B e f o r e :
LORD JUSTICE HARMAN
LORD JUSTICE DANCKWERTS
and
LORD JUSTICE SACHS
In the Matter of the Estate of FRANK HOLDER deceased:
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Between:
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FRANK WILLIAM HOLDER
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Plaintiff
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- and -
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EMILY LOUISE HOLDER (Widow)
BARBARA MARY CAMPBELL (Married Woman) and
VICTOR JAMES HOLDER
(By Original Action)
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Defendants
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And Between:
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VICTOR JAMES HOLDER
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Plaintiff
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- and -
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FRANK WILLIAM HOLDER
(By countered)
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Defendant
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(Transcript of the Shorthand Notes of The Association of Official Shorthandwriters, Ltd.,
Room 392, Royal Courts of Justice, and 2 New Square, Lincoln's Inn, London, W.C.2)
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Mr. H.E. FRANCIS, Q.C. and Mr. PAUL BAKER (instructed by Messrs. Nutt & Oliver, Agents for Messrs. Rowberry, Morris & Co.,Gloucetster)
appeared on behalf of the Appellant Frank William Holder (Respondent to cross-appeal).
Mr. J. MAURICE PRICE (instructed by Messrs. Field, Roscoe & Co., Agents for Messrs. Griffiths & Lewis, Cheltenham)
appeared on behalf of the Respondents Emily Louise Holder and Barbara Mary Campbell.
Mr. S.W. TEMPLEMAN, Q.C. and Mr. MARTIN NOURSE (instructed by Messrs. Balderston Warren & Co., Agents for Messrs. T. Weldon Thompson & Co., Tewkesbury)
appeared on behalf of the Respondent Victor James Holder (Appellant on cross-appeal).
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HTML VERSION OF JUDGMENT
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Crown Copyright ©
LORD JUSTICE HARMAN: The plaintiff in the action out of which this appeal arises is the elder son and a beneficiary under the will of the testator Frank Holder. He brought this action against the first two defendants, his mother and sister, the proving executors of the testator's will and also beneficially interested under it, and against the third defendant the testator's younger son, a beneficiary under the will and named as executor, but who has not proved. The plaintiff's claim was to set aside the sale to the third defendant of two farms the property of the testator, first upon the footing that the auction particulars had wrongly stated that these farms were subject to tenancies in favour of the third defendant and another, whereas they should have been sold with vacant possession. By way of alternative the plaintiff sought to set aside the sales upon the ground that the third defendant was an executor of the will and as such disentitled to purchase at the auction. There were also claims against the proving executors for an account on the footing of wilful default but that was abandoned at the Bar and I need say no more about it. The learned judge rejected the plaintiff's main claim, holding that the conditions of sale were correct and that the tenancies alleged did exist, but he acceded to the plaintiff's alternative claim and made a very complicated order conditionally setting aside the sale, the condition being that if the reserve price on the resale to be calculated as a result of enquiries embodied in the order exceeded the former price, the sales should be set aside and otherwise they should stand. This is no doubt the right form of order where a resale is ordered, because the purchaser is disqualified as being a trustee. He is held to his bargain if the new reserve price be not reached, but loses it if it be exceeded. The learned judge also held that the third defendant was not entitled to bid at the new auction.
The facts are fully stated in the judgment of the learned judge below and I need not repeat them except in outline. The testator owned two farms in Gloucester, one called Lower Farm, where he lived with his wife and daughter, the first and second defendants, and his younger son the third defendant, and the other known as Glebe Farm, where the plaintiff has lived since 1952 rent-free as licensee of the farmhouse thereon; he has been ordered by the judge to give up possession to the third defendant on that footing.
In 1952, as was admitted at the Bar though denied in the pleadings, an oral agricultural tenancy was created by the testator in favour of the third defendant and one Denley, who had married one of his eight sisters, at a rent of £250 a year, of a part of Lower Farm extending to 153 acres out of 259. There was no written document connected with the transaction. This left the testator farming the remaining 106 acres of Lower Farm and the 157 acres comprising Glebe Farm. In this he was helped by the third defendant, who lived with his parents both before and after his marriage in 1953 at Lower Farm. The third defendant also began about the same time to deal in stock on his own account and he kept them with his father's consent on one or other of the farms. By 1955 he owned half the stock on the farms, and by 1957, when he bought 200 ewes of the testator, the whole of it. By this time the testator was ill and minded to give up farming and he had a conversation with his son in which he said he could let the farms at £2 an acre. The third defendant expressed his willingness to take them over at that rent and to this proposal the testator assented and thenceforth the third defendant was in control of both farms, so far as not let to him and Denley, at a rent of £5 04 per annum. It appears that in April, 1957, the third defendant felt that he owed something to the testator for the keep of his stock and he paid him £250 but disclaimed any idea that this was intended to create a tenancy. In October, 1958, the third defendant paid the testator a cheque for £700, of which, according to the testator's statement to his widow, Mrs. Holder, £500 represented rent from Michaelmas, 1957.
The testator died on the 7th August, 1959, having by a will made in 1950 appointed the defendants to be executors and creating a trust for sale with an equal division of the proceeds among his ten children. He was the owner besides the two farms of some £4,000 on deposit at the tank and some personal chattels. The widow instructed solicitors on behalf of the executors and the solicitors caused an executors' account to be opened on which during the period between October, 1959, and August, 1960, the third defendant joined in signing nine cheques in payment of the testator's debts. The third defendant also signed some documents sent him by an insurance company endorsing over policies on the house and farm machinery.
The plaintiff took legal advice in August, 1959, and preferred a number of claims of no substance against the executors, as for instance that he was a partner and that he had wages owing to him. The third defendant continued to live in the house at Lower Farm and carried on the two farms. As might have been expected, the members of the family could not agree on the disposal of the testator's farms, and there were various abortive meetings in 1960 in an attempt to arrive at a settlement. At one such meeting in April, 1960, when it became obvious that the third defendant desired to buy the farms and that the plaintiff objected, the third defendant was advised to seek separate advice and in August, 1960, he did instruct solicitors on his own behalf. They appear to have advised him at once that if he wished to buy the properties he must renounce the executorship and this he did by an instrument made in August, 1960, which recited that he had not intermeddled with the estate. A person in that position is not debarred from purchasing the trust property: see Clark v. Clark (9 Appeal Cases 733). In September, 1960, he offered £30,000 for the farms, but the family thought this not enough. Probate was granted to the first and second defendants in November, 1960, on the footing that the third defendant had renounced. Mrs. Holder then instructed the valuer, Mr. Hone, who had already valued for probate at her request, to revise his valuation with a view to fixing reserves for an auction of the properties. The probate values, which of course relate to August, 1959, were agreed with the District Valuer at ,£14,000 for Lower Farm and £8,000 for Glebe Farm. The reserves fixed for the purposes of the auction were £17,000 for Lower Farm and £14,000 for Glebe Farm. These reserves were fixed upon the footing that agricultural tenancies existed first in favour of the third defendant and his brother-in-law and secondly of the third defendant himself. No attempt had been made to raise the rents since the testator's death and they were admittedly too low, but any purchaser could increase them as from Michaelmas, 1962, and the reserves took that fact into account.
The auction was held in July, 1961, and was attended by all the members of the family in England and some outsiders. The plaintiff through his solicitor objected that the sale should be with vacant possession except for a tenancy in his favour of Glebe Farm house, but the executors' solicitor refused to accede to this. The plaintiff raised no further objection. The third defendant bid through his solicitor and purchased the properties at an aggregate price of £32,500. This, as the judge found, was a good price if the alleged agricultural tenancies did in fact exist, but considerably less than a full price if vacant possession could be given.
The judge held that the agricultural tenancies in question did exist and that the conditions of sale were rightly drawn, and it is against that decision that the plaintiff appeals.
This is an issue of fact. The learned judge decided it in favour of the third defendant on what he called the absence of evidence that there were no such tenancies. He said this:
"What I have to consider is whether, in the absence of any positive evidence that they did not intend to create legal rights, there are any circumstances in the case which would, or might, prevent the law from drawing the inference that a legally binding relationship was created. After all, if one man allows another to occupy his land in return for an annual payment the inference, in the absence of evidence to the contrary, must be that he is granting a tenancy or a contractual licence".
I pause to say that a contractual licence is enough having regard to the Agricultural Holdings Act to create an agricultural yearly tenancy.
I agree with the learned judge on his conclusion but I should have said that it was not necessary to rely on a mere absence of evidence to the contrary but that there was strong positive evidence of the existence of the tenancies. The tenancy in favour of the third defendant and his brother-in-law, although entirely oral, was admitted at the Bar, and the absence of written evidence altogether fails to convince me that there was no intention to create a binding arrangement as to the rent in 1957 in view of the testimony first of the third defendant himself, whose honesty was favourably rated by the judge, secondly the evidence of the widow to the effect that the testator had told her both in 1957 and in 1958 that rent was payable, thirdly the evidence of Mr. Parker, the testator's accountant, who communicated to the tax inspector when settling the testator's liabilities that these let-tings had been made in 1957. This was based on information supplied to him by the testator. I do not see why these pieces of evidence should be rejected even though it be true that claims against the estate of a dead man must be scrutinised with a jealous eye. Moreover it seems to me inherently improbable that the testator and the third defendant did not intend by their arrangement to create legal rights and obligations between them. I am therefore of opinion that the plaintiff's appeal fails and must be dismissed.
The cross-appeal raises far more difficult questions, and they are broadly three. First, whether the actions of the third defendant before probate made his renunciation ineffective. Second, whether on that footing he was disentitled from bidding at the sale. Third, whether the plaintiff is disentitled from taking this point because of his acquiescence.
It was admitted at the Bar in the Court below that the acts of the third defendant were enough to constitute intermeddling with the estate and that his renunciation was ineffective. On this footing he remained a personal representative even after probate had been granted to his co-executors and could have been obliged by a creditor or a beneficiary to re-assume the duties of an executor. The judge decided in favour of the plaintiff on this point because the third defendant at the time of the sale was himself still in a fiduciary position and like any other trustee could not purchase the trust property. I feel the force of this argument, but doubt its validity in the very special circumstances of this case. The reason for the rule is that a man may not be both vendor and purchaser; but the third defendant was never in that position here. He took no part in instructing the valuer who fixed the reserves or in the preparations for the auction. Everyone in the family knew that he was not a seller but a buyer. In this case the third defendant never assumed the duties of an executor. It is true that he concurred in signing a few cheques for trivial sums and endorsing a few insurance policies, but he never so far as appears interfered in any way with the administration of the estate. It is true he managed the farms, but he did that as tenant and not as executor. He acquired no special knowledge as executor. What he knew he knew as tenant of the farms.
Another reason lying behind the rule is that there must never be a conflict of duty and interest, but in fact there was none here in the case of the third defendant, who made no secret throughout that he intended to buy. There is of course ample authority that a trustee cannot purchase. The leading cases are decisions of Lord Eldon - Ex parte Lacey (6 Vesey at page 626) and Ex parte James (8 Vesey at page 344). In the former case the Lord Chancellor expressed himself thus: "The rule I take to be this: not, that a trustee cannot buy from his cestui que trust, but, that he shall not buy from himself. If a trustee will so deal with his cestui que trust, that the amount of the transaction shakes off the obligation, that attaches upon him as trustee, then he may buy. If that case is rightly understood, it cannot lead to much mistake. The true interpretation of what is there reported does not break in upon the law as to trustees. The rule is this. A trustee, who is entrusted to sell and manage for others, undertakes in the same moment, in which he becomes a trustee, not to manage for the benefit and advantage of himself".
In Ex parte James, in 8 Vesey, the same Lord Chancellor said this:
"This doctrine as to purchases by trustees, assignees, and persons having a confidential character, stands much more upon general principle than upon the circumstances of any individual case. It rests upon this; that the purchase is not permitted in any case, however honest the circumstances; the general interests of justice requiring it to be destroyed in every instance".
These are no doubt strong words, but it is to be observed that Lord Eldon was dealing with cases where the purchaser was at the time of sale acting for the vendors. In this case the third defendant was not so acting: his interference with the administration of the estate was of a minimal character and the last cheque he signed was in August before he executed the deed of renunciation. He took no part in the instructions for probate, nor in the valuations or fixing of the reserves. Everyone concerned knew of the renunciation and of the reason for it, namely that he wished to be a purchaser. Equally, everyone including the three firms of solicitors engaged assumed that the renunciation was effective and entitled the third defendant to bid. I feel great doubt whether the admission made at the Bar was correct, as did the judge, but assuming it was right, the acts were only technically acts of intermeddling and I find no case where the circumstances are parallel. Of course, I feel the force of the judge's reasoning that if the third defendant remained an executor he is within the rule, but in a case where the reasons behind the rule do not exist I do not feel bound to apply it. My reasons are that the beneficiaries never looked to the third defendant to protect their interests. They all knew he was in the market as purchaser; that the price paid was a good one and probably higher than anyone not a sitting tenant would give. Further, the first two defendants alone acted as executors and sellers: they alone could conveys they were not influenced by the third defendant in connection with the sales.
I hold, therefore, that the rule does not apply in order to disentitle the third defendant to bid at the auction, as he did. If I be wrong on this point and the rule applies so as to disentitle the third defendant to purchase, there arises a further defence, namely, that of acquiescence, and this requires some further recital of the facts.
Completion of the sale was due for Michaelmas, 1961, but by that time the third defendant was not in a position to find the purchase money. The proving executors served a notice to complete in October, 1961, and, the validity of this notice being questioned, served a further notice in December. In February, 1962, the plaintiff's solicitor pressed the defendants to forfeit the third defendant's deposit and this was a right given by the contract of sale and is an affirmation of it. Further, in May, 1962, the plaintiff issued a writ for a common decree of administration against the proving executors, seeking thus to press them to complete the contract and wind up the estate. The contract was in fact completed in June, 1962, and in the same month ,£2,000 on account was paid to and accepted by the plaintiff as his share and he thereupon took no further steps with his action. In order to complete, the third defendant borrowed £21,000 from the Agricultural Mortgage Corporation with interest at 7½ per cent. He also borrowed a.3,000 from his mother with interest at 6½ per cent., and a like sum from his sister at a similar rate of interest. In November, 1962, the third defendant demanded possession of Glebe Farm house from the plaintiff, who at that time changed his solicitors and it was suggested by the new solicitors in February, 1963, that the third defendant was disqualified from bidding at the auction. This was the first time any such suggestion had been made by anyone. The writ was not issued till a year later.
I have found this question a difficult one. The plaintiff knew all the relevant facts but he did not realise nor was he advised till 1963 that the legal result might be that he could object to his brother's purchase because he continued to be a personal representative. There is no doubt strong authority for the proposition that a man is not bound by acquiescence until he knows his legal rights. In Cockerell v. Cholmeley (1 Russell and Mylne page 418) Sir John Leach (at page 425) said this: "It has been argued that the defendant, being aware of the facts of the case in the lifetime of Sir Henry Englefield, has, by his silence, and by being a party to the application to Parliament, confirmed the title of the plaintiffs. In equity it is considered, as good sense requires it should be, that no man can be held by any act of his to confirm a title, unless he was fully aware at the time, not only of the fact upon which the defect of title depends, but of the consequence in point of law; and here there is no proof that the defendant, at the time of the acts referred to, was aware of the law on the subject". There, however, the judge was asked to set aside a legal right.
In Willmott v. Barber (15 Chancery Division) Lord Justice Fry said this at page 105:
"A man is not to be deprived of his legal rights unless he has acted in such a way as would make it fraudulent for him to set up those rights. What, then, are the elements or requisites necessary to constitute fraud of that description? In the first place the plaintiff must have made a mistake as to his legal rights. Secondly, the plaintiff must have expended some money or must have done some act (not necessarily upon the defendant's land) on the faith of his mistaken belief. Thirdly, the defendant, the possessor of the legal right, must know of the existence of his own right which is inconsistent with the right claimed by the plaintiff. If he does not know of it he is in the same position as the plaintiff, and the doctrine of acquiescence is founded upon conduct with a knowledge of your legal rights".
On the other hand, in Stafford v. Stafford (1 De Gex and Jones 193) we find Lord Justice Knight Bruce saying this at page 202:
"Generally, when the facts are known from which a right arises, the right is presumed to be known...."
Like the learned judge, I should desire to follow the conclusion of Mr. Justice Wilberforce (as he then was),which reviewed the authorities, in re Pauling, reported in 1962 1 Weekly Law Reports at page 108; and this passage was mentioned without dissent in the same case in the Court of Appeal:
"The result" (says the learned judge) "of these authorities appears to me to be that the court has to consider all the circumstances in which the concurrence of the cestui que trust was given with a view to seeing whether it is fair and equitable that, having given his concurrence, he should afterwards turn round and sue the trustees: that, subject to this, it is not necessary that he should know that what he is concurring in is a breach of trust, provided that he fully understands what he is concurring in, and that it is not necessary that he should himself have directly benefited by the breach of trust".
There is therefore no hard and fast rule that ignorance of a legal right is a bar, but the whole of the circumstances must be looked at to see whether it is just that the complaining beneficiary should succeed against the trustee.
On the whole I am of opinion that in the circumstances of this case it would not be right to allow the plaintiff to assert his right (assuming he has one) because with full knowledge of the facts he affirmed the sale. He has had .£2,000 as a result. He has caused the third defendant to embark on liabilities which he cannot recoup. There can in fact be no restitutio in integrum, which is a necessary element in rescission.
The plaintiff is asserting an equitable and not a legal remedy. He has by his conduct disentitled himself to it. It is extremely doubtful whethei the order if worked out would benefit anyone. I think we should not assent to it, on general equitable principles.
LORD JUSTICE DANCKWERTS: This appeal raises two points. The first of these is whether at the date of the testator's death on the 7th August, 1959, the younger son, Victor, was entitled to a tenancy of and occupied the otherwise unlet portions of the farm as a tenant of the testator. It is quite clear that from 1952 153 acres of Lower Farm, Oxenton, had been let to Victor and his brother-in-law, Denley, by the testator at a rent of £250' a year.
The testator made his will on the 11th July, 1956, when he was still carrying on his farming business on the rest of Lower Farm and on Glebe Farm. By that will he gave a legacy of .£1,000 to his widow, and gave his estate to his trustees on trust to sell and divide the proceeds between his widow and his ten children (two sons and eight daughters) in equal shares. He named as executors his son Victor and the widow and one daughter, Mrs. Barbara Campbell. But in 1957 the testator (who was 72 and in bad health) had decided to retire and hand over his farms to his younger son Victor. Victor was accepted by the learned judge to be a trustworthy witness and, if his evidence is accepted, it is clear that the testator (who said that he could let his farms at £2 per acre) intended to let the Glebe Farm to Victor on an agricultural tenancy at a rent of -R504 a year and to let to him the unlet portion of Lower Farm at a rent annually of £190.
It is said that the terms of the testator's will showed a desire for equality among his children and the testator could not have intended to give Victor a special position.
But there was every reason why the testator should prefer Victor. Victor, who was born in 1931, not only farmed the 153 acres of part of Lower Farm but helped his father in his farming business, and with his father's consent built up a farming business of his own and by 1957 there was very little of his father's stock left on the land. There was also another compelling reason for letting the land to Victor at a rent, in that the testator, no longer having the profits of a farming business, would need an income for his support. Like in the stories of Hans Andersen and Grimm, the younger son was the hardworking and enterprising son, and he was on very good terms with his father.
Not so Frank, the elder son, the plaintiff in this action.
He was allowed to live rent-free in the small farmhouse on Glebe Farm, so that he could look after his father's stock, but the evidence is that he did very little work and was content to live on £2. 10s. 0d. a week pocket money from his father, and the earnings of his wife as a personnel officer. His wife is now dead.
Victor's evidence is supported to some extent by his mother's evidence and by various other incidents, but it is unnecessary to set these out. In my view, it is plain that Victor was a tenant of the farms. In accordance with the testator's practice, in none of these matters were there any documents. The lettings were entirely oral agreements. Frank was only a licensee.
Accordingly, I would dismiss the appeal on this point.
The other point arises on a claim in the action by the plaintiff, Frank, that a purchase by Victor from the proving executors, Mrs. Holder and Mrs. Barbara Campbell, of the two farms at a price of £32,500 on the 12th July, 1961, should be set aside on the ground of a conflict between Victor's personal interest and his position as one of the executors appointed by the will.
It is necessary to state the events which occurred.
After the testator's death on the 7th August, 1959, nothing was done until the beginning of October, 1959, when the widow, Mrs. Holder, who throughout took charge in respect of the affairs of the estate, gave instructions to Messrs. Griffiths & Lewis, solicitors of Cheltenham, to act for the executors. These solicitors then obtained the signatures of all three of the executors named in the will for the purpose of opening an executors' account at the Cheltenham branch of Lloyds Bank, and on the 22nd October, 1959, £758. 14s. 0d. was paid in, being almost entirely made up of rent from Victor and from Victor and Denley for the year 1958/1959.
Between the 29th October, 1959, and August, 1960, nine cheques, totalling nearly £600, were drawn, signed by all three of the executors named in the will, for the purpose of paying the funeral expenses, redemption of land tax and some liabilities of the estate. Several insurance policies standing in the testator's name in regard to fire and other similar matters were endorsed with the names of the executors. Mrs. Holder instructed Mr. Hone, the local estate agent, to value the farms on the basis that Victor, as well as Victor and Denley, had tenancies in respect of the farms. Mr. Hone valued on this basis Lower Farm at £14,000 and Glebe Farm at £8,000 (making a total of £22,000) for the purposes of probate, and these values were agreed by the District Valuer.
When Frank heard of Victor's claims of tenancies in the middle of November, 1959, he instructed Messrs. Ivens, Thompson & Green, solicitors of Cheltenham, to act for him.
In March, 1960, a meeting was held at the offices of Messrs. Griffiths & Lewis which was attended by Mr. White (of the firm of Griffiths & Lewis) and the three executors, Mr. Brook of Messrs. Ivens, Thompson & Green, and the plaintiff, Frank, and all the other members of the family except three daughters who lived in America. Mr. White put before the meeting all the evidence that he had as to the tenancies, and Mr. Hone's valuations were also produced and discussed. No agreement was reached and Mr. White suggested to Victor that he had better be separately represented.
In April, 1960, a further family meeting was held at Lower Farm, but again no agreement was reached.
Soon after this, Victor instructed Messrs. T. Weldon, Thompson & Co., of Tewkesbury, to act for him. On the 22nd August, 1960, Victor executed a deed of renunciation, which recited that he had not intermeddled in the estate.
On the 8th September, 1960, a further meeting (the third) was held in the offices of Messrs. Griffiths & Lewis, which was attended by the same members of the family (including the executors), and four solicitors; Mr. White for the widow and Mrs. Campbell; Col. Hattrell of T. Weldon, Thompson & Co., for Victor; Mr. Bazeley for the plaintiff; and another solicitor for Mr. Denley. The plaintiff, Frank, was, of course, among those present. Mr. White explained that Victor had executed the deed of renunciation and that only Mrs. Holder and Mrs. Campbell were applying for a grant of probate. The question of the tenancies was again discussed but no agreement was reached.
It was plain that Victor had executed the deed of renunciation with a view to purchasing the farms. He made an offer of £30,000, which, of course, was well above the probate value, but this was not accepted. It was left on the footing that if Victor could not make a better offer the proving executors would offer the farms for sale by auction. It was clear that Victor intended to bid at the auction.
From Frank's evidence at the trial, it appeared that Frank objected to Victor (with whom he was on bad terms) buying the farms at any price or on any terms, but not on the ground of Victor's appointment by the will as one of the executors. When the question of ordering resale arose at the hearing of the action, Frank added the additional ground that he would like to buy one of the farms, though he is in receipt of Legal Aid and it was not apparent how he would be able to produce the price. He was clearly actuated by spite.
On the 10th November, 1960, Mrs. Holder and Mrs. Campbell obtained a grant of probate without Victor. On the 12th July, 1961, the farms were put up for sale by auction. Victor took no part in the instructions for sale. A few days before the auction, the executors, Mrs. Holder and Mrs. Campbell, and Mr. White arranged the reserves at Mr. Hone's office. The rents of £250 and £504 payable in respect of the tenancies in 1961 were lower than could be obtained after notice and, if necessary, arbitration. No notices had been served by the executors, but a purchaser could obtain the higher rents by serving notice himself, and such rents would become payable from Michaelmas, 1962. On this basis the reserves fixed were £17,000 for Lower Farm and £14,000 for Glebe Farm, making a total of £31,000.
The auction took place on the 12th July, 1961, and was attended by most of the members of the family and a fair number of other persons. The particulars of sale stated that the farms were subject to tenancies, and that the plaintiff was occupying Glebe Farm. The date for completion was the 22nd September, 1961. Before the properties were put up for sale, Mr. Green, of Ivens, Thompson & Green, who was present with his client, the plaintiff, claimed that his client had a tenancy of Glebe Farm House, and was not merely a licensee. Mr. Lewis, for the proving executors, replied that they were satisfied that the position was as stated in the particulars and the sale must proceed on that basis. After some brisk bidding both farms were knocked down to Col. Hattrell, who was bidding on behalf of Victor; Lower Farm at £18,250 and Glebe Farm at £14,000, making a total of £32,250. Victor paid a deposit of £3,250, but he was unable to complete on the 22nd September, because the credit squeeze interfered with his arrangements to raise the rest of the price on mortgage.
On the 26th September, 1961, the executors served on Victor a notice to increase the rents, and on the 10th October they served on him a notice to complete within 21 days, but Victor's solicitors contended that this notice was bad, and on the 13th December, 1961, the executors served another 21-day notice.
On the 23rd February, 1962, the plaintiff's solicitors wrote to the executors' solicitors pressing them to forfeit Victor's deposit and to put the farms up for sale again. The executors took no notice of this and on the 21st May, 1962, the plaintiff issued a writ against the proving executors only, for an account of their dealings with the estate. By this time Victor had been able to make arrangements for payment of the balance of the purchase price, and the sale was completed by conveyance on the 5th June, 1962. Victor had obtained £21,000 on mortgage at 7ig per cent, from the Agricultural Mortgage Corporation (repayable over 60 years) and loans of £3,000 each from his mother and a sister at 6½ per cent, on second charges, so that the further amount that Victor had to pay was quite small.
On the 27th June, 1962, £2,000 was sent to Messrs. Ivens, Thompson & Green on account of the plaintiff's one-eleventh share? and it was calculated that the balance of his share would be about £1,000.
On the 14th November, 1962, Victor's solicitors gave notice determining the plaintiff's licence to occupy Glebe Farm House and claiming possession on the 30th November.
At some time in the latter part of 1962, Frank changed his solicitors and his new solicitors, Messrs. Rowberry, Morris & Co., of Gloucester, suggested that Victor might not have been entitled to purchase the farms. There had been four firms of solicitors acting in these matters, but apparently none of them had raised this point before.
After some correspondence between Frank's solicitors and the solicitors of the proving executors, on the 29th January, 1964, the writ in this action was issued, claiming that Victor remained an executor and the renunciation was invalid, and asking for rescission of the sale of the farms to Victor and a re-sale, and alternatively against the proving executors accounts on the footing of wilful default. In his Defence and Counterclaim Victor claimed that he was a tenant of the farms and that he was entitled to purchase them and that the plaintiff consented to or acquiesced in the sale to Victor and could not complain of it. Victor also counterclaimed for possession of the Glebe Farm House.
The attack on the validity of the deed of renunciation was based on five alleged acts of administration or intermeddling in the estate by Victor: (1) by joining in the opening of an executors' account at Lloyds Bank, Ltd., at Cheltenham, and in the operation of it by signing nine cheques 3 (2) by allowing the endorsement of insurance policies in the names of all three of the persons named as executors; (3) by joining with the other two persons named as executors in instructing solicitors to act for the executors in the administration of the estate and continuing to retain them until August, 1960. There were two other grounds mentioned in the Statement of Claim, one relating to a Dutch barn and the other to the testator's stock at the farm, but these were not relied upon at the hearing of the action.
The three grounds that were relied on are so technical and trivial and not really the acts of Victor, who really simply complied with the directions of Mrs. Holder, that in my opinion they should not have the effect of preventing a renunciation of probate by an executor. However, it was conceded at the hearing that the renunciation was invalid and, accordingly, we must act on that admission and the effect that it has in regard to the position of an executor. In my view this was a mistake.
However, the position thus created appears to be that Victor remained technically an executor and could be compelled by a beneficiary or a creditor to take probate, but under the former law and the provisions of the Administration of Estates Act,1925, the proving executors can convey property forming part of the estate without Victor's concurrence and can act generally as the executors of the testator.
However, even if Victor, after the date of the purported deed of renunciation, remained an executor, the questions remain: (1) was Victor's position saved by acquiescence or confirmation and (2) should, in the particular circumstances of this case, the court grant the equitable relief of rescission after completion of the transaction? And was Victor entitled to bid at the auction?
There is no allegation of fraud in the present case. Victor acted in complete innocence and did not know that he was regarded as debarred from purchasing the farms. He bought them at a public auction, in respect of which he took no part in regard to the arrangements for the auction, and the learned judge found that the prices that he paid were good prices. They were well above the reserve prices.
Victor and the two proving executors were at arm's-length. There was no question of knowledge which Victor might have acquired as an executor. He had a great amount of knowledge of the farms acquired by him, while he was a tenant or when he helped his father in the carrying on of the farms, and he was the obvious person to purchase these farms-and likely to offer the best price.
I agree with Lord Justice Herman that there was no reason why he should not bid at the auction and purchase the farms.
As regards the authorities, no case is at all near to the facts of this case. The principle that a trustee cannot purchase part of the trust estate goes back to the statement of it by Lord Eldon in 1802 in Ex parte Lacey, reported in 6 Vesey's Reports at page 625. Lord Eldon stated the principle in the most severe form. The reason given by Lord Eldon, that it is impossible to ascertain what knowledge the trustee may have, seems less persuasive in the light of Lord Bowen's famous dictum that "the state of a man's mind is as much a matter of fact as the state of his digestion", and the almost daily experience of any judge engaged in ascertaining the knowledge and intentions of a party to proceedings.
The principle is repeated in Ex parte James (1803) 8 Vesey's Reports page 337. The subject is dealt with in Snell's Equity (26th Edition) at page 259, where it is pointed out that the true rule is not that a trustee may not purchase trust property; it is that a purchase of trust property by a trustee is voidable within a reasonable time at the instance of any beneficiary (citing Ex parte James at page 345, and re Bulmer, 1937 Chancery page 499).
It is said that it makes no difference, even though the sale may be fair and honest and may be made at a public auction: see Snell, page 260. But the court may sanction such a purchase and if the court can do that (see Snell, page 219), there can be no more than a practice that the court should not allow a trustee to bid. In my view it is a matter for the discretion of the judge.
It has always been accepted that a trustee cannot retire for the purpose of purchasing the trust estate (see Boles and the British Land Company's Contract. 1902 1 Chancery page 244). If that is right, Victor would not have benefited much if the deed of renunciation had been valid. But the plaintiff's right of action may be barred by acquiescence or confirmation. The cases on this subject are rather confusing in regard to the knowledge that a beneficiary must have in order to prevent his knowledge barring him in a subsequent attempt to set the transaction aside, and how far the beneficiary must know the legal result of the facts of which he was aware.
The matter of the purchase of the farms was discussed fully and at length at the family meetings and I find it impossible to believe that Frank did not know the facts. No one seems to have objected to Victor buying on the ground that he was an executor. Frank treated him as not being an executor when he brought his action against the proving executors alone. He accepted the benefits of the sale when he received £2,000. None of the four solicitors involved in the discussions which took place questioned Victor's right to purchase. Frank had his own solicitor at his elbow, and that solicitor should have advised him on the legal position. Instead he apparently said nothing, stood by with Frank, end allowed the sale to be completed by conveyance of the farms to Victor by the proving executors and the payment of the purchase price by Victor, who has altered his position by mortgaging the farms and carrying on the farming business on the farms.
As to the cases, Cockerell v. Cholmeley (1830) 1 Russell and Mylne's Reports page 418, and Stafford v. Stafford, 1 De Gex and Jones' Reports page 193, show different views on the point whether appreciation of the situation in law is necessary.
My decision in Re Howlett (1949 Chancery page 767) did not really deal with the matter. Like Lord Justice Harman, I prefer the view expressed by Mr. Justice Wilberforce (as he then was) in Pauling's Settlement (1962 1 Weekly Law Reports page 86), that all the circumstances must be considered and there is no hard and fast rule.
In my opinion Frank has acted in such a way in the present case in regard to Victor's purchase of the farms that he must be taken to have acquiesced~ in or to have confirmed the sale and cannot now claim to have the sale set aside.
There is authority for the general rule that, in the absence of fraud, a transaction which has been completed will not be set aside: Seddon v. The North Eastern Salt Co. Ltd. (1905 1 Chancery page 326) and other cases. But there are dicta of Mr. Justice McCardie in Armstrong v. Jackson (1917 2 King's Bench-822, at pages 826-827) (where a broker sold his own shares to his principal) that the rule does not apply where there is a fiduciary position. But in that case there seems to have been fraud.
Whether that be the case or not, on general equitable grounds I am of opinion that in the present case the transaction should not be set aside. The transaction is not void. It is one which is voidable and is liable to be set aside if a proper case is made out for that relief.
As has been pointed out by Lord Justice Harman, the plaintiff is claiming equitable relief against Victor, who is the legal owner of the farms and is in occupation of them. He has paid what was a good price at the time of the sale. Much hardship would be caused to Victor if the transaction was set aside now. He purchased the farms in good faith, believing that there was no bar to that course. The plaintiff stood by and benefited along with the other beneficiaries by the sale. He had legal advice to hand and made no attempt to stop the completion of the sale. Now, after completion, he is attacking the sale for purely selfish reasons. He cares nothing for the effect that setting aside will have upon the estate of the testator and the other beneficiaries under the will. The costs of the sale (some £875) will all be thrown away.
The order made by the learned judge will cause some unfairness to Victor and is so complicated that it will be difficult and expensive to work out. In fact, it is not really possible in the circumstances to carry out restitution, which is a condition of the equitable relief which the plaintiff seeks. The plaintiff's position would have been expressed in former times by the words "he has no equity".
For all these reasons, in my opinion the Court should not grant the equitable relief of setting aside or rescission in the present case.
Accordingly, I would, on this part of the case, allow the appeal, discharge the order made by Mr. Justice Cross, and dismiss the plaintiff's action with costs. As I have already indicated, 1 would dismiss the plaintiff's appeal as regards the counterclaim, with costs.
LORD JUSTICE SACHS: So far as the plaintiff's appeal is concerned, once the learned trial judge had come to the conclusion that Victor was an honest witness (a matter incidentally borne out by intrinsic material in his testimony) it seems to me that there was a considerable amount of positive evidence tending to show that the arrangement between the testator and Victor was intended to create legal rights - and having regard to section 2 of the Agricultural Holdings Act, 1948, it matters not whether it was intended to create a tenancy or a contractual licence.
It became clear that the testator owing to his ill-health intended to make over the land in question to Victor. It was, of course, equally clear that he did not intend to make a gift of the freehold in the farms, but that he was making it over by way of an arrangement giving Victor the right to farm the land and the testator the right to receive rent. It is to be noted that Victor in his evidence, which it is not open to this court to doubt even if it so wished, distinguished clearly between the £250 which he paid in April, 1957, before the relevant arrangement was made and the sums he later arranged to pay: the former was not, and the latter was, termed rent. Rent is, after all, a periodic payment, and in this case the period was clearly intended to be annual: so Mr. Francis was driven to the untenable submission that nonetheless the testator was entitled in law to evict Victor at any given moment without notice, whatever be the state of the season or of any crops, whilst Victor in his turn was equally entitled to abandon the land at any given moment.
Without turning to the evidence of Mrs. Holder and the accountant, Mr. Parker, it seems to me that the only proper inference to be drawn was that a contractual occupation was intended to be effected. The evidence, however, of Mrs. Holder and Mr. Parker both point clearly in the same direction, and to my mind the letter written by the latter on the testator's instructions on the 30th June, 1959, would have been conclusive had Victor's evidence left the issue in doubt. Once Mr. Parker's letter was admitted into evidence it was for the court to assess its weight and it seems to me to have the considerable cogency which I have indicated.
It thus does not seem useful to add anything further to the judgments delivered by my Lords, with each of which I agree, dismissing the plaintiff's appeal.
As regards the cross-appeals, a number of issues have been raised and fully argued by both parties in a way which has afforded very considerable assistance. All these issues were argued upon the basis of a concession made on behalf of Victor before the trial judge to the effect that his actions as pleaded in paragraph 4 (a), (b) and (c) of the Statement of Claim constituted an intermeddling which were of such a character that no deed of renunciation could be effectively executed by him. Both on the face of the pleadings and upon the evidence as adduced at trial, these acts were of a most minor character and, as already stated by my Lords, were even in aggregate by no means clearly an intermeddling: (b) on its own clearly was not. That point, however, being thus not open for further argument this judgment proceeds on the basis that the renunciation was invalid.
On that basis the first issue is whether in the circumstances of this unusual case Victor remained after executing the deed of purported renunciation under that disability which normally attaches to an executor in relation to purchasing part of the estate or whether he was, as Mr. Templeman submitted, so moribund qua executor that the disability did not attach to him.
The Court having been informed that there was no authority touching anyone who had been in a position precisely parallel to that of Victor, reliance was placed by Mr. Francis on the rule that no trustee and accordingly no executor could bid for or purchase property vested in him qua trustee or executor. This is the rule as enunciated by Lord Eldon in 1802 and 1803 in the leading cases of Ex parte Lacey (6 Vesey 625) and Ex parte James (8 Vesey 337), from which my Lord Justice Harman has already cited the relevant passages. These cases related to men who had been acting as assignees of a bankrupt's estate and who had thus gained considerable special knowledge of which they could make use at an auction or otherwise when purchasing that property: indeed at any rate one of them (Ex parte James) related to a professional man advising the assignees as such. For the reasons given by my Lord in his judgment after citing those passages I too consider that the rule is not applicable in the present case, where the plaintiff was in practice "moribund" qua executor and was affirmatively established to have gained no helpful knowledge from his position as executor before he executed the deed which was intended to effect a renunciation.
It is moreover a matter which may well be open to argument as to whether the above rule is, in any event, nowadays quite as rigid as was postulated by Mr. Francis. It is clear that the court has jurisdiction to allow a trustee to bid for trust property (Tennant v. Trenchard, Law Reports 4 Chancery Appeals at page 547), and in addition it was conceded at the Bar that procedure exists by which a trustee or an executor can obtain the leave of the court in appropriate circumstances to purchase such property: and I understand that such leave has been given even if a beneficiary objects.
Moreover I agree with Lord Justice Danckwerts in his comments on that part of the foundation of the rule which stems from the alleged inability of a court to ascertain the state of mind of a trustee: and am inclined to the view that an irrebuttable presumption as to the state of his knowledge may no longer accord with the way in which the courts have now come to regard matters of this type. Thus the rigidity of the shackles imposed by the rule on the discretion of the court may perhaps before long be reconsidered as the courts tend to lean more and more against such rigidity of rules as can cause patent injustice - such as was done in the case of Cockerell v. Cholmeley (1 Russell and Mylne, 418). The rule, after all, appears on analysis to be one of practice as opposed to one going to the jurisdiction of the Court.
Next I turn to two farther issues: the first is whether the plaintiff acquiesced in Victor's purchase of the property: the second is whether even if there was no acquiescence he ought to be given that equitable relief which was granted by the trial judge. These two issues have naturally to be considered separately, though many of the factors relevant to the second are also relevant to the first.
The plea of acquiescence in this particular case seems to me to have a close resemblance to one of estoppel: and it is to be noted that in Volume 14 of Halsbury's Laws of England it is stated in paragraph 1178: "Acquiescence operates by way of estoppel. It is quiescence in such circumstances that assent may be reasonably inferred and is an instance of estoppel by words or conduct". Whilst recognising that these two pleas are not necessarily coterminous it yet seems to me that in the present case if the facts are sufficient to create an estoppel then a fortiori a plea of acquiescence must succeed.
In relation to this plea the first question to be considered is what facts were known to the plaintiff (and for that matter to his solicitor) before the auction took place and before the sale to Victor was completed. Firstly the plaintiff knew that Victor was an executor under the will~ secondly, turning to the allegation in paragraph 4 (c) of the Statement of Claim, "In October, 1959, joining with the 1st and 2nd defendants and instructing solicitors to act on his and their behalf in administering the estate of the testator and continuing to retain the same solicitor until August 1960", it is clear from the primary evidence and from the inferences to be drawn from it that the plaintiff knew solicitors had been employed by the executors in the administration of the estate and that Victor was one of those responsible for that employment. (It is not in point that it was his mother who had spoken to the solicitor on behalf of all three executors when they had in fact ratified her so doing). He also knew that the executors personally or by their solicitors had employed one Hone to effect a valuation.
Next turning to the allegation in paragraph 4 (a) (which relates to the executors' account and the cheques drawn upon it), the plaintiff at all material times realised, as must be the case also as regards his solicitors, that the executors were in the normal course of events thus discharging liabilities that had fallen, on them: indeed he admitted as much under cross-examination in regard to the funeral expenses. Here again the fact that he did not know precisely what cheques had been drawn is not in point.
The plaintiff thus knew, as did his solicitor, facts now relied upon as constituting intermeddling and but for which no court could have held that there was an intermeddling. So his conduct falls to be assessed on the basis of that knowledge unless he can successfully provide himself with an escape route upon asserting that he was not aware of the legal effect of matters within his knowledge. With that last point I will deal separately later.
Next there falls to be considered his conduct in relation to the sale to Victor. In the first place it is to be noted that he himself by his solicitor suggested that he and Victor should join in purchasing the property: a direct encouragement of the view that Victor could purchase property from the estate. Thereafter during the preparations for an auction the plaintiff did nothing which could in any way be construed as an objection to Victor bidding and indeed it is obvious that all concerned assumed that he would. At the auction itself the plaintiff by his solicitor raised an objection to the plaintiff being regarded as a licensee (as opposed to a tenant) of part of the property and perhaps also objected to Victor being regarded as anything but a licensee: but not a word was raised against Victor bidding at the auction where such bidding would almost certainly enure to the benefit of the estate.
Thus by his conduct he expressly and impliedly represented that Victor could properly do the very act to which he now objects - purchase the property.
Moreover after the auction the plaintiff pressed for the rigour of the contract to be enforced and for Victor's deposit to be forfeited: indeed he went so far as to issue a writ against the executors, the ostensible object of which was to compel them to enforce the contract in the above way. Then when the contract had been completed he duly received a cheque for £2,000 from the proceeds and must have disposed of most of those proceeds in a way which has rendered him eligible for Legal Aid.
It was in these circumstances that Victor made his bid at the auction, completed the sale having paid full value for the property, and involved himself in all the expenses such operations entail. Later - still in the absence of any indication from the plaintiff that he desired to upset the sale - he expended money on improving the property.
To my mind (subject to the escape route point) this is a case of the plaintiff being estopped from now saying that Victor should never have bid or completed. Incidentally it is also a case of approbation by subsequent conduct from which the plaintiff cannot now resile. A fortiori it is a case of acquiescence.
Next comes the point whether ignorance of the effect in law of facts which constitute an intermeddling can avail the plaintiff. This is a case where the plaintiff and the defendant were on a completely equal footing. Both were laymen whose occupation had been on the land, and each was at all material times armed with professional advice in the shape of a solicitor. In this behalf I would as a preliminary matter venture to differ from the view taken by the learned trial judge that the plaintiff's solicitors' retainer was so limited as not to include advising him generally in all matters touching Victor's desire to bid for and purchase the property. In the absence of any evidence to the contrary from the solicitor himself it seems to me a clear inference that he was retained to advise generally on the matters in issuer and if any confirmation were needed of that view it can be derived from the answer given by the plaintiff himself at page 29 of Day 2, Volume 1. Nor am I disposed to draw the inference that the plaintiff's solicitor was wholly unaware of the law with regard to intermeddling: it seems to me highly unlikely that he did not turn his mind at some stage to this question in relation to the facts which he knew. As the plaintiff refrained from calling him into the witness-box I see no reason why inferences in favour of the plaintiff should be drawn on this point contrary to those which would normally result from the evidence as a whole before the trial judge. To my mind upon that evidence it is at any rate open to the court to draw the following inferences as regards the solicitor. Firstly that he knew the facts above stated; secondly that he had in accordance with his duties considered whether they constituted an intermeddling; next that he may well have come to a definite, tenable and perhaps correct conclusion that they did not; and finally that he shaped his course upon that basis.
Once one comes to the conclusion that the plaintiff and Victor were indeed upon an equal footing, each with professional advisers, there seems to me to be no reason why one should not apply the normal rule that the effect in law of a person's conduct should be assessed by having regard to his actions in a common-sense way. In all common sense the plaintiff did in fact assent to Victor bidding and did so with knowledge of the relevant facts. To provide him with an escape route of the type propounded by Mr. Francis would seem to work injustice and to open the way in a great many cases to suggesting that a man with appropriate professional advisers should be allowed to say that he was personally ignorant of the law when he wished to reopen a concluded transaction. It would also open the way in a great many cases where the law might be doubtful for a man to come in at almost any stage after a transaction had been completed and says "Well, the law is now shown to be different from what I thought at the time and I object to what has happened although I had full opportunity to object earlier". Accordingly I reject the "escape route" submissions of Mr. Francis.
It may well be that ignorance of the legal effect of facts may in certain circumstances afford an answer to a plea of acquiescence where conduct does not amount to an estoppel. But I know of no authority for such a proposition in relation to estoppel: indeed having regard to the judgments in Holt v. Markham (1923 1 King's Bench 504) (a case in which both parties were ignorant of the legal effect of certain regulations) I doubt if there is any warrant for it in estoppel in pais.
In so far as there may be cases of acquiescence to which the normal rules of estoppel do not apply I too agree that the judgment of Mr. Justice Wilberforce (as he then was) in Pauling's case (1962 1 Weekly Law Reports 86) provides the correct guide and that upon that basis too the plaintiff would fail.
As regards the further issue - whether this is a case in which the Court should grant equitable relief if it was open to it so to do, 1 fully agree with what has been said by my Lords and have nothing to add.
I too would allow the cross-appeal.
(Appeal dismissed. Cross-appeal allowed. Minutes of Order to be agreed between Junior Counsel. Leave to appeal to House of Lords refused)
