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Issue 40 – September 2009  

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Legislation

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Law Society practice note:
Making gifts of assets

Solicitors are regularly instructed to assist in the making of a gift of assets. Whether the client is transferring property or investments to their next of kin, family members or friends for various reasons, the client must be advised of the benefits and risks of making such a gift.

This practice note advises on dealing with a client who intends to gift their assets.

Events


Discounts


Cases

Perrins v Holland and others

Will – Testator. Chancery Division: The will of the deceased was upheld as there was no doubt that the will which had been executed had represented the deceased's wishes. He had accordingly known of and approved the contents of the will on the date he had executed. He had had testamentary capacity when he gave instructions and the will as drafted had embodied those instructions and when R had executed the will months later, his testamentary wishes had remained unchanged.

Citation: [2009] All ER (D) 30 (Aug)
Alternative citations: [2009] EWHC 1945 (Ch)
Hearing date: 31 July 2009
Court: Chancery Division, Birmingham District Registry
Judge: Lewison J
Representation: James Quirke (instructed by Tyndallwoods Solicitors) for the claimant. Angus Burden (instructed by Williamson & Soden) for the third defendant.

Keywords: Will – Testator – Testamentary capacity – Deceased giving instructions to legal executive – Will executed over one year later – Son challenging will – Whether deceased knowing and approving of contents.

Summary: The judgment is available at: [2009] EWHC 1945 (Ch)
The deceased (R) died on 31 January 2003. He had made a will on September 2001, of which probate was granted on 24 June 2003. The net estate was valued, for probate purposes, at just near £180,000. The only substantial asset was R's bungalow. By his will, R had left his entire estate to D, his carer. It also provided that in the event that D failed to survive him, his estate would be divided equally between his son and his brother.

The son challenged R's testamentary capacity both at the time that he had given instructions for the will and also at the date when he had executed. There was no attack based on undue influence. Evidence was heard as to R's medical conditions during his life. He had been diagnosed in 1991 as having multiple sclerosis. In April 2000, F, a legal executive, had gone to see R at home because he had been informed that R wished to make a will and to execute a power of attorney. R expressed his wishes to F. F formed the view that R had testamentary capacity. A draft will was sent to R in June.
 
A year later, having not heard from R for a year, F wrote to him. F sent a fresh copy of the will and the enduring power of attorney. The will was executed in September 2001. The son was concerned about R and, with the aid of his mother, wrote to the Public Guardian's Office in November 2001, saying that R was not capable of making rational decisions. He subsequently challenged the will.
It was common ground that the events in the instant case were governed by the common law test for incapacity rather than the Mental Capacity Act 2005.

The court ruled:

On settled authority, what was required at the date of execution was that the testator understood that he was executing a will for which he had previously given instructions. It was not necessary for the will to be put to him clause by clause or that its general purport was explained. It was not even necessary that the testator would have understood the will if it had been put to him clause by clause. What was necessary was that the testator knew that he was making a will and believed that it was the will for which he had previously given instructions (see [43] of the judgment).

On the evidence, R had had testamentary capacity in April 2000 when he gave instructions for the will. There was no reason to doubt F's account of his meeting with R, which was supported by contemporaneous attendance note and memorandum. There was nothing which showed that R had changed his mind and no external event which would have caused R to change his testamentary wishes. On the evidence, R had understood in September 2001 that he was executing a will; and F had run though the will with him briefly. In all the circumstances, there was no doubt that the contents of the will had continued to represent R's testamentary wishes.

Accordingly, on the evidence, the contents of the will had been summarised and R had understood the summary. He had accordingly known of and approved the contents of the will on the date he had executed. He had had testamentary capacity when he gave instructions and the will as drafted had embodied those instructions and when R had executed the will months later, his testamentary wishes had remained unchanged (see [105]-[121] of the judgment).

Parker v Felgate 32 WR 186 considered.

Devas and ors v Mackay

Will – Construction. Chancery Division: Applying established case law to the evidence, the defendant had not proven that the deceased had the necessary testamentary capacity at the time her disputed will was executed and a number of suspicious features of the instant case suggested that the deceased lacked want of knowledge and approval.


Citation: [2009] All ER (D) 09 (Aug)
Alternative citations: [2009] EWHC 1951 (Ch)
Hearing date: 31 July 2009
Court: Chancery Division
Judge: Asplin QC
Representation: Constance McDonnell (instructed by Hewitsons LLP, Cambridge) for the claimants.The defendant did not appear and was not represented.

Keywords: Will – Construction – Intention of testator – Testator suffering ill health prior to death – Claimants disputing last will of testator – Whether testator lacked testamentary capacity.

Summary: The judgment is available at: [2009] EWHC 1951 (Ch)
D was an elderly lady who had suffered with both physical and mental ill health for a number of years before her death in December 2006. For the last few years of her life, D had been cared for by, among other people, M, who was the mother of the defendant. Between July 2001 and July 2002, D made and amended her will with the advice of professional advisors. Her solicitor was satisfied that despite her forgetfulness and communication difficulties, D had a sufficient level of understanding to proceed. Under the 2002 will the bulk of D's estate was left between her children and grandchildren with the second and fourth claimants appointed as executrices.
In August 2003, D was referred to a specialist by her general practitioner, who noted symptoms consistent with vascular dementia. Following further declines in D's health, in late 2003, M began work as D's carer.

By April 2004, M had taken full control over D's care. By this time, D was paralysed and no longer able to communicate anything other than her basic needs. The claimants and other witnesses contended that they experienced increased difficulty in contacting D and arranging visits because M made it difficult for them to do so.

From November 2004 onwards, considerable cash amounts were withdrawn from D's bank account and very large cheques written in favour of M and D's secretary, A. D's cheque books and pin number were under the control of M and A. A will dated 1 November 2005 was executed by D, which was the will under dispute in the instant case. The 2005 will was a home made will witnessed by M and A under which the sole beneficiary and executor was the defendant. There was no evidence that D had been read the terms of the 2005 will or had read them herself.

The claimants disputed the 2005 will on the grounds that, inter alia, D lacked testamentary capacity in November 2005 when the 2005 will was made, that the provisions of the 2005 will represented a radical and irrational departure from the provisions of her previous wills, and that it was irrational to have left her entire estate to the defendant whom she barely knew. Furthermore, D did not know or approve of the contents of the 2005 will and additionally, the circumstances in which the 2005 will was executed ought to have raised the suspicions of the court.

The application would be granted.

It was established case law that a number of tests ought to have been applied to the facts and the evidence. These related to testamentary capacity, upon whom the burden of proof rested in proving unsoundness of mind and want of knowledge and approval. The court would ordinarily presume that a testator had capacity at the time when he made his will if it was rational on its face and in such circumstances, the burden was initially upon the claimants to have raised a real doubt as to capacity. Additionally, if the circumstances in which the will was executed were such as to arouse the suspicion of the court, the burden was upon the propounder to prove affirmatively that the will in question represented the true will and intention of the deceased. (see [60] - [66] of the judgment).

On the balance of probabilities, in the light of the expert medical evidence and the factual evidence as to D's physical and mental state, the burden was on the defendant to prove that D had had testamentary capacity at the time that she had made her will. On the evidence, the judge was not satisfied that D had testamentary capacity. In relation to want of knowledge and approval, there were held to be a number of suspicious features including, inter alia, the nature and contents of the 2005 will and the circumstances surrounding its execution, the medical and factual evidence that suggested that D would not have been able to understand the content of the 2005 will and that it could not have been dictated by D and there was no evidence that it was either read or explained to her. There was no evidence that satisfied the court that the content of the 2005 will was truly representative of D's testamentary intentions (see [68] - [77] of the judgment).

On the balance of probabilities, D had testamentary capacity in July 2002, so the 2002 will would be admitted to probate and the 2005 will would be pronounced against (see [78] of the judgment).
Banks v Goodfellow [1861-73] All ER Rep 47 applied; Fuller v Strum [2001] All ER (D) 92 (Dec) applied; Hoff v Atherton [2004] All ER (D) 314 (Nov) applied; Wyniczenko v Plucinska-Surowka [2005] All ER (D) 245 (Nov) applied; Ledger v Wootton [2007] All ER (D) 99 (Oct) applied.

Martin v Triggs Turner Bartons (a firm) and others

Solicitor – Negligence. Chancery Division: The court awarded the claimant damages in the sum of £40,000 in circumstances where the defendants had failed to draft the claimant's husband's will, the testator, in accordance with the testator's instructions.

Citation: [2009] All ER (D) 12 (Aug)
Alternative citations: [2009] EWHC 1920 (Ch)
Hearing date: 31 July 2009
Court: Chancery Division
Judge: Floyd J
Representation: Henry Legge (instructed by Mishcon de Reya) for the claimant.Michael Waterworth (instructed by Fishburns) for the defendants.

Keywords: Solicitor – Negligence – Will – Duty of care – Instructions to draw up will conferring power of advancement – Claimant beneficiary alleging defendants failing to properly draw up power of advancement and allocation of redemption proceeds of index-linked national saving certificates – Claimant alleging failure by third defendant to process her claim to state bereavement benefits or give proper advice in relation to that claim – Whether defendants negligent.
 
Summary: The judgment is available at: [2009] EWHC 1920 (Ch)
In December 1999, the testator was terminally ill with cancer. He instructed the first defendant firm to draft a new will for him, his existing will having been home-made. His new, and last, will was executed on 23 December. He died on 7 January 2000, at the age of 56. Under the testator's last will, the testator's wife, the claimant, took a house which had been their home since 1986, and a life interest in the whole of the testator's residuary estate. There was to be a discretionary charitable trust lasting for twenty years following her death, with gifts over to charities of the testator's choice. The will contained an express power of advancement of capital.

The power of advancement provided that: 'at any time and from time to time during the lifetime of my said wife [the claimant] my Trustees may raise any sum or sums out of capital which (taken as a fraction of the value of my residuary estate from time to time) do not exceed in aggregate the fraction which the sum of £100,000 is of my entire residuary estate at my death of the value of my residuary estate and pay or to apply it for the benefit of my said wife in such manner as they (being not less than two in number) shall in their discretion think fit and I DIRECT that during the lifetime of my said wife my Trustees shall have her comfort and well-being as their first and paramount consideration at all times'.

The last will named all the partners of the second defendant firm as executors. The grant of probate was obtained by the third and fourth defendants, and partners in the first and second defendants, who had, together, been involved with the file. In 2002, the claimant intimated a claim for rectification of the will against the executors and the charities entitled in remainder.
The action did not need to be commenced because it was compromised before the intended proceedings were issued. The deed of compromise, to which the charities entitled in remainder and the Attorney General (representing charity generally) were parties, resulted in a partition of the fund, 66.5% to the claimant and 33.5% to the charities. The parties paid their own costs. The costs of the executors came out of the fund. The claimant brought proceedings in negligence against the defendants.

Her principal allegation of negligence was that the power of advancement had been drafted negligently. She alleged in broad terms that, instead of being drafted as a maximum of around £100,000 it should have provided that the trustees could advance everything except £100,000 (It was common ground that, if that was correct position, the solicitors could be rendered liable to the claimant by virtue of the principle enunciated by the House of Lords in White v Jones[1993] 3 All ER 481). She argued that, had the power of advancement been drafted in the manner contended for by her, she would have been able to secure a more favourable settlement of the intended rectification action. As regards to post-death negligence, she alleged that the third defendant had failed to process her claim to state bereavement benefits or give proper advice in relation to that claim and, that there had been an incorrect allocation of the redemption proceeds of the index-linked national savings certificates held by the estate.

The court ruled:

(1) On the facts, the will had not been drafted in accordance with testator's instructions. A duty of care had been owed to the claimant to draft the will in accordance with the testator's intentions so far as they had been intended to benefit her. That duty had been breached by the failure to draft the will in accordance with the testator's instructions. The claimant had suffered a loss by the negligent act from the date of the testator's death. The value of the benefit which she had actually received had been reduced as compared with that which the testator had intended. One way of looking at it was that she had lost the right to the trustees' consideration of any request which had exceeded the £100,000 fraction set by the incorrectly drafted will. 
 
Another way of putting it was that she had been placed in a worse position in relation to the remaindermen if she had wished to achieve a partition of the estate with them. It might be difficult to place a value on the amount of that loss: but that was a matter of quantification, and had not called into question the fact that a loss had been sustained. In all the circumstances of the instant case, the claimant would be awarded £40,000 as the quantum of her loss (see [70], [71] of the judgment).
Moore (DW) & Co Ltd v Ferrier [1988] 1 All ER 400 considered; Allied Maples Group Ltd v Simmons & Simmons (a firm) [1995] 4 All ER 907 considered.

(2) It was established authority that, ordinarily, an executor did not owe a duty to advise a beneficiary in connection with the affairs of the beneficiary. However, that rule was subject to the principles about assumption of responsibility and reasonable reliance (see [94] of the judgment).
In the instant case, the third defendant had assumed responsibility to advise the claimant about her pension entitlement, and to take steps to find out whether her belief in the non-entitlement was correct. The circumstances of the relationship had been such as to make it reasonable to rely on the third defendant, so as to create the necessary duty of care.

There had been reliance. The claimant would have gone away from the meeting thinking that there was nothing further she needed to do until she heard from the third defendant.  As she did not hear, she did nothing, and had lost her claim to entitlement. Accordingly, there had been a breach of duty. There had not been any contributory negligence on the part of the claimant. Once responsibility had been assumed, there was nothing the claimant needed to do. As a result, the claimant had lost the benefits that would have been paid between 2000 and 2007, which had been valued at £25,047 (see [97]-[100] of the judgment).

Cancer Research Campaign v Ernest Brown & Co (a firm) [1998] PNLR 592 considered.
(3) In the circumstances, the proper treatment of the national savings certificates was to treat the addition to their 'value' whether described as 'interest' or 'index-linking' as income and not capital. The executors had owed the claimant a duty of care to point out that the national savings treatment was not or might not be correct, and on those facts they had been in breach of that duty (see [105] of the judgment).

Holder, Re, National Provincial Bank Ltd v Holder [1953] 2 All ER 1 considered.

Parkinson v Fawdon

Will – Construction. Chancery Division: When construing the intention of the deceased in interpreting the instructions in a will, the court could take into account (i) all the persons and facts known to the deceased at the time when he made his will; and (ii) any document which was substantially contemporaneous with the will and was of an important character and which showed who the testator had in mind and intended by the misdescription.


Citation: [2009] All ER (D) 322 (Jul)
Alternative citations: [2009] EWHC 1953 (Ch)
Hearing date: 30 July 2009
Court: Chancery Division
Judge: Norris J
Representation: Paul Emerson (instructed by Bunkers, Hove) for the claimant.Anna Clarke (instructed by Chivers Eastern Brown, Tolworth) for the defendant.

Keywords: Will – Construction – Intention of testator – Words of will showing accidental omission or mistake – Whether court may take into account external factors in determining intention

Summary: The judgment is available at: [2009] EWHC 1953 (Ch)
H and F shared a farm in Cornwall. In November 1996 they made mirror wills, each leaving his estate to the other and appointing him as sole executor. In the event that the other did not survive the testator there was an appointment of alternative executors and a division of the residuary estate. In both wills the alternative executors were to be 'Mark Parkinson of 215 Ditching Road Brighton' who was said to the nephew of H and the defendant.
The estate would be divided in half with one half going to Mark Parkinson and the other half divisible between the defendant and her sisters. H died in April 2007 and his estate passed to F. F died shortly afterwards and the substitutionary provisions of his will took effect in relation to the combined estates. Both sisters of the defendant had died, leaving the defendant the sole beneficiary of that half of the estate. No one matched the description of 'Mark Parkinson of 215 Ditching Road Brighton'. The claimant contended that the intended reference was to him. There was no Ditching Road; but there was a Ditchling Road.

The claimant commenced proceedings for the rectification of F's will by replacing 'Mark Parkinson' with 'Justin Parkinson'. The defendant counterclaimed that the court might determine, upon the proper construction of the will and the events which took place, whether the claimant or another was the person referred to as 'Mark Parkinson' and for a grant of probate to be issued accordingly.
The counterclaim would be allowed.

Under established case law, the court was entitled to take into account, as an aid to construction of intention: (i) all the persons and facts known to the deceased at the time when he made his will; and (ii) any document which was substantially contemporaneous with the will and was of an important character and which showed who the testator had in mind and intended by the misdescription.
In using the description in the will of November 1996, F plainly intended to refer to a then living person known to him. It was equally plain that that person was the same person to whom H referred in the mirror will made on the same occasion by the same solicitors. The people who lived at 215 Ditchling Road in November 1996 included H's niece and great-nephew, the claimant. The intended reference was clearly to a male member of H's family. It would not be unusual to refer to a great-nephew as a 'nephew' and no other members of H's family had the names 'Mark' or 'Parkinson' and lived at 215 Ditchling Road. No members of F's family met the description. On the evidence, the reference to Mark Parkinson was a misdescription of the claimant.

Probate was granted to the claimant and defendant.

Ofner, Re, Samuel v Ofner [1908-10] All ER Rep 851 applied; Resch's Will Trusts, Re, Le Cras v Perpetual Trustee Co Ltd [1969] 1 AC 514 applied.

Legislation

Non-Contentious Probate (Amendment) Rules 2009

SI 2009/1893: Second female parent may apply for a grant of letters of administration on behalf of a child in the estate of a deceased person

Published date: 20 July 2009
Jurisdiction: England; Wales
Enactment citation: SI 2009/1893
Commencement date: 1 September 2009
Legislation affected: SI 1987/2024 amended
Enabling power: Supreme Court Act 1981, section 127

This instrument amends Rule 32(1)(a)(i) with effect from 1 September 2009

Summary: Amend Rule 32(1)(a)(i) of the Non-Contentious Probate Rules 1987, SI 1987/2024 (NCPR) to enable a second female parent to apply for a grant of letters of administration on behalf of a child in the estate of a deceased person. This amendment reflects the new legal parenthood provisions for same sex female couples who have a child together following assisted reproductive treatment, inserted into Sections 2 and 4 of the Children Act 1989 by the Human Fertilisation and Embryology Act 2008 (the 2008 Act).
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