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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Bhusate v Patel & Ors [2018] EWHC 2362 (Ch) (13 September 2018) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2018/2362.html Cite as: [2018] EWHC 2362 (Ch) |
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BUSINESS AND PROPERTY COURTS
OF ENGLAND AND WALES
PROPERTY TRUSTS AND PROBATE LIST
In the estate of Mr Kashinath Vithoba Bhusate (deceased)
And in the matter of the Inheritance (Provision for Family and
Dependants) Act 1975
London EC4A 1NL |
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B e f o r e :
____________________
MRS SHANATABI KASHINATH BHUSATE (personally and as personal representative of the estate of Kashinath Bhusate deceased) |
Claimant |
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- and – |
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(1) DR MANAGALA ![]() (personally ![]() (2) MRS JEEJA THAKARE (3) MRS ULKA PARMAR (4) DR RAVINDRA BHUSATE (5) DR LEKHA HERBERT (6) DR ARVIND BHUSATE |
Defendants Defendant and Part 20 Claimant |
____________________
Richard Wilson QC and Toby Bishop (instructed by Bolt Burdon Solicitors) for the
2nd to 5th Defendants
Eliza Eagling (instructed by Withers LLP) of the 6th Defendant and Part 20 Claimant
Hearing dates: 28 and 29 June 2018
____________________
Crown Copyright ©
Chief Master Marsh:
"2. That the Court strike out paragraphs 7, 15 to 19 of the Claimant's details of claim and paragraphs 5 to 8 of the 6th Defendant's Defence and Counterclaim pursuant to CPR 3.3(2)(a) because they disclose no reasonable grounds for bringing a claim. Further and in the alternative that the 2nd to 5th Defendants have summary judgment on the issues therein pursuant to CPR 24.2 because the Claimant and the 6th Defendant have no real prospect of success on the issue and there is no other reason why the issues should be disposed of at trial.
3. That the 2nd to 5th Defendants have summary judgment on the issues of:
a. the removal of the claimant and the 1st Defendant as personal representatives;
b. the grant of administration of their mother's estate;
c. a declaration that their father's estate holds the Property on trust for their father's estate and their mother's estate.
4. That the Court determine the Claimant's application to extend time pursuant to section 4 of the [Inheritance Act] as a preliminary issue."
"(b) (i) the question which the claimant wants the court to decide or
(ii) the remedy which the claimant is seeking and the legal basis for the claim to that remedy;"
"3. A grant of letters of administration in the deceased's estate was taken out of the Principal Registry of the Family Division by the Claimant and the First Defendant on 12 August 1991. That grant certified the gross value of the deceased's estate to be £137,917.78 and the net value to be £137,449.70.
4. As his widow, the Claimant's entitlement in the deceased's estate was a statutory legacy of £75,000 and a life interest in one half of the balance of his estate. The applicable interest rate is 6%.
5. The claimant exercised her right to capitalise her life interest by notice to the First Claimant dated 16 March 1992.
6. The deceased's estate was principally comprised of his dwelling house at 62 Brookside Road, London NW 11 (the Property). The Property was solely owned by the deceased and was the Claimant's matrimonial home. At the time of the deceased death it was occupied by the deceased, by the Claimant and by the Fourth, Fifth and Sixth Defendants.
7. In or about July 1990 the Claimant was given to understand by a relative of the deceased's first wife, Vishwanath Dahake that the Fourth defendant, on behalf of the other siblings, had expressed the view that she might remain in the Property for as long as she wished.
8. In September 1990 the Claimant and the Sixth Defendant became the sole occupants of the property.
9. On 8 July 1992 the Claimants then solicitors, Kannan & Co, wrote to Messrs Rubens Rabin & Co for some or all of the Third, Fourth and Fifth Defendants setting out their calculation of the Claimant's interest in the estate based on hypothetical sale prices for the Property.
10. No agreement was reached between the parties as to the distribution of the estate and the Claimant was advised by her solicitors that the Property needed to go on the market for sale. The Property was marketed for sale between June 1992 and August 1994. The sole offer received for the Property was £120,000 in May 1994.
11. In February 1993, the Second Defendant's solicitors, Francis & Solomons, expressed concern that the Claimant was not offering to compensate the estate for her occupation of the Property.
12. After February 1993 no Defendant suggested or demanded that the Claimant should be making payments for her occupation of the property.
13. The Claimant was content for a sale to proceed but the Defendants took the view that the market was such that a sale would be disadvantageous.
14. Had a sale proceeded in 1994 at £120,000 the Claimant would have been entitled to the entirety of the equity in the Property pursuant to her entitlement in the deceased's estate including accrued interest.
15. In the premises the Claimant became beneficially entitled to the equity in the Property reflecting her entitlement in the deceased's estate.
16. In the alternative the court should infer, alternatively impute to the parties, a common intention that the Claimant became the sole beneficial owner of the Property by dint of a resulting, alternatively a constructive, trust.
17. Further in the alternative, in 1994, by dint of a resulting, alternatively a constructive trust the parties became equitable co-owners of the Property. The parties' shares therein are:
(a) In proportion to their contributions thereto being reflected in their shares of the deceased's estate which they elected to retain in the property; alternatively,
(b) Such share as the court might deem just by reference to their entire course of dealing in relation to it.
In either event the Claimant will say that the Court might infer, alternatively impute to the parties, a common intention that the First to Fifth Defendants interests in the Property crystallised in 1994, or at such later date as the court might deem just, such that the Claimant and the Sixth defendant only were to enjoy the benefit of any subsequent increase in the value of the Property.
18. The court might infer or impute such intentions from:
(a) the failure or refusal of the 1st to 5th defendants to make any contribution towards the maintenance and upkeep of the Property;
(b) the Claimant continuing to the best of her ability to maintain the Property and effect repairs to it;
(c) the Sixth Defendant assisting the Claimant in this regard; and
(d) the assurances and representations made by one or more of the other Defendants to the sixth defendant that:
(i) the Claimant might live in the property for so long as she wished;
(ii) that the property might fall down for all they cared;
(iii) that they were content to transfer any interest they might have to him without compensation.
19. Further in the alternative the Claimant's entitlement in the estate is her statutory legacy and capitalised life interest plus interest at 6% per annum since the death of the deceased."
(1) Case 1: She claims to be the sole beneficial owner of the property by virtue of the facts and matters pleaded in paragraphs 3 to 14 of her claim. The outcome asserted by the claimant is said to be the legal consequence of the events to which she refers.
(2) Case 2: The same outcome is arrived at, based on the same facts and matters, either by a resulting trust, or alternatively, by a constructive trust, based on the common intention of the parties.
(3) Case 3: Next, the claimant says that in 1994, her joint interest in the property with the defendants crystallised by the creation of either a resulting or constructive trust. Again, this is said to be the consequence of the common intention of the parties. She does not specify the proportions in which the interests are held but provides two alternative ways in which those interests are to be established.
"5. As stated at paragraph 5 [of the claimant's claim], the Claimant exercised her right to capitalise her life interest by notice to the First Defendant dated 16 March 1992. Given that the deceased's estate was principally comprised of the Property, at that time all parties had an interest in the Property. But the parties' common intention altered significantly over the years. The First to Fifth Defendants have ignored the Property and have not attempted to invest in it, maintain it or repair it. They have never sought for the Property to be sold or let out. They allowed the Claimant and the Sixth Defendant to act in all respects as sole beneficial owners of the property.
6. In the premises the court should infer, alternatively impute to the parties, a common intention that between them the Claimant and the Sixth Defendant were entitled to the whole beneficial interest in the Property. In reliance on the aforesaid common intention, the Sixth Defendant has acted to his detriment, in particular since 2000, the Sixth Defendant has spent £52,032.41 on repairs and maintenance to the Property and approximately £7,680 on insuring the Property.
7. Alternatively, in the circumstances a proprietary estoppel arises so that the First to Fifth Defendants are estopped from denying that between them the Claimant and the Sixth Defendant are entitled to the whole beneficial interest in the property."
"I don't care, however long she [the claimant] is alive, leave her in it [the Property]"
(1) "As time went on …" the 1st to 5th defendants lost interest in the property.
(2) She was told that if the value of the property was taken at the probate value, her "entitlement is to all of the value in the property."
(3) She and the 6th defendant had lived alone at the property since 1990 and had paid for its upkeep and maintenance.
(4) She understands that on one occasion, the 4th defendant told the 6th defendant that so far as he was concerned the property was nothing to do with him and could fall down. However, this assertion is not mentioned in the 6th defendant's statement.
(5) When the 6th defendant became an adult, he tried to agree with his siblings for the property to be transferred to the claimant with or without him. "Whilst I understand that at various times all of them expressed agreement. At least some of them have now changed their minds."
"My recollection is that at that stage I thought that my mother had a right to most of the Property and that the half-siblings and I had some share of the Property. Insofar as I gave it any thought I probably thought that my share was greater. Out of family obligations and respect, I offered to 'buy out' their shares so that my mother and I could move on with our lives. I had no idea of the true legal position."
The applicants' case
(1) The claimant and the 1st defendant, as administrators, were subject to fiduciary duties and under duties to preserve the estate, to get in any assets and to distribute the estate.
(2) It was their responsibility as administrators to keep the property in repair, in relation to which they had a right of indemnity from the estate.
(3) The estate remains unadministered and a beneficiary has no choate beneficial interest in property forming part of an unadministered estate. The sole entitlement is to due administration of the estate: see Re Hemming [2009] Ch 313 at [22] to [30]. The exception is where there has been an appropriation or an assent and there has been none here.
Case 1
"An assent to the vesting of an equitable interest need not be in writing. It may be inferred from conduct."
The rule against self-dealing
"The plaintiff is asserting an equitable and not a legal remedy. He has by his conduct disentitled himself to it."
"… on general equitable grounds I am of the opinion that in the present case the transaction should not be set aside. The transaction is not void. It is one which is voidable and is liable to be set aside if a proper case is made out for that relief."
(1) In my judgment, some care must be taken to qualify a statement that the rule against self-dealing entitles an interested party to apply to set aside the transaction 'ex debito justicae' just as the authors of Underhill and Hayton have done. Although it is right that a transaction involving self-dealing will generally be set aside, that outcome does not invariably follow. The court is entitled to enquire about the circumstances in which the self-dealing occurred in order to see if they can properly be characterised as being exceptional. That approach is consistent with the decisions in Kane v Radley-Kane and Holder v Holder and it does nothing to dilute the importance of the rule. It remains the case that the circumstances in which the rule will be disapplied are likely to be rare.
Cases 2 and 3
(1) The failure of the 1st to 5th defendants to make any contribution to the maintenance and upkeep of the property is merely passive. As to the allegation that there was a refusal to make a contribution, there is no pleaded case about who refused, when it was refused and how the refusal was communicated. And the evidence does not assist the claimant. At best there is evidence that the claimant "understood" the 4th defendant said the property could fall down. The 6th defendant does not mention this occasion. His evidence is that the defendants did not offer to help with maintenance, not that they refused to do so. But, in any event, the fundamental point made on behalf of the 2nd to 5th defendants is that they had no legal obligation to make a contribution. It was the duty of the claimant and the first defendant as administrators to preserve the property and to pay for its upkeep, subject to a right of indemnity from the estate.
(2) The efforts made by the claimant to maintain the property are referrable to her position as administrator. She was in occupation of the property without making any payment for it.
(3) The fact that the 6th defendant helped the claimant to maintain the property does not advance the claimant's case.
(4) Reliance is placed upon three "assurances and representations" without providing any particulars of who provided them, when and by what means. The three assurances and representations are:
(i) That the claimant might live in the property as long as she wished. This is not supported by the claimant's witness statement and no reference is made to paragraph 7 of the claim. In any event, an assurance in 1990 communicated through a relative of the deceased's first wife emanating from the 4th defendant is of limited probative value. No basis for the 4th defendant being authorised on behalf of all the defendants is given. The 6th defendant's witness statement does not support the claimant's case on this point.
(ii) That the property might fall down for all the defendants cared. This appears in the claimant's statement as something the 4th defendant said to the 6th defendant. However, he does not mention it.
(iii) That they were content to transfer any interest they might have without compensation. This is not supported by the claimant's statement or the correspondence. The 6th Defendant's statement evidences some engagement with the defendants in 2004 but on the basis that the claimant and the defendants all had a share in the property. The 6th defendant proposed that their interests would be bought out. Although he says that two of the defendants said they would agree to transfer without consideration this falls some way short of all of them agreeing. And it seems not long after the 4th defendant said the deal was off. Even if the assurances were sufficient, the claimant would have to show there was reliance in a very short period and, as noted previously, no expenditure was incurred on works of repair in and around 2004.
"Subject to section 21 (1) and (2) of this Act –
(1) no action in respect of any claim to the personal estate of a deceased person or to any share or interest in any such estate (whether under a will or on intestacy) shall be brought after the expiration of twelve years from the date on which the right to receive the share or interest accrued; and
(2) no action to recover arrears of interest in respect of any legacy, damages in respect of such arrears, shall be brought after the expiration of six years from the date on which the interest became due."
"As I have said, the better view is that the period under section 22(a) of the 1980 Act (in cases to which that section applies) will not run until the administrator has paid the costs, funeral and testamentary expenses, debts and other liabilities properly payable out of the assets in his hands, and provided for the payment of any pecuniary legacies. It is not until then that he is in a position to distribute the residuary estate to those entitled under section 46 of the Administration of Estates Act 1925; because it is not until then that "the residuary estate of the intestate" can be identified – section 33(4) of that Act. That is not, of course, to say that a beneficiary has no remedy against an administrator who delays in getting in the assets and paying the administration expenses and debts: it is only to say that, in such a case, time does not run against the beneficiary under section 22(a) of the Limitation Act 1980."
(1) He puts his case in very general terms. He says in 1992 all the parties had an interest in the property and their common intention changed "over the years". He says, in effect, the 1st to 5th defendants' interests in the property were abandoned by (i) ignoring it, (ii) not attempting to invest in it, (iii) not maintaining or repairing it and (iv) not seeking for the property to be sold or let.
(2) However, the 6th defendant is unable to say that the estate has been administered. He accepts it has not. The duties to maintain the property rested with his mother and the 1st defendant. He does not rely on an assent. On the facts he relies on, his starting point is wrong in law. Neither he nor the other parties as beneficiaries under an intestacy has a beneficial interest. They have, or had, a chose in action. Therefore, there were no interests upon which an amended common intention could bite even assuming the court were to be willing to extend the principles derived from Jones v Kernott to a family inheriting interests in an estate under an intestacy.
(3) On his evidence, all the siblings had an interest in 2004 and it was for but a short period that the possibility of a deal being done was canvassed. He suffered no detriment during that period. In any event, it is essential for him to plead (and ultimately to establish) that the 4th defendant had authority to act for other siblings – see Fielden v Christie-Miller [2015] EWHC 87 (Ch) per Sir William Blackburne at [26].
(4) The proprietary estoppel claim is based upon the 6th defendant's admission of the claimant's case. But the two cases are not consistent. Her case is limited to events post 1994 whereas his own case is not so limited. In any event, it is said that the circumstances are not sufficient to found an estoppel either as acquiescence or detrimental reliance, taking his case at its highest.
(5) No basis for the taking of an account of the 6th defendant's expenditure on the property is pleaded.
(1) She accepts the beneficiaries of an unadministered estate have only a chose in action, namely a right to the due administration of the estate. They do not have a beneficial interest in the property comprised in the estate.
(2) The ordinary rule is that estate administration is prima facie complete when all debts and expenses have been discharged and the residue ascertained. At that point the personal representatives become trustees of the assets in their hands.
(3) The point at which an administrator ceases to be such and becomes a trustee may not be easy to determine.
(4) There is no reason why the existence of a constructive trust should depend upon the technical distinction between administered and unadministered estates, a distinction which is difficult to draw and she submits that the application of such a rule would create confusion and uncertainty.
(5) A common intention constructive trust can be inferred from inaction. Here she relies upon the facts in Jones v Kernott where the court concluded that Mr Kernott had demonstrated no intention of availing himself of beneficial ownership and the logical inference in that case was that his beneficial interest had crystallised when Mr Kernott bought his own property.
Conclusions concerning the claimant's claim
(1) As to cases 2 and 3, she is not entitled to put forward inconsistent claims which rely on different common intentions.
(2) Cases 2 and 3 relying on a resulting trust are bound to fail.
(3) Based on the analysis I have summarised earlier in this judgment, Cases 2 and 3 are unsustainable on the facts she has put forward; and there is no reason to believe further evidence will improve her prospects of success.
(4) I accept the analysis put forward by the applicants of the difficulties in the claimant's case pleaded at paragraph 18 of the claim.
Conclusions on the 6th defendant's case.
Section 50 Administration of Justice Act 1985
(1) They have not provided an account to the beneficiaries.
(2) They have failed to progress the administration.
(3) The claimant and the 1st defendant are not competent to act together as co-administrators.
(4) The claim shows the claimant has a conflict of interest in relation to the other beneficiaries.
Mrs Bhusate's estate
(1) The period that has elapsed since the assent.
(2) The acceptance by the defendants of the status quo since they achieved adulthood.
Conclusion
Note 1 Save under Practice Direction 8A paragraph 15.14(1)(e). [Back]