Green & Ors v Gaul & Ors, Re Loftus (deceased)

Beneficiaries’ claims concerning an incompletely administered estate were governed by the limitation provisions applicable to claims to a deceased person’s estate. The 12-year period under section 22(a) of the Limitation Act 1980 began, at the earliest, at the end of the executor’s year. Where section 21(1)(b) applied to trust property received and converted by a trustee, no limitation period applied and laches was unavailable.

A transferee of trust property had to establish the defence of bona fide purchase for value without notice. A purchaser who knew enough of the trust circumstances to make retention unconscionable could not rely on that defence. A defaulting personal representative could be removed where that was pragmatically required in the interests of the estate.

The claimants, three daughters of the deceased, challenged their sister Margaret Gaul’s administration of their father’s intestate estate. They alleged that she had retained estate assets, dealt improperly with a builder’s yard, transferred the yard to her son Dexter, and failed to provide a proper account.

Margaret relied on an alleged family compromise, limitation, laches and estoppel. Dexter claimed to be a bona fide purchaser for value without notice. Margaret also counterclaimed for an account of assets allegedly controlled by the claimants.

The principal issues were whether there had been a compromise agreement, whether the claims were time-barred or barred by equitable doctrines, whether Dexter could retain the yard, and what remedies and accounting directions should follow.

1. Compromise. There was no compromise agreement. The contemporary negotiations, the uncompleted heads of agreement, the later termination of negotiations, and Margaret’s subsequent conduct as administratrix were inconsistent with the alleged settlement.
2. Limitation and laches. Section 22(a) of the Limitation Act 1980 applied to the claims concerning the estate. The earliest possible commencement date was the end of the executor’s year. The court also held that claims to recover trust property or its proceeds within section 21(1)(b) were subject to no limitation period, and that laches was unavailable where the statute expressly imposed no limitation period. The inventory and account acknowledged Margaret’s duty to account, although it did not acknowledge the estate’s entitlement to the yard.
3. Dexter. The relevant issue was whether Margaret had acted in breach of trust and whether Dexter had proved bona fide purchase for value without notice. His knowledge of the yard’s status as an estate asset, the beneficiaries’ original entitlement, the family dispute and Margaret’s position meant that he had not purchased in good faith. He held the yard and its profits for the estate.
4. Counterclaim. The court declined to order an account at that stage. It declared that the offshore accounts belonged to the Company, leaving further questions concerning restoration and payments to the new administrator.
5. Remedies. Margaret’s retention and conversion of estate assets, mortgage of the yard, transfer to Dexter and defective accounting amounted to breaches of trust. She was removed under section 50 of the Administration of Justice Act 1985, and an independent solicitor was to replace her. Dexter was ordered to reconvey the yard and account for profits. Capital expenditure improving the property was not reimbursable, but revenue expenditure could be credited in the profits account.