Re Estates of John Hinds and Esther Hinds

• Jurisdiction: Cayman Islands
• Judge: (Chadwick, P., Martin and Moses, JJ.A.)
• Judgment Date: 20 November 2015
• Court: Court of Appeal (Cayman Islands)
• Date: 20 November 2015

Court of Appeal

(Chadwick, P., Martin and Moses, JJ.A.)

IN THE MATTER OF THE ESTATES OF JOHN HINDS AND ESTHER HINDS

P.B. HINDS

and

C.M. HINDS (as administrator of the estate of ESTHER HINDS) and FIVE OTHERS

R. Ham, Q.C. and R. Coe for the appellant;

T. Roscoe and G. Giglioli for the first respondent;

Ms. C. Stanley, Q.C. and R. Jones for the second to sixth respondents.

Cases cited:

(1) Commr. of Stamp Duties (Queensland) v. Livingston, [1965] A.C. 694; [1964] 3 W.L.R. 963; [1964] 3 All E.R. 692, applied.

(2) Fisher v. Brooker, [2009] 1 W.L.R. 1764; [2009] 4 All E.R. 789; [2009] Bus. L.R. 1334; [2010] E.M.L.R. 2; [2009] UKHL 41, referred to.

(3) Frawley v. Neill, [2000] C.P. Rep. 20, followed.

(4) Jones v. Kernott, [2012] 1 A.C. 776; [2011] 3 W.L.R. 1121; [2012] 1 All E.R. 1265; [2012] 1 FLR 45; [2011] 3 F.C.R. 495; [2012] WTLR 125; [2011] UKSC 53, applied.

(5) Ponder, In re, [1921] 2 Ch. 59, applied.

(6) Stack v. Dowden, [2007] 2 A.C. 432; [2007] 2 W.L.R. 831; [2007] 2 All E.R. 929; [2007] 1 FLR 1858; [2007] 2 F.C.R. 280; [2007] WTLR 1053; (2006–07), 9 ITELR 815; [2007] UKHL 17, referred to.

(7) Williams v. Central Bank of Nigeria, [2014] A.C. 1189; [2014] 2 W.L.R. 355; [2014] 2 All E.R. 489; [2014] WTLR 873; [2014] UKSC 10, referred to.

Legislation construed:

Limitation Law (1996 Revision), s.19(1): The relevant terms of this sub-section are set out at para. 34.

s.19(4): The relevant terms of this sub-section are set out at para. 40.

s.23: The relevant terms of this section are set out at para. 34.

s.24(1): The relevant terms of this sub-section are set out at para. 38.

s.24(3): The relevant terms of this sub-section are set out at para. 35.

s.24(4): The relevant terms of this sub-section are set out at para. 35.

s.27(3): The relevant terms of this sub-section are set out at para. 43.

s.31: The relevant terms of this section are set out at para. 39.

Trusts—constructive trusts—common intention—two-stage test to be adopted when determining whether party intended to have beneficial interest in matrimonial home—if registered in sole name of one party, court first to consider whether parties intended to have joint beneficial interest—court then to determine extent of respective interests according to parties” intentions and fairness—two stages not to be elided so that fairness considered at first stage

Limitation of Actions—breach of fiduciary duty—future interest—if beneficiary has both possessory interest in half trust property and remainder interest in other half, Limitation Law (1996 Revision), s.27(3) provides that limitation period for action to recover property on wrongful sale and transfer of proceeds commences when beneficiary gains full interest in property

The appellant applied to the Grand Court for declarations that a number of properties were held on trust for his benefit.

The appellant”s father was John Samuel Hinds, and his mother was Esther Hinds. Esther had previously been married to John Samuel”s first cousin, by whom she had three sons: Clive, John and Thomas (‘the three brothers’).

Following John Samuel”s death, Esther became administratrix of his estate, which included various parcels of land: (a) Parcel 1 (‘the Cayman house’); (b) Parcel 63; (c) Parcel 191; and (d) Parcels 172, 175, 222 and 81 (‘the retained parcels’). Esther was entitled to commission as administratrix of the estate, and a life interest in half the residuary estate by virtue of the Succession Law 1975; the appellant was entitled to the other half of the residuary estate and, on Esther”s death, to the capital which had been subject to Esther”s life interest.

Esther transferred Parcel 63 to the three brothers in 1999, and sold Parcel 191 in 2005, transferring the proceeds of the sale to Clive and his

wife. The retained parcels and the Cayman house were held by Esther until she died in 2010 and Clive was appointed as administrator of her estate.

The appellant sought declarations (a) that the retained parcels, the Cayman house and the proceeds of the sale of Parcel 191 remained part of John Samuel”s estate, of which he was sole beneficiary following Esther”s death, and were not part of Esther”s estate, of which the appellant and the three brothers were joint beneficiaries; and (b) that Parcel 63 had been transferred in breach of trust and was held by the brothers on trust for his benefit. The respondents contended that (a) the title to Parcel 63 was now indefeasibly held by the three brothers; and (b) the other parcels had formed part of Esther”s estate.

The Grand Court (Foster, J.) dismissed the appellant”s claims on the basis that (a) the appellant lacked standing to seek the declarations as Esther had failed to administer John Samuel”s estate prior to her death by selling the properties and dividing the proceeds of sale, and the appellant”s right to enforce administration of the estate was therefore defunct; (b) an interest in the Cayman house had been held by John Samuel for Esther due to a common intention constructive trust which arose as it was fair that Esther receive a share in the property; (c) the claims to the retained parcels, Parcel 63 and Parcel 191 were time-barred; (d) the appellant had acquiesced in Esther”s dispositions concerning the properties as he had known that she intended to divide them between himself and the three brothers, and the delay in bringing proceedings had in any event caused undue prejudice to the respondents due to the impossibility of adducing evidence from Esther; and (e) the appellant”s claim was similarly barred by the doctrine of laches due to the lengthy delay in bringing proceedings.

On appeal, the appellant submitted that (a) as the parcels had originally formed part of John Samuel”s estate, of which he was the sole beneficiary, he was therefore prima facie entitled to the properties, and it was for the respondents to establish otherwise; (b) there was no common intention constructive trust of the Cayman house in favour of Esther”s estate; (c) the respondents could not assert that the appellant”s claims were time-barred as they had not properly pleaded limitation as a defence; (d) he had not acquiesced in the transfers of the properties to the respondents; and (e) he had standing to claim a proprietary interest in the parcels as the estate had been administered by Esther prior to her death as all third party debts had been satisfied.

The respondents submitted that (a) Esther had an interest in the Cayman house as a joint tenant, which had been held on constructive trust by John Samuel, and therefore on his death the house had become hers and it formed part of her estate on her death; (b) the appellant”s claims were time-barred by the Limitation Law (1996 Revision) as a limitation period of 12 years applied to claims concerning land (under s.19), and a limitation period of six years applied to trust property other than land (under s.27), such as the proceeds of the sale of Parcel 191, and therefore the claims to Parcel 63 and the proceeds of sale became time-barred in

2011; (d) the appellant had acquiesced in Esther”s sale of Parcel 191 as he had raised no objection to her use of the proceeds during her lifetime, and had also acquiesced in a division of the retained parcels between himself and the brothers as this had been Esther”s stated intention in 1987, which he had similarly not challenged; and (e) in any event, the appellant had no standing to claim a proprietary interest in the parcels as Esther had not fully administered John Samuel”s estate prior to her death, and therefore the appellant merely had an interest in an unadministered estate and had no proprietary interest.

Held, allowing the appeal in part:

(1) The declaration sought by the appellant with respect to the Cayman house would not be granted as an interest in it had been held by John Samuel on a common intention constructive trust for Esther. A two-stage test was to be adopted when determining whether the parties intended an interest in the property to be held on constructive trust: first, in cases in which the property was registered in the sole name of one of the parties, the court would consider the parties” conduct and determine whether it had been intended that the other party should have an interest in the property; and, secondly, if it had been intended that the party have an interest, the court would determine the extent of the parties” respective interests in the property by reference to their intentions and fairness. The Grand Court had applied the wrong test as it had elided these stages and considered whether it would have been fair for Esther to have an interest in the property, but had nevertheless reached the correct conclusion as it was clear that it had been intended that she should have such an interest. The building contract for the house stipulated that the property was held jointly by John Samuel and Esther, a mortgage obtained to meet part of the building cost of the house was in their joint names, and Esther had contributed her own funds towards the construction of the house. Further, the parties” common intention had been that they held the property as joint tenants and, on his death, John Samuel”s interest was therefore inherited by Esther. The appellant”s claim with regard to the Cayman house therefore failed (paras. 23–29).

(2) The declaration sought regarding Parcel 63 would also not be granted. The parcel had been wrongly transferred to the three brothers in breach of trust in February 1999. However, s.19 of the Limitation Law (1996 Revision) stipulated a limitation period of 12 years for claims regarding land, after which no claim to recover the property could be made (as stipulated by s.23), and as the limitation period commenced as soon as the property was wrongfully transferred, the estate”s claim was time-barred after February 2011. Section 24(3) and (4) (which stated that, when land was held on...