Property Law: Fuller v Strom - Case Study Example

Property Law The first question that arises is the validity of the will and whether it can be established on the basis of genuine testamentary intent. In the recent case of Fuller v Strom1, Mr Strom’s will contained the words “I hate him like poison” and the validity of the will was challenged on grounds of the words of the testator being out of character. However, the Court of Appeal disagreed, holding that the testator knew and approved of the contents2. Testamentary freedom is the defining principle of inheritance law; in the case of Re Segelman3 Chadwick J stated that “the probability that a will which a testator has executed in circumstances of some formality reflects his intentions is usually of such weight that convincing evidence to the contrary is necessary.” The case of Re Snoek4 also established that a testator has the right to make dispositions out of the estate as she wishes. Since there is an existing presumption that a will which is rational on its face is valid5, it must be assumed that Dipesh has made the will with full knowledge and Nanda, as the executrix of the estate, will have a duty of care to give effect to his testamentary intent and ensure that the property is disposed of in such a manner that the interests of the beneficiaries named in the will is not compromised. Since 500,000 pounds out of the estate is already to be paid to the living nephews and nieces, there is an amount of 300,000 pounds that may pass as the residual estate to Nanda, of which she has already spent 200,000. There is a conflict that arises in this instance, because a will that is unconditional, i.e, designating Nanda as the beneficiary of the residual estate for life, must be immediately executed and conflicts with the provision made for Minesh on the remainder estate. There may be grounds for Minesh to file a claim on the estate. In the case of Corbett v Newey6 the beneficiary of the residual estate and the rightful beneficiaries had both instituted legal proceedings to make their claims and the costs were taken out of the estate. In Nanda’s case also, her failure to take a grant of probate and taxation7 that could accrue on the estate which is valued at 2,000,000 may further compromise Nanda’s position as executrix, in making out necessary payments from the estate. It must be noted that the value of Dipesh’s estate is 2,000,000 pounds of which the value of the house is 800,000 pounds. This suggests that the barn attached to the property may be worth much more and Rebecca’s claim on the estate must be taken into consideration. Both Dipesh and Peter have died before the completion of formalities for the transfer of the hall to Peter. Since Dipesh has however received the sum of 20,000 pounds, this may be enough evidence of his intent to conclude the sale, therefore Peter definitely a claim on Dipesh’s estate, at least in proportion to his investment in it. However, since Dipesh’s will does not provide any indication that the barn at Dipesh Hall is to be passed on to Peter, it may pass under the provisions of interstacy to his wife Nanda, since it only constitutes an oral promise to Peter to sell him the barn. For instance in the recent case of Thorner v Curtis8 the testator made a promise to his nephew, to leave the residue of his estate to him, but died without leaving the will, so the estate passed in interstacy to his blood relatives, his sisters. The nephew brought a claim in estoppel, especially because he had worked hard on the estate without remuneration. The Court found on behalf of the nephew on grounds that an unconscionable result would accrue if the estate was allowed to pass in interstacy. The question of passage of the barn is also one occurring without a formal written will/agreement to rely on. However, since Dipesh has received the payment for the hall, a mutual will may have come into existence on the disposition of the barn and its contents, in accordance with the Law of Property Miscellaneous Provisions 1989. In the case of Re Goodchild9 a constructive trust was imposed on property received from the testator on the basis of the existence of a mutual will. A constructive trust may be imposed on Rebecca’s behalf in regard to the proceeds from Dipesh’s barn and its contents, including the paintings which have been sold. Peter may also have a claim in estoppel, since he has parted with 20,000 pounds to his detriment on the basis of reliance on Dipesh’s promise to sell him the barn. The question of sale of the paintings may also be a contentious issue, since they have occurred after Dipesh has already agreed to sell the barn and its contents to Peter, therefore Peter may have a claim on them, including the proceeds from the paintings that Raj has sold. Since Raj is also one of the nephews, he is also entitled to the sum of 100,000 pounds for the estate, hence the question of whether he can also profit from the sale of a paintings which was part of a barn that was sold to Peter is the issue. It is possible that his share of those proceeds as well as the allocation he has made to his wife may be justified under the provisions of the Inheritance (Provision for Family and Dependents) Act 1975. But the precedent established in the case of Pascoe v Turner10 was that the award should not confer a windfall on the claimant, therefore this could be a basis for a claim to be made against him. Where Rebecca’s claim on the barn and the proceeds of the paintings is concerned, the outcome appears uncertain, due to the failure of Peter and Dipesh to adhere to the formality requirements set out under Section 2 of the Law of Property (Miscellaneous Provisions) Act 1989. Before his death, Peter has orally promised Rebecca the barn, but this has not been formally executed in writing, hence even if Peter can legitimately make a claim under proprietary estoppel on the paintings, this may not be transferable to Rebecca due to the possible failure to establish a legitimate claim. In the case of White v Jones, a remedy was fashioned to address the injustice that occurred since the only person who suffered a loss had no claim on the estate.11 Nanda therefore needs to be aware that a constructive trust may be set out by the courts in favor of Rebecca. In the case of Taylor v Dickens12an elderly lady promised her gardener she would leave her estate to him in her will, in return for which he worked without remuneration. The lady did indeed make such a will, then revoked it and left the property to someone else. The Court held that just by making the will, she had satisfied the expectation, hence estoppel would not apply. But in the case of Jennings v Rice13in a very similar case, the Court held that the appellant was entitled to some financial provision from the estate, albeit not the entire estate as promised, because he had relied on the promise to his detriment. Applying this in the case of Rebecca, Peter has relied on the promise to convey the barn at Dipesh Hall with its contents to his detriment, i.e, the payment of 20,000 pounds. In such cases, the courts have explained that in satisfying the question of equity that rises in these cases, any award made must be proportionate to the expectation and detrimental reliance. On this basis, it appears likely that the courts may allow some financial provision from Dipesh’s estate for Rebecca in proportion to her expectation and Peter’s detrimental reliance on the contract for sale that was to be completed on the barn. Nanda’s failure to satisfy Rebecca’s legitimate expectations may give rise to a breach of her duty as executrix of the estate, especially since her actions in purchasing the gold plated Rolls Royce have also resulted in a loss to the estate14. Another question that may arise in this context pertains to the interests of Rani, Ashok’s wife who is not directly named in the will. It is only those nephews and nieces living at the death of Dipesh, who can receive the sum of 100,000 pounds each. Ashok was living at the time of Dipesh’s death, so he will be entitled to receive the 100,000 pounds. After this death, the amount may pass to his child whom his wife Rani is pregnant with, as per Section 33 of the Wills Act, which allows for any gift in the will to pass to the relative’s child or children, unless a contrary intention is shown in the will15. Dipesh has specifically indicated that the nephews and nieces must be alive to receive the bequest, therefore testamentary intention must be examined to discover whether Dipesh did not intend this bequest to be made if any of the nephews/nieces died a short time after his death as is the case with Ashok. However, there is no indication in his will that Section 33 of the Wills Act should not apply. In the case of Blech v Blech16the will of the testatrix contained a similar requirement for the beneficiaries of the will to survive the testatrix, however it was held that the court could interpret this otherwise if the context and circumstances showed that this was not specifically the testator’s intention. In the case of Ling v Ling17 the phrase in question indicated a gift left to “all or any of my children living at my death….” and this was also deemed to include grandchildren. In Dipesh’s case, since there is no indication that he did not want section 33 of the Wills Act to apply, the child Rani is pregnant with may be entitled to the bequest meant for Ashok. Rani may also have some grounds to request financial provision for her child against the sum of 100,000 pounds owing to Ashok under the Inheritance (Provision for Family and Dependents)Act 1975. Under the provisions of this Act, person/s who before the death of the deceased were “being maintained, either wholly or in part, by the deceased”18 will have the right to apply to the Court for some financial provision to made in his or her behalf. In arriving at a determination of whether or not the person in question was being maintained by the deceased, the provisions of the Act require the courts to determine if the deceased was “making a substantial contribution in money or money’s worth towards the reasonable needs of that person.”19 This may well apply in the case of Rani and the child she is pregnant with, who were being supported by Ashok before his death and may also apply in the case of Minesh, if he was being actively supported by Dipesh. In the case of John and James, they are not family dependants but are the executors of Sanjay Ram’s estate, hence they will also function as the personal representatives or trustees of the estate. One of the children Ben, has not yet reached the age of 18 and will therefore be deemed to be a minor. Sections 31 and 32 of the Trustee Act of 1925, which govern the interests of minors in the proceeds of a trust, may apply in this case and his interest may be contingent upon him reaching the age of 18. Similarly, Daniel’s interests in the proceeds of Sanjay Ram’s estate may be contingent upon the provision made according to the trust that Sanjay Ram mentions in his will and is therefore not immediately payable. The first question that must be considered is the extent of authority that John and James may have in continuing to run the business. According to Section 15(f) of the Trustee Act of 1925, it is clearly stated that a personal representative may, at his/her discretion: “…compromise, compound, abandon, submit to arbitration or otherwise settle any debt, account, claim or thing whatever relating to the testator’s or intestate’s estate; and for those purposes may enter into, give, execute and do such agreements, instruments of composition or arrangement, releases and other things as seem to him expedient, without being responsible for any loss occasioned by any act or thing so done by him in good faith”. On this basis, it would appear that John and James may be well within their rights to continue to administer Sanjay Ram’s estate and run his business. However, under the provisions of the Trustee Act, the representatives do not have the power to compromise claims without reference to the beneficiaries. In this instance, since the children of Sanjay Ram are to receive the estate in equal shares, John and James may need to take their interests into consideration and if they continue to run the business and Sanjay Ram’s estate, it will be only as trustees on behalf of the real beneficiaries, i.e, the children of Sanjay Ram. Since one of the children is a minor and Daniel’s share is tied up in a trust added to which his whereabouts are not known, John and James may need to continue to administer Sanjay Ram’s estate and run his business, holding it in trust for the beneficiaries of Sanjay Ram’s estate. Moreover, if Chloe chooses to receive his share of the estate, John and James may need to make arrangements for such dispensation to be made to him. Under the Trustee Act of 2000, there is now a statutory duty of care that personal representatives will be required to exercise and while acting as trustees in the course of a business or profession, they must in particular, have regard to “any knowledge or experience that it is reasonable to expect of a person acting in the course of that business or profession.”20 Since John and James have already been carrying out Sanjay Ram’s business, they may have this knowledge. It must also be noted that Section 31(6) of the Trustee Act of 2000, which modifies the existing Trustee Act of 1925, has included a new general power of investment of trust proceeds by trustees as a default measure.21 By virtue of Section 35(1) of the Trustee Act of 1925, personal representatives will be as subject to the Trustee Act as actual trustees carrying out the requirements of a Trust. Therefore, in the event that Chloe chooses to exercise his right to acquire financial provision from the estate, John and James must make arrangements accordingly, but may continue to administer the rest of the estate and run the business on behalf of Ben and Daniel. The case of Howard raises the issue of adverse possession. Although he is living rent free, “possession is not normally adverse if it is enjoyed…..with the consent of the true owner.”22 In the case of Pye v Graham23 a squatter who had been in possession of a property for 2 years was granted ownership of the property. Under the revised provisions of the Land Registration Act of 2002, a squatter may legally register himself as owner of land he has possessed adversely. In the case of Lodge v Wakefield Metropolitan Council24 the plaintiff had been a tenant of the defendant under an informal tenancy but had not paid rent on the land for several years and claimed to have acquired the property by adverse possession. This was held to be a valid cause of adverse possession; hence where Howard is concerned, if he had been living rent free for ten years, he may be able to claim the property. If a claim for adverse possession does not exist however, then John and James may have good grounds to have him existed and he may also have to make good the value of the goods he has sold from the premises. Bibliography * Barlow, John S, King, Lesley and King, Anthony, 2003. “Wills, administration and taxation: A practical guide”, Sweet and Maxwell. * Parry, David Hughes, Kerridge, R and Clark, J.B., 2000. “The Law of Succession”, Sweet and Maxwell. Cases Cited: * Blech v Blech (2002) WTLR 403 * Carr Glyn v Frearsons (1999) 1 FLR 8 * Corbett v Newey (1998) Ch 5 * Fuller v Strom (2002) WTLR 199 * Hastilow v Stobie (1865) LR1 P and D 64) * J A Pye v Graham (2002) UKHL 30 * Jennings v Rice (2002) WTLR 367 * Ling v Ling (2002) WTLR 553 * Lodge (T/A Jd Lodge) v Wakefield Metropolitan Council (1995) EWCA Civ 41 * Pascoe v Turner (1979) 1WLR 431 * Ramnarace v Lutchman (2001) 1WLR 1651 * Re Goodchild (1997) 1 WLR 1216 * Re Segelman (1996) Ch 171 * Re Snoek (1988) 13 Family Law, 18 * Symes v Green (1859) 1 Sw and Tr 401 * Taylor v Dickens (1998) 1 FLR 806 * Thorner v Curtis (2007) EWHC 2422 (Ch) * White v Jones (1995) 2 AC 207 (HL) Legislation cited: * Inheritance (Provision for Family and dependents) Act 1975 * Law of Property (Miscellaneous Provisions) Act 1989 * Section 1 (1) of the Trustee Act of 2000. http://www.uk-legislation.hmso.gov.uk/RevisedStatutes/Acts/ukpga/1925/cukpga_19250019_en_2; April 20, 2008 * See explanatory notes to the Trustee Act of 2000; Retrieved April 20, 2008 from: http://www.opsi.gov.uk/acts/acts2000/en/ukpgaen_20000029_en_1 Trustee Act of 1925 Read More