Brooke & ors v Purton & ors [2014] EWHC 547 (Ch)

Analysis

In 2009 Steven Huntley (the deceased) sought the advice of a solicitor in relation to wills and inheritance tax planning. At the date of his death, 11 March 2011, the deceased’s estate was valued at £6.9m, which was comprised of a 90% shareholding in an unquoted company (£5.4m), real estate, vintage cars and cash. The deceased’s estate was substantially similar in 2009.

The deceased had wanted to leave his estate equally between his partner, Louise, and his five children. He had expressed concerns to his solicitor about leaving substantial assets to his children outright and his solicitor had recommended using a discretionary trust structure in his will. The deceased had been advised that this would enable him to pass his business assets, free of inheritance tax, into the trust. The trust could then be ‘topped up’ with cash or other assets provided that his nil-rate band had not already been fully utilised. The deceased’s trustees could then manage the trust assets for the deceased’s children until they were ready to hold the assets themselves.

As the result of a drafting error by the deceased’s solicitor it became apparent that the will which the deceased had signed contained wording which frustrated this intention and did not achieve what he had been advised it would. The result of the will as drafted was to prevent any assets from passing into it.

The deceased’s executors and trustees applied to the court to correct the will either by construction or rectification. The defendants (the beneficiaries of the trust) were broadly in agreement with the trustees’ application.

Held (granting the application):

1. 1) Marley v Rawlings [2014] WTLR 299 sets out the correct approach to the construction of a will and this is the same approach as adopted when interpreting a contract. The court must find the intention of the parties by identifying the meaning of the relevant words:
2. a) In the light of (i) the natural and ordinary meaning of those words, (ii) the overall purpose of the document, (iii) any other provisions of the document, (iv) the facts known or assumed by the parties at the time that the document was executed, and (v) common sense, but
3. b) Ignoring subjective evidence of any party’s intentions
4. 2) In addition, when construing a will, s21 Administration of Justice Act 1982 (AJA) is a highly relevant provision relating to interpretation. This section confirms the view that a will should be interpreted as a contract, notice or patent.
5. 3) If the court puts itself in the armchair of the deceased (when he was considering the will and the explanatory summary), with his knowledge and belief as to the then present and future nature and value of his various assets, the literal interpretation of the will could not plausibly represent his intentions. It was clear that something had gone terribly wrong. On this basis the deceased’s will should properly be construed as though sub-clause 6.1.3.1 was omitted. With this omission, the deceased’s business assets, together with any unused nil-rate band, could pass into the discretionary trust.
6. 4) The law of rectification of the will is encompassed in s20 AJA. Rectification would have been appropriate in this case, however it was unnecessary to consider such a claim as, on a true construction of the will, the will already had the meaning sought.

JUDGMENT DAVID DONALDSON QC: [1] This action concerns a will which went seriously wrong in the drafting. The court is asked to put it right by construction and/or rectification. The application is made by the executors of the will and trustees of a trust arising under the will, probate of which was granted on 29 …

Continue reading "Brooke & ors v Purton & ors [2014] EWHC 547 (Ch)"