Iliffe v James a Trafford & Anor [2001] EWHC Ch 469 (19th December, 2001)

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England and Wales High Court (Chancery Division) Decisions

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Cite as: [2001] EWHC Ch 469

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Iliffe v James a Trafford & Anor [2001] EWHC Ch 469 (19th December, 2001)


		Case No: 00 01 666

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

Royal Courts of Justice
Strand, London, WC2A 2LL
Date: 19 December 2001

....................................................

B e f o r e :

THE HONOURABLE MR JUSTICE HART
____________________

Richard Oliver Robert ILIFFE
Claimant

- and -

James Anthony TRAFFORD & Anr
Defendant

____________________

Mrs Teresa Rosen Peacocke (instructed by Morrison & Masters, Solicitors for the Claimant)
Miss Sonia Proudman QC & Miss Barbara Rich (instructed by Wilsons, Solicitors for the Defendants)
____________________

HTML VERSION OF JUDGMENT
I DIRECT PURSUANT TO CPR PART 39 P.D. 6 THAT NO OFFICIAL SHORTHAND NOTE SHALL BE TAKEN OF THIS HTML VERSION OF JUDGMENT AND THAT COPIES OF THIS VERSION AS HANDED DOWN MAY BE TREATED AS AUTHENTIC.

SIGNED: .................................................... MR JUSTICE HART
DATE: ....................................................
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HTTP://WWW.COURTSERVICE.GOV.UK/SITEMAP.HTM UNDER THE HEADING “HTML VERSION OF JUDGMENTS” ON THE HOMEPAGE

____________________

Mr Justice Hart:

Introduction

By his Will dated 7 April 1992, the late Harry Osborn Stibbard (“Major Stibbard”) appointed his solicitor Richard Dennis Flack (“Mr Flack”), his son Peter James Stibbard (“Peter”) and his daughter Sally Ann Pierce (“Sally”) to be his executors and trustees. He gave the whole of his estate to his trustees on the usual administration trusts and then directed them to divide it into four equal shares to be held by (a) as to one share on trust for the claimant Oliver Iliffe, the son of his daughter Susan Iliffe (“Susan”), if he should survive and attain the age of 21 years with a gift over to Oliver’s children, (b) as to the second share on trust for his grandson Andrew Stibbard, the son of Peter, at 21 with a gift over to his children, (c) as to the third share on trust for his grand-daughters Helena and Harriet, the daughters of his son Paul Edward Stibbard (“Paul”), at 21 with a gift over to their children by substitution and (d) as to the fourth share on trust for such of Sally’s children as were living at his death with a gift over to their children (and with provisions for substitution in the event of any child of Sally pre-deceasing Major Stibbard leaving children). By a codicil dated 26 July 1993 Major Stibbard replaced Mr Flack as an executor with a Mr Arthur John Henry Young and a Mr Charles Leuchars.

Major Stibbard died on the 23 January 1997. Of the grandchildren named in the Will all survived Major Stibbard. Sally had had two children since the date of the Will, Timothy and Lucy. With the exception of the claimant Oliver who had attained the age of 18 years on the 27 October 1996, all the grandchildren were minors. The appointment of Sally and Peter as executors of the Will proved highly controversial. Major Stibbard and his children had been embroiled since 1991 in various disputes arising out of the dissolution of a farming partnership which had until that time been carried on between them. In an affidavit sworn in certain proceedings commenced by Sally and Peter on the 14 February 1997, Mr Williams, a partner in Burges Salmon, solicitors acting on behalf of Sally and Peter, gave an account of the background to the disagreements which bedevilled this family. That document was accepted by Mrs Rosen Peacocke on behalf of Oliver as giving a fair background account of the origin and nature of the litigation which had occurred and which was ongoing. I quote from it:-

"BACKGROUND

4. Stibbard Partners. Until 29 September 1991 the First Plaintiff (“Mrs Pierce”) and her older brother, the Second Plaintiff (“Mr Peter Stibbard”), were in partnership with their older sister, the First Defendant (“Mrs Iliffe”), their brother, the Second Defendant (“Mr Paul Stibbard”) and their father, the late Major Harry Osborn Stibbard (“Major Stibbard”). The partnership carried on the business of farming under the title Stibbard Partners pursuant to three Partnership Agreements dated 12 May 1967, 8 July 1975 and 21 September 1978.

5. Land farmed. Stibbard Partners farmed approximately 1370 acres of freehold land on two separate and distinct holdings lying some 7 miles apart. The first is some 820 acres of land at Baydon Farm, Ramsbury, near Marlborough, Wiltshire and the second being some 550 acres of land at Park Farm, Ogbourne St George, near Marlborough, Wiltshire. In addition, Stibbard Partners farmed approximately 50 acres of tenanted land held from a third party at Ogbourne St George. The farming operation at Baydon Farm was primarily arable, whilst that at Park Farm was primarily a dairy unit.

6. Freehold land. The ownership of the freehold land at both Baydon Farm and Park Farm is complex. It involves a Will Trust of Major Stibbard’s late wife, Mrs Winifred Helen Stibbard, and a Marriage Settlement in relation to the majority of the interest of Mrs Iliffe. Various parts of the land at both Baydon Farm and Park Farm are owned jointly by the partners (or some of them) of Stibbard Partners. The legal estate of two separate parcels of land at Baydon Farm amounting to some 184 acres and some 108 acres vested in Major Stibbard prior to his death. Also, there has been litigation in respect of part of the freehold land. In Action No CH 1993-P-7810 commenced on 22 October 1993, Mrs Pierce and Mr Peter Stibbard sought a declaration that a Deed of Assignment dated 24 October 1981 was void and of no effect by reason of, inter alia, the undue influence of Mr Paul Stibbard.

7. Tenancy agreements. The freehold land at Baydon Farm and Park Farm, within the ownership of the Stibbard family, was until 29 September 1991 tenanted by Stibbard Partners pursuant to six separate tenancy agreements dating between 26 October 1970 and 3 May 1976.

8. Stibbard Partners’ Arbitration. On 6 February 1991 Mr Ben Beaumont of Counsel was appointed as arbitrator in respect of a dispute in connection with the continued trading of Stibbard Partners. The application to appoint Mr Beaumont was made by Mrs Iliffe pursuant to the terms of one of the Partnership Agreements. During the course of the partnership arbitration (“the Partnership Arbitration”) and thereafter I have acted for Mrs Pierce and Mr Peter Stibbard. Although Mrs Iliffe and Mr Paul Stibbard have generally acted in concert, they have for the most part been separately represented. Townsends, Solicitors of Swindon, have acted for Mrs Iliffe. Mr Paul Stibbard, who is himself a tax partner at Baker & McKenzie, has been variously represented by Norton Rose, Counsel by way of direct instruction, on his own behalf or by his own firm.

9. Dissolution of Stibbard Partners. On 29 September 1991 Stibbard Partners dissolved and, simultaneously, the tenancies under which it farmed Baydon Farm and Park Farm were determined by notice to quit.

10. Subsequent litigation. Since September 1991 litigation has proliferated between members of the Stibbard family including:-

(1) Action No 1991-P-2642 in the Commercial Court of the Queen’s Bench Division of the High Court of Justice. This was an action commenced on 12 December 1991 by Mrs Pierce and Mr Peter Stibbard to vary or set aside an interim Award of Mr Beaumont.

(2) Action No 1992-I-138 in the Swindon District Registry of the Chancery Division of the High Court of Justice. This was an Action commenced by Mrs Iliffe on 18 May 1992 seeking the rescission of an agreement in respect of a conveyance of a property in favour of Mrs Pierce together with damages.

(3) Action No 1992-R-2685 in the Commercial Court of the Queen’s Bench Division of the High Court of Justice. This was an application commenced by Mrs Pierce and Mr Peter Stibbard on 11 September 1992 to set aside a further Interim Award of Mr Beaumont and to remove him as arbitrator on the ground that he misconducted himself. Mr Beaumont resigned as arbitrator on 24 November 1992.

(4) Action No CH 1993-I-2870 in the Chancery Division of the High Court of Justice. This was an action commenced by Mrs Iliffe on 22 April 1993 claiming, inter alia, breach of trust against Mrs Pierce and Mr Peter Stibbard.

(5) A milk quota arbitration under the Dairy Produce Quotas Regulations (“the Milk Quota Arbitration”). This arbitration was commenced in October 1993 by Mrs Pierce and Mr Peter Stibbard in respect of the apportionment of milk quota and other issues arising upon, inter alia, the dissolution of Stibbard Partners and the termination of the tenancies under which Stibbard Partners farmed the co-owned land. Mr Roger Stone FRICS FAAV acts as arbitrator.

(6) Swindon County Court Case No SN401611. This was an application commenced by Mr Paul Stibbard in March 1994 disputing the jurisdiction of Mr Stone to act in connection with the Milk Quota Arbitration.

11. Heads of Agreement. On 9 February 1995 a comprehensive agreement was reached between the parties contained in a document entitled Heads of Agreement (“the Heads of Agreement”) which was intended to compromise all of the outstanding litigation, the partnership arbitration and the milk quota arbitration. The Heads of Agreement, which extended to some thirty-one pages (excluding Schedules and Plans) was due to be completed on 30 March 1995. It was not. Further litigation instead has ensued, namely:-

(1) Action No CH 1996-I-1434 in the High Court of Justice, Chancery Division. This was an action commenced by Mrs Iliffe and Mr Paul Stibbard on 1 March 1996 seeking, inter alia, specific performance of the Heads of Agreement and a collateral agreement relating to certain milk quota formerly registered in the name of Stibbard Partners. The proceedings were compromised by way of Tomlin Order on 6 March 1996 on terms whereby, inter alia, Mrs Pierce, Mr Peter Stibbard, Mrs Iliffe and Mr Paul Stibbard each undertook to use their best endeavours to complete and effect all transactions and matters arising out of the Heads of Agreement on or before 1 April 1996. Completion of the Heads of Agreement did not take place before 1 April 1996 and has not taken place to date.

(2) On 14 February 1997 the current proceedings were commenced by Mrs Pierce and Mr Peter Stibbard seeking specific performance of the Heads of Agreement and all related agreements and declarations as to the finality of the settlement of the disputes between the former partners of Stibbard Partners."

Against that background Mr Young and Mr Leuchars were unwilling to take a grant and the upshot was that in the event the family agreed that none of the named executors should take office but that instead a grant should be made of letters of administration with Will annexed to the defendants. The defendants are two partners in the firm of Wilsons, solicitors, of Salisbury. An order under Section 116 of the Supreme Court Act 1981 was applied for accordingly, and made on the 22 August 1997. In due course the proposed administrators were in a position to apply for a grant, which they obtained on the 30 March 1998. In the meantime an order had been sought and obtained (in June 1997) appointing the defendants to represent the estate of Major Stibbard for the purposes of the specific performance action which had been commenced by Sally and Peter in February 1997 (“The Specific Performance action”).

Major Stibbard’s estate consisted essentially of some personal chattels, some Ј173,000 worth of cash and shares, and his beneficial interest in certain parts of the land which had been subject to the partnership. That land consisted of land which has in these proceedings been referred to as the “red” “green” and “black” land. The red land, consisting of some 122 acres of arable, 44 acres of pasture and 14 acres of woodland at Baydon Manor Farm, Ramsbury near Marlborough, Wiltshire, was beneficially owned as to 50% by Major Stibbard and as to the remaining 50% by his four children, Peter, Sally, Paul and Susan. The Heads of Agreement envisaged that Paul’s and Susan’s shares would be transferred to Peter and Sally. The green land, consisting of 78 acres of arable, 3.5 acres of pasture and 8.5 acres of woodland, was owned as to 30% by Major Stibbard, and as to the remaining 70% by the four children in equal shares. Once again, the Heads of Agreement envisaged that Paul’s and Susan’s shares were to be transferred to Peter and Sally. The black land, consisting of Baydon Manor itself, its garden and the adjoining orchard and cricket field parcels, was beneficially owned as follows. The manor itself and the garden were 100% owned by Paul. The orchard and cricket field were 30% owned by Major Stibbard and as to the remaining 70% by his four children. In this case the Heads of Agreement envisaged that Major Stibbard, Peter and Sally would transfer all their shares to Paul and Susan.

In each case the legal ownership of the land was vested in Major Stibbard at his death as trustee. As personal representatives of the last surviving trustee of the legal estate, the defendants had the power to appoint new trustees of the land : see s.36(1) Trustee Act 1925. Pending such appointment they were entitled to exercise or perform any power or trust in relation to the land which was exercisable by Major Stibbard: see s 18(2) Trustee Act 1925. The point is relevant because some of the allegations made against the defendants in the pleadings appear to have been made against them in that capacity, as opposed to their narrower capacity as administrators in relation to the estate’s fractional interest in the land. The point is also relevant because it has been suggested (although not pleaded) that the defendants’ actions in the administration of the estate were affected by a conflict which existed between their duties in relation to the legal estate in all of the land and their duties as administrators of Major Stibbard’s estate.

This action was commenced on 22 December 1998, just under nine months from the date on which the defendants obtained their grant. By the Statement of Claim, settled by Mrs Rosen Peacocke of counsel and also served on the 22 December 1998 the claimant charged the defendants with having been “guilty of wilful default in not getting in and/or preserving certain property of the estate, and in failing to account to the plaintiff for his share of income derived from the assets of the estate”.

No letter before action had been sent prior to the commencement of these proceedings. That fact, coupled with the fact that the defendants had enjoyed their grant for less than a year, might lead to the supposition that the failures complained of were both serious and blatant, and justified the urgent and per-emptory issue of proceedings. The particulars given of the wilful default were:

"The Defendants have:-

(i) failed to take any or adequate steps to recover rent and/or mesne profits in respect of the occupation of Baydon Manor Farm by Park Farm Partnership and one Mr Robert Charles Pearce (sic);

(ii) failed to require the occupants of the said land to remedy defects and dilapidations in the land and buildings thereon, which are deteriorating;

(iii) failed to take steps to recover possession of the land from the present occupants with a view to remedying the defects in the land and buildings allowed to develop during the period of occupation, and with a view to the disposal thereof;

(iv) failed to dispose of the land by sale or auction, or otherwise preserve the value of the land and/or the interest of the estate therein for the benefit of the Plaintiff (and other beneficiaries);

(v) failed to account to the Plaintiff for his share of the income arising from the estate."

In addition an unparticularised allegation is made that “the defendants have incurred and are continuing to incur unreasonable and excessive expenses in connection with the land forming part of the estate."

The relief sought is limited to an account on the footing of wilful default, although the common form plea for administration of the estate “if and so far as necessary” was of course added.

There was, at least after argument, little disagreement between the parties as to the matters upon which the court had to be satisfied before ordering administrators to account on the footing of wilful default. First, it was common ground that in this context “wilful default” does not mean anything more than a falling below the standards to be expected of a reasonably competent administrator: see the explanation of the various senses in which the expression “wilful default” is used given by Millett LJ (as he then was) in Armitage v Nurse [1998] Ch 242 at 252 C-G. Secondly, in order to justify the court in ordering an account on the footing of wilful default (i.e. making the defendants liable not only in respect of the assets which have come to their hands but also in respect of assets which ought to have come to their hands), it is necessary for a claimant to plead and prove at least one act of wilful default: see Sleight v Lawson (1857) Cases in Chancery 292, and see per Brightman LJ in Bartlett v Barclays Bank (No 2) [1980] 11 Ch 539 at p. 546. To that proposition may be added the footnote that the act of wilful default concerned must be such as to enable the court to infer that other such acts have taken place: See per Slade J (as he then was ) in Re Tebbs decd [1976] 1 WLR 924. I was also reminded by Mrs Rosen Peacocke of Brightman J’s observations in Bartlett v Barclays Bank (no 1) [1980] 1 Ch 515 at 534 on the higher standard of skill to be expected of the professional trustee. In her opening remarks to me Mrs Rosen Peacocke suggested that all that was necessary was that some act of wilful default should be established as having taken place before the date of trial. In the present case, however, the claimants’ pleadings had not been amended since the commencement of the proceedings so as to allege any act of wilful default subsequent to the issue of the writ. She therefore accepted that she was limited by her pleadings to events which had taken place, or not taken place, between the date of the grant in March 1998 and the issue of the proceedings in December 1998. That raised questions as to the relevance of the conduct of the defendants prior to the date of the grant on the one hand, and subsequent to the issue of the proceedings on the other.

As to the conduct of the defendants before the grant, both Mrs Rosen Peacocke’s opening submissions and the evidence led by her on behalf of her client suggested that little thought had been given to the effect of the grant. In opening, she told me that for reasons which she did not understand, there had been two grants in this case, one in August 1997 and one in March 1998. That was, of course, a misunderstanding of the position. She had, however, correctly pleaded that the grant itself had been in March 1998. She continued, however, to rely on events prior to that date in various respects, chiefly in submitting that the amount of information already in the possession of the defendants as at March 1998 meant that they were, or should have been, in a position to take immediate steps which, on her case, they had signally failed to take.

As to the events following the issue of these proceedings, their relevance was said to be of two kinds. First, it was submitted that an analysis of the defendants’ conduct since December 1998 would assist the court in drawing inferences as to the motivation for their conduct prior to that date. Secondly, it was submitted that evidence of one particular transaction which has now taken place (and of which her client approves) would have taken place much earlier, but on identical terms, had the defendants conducted themselves in the way in which she submitted they should have done prior to the issue of the proceedings settled by her.

Major Stibbard’s interest in the red and the green land was valued for probate at Ј265,000. In April 1999 Strutt & Parker valued the interest in the red land at Ј185,000 and the interest in the green land at Ј80,000 (a total of Ј265,000). That valuation was shortly afterwards revised to a total of Ј272,500 (red land Ј190,000, green land Ј82,500). As a result of a bidding process authorised by the Court on the application of the defendants, a price of Ј385,500 has in fact been achieved on a sale to Sally and Peter. As I understand Mrs Rosen Peacocke’s submissions, the claimant’s present contention is that that sale at that price should have been achieved at an earlier date, and the fact that it was not so achieved was the result of breaches of duty by the defendants in the period between the date of the grant in March 1998 and the issue of the writ on the 22 December 1998. In order to test that contention it was necessary to consider the course of events which led to the sale at the artificially high price of Ј385,500. On the evidence before Master Winegarten on 8 August 2001, the fair market value of the interest did not exceed Ј280,000 (which was set by Master Winegarten as the reserve price for the sale). I deal briefly with this question at paragraph 61 below.

Review of principal events from April 1997 to the commencement of proceedings

From the outset of their involvement the defendants appreciated the nature of the problems which any personal representatives of Major Stibbard would be likely to encounter. By a letter dated 15 April 1997, Mr Trafford and Mr Voremberg, partners in Wilsons, circulated to all interested parties a memorandum as to the way forward. That included the following passages:

"6. We consider that two individuals, preferably professionals, and totally independent of the various branches of the family, should act as administrators of HOS’ estate. Their duty will be to secure the assets of the estate, realise those which it is appropriate to realise, settle the liabilities of the estate and then distribute the estate according to the Will. We are aware of the number of issues which are likely to arise during the course of this process, and which will be potentially contentious between members of the family. These include:-

(a) what (if any) claim HOS’ personal representatives have against Peter and Sally for rent and profits relating to the use of HOS’ land and farming assets during his lifetime and since his death;

(b) how HOS’ land should be disposed of;

(c) responding to the writ dated 14 February 1997.

This does not purport to be an exhaustive list of potential problems.

7. We propose that in the circumstances which have arisen, Oliver and the parents of all the other minors who are beneficiaries under the will should be asked to agree to JAT and RV applying for a grant of letters of administration with the will annexed and thereafter acting as admininstrators of HOS’ estate. We believe that they would be in the best position to act impartially and if conflicts between the beneficiaries (through their parents) arise, they will if necessary be able to apply to the Court for directions in relation to the administration."

On the 25 April 1997 Mr Flack wrote to Mr Voremberg and Mr Trafford giving them additional details about the background to the disputes in the family. The letter included the following passages:-

"It is to be regretted that the Major’s desire to have some independent executors has been thwarted, as a result of both John Young and Charles Leuchars renouncing probate, as they have now both done. However, I can well understand their reasons for doing so.

I would not read too much into the fact that Peter and Sally were appointed executors. The Major took great pride in building Baydon up to the size it was at the time of his death, because that was his creation, unlike Park Farm, which his wife inherited. He therefore wanted to keep Baydon as a unit if at all possible, and the only way that he could do that was to throw in his lot with Sally and Peter when it came to the division of the property under the Heads of Agreement.

He was always concerned about Richard Iliffe’s influence over Susan, so would not countenance her as an executor.

I think the Major held Paul very largely responsible for the dissolution of the partnership, which the Major did not wish to happen, and so again did not feel inclined to make him an executor.

The general wrangling between his children was the root cause of the Major changing his Will so that he benefited his grandchildren instead, although that has brought its own complications. At least he accepted that there should be a stirpital distribution rather than a capital one.

For what they are worth, and bearing in mind that this letter is written in strictest confidence, I would make the following observations:

..........

3. It is essential in my view for independent administrators to be appointed, but it is not a task to be taken on lightly, granted the long running nature of the dispute between the children, which will inevitably cloud matters for the administrators. This is not because the administration of the estate itself is excessively complicated, but more that it is in the very nature of the individuals involved.

I will give you one example: Paul wrote to Charles Leuchars saying that Sally and Peter were suing the Major’s estate; strictly that is true, but it would have been a much fairer observation to say that Sally and Peter were suing everyone who was a party to the Heads of Agreement and certainly that would have caused less concern to Charles Leuchars who felt personally threatened.

4. The Major did not want to give Susan grounds for removing him from office as a Trustee of her Marriage Settlement, so he felt unable to take any benefit from Sally and Peter’s partnership as a partner, because that partnership was farming land jointly owned by the Trustees of the Marriage Settlement. Having taken that decision, it would have been inequitable for him to take a rent for his own share of the land farmed by that partnership.

5. The intention was that he would enter into partnership with Sally and Peter once the Heads of Agreement had been completed. Sally and Peter were aware that they had not been left the Major’s share of Baydon in his Will, and wanted it a condition of that partnership agreement that the Major give them an option to buy the share at valuation, which he was not prepared to do. The condition was dropped, although the Major did indicate that he would be prepared to give them an option exercisable on his death. However, that indication came after his last stroke, and although I got everything agreed with Burges Salmon on behalf of Sally and Peter, it was never felt that the Major was well enough for me to visit him to go through the document and take his detailed instructions on it, although he and I had been through the parameters some months previously.

6. I have no doubt that whilst the Major for himself could choose not to take rent from the land, a different situation pertains now, and I am sure his personal representatives must demand mesne profits from the date of his death.

7. None of the parties is without fault or blemish of one kind or another. Furthermore, each of the children, I am sure, has their own agenda which is not necessarily apparent from their public utterances. That said, Sally and Peter seem to be generally of one mind."

On the 24 July 1997 the claimant wrote to the defendants giving them detailed information as to matters which he thought they should have in mind as administrators, including the following:-

"8. With regard to the Green and Blue land [i.e. the green land and the red land) at Baydon rent would be due from Mr R C Pierce and his father, Mr E H Pierce, (both of Timbridge Farm, Little Bedwyn, Marlborough, Wiltshire) to the Major’s estate for the benefit they took via grazing and cutting the pastures, and also for the use of the farmyard for inwintering cattle. As the Major had a life interest in Mrs WH Stibbard’s estate he would also take the rents due to it. The relevant period would appear to be 1 October 1991 to the present. The Major, as has been confirmed by Mr Richard Flack, his solicitor, (now with Messrs Bevan Ashford in the South-West somewhere), never waived his claim for rents. The amount will be substantial and obviously will need to be professionally valued."

On 31 July 1997 he wrote again saying:

"Dear Mr FitzGerald and Mr Trafford

Major Harry Osborn Stibbard Deceased

Further to my letter to you of the 24 July 1997, I have been looking at the interrelationship of Sections 5, 6, and 43 of the Heads of Agreement signed by or on behalf of members of my Grandfather’s family.

Quite obviously my Grandfather conveyed no land to anyone nor released any beneficial interest to anyone in this respect. Mr Flack did confirm that his client had not waived his claim to rent. My Grandfather’s estate in land and property (as comprised of his and his wife’s interests) would therefore be entitled to a rent claim against Park Farm Partnership from 1 October 1991 to the present. In order that there be no question as to this eventuality I believe Park Farm Partnership should be immediately put on notice as to their past and continuing liability.

Yours sincerely."

The reference to Mr Flack’s confirmation that Major Stibbard had not waived his claim to rent was, I think, a reference to a letter which Mr Flack had written to Susan’s solicitors on 16 January 1997 in which he had written that “the Major is not a partner in Park Farm Partnership [the name under which Sally and Peter traded] and to the best of my knowledge he has received nothing by way of rent or mesne profits in respect of his share of the land. This does not mean that the Major has foregone his rights to payment but rather has stood to one side with a view to maintaining even handedness and not benefiting himself at the expense of others.” The significance of the reference to Sections 5, 6 and 43 of the Heads of Agreement is that by clause 5 of the Heads of Agreement Paul and Susan had agreed to convey all their interest in the red and green land to Peter and Sally, whereas by Clause 6 Major Stibbard, Peter and Sally had agreed to convey all their beneficial interests in the black land (i.e. in the cricket field and the orchard) to Paul and Susan. The Heads of Agreement gave rise to no obligation on the part of Major Stibbard to convey his beneficial interest in the red and the green land to Sally and Peter although plainly, if the Heads of Agreement were to be enforced, Sally and Peter would be the obvious purchasers of Major Stibbard’s interest in that land. However, while the Heads of Agreement imposed no obligation on Major Stibbard to transfer his beneficial interests in the red and the green land to Peter and Sally, Clause 43 of that document provided that:-

"The Major, Susan, Paul, Peter and Sally each acknowledge the right of the other to occupy such co-owned land that has been occupied by any of them from 29 September 1991 until the Completion Date."

The Completion Date was defined by Clause 2 of the Agreement as 31 March 1995. It had subsequently been extended to a date in 1996, but that date had passed without the contemplated transfers having taken place, a matter which had given rise to the subsequent litigation. The red and the green land had been occupied by Peter and Sally from the 29 September 1991.

In September 1997 the defendants instructed Mrs Warnock-Smith of Counsel to advise them as to the stance which should be taken by them on behalf of the estate in the Specific Performance action. In their instructions they drew attention to the fact that:

"One of the most immediate problems for the Administrators will be whether or not Major Stibbard’s Estate should claim rent in respect of the occupation of any land beneficially owned by him at his death. Paragraph 43 of the Heads of Agreement seems to suggest that each party will continue to occupy such co-owned land that has been occupied by any of them from 29 September 1991 until the completion date. Quite clearly the Adminstrators will be under a duty to obtain income from the assets of the Estate. The question will therefore be whether they can require rent to be paid for land beneficially owned by the Estate pending the outcome of the litigation or whether this is inextricably linked with the litigation and therefore cannot be dealt with in isolation from it."

In conference on the 9 October 1997 Mrs Warnock-Smith is recorded as having advised:

"That there was no basis on which rent was due to the Estate from the occupation of the land in which the Major had an undivided share. Also, if the Heads of Agreement were enforceable, there was no basis on which they could claim rent."

Mr FitzGerald understood that advice to mean that the estate had no claim for payment in respect of the pre-death occupation of the land by Sally and Peter, and that the post-death position depended on the enforceability of the Heads of Agreement. Mr FitzGerald wrote to the claimant on the 20 November 1997 explaining the position as he saw it as follows:-

"The point at issue is whether or not there is rent or mesne profits due from the Pierces to your grandfather’s estate in respect of the Pierce’s occupation of land up to the date of your grandfather’s death. In my opinion there can only be “rent” due if there had been a tenancy agreement in place between your grandfather and the Pierces. So far, nobody has been able to produce or provide evidence of any such agreement. I therefore find it strange that Mr Flack says that that does not mean that the Major had foregone his rights to payment. The inevitable consequence of not having an agreement in principle prior to allowing someone into occupation of your land seems to me that you do forego any right to payment unless or until you renegotiate the question. So far as I am aware such occupation was not renegotiated prior to your grandfather’s death and so I can see no legal basis on which payment can be claimed from the Pierces. The only exception to this general rule is that if the occupant of land is a trustee of that land he must account to the trust for any benefits from his occupation. That is clearly not the case here.

This is quite clearly a matter which the Administrators have got to investigate once we have a grant but we cannot do anything until then. As to whether it can be looked at in isolation from the litigation over the Heads of Agreement is a matter on which we may have to get the directions of the Court."

Mrs Rosen Peacocke initially submitted to me that this analysis of the position in relation to the estate’s ability to claim a payment for the pre-death period was flawed. There is, indeed, every reason to suppose that the complaint made in paragraph 7 (i) of the Statement of Claim includes a complaint in respect of the pre-death position. However, after a certain amount of debate with the Bench she accepted that Mr FitzGerald’s analysis was in fact correct, although she continued to maintain that the defendants had been at fault, following their formal appointment, in not having pressed Sally and Peter to make a voluntary payment in respect of this period, and also in not having made further investigations into various offers alleged to have been made by Sally and Peter in the period prior to the conclusion of the Heads of Agreement. As I note later in my judgment these submissions were not wholly consistent with Mrs Rosen Peacocke’s final submissions as to the course which competent professional administrators should have taken in relation to this and other questions.

The claimant wrote to Wilsons on the 28 November 1997 raising with them the question of occupation of the land by Messrs EH and RC Pierce (the latter being Sally’s husband Robert) who had allegedly been allowed by Sally and Peter to graze some of the land for their cattle. The claimant’s point was that Robert Pierce and his father were not parties to the Heads of Agreement and that in the event of the Heads of Agreement not being completed they should be made to pay for the grazing rights which they had enjoyed from January 1997 onwards. Mr FitzGerald replied (on 22 January 1998) that the question of occupation of the land would be looked into and reported to the beneficiaries as soon as the grant was obtained.

On the 20 March 1998 a meeting was held between the claimant, his father Richard Iliffe, Paul and the defendants. It appears that the meeting had been initiated by Paul who is recorded as having said that “The purpose of wanting a meeting was so that clear ground rules were set out. He was concerned that the administration of his father’s estate did not go the same way as the partnership. He briefly outlined the problems and in particular the milk quota”. Enquiries were made as to the current level of fees incurred by Wilsons which were said then to stand at between Ј12,000 and Ј13,000. The question of rent was raised. Mr FitzGerald advised that:

"on the papers we had there was no suggestion of rent being received by Major Stibbard. Both he and [Mr Trafford] could only act on evidence that we had. Until such time as [the defendants] were appointed as administrators, they were not in a position to look into the question of rent since the date of Major Stibbard’s death. Once they were appointed this matter would be considered."

He also informed the meeting that Strutt & Parker had only advised on capital value for the purposes of completing the Inland Revenue account and that they had not been asked to advise on rental values of the land. Wilsons’ attendance note of the meeting also records as follows:

"The question was raised whether OL [sic] could call for a sale. PDPF and JAT advised that if their appointment went ahead, the legal title would be vested in them as administrators. The land would be held upon trust by them for the other beneficiaries.

With regard to a sale the wishes of the beneficiaries would be taken into account but the administrators would need to obtain the best price for the land. The land would not automatically be sold to the other co-owners."

The language used here suggests that what was under discussion was a sale of the land rather than a sale of the estate’s interest in it.

After obtaining their grant,and after seeking to establish ground rules as to the extent to which the beneficiaries and/or their parents should be copied in to the defendants’ dealings and communications with the warring branches of the family, the defendants took up the question of “rent” from the occupiers of the red and green land. This they did by a letter dated 7 May 1998 to the Pierces which was copied to Paul, Peter, Richard and Susan, and the claimant. After emphasising that they were obliged on behalf of the estate to maximise its income they wrote as follows:

"I should therefore be grateful if you could let me have the following information:

1. Please confirm that you or the Park Farm Partnership have been in occupation of the whole land hatched red and green since the date of Major Stibbard’s death.

2. If you or the Park Farm Partnership have not occupied the whole of the land continuously, please indicate the land which has been occupied and for what periods and state who has been in occupation of the other parts.

3. Do you or the Park Farm Partnership wish to continue to occupy some or all of the land? If so and if not the whole, please indicate the areas which you wish to occupy.

Once I have the answers to these question I can ask Strutt & Parker to advise on the appropriate level of rent. I am assuming that rent would not be charged or claimed by any of the co-owners of the land."

Sally replied on the 21 May in the following terms:-

"I confirm that, arising from the agreement which my brother, Peter and I had with my father, Park Farm Partnership has farmed the land hatched red and green on the plan sent with your letter of 7 May since the Heads of Agreement were entered into and at all times since, but we have not used the Sporting Rights.

In the light of the agreement which we had with my father, I am not clear that any payment is due for the period since my father’s death.

I am going to make some enquiries of Richard Flack who acted for my father in relation to these agreements, and will come back to you.

I understand no rent will be levied against Paul and Susan for any of the property in which my father had an interest. Please could I have details as to why this is the case."

On the 2 June 1998 the claimant discussed the position with the probate manager in Wilsons (Frances Mayne) and expressed a concern over the granting of any tenancy because of its potential effect on the future market value. On 20 June 1998 his father Richard Iliffe wrote to Mr FitzGerald suggesting that the proper course was for Peter and Sally to bring further proceedings to challenge the estate’s claim on them for occupation rent, and adding:

"There may be elements of the Peter/Sally camp who would prefer the assets, as passing to them via the Heads, to be sold. If a formula can be agreed for the extraction of the Major’s interests from the sale proceeds, then the Iliffes would agree this route, provided that the sale proceeds were embargoed in a joint Wilsons/Townsends/Burges Salmon account pending completion of the conveyancing between the various parties as required by the Heads of Agreement."

The idea was clearly there being mooted that the way forward might lie in a sale of the land as a whole.

In the meantime, on the 18 June Mr FitzGerald had sought Mrs Warnock-Smith’s advice in the light of Sally’s reply to the letter of the 7 May. The defendants had interpreted this as a ploy to get them involved in taking sides in the litigation. Mr FitzGerald pointed out that Major Stibbard’s interest as such in the land was not affected by the Heads of Agreement. Counsel telephoned in reply to the letter on 23 July, and advised that, in the absence of any significant progress in the specific performance action, the defendants should apply to the court for directions.

On 5 August 1998 Frances Mayne had a telephone conversation with Robert Pierce in which he said that they were happy to pay rent but “felt that as the Heads of Agreement has not as yet been completed Paul Stibbard should be asked to pay rent on the area of land he currently occupied. This rent could be paid into a holding account and if and when the Heads of Agreement were completed Paul could always be reimbursed”. He also added that the Pierces were also anxious to complete the Heads of Agreement as soon as possible. Mr FitzGerald wrote to Robert and Sally on 7 August, copying his letter to Paul, Peter, Richard and Susan Iliffe and the claimant, summarising the suggestion that had been made and concluding that:-

"In the absence of any agreement on this point the administrators will have no option but to apply to the Court for directions in connection with any action they ought to take on behalf of the Estate to collect rent on behalf of Major Stibbard’s property interests."

That was reiterated to Robert Pierce in a telephone conversation between Mr FitzGerald and Mr Williams of Burges Salmon on 7 August 1998. Robert Pierce was present with Mr Williams during this conversation.

Paul then wrote on the 11 August 1998 saying that he would be prepared to give serious consideration to a reciprocal arrangement. However, his letter makes plain his view that the rent to be paid by Sally and Peter should be in respect of the whole pre-death period, describing it as “some hundreds of thousands of pounds”. He also asserted that it should be for the defendants as administrators to recover income owing to Major Stibbard in his capacity as a trustee of his (Paul’s) mother’s Will Trust for the period from 1 April 1995 until 23 January 1997. He also asserted, relying on Mr Flack’s letter dated 16 January 1997, that Major Stibbard had never forgone his rights to payment for the use of his land from 1 April 1995 to 23 January 1997 and insisted that there was a “clear duty upon the administrators to collect in the rent due to my father’s estate over the period from 1 April 1995 onwards”.

In the light of all these developments, the defendants, with the assistance of Mr Wiltshire of Wilsons’ Litigation Department, drew instructions to counsel (dated 20 August 1998) stating that they had come to the conclusion that in the absence of significant progress in the wider litigation it was now necessary to apply to the Court for directions as to the steps the defendant should take with regard to the question of rent. The instructions concluded with the words:

"Counsel is also asked to advise whether there is any merit in the administrator proposing that the way forward is by consent or failing that a summons for directions and sending a draft to all parties."

This was followed (in point of time) by a letter to Mr Trafford from Richard Iliffe dated 26 August 1998 in which he made the following points:

(1) First, he took issue with the contentions of Robert Pierce that Sally and Peter should not be paying anything in respect of the pre-death period. He described this as a fatally flawed premise, and suggested that the defendants should not be retaining non income producing assets;

(2) He asserted that there had been “steady increase in dilapidations” during Sally and Peter’s occupation of farm buildings, and said that the trustees should be obtaining a schedule of dilapidations back to the start of their occupation and claiming appropriate relief against Sally and Peter. He said that this “would make the site more marketable in the event that the trustees determined to dispose of the estate’s real properties”;

(3) Thirdly, he made the point that agricultural values might well fall and that the timing for the estate properties’ sale should be sooner rather than later in order to maximise capital returns for the estate and achieve the best long term income benefit for the beneficiaries. He concluded as follows:-

"The Grant of Letters of Administration was obtained by the Trustees some months ago. I therefore hope that the Trustees will give careful attention to the issues of recovering the rent due to the Estate and the disposal of the relevant Estate properties. This will be in the best interests of the beneficiaries and will eliminate the major risk of the Estate being dragged into endless correspondence and dispute with Mr Pierce over the issues of annual rents, dilapidations etc., and the expense that would be so generated.

I would be grateful if you could consider the above with your co Trustee and give me a brief indication of the Trustees preferred course of action in this matter."

I comment on this letter as follows. First, it is now common ground that what is said in the letter in relation to dilapidations had no foundation in fact. Secondly, what the letter appears to have had in mind in relation to a sale was a sale of the land as opposed to a sale of Major Stibbard’s interest in the land. This is clear from the passage in the letter where Richard Iliffe says “If indeed the trustees decide to proceed as above, the appropriate course of action would be for the assets which do not pass under the Heads of Agreement, and which remain vested in the name of the deceased, to be sold off.” Thirdly, it is this letter which was subsequently relied on by the claimant as having constituted the letter before action so far as these proceedings were concerned. The claimant’s solicitors were indeed falsely instructed that the defendants had failed to respond to or acknowledge the letter, and asserted that as the reason why the claimant had “had no alternative to commence proceedings to seek relief in accordance with the particulars set out in the Statement of Claim”: see Lemon & Co’s letter dated 4 January 1999. In fact the letter dated 26 August 1998 was responded to by the defendants by a letter dated 17 September 1998 which informed Richard Iliffe that counsel had in the meantime been instructed to advise on the points that he had raised. That was indeed the case. By a letter dated 1 September 1998 to counsel, Mr FitzGerald had enclosed a copy of Richard Iliffe’s letter raising with her the question of the defendants’ right to sell the legal estate.

There was then a further development, in that Burges Salmon (on behalf of Sally and Peter) proposed to issue a summons in the Specific Performance action seeking inter alia specific performance of the Heads of Agreement and inquiries as to the damages, if any, suffered by each of the parties to the specific performance action as a result of the breaches (if any) by the counter-parties) of those heads. Included in the inquiries was an “inquiry whether Major Harry Osborne Stibbard or his estate has suffered any, and if any what damages by reasons of any and if any what breach or breaches of any of the earlier agreements by any of [Sally and Peter] or [Susan and Paul]”. This was copied to Mrs Warnock-Smith on the 14 September, and on the 24 September further consequential correspondence was included with her instructions.

On the 29 September 1998 Mr FitzGerald had a telephone conference with Mrs Warnock-Smith. It is clear from Mr FitzGerald’s attendance note that Mrs Warnock-Smith took the view initially that costs might be saved by letting the Burges Salmon summons proceed so as to “see what happens”. If that was disposed of by consent it might render any Beddoe summons issued by the administrators unnecessary. It is clear, however, that Mr FitzGerald persuaded her that the prospects of the litigation being settled by consent were so remote as not to justify the administrators holding over their summons for directions as to what to do vis a vis the question of rent. It was therefore agreed that the relevant persons would be notified that the administrators were now going to apply to the court for directions as to what to do concerning rent and that Mrs Warnock-Smith would draft an appropriate summons. That was done by a letter dated 1 October 1998 to the Pierces circulated to Paul, Peter, Richard and Susan and to the claimant.

On 12 October Sally wrote to Wilsons advising them that a meeting had taken place on 11 October between Richard Iliffe, Paul, Peter and Robert Pierce, and asking to be supplied with Strutt & Parker’s valuation “to assist progress in this delicate situation”. On the same day Richard Iliffe wrote to Messrs Wilsons telling them not to pay a debt due to Sally and Peter from the estate pending his taking further legal advice on the issue of sums owed to the estate in respect of occupation by Sally and Peter of the land.

On 14 October 1998 Richard Iliffe reported to Frances Mayne that, as a result of a meeting between himself, Paul, Sally and Robert Pierce, it appeared that the Pierces were now interested in buying out the other family members’ interests in the land. He said that he hoped matters could be completed within a year. He expressed concern at the length of time matters were taking to proceed. It appears that he saw himself both then and on the 26 August as acting on behalf of the claimant, and the claimant in his evidence did not seek to suggest otherwise. He wrote on the 23 October asking to be supplied with all the instructions to counsel together with any opinion that had been received saying “this should ensure that the issues that you propose to present to the court do indeed cover those relevant points at issue between the parties in respect of the exercise of your discretion in relation to this estate. Plainly it would be inconvenient if having applied to the court with respect to the resolution of certain issues, there are other issues which have been overlooked upon which the court’s guidance is also required”. On the same day Frances Mayne pressed Mrs Warnock-Smith on the drafting of the summons and was told that it was hoped to deal with it in the early part of the following week. On 28 October Mrs Warnock-Smith advised that copies of the instructions to her and her opinion should not be disclosed to the parties, but that the originating summons should be circulated in draft to explore what other issues they wished to raise. On the same day Frances Mayne wrote to all concerned in relation to the proposal that the Pierces should purchase interests in the land, informing them that the administrators regarded this as a matter on which they would need to seek the court’s approval.

On the 11 November 1998 Sally wrote to Frances Mayne asking for her decision in principle on the question of herself and Peter

" purchasing the share of my father’s estate left to the grandchildren, subject to the agreement of the family, as this would appear to be an acceptable formula to resolve the matter. This was also my father’s wish which is borne out by the Options contract that he asked to be prepared shortly before his illness and death.

Would this have to be dealt with before or after the Heads of Agreement is completed?

We would appreciate a prompt response to this matter, as family negotiations are on-going.” "

Mr FitzGerald replied on the 19 November advising her that there was no objection in principle and that such a purchase could take place before or after completion of the Heads of Agreement. Mrs Rosen Peacocke was disposed to criticise the terms of Mr FitzGerald’s reply because of a reference in it to the sale being “subject to the agreement of the family and agreement on the price”. The criticism was (I think) that by raising the spectre of an “agreement of the family” Mr FitzGerald was unnecessarily embroiling the defendants in the family quarrel. This criticism was misplaced. The language used simply reflects the terms of Sally’s own letter.

On 11 November 1998 Townsends (Susan’s solicitors) circulated consent orders in various of the actions then unresolved. On the 17 November they wrote to Burges Salmon, with copies to Paul and Wilsons indicating their understanding that “all parties are making a positive effort to resolve all outstanding issues and to complete as soon as possible.” On 27 November 1998 Mr FitzGerald updated Mrs Warnock-Smith with the on-going developments in the general family litigation and reminded her that the administrators still had to deal with the question of rent, the repayment of the loan, and the question of the possible sale of the Major’s land. He asked her whether the latter needed the approval of the Court. She advised by telephone on the 14 December 1998. At that stage it appeared that there was to be a meeting in the relatively near future (the “Agenda Setting Meeting”) with a view to a final resolution by the parties of their differences. On the relevant points counsel is recorded as having advised as follows:-

"So far as the purchase of the Major’s interests in the land at Baydon is concerned, Counsel suggests that Sally and Peter need to clarify exactly what land they want to buy but subject to agreement on the price, Counsel does not feel that such a sale would need to be approved by the Court. We should obviously get a proper professional valuation.

On the question of rent, Counsel advocated a wait and see policy until after the Agenda Setting Meeting. Any application to the Court for directions prior to resolution of the overall dispute was likely to be adjourned until resolution of the main dispute or there was a clearer idea of whether it was going to be resolved. We have already told the parties that we will be seeking directions on the question of rent."

On the 15 December 1998 Wilsons wrote to Sally and Robert Pierce (copying the letter as usual to Paul, Peter, Richard and Susan Iliffe and to the claimant) apologising for the delay in responding to various outstanding matters and explaining that their problem had been in obtaining advice from counsel who had been under pressure of work. On the relevant points they summarised counsel’s advice as follows:-

"1. Major Stibbard’s land at Baydon

It would be helpful if you could send us a plan delineating the land at Baydon where you and Peter Stibbard wish to buy out the late Major Stibbard’s interest. We have not been notified that there is any disagreement as to the principle of this, and so we would propose taking Strutt & Parker’s advice as to the current value and then subject to agreement on the value, there would seem no reason why the matter could not proceed.

2. Rent for Baydon land

As we have previously indicated, we are going to have to obtain a direction from the Court on this matter but Counsel’s advice is that until the parties are close to implementing the Heads of Agreement or it is apparent that there is no prospect of the Heads of Agreement being implemented the Court will not give any meaningful directions. We therefore propose to wait until at least after the proposed Agenda Setting Meeting before taking this aspect any further. As previously indicated our position over rent or mesne profits for any occupation of any co-owned land in which the late Major Stibbard had an interest at his death is therefore reserved."

On the same day Mr FitzGerald sought counsel’s confirmation that it was unnecessary, and undesirable so far as costs were concerned, for the administrators to be represented at the agenda setting meeting. She agreed.

The claimant’s response to the letter of the 15 December 1998 was to issue and serve these proceedings. Unsurprisingly they were met with astonishment on the part of the defendants. They responded immediately by letter dated 23 December 1998 in which, inter alia, they state:

"You complain that the Personal Representatives have failed to discharge their duties and have launched into litigation without having first sought to open dialogue to see if matters can be resolved without the costs associated with litigation. Our clients are greatly concerned that your precipitate action may erode the assets of the Estate to the detriment of the beneficiaries. You will be aware that the ethics of the Woolf reforms is to ensure that there is as much openness and negotiation between parties as possible so as to promote resolution of issues in the most cost effective manner. This you have chosen to ignore, which is material in relation to costs and we shall be drawing it to the court’s attention."

In the New Year the defendants instructed Mrs Warnock-Smith to arrange a meeting with Mrs Rosen Peacocke with a view to discussing the issues. Such a meeting was arranged, but then cancelled by Mrs Rosen Peacocke as a result of her being instructed by the claimant not to attend such a meeting.

The nature of the claimant’s case

I turn now to consider whether the conduct of the defendants which I have sought to chronicle in the critical period amounted to a passive failure to act such as to render them liable to account on the footing of wilful default. I have, however, had considerable difficulties throughout this case in establishing exactly what it is alleged that the defendants ought to have done. In her written opening submissions Mrs Rosen Peacocke summarised her claim in this way

"8: The main points of this claim are as follows:-

a) The sale of the property: the evidence establishes that this was the most substantial asset in the estate, and its realisation did not depend upon the working out of the 1995 Heads of Agreement or any other compromise of the family dispute. The property has now been sold, but only after unreasonable delay and entirely unnecessary expenses were incurred by the administrators;

b) The rent/mesne profits pending sale: the evidence also establishes that the occupiers of the land expressed their willingness, both before and after the Major’s death, to pay a fair rent or mesne profits for their continued occupation of the land. The amount of rent/mesne profits which the administrators could reasonably have expected to recover for the estate is the subject of expert evidence, which has been agreed. No steps were taken by the administrators at any time to collect these sums for the benefit of the estate;

c) Fees and expenses of administration: the administrators cannot have it both ways; on the one hand, they maintained for years that they were powerless to progress the administration of the estate whilst there remained outstanding issues between the family members in relation to the partnership dispute. They replaced Major Stibbard as a party to litigation between family members, but said that they understood that their role was to remain neutral. Their lack of progress and neutrality cost the estate more than Ј80,000 which cannot be justified.

d) Dilapidations: the evidence establishes that the property did not deteriorate in value due to any waste committed by the occupiers, but the administrators took no steps to protect the position at the time they took office. "

In expanding on those submissions in opening she submitted that, in relation to the claim against Sally and Peter for payment in respect of their occupation of the land, the defendants had taken no effective steps to “get to the bottom” of the question whether Sally and Peter or Robert Pierce and his father were liable in respect of the pre-death period. She did acknowledge (eventually) that on the information available to them the defendants had no claim in respect of the pre-death period (see paragraph 20 above). She was also constrained to acknowledge that the defendants had written to all relevant persons seeking information in relation to the question. She still maintained, however, that the defendants were at fault in not having sought a voluntary payment in respect of the pre-death period or what she described as a compromise of that claim. As to that I do not think that the administrators can be charged on the footing of wilful default for not having obtained any payment in respect of something to which they had no legal entitlement. She submitted that the administrators should have made more exhaustive inquiries of Mr Flack, that they should have made more serious inquiries of Peter and Sally as to the basis of their occupation of the land, and that they should have enquired of Robert Pierce and his father whether they had in fact enjoyed grazing rights at any time, and she submitted that they should after making those inquiries have then asked those persons whether they were prepared voluntarily or by way of way of compromise to make payment in respect of the pre-death period. Given that the defendants are now acknowledged by her not to have had any sustainable claim in relation to the pre-death period, and given that one of her complaints against the defendants is that they spent estate money fruitlessly, I found her submissions in this respect surprising. In relation to the post-death period she accepted that the defendants faced the problem that it was at least arguable that clause 43 of the Heads of Agreement prevented any claim being made, and that the defendants could not in practice make such a claim without the authority of the court and thereafter running the risk of becoming actively and expensively embroiled in the ongoing disputes between their beneficiaries’ parents.

Her opening submissions in relation to the defendants’ default in connection with the realisation of Major Stibbard’s estate were to the effect that they should have taken earlier steps to invite bids for the estate’s interest in the land from the other co-owners. This was in striking contrast to the claim made in the Statement of Claim that they should have taken steps to recover possession of the land with a view to its disposal (see paragraph 7 (iii)) and that they were in default for having failed to dispose of the land by sale or auction (see para 7 (iv)). Mrs Rosen Peacocke submitted that the reference to “the land” in paragraph 7 (iv) of the Statement of Claim was to be read as a reference to Major Stibbard’s interest in the land. However, it is absolutely clear from the language used by her in the pleading that that is not what was in the claimant’s mind at the date of the issue of the writ. Moreover, it is absolutely clear from Richard Iliffe’s letter of the 26 August 1998 (which I was invited to treat as written on behalf of the claimant) that what the claimant had in mind as being the appropriate course of action for the administrators to take was a sale of the land on the open market as opposed to a sale of the estate’s interest in the land to one or more of its co-owners. That is also consistent with the thinking in Richard Iliffe’s letter of 20 June 1998, and the reaction of the claimant (by his issue of these proceedings) to the suggestion in the defendants’ letter dated the 15 December 1998 that they proposed to proceed with a valuation of the land with a view to the sale of the estate’s interest in it to Sally and Peter. My conclusion was that this late change of tack by Mrs Rosen Peacocke on behalf of the claimant was dictated by her appreciation that the claim that the defendants could readily have sought possession of the land and sold it with vacant possession was misconceived. As Miss Proudman and Miss Rich had pointed out in their skeleton argument, the defendants as trustees of the land would have been unable to obtain vacant possession without an order of the court (see section 13 (7) of the Trusts of Land and Appointment of Trustees Act 1996); and any such order would almost certainly have been opposed by Sally and Peter in their capacity as beneficial co-owners and would probably have been opposed by any litigation friend appointed to represent the interest of Sally and Peter’s children, given that their parents’ livelihood in part depended on continuing to farm the land.

On the question of dilapidations, Mrs Rosen Peacocke admitted that there were none, but submitted that the defendants were in wilful default for not having instructed Strutt & Parker to establish this fact at the commencement of the administration in March 1998. In evidence, Mr FitzGerald told me that the inference he had drawn from the terms of Strutt & Parker’s probate valuation was that there were no significant items of disrepair (which he thought would otherwise have been mentioned) and had proceeded on that basis until the question of dilapidations had been raised in these proceedings. Thereafter Strutt & Parker had been instructed to consider the question and had advised that there were none. Once again the complaint from this particular claimant that the defendants ought to have incurred the additional expense at the outset of instructing Strutt & Parker to prepare schedules of dilapidations is an odd one.

When pressed further during the course of her opening as to the precise nature of her complaint against the defendants, Mrs Rosen Peacocke submitted that it was in essence that the defendants had simply “faffed around” rather than taken a robust grip on the administration from the outset. She justified this characterisation of the defendants’ conduct by giving as an example the fact that their alleged lack of decisiveness had involved them taking counsel’s advice on no less than four occasions (10 October 1997, 23 July 1998, 29 September 1998 and 14 December 1998).

I pressed Mrs Rosen Peacocke further during the course of her final submissions to identify exactly what it was that she submitted the defendants ought to have done. On the afternoon of the 6 December, her answer to me was that as persons who had put themselves forward as being able to deal robustly, professionally and impartially with this difficult estate, they should have proceeded (having received counsel’s advice on 10 October 1997) by writing to all interested parties once they had obtained their grant, making it clear that they did not propose to pursue the question of the pre-death “rent”, and that in relation to the post-death rent they proposed to leave that question to the final working out of the Specific Performance action. They should have announced that they intended to preserve their position as to this question in the specific performance action. They should also have communicated to the parties their intention, should there be no resolution of the question after a certain period of time, to revisit the matter by seeking the directions of the court. In relation to the question of the sale of Major Stibbard’s interest in the estate they should have immediately instituted a process of sealed bids from the co-owners. I pointed out to her (as had been emphasised by Miss Proudman in her closing address) that the process of sealed bids which had eventually taken place with the approval of the court, and which had resulted in the artificially high price having been obtained, had taken place after Paul, Susan, Peter and Sally had, in December 2000, reached ostensible agreement in relation to the outstanding issues in the specific performance action. From that time onwards it was clear that Peter and Sally were going to obtain Susan’s and Paul’s interests in the land in accordance with the Heads of Agreement. By that time, therefore, Peter and Sally had a much greater incentive to bid for the outstanding interest of the estate than they would have had at a time when the destination of Paul’s and Susan’s shares remained indeterminate.

In the light of the debate which had taken place the previous afternoon Mrs Rosen Peacocke advanced a further thesis on 7 December 2001, the final day of the trial. This was that, in light of the information which the defendants had acquired in the year preceding March 1998, their proper course on obtaining their grant should have been to ask Strutt & Parker to advise on both the capital and present rental value of Major Stibbard’s interest in the land, and that they should then have instructed counsel to settle an application to the court for directions as to the steps to be taken by the defendants with a view to realising Major Stibbard’s interest in the land and to recovering payment for its use during the period after his death. Had they done that, her thesis was that counsel would have advised, as Mrs Warnock-Smith did in July 1998, that such an application should be made and the question of payment in respect of the pre-death period could also have been included in the questions to be put to the court. They should then have advised all the parties (i.e. all persons interested) that this is what they proposed to do. Had they done this, so that the application for directions had been in at least an advanced state of preparation by mid 1998, Paul, Susan, Sally and Peter would have had a real incentive to reach a comprehensive agreement in relation to all the outstanding matters of the 1995 Heads of Agreement. In particular Sally and Peter would have had a real idea of the quantum of rent then being claimed. That would in turn have given them every incentive to pursue the question of buying out the estate’s interest in the land. The parties would thus have been given an incentive to address the overall questions of the settlement of the rent issue, the specific performance action, and the issue of the disposal of the estate’s interest in the land. If the parties could not reach agreement between themselves, then the defendants would be ready to launch an application to the court for directions. She submitted that it was likely that this firm and clear approach would have led to Sally and Peter arriving at a situation where they would have bid the sum which was eventually achieved in 2001. In the meantime the defendants would have been relieved from the need to communicate with the family, and listen to their representations and counter representations.

This submission contrasted with the submission which she had made the previous day, and also with her general opening thesis that the defendants had been mistaken to have any regard whatsoever to the progress of the underlying disputes between the beneficiaries’ parents in deciding how to tackle the question of rent and the question of disposal of the estate’s interest in the land. It also contrasted with an earlier submission that the defendants ought to have explored with Sally and Peter their willingness to pay rent voluntarily. It was, however, consistent with her earlier submission that, having invited Sally and Peter’s proposals in relation to rent and having been met with the counter proposal that Paul should pay rent in respect of the black land, the defendants should not have bothered to put this proposal to Paul. As to that I am quite satisfied that had they failed to put this proposal to Paul they would have been subjected to severe criticism from one side or another. This final submission also depended on the assumption that it was more probable than not that, had the defendants adopted this attitude, Sally and Peter would have been provoked into concluding an agreement with Susan and Paul and thus stimulated to make an offer for the outstanding interest of the estate in the land. This contrasted with Mrs Rosen Peacocke’s other earlier thesis that the defendants should have approached the administration of this estate on the footing that those persons were unlikely ever to agree on anything.

I would also add that, as a general strategy, this suggested course of conduct was not so very different in principle from that actually adopted by the defendants. Although one may comment that the steps they took along this line tended to be reactive rather than proactive, this was the line which in practice was pursued: viz that the question of rent should be made the subject of an early application for directions, in the hope that this might stimulate progress towards an agreement of the issues raised by the specific performance action and in due course provoke an offer from within the family to purchase the estate’s interest in the land. I do not myself think that the fact that the defendants had not taken professional advice as to the current rental value of the land is likely to have had the slightest effect on the stance taken by anyone to the issues involved. There is no suggestion that the land was going to achieve a rental value to any significant extent different from rental values obtainable for land of that character in that part of North Wiltshire, a matter which could have been expected to have been well within Sally and Peter’s ken. Nor do I think that the defendants are to be criticised for not immediately having threatened to raise with the court the question of the disposal of the estate’s interest in the land. They have indeed subsequently been criticised by the claimant for having done just that, it being suggested repeatedly by the claimant’s solicitors in correspondence (as recently as the 22 February 2001) that asking the court for approval of the sale of the estate’s interest in the land was “pointless and a waste of time and costs”. For this proposition the advice of Mrs Rosen Peacocke was itself invoked as authority.

The defendants’ case

The defendants responded to the writ with a reasoned statement of their case by a letter dated 15 February 1999. The letter began by deploring the fact that the claimant had instructed his counsel to refuse to meet the defendants’ counsel. It then complained of the lack of particularity in the claimant’s pleaded case. Both these protests seem to me to have been justified. The claimant has since justified the refusal to particularise his claim further by reference to the terms of this letter, it being said that the letter itself demonstrated that the defendants well understood the nature of the case alleged against them. It is true that no order has ever been sought requiring the claimant to give proper particulars of his claim, but the fact that the defendants have in the event been content to fight this case on the basis of a pleading against them which was woefully short in detail is not something which the claimant is entitled to pray in aid to his advantage. In particular it does not, in my judgment, justify him in seeking to advance a case in this court which would require amendment, as opposed to particularisation, of his original pleas.

The defendants’ response to the allegation in paragraph 7(i) of the Statement of Claim was as follows:-

"Failed to take steps to recover rent/mesne profits in respect of the occupation of Baydon Manor Farm

The entitlement of the estate to rent/mesne profits is not clear as the Major did not himself seek payment before his death and the fact that the occupation is covered by the provisions of the Heads of Agreement, in particular paragraph 43. Given this uncertainty, our clients have a choice of seeking guidance from the Court by means of a Beddoe Summons as to whether to pursue the matter or alternatively to resolve the issue within the ambit of case number CH 1997-P-No 1046 (“the Main Action”) to which our clients are already Defendants. The Main Action seeks to implement the terms of the Heads of Agreement and address any damages resulting from the failure to complete the Agreement. A Beddoe Summons (which would have to be served on all beneficiaries) would be expensive, particularly due to the fact that the other beneficiaries are minors which would require them all to be represented by independent guardians. Our clients have taken the view that the proper course of action is to participate in the negotiations to settle the Main Action in anticipation that such settlement would deal with the terms of the occupation of the land and thereby avoid the expense of the Beddoe Summons. This course of action has been specifically advised by Counsel. The Main Action is now being compromised upon terms that an account be taken of any damages suffered by the estate as a result of any breach of the Heads of Agreement. Our clients are of the view that such an account would have to include the question of the occupation of the land from 30 April 1995 (being the completion date under the Agreement) to date. Whilst our clients appreciate your client’s entitlement to income, they take the view that the stance taken by them is reasonable and proper in all the circumstances."

These views seem to me to have been reasonable ones to hold. As already indicated, on the information available to the defendants, there was no sustainable claim to pre-death rent. This was eventually accepted on behalf of the claimant. The proposition that more could have been done to investigate the pre-death position, in particular the question of the occupation of the land by Mr Pierce and his father, is no doubt true. There was indeed probably no limit to the extent to which members of this family would have been prepared to engage in debate on the subject if given their heads. Some indication of the depth of the barrel which would have had to be scraped is given by the late attempt of the claimant to rely on an affidavit sworn by Peter Williams in 1993 (i.e. well before the 1995 Heads of Agreement) in which reference was made to Sally and Peter being prepared to make payment for occupation. It was quite clear that Clause 43 of the Heads of Agreement was designed to draw a line under this question until the Completion Date as defined in the Heads of Agreement. The key question in relation to both pre- and post-death “rent” therefore was whether Clause 43 of the Heads of Agreement continued to have force after the defined Completion Date and pending actual completion of the 1995 Heads of Agreement. Since at that time no-one was asserting that the 1995 Heads of Agreement did not remain enforceable (i.e. the assumption on all sides was that it should be completed) this was a question which fell naturally to be resolved within the specific performance action. Mrs Warnock-Smith’s reluctance to encourage the defendants independently to grasp this nettle by the issue of an expensive Beddoe summons at a time when the very question appeared about to be raised in the specific performance action is entirely intelligible. So too was the defendants’ insistence, amid the clamour of the representations being made to them by Paul, the claimant and his father, that they ought nevertheless to be seen as doing something.

The defendants had in fact correctly perceived that the parties to the specific performance action were moving towards an agreed solution. On 23 February 1999 an order by consent was made by Deputy Master Bartlett in which, inter alia, an inquiry was sought as to “whether [Major Stibbard] or his estate has suffered any and if what damages by reason of any and if any what breach or breaches of any of the Agreements by either of [Sally and Peter] or [Susan and Paul].” It was a summons proposing this relief to which Mrs Warnock-Smith had adverted on 29 September 1998.

The right to seek such an inquiry has been preserved for the estate by the Tomlin Schedule to the subsequent order dated 21 December 2000 made (as it happens) by myself in the Specific Performance action. The estate is still free to pursue that inquiry. As I understand the position, the defendants have as yet taken no decision as to whether or not to pursue the inquiry, or to take other steps in relation to the question of rent and mesne profits, preferring first to dispose of this action. Whatever the merits of that stance, their conduct on this issue subsequent to the commencement of these proceedings throws no light on the question whether their stance in the earlier period constituted wilful default. On that question I have no doubt whatsoever that no wilful default has been made out.

The defendants’ response to paragraph 7 (ii) was as follows:

"Failed to take steps for occupiers to remedy dilapidations

You have not chosen to particularise what defects and dilapidations you refer to. In any event, the occupation is on the basis of an unwritten licence and is subject to the terms of the Heads of Agreement. We are not aware of any contractual basis which would enable our clients to require the occupants to remedy dilapidations. Our clients’ recourse is limited to a claim for damages for any diminution in the value of the deceased’s interest. Firstly, we are advised that there are no wants of repair that would devalue the estate’s interest in the land and secondly, this is a matter that would be dealt with under the account to be taken in the Main Action."

Given that claimant’s expert evidence failed to identify any dilapidations, this claim survives only in the ghostly form of an allegation that competent professional advisors would have spent the estate’s money in establishing the non-existence of any dilapidations at an early stage. The evidence establishes that the defendants proceeded on the assumption that no significant want of repair existed since none had been referred to by the probate valuers (Strutt & Parker). They were only prompted to seek express confirmation of the fact by the allegation made in these proceedings and a subsequent particular allegation made by Paul in early 1999. I see no grounds here for holding that the defendants were guilty of wilful default. To the extent that they neglected the issue, the neglect was benign. The inference that the defendants drew from the first Strutt & Parker valuation was in fact correct.

Their response to paragraph 7 (iii) was as follows:-

"Failed to recover possession

The Major’s interest is subject to the other beneficial owners’ interests and the occupation is the subject of the Heads of Agreement. In view of the history of serial litigation within the family, it is self-evident that any proceedings for possession would result in what would in effect be satellite litigation to the Main Action. Our clients can see no advantage to such proceedings in any event."

This allegation has not been proceeded with.

Their response to paragraph 7 (iv) was as follows:-

"Failed to dispose of the land by sale or auction

The land is subject to the interests of the other beneficial owners and any sale of the freehold would, as a matter of practice, require their consent. Further, the marketability of the land is severely prejudicially affected by the Main Action. In these circumstances, our clients do not believe that there would be any positive advantage to the estate in taking steps to sell the property by private tender or auction. Our clients are, however, prepared to consider offers for the estate’s beneficial interest in the land in the full knowledge that the only persons likely to make an offer would be members of the family."

This allegation was also not proceeded with. Instead, the claimant sought to bend this into a new allegation that the steps taken to market the estate’s interest in the land by inviting bids from within the family were negligently inadequate. As already recorded, Sally had on 11 November 1998 written expressing an interest in purchasing the estate’s interest in the land, “subject to the agreement of the family”. The defendants had properly said that any such purchase could take pla ce independently of the completion of the Heads of Agreement. The claimant knew that this was the stance being adopted. It is quite impossible to see how else the defendants should have responded.

The suggestion that different action at an earlier stage by the defendants would, or might, have led to an earlier offer by Sally or others seems to me wholly speculative. If they had written round the family in March 1998 inviting bids, it seems to me improbable that that would have resulted in a bidding process such as was finally achieved. At that time there was no reason to suppose that the issues raised by the Specific Performance action were going to be susceptible of early resolution. Until they were resolved, it was unlikely that the obvious bidders (Sally and Peter) would throw their hats into the ring. Such action on the part of the defendants would, on the contrary, have been likely to provoke an essentially sterile, but no doubt inflamed, debate as to whether they should use their legal title to seek possession and to sell the freehold, i.e. the very thing which the claimant by his pleaded case ventures (hopelessly) that they should have done.

I have considered (as invited to do by Mrs Rosen Peacocke) whether some adverse inference as to the defendants’ pre-action conduct in relation to this issue can be drawn from the steps which they subsequently took. These steps, in response to an offer by Sally to purchase the estate’s interest in the red and green land in June 1999 and an offer by Paul to purchase the estate’s interest in the green land in July 1999, included the step of seeking the court’s directions as to whether Sally’s offer should be accepted. As already noted, the claimant’s advisors appeared to consider this to be unnecessary. However, the ultimate issue of the process has undoubtedly been beneficial to the estate. I have not found any material in the post-action period which justifies the inference that some earlier action by the defendants in the pre-action period would have produced the desired result. On the contrary, the view I take is that the advocates of a “wait and see” policy have probably been vindicated by events, and certainly not shown to be wrong.

In relation to paragraph 7 (v) the defendants said:-

"Failed to account to the Plaintiff for income

Our clients do not believe that it is prudent to release income from the estate, taking into account all material factors."

No attempt was made in the course of the cross-examination of the defendants to challenge this.

In relation to the final allegation that the defendants had incurred unreasonable and unnecessary expenses, the defendants said:-

"Incurring unreasonable and excessive expenses

We simply do not know what you are talking about and therefore cannot respond to this point."

The allegation has never been particularised. In cross-examination Mrs Rosen Peacocke limited herself to asking certain questions about costs incurred by the defendants since the commencement of the proceedings. In her closing submissions she made it clear that this head of claim was not an independent head of claim but depended upon the establishment of one or more acts of wilful default in the pre-action period likely in their nature to lead to subsequent unreasonable and/or unnecessary expenditure. No such act has in my judgment been made out.

The answers given by the defendants in that letter were fully borne out by their written and oral evidence before me as to their thought processes. I accept that evidence.

In the final anaysis, the claimant’s allegations of wilful default appeared to reduce to an allegation that they had failed to act from the outset with sufficient robustness, and the proposition that greater robustness would have led to an earlier resolution of the difficulties inherent in the administration. I have by no means been satisfied that either of these propositions have been made out. Even had I been so satisfied, however, it would not have followed that the defendants had been guilty of wilful default. There was, in my judgment, no single demonstrably correct way to approach the questions raised by this administration which had been correctly identified by Wilsons in their memorandum of 15 April 1997 (see paragraph 13 above). It is quite apparent that from the outset the defendants were anxious to avoid involving the estate in unnecessary litigation expense if that could be avoided. Given the nature of the questions facing them, it was necessarily a matter for quite fine judgment as to how they could be resolved without such expense. I am satisfied that at every stage the defendants were honestly and competently exercising their judgment, and that their recourse to counsel was on every occasion appropriate.

In the result I am quite satisfied that this rash and highly speculative action must fail. The characterisation of it by the defendants in their letter of 15 February 1999 as “precipitate and unwarranted” seems to me fully justified. Had the claimant been genuinely concerned in late 1998 that the defendants were approaching the discharge of their duties in a misguided manner, there was nothing to prevent him, with the legal assistance which he had by then obtained, from writing a reasoned letter to the defendants explaining the steps he felt they should take. Had that produced no satisfactory response, he could himself have invited the court to give appropriate directions to the administrators. He did not choose to take that course. Instead he has brought hostile proceedings alleging, in effect, professional negligence against the defendants. Given that, at that time, the negligence (had there been any) was potentially curable the motivation for proceedings in this form at that time remains (for me at least) a mystery. Possibly the answer lies in the claimant’s apparently deep-rooted belief that the defendants have throughout been, consciously or otherwise, biased in favour of Sally and Peter. I am satisfied that there was no basis for this belief, and that his counsel wisely declined to press, in the face of the objections of the defendants, that he be allowed by a final witness statement to expatiate on this area of his concerns. It may, however, be significant that what appears to have prompted these proceedings was the information given by the letter of 15 December that the defendants were postponing a decision on the “rent” issue and in the meantime considering a sale of the estate’s interest to Sally. It is, however, unnecessary to pursue these speculations any further. I am only prompted to indulge in them at all by the very real regret one must feel that a young man in the claimant’s position (aged only 19 at the commencement of the proceedings) should have been persuaded to put his inheritance at risk by bringing an action such as this.

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	England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Iliffe v James a Trafford & Anor [2001] EWHC Ch 469 (19th December, 2001) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2001/469.html Cite as: [2001] EWHC Ch 469

		Royal Courts of Justice Strand, London, WC2A 2LL Date: 19 December 2001
		....................................................

	Richard Oliver Robert ILIFFE	Claimant
	- and -
	James Anthony TRAFFORD & Anr	Defendant