Judgment was recently handed down in the high-profile case of Colicci & Ors v Grinberg & Anor [2023] EWHC 1177 (Ch), which concerned a deed made between two former spouses leaving shares in the family business to their children in the event of their death, and considered whether a later agreement entered into by the deceased superseded that deed. It was found that the deed was binding and, as a consequence, the deceased's company shares (purportedly worth over £1.5 million) would pass in accordance with the terms set out in the earlier deed and not his later will.
In 1982 Ernesto Colicci and his first wife, Josephine, established a successful ice cream business ECSI Ltd (trading as Colicci). The multi-million pound business ran a number of cafes, kiosks and restaurants across London. The dispute existed between Ernesto's first and second families as to how the shares in the business would pass on his death and centred on the interpretation of a deed entered into by Ernesto and Josephine, which required them to make wills leaving their shares in the business to their children. At the time of his death from COVID-19 in 2021, Ernesto had not entered into a will in the agreed terms. Recorder Mark Anderson KC found that the 2016 deed did impose obligations on Ernesto, notwithstanding a later shareholders agreement which purported to deal with the shares differently.
Ernesto and Josephine had two adult children. Robert and Rosanna, who later joined the family business. Ernesto and Josephine divorced in 2011 and, at that time, entered into a shareholders agreement which included a clause which dealt with the transfer of the shares during their lifetime and on death. Upon the death of the first of them, the survivor had the right to acquire, at full value, any of the deceased's shares if the shares did not pass to the adult children in accordance with that agreement.
Ernesto remarried the defendant (Nora) in 2014. The claimants (Josephine, Robert and Rosanna) were however concerned that Ernesto may bequeath the shares in the company to Nora. In March 2016, when Nora was expecting their baby, Ernesto gave instructions for a new will which left specific legacies (including the shares in ECSI Ltd) equally between his (soon to be) three children, with the residuary estate passing to Nora. The claimants did not know about the will.
In view of the concerns about the shares, Robert instigated discussions around ensuring the adult children inherited the shares. Without informing them about the will, Ernesto entered into a deed in 2016, the effect of which was that on the death of Ernesto or Josephine, the shares would pass to the adult children without costs and free of taxes. The deed provided that Ernesto and Josephine would covenant to make a will leaving the shares to the adult children and that neither of them would revoke or change the bequests. Ernesto did not inform Nora about the 2016 deed.
Whilst the 2016 deed dealt with the situation on death, it did not deal with the position of selling the shares during Ernesto or Josephine's lifetime. Further, Robert was keen to confirm his position in the business, including a place on the board. This led to a new agreement being signed in 2017. This agreement included a clause dealing with the death of Ernesto or Josephine and that clause dealt not only with the impact on death but also bankruptcy and other events. It included a clause that the agreement superseded any previous agreement in relation to the matters covered. The question was, therefore, whether the 2017 agreement revoked the 2016 deed.
Recorder Anderson found that the 2016 deed imposed obligations on Ernesto and Josephine which were different from the 2017 agreement. The 2017 agreement had spelled out that the 2011 agreement was superseded by the 2017 agreement, and Recorder Anderson would have expected explicit reference to the 2016 deed being superseded if that was the intention. He accepted the interpretation put forward by Josephine, Rosanna and Robert that the 2017 agreement did not supersede or revoke the 2016 deed and the shares would therefore pass in accordance with that document.
In view of this decision, Nora also sought an order delaying the transfer of the shares, pending her bringing a claim (a) under the Inheritance (Provision for Family and Dependants) Act 1975 ("the 1975 Act") that reasonable financial provision had not been made for her under the 2016 will and (b) that the 2016 deed be set aside on the (often difficult to establish) ground that the deed was entered into with the intention of defeating an application by Nora under the 1975 Act. Such a claim should be brought within six months of a grant of probate being obtained but no such claim had been brought. Recorder Anderson refused Nora's request.
The case is an interesting examination of how the court has to construe an agreement and is required to consider the intentions and understanding of a party retrospectively in relation to that agreement. In this case, it determined that Ernesto's intention was not easy to discern, as he was "conspicuously uncommunicative". As noted, he had not told Nora about the 2016 deed nor the 2017 agreement. The court therefore reached its own findings as to Ernesto's intention – namely, that he had no reason to think that the 2017 agreement superseded the 2016 deed. It appears surprising that Nora did not issue a protective claim under the 1975 Act, pending determination of this claim, as she will now need to apply for permission to bring such a claim. We will await with interest any further developments.