State of play: case law review

Singh v Singh

This case concerned a father’s claim against his sons (principally his elder) over the ownership of property held in the sons’ names. The claimant (father) alleged this property was, in fact, owned by the wider family under the Hindu law concept of Mitakshara, and further that under English law this arrangement established a constructive trust of the property for the family’s benefit based on their common intention. The family are Sikhs but Mitakshara applies equally to families of both faiths.

The father was born in what was then British India and is now Pakistan, and moved to East Africa as a young man. He married there and started a family. His elder son, Jasminder, was sent to England at 16 to complete his education and stayed to pursue a career as an accountant.

Jasminder’s parents, along with their younger son, Herinder, who was then a child, followed him to England when he was in his early 20s and moved in with Jasminder and his sister (who were already living in the same property).

It is a feature of this case that the parents and their three children and, in time, their respective spouses and children, lived together in a succession of increasingly expensive properties owned in Jasminder’s sole name and purchased (in relation to the first two properties) with assistance by way of loans from the father.

Not long after the family settled in England, a business opportunity arose to run a hotel. Jasminder, along with other members of the extended family who had also moved to England, bought shares and were appointed as directors. Jasminder and the father also made financial contributions to the expansion of the company in its early stages.

The business was extremely successful. Jasminder as chief executive was instrumental in achieving this and his shareholding is worth several million pounds. As a result, he was able to buy Tetworth Hall, a multimillion pound property, which was the family home before the disputes that were the subject of this claim.

Joint family

The principle of Mitakshara is that a Hindu or Sikh family living together in a household made up of many family members should be considered a ‘joint family’ and that a further step can be taken by them to treat particular property as ‘joint family property’. This would form a relationship known as a coparcenary. In this context, ‘family’ is taken to mean three generations of male descendants (known as coparceners) from a common male ancestor acting on their own behalf and that of the female
family members.

‘Joint family property’ is held nominally by the family head, known as the karta, who will represent the family to the outside world and act as something akin to a manager of the joint family property. The karta is generally the father or eldest son. In this case, the father alleged that Jasminder had acted as karta on behalf of the family when buying the family home(s) and when he purchased shares in the family business.

Sir William Blackburne had to decide whether, as a question of fact, the family did indeed consider the property to be joint family property, and, if so, whether that relationship could be construed under English law as a constructive trust for the benefit of the family, and the terms of such a trust.

The father’s claim failed at the first hurdle. There was insufficient evidence to establish a common understanding that the joint family considered the property in Jasminder’s name (or separate property held in Herinder’s name) to be ‘joint family property’ for the purposes of Mitakshara.

There was no documentary evidence of this understanding and under cross-examination all the parties involved admitted that they were not familiar with the terms Mitakshara or karta, or that Jasminder had acted in this role since the original family home was purchased.

This would not necessarily have prevented the existence of such an understanding as, similarly to the
concept of a constructive trust under English law, the parties do not need to fully comprehend the legal nature of the relationship for it to exist, but in this case the complete lack of awareness or evidence of the alleged relationship prevented Sir William from finding it to have been the family’s true understanding of their situation.

Mitakshara principles

In fact, there was considerable evidence to contradict the existence of joint family property under the principles of Mitakshara. In particular, various legal documents, declarations of intent and tax returns prepared over many years by the different family members had always treated the property as being under separate ownership. As such, the evidence was inconsistent with the claim that there was a common intention to hold any property as joint family property under Hindu legal principles.

However, Sir William attributed no dishonesty to the father for bringing the claim. He attributed the roots of the difference between father and Jasminder to be their very different upbringings and cultural attitudes, and an ‘unspoken assumption’ held by the father that was not shared by his sons.

JS v KB MP

This Court of Protection case looked at who should bear the costs of court proceedings and whether the general rule should be departed from.

DB was 90 at the time of the hearing, had progressive dementia and was found not to have capacity at the time her property was sold and another bought. She had been cared for by her daughter, JS, and son-in-law, MS. JS’s intervention in her mother’s affairs began at a low level as she was not an attorney or a court appointed deputy.

As DB’s capacity diminished, JS’s involvement in the finances increased until she was acting as if she held power of attorney.

JS instructed solicitors and sold DB’s house in 2010 and the proceeds of sale were invested in a property that was registered in the joint names of JS and MS. The three lived together so that JS and MS could continue to care for DB. Cobb J commended JS for the care that she gave to DB and the sacrifice she had made to do this. However, he criticised the way the finances were handled.

JS maintained that the funds to buy the property were lent by DB to her and MS pending the sale of a property in Spain that JS and MS owned and that her brother, KB, was aware of the arrangement. She also said that DB had capacity to consent to the sale and loan arrangement.

KB said that JS offered to pay KB his share of his future inheritance out of the proceeds of the Spanish property sale rather than the full amount owed to DB being repaid to her. KB wanted the property to be put in DB’s sole name or in the joint names of JS and KB.

Solicitors were instructed at the end of 2011 when KB informed JS that he was reporting her to the Office of the Public Guardian.

In March 2012, JS applied for deputyship, which was rejected. At a hearing in 2013, JS eventually accepted that she should not pursue her application to be her mother’s deputy so the issue of costs was to be decided.

Section 55 of the Mental Capacity Act 2005 and part 19 of the Court of Protection rules 2007 set out the general rule: that costs are paid by the patient or charged to their estate.

The court can depart from this if the situation justifies it; to decide this, the judge may have regard to all the circumstances including the conduct of all parties before and during proceedings and the reasonableness of raising and pursuing the issue in question.

JS did not try to resolve the issue of the title to the new property. She falsely asserted that KB had agreed to the property being put in her name and she delayed the transfer of the property into DB’s name.

Cobb J also found that KB was not entirely blameless as he failed to check JS’s authority to deal with their mother’s financial affairs and the whereabouts of the proceeds of sale of his mother’s property. He was aware his mother’s capacity was deteriorating but did nothing to ensure her finances were dealt with in the correct manner.

For these reasons, Cobb J ordered that JS should pay two-thirds of KB’s costs and four-fifths of DB’s costs. He gave leave for the independent deputy to enter into an equity release to lend money to JS to pay the costs incurred. JS was to repay the costs or allow for them to be deducted from her share of inheritance if DB should die before the loan is repaid.

When pursuing matters through the Court of Protection, practitioners should make clients aware that the general rule that costs are met from the patient’s estate can be departed from at the judge’s discretion with the behaviour of the parties being taken into account.

Kershaw v Roberts

This case relates to a point of procedure regarding the application of cost budget rules to a part 8 claim.

Ian Kershaw, the claimant, lived with Jane Jones for some years before her death. Jones died intestate and Kershaw brought a claim under the Inheritance (Provision for Family and Dependants) Act 1975 (the Act) for reasonable financial provision from Jones’ estate. The defendants are the deceased’s sister and personal representative and the deceased’s son, who is the beneficiary under the intestacy subject to Kershaw’s claim.

The claim was issued and a notice for a directions hearing was sent to the parties. Seven days before the hearing the claimant served a costs budget and the defendants in response then served their own costs budget two days before the hearing.

At the hearing, the claimant argued that the hearing was, in substance, a case management conference (CMC) and that the defendants had failed to serve their costs budget within the appropriate time of seven clear days. The claimant argued, therefore, that the defendants’ costs should be limited to court fees only.

The district judge held that a costs case management hearing should be listed for the issues to be decided, at which it was held that the initial hearing had not been a CMC and therefore the defendants had no obligation to file a costs budget.

The claimant appealed and argued that the claim had been automatically allocated to the multitrack and that any directions hearing under part 8 of the civil procedure rules (CPR) is a CMC.

Under rule 57.16(1) CPR, the Act claims must be brought under part 8 procedure, which is appropriate for claims where there is no substantial dispute of fact. Rule 8.9(c) provides that where part 8 procedure is followed, the claim shall be treated as allocated to the multitrack. CPR part 29 applies to multitrack cases, with rule 29.2 allowing the court to fix a CMC or pre-trial review at any time after the claim has been allocated to the multitrack.

LiPs exception

At the time that this case was being considered, rule 3.12 established that the costs management provisions in part 3 apply to all multitrack cases. Under rule 3.13, all parties, except litigants in person, must file and exchange costs budgets either by the date specified in the court’s notice or seven clear days before the first CMC. Under rule 3.14, a party which fails to file a costs budget will only be able to recover court fees.

Mr Justice Hickinbottom held that the initial hearing was not a CMC. On the basis that rule 8.9(c) does not automatically allocate part 8 claims to the multitrack, judges have discretion to allocate part 8 claims to any track.

Only when the claim is specifically allocated to the multitrack do the provisions of part 29 apply. As the claim was only specifically allocated to the multitrack at the initial hearing, the hearing could not have been a CMC.

Hickinbottom J also stated matters of fact to support his conclusion. The notice of hearing had referred to a “directions hearing”, the time estimate allocated for the hearing in that notice would have been inadequate for a CMC and there had been no attempt to agree the costs budget as would be required before a CMC.

Given that the hearing was not a CMC, the defendants’ cost budget could not have been late. Therefore, the rule 3.14 sanction did not apply to that budget. It does not appear to have been considered by either party, but as the claimants had not provided their costs budget within seven clear days of the hearing either, had the hearing been a CMC they too would have been subject to the sanctions in rule 3.

The case is now of historic interest. As of 22 April 2014, rule 3.12 has been amended to provide that part 8 claims are no longer the subject of costs management at all.

 

Heather Viljoen is a solicitor at Michelmores

She writes regular case updates for Private Client Adviser

 

Lynsey Colman is an associate at Barlow Robbins

She writes regular case updates for Private Client Adviser

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