Trust and Estate Disputes Quarterly Round-Up: Q4 2022

This quarterly contentious trust and probate litigation update provides a summary of a cross-section of reported decisions handed down in the courts of England and Wales in the period October 2022 - December 2022.

Guest v Guest 2022 UKSC 27

The Supreme Court has given judgment in this long running and high profile proprietary estoppel claim.

Tump Farm had been in the Guest family for three generations. Andrew Guest left school when he was 16 years old and worked at the farm for over 30 years. In October 1981, Andrew’s parents made wills designed to ensure that Andrew and his brother would inherit Tump Farm and its business in equal shares. However, by 2015 relations between Andrew and his parents had significantly deteriorated and he subsequently stopped working and moved away from the farm. In May 2018 Andrew’s parents made new wills excluding Andrew from any entitlement.

In 2017, Andrew issued proceedings against his parents premised on their repeat assurances that he would inherit a substantial interest in the farm and that he had relied on that assurance to his detriment. At first instance, Andrew was successful and awarded a lump sum comprised of 50% of the market value of Tump Farm’s dairy farming business and 40% of the value of the freehold and buildings at Tump Farm.

The remedy was appealed in the Court of Appeal with Andrew’s parents submitting that the relief given should have been based on what the parents intended as opposed to Andrew’s expectation. The court determined that the High Court Judge was not wrong in his original valuation of detriment. The Court of Appeal acknowledged that differing methods to quantify detriment had been applied in other cases of a similar nature but considered that the discretion afforded to the court was very broad and flexible. In this case, the approach adopted by the court at first instance was found to be appropriate. The appeal was dismissed.

The Supreme Court was asked to consider further the appropriate remedy, in particular:

1. Whether a successful claimant’s expectation was an appropriate starting point when considering remedy; and
2. Whether the remedy granted went beyond what was necessary in the circumstances.

In effect the court had to determine whether in circumstances whereby Andrew’s claim had been successful they should enforce the promise made by his parents or apply a different remedy to instead compensate him for the detriment he suffered as a consequence of working on the farm for 30 years for a basic wage.

All five Justices of the Supreme Court allowed the appeal (albeit were split in their approach). Lord Briggs giving the lead judgment concluded that Andrew should be given either a lump sum payment but at a reduced sum to reflect the accelerated payment or that Tump farm be placed in trust for him but with a life interest in his parents favour. It was for the parties to reach an agreement as to which remedy should be applied.

Margulies v Margulies 2022 EWHC 2843 Ch

The Chancellor of the High Court, Sir Julian Flaux, has given judgment in a claim between two brothers, Stephen and Marcus Margulies concerning a purported declaration of trust in relation to an account with UBS in Switzerland in favour of Stephen.

The claim was the sixth set of proceedings between the brothers concerning their late father’s estate following his death in 1991, the most recent previous proceedings issued in 1997 also by Stephen alleging that Marcus inherited their father’s residuary estate subject to a secret trust in Stephen’s favour. The claim was struck out at first instance and the decision subsequently unanimously upheld by the Court of Appeal. Marcus submitted that the new claim was barred because it was the same claim as the claim pursued in 1997.

The court considered the law on res judicata finding that issue estoppel would bar the new claim unless Stephen could show that there were special circumstances such that the estoppel would cause injustice. The Chancellor noted that the exception should be kept within narrow limits and that in his judgment the matters relied on by Stephen came “nowhere near justifying the application of that exception”.

Click here for a more detailed analysis of this case.

Hopes v Burton 2022 EWHC 2770 Ch

The High Court has considered a Part 8 claim to set aside two appointments from a trust on the grounds of mistake.

The case related to two deeds of appointment made in 2013 and 2014 by the trustees of a trust settled by Hilary Marsden in 1992 in respect of a policy she held with Skandia Life. The declaration of trust provided for two types of beneficiary (1) the Possible Beneficiaries and (2) the Immediate Beneficiaries, who were Hilary’s two children Adam and Kate, her former partner Amanda and her former partner’s daughter Lillie.

The settlor passed in 2004. The trustees of her estate did not become aware of the policy with Skandia Life until late 2012 when the policy was valued at £2.15 million. At this time, the original trustees agreed to stand down and two new trustees were appointed in their place. The new trustees decided that Amanda should no longer be a beneficiary of the trust and that whilst Lillie would benefit in her lifetime this benefit should not carry over to her family when she died. In 2013 the trustees entered into a deed of appointment to give effect to these decisions. A further deed of appointment was entered into in 2014 when a capital sum from the trust was distributed to Lillie.

The trustees intention when entering into the 2013 deed of appointment was to maintain the interests of Adam, Kate and Lillie but the effect of the appointments was to revoke their qualifying interests and resettle the shares onto a new trust. This gave rise to a significant immediate inheritance tax charge as well as further charges every 10 years and upon distributions.

Master Clark relied on the principles set out in the Supreme Court decision in Pitt v Holt to make his decision namely that there must be a causative mistake of sufficient gravity to render it unjust for the transaction to stand. He set aside both deeds of appointment finding that the trustees were mistaken in their belief when entering into the 2013 appointment “either that it had no adverse tax consequences, or, at the very least, that there was no risk of adverse consequences” and that either “of those mistake beliefs would in [his] judgment be sufficiently serious” to justify setting aside the appointments.

Jennison v Jennison 2022 EWCA Civ 1682

The Court of Appeal has confirmed that a foreign executor pursuing a claim in this jurisdiction in relation to property in England derives title pursuant to the law in England and Wales and is consequently able to issue proceedings here when dealing with the estate of a person who lived and was domiciled somewhere else.

In this case the deceased, Graham Jennison, lived and died in Australia. Graham had an Australian will appointing his wife Glenda as the executrix. His estate comprised properties in Australia and England with the latter including land in Wales purchased as tenants in common with his brother Richard.

When Graham died his share of the land in Wales fell into his estate. Richard and his wife Gwyneth subsequently took steps in relation to the land that Glenda considered to be in breach of trust and issued proceedings in England accordingly. Glenda had a grant of probate in Australia but had not had it re-sealed in England prior to commencing proceedings. Richard and Gwyneth applied for the case to be dismissed on the grounds that Glenda did not have standing to bring proceedings in this jurisdiction but the Court of Appeal rejected the claim.

About the author

Katherine Pymont is a Senior Associate in our Dispute Resolution team. She specialises in Wills, Trusts and Inheritance Disputes. Katherine's experience includes challenging the validity of wills (including claims for lack of testamentary capacity, want of knowledge and approval, fraud, forgery and undue influence), claims under the Inheritance (Provision for Family and Dependants) Act 1975, removal of executors and trustees, breach of trust claims, fraud cases involving trust structures and professional negligence claims relating to wills and trusts.