It is not every day we advise on a dispute as to who is to
inherit an entire village.
Yet this unhappy family dispute is precisely the situation that
confronted Paul Hewitt and Geoffrey Kertesz. After various twists and
turns, the dispute was resolved shortly after a contested hearing
not on the merits, but on a procedural point, namely whether the
claimants could introduce a new proprietary estoppel claim three
months before trial.
The village
Chettle is a village in Dorset of some 1,150 acres. In 1966, it
was owned by Esther Bourke, who had three children: Susan, Patrick
and Edward. Susan is our client.
In 1966, Esther, who was terminally ill, transferred Chettle to
Susan in consideration of marriage so it would pass free of
inheritance tax. At the time, the family took advice from
solicitors who advised that the transfer to Susan had to be 'no
strings attached' or the Inland Revenue (now HMRC) would say
inheritance tax was chargeable on Esther's death. Esther also
transferred Chettle House, a magnificent stately home located in
the village, to Patrick.
Susan has thus owned the village since 1966. Patrick lives in the
village and his son, Peter, now owns and lives in Chettle
House.
Chettle has 33 tenanted cottages, a church, and a village
shop.
The claims
Fast forwarding nearly 50 years to November 2013, Patrick and
Peter brought a claim against Susan on two grounds.
First, they claimed that, based on an alleged oral family
agreement entered into in 1966, Susan was bound to leave the
village to Peter, as Patrick's eldest son. Patrick and Peter
alleged the oral agreement also required Susan not to have
children; she had a daughter in 1982.
Second, Patrick claimed that he had acquired title to some 120
acres of land in the village under the doctrine of adverse
possession. In other words, he claimed he had acquired the land as
a squatter.
The proprietary estoppel claim that wasn't
Before formal proceedings began, letters sent to Susan included
language that bore all the hallmarks of a proprietary estoppel
claim. Peter, a partner in a law firm, made references to promises
made and broken, life choices made, and opportunities foregone.
However, when Peter and his father ultimately brought their claims,
they did not advance a proprietary estoppel claim.
The pleaded claims were factually complex, going back over 50
years, and both sides dedicated considerable resources to preparing
witness statements. The process took months. Geoff travelled to
Chettle, spent two days interviewing potential witnesses, and even
wore wellies.
Unexpectedly, on 24 September 2014, during the course of preparing
witness statements, Patrick and Peter, through their solicitors
stated they would be amending their pleadings. On 29 September
2014, we invited them to send us a draft of the amended pleading
immediately, or at least provide details of the proposed amendment.
We received no reply.
A week later, we wrote again and said that the lack of clarity on
the nature of the proposed amendment would cause difficulties in
finalising witness statements. Patrick and Peter replied on 6
October and failed to address the issues raised in our letters.
They claimed that, until they had seen the evidence on our
client's behalf, they could not confirm whether they would be
amending their pleadings because it would depend on our
evidence.
In the event, witness statements were exchanged on 3 November
2014. The witness statements submitted on behalf of Patrick and
Peter included numerous allegations that went to a proprietary
estoppel claim. Our side's witness statements were confined to
the pleaded issues.
A month later, on 2 December 2014, Patrick and Peter sent through
draft amended pleadings including a substantial new proprietary
estoppel claim. They asked our clients to consent to the
amendments. The trial, listed for eleven days and with fourteen
witnesses testifying, was due to start only three months
later.
On our advice, Susan refused to agree the amendments. Patrick and
Peter applied to the Court for leave to amend their
pleadings.
The Parties appeared before Nugee J on 27 January 2015, less than
six weeks before trial.
The hearing
In essence, we argued the situation was entirely of Patrick and Peter's own making and the amendments should not be allowed for three primary reasons:
- The proposed amendments were very late and there was no proper explanation let alone justification for the lateness;
- Patrick and Peter intentionally suppressed the proposed amendments for some months and this amounted to abuse of the Court's process; and
- If the amendments were permitted, our clients would suffer prejudice by having to prepare the existing claims for trial at the same time as dealing with the new claims from scratch.
It was going to be an uphill battle; courts generally allow parties to amend their pleadings provided they pay the other side's costs occasioned by the amendment. Here, however, we argued a costs order was insufficient; Susan is 80 years old, the trial date was in jeopardy, and a costs order could not compensate for the prejudice to our clients.
Judgment
Nugee J agreed the amendments should not be allowed for two
primary reasons.
First, the proposed amendments were too late. Patrick and
Peter' decision to hold back the basis of their proposed
amendments had been 'misguided'. The Court did not accept
their argument that they wanted to see our side's witness
statements before amending their pleadings.
Second, allowing the proposed amendments would prejudice Susan.
Nugee J found that, so shortly before trial, the parties 'ought
to know' what issues are to be tried. Patrick and Peter had
prepared their evidence 'knowing that they might very well seek
to amend to plead a proprietary estoppel claim but not telling the
defendants that that was what they were going to do'. Nugee J
described this as 'unfair'.
Nugee J therefore disallowed the proprietary estoppel claim,
concluding that:
'In circumstances where the amendment is made late; where no
good explanation has been given for so late an amendment; where to
permit the amendment might force the defendants to ask for an
adjournment but where, even if it does not, it would require a
significant amount of extra work and would put the defendants at
the disadvantage that I have referred to, as compared to the
claimants - a disadvantage entirely down, it seems to me, to the
claimants' decision not to apply to amend before exchange of
witness statements - it is, in my judgment, more consistent with
the overriding objective to refuse the amendment. This may indeed
cause prejudice to the claimants but, if so, they only really have
themselves to blame.'
Nugee J also ordered Patrick and Peter to pay Susan's costs of the application.
Epilogue
Shortly afterwards the case resolved favourably for Susan. This
procedural victory enabled the costs and inherent risks of trial to
be avoided.
Procedural arguments may not at first blush seem as interesting as
substantive arguments, and this case was no exception. A trial
involving an alleged oral fifty-year-old family agreement is, it is
safe to say, more interesting than an argument over amending
pleadings.
But Bourke v Favre illustrates that procedural points can be as
effective as substantive points in narrowing the issues and
reaching a constructive solution. A procedural victory can give a
party momentum.
The judgment also shows the importance of witness evidence. While
the parties' witness statements did not, strictly speaking,
bear on the arguments, Nugee J read them to get a feel for the
substance of the matters heading to trial. Carefully and thoroughly
prepared witness statements for trial can also be important for any
unexpected interim hearings ahead of trial.
Finally, Bourke v Favre shows that, when one issues proceedings,
one should be sure to include all claims if possible. And if new
claims come to light, do not sit on the proposed amendments,
particularly when pressed by the other side!
You can read the case itself here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.