Testators making identical wills purporting to dispose of flat — No contract complying with Law Reform (Miscellaneous Provisions) Act 1989 — Surviving testator gifting flat during his lifetime otherwise than as agreed — Whether disappointed legatee able to rely on common intention — Constructive trust
In May 1996, two testators (H and W) made individual wills that, so far as material, were in identical terms. By those terms, the survivor took the entire estate of the first to die. On the death of the survivor, certain property was to pass to the claimant, who was H’s niece, while the rest of the survivor’s property was left to the first-named defendant (PB), the son of H by a previous marriage. The property bequeathed to the claimant included a London flat that was jointly owned by H and W. Each will declared that the maker would not, in the event of surviving the other, amend or revoke the will so made, provided that the will of the first to die had not been amended or revoked.
In January 1997, W died, having made no alteration to her will, and the entire ownership of the flat vested, by operation of law, in H as surviving joint owner. In August 1997, H transferred the flat, by way of a lifetime gift, into the joint names of himself and PB. In December 1997, H died without altering his will, and the sole title to the flat vested in PB by operation of law. The claimant brought High Court proceedings claiming that, by operation of the equitable rules applicable to mutual wills, PB held the flat on constructive trust for her absolutely. PB resisted the claim primarily on the ground that, so far as the flat was concerned, the existence of a contract between H and W was ruled out by section 2 of the Law Reform (Miscellaneous Provisions) Act 1989.
Held: The claimant was entitled to a half-share in the flat.
Under the law applicable before the enactment of section 2, H and W would have made the binding contract that was necessary to bring the doctrine of mutual wills into operation: see Gray v Perpetual Trustee Co Ltd [1928] AC 391 and Re Goodchild [1997] 1 WLR 1216. But that could not have occurred in 1996, since the absence of the required single document signed by both parties precluded the existence of a contract*.
However other types of constructive trust did not depend upon proof of a binding contract, notably those based upon the defendant’s failure to give effect to a common intention upon which the claimant had relied to his detriment: see Yaxley v Gotts [2000] Ch 162, applying the observations of Lord Bridge in Lloyds Bank plc v Rosset [1991] AC 107 at p132. Moreover, section 2(5) of the 1989 Act expressly saved the creation and operation of constructive trusts. Applying the law as summarised by Robert Walker LJ in Yaxley, it would be entirely inequitable to frustrate W’s expectation, and it was unconscionable for H to do so in seeking to transfer the flat after her death. Accordingly, PB could not contend that the agreement could be breached only by some testamentary act on the part of the surviving testator.
The court was bound, however, by the judgment of Morritt LJ in Re Goodchild, to declare that no constructive trust was imposed upon the share derived from H’s original undivided share.
*Editor’s note: The judge explained that, under the old law, the death of W with her will unchanged would have amounted to part performance of a contract that was not void, but merely rendered unenforceable by section 40 of the Law of Property Act 1925 (or the earlier Statute of Frauds).
Andrew Child (instructed by Brignalls Balderston Warren, of Letchworth) appeared for the claimant; Susannah Meadway (instructed by Trott & Gentry) appeared for the defendants.
Alan Cooklin, barrister
