Hives v Machin [2017] WTLR 983

Analysis

This claim concerned the proper construction of the will of Mrs Bastubbe (‘the Testatrix’). The Testatrix had three sons, Christopher, Eric (the Claimant’s father) and Peter (the Defendant). The Testatrix made her last will in 2003 at a time when all three of her sons were living. The Defendant had one son and one daughter, and the Claimant was Eric’s only daughter. The deceased would have been aware in 2003 that Eric had a chest complaint that caused him breathing difficulties and that Christopher was suffering from illness relating to drug addiction. Christopher in fact predeceased the Testatrix.

The relevant clauses of the will were the following:

Clause 3: ‘I GIVE free of Inheritance Tax or any other duty payable on my death to my son ERIC WILHELM MACHIN all moneys and accrued interest standing to the credit of my Guaranteed Reserve Account number D/21739626-3 with the Halifax plc at the time of my death’

Clause 4: ‘I GIVE free of Inheritance Tax or any other duty payable on my death the following pecuniary legacies:-

(a) To my son CHRISTOPHER BASTUBBE the sum of Fifty thousand pounds (£50,000) [‘]

Clause 5: ‘I GIVE DEVISE AND BEQUEATH all my remaining property both real and personal of whatsoever nature and wheresoever situate (including any property over which I may have a general power of appointment) not otherwise disposed of by this my will to my Trustees [‘] UPON TRUST for such of my son PETER DAVID MACHIN my said son ERIC WILHELM MACHIN and my said son CHRISTOPHER BASTUBBE who shall be living at the date of my death and if more than one in equal shares absolutely’.

After the execution of the will in 2003, as the deceased became frailer, the Defendant applied to the Court of Protection to become the deceased’s deputy for her property and affairs which was granted on 22 March 2010. He rationalised her affairs by selling her house and closing various bank savings accounts. One of the accounts closed was the Halifax plc bond that was the subject of the legacy to Eric. The bond had matured on 3 January 2011 and had either to be closed or reinvested at that time. The proceeds (net of interest) were initially paid into a current account on 6 January 2011 and then on 21 June 2011 into an investment account.

At one stage in 2011 the balance in the HSBC current account fell to £49,088.87, so only that sum, representing Eric’s legacy, became invested in the investment account. By the date of trial, it was common ground that in June 2011 that sum represented Eric’s legacy for the purposes of sch 2, para [8] of the Mental Capacity Act 2005, which prevented the legacy from lapsing on closure of the specified Halifax account.

The investment account was closed shortly after letters of administration were granted to the Defendant in May 2015. At that time, the account had a value of £449,204. HSBC certified that the funds had increased in value by 25% from December 2010 to May 2015. By November 2011, 5 months after the sum representing Eric’s legacy was paid into the investment account, the funds had only increased in value by 0.655%.

A question of construction arose between the Defendant and the Claimant (the deceased’s granddaughter). The Claimant claimed to be entitled to the clause 3 legacy left to her father, and to one half of the residuary estate, by virtue of s33 of the Wills Act 1937. The Defendant contended that the will showed a contrary intention sufficient to exclude the operation of s33. If that was correct the Defendant would be solely entitled to the residue of the estate.

Held:

1. 1) It was not necessary for a testamentary gift otherwise to lapse entirely before s33 could apply. There was no requirement that a contrary intention be expressed in particular terms or that an express reference be made to the s33. It is also not necessary to demonstrate that a conscious decision has been taken to exclude the effect of the section: In re Meredith [1924] 2 Ch 552 at 556. The requirement is for language of the will to show that the devise or bequest in question should not take effect, in the specified circumstances, as a devise or bequest to the living issue of the deceased beneficiary. Thus, an express provision for a different substitution (or none) in the event of death would be sufficient.
2. 2) In respect of clause 5, it was necessary to interpret it in its proper background. This included (1) that the testatrix had made a will in 1986 that made express substitutional gifts in favour of issue of her son which were not repeated in her later wills (2) her earlier 1998 will gave legacies of £1,000 to each of the grandchildren: those legacies were removed in her 2002 will and did not reappear in her last will in 2003;
3. (3) the testatrix was in regular contact and had a good relationship with the Claimant;
4. (4) the testatrix was aware that Eric and Christopher had health issues. However, none of the background facts lent any different colour to the meaning of clause 5 of the will. It was impossible to conclude that the testatrix had decided to exclude all her grandchildren entirely from any benefit under the will, though it was evident that she wanted her sons to be the primary beneficiaries. The words of clause 5 should be given their natural meaning, but neither they nor other terms of the will show any contrary intention for the purpose of s33 (c.f. Ling v Ling [2002] WTLR 553; Rainbird [2013] WTLR 1609). 3) The will was not meaningless or ambiguous so as to permit the admission of evidence of the testatrix’s subjective intention under the Administration of Justice Act 1982, s21. 4) Clause 3 of the will was unambiguous and contained nothing amounting to a contrary intention for the purposes of s33.
5. 5) Only the principal sum of £49,088.87 was due to the Claimant under clause 3 of the will, not the interest earned on this sum. the ‘property representing the property disposed of’ within the meaning of para 8(2) of sch 2 was and remained the sum of £49,088.87 held in the Investment account.
6. 6) Accordingly the Claimant was entitled to one half of the residuary estate and the sum representing the specific legacy at clause 3.

JUDGMENT MR FANCOURT QC: [1] On 30 December, 2014 Mrs Marjorie Bastubbe died aged 87, leaving a last will dated 6 June 2003 (‘the will’). The legal effect of certain provisions of the will is disputed by the Defendant, Peter Machin, who was born Mrs Bastubbe’s eldest son, and the Claimant, Joanne Hives, who is …

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