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Hinds v Hinds & Ors [2014]

Published March 2015

Hinds v Hinds: locus standi and laches in probate cases

Clare Stanley QC acted for the co-defendants and Tom Lowe QC acted for the executor defendant

This was a case about two intestate estates: husband and wife. The husband died in 1978. The wife died 32 years later, in 2010. The Plaintiff was the only biological child of the marriage. The 2nd – 4th defendants (Clare’s clients) were the wife’s children from her first marriage who were treated by the husband as if they were his own biological children throughout his life. The 1st Defendant was the wife’s administrator for whom Tom Lowe QC acted.

When the husband died in 1978 the wife became his personal representative. For the following 30 plus years she treated all the assets in the estate as though they had passed to her absolutely. The vast majority of the assets were parcels of real property in the Cayman Islands. She dealt with them as though she were the beneficial owner – she sold some of the parcels, and transferred others.

By the time of her death in 2010, however, there were still a number of parcels of land which had not been disposed of. By this time, those parcels of land were worth very substantially more than had been the case in 1978 when the husband died.

The Plaintiff brought proceedings shortly after his mother’s death claiming that these properties (amongst others) were not part of his mother’s estate, but were held for him on the statutory trusts arising on the intestacy of the husband, as the husband’s only child. He also claimed that he was the beneficial owner of these assets. The Defendants argued that the claim was flawed procedurally and legally and that it should in any event be dismissed on the grounds of acquiescence and laches. Foster J agreed with the Defendants.

First, Foster J held that the Plaintiff, as a beneficiary of his late father’s estate, had no locus to bring the claim on behalf of that estate. The person with legal title to sue is the only proper plaintiff, and this applies as much to beneficiaries under a trust as it does to executors, as the cases recited by Lord Collins in Roberts v Gill [2011] 1 AC 240 show. The proper plaintiff to recover the property in the husband’s estate was the administrator of that estate. Herein lay the first problem for the Plaintiff, namely that he was not the administrator of his late father’s estate.

Of course, in exceptional cases the beneficiary may sue, but in those cases the trustee/executor must be formally joined to the proceedings. Here was the second problem for the Plaintiff. Leaving aside whether he might have been able on the facts to establish exceptional circumstances, it was simply not possible for him to join the administrator. His mother (the wife) had been the administratrix of the husband’s estate, but she was now dead. Following her death there had been no new administrator appointed of the husband’s estate and there was therefore no one to join. The action was therefore doubly improperly constituted.

Secondly, the essence of the claim was that the Plaintiff said he personally had a proprietary interest in the various parcels of land. The problem with this claim was that a beneficiary of an unadministered estate has no interest in the underlying assets themselves: see Commissioner of Stamp Duties (Queensland) v Livingston [1965] AC 694. All that he has is a right to sue the administrator for the due administration of the estate. The position is essentially identical to that which obtains when a liquidator/office holder administers the assets of a company in liquidation. The creditors (and shareholders) have no interest in the company’s assets. They have rights to ensure that the liquidator carries out his statutory duties to administer the estate, but no property right in the assets themselves. They obtain no proprietary interest until a distribution (dividend) is actually made to them: Ayerst (Inspector of Taxes) v C&K Construction Limited [1976] AC 167 (House of Lords). Therefore, the Plaintiff ’s claim ran into the sand as a matter of law because he did not have the proprietary interest that he claimed.

Thirdly, Foster J held that in any event, the Plaintiff ’s claim should be dismissed on the grounds of acquiescence and laches. After considering Duke of Leeds v Earl of Amherst (1846) 2 Ph. 117 Evans v Benyon (1887) 37 Ch D 329, Holder v Holder and Others [1968] 1 All E.R. 665, and Re Pauling’s Settlement Trust [1962] 1 WLR 86 Foster J described the principle as follows:

“in order for the court to determine whether there has been acquiescence it must consider all the circumstances of the case and in particular must establish what facts the plaintiff knew and what he did, whether actively or passively, in light of that knowledge. There is no hard and fast rule that the plaintiff ’s ignorance of his legal rights is a bar but the court must apply equitable principles in all the circumstances in order to decide whether it would be just to allow the plaintiff to assert the remedy he claims.”

On the facts, Foster J found that the Plaintiff had known about his legal rights as a beneficiary of the husband’s estate since the late 1980s, but had stood by and allowed the wife to deal with / dispose of the estate for the following 30 years, contrary to the Plaintiff ’s legal entitlement. Foster J had little hesitation in holding that this amounted to acquiescence.

Finally, and in any event, Foster J also held that the Plaintiff ’s claims were barred by laches. He held that laches could defeat a claim notwithstanding that such claim would not have been statute barred. This was a case where the wife (as administratrix) was a “Class 1” type of trustee, and thus as a matter of statutory limitation there was no limitation period (i.e. it fell within the Cayman Islands equivalent of s. 21(1) (b) of the Limitation Act 1980).

In considering the application of laches to the facts, Foster J applied the modern English approach described in Frawley v Neill [2000] CP Rep 20, which requires a value judgment by the Court as to whether it would be unconscionable in view of the delay for the claimant to be allowed to bring this claim.

The delay in bringing the claim had meant that key witnesses had died, and documents had inevitably been lost. These facts in and of themselves caused great prejudice to the Defendants, and Foster J concluded “quite likely a denial of justice” (e.g. paragraph 17.11).

Furthermore, during the period of delay the value of the land in question had risen very significantly, and Foster J considered that it would be fundamentally unfair for the Plaintiff to be able to take advantage of this. That analysis must be right, because if the Plaintiff had made a claim against his mother during her lifetime it would have had to have been for her to account for her administration, which likely would have involved a sale of all of the assets (at the reduced historical prices). In other words, his delay would enable him to profit.

Foster J unhesitatingly came to the conclusion that the delay was inexcusable and unconscionable and that the claims should be dismissed on the grounds of laches. This decision is currently on appeal to The Cayman Islands Court of Appeal.  Robert Ham QC is acting for the Plaintiff/Appellant.

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