Analysis
Mrs Elizabeth Longman (D) died on 18 April 2008, leaving the residue of her estate equally to six charities if they were in existence at the date of her death. One of the six was the International Bible Society (UK) (IBS). When the will was made, IBS was an unincorporated association, but it had incorporated in May 2007 by transferring all its assets to a new charitable company, IBS-STL Ltd. Clause 6.3 of D’s will (see para [2] of the judgment below) provided that if one or more of the named charities merged or ceased to exist her trustees could pay its share of the residue to another charity.
The transfer of the assets of IBS was registered as a merger on 7 January 2008 and the unincorporated association ceased to exist on 5 February 2008. On 16 April 2009, the trustees made an interim distribution of £330,000 to IBS-STL Ltd (the first defendant) but, by the time they were ready to make the final distribution of approximately £214,000, the first defendant had gone into insolvent liquidation. Section 75F of the Charities Act 2007 provides that, where a charity merges and the merger is registered with the Charity Commission, a gift expressed as a gift to the transferor and taking effect on or after the date of registration of the merger, takes effect as a gift to the transferee which, in this case, would be the first defendant. The trustees sought the direction of the court as to whether they were obliged to pay the balance of the residue to the first defendant or, in practice, to its creditors rather than any charitable activity or if they could exercise their discretion under the will to pay those monies to other charitable organisations. The liquidators of the first defendant did not appear and the Attorney General provided the court with written submissions prepared by counsel in favour of the application of clause 6.3 of the will.
Held
The trustees were entitled to exercise their discretion in relation to the residue and not to pay it to the creditors of IBS-STL Ltd [11]. There had been no gift to the unincorporated association. A will did not operate until the death of its maker and its provisions had to be applied as at that date. IBS had ceased to exist in February 2008 and so there could have been no gift to it on D’s death in April 2008.
JUDGMENT Nature and basis of the action [1] The claimants are the executors and trustees of the will dated 13 May 2002 (the will) of Elizabeth Longman (the testatrix), who died on 18 April 2008. The principal relief sought by them in this action, which relates to an interest in the residuary estate held by …Continue reading "Re Longman (dec’d) [2012] EWHC 666 (Ch)"