Fitzgerald & Ors v Henerty & Ors [2016] EWCA Civ 701

Case No A3/2014/1344/CHANF[2016] EWCA Civ 701
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Venue MANCHESTER DISTRICT REGISTRY
HHJ Pelling QC
3 MA 30047
Venue Royal Courts of Justice, Strand, London, WC2A 2LLDate 06/07/2016
Before
LORD JUSTICE TOMLINSONLADY JUSTICE RAFFERTY DBELORD JUSTICE KITCHIN
Between
SANDRA MAY FITZGERALDAppellants/ClaimantsCASSIE FITZGERALDAppellantOLIVIA FITZGERALDAppellantPAUL HENERTYRespondent/DefendantsCATHERINE FITZGERALD-TAHERRespondentMARGARET MATTHEWSRespondentHELEN STARKEYRespondentVALE (UK) LIMITEDRespondent
Michael Furness QC and Bobby Friedman (instructed by Aaron & Partners Llp) for ClaimantsLesley Anderson QC and Matthew Hall (instructed by Steels Solicitors) for 2 nd to 4 th RespondentsHearing Hearing date: 10 th May 2016
Judgment
[1]This appeal from the Order of HHJ Pelling QC (“the Judge”) concerns the will (“the Will”) of Thomas John Fitzgerald (“the Deceased”). Permission to appeal was granted by Gloster LJ on 6th November 2014.[2]This appeal raises no issue of law, precedent or other matter of general significance. The uncontroversial (with one unimportant qualification) relevant facts and documentary material are set out in the judgment under appeal. This judgement does no more than explain my conclusions. It does not seek to paint a full picture.[3]The Judge held that the Deceased knew and approved the contents of the Will and had capacity. The Claimants do not challenge the finding on capacity.[4]Suspicious circumstances where made out place the onus on the propounder of the will to prove knowledge and approval. Absent suspicious circumstances, the Court will assume the deceased knew and approved the will if it were read to him. The testator must know not only its contents but also their effect.[5]The Claimants contend that in concluding there were no suspicious circumstances, and in failing to take into account material considerations, the Judge reached a conclusion not open to him. They submit that this Court should find suspicious circumstances which cannot be dispelled.[6]On 2nd May 2012 when the Deceased gave instructions to his solicitor for a will he was silent about the shares (“the shares”) and had not made up his mind about Cassie and Olivia (“the girls”). A draft was discussed in hospital by the Deceased and Mr Henerty on 11th May 2012, and at 6.30am and at 11am on 14th, May 2012, the day he died, this last including Mohammed Taher the Deceased’s brother-in-law. The Deceased signed the Will in the presence of Mr Kennan his solicitor and the latter’s assistant Miss Doyle shortly before death.

The conversation of 11th May 2012

[7]The Judge accepted that the Deceased told Mr Henerty he did not know what to do about the girls. Mr Henerty quoted the Deceased saying he had not finished the Will as he did not know how to put the shares back into Vale as the two had spoken about previously. The Judge was not convinced the Deceased was unclear about how to ensure the shares went back to Vale. What he did find however unconvincing was the account by Mr Henerty, first, since there had been no 2nd May discussion of Vale, and, second, since it was odd the Deceased chose first to mention the topic to Mr Henerty rather than to his solicitor. It was also odd that he did not ask Mr Henerty to contact his solicitor, or do so himself at a time when he was using his mobile from hospital.[8]The Deceased’s reference to the two men having earlier spoken about the shares, which the Judge also found odd, Mr Henerty explained by setting out an agreement between him and the Deceased after the death of Frank Fitzgerald (the Deceased’s brother-in-law) that if anything happened to either Mr Henerty or to the Deceased their shares should go back to Vale. The Judge found that if there had been such a conversation no steps had been taken to put it into effect. Nonetheless, relying on the 14th May conversations, the Judge found the Deceased probably said he wanted to think about the Vale shares.

The conversation of 0630 on 14th May

[9]The Judge found the evidence of Mr Henerty about 06.30 on 14th much more consistent with the shares first having been raised on 11th, probably by him, the Deceased having said he wanted to think about it, or did not know about it, or both.

The conversation of 1100 on 14th May

[10]The Judge accepted as corroborative of Mr Henerty’s accountthe evidence of Mohammed Taher that of the girls the Deceased said “Yes they’ve got enough” and of the shares “Yes ask the solicitor to do that”. The Judge found Mr Henerty on 14th May had two telephone conversations with Mr Kennan, one about shares, one about the girls. Hefound the new clauses were read to the Deceased who indicated agreement. He found the difference between an option and a right of pre-emption and the failure of Mr Kennan to explain or consider it an “unreal” point. He concluded that the result the Deceased wanted was to get the shares back to Vale. There were no suspicious circumstances and the Deceased knew and approved the option clause and that excluding the girls. Discussion and conclusion The girls

Discussion and conclusion

[11]The precedent marked by Mr Kennan on 2nd May supports the view that the Deceased at that stage was minded to exclude the girls since a reference to them as beneficiaries is crossed out. Mr Kennan inferred the Deceased was telling him to leave the girls to one side. The Judge found exactly that - that on 2nd May the Deceased had not finally decided what if any provision he was to make for them. He had told Mr Kennan he would look at the draft and sign it on return from Portugal. MrKennan then had a version typed.[12]The Judge’s findings on the girls are founded in the 0630 conversation on 14th. Mr Henerty’s evidence was that the Deceased asked Mr Henerty to ring the solicitors and tell them what he and Mr Henerty had discussed, about the shares and about the girls. Asked by Mr Henerty if he wanted the girls in the will, the Deceased said he did not, they had had enough. Asked whether he were sure, he confirmed he was.[13]This account by Mr Henerty the Judge found somewhat surprising, as I have set out above, but as to the shares, not as to the girls. It was the link to the shares which led him to conclude that Mr Henerty’s evidence about the 11th conversation was not wholly truthful.[14]That conclusion was open to the Judge, since the second conversation on 14th, once the Deceased had been moved to ICU, this time in the presence of the reliable and credible Mr Taher, includes the Deceased saying the girls had had enough.[15]I agree with the Judge that by 14th the Deceased had decided to exclude the girls. It would be hard to attack that finding, given that one auditor was unchallenged as reliable and honest.[16]The best Mr Furness could do was suggest that the instructions for the girls’ definitive exclusion were transmitted to Mr Kennan by Mr Henerty, a man with an interest in ensuring the Will was made that day with the shares Option included.[17]That comes nowhere near undermining the evidence that on 14th the Deceased indicated a decision on the girls, with reasons. There is nothing left to debate. That Ground is unsustainable.

The shares

[18]During the afternoon of May 14th, in the presence of the reliable and credible Mr Taher, that the Deceased said Mr Henerty should “Do what we have discussed [about the shares]” is evidence of a previous exchange but does not reveal its contents. Mr Furness would have it that the previous exchange can only have been on 11th, as to which, he submits, the Judge did not believe Mr Henerty’s evidence.[19]Theaccurate account of what theJudge concluded about the first conversation on May 11th was that on balance Mr Henerty rather than the Deceased suggested the shares should go back to Vale. The topic was undoubtedly raised and the Deceased said he would think about it. The Judge’s doubt was only as to who mentioned the shares and, he said, it did not matter.[20]Mr Furness accepts that the Deceased intended his shares should revert to Vale and that whether the Option clause were read out or summarized is not key. The issue he argues is whether this Court can safely conclude that a probate value Option was what the Deceased understood and wanted. He relies on what he describes as a complicated arrangement being briefly explained by a solicitor himself misunderstanding it to a man gravely ill. He suggests it is inconceivable the Deceased understood his estate would be forced to sell the shares at probate value. A well man would be unlikely to understand let alone one in extremis.[21]There are difficulties in the way of that argument. Even if Mr Kennan did not grasp the significance of the Option, to which I shall come, it is not hard to understand and the mechanism it contemplates is straightforward.[22]The Judge made an unchallenged finding that as early as 0630 on 14th the Deceased was undecided about the shares. He accepted that the Deceased told Mr Henerty to ask Mr Kennan to put the shares back into Vale.[23]The best evidence of what Mr Henerty then said to Mr Kennan lies in a contemporary note by the latter of a telecon on 14th May at 1120. It reads where relevant:
“Tel. call from Mr Henerty. Vale plc Limited. ………. Returned call and he gave me more information re his first call. Provide for shareholding first to be offered at market price to Vale plc Ltd. – money part of R[esidual] E[state]. Make no provision for daughters Cassie and Olivia”
The clause drafted as a consequence Mr Kennan later read out to the Deceased. Make no provision for daughters Cassie and Olivia”[24]The Deceased chose Mr Henerty as his executor. Until Mr Henerty saw the Will he did not know what the Deceased had included in it. Twice Mr Henerty asked the Deceased if he were sure. The Judge accepted that the picture was not of a vulture at the Deceased’s bed at 0630 on 14th but of a man the Deceased had known for years and felt he could trust.[25]On the evidence the Deceased, in light of difficulties after Frank Fitzgerald's death, wanted to ensure his own shares went back to Vale.Many a testator who had built up a successful company might want to do what he could to make sure post mortem it continued successfully. The Deceased trusted Mr Kennan whom, I infer, he thought a competent draftsman.[26]The Deceased communicated his wishes on Vale on May 11th but more importantly on May 14th[27]Whether Mr Kennan misunderstood the implications is of no consequence since it is not necessary the Deceased should understand what he might have done, merely what he did. All that is necessary is knowledge and approval of the contents of the Will, not of their effect: Parker v Felgate (1883) 8PD 171.[28]The question is whether the Will reflects the Deceased’s intentions. In Perrins v Holland CA [2011] Ch Moore-Bick LJ said:
“…by the middle of the 19th century proof of knowledge and approval did not require the existence of testamentary capacity; what was required (and then only in cases where a doubt was raised) was merely sufficient proof that the testator intended to make the dispositions contained in the will. That might be established in a number of ways. As Parke B observed in Barry v Butlin (1838) 2 Moo PC 480, 485, where suspicions arise, the court must be satisfied that the will does in fact express the real intentions of the deceased. The most satisfactory evidence for that is in prior instructions or the reading over of the instrument to the deceased …”
[29]Prior instructions, just as contemplated by Moore-Bick LJ, here provide the best evidence that the Option clause expressed the Deceased’s real intention which was that his shares should go back to Vale. He understood what the clause was doing, that is setting out what he wanted, and its effect, that is that his shares would go back to a company into which he had put years of effort.[30]In Gill v Woodall (CA) [2011] 3 WLR Lloyd LJ said:
“…it seems to me that there is a risk of reading too much into the words traditionally used in this area of probate law. ……but at any rate one can say that it covers the proposition both that the testator knows what is in the document and that he approves of it in the sense of accepting it as setting out the testamentary intentions to which he wishes to give effect by execution. …”
[31]This comment aligns with the view of Moore-Bick LJ. One begins with intention – here that the shares should go back to Vale - then asks whether the Will carried it through. It did.[32]I would dismiss this appeal.[33]I agree that this appeal must be dismissed for the reasons given by Lady Justice Rafferty and Lord Justice Tomlinson. In deference to the submissions we heard, I would add the following few words of my own.[34]As for the daughters of the deceased, the second and third claimants, the position is, I think, relatively straightforward. The judge made the following important findings. The deceased did not make a decision as to whether to make provision for his daughters in his will until 14 May 2014. On that day the first defendant, Mr Henerty, visited the deceased first at 6.30am and the deceased intimated in the course of their ensuing conversation that he did not want to make provision for his daughters because “they have got enough”.[35]At about 11.00am the deceased was visited by Mr Henerty once again, but on this occasion in the company of Mr Taher. Mr Henerty asked the deceased whether he wanted him to do what he had earlier said about his daughters, to which the deceased responded “yes they’ve got enough”. There followed a telephone conversation between Mr Henerty and Mr Kennan, the deceased’s solicitor, in the course of which Mr Henerty told Mr Kennan that the deceased wished specifically to exclude his daughters from his will. Mr Kennan drew up the will accordingly. He included clause 8 which stated that the deceased had made no provision in his will for his daughters.[36]Mr Kennan then travelled with his assistant solicitor, Ms Ellis-Doyle, to the hospital. He told the deceased, in the presence of Ms Ellis-Doyle, that he had received two phone calls from Mr Henerty, one relating to the option, to which I shall shortly come, and the other relating to the decision of the deceased that he did not want any part of his estate to go to his daughters who were well provided for. The deceased confirmed that instruction by nodding his head and speaking as best he could through his oxygen mask. Mr Kennan then read clause 8 to the deceased who indicated his agreement to its terms. The will was signed by the deceased just before he died.[37]These findings were in my judgment plainly open to the judge upon the evidence he heard from Mr Henerty, Mr Taher, Mr Kennan and Ms Ellis-Doyle. Mr Henerty’s account of the conversation with the deceased at 11.00am was broadly corroborated by Mr Taher, whose honesty was accepted by the claimants, and the substance of this conversation supported Mr Henerty’s account of the conversation he had had with the deceased earlier that morning. Moreover, the evidence of Mr Kennan was materially consistent with that of Ms Ellis-Doyle.[38]I recognise that at this time the third claimant, Olivia, was in fact financially dependent on the deceased and her mother, the first claimant, but this was a matter of which the judge was fully conscious and I am satisfied that it does not undermine the conclusions to which he came, not least because Olivia was living with her mother in the former matrimonial home and ancillary relief proceedings were ongoing.[39]In my judgment the judge was entitled to find as he did that the claimants had not established that the circumstances were such as to excite suspicion as to whether clause 8 of the will represented the true wishes and intentions of the deceased, and he was also entitled to find that the deceased, at the time he signed his will, knew of and approved the terms of clause 8 and the absence of provision in the will for his daughters.[40]I therefore turn to the option embodied in clause 4 of the will, namely that the deceased’s shareholding in the fifth defendant, Vale, should be offered for sale to Vale at the value agreed with the Inland Revenue for probate and inheritance tax purposes. It is convenient to mention at the outset three findings made by the judge about Mr Henerty upon which counsel for the claimants have particularly relied. First, he would benefit substantially, albeit indirectly, were this aspect of the will to be upheld for he was a shareholder in Vale and the shares were likely to be offered to the company at a discount to their true value; secondly, he was aware of this benefit although he tried to pretend he was not; and thirdly, aspects of his evidence were so unsatisfactory that his evidence as a whole had to be treated with caution unless it was supported by documents or the evidence of a reliable witness or was against his interest.[41]These were serious findings and they were made primarily in relation to the evidence Mr Henerty gave about the key events concerning the inclusion of clause 4 in the will. Those events began with a meeting between Mr Henerty and the deceased at the hospital on the evening of 11 May. The judge considered that the evidence Mr Henerty gave about this meeting was not wholly truthful but nevertheless found that in the course of it Mr Henerty raised the issue of the shares and the possibility of them coming “back to the company”. The judge considered this was not of itself improper because it was natural that Mr Henerty might wish to avoid a repetition of the significant difficulties that had followed the death of the deceased’s brother-in-law, Frank. The deceased responded that he would think about it.[42]As I have mentioned, Mr Henerty visited the deceased again at 6.30am on 14 May. Mr Henerty claimed that at this meeting the deceased told him to telephone his solicitor and tell him “what we’ve discussed about the shares …”. The judge considered that the evidence Mr Henerty gave about this meeting was in some respects surprising but that it supported his conclusion that Mr Henerty had initiated the conversation about the shares on 11 May and that he had suggested to the deceased that provision be made for the shares to come back to the company. Having regard to the evidence a whole, the judge concluded that at this 6.30am meeting the deceased agreed to that course.[43]At the further meeting later that morning, Mr Henerty, in the presence of Mr Taher, asked the deceased “what about the shares?”, to which the deceased responded “yes, ask the solicitor to do that”. Mr Henerty then telephoned Mr Kennan and, according to Mr Kennan, told him, in effect, that the deceased did not want the shares distributed between the residuary beneficiaries before the company had had the opportunity to purchase them “at the correct market value, thereby substituting the shares for cash in the residuary estate …”. Mr Kennan thereafter embodied this instruction in clause 4 of the will and took it with him to the hospital in the manner I have described. There, in the presence of Ms Ellis-Doyle, Mr Kennan told the deceased of the instruction he had received, just as he did in relation to the instruction concerning his daughters, and the deceased confirmed that instruction. Clause 4 was read to the deceased and the deceased again indicated his agreement to its terms.[44]The judge then proceeded to deal with knowledge and approval and he found, just has he had found in relation to the absence of any provision for the deceased’s daughters, that the circumstances did not arouse suspicion to whether the contents of the will represented the true wishes and intentions of the deceased. He held that the deceased knew and approved the contents of clause 4.[45]Counsel for the claimants developed two main attacks on this aspect of the judgment. They submitted first, that the judge made a fundamental error in concluding that there were no suspicious circumstances; and that he ought to have found both that the circumstances did arouse suspicions as to whether the contents of the will represented the wishes and intentions of the deceased, and that those suspicions had not been dispelled. Secondly, there was no factual basis upon which the judge could conclude that the effect of the option was explained to the deceased. I will deal with these attacks in turn.[46]The first attack was developed by counsel for the claimants as follows. They submitted that the judge did not deal with this issue as thoroughly as he should have done; that he failed to take into account all of the evidence; and that his conclusion that there were no suspicious circumstances was not fairly open to him on the evidence. In that regard they placed particular reliance upon the judge’s findings that the will conferred a valuable benefit on Mr Henerty and that his evidence was not wholly truthful; that the deceased had never seen or heard of the option until he was attended upon by Mr Kennan and so had had no time to consider it; that the deceased was gravely ill at the time of execution of the will; and that there was no evidential basis for supposing that the deceased would knowingly have conferred a benefit on Mr Henerty.[47]I am unable to accept these submissions. I say that for the following reasons. First, the judge was acutely conscious of the deficiencies in Mr Henerty’s evidence and that he stood to benefit from the will, and yet he made the findings he did as to the substance of the discussions between Mr Henerty and the deceased at the meetings on 11 May and at 6.30am and 11.00am on 14 May. There can be no doubting the substance of the discussion at the 11.00am meeting because Mr Henerty’s evidence about it was corroborated by that of Mr Taher. Moreover, it shows that that the issue of the shares had been raised earlier. In my judgment there is no proper basis upon which this court can interfere with the findings of the judge as to what was said as regards the shares at each of these meetings.[48]Secondly, Mr Henerty had a good reason for making the suggestion about the shares to the deceased, and the deceased had a good reason to accept it, namely a wish to avoid the turmoil concerning the shares of the deceased’s brother-in-law, Frank, that had followed his death.[49]Thirdly, the precise terms of the option had nothing to do with Mr Henerty. As Mr Kennan explained and the judge accepted, the instruction conveyed to him by Mr Henerty was that the company should have the opportunity to purchase the shares at their market price. How that was to be achieved was a matter for Mr Kennan, not Mr Henerty.[50]Fourthly, it is of course true that the deceased had not seen or heard of the precise terms of the option before it was read to him by Mr Kennan, and that he was at that time close to death. But he had capacity; he confirmed his agreement to the instructions that Mr Kennan had received from Mr Henerty; and he assented to the terms of clause 4 when it was read to him.[51]I can deal with the second attack much more shortly. It was submitted that it was inconceivable that the deceased understood the effect of clause 4 and that the estate would be forced to sell the shares at what might be a vastly reduced price. I reject this submission for the reasons given by Lady Justice Rafferty and Lord Justice Tomlinson. In short, the wish of the deceased was that the company should have the right to buy the shares. That was achieved. Moreover the judge was satisfied that it was overwhelmingly likely that the deceased would have been indifferent as to whether the relevant clause created an option or a right of pre-emption.[52]The judge heard evidence over a number of days. He concluded that those propounding the will had established that the deceased knew and approved its contents. That was a conclusion he was entitled to reach. I would dismiss the appeal.[53]I agree with both judgments.[54]So far as concerns the girls, the appeal was barely arguable.[55]So far as concerns the shares, the critical point is that the deceased’s intention was found by the judge to have been simple and straightforward. It was to get the shares back to the company, no more, no less. There was no evidence that the deceased turned his mind either to the manner in which that might be achieved or to the price which it would be appropriate to require the company to pay for the shares. There was no evidence that either of these matters were of any concern to him. His intention was simple and unvarnished.[56]The judge also found for good measure that the deceased is overwhelmingly likely to have been indifferent as to whether the clause created an option or a right of pre-emption.[57]The clause concerning the shareholding was read to the deceased. That was the unchallenged “clear recollection” of the accompanying solicitor Mrs Ellis-Doyle which the judge accepted as reliable evidence. The effect of the clause was readily understandable to a businessman with full testamentary capacity. It created an option at an ascertainable price. The short point is that it achieved the deceased’s simple desire.

Cited in 1 later judgment