxes Office, Technical Group dated 15 April 2003 relating to the question of Mrs Johnson’s domicile.

As Mr Dawson observed, the case is unusual in that, in order to establish the deceased’s domicile the tribunal might reasonably have expected to have had evidence from a range of friends and family of the deceased, and perhaps correspondence or other papers from which to build a picture of the deceased’s intentions. He pointed out that Mrs Johnson was (at least, following her husband’s death) a solitary person with no family beyond Elsie Allen, her half-sister, and no close friends. She was, moreover, private and guarded, even with those with whom she lived, reluctant to discuss her circumstances or countenance making plans for her future. In these circumstances the evidence of Mr Norris comprised the only evidence available to the Appellants, and from this evidence it was necessary to draw inferences as to Mrs Johnson’s intentions.

I consider Mr Norris to be a convincing witness. Without any sense of criticism or judgment, and with a dispassionate and balanced account of what must have been at times a most demanding and difficult situation for himself and his family, he presented a picture of a bereaved old lady with deteriorating health caused by an incurable and progressive disease who required increasing care and support, but who demonstrated until shortly before her death a strong and independent – even stubborn and self-centred - character, and who refused to acknowledge the reality of her situation whilst living for the hope of returning to her home in Spain. Mr Twiddy advised that the evidence of Mr Norris should be approached with what he called a small degree of caution, and referred to the case of Re Furse [1980] 3 All ER 838 at 843 as guidance on the weight to be attached to statements (in that case, a draft affidavit which was never sworn) made specifically for the purpose of court proceedings as to domicile. Taking note of that point (and noting also that one of the concerns of the judge in Re Furse was that there had been no cross-examination on the statement entered in evidence, the witness having died before the court hearing and before the affidavit was sworn – whereas in the present case I had the benefit of Mr Twiddy’s cross-examination of Mr Norris) I nevertheless am able to find from the evidence before me the facts set out in paras. 30 to 39 below.

Following the death of her husband at the end of 1996, Mrs Johnson asked if she could come and stay with Elsie Allen and Geoff Norris at their home at 18 Linden Road in Newcastle upon Tyne. Ms Allen and Mr Norris were the only relatives with whom Mrs Johnson had contact. Although she was at that time suffering from Parkinson’s Disease, she was not then in need of constant care, but she had relied on her husband for a measure of care and looked to Ms Allen and Mr Norris to provide the support previously provided by her husband. At that time there was no discussion as to how long she would stay, but in the following weeks Mr Norris told Mrs Johnson that she could stay temporarily with him and his family (a period of 6 – 9 months was mentioned), but that for the longer term a more permanent arrangement was required, with Mrs Johnson either remaining in the UK (perhaps on the basis of the Norrises extending their house to accommodate her or purchasing a new house with suitable additional accommodation), or returning to Spain. Mrs Johnson gave no indication of her thoughts as to a permanent arrangement, but accepted the offer to stay with the Norrises for the time being. She occupied the main bedroom and used the main sitting room in their house. She ate with the family. She took no part in the household duties of shopping, cooking, cleaning or washing. She described herself to those outside the Norris family as their “visitor”. Her living arrangements continued on this basis throughout her stay at 18 Linden Road. At her suggestion she made a monthly financial contribution, based on the extra direct costs of her stay and a share of general household expenses. This financial arrangement continued until her death. Although from time to time invitations were extended to her, Mrs Johnson was involved in no social activity outside the Norris family home.

Mrs Johnson remained living at 18 Linden Road until February 2002, when she was admitted to hospital in Newcastle where she remained until her death in August 2002.

Until her death Mrs Johnson retained her house in Spain. She paid for the house and grounds to be maintained on a regular basis and for someone to care for her pets. No-one was allowed to use the house in her absence. The house and its contents were kept clean and maintained in a state ready at any time for Mrs Johnson’s occupation and use. All her furniture, furnishings, books and personal effects were at all times kept in the house until her death. None were disposed of. She brought to the UK some of her clothes and some of her jewellery, but nothing else. Such personal effects as she had in the UK were bought for her whilst she was in the UK. She kept a car at the house ready for use, but in 2001 she sold it at the insistence of Mr Norris. Mrs Johnson refused to discuss any question of selling the house, even when Mr Norris offered to purchase it himself to facilitate negotiations with the local authority in Spain relating to the adoption by the authority of the roads and services of the small estate or “urbanisations” of which the house formed part.

Mrs Johnson returned to her house in Spain whenever the Norrises offered to take her there. Both Ms Allen and Mr Norris were in full-time employment and therefore had limited opportunity to visit Spain. There were visits for about two weeks in August in each of 1997, 1998, and 1999. Mrs Johnson made no visits on her own: over that period air travel from Newcastle to Barcelona necessitated a transfer between flights at London Heathrow, which Mrs Johnson’s physical condition made impossible for her without assistance. On occasion she asked friends in the UK to take her to Spain when the Norrises could not take her (which was the case in 2000), but nothing came of this. By 2001 the Norrises judged that Mrs Johnson was not capable of managing the journey, although she was eager to visit the house and pressed them to take her. On her visits to her house in Spain Mrs Johnson’s behaviour was quite different: she was no longer the visitor or guest, as she behaved in the Norrises home, but she took charge of the running of the house and made it clear that the Norrises were her visitors. She would, with assistance, shop and cook and generally manage the household. She was more mobile and confident of her physical capabilities in her house in Spain, where the principal living accommodation was on one floor, and where the climate better suited her. However, as her condition deteriorated she could not have lived there without the level of care she received in the Norris household.

Mrs Johnson’s principal investments and bank accounts were maintained outside the UK. She held a UK bank account from which she met her immediate living expenses. Her tax returns in the UK were made on the basis that she was neither ordinarily resident nor domiciled in the UK. Mrs Johnson had a Spanish Residency Permit Card. It expired in 1998 and was not renewed.

Mrs Johnson’s physical condition deteriorated significantly whilst she was living with the Norrises. It was not a consistent rate of decline: her condition varied on a daily basis. She required occasional care during the initial months of her stay, but later in 1997 she required help in getting out of bed once or twice each night. During the day she could on occasion leave the house independently, and could dress, bathe, eat and use the toilet without assistance, but she was prone to falls, and gradually required more supervision and increasing care. Some of this was provided by external care agencies, but in the circumstances of the variability of her condition it was the constant availability of Ms Allen and Mr Norris, who were sensitive to her personal and varying needs, which provided the level and type of care Mrs Johnson’s condition required. Care of this nature and extent could otherwise have been provided only in a residential home. When residential care was discussed with Mrs Johnson (whether in the UK or in Spain) she was vehemently opposed to it and refused to consider it.

In October 2000 Mrs Johnson was admitted to hospital for an assessment following a series of falls and loss of mobility. After six weeks she insisted on returning to the Norrises, but the rate of her physical deterioration increased, and more external care was required, by now on a daily basis. Until this point her mental capacity had been unimpaired, without significant memory loss or confusion, but from this period her mental capacity began to be significantly diminished, and her focus was on her short-term survival needs.

During 2001 there were inconclusive discussions with Mrs Johnson about alternative care arrangements, since the level of care she required was placing a great strain on the Norris family. Mrs Johnson went into temporary respite care on the occasions that the family had a holiday. In June 2001 the adjoining house, 20 Linden Road, came on the market. It was suggested to Mrs Johnson that she should purchase it and renovate it both to modernise it (it was in a run-down state) and to equip it for her needs with a view to her living there supported by the care agencies and private help, with the Norrises on hand for general supervision and emergencies. She agreed to this and purchased the house and through the agency of Mr Norris instructed an architect to plan and implement the renovation of the house. She had sufficient assets to enable her to do this without requiring her to sell her house in Spain, or without it materially affecting the income she needed for her living expenses. She agreed to make the purchase on the understanding that if the arrangements proved not to be satisfactory, she could sell the house – it was not seen as an irreversible decision on her part. The plan to purchase the house ended the discussions about the possibility of Mrs Johnson moving into residential care, and she continued to live with the Norrises. There was no discussion of selling the house in Spain, or of bringing to 20 Linden Road furniture or personal effects from the house in Spain.

In February 2002 work began on the renovation of 20 Linden Road. Mrs Johnson suffered a serious fall and also in February 2002 she was admitted to an acute condition hospital and later transferred to a hospital rehabilitation/continuing care unit. Her condition continued to deteriorate, and she remained in that care unit (apart from a two-week readmission to the acute condition hospital) until her death.

Mrs Johnson had executed an enduring power of attorney in April 1998 appointing her solicitor as her attorney. Her attorney exercised the power only when Mrs Johnson authorised him to do so. Following Mrs Johnson’s admission to hospital in February 2002 and the clear deterioration in her mental state, her attorney sought medical advice and as a result of that advice applied to register the power of attorney in May 2002. Registration was effected in June 2002. The attorney instructed that work on 20 Linden Road should cease once it was made wind and water-tight, given the uncertainties of the situation. Mrs Johnson was considered to have full mental capacity until registration of the power of attorney.

Mr Dawson’s case for the Appellants was that Mrs Johnson had an undoubted domicile of choice in Spain which she never abandoned, notwithstanding that she lived in England from late 1996 until her death in August 2002. Although England was her domicile of origin, the circumstances of her life were such that, when she came to live with Ms Allen and Mr Norris, she was not “returning home” in the sense of returning to the place from which she had set forth. She had no physical, social or emotional connections with England except for her half-sister, in whose house she regarded herself at all times as a “visitor”. All the features of her own “home” were retained throughout in Spain.

In order to abandon a domicile of choice a person must both cease to reside there (the factum) and cease to intend to reside there permanently (the animus). The law is set out in Dicey & Morris: The Conflict of Laws (13^th Ed) at paragraph 6R-074 (and approved by Megarry J in Re Flynn [1968] 1 WLR 103 at 115):

“Rule 13(1) A person abandons a domicile of choice in a country by ceasing to reside there and by ceasing to intend to reside there permanently or indefinitely, and not otherwise.

(2)

When a domicile of choice is abandoned, either (i) a new domicile of choice is acquired; or (ii) the domicile of origin revives.”

Further, as stated in Dicey Rule 7, an existing domicile is presumed to continue until it is proved that a new domicile has been acquired. The courts have consistently held that there must be an unequivocal act and an unequivocal intention in order to demonstrate that a domicile of choice has been abandoned and that a new domicile has been acquired: see In the Estate of Fuld (No 3) [1968] P 657 at 686; Irvin v Irvin [2001] 1 FLR 170 at 188-9; and In re Evans [1947] Ch 695 at 707. The evidence in relation to Mrs Johnson is that when she left Spain in 1996 she intended to retain her domicile of choice in Spain. There is no evidence that at any time subsequently she formed an intention never to return. She retained her house and all her belongings in Spain throughout and whenever circumstances allowed she returned there.

There can be no intention to reside permanently in a country if the residence there is not freely chosen. The law is summarised as follows in Dicey Rule 12 at para. 6R-053:

“Without prejudice to the generality of the foregoing Rule, in determining whether a person intends to reside permanently or indefinitely in a country the court may have regard to:

(1)

the motive of which he has taken up residence there;

(2)

the fact that the residence was not freely chosen;

(3)

the fact that the residence was precarious.”

In Mrs Johnson’s case she lived as a “visitor”, or paying guest with the Norris family for the purpose only of having the care and support which became more essential as her condition deteriorated, and which no-one else could provide outside a residential care home, which she had set her face against. Her motive in living in England was not to make her home in England, but to obtain that care. It is established in Moorhouse v Lord (1863) 10 HLC 272 at 283 that you do not lose your domicile of choice merely because you take up residence elsewhere for health reasons: something more is required by way of intention and action to sever ties with your previous place of residence and to establish new ties in the place where you have moved for health reasons. Mrs Johnson had never taken the step of the “something more”.

Further, Mrs Johnson’s residence in England could fairly be described as “precarious”, since it was dependent upon the continuing goodwill and sufferance of her half-sister. This is so notwithstanding that these arrangements continued for over 5 years, since it is the nature or quality of the residence which is important in establishing the domicile intention, not the mere length of residence by itself: Ramsey v Liverpool Royal Infirmary [1930] AC 588 at 595.

For the Revenue Mr Twiddy did not seek to argue with the summary of the law given by Mr Dawson for the Appellants. He accepted that since in this case it is the Revenue which is asserting the change in domicile, the burden of proof rests on the Revenue, and that the standard of proof is that the “conscience of the court” must be satisfied by the evidence adduced: see In the Estate of Fuld dec’d (No 3) [1966] 2 WLR 717 at 726. It was the Revenue’s case that the facts of the case, and the proper inferences to be drawn from those facts, demonstrated that Mrs Johnson had, before her death, abandoned her domicile of choice in Spain so that her domicile of origin had revived. The retention of a place of residence in Spain is not inconsistent with the loss of Mrs Johnson’s domicile of choice in Spain in circumstances where she had another residence in England, and that was her chief residence, and Rule 13(1) in Dicey should be qualified accordingly: Plummer v IRC [1988] 1 All ER 97 at 106. For Mrs Johnson her chief residence was her residence in Newcastle, rather than her house in Spain.

The facts were that Mrs Johnson came in late 1996 to stay with her half-sister at the time of Mrs Johnson’s bereavement following the death of her husband, and continued to reside with her until she went into hospital prior to her death in August 2002. During the earlier years she could at any time have returned to Spain where, with her ample financial resources, she could have arranged the care and household support that her condition required. The configuration of her house in Spain suited her physical needs. However, she made the choice to be with Ms Allen and her family. Thus she chose to reside in England rather than in Spain, and from that choice it is reasonable to infer that she ceased to intend to reside in Spain permanently.

The purchase by Mrs Johnson of the property at 20 Linden Road with the purpose of renovating it to a state suitable for her occupation can reasonably be seen as being the point at which any intention of residing in Spain had “withered away”, in the phrase of Megarry J in Re Flynn at p 115, at which point, at the latest, her domicile in Spain had been abandoned. She may have retained the house in Spain by way of emotional tie to her past married life, but the place where she wanted to be was with Ms Allen and Mr Norris, and this she achieved by purchasing the property in Newcastle. That act on her part cannot be reconciled with an intention of returning to live in Spain.

This appeal relates solely to the inheritance tax liability of the executors of Mrs Johnson, and the relevant provisions are found in the Inheritance Tax Act 1984, as follows:

There is provision in s 221 Inheritance Tax Act 1984 entitling the Board of Inland Revenue to state by notice that they have determined the matters specified in such notice, including any matter that appears to the Board to be relevant for the purposes of the inheritance tax legislation. Such a notice was served on the Appellants on 15 September 2004 specifying that the Board had determined that Mrs Johnson was domiciled in the UK at the date of her death.

Section 222 Inheritance Tax Act 1984 gives the person on whom a s 221 notice of determination has been served a right to appeal against that determination (a right which the Appellants have validly exercised) and s 224(5) Inheritance Tax Act 1984 provides this tribunal with the jurisdiction to hear that appeal:

Much in this appeal is common ground between the parties. It is agreed that Mrs Johnson had a domicile of origin in England, and that in or about 1982 she acquired a domicile of choice in Spain which she retained until at least late 1996. It is agreed that since it is the Revenue who assert that there was a change in Mrs Johnson’s domicile at some point between late 1996 and her death in August 2002, the burden lies on them to prove to the required standard of proof that Mrs Johnson abandoned her domicile of choice before her death. It is agreed that if Mrs Johnson did abandon her domicile of choice in Spain, then her domicile of origin in England thereupon revived. Mr Twiddy was happy to adopt Mr Dawson’s exposition of the relevant law as to domicile and what is required to establish that a domicile of choice has been abandoned. The point of difference comprises the facts, or, rather, the inferences to be drawn from the facts in relation to Mrs Johnson’s residence and intentions: in particular, whether Mrs Johnson ever ceased to reside in Spain and whether she ever ceased to intend to reside in Spain permanently.

Since there was no dispute between the parties as to the law, and since Mr Dawson’s submissions are set out in some detail in paras. 40 to 45 above, brief mention is all that is required here. Rule 13 of Dicey (see para. 41 above) sets out the law which is relevant to this appeal: in order to demonstrate that a person has abandoned his domicile of choice in a particular country it is necessary to show that he has both ceased to reside there and ceased to intend to reside there permanently or indefinitely. Both parties made reference to the following passage in the judgment of Megarry J. in Re Flynn [1968] 1 WLR 103 at 115:

“When animus and factum are each no more, domicile perishes also; for there is nothing to sustain it. If a man has already departed from the country, his domicile of choice there will continue so long as he has the necessary animus. When he no longer has this, in my judgment his domicile of choice is at an end, for it has been abandoned; and this is so even if his intention of returning has merely withered away and he has not formed any positive intention never to return to live in the country. In short, the death of the old intention suffices, without the birth of any new intention. In this way abandonment dovetails in with acquisition. It follows that in my view the true rule is correctly stated in Dicey and Morris [as set out above].”

It is necessary to qualify the statement of the law as set out in Rule 13 of Dicey by reference to comments made in Plummer v IRC [1988] 1 All ER 97, in the context of a taxpayer who in that case retained a place of residence in her domicile of origin (which domicile she argued she had abandoned) and also a place of residence in her asserted domicile of choice. In his judgment in that case Hoffmann J. says this (at p 106 e):

“…I agree with counsel for the taxpayer that r 13(1) of Dicey and Morris (11^th edn, 1987) p 128, if read literally, appears to go too far. This says:

‘A person abandons a domicile of choice in a country by ceasing to reside there and by ceasing to intend to reside there permanently or indefinitely, and not otherwise.’

These words might suggest that domicile of choice (and presumably a fortiori a domicile of origin) cannot be lost unless the person in question has ceased altogether to reside there. I do not think that the rule was framed with dual residence in mind. At any rate, it seems to me that Udny v Udny [(1869) LR 1 Sc & Div 441] shows that loss of a domicile of origin or choice is not inconsistent with retention of a place of residence in that country if the chief residence has been established elsewhere.”

Before applying the law to the circumstances of Mrs Johnson and the inferences which have to be made from the facts as to her state of mind and intentions, it is helpful to recall the wider context of her life, set out in detail in the statement of agreed facts (see paras. 7 to 26 above). This was not, as Mr Dawson pointed out, a case of a person who had lived and worked in the UK all her life until moving to Spain on retirement only to return to the UK when ill-health and the solitude of widowhood rendered desirable the renewal of close connection with family and friends, with familiar places and a remembered way of life. Mrs Johnson had lived virtually all her married life, and most of her adult life, outside the UK. She had never established a home in the UK, and her family connections, after the death of her husband’s mother, were limited to her half-brother (with whom she had no contact) and her half-sister, to whom she made short and infrequent visits. In only the most limited way could it be said that, since 1953 when she and her husband began to live abroad as he pursued his career, for her the UK was “home”. This lack on Mrs Johnson’s part of what one might call affinity with the UK is significant background or context to any analysis of her actions and intentions.

The first question which requires an answer in order to determine whether Mrs Johnson abandoned her domicile of choice in Spain is whether Mrs Johnson ceased to reside in Spain at any point before her death. Throughout the period until her death she retained her house in Spain, kept it maintained and the grounds cared for, and generally in a state ready for immediate and comfortable occupation. Indeed, this was so to an almost remarkable extent, since, with the exception of some of her clothes and some of her jewellery, everything else she owned by way of personal effects (as well as furnishings) was kept in the house. Even her pets were maintained there. There was no use of the house other than on the visits Mrs Johnson made with the Norrises in the early period of her stay with them. On those visits Mrs Johnson appears to have resumed her life there much as she lived it before her husband died.

It is clear, therefore, that she had a place of residence in Spain until her death. It follows, I think, that when she visited the house she was residing in Spain for the purposes of the law of domicile. More questionable is whether she resided in Spain for domicile purposes after those visits ceased – whether the fact that she had available to her a place of residence in Spain in itself resulted in her residing there notwithstanding that she did not in person physically occupy that place of residence.

The Appellants argue that Mrs Johnson continued to reside in Spain because the nature of her sojourn at 18 Linden Road – in her terms, as a “visitor” – was not truly that of residence, and should in any event be disregarded for domicile purposes, since it was both precarious and taken up for a specific purpose, namely to obtain care and support. The Revenue argue the point differently, seeking support from the Plummer case to the effect that even if Mrs Johnson had throughout a place of residence in Spain, her “chief residence” was in England with the Norrises, and that is sufficient to establish the factum of absence from the country of domicile of choice.

It seems to me, in the specific context of whether a domicile of choice has been abandoned which is the matter of this appeal, that a person can cease to reside in his domicile of choice notwithstanding that he retains a place of residence there. As Nourse J. said in IRC v Duchess of Portland [1982] 1 All ER 784 at 790: “Residence in a country for the purposes of the law of domicile is physical presence in that country as an inhabitant of it.” Unlike the Plummer case, this appeal is not concerned with a person with a place of residence in two countries who regularly was physically present in both those countries (at least, not after 1999). Nor, so it seems to me, can the Appellants disregard the physical presence of Mrs Johnson in the UK on the grounds that it was precarious, or chosen for a specific purpose – that principle is relevant to the determination of whether a person has established a domicile of choice, not whether he has abandoned such a domicile. It is my view, and I so hold, that once Mrs Johnson ceased to have any physical presence in Spain – that is, once her visits there ceased after 1999 – she ceased to reside there for the purposes of the law of domicile, notwithstanding that she retained her house which was available to her as her residence.

That being so, the second question to be decided is whether Mrs Johnson had, before her death, ceased to intend to reside in Spain permanently or indefinitely. Here we are concerned not with the act of Mrs Johnson ceasing to reside in Spain, but her intentions so far as they can now be discerned. From the facts as I find them from the evidence presented at the hearing I do not consider that the Revenue can establish to the required standard of proof – the balance of probabilities - that Mrs Johnson ceased to intend to reside permanently in Spain.

In dealing with this second question it is again necessary to look first to the circumstances of the residence Mrs Johnson retained in Spain and to what I have described as the remarkable extent to which she maintained it ready for occupation. This is in marked contrast to the circumstances in which she chose to live at 18 Linden Road, where she made no attempt to gather around her any effects from her own home – not even personal photographs, books or other mementos: where she was, in short, the “visitor” as she described herself. She regarded her home as being in Spain and not in England. She made no attempt to create about her a home in England, but she preserved in every respect and detail her home in Spain. That, it seems to me, is a clear indication that she retained the intention of returning to live in her home in Spain if and when the circumstances permitted. At the hearing I questioned Mr Norris as to whether Mrs Johnson may have regarded the house in Spain as some sort of memorial of her husband or her married life to be preserved for that reason. His reply was that she valued the house as her home where she was not beholden to anyone else, as she demonstrated when she visited the house, and whilst the house clearly held memories for her and was an emotional link with her married life, she was not overly sentimental – she had no hesitation, for example, in disposing of her husband’s clothes when she returned to the house after his death.

Since Mrs Johnson required assistance in order to travel to Spain the circumstances which permitted her to return were limited to the holidays which the Norrises were able and prepared to devote to that purpose. The evidence of Mr Norris was that she was always eager to press them to take her to Spain, even when that was beyond her physical capability in later years. At no point did she take any action which prevented her from returning to her home in Spain or which signalled that she had given up on her hope of returning there – her deteriorating physical and (later) mental health may have made that increasingly unlikely, but her own acts were consistent with a continuing intent to return there to live in her home, albeit with the care and support of Ms Allen and Mr Norris. There was no evidence to this effect, but in the circumstances it is reasonable to surmise that Mrs Johnson may have anticipated that, with the retirement of Ms Allen and Mr Norris not too distant, and with their daughters leaving home, she and they could well have spent significant periods at her home in Spain.

Mr Twiddy pointed to the passage in the judgment of Megarry J. in Re Flynn which I have already quoted concerning the withering away of the intention to return to the country of domicile of choice (see para. 53 above): this, he says, aptly describes Mrs Johnson’s state of mind – as her health deteriorated and she became more and more dependent upon the Norrises, her intention of returning simply withered away in the face of the inevitable fact of her physical incapacity. That in my view is not a reasonable inference to draw from the evidence. Clearly Mrs Johnson must have been increasingly aware of her growing dependence upon the Norrises, but as her condition deteriorated her resolve was directed at ensuring that she remained in their care, and not in the care of a residential home. This is consistent with her desire to return to Spain – it remained a possibility if she continued to live in their care, but that possibility effectively ceased if she moved to a residential care home.

Mr Twiddy referred to the purchase by Mrs Johnson of the adjoining house at 20 Linden Road in late 2001 as an event – perhaps the defining event - which demonstrated that she had ceased to intend to reside permanently in Spain – by agreeing to make that purchase and to renovate the house she had shown herself willing to accept the care arrangements proposed by the Norrises and she thereby implicitly signalled that she intended to live out the rest of her life in England rather than in Spain. The evidence suggests that this might be too simplistic a view of Mrs Johnson’s intentions. It seems that she was presented with, in effect, an ultimatum (and in using that expression I intend no criticism of the Norrises, who in their treatment of Mrs Johnson appear to have surpassed all reasonable calls of family ties or duty): either purchase this house and renovate it so that it can be used as the means of continuing the level and nature of care presently enjoyed, including the involvement – albeit reduced – of the Norrises; or move to a residential care home. As Mr Norris explained, Mrs Johnson saw the purchase as the means to postpone the step she most resisted. She was prepared to purchase the house and to renovate it (which she could well afford to do), but only on the understanding that it was not an irreversible action. It seems, therefore, that the purchase of the house at 20 Linden Road was not an expression of an intention to abandon the possibility of returning to Spain – since it secured her continuing life with the Norrises it was more likely seen by Mrs Johnson as the best way to keep open that possibility. Mr Norris accepted that if Mrs Johnson had lived to see the completion of the renovation of the house she may at that point have been faced with, in his terms, the “crunch decision” as to whether to make that, rather than her house in Spain, her home, but that point of decision never arrived for her.

Mr Twiddy argued that Mrs Johnson’s priority, from late 1996, was to be with Ms Allen so that she could be cared for by her in the circumstances of Mrs Johnson’s incurable and progressive illness. She made that choice rather than the choice to live in Spain where she could have paid for the care she required. That choice required that she should live in England, so that in making that choice, he argued, Mrs Johnson ceased to intend to live permanently in Spain. That again seems too narrow or simplistic an analysis in the circumstances of this case. Following her husband’s unexpected death Mrs Johnson sought from Ms Allen the support and help of the kind she had had from him, and as her illness progressed more support was required. But that is not inconsistent with a continuing intention to live in Spain for so long as there was the possibility that such support and help by Ms Allen could be provided to Mrs Johnson in her own home in Spain. The visits in the early years showed that such an arrangement was feasible, and Mrs Johnson’s eagerness to return to Spain at any time demonstrates her underlying desires. Had the question been posed to her: assuming you can have the care and support of the Norrises either in Linden Road or in your house in Spain, where do you intend to live, then there is no doubt as to the answer Mrs Johnson would have given. That is because England held no ties for her other than it being the home of the Norrises, on whom she became dependent. Her home and her life were in Spain, and she took care and incurred expense to secure that she could return to that home and life if and when the circumstances of her care permitted. Nor is the question as posed fanciful: Mrs Johnson could have seen that it was within the bounds of possibility that the time could come when the Norrises were in a position to give her that choice, at least in terms of extended periods of residence in Spain.

For these reasons I conclude that the Revenue do not establish that Mrs Johnson ceased to intend to reside permanently in Spain, and accordingly they fail to establish that by the time of her death she had abandoned her domicile of choice in Spain. Mrs Johnson was therefore not domiciled in the UK on her death, and for that reason I make the direction I specify in para. 5 above.