Analysis
The claimants were the trustees of a settlement settled by the deceased’s father. The defendants were the deceased’s three children. Under the terms of the settlement the deceased enjoyed a special power of appointment which could be exercised in respect of property described in the fund, whether by deeds revocable or irrevocable or by will or codicil. The deceased had exercised this power twice. First, by a deed of appointment in 1981, with effect from her death, the deceased appointed the fund between the three defendants. Second, by a deed of revocation in 1997, expressed to be supplemental to the settlement and the 1981 deed of appointment, with effect from her death, the fund was appointed on trust for only two of the three defendants, omitting the third defendant.
By clause 7 of her last will and testament made in 2007, the deceased devised, bequeathed and appointed the whole of her real estate, residue and remainder over which she had any power of testamentary disposition whatsoever to the three defendants. The claimants, adopting a neutral stance, applied for a determination of how clause 7 of the deceased’s will should be interpreted. The will was governed by Manx law, which was accepted as being the same as English law. The first defendant contended that the effect of clause 7 of the will was no more than a general residuary gift to cover all bases, to sweep up anything not already disposed of, and to avoid any possible intestacy: it did not revoke the 1997 deed of revocation. The third defendant contended that the effect of clause 7 was to revoke the 1997 deed of revocation and make a fresh appointment.
Held:
- (1) The exercise of a special power of appointment is a question of intention to be deduced from the instrument in question, and there is no need to refer expressly to the particular power or to the property subject to the power, such that the intention may be deduced from more general wording. If the deceased had not previously exercised the power of appointment, clause 7 of the will would have been a valid appointment under the settlement appointing the fund between the three defendants equally, but the 1997 deed of appointment had to be revoked for the new appointment to be effective (paras 22-25).
- (2) The intention to exercise a power of revocation must be apparent from the instrument. A power of revocation is distinct from a power of appointment. Without more, the mere exercise of a power of appointment will not operate as a revocation. However, a power of revocation may be exercised other than in express terms. Moreover, if a testamentary gift framed in general terms will fail altogether unless it is construed as entailing the exercise of a power of revocation, so as to bring within the ambit of the will the property which is the subject of such power, the instrument will be taken as an exercise of the power (paras 32, 35, 43, 49, 55).
- (3) The deceased’s testamentary intention, objectively deduced from the language of her will and interpreted in its context, was to revoke the 1997 deed of appointment and make a fresh appointment in favour of all three children equally. The deceased only had one power of appointment which derived from the settlement, such that the general words of clause 7 of the will were close to an express reference to the power derived from the settlement. If no prior appointment had been made, clause 7 would have operated as the exercise of the special power of appointment under the settlement. Although there was no reference to the settlement or the 1997 deed of appointment or revocation, in context, the words of appointment in clause 7 of the will, which could only apply to the power derived from the settlement, were to be construed as an implied revocation of the 1997 deed of appointment, otherwise the words of appointment in the 1997 deed of appointment would be otiose. In the context of there being no other power of appointment available to the deceased, the notion that clause 7 did not refer or operate in relation to the settlement would be commercially unrealistic. In the circumstances there was an intention to exercise the power of revocation deduced reasonably and objectively from the terms of clause 7 of the will in context, otherwise a significant part of the will would be a waste of ink. The present case was a ‘one power case’ (Pomfret v Perring (1854), In re Brace [1891], In re Thursby’s Settlement [1910] distinguished) (paras 66-70).
- (4) The conclusion on construction was reached without consideration of extrinsic evidence. However, the will was ambiguous such that extrinsic evidence could be considered as there was a tension between the literal reading propounded by the first defendant and the purposive, contextual meaning advocated by the third defendant, and the meaning and effect of the will was heavily influenced and coloured by the factual matrix. The extrinsic evidence available was limited and not particularly cogent or compelling, but insofar as it assisted the interpretation of the will, it supported rather than undermined the conclusion on interpretation reached independently of such evidence (paras 71-78).
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