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Issue 34 – February 2009  

Cases Legislation
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In brief

Intestacy rules change comes into force

On 1 February, the increases in the statutory legacy for married couples and civil partners whose spouse or civil partner dies without leaving a will come into force. The new levels will increase from £125,000 to £250,000 where there is a surviving spouse or civil partner and child, and from £200,000 to £450,000 where there is a surviving spouse or civil partner and parents or siblings, but no children.

Change in the submission of probate applications

From 1 January 2009, two copies of the sworn will and codicils (if applicable) must be supplied in A4 size with grant application papers to the Probate Registries. Failure to comply with these new requirements will result in the case being stopped and delayed.

This matter was taken up by Patricia Wass, as chair of the Law Society Probate Section, with HM Courts Service (HMCS), and a disappointing response was received from Helen Smith, probate service director, just before Christmas. Both this letter and the original notice issued by HMCS can be downloaded from the Probate Section website newspage.

If practitioners experience difficulties or delay caused by this new practice requirement, email the probate section (probatesection@lawsociety.org.uk) so we can take this up again with HMCS.

www.lawsociety.org.uk/probate

Call for evidence launched

Lord Hunt of Wirral is calling for evidence from the entire legal profession as part of his Law Society-commissioned review of regulation. He has launched his evidence gathering process by publishing a formal Call for Evidence document, which inaugurates a three-month initial consultation period ending on Thursday 9 April 2009.

www.legalregulationreview.org.uk/evidence.html

Events

Discount offers

To order any of the above titles and claim a Section discount, contact LexisNexis Butterworths customer services (telephone 020 8662 2000 or email customer.services@lexisnexis.co.uk, quoting: “Law Society Section discount offer”. A full list of publications is available at www.lexisnexis.co.uk

Cases

Revenue and Customs Commissioners v Bower and other (executors of Bower (deceased))


Citation: [2009] All ER (D) 68 (Jan)
Hearing Date: 5 November 2008
Court: Chancery Division
Judge: Lewison J
Representation: David Ewart QC (instructed by the Treasury Solicitor) for the Revenue.Rex Bretten QC (instructed by Damian Ciappelli) for the settlor's executors.

Abstract: Inheritance tax – Valuation. Chancery Division: The appeal by the settlor's executors against a decision of the Special Commissioner that the right to monthly payment under the terms of an estate planning bond set up by the settlor before her death was worth £4,200 was allowed on the ground that in arriving at that figure the Special Commissioner had committed errors of law.

Keywords: Inheritance tax - Valuation - Value of settled property – Reserved rights to life annuity – Settlor paying premium for life annuity policy - Policy issued to trustees of settlement – Settlor subsequently dying - Premium chargeable to inheritance tax – Value of gift – Correct value attributable to reserved rights – Inheritance Tax Act 1984, section 160.

Section 160 of the Inheritance Tax Act 1984 provides: 'Except as otherwise provided by this Act, the value at any time of any property shall for the purposes of this Act be the price which the property might reasonably be expected to fetch if sold in the open market at that time; but that price shall not be assumed to be reduced on the ground that the whole property is to be placed on the market at one and the same time'.

The settlor, aged 90 and in poor health, bought an estate planning bond from Axa in 2002. She paid £73,000 for the bond, which she transferred to trustees on the terms of a trust. Under its terms, she was entitled to monthly payments of just over £300 in her lifetime. Although the transfer was potentially an exempt transfer for the purposes of inheritance tax, she died very shortly after taking out the bond. The question arose as to the value of the transfer that she made, which was to be calculated by taking the price paid for the bond and subtracting from it the value of the right to a monthly payment.

For inheritance tax purposes, the value of property for inheritance tax purposes was governed by section 160 of the 1984 Act. The Revenue and Customs Commissioners (the Revenue) took the view that in the real world there would not have been a buyer for the right to the monthly payment given the settlor's age and state of health, and accordingly, a purely nominal figure should be attributed to the value of the rights in order to give effect to the statutory hypothesis that the sale must be assumed. Accordingly, it fixed on a figure of £250.

The settlor's executors disputed that figure, and the matter came before the Special Commissioner for determination. The Special Commissioner accepted that in the real world the buyer of an interest like the settlor's right to a monthly income for her lifetime would either wish to lay off the mortality risk by buying back-to-back term insurance or would wish to minimise the mortality risk by pooling a number of such interests where the risks of each would have a self-cancelling effect. The Special Commissioner concluded that no buyer would be able to lay off the mortality risk by taking out term life insurance. So far as pooling was concerned, he decided that the possibility of pooling risks by buying more than one annuity was precluded by the statutory hypothesis which required a sale of the settlor's rights alone.

Accordingly, the Special Commissioner found that the combination of the real world and the statutory hypothesis was that those who bought interests of that type in the real world would not have bought that particular interest. The Special Commissioner went on to consider whether the sale in the open market contemplated that a sale should take place in 'some sort of conventional market manner', and decided that no such connotation was involved, and that he was entitled to consider other possible purchasers. In his decision, the Special Commissioner came to the conclusion that the right to the monthly payment was worth £4,200. The Revenue appealed.

The appeal would be allowed.

The property should be assumed to have been capable of sale in 'the open market'. The property should be assumed to have been capable of sale in the open market, even if in fact it had been inherently unassignable or held subject to restrictions on sale. The question was what a purchaser in the open market would have paid to enjoy whatever rights attached to the property at the relevant date.

In asking whether the sale in the open market contemplated that a sale should take place in 'some sort of conventional market manner', it was not at all clear that the Special Commissioner had appreciated that the hypothetical sale took place in the real world. He had not been wrong in saying that he had been entitled to consider other possible purchasers. There had to be an assumed buyer in order to give effect to the statutory hypothesis that the sale took place. However, although the Special Commissioner had been entitled to consider possible purchasers, he had not been entitled to invent them. The assumption of a buyer, in order to give effect to the statutory hypothesis, in addition said nothing about the price which the buyer was assumed to have paid. If in the real world an asset was worthless, the statutory hypothesis did not make it valuable. It was not lip service to the hypothesis in those circumstances to ascribe a nominal value to an asset. On the contrary, it was the necessary consequence of a finding of fact that an asset was not commercially, as opposed to legally, saleable coupled with the assumption that a sale should be assumed to have taken place. It followed that at that point in his decision the Special Commissioner had gone wrong in law.

The Special Commissioner then went on to consider the price at which the hypothetical willing speculator would have bought the interest. The Special Commissioner had described his figure as being 'little more than uninformed, but hopefully realistic, guesswork', thereby acknowledging that there had been no evidence before him about how a price payable by a speculator might be calculated. Nevertheless, he went on to produce what he described as 'my calculation and valuation'. The Special Commissioner's method of calculation and valuation was not one that had been put forward by anyone and not put by him to any of the witnesses or parties for comment. That in itself was a breach of the rules of natural justice. More importantly, it had not been based on the evidence before him. It had flowed from his erroneous conclusion that he had been required or entitled to populate the real market, in which the hypothetical sale took place, with hypothetical speculators who had not shared the characteristics of real buyers.

The Special Commissioner's decision had been erroneous in point of law.

IRC v Gray (Executor of Lady Fox) [1994] STC 360 applied; Walton v IRC [1996] STC 68 considered.

Sammut and others v Manzi Jnr and others

Citation: [2008] All ER (D) 79 (Dec)
Alternative Citations: [2008] UKPC 58
Hearing Date: 4 December 2008
Court: Privy Council
Judge: Lord Phillips of Worth Matravers, Lord Hope of Craighead, Lord Rodger of Earlsferry, Baroness Hale of Richmond and Lord Carswell

Abstract: Will – Construction. The Privy Council gave guidance on the approach to interpreting wills and the expression 'per stirpes'.

Keywords: Will – Construction – Approach – Definition of 'per stirpes' – Format of will – Will providing for equal share of 25% between cousins and ex-wife – Whether share between each cousin individually and wife or 12.5% for cousins as a group and 12.5% for wife – Bahamian courts finding wife entitled to 12.5% – Whether courts in error – Definition of 'per stirpes'.

Summary: The testator died in the Bahamas in February 2004, aged 73. His executors estimated the value of his estate at $US30m. The proceedings concerned a will made in June 2003, which was admitted to probate in July 2004. Clause 6 of the will provided: 'I hereby give demise and bequeath all of my real and personal property  [...]. to the following persons in the following shares: (i) The first share representing Fifty percent (50%) of my estate to my son, Robert Adams  [...] (ii) The second share representing Twenty-Five percent (25%) of my estate to: a. my cousins  [...]; and b. my ex-spouse Ruby Adams  [...] in equal shares as to the realty in fee simple and as to the personalty absolutely. If any of [the cousins and/or the wife] shall predecease me or shall fail to survive me for a period of Fourteen (14) days, the share to which that individual is entitled shall be paid, transferred or applied to the living heirs of the deceased individual (and, if there shall be more than one such living heir, then among all of such living heirs in equal shares, per stirpes) If the deceased individual shall leave no issue surviving him or her, the share of that deceased individual shall be paid  [...] to the surviving beneficiaries named in this sub-clause 6(ii) in equal shares and, if there shall be more than one such surviving beneficiary, then among all such surviving beneficiaries in equal shares per stirpes  [...]'. The appellants, referred to in the proceedings as 'the cousins', were the four beneficiaries named in clause 6(ii)(a), namely the testator's first cousins.

The first and second respondents were the executors. The third respondent was R, the testator's only child. The fourth respondent was the testator's ex-wife, who was R's mother. The issue of construction on appeal concerned the manner in which the second share of 25% of the testator's estate, as provided in clause 6(ii), fell to be apportioned in equal shares between all five beneficiaries, so that each took 5%, or whether it fell to be apportioned into two equal portions, one to be shared by the four cousins and the other by the wife, so that each cousin would have 3.125% and the wife 12.5%. At first instance, the judge remarked that the will appeared to have been prepared by means of a modern word-processor computer program and commented that he considered it important to note how the will had been formatted. He went on to find in favour of the wife and hold that she was entitled to 12.5% of the estate. The Court of Appeal upheld that decision and the cousins appealed.

The issues included the proper approach to interpreting the will and the meaning of the phrase 'per stirpes'.

The appeal would be allowed.

(1) The starting point when construing any will was to attempt to deduce the intention of the testator by giving the words of the will the meaning that they naturally bore, having regard to the contents of the will as a whole. Sometimes it was legitimate to have special regard to extrinsic evidence in order to show that the words used had a special meaning to the testator, or to resolve uncertainty or ambiguity. Little assistance in construing a will was likely to be gained by consideration of how other judges had interpreted similar wording in other cases. The starting point had to be to look at the natural meaning of the wording of the will to be construed without reference to other decisions or to prima facie principles of construction (see [4] - [6] of the judgment).

It would not be safe in the instant case to attach significance to the formatting achieved by a word processor that might well have been operated by a secretary. More pertinently there was no significance from the precise lay-out of the words used, nor from the use of a semi-colon in the last line of clause 6(ii)(a). The first impression made by the wording of clause 6(ii) was that each of the five persons was to receive an equal share. That was supported by the form of clause 6 taken as a whole; had the testator wished the wife to take a share so much greater than each of the four cousins, the obvious way of achieving that would have been to have bequeathed her share by a separate sub-clause. If clause 6(ii) was construed so that each of the five named beneficiaries received an equal 5% share, consistency was achieved throughout the whole of that sub-clause (see [8], [11] - [21] of the judgment).

Houston v Burns [1918-19] All ER Rep 817 distinguished; Hall, Re, Parker v Knight [1948] Ch 437 considered.

(2) The Latin word 'stirpes' could be translated as meaning 'stock'. But that was not an expression likely to occur to a modern testator when telling his lawyer how he wished his estate to be distributed; it was more helpful to use the alternative meaning of 'family'. In modern usage the phrase as a whole could be taken to mean 'by family'. A gift 'per stirpes' did not require the bequest to be distributed among all the living members of each family, so that children shared in it as well as their parent if he or she was still alive. A characteristic of distribution per stirpes was that remote descendants did not take in competition with a living immediate ancestor of their own who took under the gift. Correctly used, the phrase enabled a gift to a person who predeceased the testator to be distributed among the person's descendants, if any, so that it was kept within that person's family. Where the gift was to a number of persons all of whom were named, the addition of the words 'per stirpes' said nothing about how the gift was to be divided between those individuals if they all survived.

The general rule was that the gift would be divided between them equally. The addition of the words 'per stirpes' might be taken to indicate that there was to be a gift over to their heirs or their issue if one or more of them predeceased the testator. But that would usually be done by adding an express direction to that effect (see [25] - [29] of the judgment).

No significance in the instant case would be attached to the fact that the words 'per stirpes' were not added after the words 'in equal shares'. The phrase was correctly used elsewhere in clause 6(ii), where it qualified a gift over to heirs or to issue. It made it clear that the gift over was to each family equally, the issue of each parent who predeceased taking over the share which the parent would have taken had he survived (see [30] of the judgment).

Gibson v Fisher LR 5 Eq 51 considered; Kingsbury v Walter [1900-3] All ER Rep Ext 1531 considered.

Frear v Frear and another

Citation: [2008] All ER (D) 24 (Dec)
Alternative Citations: [2008] EWCA Civ 1320
Hearing Date: 2 December 2008
Court: Court of Appeal, Civil Division
Judge: Sir Andrew Morritt C, Hooper and Wilson LJJ
Representation: Timothy Hirst (instructed by Atkinson and Firth) for the claimant. Jonathan Walker-Kane (instructed by Turners) for the defendants.

Abstract: Equity – Election. The Court of Appeal, Civil Division, dismissed the appeal of the claimant against the dismissal of his claim against the two personal representatives of the estate of his deceased mother on the ground that the claimant was directed by equity to elect between, on the one hand, keeping both his existing quarters of the his beneficial interest in a property but renouncing his right to a further quarter under the will and, on the other hand, ceding to the siblings one of his two existing quarters but asserting his right to one quarter under the will.

Keywords: Equity – Election – Application of doctrine of election to will – Claimant claiming entitlement to three-quarters of beneficial interest of property – Whether claimant holding half beneficial interest in property at date of mother's death – Whether mother believing herself to hold entire beneficial ownership - Whether claimant to be put to election.

Summary: The claimant's mother died on 19 December 2005. By her last will, made on 7 March 2005 and duly admitted to probate, she made specific legacies in relation to all her chattels and devised and bequeathed her residuary estate as to 50% to the claimant and as to the other 50% to her other four children, including her two executors, in equal shares. The only asset falling into the mother's residuary estate was an unencumbered freehold interest in a property which had become vested in her sole name. The claimant brought proceedings against the two personal representatives of the mother's estate. The issue arose as to whether she had held the entire beneficial interest in the property or only one half or it.

Before the judge, the claimant contended, inter alia, that at the date of her death, his mother had held the legal interest in the property on trust as to one half for himself and as to the other half for herself, with the result that one half of the beneficial interest in it fell into her estate and that, in the light of the provision by her will that he should receive one half of her estate, he became entitled, in all, to three quarters of the beneficial interest in the property. The judge rejected the claimant's arguments. He held that, at the date of the mother's death, the claimant did not hold one half of the beneficial interest in the property, but had had only a right that one half of it would be bequeathed to him. The claimant appealed.

He submitted that (i) the judge had been wrong to hold that he had no more than a right that the survivor of his parents would bequeath to him one half of the beneficial interest in the property; (ii) instead, the judge should have held that, following its purchase in 1982, the parents, and thus the survivor of them, held the legal interest in the property in trust as to one half for the claimant and as to the other half for themselves; (iii) it followed that it had been open to the mother, by her will, to dispose only of one half of the beneficial interest in the property; (iv) contrary to the conclusion of the judge, the mother had not purported, by her will, to dispose of more than one half of the beneficial interest in the property; and (v) in disposing of her one half of the beneficial interest in the property, the mother had chosen to bequeath one half of it to him; (vi) thus he was entitled to three quarters of the beneficial interest.

The defendants submitted that the equitable doctrine would require the claimant to be put to an election, albeit the doctrine of election had not been raised before the judge, in that the mother, unaware that the claimant already held one half of the beneficial interest in the property, had intended, by her will, that he should receive one half, and not three quarters, of the beneficial interest in the property, equity would put the claimant to an election as to whether to keep his existing beneficial interest and to renounce his bequest or to accept his bequest and to compensate the estate by ceding to it his existing beneficial interest or its notional value. As to the doctrine of election, it was common ground that it would not apply unless, when the mother had made her will, she considered that she owned the entire beneficial interest in the property and had thus purported thereby to dispose not only of her half interest, but also of the claimant's interest in it.

The defendants applied for fresh evidence to be admitted as to the mother's intention. That evidence consisted of an attendance note of the solicitor who had drawn the mother's will, dated eight days prior to the execution of the will (see [35] of the judgment). The claimant submitted that the doctrine of election did not require him to be put to election because the mother had not purported by her will to dispose of the claimant's one half of the beneficial interest in the property or, alternatively, her purported bequest of his interest was to himself, rather than to another person and so fell outside the ambit of the doctrine.

The appeal would be dismissed.

(1) On the evidence, the judge had erred in finding that, at the date of the mother's death, the claimant had not held one half of the beneficial interest in the property but had only a right that one half of it would be bequeathed to him. His finding was against the weight of the evidence. In all the circumstances, there was no evidence to justify a conclusion that the claimant had foregone the beneficial interest in the property which would ordinarily have arisen in his favour. Accordingly, consideration had to be given as to whether the claimant should be put to election (see [27]-[31] of the judgment).

(2) In the instant case, inherent in the judge's conclusion that the mother had been obliged to bequeath to the claimant one half of the beneficial interest in the property and that, by her will, she had discharged that obligation, was a finding that the mother had considered, by her will, that she was disposing of the whole of the beneficial interest in the property. The fresh evidence confirmed that beyond doubt. Moreover, the mother's disposition of the claimant's half of the beneficial interest had taken the form of her purported placement of it into her residuary estate, which she had directed should be held as to one half for him and to the other half for the siblings. Therefore, in relation to one half of the claimant's existing beneficial interest in the property (equal to one quarter of the whole of the beneficial interest in it), the mother's purported disposition was to the siblings. Equity thereupon directed the claimant to elect between, on the one hand, keeping both his existing quarters of the beneficial interest but renouncing his right to a further quarter under the will and, on the other hand, ceding to the siblings one of his two existing quarters but asserting his right to one quarter under the will (see [34]-[35] and [39]-[41] of the judgment).

Accordingly, albeit by a different process of reasoning to that adopted by the judge, the claimant's appeal would be dismissed, with the precise terms of the order reflecting the nature of the claimant's election (see [42] of the judgment).

Grissell v Swinhoe LR 7 Eq 291 considered; Brown v Gregson [1920] All ER Rep 730 considered.

Raymond Saul & Co (a firm) v Holden (as personal representative of Hemming (deceased)) and another

Citation: [2008] All ER (D) 176 (Nov)
Alternative Citations: [2008] EWHC 2731 (Ch)
Hearing Date: 12 November 2008
Court: Chancery Division
Judge: Richard Snowden sitting as a deputy judge of the High Court
Representation: Peter John (instructed by Raymond Saul & Co) for the claimant. Robert Denman, solicitor advocate of Holden & Co, for the first defendant. Constance Mahoney (instructed by Moon Beever) for the second defendant.

Abstract: Bankruptcy – Property available for distribution. Chancery Division: Having regard to sections 306 and 436 of the Insolvency Act 1986, the bankrupt's trustee in bankruptcy became entitled, and remained entitled, to receive, following his discharge from bankruptcy, assets representing the residuary estate left to the bankrupt in a will, in priority to the executor of the bankrupt's estate, following his death.

Keywords: Bankruptcy – Property available for distribution – Discharged bankrupt – Bankrupt sole residuary legatee under will – Whether assets ascertained forming net residuary estate payable to bankrupt or to trustee in bankruptcy – Insolvency Act 1986, sections 306, 436.

Summary: Section 306(1) of the Insolvency Act provided: 'The bankrupt's estate shall vest in the trustee immediately on his appointment taking effect or, in the case of the official receiver, on his becoming trustee.'

Section 436 of the Insolvency Act 1986, so far as material, provided: '"property" includes money, goods, things in action, land and every description of property wherever situated and also obligations and every description of interest, whether present or future or vested or contingent, arising out of, or incidental to, property'.

BH died in July 2003. Under her will, after a few minor specific bequests, she left the entire residue of her estate to her son, H, who was also named as one of her executors. At the time of her death, BH and H owned a farmhouse and a cottage as tenants in common in equal shares. In September 2003, H was adjudicated bankrupt. The second defendant (the trustee) was appointed as H's trustee in bankruptcy with effect from 14 October 2003. H took a grant of probate as the sole executor of BH's will in February 2005. Following the amendment of section 279 of the Insolvency Act 1986 by section 256 and schedule 19 of the Enterprise Act 2002, H was automatically discharged from bankruptcy in April 2005. The cottage was sold for £125,000 in May 2005. Half of the net proceeds, representing H's personal interest in the cottage, were paid to the trustee. The balance, representing BH's interest, was retained by the claimant, a solicitors firm, which at the time was acting for H in his capacity as his BH's executor. The trustee wrote to the claimant requesting that it release the further sum of £28,969.69 from the moneys which it held in order to satisfy the balance then due in H's bankruptcy. The claimant refused that request arguing that although H had been the residuary legatee of BH's estate at the date of his bankruptcy, that status gave him no legal or equitable interest in any of the assets in her estate and would not do so until the administration of the estate had been completed.

The claimant contended that the only right which a residuary legatee had was a right to have the deceased's estate properly administered. In its view, the only thing that the trustee could request was that BH's estate should be administered. The claimant also made the further point that even when BH's estate was fully administered, the trustee would not be able to claim the assets then forming the residue, on the basis that H had been discharged from his bankruptcy, and an after-acquired property notice could not be served in respect of any property which the bankrupt only acquired after his discharge in view of section 307(2)(c) of the Insolvency Act 1986. In April 2006, the claimant brought proceedings seeking a determination pursuant to Civil Procedure Rules, SI 1998/3132, rule 64 of the question whether they should make payment of the residue of BH's estate to H as residuary beneficiary, or to the trustee.


The defendants to the claim were H and the trustee. The trustee issued a claim in the county court for possession and sale of the farmhouse. That action was transferred to the High Court so that it could be heard in conjunction with the instant proceedings for the claim under CPR Part 64. In the meantime H died. The first defendant (the executor) was the sole executor by appointment of H's will. In that capacity he was substituted for H as a party to the proceedings. The executor also became the executor of BH's estate by succession. 

The issue arose as to whether, if a sole residuary legatee under a will became bankrupt but was automatically discharged from bankruptcy before the completion of the administration of the estate of the testator, the money and assets which were thereafter ascertained to form the net residuary estate were payable to him or to his trustee in bankruptcy. It was common ground between the parties that until the estate of a testator was fully administered, a residuary legatee or anyone claiming through him did not own or have any interest in any specific asset in the hands of the executor. Hence the parties were agreed that H had not, at the commencement of his bankruptcy, owned or had any proprietary interest in any of the specific assets in BH’s unadministered estate.

The court ruled:

(1) Upon the death of a testator, a residuary legatee had an immediate entitlement, arising from the terms of the will, to have transferred to him, at the completion of the administration of the estate, such assets (if any) as then formed the residue of the estate. That entitlement did not give the residuary legatee any present property interest in any of the individual assets forming the estate whilst it was being administered. Nor could it give the legatee any immediate interest of a proprietary nature in what was called 'the residue of the estate', because that was simply a concept which had no existence independent of the assets which were eventually found to comprise it, as and when the estate has been fully administered. The residuary legatee's immediate entitlement to future payment (if there were any assets left to form the residue) was, however, recognised and protected whilst the estate was in the course of administration by a right of action to compel the due administration of the estate (see [49] and [50] of the judgment).

The due administration of the estate, by its very nature, involved the application of the assets for the benefit of the creditors, the taxation authorities, legatees of various sorts, and (finally) the residuary beneficiaries. Because the entitlement to receive such assets as might comprise the residue in the future was the very foundation for the legatee's right to compel due administration of the estate, there was no sensible basis upon which the two could be separated. The right of action would not be given to a stranger to the estate who had no possibility of receiving such assets in the future. It was therefore correct to describe the right of the residuary legatee as a composite right to have the estate properly administered and to have the residue (if any) paid to him as and when the administration was complete. That composite right was a chose in action, which was transmissible, and accordingly fell within the first limb of the definition of 'property' in section 436 of the 1986 Act (see [50] and [51] of the judgment).

(2) When a residuary legatee became bankrupt, the chose in action which vested in his trustee in bankruptcy was the composite right that included the right to have the assets comprised in the residuary estate paid over to him at the end of the administration of the estate. Once that right vested in the trustee, the right would not re-vest in the bankrupt unless and until his bankruptcy debts and costs had been paid; and the right would be capable of being asserted by the trustee in bankruptcy against the executors, so as to preclude them from giving priority to any rival claims to the assets comprising the residue at the end of the administration. Even if a residuary legatee's right was limited to a right to compel due administration of the estate, the legatee would nevertheless still have an immediate 'interest' which would fall within the second limb of the extended definition of 'property' in section 436 of the 1986 Act (see [52] of the judgment).

Accordingly, H's entitlement to BH's residuary estate, including the right to receive the assets comprising that residue as and when the administration of the estate was complete, vested in the trustee by the operation of section 306 of the 1986 Act. The trustee thereupon became entitled, and remained entitled, to receive the assets representing the residuary estate as and when the administration of the estate was complete, in priority to the executor (see [70] of the judgment).
Stamp Duties Comr (Queensland) v Livingston [1964] 3 All ER 692 considered; Leigh's Will Trusts, Re, Handyside v Durbridge [1969] 3 All ER 432 considered.

Carr and another v Thomas

Citation: [2008] All ER (D) 158 (Nov)
Hearing Date: 17 November 2008
Court: Chancery Division
Judge: Judge Behrens sitting as a judge of the High Court
Representation: Michael Waterworth (instructed by Sparling, Benham and Brough) for the claimants. Michael O'Sullivan (instructed by TG Baynes) for the defendant.

Abstract: Probate – Will. Chancery Division: On the evidence in the instant case, despite suffering from brain cancer, the testatrix had testamentary capacity at the time he signed the will in issue.

Keywords: Probate – Will – Validity – Testamentary capacity – Testator diagnosed with terminal cancer – Testator making will despite secondary brain cancer – Whether testator having testamentary capacity.

Summary: By a will dated 4 October 2002, the defendant, the testator's sister was named as a principal beneficiary. Some time after making the 2002 will, the testator began a relationship with NM. NM began co-habiting with the testator around the time he was diagnosed as having terminal bowel cancer with secondary brain cancer. Shortly before the testator's death he instructed a solicitor to draw up another will under which the majority of his estate passed to NM. Pursuant to the will, the claimants, partners of the firm called upon to draft the new will, were named as executors. There was no contemporaneous medical assessment of the testator, who died in August 2006. The claimants sought probate of the will. The solicitor and her assistant that were called upon by NM and the testator to draft the new will both testified that the testator had capacity, the defendant contended otherwise, and medical evidence supporting both parties' contentions was adduced.
The issue for determination was the mental capacity of the testator.

The court ruled:

It was established law that it was essential that a testator should: (a) understand the nature of the act of making a will and its effects; (b) understand the extent of the property of which he was disposing; (c) be able to comprehend and appreciate the claims to which he ought to give effect; and, with a view to the latter object, that no disorder of the mind should poison his affections, pervert his sense of right, or prevent the exercise of his natural faculties - that no insane delusion shall influence his will in disposing of his property and bring about a disposal of it which, if the mind had been sound, would not have been made.

On the evidence, the testator had known and understood that he was making a will and what a will was. He had clearly considered the competing claims on his estate. In the circumstances, it was wholly unrealistic to suggest that he had not understood what he was doing. The testator had testamentary capacity and had approved of the contents of the will when he signed it.

The will dated 9 August 2006 would be admitted to probate.

Banks v Goodfellow [1861-73] All ER Rep 47 applied; Sharp v Adam [2006] All ER (D) 277 (Apr) considered.

Fraser and others v McArthur Stewart and others

Citation: 2008 Scot (D) 13/11
Alternative Citations: [2008] CSOH 159
Hearing Date: 14 November 2008
Court: Appeal Court, Court of Session
Judge: Lord Brailsford
Representation: Mr Sutherland (instructed by Anderson Strathern) for the pursuers. Miss Haldane (instructed by Dundas & Wilson) for the defenders.

Abstract: Wills - Negligence - In an action by disappointed beneficiaries against solicitors who wrongly advised a testator regarding the legacy of a croft and whom the testator had then instructed to prepare a will in accordance with that advice, the court held that the defenders owed no duty of care to the pursuers and accordingly the case fell to be dismissed as irrelevant.

Keywords: Testator instructing solicitors to prepare will in accordance with advice – Residuary beneficiaries claiming solicitors' negligence causing them loss of legacy of croft – Whether defenders owing duty of care to disappointed beneficiaries.

Summary: The second and third pursuers were residuary beneficiaries under a will of the late JF. The first pursuer was the widow of the late AF, a brother of JF. AF survived his brother and was a residuary beneficiary under JF's will. Following the death of her husband, the first pursuer was a residuary beneficiary of JF. The first defenders were a firm of solicitors and the remaining defenders were past or present partners in the firm. Prior to his death JF was owner of a croft near Fort William. It was averred that in 1997, being in poor health, he contacted the first defenders for the purpose of making a will, and that he intended that, apart from bequests to a charity and the church, that AF, the second and third pursuers and HF (a fourth residuary beneficiary who did not enter the process) were to become the beneficiaries of an equal share of the whole of the remainder of his free estate. It was averred that an employee of the first defenders advised JF that 'a croft could not be divided and that in order to pass on the croft he would require to nominate an individual as the tenant'.

JF was unhappy with that advice as it was contrary to his wishes for the disposal of his estate. Ultimately however he followed the advice and instructed the first defenders to prepare a will nominating an individual as tenant of the croft. A will was drafted nominating an individual and was signed on 4 February 1998. JF died on 12 July 1998 leaving that will as his final and operative testamentary statement. As counsel for the defenders accepted, the advice given to JF was wrong. It would have been possible to have prepared a will which gave effect to his intentions. It was averred that as a result of the wrong advice, which was negligence on the defenders' part, the pursuers suffered loss, injury and damage. The loss was of a legacy of the croft with vacant possession. In a debate on the procedure roll the defenders argued a plea to relevancy and specification. Their motion was that the case should be dismissed. The pursuers submitted that a proof before answer of all pleadings should be allowed.

Counsel for the defenders' principal submission was that the case fell into the category of claims by intended or disappointed beneficiaries. In order relevantly to aver a case of negligence against solicitors disappointed beneficiaries had to offer to prove: (1) that they were intended beneficiaries under a will; (2) that the solicitors were aware that they were intended beneficiaries; (3) that the defenders failed to create a testamentary document that gave effect to the testator's intentions, and (4) that as a result of the defenders' negligence the pursuers had reasonably foreseeably been denied a specific legacy. Counsel drew attention to averments in the pleadings to the effect that JF gave instructions for the preparation of a will in the manner advised by his solicitors. A will had been prepared in accordance with the testator's instructions.

The case was not an example of defenders negligently failing to give effect to a testator's instructions. Accordingly, as a matter of averment, the case failed to meet all the conditions which were essential prerequisites to establishment of a valid claim. Counsel founded upon White v Jones, submitting that prior to that case it was accepted that solicitors did not owe a duty of care to third parties affected by the services rendered by the solicitor, and that the case established a very limited extension to the law to allow claims by disappointed beneficiaries in strictly limited circumstances being capable of expression and limitation in the four principles desiderated. Counsel for the pursuers submitted that the relevant factor was the point in time when solicitors might be said, as a matter of law, to have assumed responsibility for a testator's affairs. The defenders' position was that that point arose only when a will was made. That was an incorrect approach and the correct interpretation of White v Jones was that responsibility arose when the solicitor failed to give effect to the testator's intentions. If as a result of negligent advice the testator's intention was defeated then, on an application of the principle in White v Jones, the disappointed beneficiary had a right against the solicitor.

The court ruled:

In the circumstances the defenders owed no duty of care to the pursuers. Accordingly, the case fell to be dismissed as irrelevant.

In White v Jones the negligent solicitor failed to give effect to his client's instructions with a consequent, direct, loss by the beneficiaries. In the instant case there was no suggestion that the will the defenders prepared was other than a correct expression of the testator's last stated testamentary intentions. Those intentions might well have been formulated on the basis of the defenders' negligent advice. Nonetheless that negligent act was of a different character to the negligent act in White v Jones. The negligent act in the instant case was also perpetrated at a time when there was scope both for the mistake to have been recognised and, importantly, when there was in any event time for the testator to change his intentions.

There was a further distinction: as a matter of averment there was nothing in the instant case to indicate that the testator's ultimate intention was not that expressed in the will. For those reasons the court considered that White v Jones was not directly in point and that the ratio was not binding upon it. It found nothing in the decision which would allow it to construe that case in a wider way. On the contrary, the majority were at pains to restrict the applicability of their decision to cases where solicitors negligently prepared a will which did not reflect the testator's instructions. Whilst that might seem close to the situation in the instant case, it was different. That difference, albeit narrow, was important. If that was correct then the position remained that solicitors did not in general owe a duty of care to third parties.

White v Jones [1995] 1 All ER 691 considered.

Sprackling and others v Sprackling

Citation: [2008] All ER (D) 55 (Nov)
Alternative Citations: [2008] EWHC (Ch) 2696
Hearing Date: 6 November 2008
Court: Chancery Division
Judge: Norris J
Representation: Eason Rajah (instructed by Pitmans) for the claimant. Nichola Preston (instructed by Employment Law Services) for the first defendant. The second defendant did not appear and were not represented.

Abstract: Will - Rectification. Chancery Division: A claim to rectify the testator's will pursuant to section 20 of the Administration of Justice Act 1982 was allowed as the will in question had failed to carry out the testator's intentions as a consequence of failures to understand his true instruction.

Keywords: Will – Rectification – Failure to carry out testator's intentions – Whether testator intending to provide legacies in terms contained in will – Whether testator's instructions misconstrued – Whether rectification of will should be ordered – Administration of Justice Act 1982, section 20 (1).

Summary: Section 20 of the Administration of Justice Act 1982, so far as material, provides: '(1) If a court is satisfied that a will is so expressed that it fails to carry out the testator's intentions, in consequence  [...] (b) of a failure to understand his instructions, it may order that the will shall be rectified so as to carry out his intentions  [...]'

The testator died on 17 February 2006, leaving his two sons, the first and second claimants, a daughter, the third claimant, and his second wife, the first defendant. The testator had been a farmer and agricultural contractor. At the time of his death his assets had included freehold lands at Sandilands and Nyewood Farms (the farms). The first claimant and defendants were appointed as his executors. Clause 3.3 of the will gave a legacy to the first defendant of 'Sandilands Farm  [...] [including] the fishing lake with access to the car park'. By clause 4 the testator made a further legacy in terms that, 'In the event that my brother  [...] has predeceased me I give absolutely but subject to any tax my property known as Nyewood Farm [...]to [the first claimant]'. A dispute arose between the parties as to true instructions of the testator. The claimants maintained that the testator had intended to leave the first defendant the farmhouse, with its curtilage of garden, paddocks, fishing lake and its car park, together with access rights over the relevant farmland. The claimants and first defendant agreed that the testator had not intended to leave Nyewood Farm in the terms provided for in clause 4 of the will. The claimants brought proceedings under section 20 of the Administration of Justice Act 1982 to rectify the testator's will.

They submitted that mistakes had been made in the preparation of the will so that the will had not reflected the true instructions of the testator.

The court ruled:

On the evidence, the will had failed to carry out the testator's intentions in respect of the farms as a consequence of failures to understand his true instruction. (see [69] of the judgment).
The will would be rectified.

Martin v Browne and another

Citation: [2008] All ER (D) 82 (Jul)
Alternative Citations: [2008] EWCA Civ 712
Hearing Date: 22 May 2008
Court: Court of Appeal, Civil Division
Judge: Arden, Lloyd and Lawrence Collins LJJ
Representation: Sarah Richardson (instructed by Howard Cohen & Co) for the claimant. Justin Holmes (instructed by Gordons) for the defendants.

Abstract: Will – Revocation. Court of Appeal, Civil Division: On the evidence, the judge had rightly granted the claimant summary judgment in respect of a dispute over the parties' mother's will.

Keywords: Will – Revocation – Destruction – Burning, tearing or otherwise destroying will – Defendants obtaining grant of probate on basis mother dying intestate – Claimants seeking declaration that will executed in 1983 was mother's last will and testament – Claimant obtaining summary judgment – Defendants appealing on basis that mother had torn up will – Whether judge erring in concluding defendants having no real prospect of establishing mother tore up will.

Summary: The parties' mother, M, died in 2006, upon which the defendants obtained a grant of probate of M's estate on the basis that she had died intestate. The claimant brought probate proceedings seeking a declaration that M's will, which was executed on 28 September 1983, was her last will and testament. The claimant sought revocation of the grant to the defendants and a grant in solemn form to his solicitor, who was the attorney for the executor named in the will. The underlying issue between the parties was whether M had destroyed her will with the consequence that the estate, including the house, had to be divided amongst the ten surviving children. The claimant applied for summary judgment on the basis that M had executed only one copy of the will and the only executed copy was at all times, between its execution and her death, held by his solicitors. Accordingly, the will could not have been destroyed. The judge granted summary judgment. The defendants appealed.


It was common ground that summary judgment was appropriate if the defence had no real, as opposed to fanciful, prospect of success; and that the court should not undertake a mini trial on the statements and documents. However, the defendants submitted that an injustice had been done to them on the facts.

The appeal would be dismissed.

The dispute of fact for summary judgment purposes was not whether the defendants had seen M tear up a document, but whether the defendants had a real prospect of showing at trial that the document was an original, properly executed, version of the will. On the evidence, the judge had been right to find that there was no real prospect of the defendants establishing that M had to have torn up an original duplicate of her will (see [34] and [42] of the judgment).

Carr and others v Beaven and others

Citation: [2008] All ER (D) 289 (Oct)
Alternative Citations: [2008] EWHC 2582 (Ch)
Hearing Date: 29 October 2008
Court: Chancery Division
Judge: Floyd J
Representation: Peter John (instructed by Howard Pollock & Webb, Norwich) for the claimants. Michael Waterworth (instructed by Mills & Reeve LLP) for the defendants.

Abstract: Probate – Will. Chancery Division: The deceased had had the requisite testamentary capacity to execute a will in November 2000, on that basis, the court pronounced in favour of that will.

Keywords: Probate – Will – Validity – Testamentary capacity – Claimant executors seeking to admit will to probate - Defendants challenging testamentary capacity of deceased – Whether deceased having requisite capacity to execute will.

Summary: The claimants were the executors of the will of the deceased. The second claimant was the deceased's second wife. The first to fourth defendants were the deceased's children by his first marriage. They had enjoyed difficult relationships with their father: he had left the family home to live with the second claimant in 1971. Upon leaving the family home, he had made provision for his four children by creating a trust in their favour, into which he placed three fairly substantial properties. In September 1997, the deceased suffered a stroke whilst on holiday. The stroke affected him physically, causing some slurred speech and a lack of coordination. On 5 January 1998, he executed a will (the 1998 will) by which he made specific bequests of £10,000 to each of his four children. The trustees of the 1998 will were also directed to grant a lease of a cottage to S and his wife for a period not exceeding 60 years at a nominal rent.

The deceased's mental health began to deteriorate after 2000. A further will was executed n March 2000, albeit that the deceased's solicitor had expressed concerns in relation to his testamentary capacity. The solicitor had suggested obtaining a medical opinion so as to remove a 'question mark' over capacity. The medical practitioner diagnosed mild dementia. Those concerns notwithstanding, by the terms of the March 2000 will, the deceased removed the bequests to his children and altered the provision relating to the lease to be granted to S. Subsequently, the deceased executed a further will on 17 November 2000 (the November 2000 will), which removed completely the provision relating to the grant of the lease to S. By the instant proceedings, the claimants sought probate in respect of the November 2000 will. The defendants resisted that application.


The principal issue that fell to be determined was whether the deceased had lacked the requisite testamentary capacity to execute the November 2000 will.

The court ruled:

While it was clear that the deceased's mental condition was deteriorating from the time of his first stroke, and that by November 2000 he was suffering from mild to moderate dementia, on the evidence, he had had the necessary testamentary capacity on the occasions on which he had given his instructions for and executed the November 2000 will. It was improbable that he retained that capacity when the 2004 codicil was executed, although, in the events that had happened, it was of little significance (see [82]-[90] of the judgment).

Accordingly, the court would pronounce in favour of the November 2000 will but not the 2004 codicil.