Oxford don awarded nearly £1m in damages after law firm negligently drafted property trust agreement
A judge in the High Court of England and Wales has awarded an Oxford professor over £985,000 in damages after successfully establishing that the law firm that drew up the trust agreement governing his late mother’s estate had negligently failed to provide a veto over a proposed sale to the trustees.
Christopher Gosden and his spouse Jane Kaye argued that Halliwell Landau had failed to register a restriction on the Land Registry that would have allowed them to maintain control over whether or not the house was sold. Following the refusal of his claim in the High Court, he appealed to the Court of Appeal (Civil Division).
The case was heard by Judge Pelling QC in the High Court. The appeal was heard by Lord Justice Patten, Lord Justice Jackson, and Lady Justice Asplin.
Entered civil partnership
The first claimant, a Professor of European Archaeology at the University of Oxford, was the only child of Dr Jean Weddell, with whom he had reconnected in 1990 after he had been given up for adoption. In 2003 she decided that she wished for her Edwardian home in Kennington to pass to him after his death, estimated to be worth over £1 million.
In order to mitigate the amount of Inheritance Tax payable on the property’s transmission, Dr Weddell’s accountant referred her to a wealth management company which was marketing a scheme for the mitigation of IHT known as the Estate Protection Scheme (EPS). The scheme was designed to enable the owners of property to dispose of the property on terms which enabled them to continue to live there until death, but which reduced the value of the property in their estate for IHT purposes.
Halliwell Landau was instructed to draw up a trust agreement to give effect to the EPS, with Dr Weddell and the claimants as the trustees. A document created by the firm stated that a title restriction would be entered in HM Land Registry to prevent the sale of the property without notice to the trustees.
In around 2006, Dr Weddell entered a relationship with Wendy Cook, a 37-year-old barrister. Her relationship with her son degraded, particularly after she became Ms Cook’s civil partner and moved to a house on the Isle of Wight with her in 2010. There, she made a new will that passed the majority of her estate to Ms Cook and stated to a solicitor that she wished the Kennington property to be sold.
The property was sold in 2010 for £710,000 without the knowledge of the claimants, who only became aware of the sale in 2015. It was submitted that had the restriction been properly entered by Halliwell Landau on the Land Registry, the purchaser would have required its removal in order for the sale to proceed, and the claimants had lost the power to veto the sale as a result.
In the High Court, Judge Pelling found that the claimant had not established any loss and that he would have agreed to comply with his mother’s wish for a sale regardless. In his view, the claimants had merely lost a chance of obtaining the property. On appeal, the claimant argued that the judge had erred in accepting the submissions for the defendant on this point.
Lost power of veto
In his judgment, with which Jackson LJ and Asplin LJ agreed, Patten LJ said of Judge Pelling’s approach: “The judge was wrong to treat this as a claim based on a loss of a chance unless the starting point of the claimants had been that they would, as a matter of course, have consented to whatever Dr Weddell ultimately wished to do with the Property but would have attempted to persuade her to change her mind.”
He continued: “That is not how their claim was formulated. It was pleaded and presented on the basis that what they had lost through the respondents’ negligence was the power to veto the sale. Had Halliwell Landau registered the restriction in accordance with the duty of care which they owed to the claimants, no sale could have taken place without their consent.”
Of the judge’s opinion that the first claimant would have agreed with his mother’s wishes regardless, he said: “The judge’s analysis of what is likely to have occurred in 2010 is largely based on his view of the events of 2005. But that seems to me to be a very slender basis for inferring that the claimants, as the judge put it, would have agreed with whatever Dr Weddell decided to do.”
He continued: “Any assessment of whether the claimants are likely to have consented to a sale in 2010 must be made by reference to how things then stood. By that time Dr Weddell had gone to live with Ms Cook on the Isle of Wight. There had been the significant diminution in contact between Professor Gosden and his mother as I described earlier and a corresponding concern on the part of both claimants about Dr Weddell’s capacity and what they regarded as the malign influence of Ms Cook in the arrangement of Dr Weddell’s affairs.”
Patten LJ concluded: “The claimants’ evidence, put at its lowest, was that they would not have considered agreeing to a sale and to the end of the EPS arrangements without being given an explanation or justification for the sale and the use of its proceeds which both indicated that the sale was the product of an independent, informed decision by Dr Weddell and was in her own best interest. The judge heard no evidence from Ms Cook or any other witness which allowed him to conclude that in 2010 any such justification could have been given.”
For these reasons, the appeal was allowed. The case was remitted back to Justice Pelling for the determination of damages. In January 2021, he ruled that the respondents must pay the appellant damages in the sum of £985,299.
© Scottish Legal News Ltd 2021