In re Clore (dec’d), [1982] Fam. 113

[1982] 	

	 		
113 	

	
	
Fam. 	

	 	 	

	[FAMILY DIVISION] 		

	In re CLORE, DECD.*3		

	
1981 Dec. 1, 2, 4 	

		
Ewbank J. 	

	

	Executor and Administrator - Administrator - Grant ad colligenda bona - Will naming executors resident abroad - Assets of estate removed from jurisdiction - Dispute as to capital transfer tax - Conduct of executors - Whether "special circumstances" rendering it expedient to appoint administrator - Supreme Court of Judicature (Consolidation) Act 1925 (15 & 16 Geo. 5, c. 49), s. 162 (1) (as amended by Administration of Justice Act 1928 (18 & 19 Geo. 5, c. 26), s. 9 ) 		

	The testator died in July 1979 leaving assets of between £30m. and £40m. By a will made in Monaco he purported to dispose of all his property there. By a second general will, in which he purported to deal with all his other property, he left all his assets to the trustees of his personal settlement in Jersey, the beneficiaries of which were three charitable foundations. The executors named in the general will were domiciled in France and Israel respectively. The testator's son disputed the will and issued caveats in Jersey and in England. 		
	The Inland Revenue Commissioners contended that the testator died domiciled in England, or ought to be deemed to 		

	*3 Reporter's note. The decision of Ewbank J. was affirmed by the Court of Appeal: see [1982] Ch. 456. 		

 
	
[1982] 	

	 		
114 	

	
	
Fam. 	

		
In re Clore, decd. 	

		

 	

	have been domiciled in England, and that, but for their own default or neglect the executors would have received amounts of money which they had not in fact received, including the proceeds of sale of a large estate in Herefordshire, amounting to £20 m. which had been removed to Jersey, and they sought to assess capital transfer tax accordingly. The executors disputed the amount of capital transfer tax payable and maintained that they were unable to obtain a full grant of probate because of that dispute. The Inland Revenue Commissioners sought an order that a grant of administration ad colligenda bona be made to the Official Solicitor under section 162 of the Supreme Court of Judicature (Consolidation) Act 1925 (as amended).1 The senior registrar granted the application. 		
	On appeal by the executors: - 		
	Held, dismissing the appeal, that "special circumstances" justifying the court in exercising its discretion under section 162 (1) (b) of the Act to appoint someone other than the executors named in the will as administrator ad colligenda bona of an estate were not limited to circumstances connected with the estate or its administration but extended to any relevant circumstances; that the conduct of the executors in relation to the estate and the fact that they both lived abroad were both factors capable of amounting to special circumstances, and that, accordingly, because of those circumstances and because of the insolvency of the estate (if the Inland Revenue Commissioners' claim was justified), it was expedient to appoint an administrator ad colligenda bona who was not an executor (post, pp. 117G-H, 121A-C). 		
	In re Taylor, decd. [1950] 2 All E.R. 446 considered. 		

	The following cases are referred to in the judgment: 		

	Inland Revenue Comrs. v. Stype Investments (Jersey) Ltd. [1981] Ch. 367; [1981] 3 W.L.R. 426; [1981] 2 All E.R. 394. 		
	Richardson, In the Goods of (1871) L.R. 2 P. & D. 244. 		
	Saunders v. Vautier (1841) Cr. & Ph. 240. 		
	Taylor, decd., In re [1950] 2 All E.R. 446. 		

	No additional cases were cited in argument. 		

	APPEAL from the senior registrar. 		
	The Inland Revenue Commissioners, the plaintiffs, invited the court to grant letters of administration ad colligenda bona of the estate of Sir Charles Clore, deceased, to the Official Solicitor by virtue of section 162 of the Supreme Court of Judicature (Consolidation) Act 1925 (as amended by section 9 of the Administration of Justice Act 1928). The defendants, Nathan Meyohas of France and Joseph Kaiserer of Israel, executors appointed by the deceased's will, opposed the application. The senior registrar, Mr. Registrar Bayne-Powell, granted the application and on August 3, 1981, ordered that letters of administration ad colligenda bona of the estate of Sir Charles Clore, deceased, be granted to the Official Solicitor. 		
	The executors appealed. The hearing was in chambers, but judgment was delivered in open court. 		
	The facts are stated in the judgment. 		

	1 Supreme Court of Judicature (Consolidation) Act 925, s. 162 (1) (as amended): see post, p. 117D-F. 		

 
	
[1982] 	

	 		
115 	

	
	
Fam. 	

		
In re Clore, decd. 	

		

 	

	John F. Mummery for the Crown. 		
	Leolin Price Q.C. and P. W. E. Taylor Q.C. for the executors. 		

	EWBANK J. This is an appeal from the order of the senior registrar made on August 3, 1981. By the order the senior registrar provided that a grant ad colligenda bona should be given to the Official Solicitor and in doing so he passed over the executors under the will. The executors appeal against that order. Before the registrar the executors were opposing a grant ad colligenda bona, but they now ask for such a grant for themselves rather than for the Official Solicitor. They have issued a draft summons for that purpose. 		
	Sir Charles Clore was born in England in 1904 and died on July 26, 1979. He was domiciled in England for most of his life and the Inland Revenue Commissioners claim that if he was not, in fact, domiciled in England at the time of his death, he ought to be deemed to be domiciled in England under the appropriate statutory provisions for tax purposes. 		
	Sir Charles Clore left two wills - a Monaco will, dated April 4, 1979, and a general will, dated April 9, 1979. By the general will the testator dealt with all his property, other than the property in Monaco. Under the Monaco will all his assets went to his daughter, Mrs. Duffield. The executor under that will is M. Meyohas, who lives in France. Under the general will, the executors are M. Meyohas, Mr. Kaiserer, who lives in Israel, and Mr. Karlweis, who lives in Switzerland. Mr. Karlweis, on January 23, 1980, executed a form of renunciation and if that form is valid he is no longer an executor under the general will. 		
	Under the general will, all the testator's property was left to the testator's personal settlement which he had created in Jersey on February 20, 1979. Under the settlement, the beneficiaries are three charitable foundations, the Clore Jersey Foundation, the Clore 1979 Israel Foundation, and Kerin Clore (Israel). The testator had two children, a son, Alan Clore, and a daughter, Mrs. Duffield. Alan Clore attacks the general will and has issued a caveat in England and in Jersey. He asserts that the testator died domiciled in Monaco and that the disposition made by the testator is invalid since he, by the law of Monaco, was entitled to share in the estate; the estate is worth something of the order of £30m. to £40m. 		
	Although the testator died on July 26, 1979, there has been no grant of probate in England yet. The executors assert that they are ardent to be appointed executors under a grant of the English court. The reason why there has been no grant is there has been a dispute about the payment of capital transfer tax. 		
	Under section 156 (a) (i) of the Supreme Court of Judicature (Consolidation) Act of 1925, the executors must deliver an account and a receipt for capital transfer tax before a grant of probate can be issued. The executors do not agree with the assessment the Crown makes and further they say that they have not the money in the jurisdiction in any event. 		
	The dispute seems to centre on two main points; the first is the Crown's assertion that the testator died domiciled in England, or, at any rate, ought to be deemed to be domiciled in England, and the second relates to the 		

 
	
[1982] 	

	 		
116 	

	
	
Fam. 	

		
In re Clore, decd. 	

		
Ewbank J. 	

	

	provisions of section 27 of the Finance Act 1975. This limits the liability of a personal representative to the amount of assets which he himself has received. The executors assert that their liability is so limited. There is a provision in section 27 of the Finance Act 1975 that if the personal representative might have received other assets but for their own neglect or default, then the limitation extends to those assets also. The Crown asserts that but for the neglect, or default, of the executors, there would be, at any rate, a further £21m. in England available to meet the tax claims. 		
	An appeal from a registrar to a judge is a rehearing. The senior registrar considered the matter in a careful judgment, but some of the points which were taken before him were not taken before me, and some of the points which were not taken before him have been taken before me. So I approach the matter afresh. It might be wondered why such an application is dealt with in the Family Division of the High Court. The answer is that non-contentious probate is part of the jurisdiction of the Family Division, and although this matter could hardly be more contentious, it is, nevertheless, categorised as a non-contentious matter. 		
	There is bound to be further delay before a full grant is made and it now appears to be accepted by the executors that someone ought to have a grant ad colligenda bona which would enable the administrator so appointed to bring in the assets, to pay debts, and, in particular, to sell six aeroplanes worth about £4m. which are a deteriorating asset of the estate. Alan Clore has issued a caveat in the estate and the senior registrar considered whether the issuing of a caveat affects the power of the court to make a limited grant, such as is asked for in this case. He rightly concluded, in my judgment, that although a full grant cannot be made with an effective caveat on the file, the caveat does not affect the power of the court to issue a limited grant. 		
	A grant ad colligenda bona, together with other grants, is made under section 162 of the Supreme Court of Judicature (Consolidation) Act 1925. The provisions of that section are shortly to be replaced by section 116 of the Supreme Court Act 1981. 		
	The Crown puts forward the Official Solicitor as a suitable administrator on the ground that he will be independent and reliable. The executors oppose his appointment on the ground of the inconvenience and difficulty that a new person, a new administrator, would have in mastering the details of this great estate, particularly coming in 2 years after the death of the testator. They assert that the appointment would be inefficient and expensive and would cause further delay. They say that the appointment should be given to themselves as they are the executors who, in the end, will get the grant. They were appointed by the testator as his representatives and thus are the proper administrators to be appointed. They are ready, willing, ardent and able to take either a limited, or full, grant. 		
	The executors have referred to various cases which indicate the concern of the court that the personal representatives chosen by the testator should have priority. They have referred to In the Goods of Richardson(1871) L.R. 2 P. & D. 244, where Lord Penzance said, at p. 246: 		

	"It would, therefore, be unwise of the court to depart from the old-established rule, that a grant of administration must be made to 		

 
	
[1982] 	

	 		
117 	

	
	
Fam. 	

		
In re Clore, decd. 	

		
Ewbank J. 	

	

	the person who is by law entitled to the property. That rule is the basis of the practice that has been acted on by the Ecclesiastical Courts for centuries; it is a sound rule, and by departing from it the court would introduce a practice the laxity of which might lead to dangerous consequences." 		

	The problem that faces the executors in obtaining a full grant can be circumvented in the case of limited grant. This is achieved under section 156 (a) (ii) of the Supreme Court of Judicature (Consolidation) Act 1925, which provides that arrangements may be made through the President of the Family Division and the Inland Revenue Commissioners, for dispensing with the receipt of the payment of capital transfer tax and the Crown proposes, if a limited grant is made, to apply to make such arrangements, so that the administrator appointed can collect the assets, pay the debts and perform the other duties of an administrator ad colligenda bona. 		
	On an application for the appointment of an administrator ad colligenda bona, the court is guided by section 162 of the Supreme Court of Judicature (Consolidation) Act 1925 (as amended), which provides that in granting administration the court shall have regard to the rights of all persons interested. That means, in the first place, the executors, who normally have priority, and, in the second place, it means, in this case, the Inland Revenue, who are the main creditors of the estate. 		
	Paragraph (b) of the proviso to section 162 reads: 		

	"... if, by reason of the insolvency of the estate of the deceased or of any other special circumstances, it appears to the court to be necessary or expedient to appoint as administrator some person other than the person who, but for this provision, would by law have been entitled to the grant of administration, the court may in its discretion, notwithstanding anything in this Act, appoint ... such person as it thinks expedient ..." 		

	The Crown says that the estate in England is insolvent, and that there are other special circumstances which the court ought to regard as making it necessary and expedient to appoint someone other than the executors as administrator. In considering the question of special circumstances I have been referred to In re Taylor, decd. [1950] 2 All E.R. 446. Willmer J. said, at p. 448: 		

	"I am much attracted to the view put forward in argument by counsel for the respondent that the terms of this proviso, where it mentions 'insolvency of the estate ... or ... any other special circumstances,' relate only to special circumstances in connection with the estate itself or the administration of the estate." 		

	Speaking for myself, since this is a section giving discretion to the court, I would not impose any limitation on the words "special circumstances." I would say that the words "special circumstances" are not necessarily limited to circumstances in connection with the estate itself or its administration, but could extend to any other circumstances which the court thinks are relevant, which lead the court to think that it is necessary, or expedient, to pass over the executors. 		
	The Crown says that the special circumstances in this case are the 		

 
	
[1982] 	

	 		
118 	

	
	
Fam. 	

		
In re Clore, decd. 	

		
Ewbank J. 	

	

	conduct of the executors so far in relation to the administration and the fact that both executors live abroad. The first aspect which the Crown points to relates to a property known as the Guy's estate in Herefordshire. This was a property owned by the testator. On May 23, 1979, the testator was party to a declaration of trust executed by a company known as Stype Investments (Jersey) Ltd., with registered offices in St. Helier, Jersey. The signatories of the declaration of trust were Mr. Sainer, acting as the attorney of the testator, and Mr. Dobbs, who is a director of Stype Investments (Jersey) Ltd. By the declaration, the company, Stype Investments (Jersey) Ltd., declared that on the conveyance to them of the Guy's estate, they would hold the property as a bare nominee for the testator - the beneficial ownership would remain with him - and that they would account to the owner for the net proceeds of sale and the net rents and profits arising therefrom until sale. At the same time, the testator vested the estate in Stype Investments (Jersey) Ltd. The directors of Stype Investments (Jersey) Ltd., are M. Meyohas and Mr. Kaiserer, together with Mr. Dobbs, who is an employee of a bank in Jersey. The solicitors for the executors in this action have also been the solicitors for Stype Investments (Jersey) Ltd. On May 25, 1979, Stype Investments (Jersey) Ltd. entered into a contract of sale of the Guy's estate. They agreed to sell the estate to the Prudential Assurance Co. Ltd. for £20.5m. pounds. Completion was due on September 28, 1979. In July 1979 the testator died. On September 27, 1979, the day before completion of sale was due, Alan Clore issued caveats in the estate of the testator in England and in Jersey. On September 29, 1979, the completion moneys were paid to Stype Investments (Jersey) Ltd. into a bank account in Jersey. 		
	The Crown thinks that the £20.5m. which was paid over ought to have remained in England. The Crown asserts that it was subject to capital transfer tax of some £15m. and criticises the executors for spiriting the money away to Jersey. 		
	Alan Clore started proceedings in the Royal Court in Jersey and the £20m. there is blocked and is subject to the orders of the Royal Court of Jersey and to article 22 of the Probate (Jersey) Law 1949 which provides that the production of a grant of probate is necessary to establish the right to recover, or receive, any part of the personal estate and effects situated in the Island of any deceased person. 		
	I am told that the Jersey court would accept the consequence of a finding that the testator died domiciled in England, but would not accept a decision of the English court that the testator is to be deemed to have been domiciled in England and, accordingly, it may be that this sum of money has been lost so far as the revenue is concerned. 		
	The Crown, in the first instance, took the view that Stype Investments (Jersey) Ltd. had intermeddled in the testator's estate by transferring assets of the estate from England to Jersey. It asserted that as a result, Stype Investments (Jersey) Ltd. had become an executor de son tort and, accordingly, liable to reimburse the Crown. 		
	The Crown started an action in the Chancery Division: [1981] Ch. 367. That action failed in limine. In relation to payment of the moneys on completion, Goulding J. said, at p. 378: 		

 
	
[1982] 	

	 		
119 	

	
	
Fam. 	

		
In re Clore, decd. 	

		
Ewbank J. 	

	

	"Completion took place on or about the stipulated date. Sir Charles, of course, had by then been dead for two months, and no grant had been obtained in respect of his estate. The defendant" - that is Stype Investments (Jersey) Ltd. - "was thus obliged to receive the purchase money and to retain it for the time being. Shortly before the completion date the defendant through its London solicitors arranged with the Prudential that the money payable on completion should be remitted direct by the Prudential to the defendant's account with a bank in Jersey. The defendant also instructed its solicitors to transfer to the same account the balance of the deposit held by them, after retaining their costs and expenses. The whole net proceeds of sale of the Guy's estate thus came to be deposited in Jersey." 		

	The Crown says that the money did not have to be transferred to Jersey. It could have been left in England. The Crown stressed that the executors under the will, and the directors, Stype Investments (Jersey) Ltd., who transferred the money out of England, are the same people, using the same solicitors. The executors say, "Not so." They say Mr. Dobbs is also a director and he is not an executor. "In any case we were wearing different hats." 		
	The Gown's case is put this way: the executors derive their title not from the grant of probate, which has not yet been made, but from their appointment in the will and upon the death of the testator and that the first duty of the executors is to take possession of the assets of the testator and bring them under their control and then to pay the testator's debts. The Crown says that one of the testator's assets was his interest under the declaration of trust regarding the Guy's estate and that under that declaration of trust, having regard to the rule in Saunders v. Vautier (1841) Cr. & Ph. 240, the executors were entitled to require Stype Investments (Jersey) Ltd. to retain the money in England. The Crown says that these executors concurred in the decision to remove the £20.5m. out of England. 		
	The executors put the matter in an entirely different way. They say that from the time of the declaration of trust and the conveyance of the Guy's estate, to Stype Investments (Jersey) Ltd., the asset was no longer land in England, but was a chose in action. The chose in action was situated in Jersey, because that is where any action in relation to it would have to be brought. That is because Stype Investments (Jersey) Ltd. have their registered office in St. Helier. The executors say that notwithstanding the duties of executors to gather in the assets and pay the debts they could not give an adequate receipt without probate to anybody who required one, and that this is particularly the case because of the caveat. I doubt, however, whether the caveat, in fact, affects the situation one way or the other. 		
	The executors say that not only could they not give an adequate receipt, but they could not compel the trustees to pay the money over to them. In particular, they say, the Inland Revenue do not correctly understand the rule in Saunders v. Vautier, Cr. & Ph. 240. They say the trustees had to retain the money until they could properly hand it over. 		

 
	
[1982] 	

	 		
120 	

	
	
Fam. 	

		
In re Clore, decd. 	

		
Ewbank J. 	

	

	They refer to the passage in the judgment of Goulding J. which I have read, and they say the bank account of Stype Investments (Jersey) Ltd. in Jersey was clearly the proper place to keep the money until they were able to hand it over properly to the executors. They go on to say that once the money was in Jersey there has been no way in which they have been able to return it to England because of the law of Jersey and the orders of the Royal Court of Jersey. The transactions involving the Guy's estate seem to have been cunningly planned and carefully arranged in accordance with the law. If the executors are right, at the stroke of Mr. Sainer's pen, the land in England became money in Jersey, not available to pay the taxes claimed by the Inland Revenue Commissioners in this country. 		
	I have not been asked to decide the validity of the opposing arguments in relation to this matter. I have been asked on behalf of the executors to note that they have a serious argument which, in due course, will merit careful consideration and which may well succeed. I accordingly do not attempt to unravel all the implications of the transaction. But I do observe that the executors who now ask for the grant ad colligenda bona are the directors of the Jersey company who concurred in the removal of £20.5m. which might otherwise have been left in England. I am not surprised that the principal creditor of the estate does not have confidence that his interests will be preserved if the executors are given a grant ad colligenda bona and this lack of confidence on the part of the Crown is a factor which I take into account in coming to a conclusion. 		
	The Crown also draws attention to the testator's shareholding in England. It is said that the executors have been far from candid in relation to the testator's shareholding in England. According to the records of the Inland Revenue Commissioners, the testator had some £13m. worth of shares in England. There has been no reference to this shareholding from documents supplied by the executors. When asked in an affidavit about the shareholding, the reply was merely that all the shares had been sold by the testator before his death. During the course of the hearing I was told there was no secret about this matter. They were sold in 1978 and the proceeds were settled in the personal settlement of the testator; that is the personal settlement created on February 20, 1979, in Jersey. The Crown points out that this means another £13m. worth of assets have found their way to Jersey. They say that tax is going to be due on this holding if the testator is deemed to have been domiciled in England. The executors, for their part, say the transfer of this money to Jersey is nothing to do with them. The Crown also asserts that the executors have been delaying in the process of administration of the estate. 		
	The main dispute between the executors and the Inland Revenue Commissioners is the tax liability. Since January 1981 the Crown says the executors have known that the Inland Revenue Commissioners were not going to change their position and, yet, it was not until July 20, 1981, that the executors started legal proceedings in order to determine the liability for tax and, even now, the Crown points out, no evidence has been filed. They say it is 2 years since the testator died, and there has been a marked lack of urgency so far as the interests of the principal creditor is concerned. There seems to be substance in that assertion. 		

 
	
[1982] 	

	 		
121 	

	
	
Fam. 	

		
In re Clore, decd. 	

		
Ewbank J. 	

	

	The next point the Crown raises is not related to any conduct on the part of the executors, but merely to the fact that the executors both live abroad. This, I think, is a factor which can be taken into account, particularly when it is coupled with the way the executors have so far dealt with the estate. 		
	It will be recalled that insolvency is a circumstance in itself which can be regarded by the court as making it necessary or expedient to pass over the executors. It is accepted by the executors that if the Crown claims are justified, the estate in England will be insolvent. 		
	The conclusion I have come to is that both by reason of the insolvency of the estate in England, and the special circumstances which I have described, it is expedient that an administrator should be appointed who is not one of the executors. In my judgment, the Official Solicitor is an expedient person for such an appointment and I, accordingly, dismiss this appeal from the order of the senior registrar and I confirm the granting of administration ad colligenda bona to the Official Solicitor. 		

 		
Appeal dismissed. 	

	

	Solicitors: Solicitor of Inland Revenue; Titmuss, Sainer & Webb.		

	M. B. D.