Cardigan v Moore & Anor

A recital in a deed may create an estoppel where the parties are to be taken to have agreed that the recited facts are true. The deed must be construed objectively, in its factual and documentary context. Chattels become fixtures according to the degree and purpose of annexation; framed paintings ordinarily remain chattels where they are affixed for their better enjoyment as pictures. The self-dealing rule applies strictly where a trustee grants a lease to himself or concurs in a transaction in which he has a personal interest. Fairness, absence of profit and apparent beneficiary consent do not by themselves prevent the transaction being set aside where the trustee failed to consider the beneficiaries’ interests independently.

The claimant, the Earl of Cardigan, claimed that family paintings remained assets of a partnership and that paintings displayed at Savernake Lodge were included in a 20-year lease granted to him in 1999. The trustees counterclaimed for the lease to be set aside under the self-dealing rule.

The dispute arose after a 2008 Tomlin order and deed of retirement and appointment transferred control of the Estate and identified assets, including paintings, in a schedule. The court had to determine the ownership of the paintings, the construction of the lease, and whether the lease was voidable because the claimant had acted as both trustee and lessee.

1. The claimant was estopped from contending that the paintings remained partnership property. The recital in the 2008 Deed stating that the trust assets were identified in the Second Schedule was a clear and unambiguous statement which he was to be taken to have agreed to admit. The principle in Greer v Kettle [1938] AC 156 applied.

2. In any event, proper construction of the 2008 Deed led to the same result. Applying the objective approach described in Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749 and Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896, the deed transferred all assets listed in the Second Schedule, including the paintings. The paintings were therefore held by the trustees in the proportions specified by the Tomlin order.

3. The lease did not extend to the paintings. Paintings displayed on walls were not naturally furniture. Whether they were fixtures depended on the degree and purpose of annexation. Applying Holland v Hodgson (1872) LR 7 CP 328 and Berkley v Poulett [1977] 1 EGLR 86, the paintings had been housed and hung for enjoyment as paintings and had never become part of the building. They were not fixtures or fittings within the lease.

4. The trustees were entitled to have the lease set aside. The self-dealing rule applied to a lease granted by trustees to one of themselves, regardless of fairness or profit. The claimant’s conflict arose from his decision to accept trusteeship, so Sargeant v National Westminster Bank plc (1990) 61 P&CR 518 did not assist him. The claimant and his co-trustee had not properly considered the beneficiaries’ separate interests. Their concurrence was therefore ineffective and the transaction was voidable.

5. Consent, laches and acquiescence did not bar relief. Successor trustees could challenge consent given by predecessor trustees, and the delay caused no relevant prejudice. The general leasing power in the 1951 Conveyance did not derogate from the self-dealing rule.

The conclusions were that the paintings were no longer partnership property, the lease did not include them, and the trustees were entitled to set aside the lease.

Not stated in the judgment.