Rawstron & anr (executrices of the estate of Lucian Freud) v Freud [2014] EWHC 2577 (Ch)

Analysis

Lucian Freud (the deceased) achieved international recognition as an outstanding painter and draughtsman, and he acquired considerable wealth over the course of his long and successful life. His final will was dated 10 May 2006 (the 2006 will), superseding his previous will of 25 June 2004 (the 2004 will). Both wills were professionally drafted. His residuary estate, after payment of legacies and inheritance tax, was estimated at around £42m.

The claim was brought by the claimants under CPR Part 8 in their capacity as executrices of the deceased’s final will. The first claimant was the deceased’s solicitor, who provided legal services to the deceased from 1986, and who had a great deal of contact with him over the course of his life. The second claimant was one of the many children of the deceased.

The claim concerned the construction of the para 6 of the deceased’s 2006 will, which provided as follows:

‘I GIVE all the residue of my estate (out of which shall be paid my funeral and testamentary expenses and my debts) and any property over which I have a general power of appointment to the said Diana Mary Rawstron and the said Rose Pearce jointly’.

The claimants sought a declaration that under this clause they were absolutely entitled to the deceased’s residuary estate. While this was the only relief claimed by their CPR Part 8 claim form, the claimants also contended that the gift of residue was subject to a trust imposed by the deceased, the terms of which were left undisclosed. However, they informed the defendant that he was not a beneficiary of that trust.

The defendant contended that on a proper construction of the will, the residue was not given to the claimants for their absolute benefit, but to hold on trusts which are not set out in the will, by means of a half secret trust. In the case of a half secret trust, the details must be communicated to the trustee before or contemporaneously with the execution of the will. In the case of a fully secret trust, the trust can be communicated up until the death of the testator. As on his argument the clause created a half secret trust, the defendant wished to explore whether a valid half secret trust was created, or whether the clause failed and there was an intestacy of the residue in which case he would be entitled to a share. However, the claimants contended that even if the defendant’s construction of the clause were correct, the secret trust would still qualify as a valid half secret trust, as its terms were communicated to them before the will was executed. The evidence in support of that contention was not disclosed to the defendant, who reserved his right to contest the point in the event that the claimant’s claim failed.

Held:

1. 1) None of the points raised by the defendant outweighed the essential point made by the claimants that the gift in clause 6 was expressed as a simple gift of residue and that clause 6 contained no mention of a trust;
2. 2) The fact that the deceased referred to the claimants as ‘trustees’ in clauses 3 and 4 but referred to them by their names in clause 6 is more consistent with that construction that, under clause 6, he intended them to take personally and absolutely rather than as trustees;
3. 3) The subject matter of the gift in clause 6 included also the chattels referred to in sub-clause 3.3, the copyrights given to the claimants in trust under clause 4, and all the remaining property in the estate. However, in clauses 3 and 4 the claimants took in fiduciary capacity and not a personal one, as demonstrated by the different ways the claimants are referred to in clauses 3 and 4 on the one hand, and clause 6 on the other;
4. 4) While on the one hand, a gift conferred to a testator’s solicitor meant that the court should be vigilant before accepting that clause 6 meant that the claimants took as beneficial legatees, on the other hand the law recognised secret trusts, and it was commonplace for solicitors to be appointed as trustees in those circumstances;
5. 5) As to the defendant’s argument that the fact that the claimants comprise the testator’s solicitor and only one of his living issue were consistent with a finding that the clause was intended to be a gift on trusts, this would make the use of professional persons to be fully secret trustees difficult if not impossible, and those facts were insufficient to warrant reading clause 6 of the will as imposing an undefined trust on the residuary legacy;
6. 6) It was not the case that clause 3.3 would serve no purpose if clause 6 was intended to give the deceased’s residuary estate to the claimants beneficially;
7. 7) The administrative trust powers in clause 7 might have a purpose even if clause 6 was to bear the claimants’ interpretation. They should be viewed as ancillary provisions and did not justify interpreting clause 6 as a gift to the claimants as trustees, rather than absolutely. The same points applied to clause 8;
8. 8) References to ‘trust funds’ in clause 7 were clearly taken from the 2004 will. A clause like clause 7 is the product of the testator following legal advice without any independent informed cogitation, and that, in the present case, the detailed wording of clause 7 had been copied over verbatim from the 2004 will without any focused consideration as to whether every part was necessary or appropriate in light of the differences from the 2004 will that appear elsewhere in the will;
9. 9) It was striking that the 2004 will plainly intended to create a half secret trust. The only reasonable conclusion to be drawn from this change of wording was that the deceased did not intend to create a half secret trust by clause 6 of the will which superseded it. If that had been his intention, it was difficult to see why, with the advantage of professional legal advice from the same solicitors who had drafted the 2004 will, he did not use either the same words, or at least clearer words than he used in the will;
10. 10) The facts were peculiar to the present case, and distinguished it from the authorities cited;
11. 11) In conclusion, in light of (a) the natural and ordinary meaning of the words used in clause 6 of the will, (b) the overall purpose of the will, (c) the other provisions of the will, (d) the material factual matrix when the will was made, (e) common sense, the claimants’ interpretation of clause 6 of the will was to be preferred to that suggested by the defendant;
12. 12) The claim therefore succeeded.

JUDGMENT RICHARD SPEARMAN QC Introduction [1] In his long and successful life, the late Lucian Freud achieved international recognition as an outstanding painter and draughtsman, and, with it, considerable wealth. He also lived a very full private life. These matters form the background to these proceedings under CPR Part 8, which raise a short point …

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