Analysis
By her will (which was drafted by a legal executive of the third defendant), Audrey Thelma Anita Arkell (the testatrix) gave the ‘Nil-Rate Sum’ to the appellant. This was defined as:
‘… the largest sum of cash which could be given on the trusts of this clause without any inheritance tax becoming due in respect of the transfer of the value of my estate which I am deemed to make immediately before my death.’
Subsequent clauses gave her residence, personal chattels and specified shares to the appellant ‘free of inheritance tax’ and her net residuary estate was directed to be divided ‘subject to the payment of debts and funeral and testamentary expenses and inheritance tax’ between over 20 organisations, all of which were expressed to have registered charity numbers, including the respondent. At the time of the testatrix’s death the nil-rate band for inheritance tax purposes was £325,000 and a construction dispute arose as between the residuary beneficiaries on the one hand and the appellant on the other as to the effect of the gift of the Nil-Rate Sum. The value of the assets within the non-charitable gifts significantly exceeded the nil-rate band and the respondent, on behalf of the residuary beneficiaries, claimed that the gift did not confer any valuable benefit on the appellant, entitling him only to such sum (if any) as was not ‘used up’ by the other chargeable gifts. Since that amount had already been used up, because the value of those gifts exceeded the nil-rate band, there was nothing available to the appellant. The appellant, on the other hand, alleged that on the true construction of the will, assisted by part of a witness statement by the draftsman which was said to be extrinsic evidence of the testatrix’s intention, the gift should be construed as a tax-free gift of £320,000.
Chief Master Shuman delivered an oral judgment on 5 February 2021 determining that she would not admit extrinsic evidence of the testatrix’s intention and a reserved judgment on 17 August 2021 determining the correct construction of the will in favour of the respondent and against the appellant. The appellant appealed on the grounds that the Chief Master erred in refusing to admit the witness statement of the draftsman on the basis that the gateways in s21 of the Administration of Justice Act 1982 were not satisfied, and that she ought to have had held that the will was ambiguous in the light of surrounding circumstances or on its face.
Held (dismissing the appeal):
As to the question whether the will was ambiguous on its face, it was well established that there would be ambiguity when the words used were capable of having two or more meanings and it was argued in this case that the words used were capable of defining the occasion of the charge rather than giving rise to the computation of the sum passing under the gift, such ambiguity being created or amplified by the order in which the gifts appeared in the will. However, the appellant had not demonstrated any language used on the face of the will which was ambiguous and therefore his case under this head failed. The words of the gift could only have one meaning in themselves and in a fiscal context. The definition of the ‘Nil-Rate Sum’ was clear and unambiguous; it could not be ignored or altered. The words ‘in respect of the transfer of value… which I am deemed to make’ described a process (ie a computation), not a date, occasion or event (ie a charge).
As to the question whether there was ambiguity in the light of surrounding circumstances, the admissible evidence in the witness statement of the draftsman suggested that he had misunderstood how inheritance tax works and was therefore mistaken as to the fiscal consequences of the will. It was impossible, however, to see from that evidence how it gave rise to any ambiguity in the wording of the gift. At most, the evidence demonstrated error but not an error which gave rise to ambiguity. What the appellant needed was a different definition of the ‘Nil-Rate Sum’ and only a claim to rectification could achieve that result, but no such claim had been made here. It followed that the Chief Master’s analysis and decision were correct, and the appeal should be dismissed.
JUDGMENT SIR ANTHONY MANN: Introductory [1] This is an appeal from what were in substance two orders of Chief Master Shuman. The first was made on 5 February 2021, though not drawn up. It was made, or is treated as made, pursuant to an oral judgment dated 5 February in which the Master determined that …Continue reading "Beasant v Royal Commonwealth Society for the Blind & ors [2022] WTLR 853"