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Family Law

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07 MAY 2009

EXECUTORS, ADMINISTRATORS, WILLS AND PROBATE: Rahme v Smith and Williamson Trust Corporation Ltd [2009] EWHC 911 (Ch)

(Chancery Division; Morgan J; 30 April 2009)

In the course of the husband's divorce proceedings, the husband went to live in the claimant's flat and the claimant introduced the husband to a solicitor, to assist in the husband's ancillary relief claim against the wife, who was a wealthy woman. The claimant and the husband agreed that the husband would pay the claimant 25% of whatever the husband eventually received from the wife. Agreement was eventually reached, and under the consent order the husband received £2.5 million; a few days later the husband and wife agreed that the wife would also pay £285,0000 in return for some shares held by the husband. The husband paid the claimant £695,000. When, a few years later, the husband died, the claimant sued his estate, claiming that the £695,000 payment related to something else, and that he had not yet been paid the 25% of the husband's financial settlement due. In addition, he claimed repayment of what were said to be substantial sums loaned to the husband, plus rent for the time spent in the claimant's flat, and for valuable wines and spirits consumed by the husband during his stay with the claimant. The administrators of the estate counterclaimed, alleging that the £695,000 was the 25% payment, but seeking repayment of that sum on the grounds that the claimant had misrepresented the agreement to the husband, and also claiming repayment of £240,000 paid by the wife to the claimant after the financial settlement was reached, allegedly by way of secret commission. The court dismissed the claim, and allowed the administrator's counterclaim. The alleged rent, consumption of alcohol, and some loans to the husband had all been intended to be subsumed within the 25% agreement, and the claimant had received the 25% payment. Further, the claimant had committed a clear and serious breach of his contractual and fiduciary duty to the husband by accepting sums from wife as part of an agreement with her to keep the settlement below a certain sum. The claimant's obligation to maximise the amount of the settlement was in clear conflict with an agreement with the wife to reduce the amount of the settlement. With a breach of fiduciary duty of this kind, the fiduciary forfeited the right to remuneration, even if the fiduciary had supplied the relevant services, without any allowance made for the value of those services. The claimant was required to repay both the 25% payment and the sums received from the wife.

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