Terceira and Others v Terceira

• Jurisdiction: Bermuda
• Judgment Date: 26 January 2011
• Date: 26 January 2011
• Docket Number: Civil Jurisdiction 2009 No. 399
• Court: Supreme Court (Bermuda)

In The Supreme Court of Bermuda

Civil Jurisdiction 2009 No. 399

BETWEEN:

Ronald Frederick Terceira

Plaintiff

and

Harold Michael Terceira

Nadine Joy DeCouto

Karon Marie Terceira

Carol-Ann Terceira

David Alan Livingston Terceira

Linda Claire Wilkinson

Defendants

Mr A Dunch for the Plaintiff

Mr D Kessaram and Mrs L Charleson for the Defendants

The following cases were referred to in the judgment:

Taylor v PerinchiefBDLR [1995] Bda LR 13

OA "CT" Mobile v IPOC International Growth Fund LtdBDLR [2006] Bda LR 69

Cobbe v Yeoman's Row Management LtdWLR [2008] 1 WLR 1752

Gillett v HoltWLR [2000] 3 WLR 815

Smith v HollowayBDLR [2010] Bda LR 85

Abstract:

Ownership of warehouse left in will - Oral promise to convey property to son - Will left property to children in equal joint interest - Proprietary estoppels - Rental income - Delay in asserting claim - Breach of duties as executor - Waiver - Unclean hands

JUDGMENT of Kawaley, J

Introductory

1. Battling over family inheritance is often a powerful emotional attraction as it affords the bereaved a distraction from their grief. Such battles tend to override the better instincts which would motivate the less emotional to privately resolve any family disputes and honour the memory of their loved ones in a more dignified manner. This may explain in part the present litigation in which the Plaintiff, an eldest child, sues his six other siblings in respect of a dispute as to his entitlement to certain property which in legal title terms forms part of their deceased father's estate ("the Estate"). He claims that he is entitled to the legal and beneficial ownership of a commercial building known as 5 Marsh Lane, Devonshire ("the Property") by virtue of the doctrines of proprietary estoppel and/or constructive trust. In short, the Plaintiff contends that he only erected the building at his expense and business risk because his father promised that he would convey the Property to him.

2. The Defendants contend that the Property forms part of the Estate and in which all seven siblings have an equal joint interest. They say the Plaintiff's evidence as to the alleged promise is not credible and should be rejected. Further and in any event, he has waived the right to pursue the claim and is debarred by his inequitable conduct as Executor from claiming relief. By their Counterclaim, the Defendants claim compensation for the Plaintiff's use and occupation of the Property from June 1, 2007 when the parties' mother died.

3. The bitterness with which this inheritance battle was conducted is to some extent explained by the fact that the majority of the parties both lived and worked on property forming part of the Estate. The family ties that run through the various legal and commercial dealings which bear on the issues in dispute make it impossible for the Court to assess the hotly contested evidence through the lens ordinarily used for

either a purely commercial case or a traditional family property case. The central dispute concerns the ownership of a commercial building erected on family property and disputants who, by and large, both lived and worked on family property.

The Plaintiff's case

RFT

4. The Plaintiff's evidence and that of his witnesses on its face clearly supported his pleaded case. He testified that he and the First and Second Defendant ("HMT" and "NJD" respectively) were at all material times executors of the Estate of the late Harold Frederick Livingston Terceira, who died on January 16, 1996.

5. The Plaintiff ("RFT") stated that together with his wife Susan ("KST") in or about 1985, he purchased a business called Gulfstream Graphics, a commercial printing business. Due to a fire at the firm's initial premises in or about 1986, they commenced looking for new premises. They asked KST's brother Bruce Barker to look out for a suitable property for them. RFT recalled looking at several properties during this period, in particular a commercial property at Laffan Street on sale for $455,000. During this time, RFT recalled discussing his need to find new premises for his business with his father.

6. In the course of one discussion on the balcony of his father's 3 Marsh Lane premises, RFT recalled his father pointing to the vacant land now known as 5 Marsh Lane and saying words to the effect of "why don't you build your own building over there?" RFT repeated this account both vigorously and demonstratively throughout his oral testimony. As a result of further discussions on that same day, RFT understood his father to be proposing that (a) he (RFT) would fund the planning, design, construction and maintenance of the building, and (b) his father would thereafter subdivide the land between 3 and 5 Marsh Lane and convey the latter portion to RFT. Despite his wife's concerns about her father-in-law's promise not being in writing, RFT met with his father again and confirmed this oral agreement.

7. In reliance on his father's assurance and promise, RFT applied for and obtained planning permission and a bank loan and the designing, approval and construction of the building was financed through a combination of his own funds and bank financing. Construction began in 1988 and concluded in 1990; as of January 1, 1991, RFT was registered as the owner of the building in the Land Valuation List and has paid land taxes since then and insurance since 1990. He never paid nor was asked to pay rent by either of his parents during their lifetime. All rents generated by the Property were paid to RFT's company, Gulfstream Graphics. RFT had no further discussions with his father about subdividing the land after the Property was occupied.

8. RFT and his wife arranged the Planning application although it was filed under the name of the father who was the legal owner of the land. Shortly before this, RFT and his brother HMT informally agreed that the latter would do the foundation and construction of the building at a discounted labour rate in return for HMT being permitted to rent space in the building at a discounted rate. In or about October 1987, Planning approval was granted. David Mello paid the requisite fee on behalf of RFT and his wife. In or about November 1987, they borrowed $240,000 secured by the deeds of the house owned by RFT and his wife. The couple had an existing loan outstanding in the amount of $28,000 in respect of the purchase of their business.

9. In or about November 1987, RFT contacted Atlantic Building Systems ("ABS") in Atlanta, the same company which his father had used for the construction of the 3 Marsh Lane commercial premises. RFT purchased tickets for himself, his father and Michael to travel to Atlanta; his father was interested in coming while RFT thought HMT's construction role made it beneficial for him to visit ABS as well. Their route was via Tennessee where DALT lived and their father owned property. While the trio travelled together to Tennessee, their father stayed there and DALT joined his two older brothers for the business trip to Atlanta. In Atlanta, they commenced negotiations with ABS about the supply of materials for the Property and extra

materials requested by their father for 3 Marsh Lane. A contract was eventually executed in or about May 1988.

10. HMT, according to RFT, delayed commencing work on the foundations for the Property, which he only started in August 1988 and had not completed by October. He approached his father who arranged for other contractors to complete the work, albeit paid by RFT. Some of these workers were seconded from other projects being run by his father. In about 1990, when the exterior works had been completed, RFT could not afford to complete the interior. His father took out a bank loan in the amount of $76,000 on the understanding that (a) RFT would pay the interest due to the Bank in such amounts as he could manage, and (b) the father would advance whatever was required by RFT to complete the project, which RFT would repay. Two payments of $20,000 were in fact advanced on this basis. When RFT referred a tenant to his father, his father agreed that the rent from space in 3 Marsh Lane could be applied by RFT towards the interest payments on the father's loan. These payments were made between 1991 and 1995, during which period RFT and his wife made one $8000 balloon payment, and after which RFT resumed making interest payments. After the father's death on January 16, 1996, RFT's mother advised that the bank wished the loan to be amortised. It was agreed that RFT and his wife would be responsible for one-third of the loan, a $500 interest payment, and that the mother would pay $1000 per month in reduction of the outstanding principal. Shortly thereafter, the mother paid off that loan in full as well another loan in relation to NJD.

11. According to RFT, at a March 1996 meeting with his two co-executors with Peter Smith shortly after his father's death, he made it clear that the property should not form part of the estate. He conceded now knowing that it was probated as such, perhaps because his father retained legal title. Both his siblings vigorously contested the assertion that RTF asserted ownership at this stage.

12. On or about May 15, 2007, the parties' mother passed away. At a June 2007 family meeting, the Defendants proposed keeping all properties together. RFT proposed a subdivision so that he could continue to operate his business in return for his interest in any other property even if the land was worth less than his 1/7th share of the entire estate. This was the first time his siblings objected to his assertion that he owned the building erected on 5 Marsh Lane. According to his siblings, this was the first time he asserted he owned the building, and he did so in terms which suggested that RFT accepted he did not own the land on which it stood. Under cross-examination, RFT agreed with this characterisation of the way in which he asserted his claim, but denied that this was...