Trusts of land and contentious probate

The increase in private client litigation shows no sign of abating, with figures from HMCTS suggesting that up to 10,000 caveats are being lodged per annum, the number of probate claims reaching trial is increasing year on year, and a constant stream of reported decisions relevant to practitioners in this field. 

This month we consider a family dispute relating to the beneficial interests in properties bought by a family and placed in the names of one of the children, and a probate claim brought by a disappointed beneficiary which resulted in a disagreeable costs order. 

Trusts of land:  Khan v Khan [2024] EWHC 2491 (Ch)

In this claim, the Claimants successfully established the existence of trusts in their favour over four valuable properties in London.

The Claimants (Ahmed, Sarwar, Shalima, Farhana and Jennifer) and the Defendant (Muhammed) are all siblings and the children of Fatima Khan (‘Mrs Khan’) and the late Abdul Khan (‘Mr Khan’).  In 1998, one of the properties, 7 Essex Grove, was purchased using money belonging to Mr and Mrs Khan and was placed in the name of Farhana.  The Claimants contended that it was placed in Farhana’s name on the basis of a prior agreement that she would hold the property on trust for Mr Khan during his lifetime and thereafter for her and her two sisters Shalima and Jennifer in equal shares.

In 2004, Mr and Mrs Khan transferred another one of the properties, 14 Stapleton Road, to Muhammed, their eldest son.  14 Stapleton Road had previously been owned jointly by Mr and Mrs Khan for many years. At the time there was significant equity in the property; Muhammed paid off the remaining mortgage using a mortgage which he took out.

The Claimants contended that 14 Stapleton Road had been transferred to Muhammed on the basis of a prior agreement that he would hold the property for Mr Khan during his lifetime and then for Muhammed and his two brothers Ahmed and Sarwar in equal shares.  They contended that it was agreed amongst the family that the equity in 14 Stapleton Road would then be used to purchase another property, 53 Norbury Crescent, which would be operated as a children’s nursery, a care home, or in the last resort as the family home, and that 53 Norbury Crescent would again be held by Muhammed on trust for Mr Khan during his lifetime and thereafter for Muhammed, Ahmed and Sarwar in equal shares.

In 2005, after Farhana had undergone financial remedy proceedings, during which her ex-husband had attempted to claim 7 Essex Grove, Farhana created leases of the three flats in the property in favour of Muhammed. The Claimants’ position was that this was intended to protect the property against future claims of a similar nature, and that the creation of the leases in Muhammed’s favour was subject to a prior agreement that he would hold those leasehold interests on the same trusts as before.

In September 2006, 5 Ullswater Road was purchased in Muhammed's name. The Claimants contended that this was purchased with the aid of a remortgage obtained on 14 Stapleton Road or alternatively 7 Essex Grove at Mr Khan's direction, and that again, it was purchased on the basis that it would be held by Muhammed on trust for Mr Khan during his lifetime and thereafter for Ahmed, Sarwar, and Muhammed in equal shares.

In 2013, the Defendant wrote an email to Shalima and other family members in which he stated: “I want Essex Grove out of my name by 2014.  This belongs to three sisters as stated clearly.”  The email ended with Muhammed’s name. The Claimants contended that this was sufficient proof of an express trust of 7 Essex Grove in favour of Shalima, Farhana and Jennifer for the purposes of section 53(1)(b) of the Law of Property Act 1925 and that the email constituted signed writing for the purposes of that section given the Court of Appeal decision in Hudson v Hathway [2023] KB 345.

In a judgment dated 4th October 2024, Saira Salimi, sitting as a Deputy High Court Judge, held that the Claimants had been able to demonstrate an effective express trust of 7 Essex Grove in favour of Shalima, Farhana and Jennifer and that the type of constructive trust applied in the Court of Appeal in De Bruyne v De Bruyne [2010] 2 FLR 1240 applied to the other properties, in favour of the other claimants. A De Bruyne type trust depends on there being a prior agreement that the recipient of property will hold that property on trust for other persons, such that it is unconscionable for him to deny that he is holding the property on those trusts; it does not require detriment to be demonstrated by the intended beneficiaries of the trust, even if the beneficiaries were children at the crucial time.

Much of the factual evidence was disputed in this case, but it is clear that Muhammed had no real answer to the key aspects of the Claimant’s case that arose from the documentary record.  It demonstrates the importance, in cases where the relevant evidence spans many years and includes disputes as to whether given events happened (and what their significance is if they did), of stress-testing a client’s case by reference to the key documents – in other words, how they deal with points in the evidence which cannot realistically be subjected to cross-examination and which are inconsistent with the client’s case. 

The case also demonstrates that taking procedural or conduct points at trial is unlikely to improve a client’s position unless there is real substance in the point.  Muhammed contended that there had been inadequacies in the Claimants’ disclosure, and both sides levelled allegations of unlawful or unethical conduct against each other to impugn the other side’s credibility.  In general, judges will be reluctant to engage with such an argument unless it appears relevant to a specific issue in the case; “throwing it into the pot” will usually not be welcomed.

Contentious probate:  Neate v Heselden and ors (Central London County Court, 24 October 2024)

Several substantial contentious probate decisions involving multi-million pound estates have been reported in the past year or two.  This case involved a smaller estate (worth circa £250,000) but is perhaps a more accurate reflection of the type of estates that frequently end up being fought over in the courts – relatively modest in value and likely to become highly depleted by legal costs.  It is also an object lesson in the dangers of a disappointed beneficiary’s conviction that “Dad wouldn’t have done this” or that something has ‘gone wrong’ in the will’s preparation to prevail over a dispassionate analysis of the evidence available.

The contentious probate case of Neate v Heselden was heard over four days at Central London County Court by His Honour Judge Gerald.  The case attracted media attention due to its unusual circumstances involving a valuable stamp collection and a longstanding friendship between the testator, Raymond Watts (known as ‘Ray’), and his former cleaner, Susan Pope (‘Susan’).

HHJ Gerald delivered judgment on 24th October 2024, confirming the validity of Ray’s will dated 2nd May 2019, as modified by a codicil dated 12th November 2020. The judgment upheld Ray’s wish to leave legacies to his biological children and name his good friend Susan as the primary beneficiary of his estate. In doing so, he dismissed the claims of Ray’s stepdaughter, Beverley Neate (‘Beverley’), who had contested the validity of the will on the basis of want of knowledge and approval.

Susan started working for the Deceased in 2011 after he had placed an advertisement for a cleaner. However, over the years, Susan became a close friend of Ray’s and shared in his hobby of philately – described in evidence as Ray’s ‘sole focus’ in later life – often taking Ray to stamp fairs across the country.  Ray became ill in the last years of his life, and Susan acted as a carer for him, taking him to all his medical appointments, visiting him in hospital and generally supporting him with daily living.

As HHJ Gerald commented during the trial, Susan was the “single biggest constant” in Ray’s life. To thank her for her unwavering friendship and support, Ray decided to gift Susan his valuable stamp collection and leave most of his estate to her on his death.

In contrast, towards the end of Ray’s life, Beverley, Ray’s stepdaughter, started acting in ways described by Ray as “disrespectful and distressing.” Her actions included entering his property while he was ill in hospital and hiring a locksmith to change the locks without informing Ray.

Because of Beverley’s behaviour, Ray decided that he no longer wished to make any meaningful provision for her in his will. To reflect this, he made the 2020 codicil to modify his 2019 will and reduce Beverley’s legacy from £15,000 to £1.  He also made a detailed witness statement explaining his reasoning and setting out the upset that Beverley’s conduct had caused. 

Beverley sought to establish that the 2019 will and 2020 codicil were invalid. She brought her claim on the grounds that Ray did not know and approve the content of the will or codicil and argued that his estate should be administered in accordance with his previous will dated 8th June 2007.

The First and Second Defendants are the executors and trustees of the 2019 will and remained neutral in the proceedings. Beverley’s claim was dismissed, and she was ordered to pay the costs of all Defendants on an indemnity basis.  HHJ Gerald was highly critical of Beverley’s conduct during the claim, characterising her behaviour as “vengeful” and stating that he was satisfied that the only settlement she would have accepted“would have been total surrender by the Defendants”.

Whilst this case may, on some views, seem like an extreme case (as the award of indemnity costs suggests), the reality is that many speculative contentious probate claims are commenced, or caveats lodged, on the strength of not much more than the type of conviction held by Beverley that she understood what Ray’s true wishes were and the fact that the 2019 Will and the 2020 Codicil did not match those wishes was in itself evidence of a problem. 

This case underlines the importance of having cogent evidence of a sustainable and genuine concern going beyond “Dad didn’t want this” before a will challenge is launched.  Courts do not lightly declare professionally drawn wills to be invalid: “as a matter of common sense and authority, the fact that a will has been properly executed, after being prepared by a solicitor and read over to a testatrix, raises a very strong presumption that it represents the testatrix's intentions at the relevant time.” (Gill v Woodall [2011] Ch. 380, per Neuberger LJ at §14; also Hawes v Burgess [2013] EWCA Civ 74, per Mummery LJ at §13-14).  Here, the will files were detailed, meticulous and – unusually for a probate claim – contained actual evidence from the testator himself as to his reasoning in the form of his witness statement. 

It would take a formidable body of evidence to demonstrate that the evidence of knowledge and approval on Ray’s behalf was nonetheless insufficient or vitiated in some way.  Beverley’s evidence came nowhere near this standard and, in reality, merely demonstrated that she had no direct challenge to the will beyond her own inferences about its contents.  This was not a promising basis for a will challenge.  As stated by HHJ Gerald in his costs judgment, “It is appropriate for the court to make a [punitive] costs order in order to indicate its disapproval of the use of the courts in circumstances where there really is no evidence”.

(Author: Elis Gomer, barrister, 5 Stone Buildings)