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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Laird v Simcock & Ors [2023] EWHC 2054 (Ch) (07 August 2023) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2023/2054.html Cite as: [2023] EWHC 2054 (Ch) |
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
CHANCERY APPEALS (ChD)
On appeal from the order of Master Clark dated 26th July 2022 (Claim Number PT-2022-000029)
7 Rolls Buildings Fetter Lane London, EC4A 1NL |
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B e f o r e :
____________________
CLARE ALISON LAIRD (FORMER EXECUTOR AND TRUSTEE OF THE ESTATE OF ROBERT JOHN SIMCOCK DECEASED) |
Claimant/Appellant |
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And |
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(1) CATHERINE ANNE LOWDER SIMCOCK (EXECUTOR, TRUSTEE AND BENEFICIARY OF THE ESTATE OF ROBERT JOHN SIMCOCK DECEASED) (2) CHARLOTTE REBECCA SIMCOCK (3) ELIZABETH JUNE SIMCOCK (4) GEMMA LOUISE SIMCOCK |
Defendants/Respondents |
____________________
The Defendants did not appear and were not represented at the hearing
Hearing date: 15th June 2023
____________________
Crown Copyright ©
Remote hand-down: This judgment was handed down remotely at 10.30am on Monday 7th August 2023 by circulation to the parties and their representatives by email and by release to the National Archives.
Mr Justice Edwin Johnson:
Introduction
The parties
The factual background to the claim for rectification
"4 Gift for my Wife
4.1 I give TWO HUNDRED THOUSAND POUNDS (£200,000), free of inheritance tax, to the Trustees to hold upon the following trusts.
4.2 The income of the Fund shall be paid to my Wife during her lifetime.
4.3 Subject as above, the Trustees shall hold the capital and income of the Fund upon the trusts contained in clauses 7 to 10 in relation to the Trust Fund, as if references to the "Trust Fund" were references to the Fund."
"18.7 The 'Fund' shall mean:
18.7.1 the legacy of £200,000 in clause 4;
18. 7.2 all accumulations (if any) of income added to the Fund; and
18. 7.3 the money, investments and property from time to time representing the above."
"7 Residuary gift - discretionary trusts
7.1 The Trustees shall hold the capital and income of the Trust Fund upon trust for or for the benefit of such of the Discretionary Beneficiaries, at such ages or times, in such shares, upon such trusts (which may include discretionary or protective powers or trusts) and in such manner generally as the Trustees shall in their discretion appoint…."
"18.4 The 'Trust Fund' shall mean:
18.4.1 my Estate, after the payment of my debts, funeral, testamentary and administration expenses and legacies;
18.4.2 all money, investments or other property paid or transferred by any person to, or so as to be under the control of, and, in either case, accepted by the Trustees as additions;
18.4.3 all accumulations (if any) of income added to the Trust Fund; and 18.4.4 the money, investments and property from time to time representing the above."
"Priority amongst beneficiaries should be given to my children, as indicated above, my wife is included as a potential beneficiary only should it transpire that there is inheritance tax to pay on my death which could be mitigated by part of the estate being appointed on a life interest trust for her. In any event I wish all capital ultimately to pass to my three daughters in equal shares."
"*Variation – Appt from Will Trust? Use Catherine as conduit"
"10. The meeting on 22 January 2019 was the first meeting anyone from the firm had with the family. The First, Second and Third Defendants were in attendance with myself and Peter Snodgrass of this firm. It became quickly obvious to me that the nature of the deceased's Will, with the entire estate falling on a discretionary trust, meant an immediate charge to Inheritance Tax would apply if the First Defendant's spousal exemption was not used by way of an appointment of some sort out of the trust. This is mentioned in my attendance note of the meeting which is at pages A95-97. In addition, the unknown level of assets attracting APR or BPR (the position in respect of which was complicated as a result of an apparent ongoing dispute with the deceased's siblings over the deceased's late father's estate) meant that it would be difficult to file an exact return with HMRC. I explained these issues to the attendees.
11. I did not suggest that the whole estate should simply be appointed to the First Defendant, either absolutely or on a life interest trust. Since this was an initial appointment and we were in the process of gathering asset and liability information, the discussion on this topic did not proceed further than these initial comments."
"I should advise from the outset that these forms are not straight-forward, but I do think it is important that you understand the principles of we are setting out to achieve, which I shall endeavour to do as simply as possible below.
Firstly, there will be no Inheritance Tax due on Robert's estate. As I worked through the figures which Alistair and Peter provided me with based on Brown & Co's valuation, and in particular taking note that only a certain proportion of the farm assets would attract agricultural property relief (APR) from Inheritance Tax, I have drafted a Deed of Appointment on life interest terms in your favour, as I suggested at our initial meeting this year. In essence, what this does is to pay whatever assets not attracting Inheritance Tax from the discretionary trust onto a different kind of trust in your favour, which attracts spousal exemption from the tax. As such, I am not too concerned with any enquiries which the Revenue may raise in respect of value of the farm assets or their APR value, because anything which does not attract the relief will, by default, attract spousal exemption instead. The other point is of course that the farm figures are not fixed; it appears quite possible that they will be subject to assessment and possible litigation between the Trustees and Robert's brothers, and this is something that I will make clear to the Revenue when I correspond with them, to notify them that the figures are provisional.
Therefore I should be grateful if you could please read through the Deed and then sign it where indicated with an independent witness, who must add his or her details accordingly. My Partner in my team, Clare Laird, is the other Executor and Trustee."
"Spousal exemption on life interest of residuary estate, appointed from residuary discretionary will trust"
The problem
"2 Appointment
The Appointors, in exercise of the power of appointment conferred by clauses 8 and 9 of the Will and of all other relevant powers, hereby irrevocably appoint and declare that
2.1 The income of the Trust Fund shall be paid to Catherine during her lifetime.
2.2 The Trustees may, at any time during the Trust Period, pay or apply the whole or any part of the Trust Fund in which Catherine is then entitled to an interest in possession to her or for her advancement or otherwise for her benefit in such manner as the Trustees shall in their discretion think fit or to any of the Discretionary Beneficiaries set out in 18.8 of the Will. In exercising the powers conferred by this sub-clause, the Trustees shall be entitled to have regard solely to the interests of Catherine and to disregard all other interests or potential interests in the Trust Fund.
2.3 Subject as above, the capital and income of the Trust Fund shall be held upon trust for Catherine's children as survive her and if more than one in equal shares PROVIDED that if any such child dies in Catherine's lifetime leaving a child or children such child or children shall take the deceased child's share of the Trust Fund"
"18.4 The 'Trust Fund' shall mean:
18.4.1 my Estate, after the payment of my debts, funeral, testamentary and administration expenses and legacies;
18.4.2 all money, investments or other property paid or transferred by any person to, or so as to be under the control of, and, in either case, accepted by the Trustees as additions;
18.4.3 all accumulations (if any) of income added to the Trust Fund; and 18.4.4 the money, investments and property from time to time representing the above."
"We have reviewed the correspondence that led up to the Deed of Appointment being executed and our conclusion is that an error was made in the drafting of the deed, such that it appointed the entire estate on life interest trust when, in fact, it should only have appointed the tax-bearing assets onto the trust."
The Claim
"an order for rectification of the Deed so that clause 2.1 of the Deed is rectified to read "the income of all that part of the Trust Fund which does not attract any relief from Inheritance Tax given by the provisions of Chapter I or Chapter II of Part V of the Inheritance Tax Act 1984, or any modification or re-enactment of them, shall be paid to Catherine during her lifetime"
"PT-2022-000029 Laird v Simcock
1. My preliminary view is that the evidence is insufficient to show the "clerical error" set out at para 9 of the details of claim, and the claim does not therefore succeed.
2. Since the claim is unopposed, I am willing to give the claimants an opportunity to file further evidence, including:
(1) documents evidencing the information and advice (both oral and written) provided by Mr Sharpe to Mrs Simcock in relation to the proposed deed of appointment ("the Deed") (in addition to his letter dated 20 December 2019), including the information and advice given
(i) at the meeting on 22 January 2019 (Mr Sharpe's letter of 20 December 2019, and para 27 of his statement refers – but does give any account of what happened); and
(ii) in the phone call on 31 December 2019 (referred to in Mr Sharpe's email of that date);
(2) documents evidencing Mrs Simcock's instructions to Mr Sharpe in respect of the Deed;
(3) documents evidencing
(i) the information and advice (both oral and written) provided by Mr Sharpe to Ms Laird in relation to the Deed;
(ii) Ms Laird's instructions to Mr Sharpe in respect of the Deed;
(4) an explanation by Mr Sharpe as to his thought processes when drafting the Deed, in particular how and why he chose to use the expression "the Trust Fund"; and any documents evidencing those thought processes;
(5) documents evidencing the understanding of each of Mrs Simcock and Ms Laird as to the meaning of "tax bearing assets" at the date of executing the Deed, and how they reached that understanding;
(6) an explanation by each of Mrs Simcock and Ms Laird as to:
(i) whether they read the Deed before signing it;
(ii) if so, what they understood its effect to be by reference to its wording, including the use of the term "Trust Fund";
(iii) if and to the extent they did not read it, the basis of their understanding as to its effect (including the documents read by them in reaching that understanding).
3. For the avoidance of doubt, the above does not limit or constrain the claimants in the additional evidence they may wish to file."
"40. Following the hearing on 29 April 2022, I formed the preliminary view that the claim would fail on the evidence before the court. However, since the claim was unopposed, I offered the parties an opportunity to file further evidence as to the state of knowledge and the intention of each of the trustees when executing the Deed."
The Judgment
"49. The effect of Ms Laird's evidence is that, when executing the Deed, she had no knowledge of what was intended to be achieved by it. Although she says that she relied on Mr Sharp to advise her, she does not state that he did. I am not therefore satisfied that she had any intention as to what she was achieving by executing the Deed. Her only intention was to sign the document which Mr Sharp put before her to sign.
50. Her evidence in her second statement is also, in my judgment, inconsistent with that in her first witness statement, such that it is difficult to understand how she could have signed the statement of truth in the first witness statement.
51. Ms Laird's second witness statement also sets out her understanding of the expression "tax bearing assets" as being, unsurprisingly, assets in respect of which inheritance tax would be paid. There is no reference by her to its meaning in the context of the deceased's estate i.e. assets in respect of which APR or BPR was not available, or indeed any indication that she knew that the estate included assets in respect of which these reliefs could be claimed. Indeed, if she had understood what Mr Sharp says he was intending to achieve by the Deed, it is difficult to see how having read the Deed, she could have signed it.
52. I have taken into account that Mr Sharp in his third witness statement (at para 14) says that he recalls telling Ms Laird that the intention of the Deed was to appoint the taxbearing assets only to Catherine on a life interest trust, and that this did not constitute an appointment of the whole estate to her. No details are given, and there are, as noted, no file notes or any other records of any conversations between Ms Laird and Mr Sharp. In my judgment, the inference to be drawn from the evidence as a whole is that Ms Laird delegated matters in their entirety to Mr Sharp, and lacked any relevant intention when executing the Deed."
"54. This in my judgment falls short of showing the specific intention that the trustees are said to have had, namely that only the tax-bearing assets would be appointed to Catherine. The general intention referred to by her was of course achieved by the Deed as executed, because the entirety of the residuary estate thereby became subject to spousal relief.
55. Catherine's second witness statement confirms that she did not give any instructions to Mr Sharp as to the contents of the Deed. The only written information she received from him was his letter dated 20 December 2019, enclosing the draft Deed. The letter itself contains a confusing error (the omission of the word "relief") and it is clear from Catherine's evidence that she did not understand it. In my judgment it is not possible on this evidence to attribute to Catherine an intention, when she executed the Deed, that only assets which did not attract APR or BPR would be appointed from the discretionary trust to a life interest trust in her favour."
"56. For these reasons, I am not therefore satisfied that the claimant, Ms Laird, has shown to the level required of "convincing proof" that the trustees had the true intention alleged as being that to which effect was not given in the Deed. The claim therefore fails."
The grounds of appeal
(1) The Master misdirected herself on the applicable law by:
(i) failing to apply the correct test when determining whether grounds for rectification had been established; and/or
(ii) failing to apply the correct standard of proof to the Claim.
(2) The Master misdirected herself on the evidence by:
(i) failing to properly evaluate the evidence and have any, or any sufficient, regard to the unopposed nature of the evidence; and/or
(ii) making findings of fact that were not open to her on the evidence before the court and/or that could not be fairly or properly made at the disposal hearing of a Part 8 claim on written evidence; and/or
(iii) failing to make necessary findings of fact; and/or
(iv) failing to have any, or any sufficient, regard to the nature of the final hearing and/or failing to direct a further hearing, or trial of the claim, in circumstances where unopposed evidence was not accepted by the court.
The law – rectification and evidence
"(1) While equity has power to rectify a written instrument so that it accords with the true intention of its maker, as a discretionary remedy rectification is to be treated with caution. One aspect of that caution is that the claimant's case should be established by clear evidence of the true intention to which effect has not been given in the instrument. Such proof is on the civil standard of balance of probability. But as the alleged true intention of necessity contradicts the written instrument, there must be convincing proof to counteract the evidence of a different intention represented by the document itself (1154h-1155b);
(2) There must be a flaw in the written document such that it does not give effect to the parties'/donor's agreement/intention, as opposed to the parties/donor merely being mistaken as to the consequences of what they have agreed/intended; for example it is not sufficient merely that the document fails to achieve the desired fiscal objective (1158f-g);
(3) The specific intention of the parties/donor must be shown; it is not sufficient to show that the parties did not intend what was recorded; they also have to show what they did intend, with some degree of precision (1158g-j);"
"11. In other words, rectification is about putting the record straight. In the case of a voluntary settlement, rectification involves bringing the trust document into line with the true intentions of the settlor as held by him at the date when he executed the document. This can be done by the court when, owing to a mistake in the drafting of the document, it fails to record the settlor's true intentions. The mistake may, for example, consist of leaving out words that were intended to be put into the document; or putting in words that were not intended to be in the document; or through a misunderstanding by those involved about the meanings of the words or expressions that were used in the document. Mistakes of this kind have the effect that the document, as executed, is not a true record of the settlor's intentions."
"What is relevant in such a case is the subjective intention of the settlor. It is not a legal requirement for rectification of a voluntary settlement that there is any outward expression or objective communication of the settlor's intention equivalent to the need to show an outward expression of accord for rectification of a contract for mutual mistake: see, for example, the line of pensions cases AMP (UK) plc v Barker [2001] Pen LR 77, paras 67—68, Gallaher Ltd v Gallaher Pensions Ltd [2005] Pen LR 103, paras 116—117 and Drake Insurance v McDonald [2005] Pen LR 401, paras 34—35. In Chartbrook Ltd v Persimmon Homes Ltd [2009] AC 1101 the House of Lords agreed with Lord Hoffmann's (obiter) explanation of an objective test for rectification for mutual mistake in the case of a contract so as to bring the final document into line with the parties' prior consensus objectively ascertained. Nothing he said there touched upon the requirements for rectification for unilateral mistake in a non-contract case."
"Although, as I have said, there is no legal requirement of an outward expression or objective communication of the settlor's intention in such a case, it will plainly be difficult as a matter of evidence to discharge the burden of proving that there was a mistake in the absence of an outward expression of intention."
"57. There remains, however, Mr Collings's more general point that the Registrar was faced with the task of deciding a factual issue on which he had directly conflicting witness statements. They were those of Mr Satow and Mr Belcher asserting that Mr Belcher was a Farrers' client in December 1990; and that of Mr Gordon which, with masterly economy, was to the opposite effect. In my view that does raise a difficulty with the Registrar's decision. The reason for that is that the Registrar was dealing with an application which (subject only to any appeal) finally decided the rights of the parties with regard to the section 366(1) application. It was, therefore, akin to a trial, albeit one of modest dimensions. It is, I believe, by now familiar law that, subject to limited exceptions, the court cannot and should not disbelieve the evidence of a witness given on paper in the absence of the cross-examination of that witness. The principle has traditionally been stated in relation to statements made under oath or affirmation, but it was not suggested to me that it does not apply equally to a witness statement. I will refer to three authorities."
"61. The basic principle is, therefore, not an unqualified one. In particular, paper evidence which is manifestly incredible can be disregarded or disbelieved. But it will require a fairly extreme case for untested paper evidence to be rejected on that basis."
"65. Subject to one point, I have therefore come to the view that the general principle about conflicting paper evidence precluded the Registrar from weighing up the opposing accounts in the way he did and making the finding of fact that he did. In my judgment he should have concluded that, without cross-examination of the witnesses, he could not decide where the truth lay."
"58. As regards the need for oral evidence, Mr Ashworth reminded us that it is well-settled practice that if a court finds itself faced with conflicting statements on affidavit evidence, it is usually in no position to resolve them, and to make findings as to the disputed facts, without first having the benefit of the cross-examination of the witnesses. Nor will it ordinarily attempt to do so. The basic principle is that, until there has been such cross-examination, it is ordinarily not possible for the court to disbelieve the word of the witness in his affidavit and it will not do so. This is not an inflexible principle: it may in certain circumstances be open to the court to reject an untested piece of such evidence on the basis that it is manifestly incredible, either because it is inherently so or because it is shown to be so by other facts that are admitted or by reliable documents. Mr Ashworth referred us in support to Re Hopes (Heathrow) Ltd, Secretary of State for Trade and Industry v. Dyer and others [2001] 1 BCLC 575, at 581 to 582 (Neuberger J). He also referred us to paragraphs 17 and 18 of the judgment of Mummery LJ in Doncaster Pharmaceuticals Group Ltd and Others v. The Bolton Pharmaceutical Company 100 Ltd [2006] EWCA Civ 661, which provides a reminder of the caution the court should exercise in granting summary judgment in cases in which there are conflicts of fact which have to be resolved before judgment can be given. Mr Ashworth said that these principles apply equally to the case in which the evidence is given by witness statement rather than by affidavit, and I agree. I said as much in my summary of the principles in Long v. Farrer & Co and Farrer [2004] EWHC 1774 (Ch); [2004] BPIR 1218, at paragraphs 57 to 61."
The first ground of appeal - analysis
"44. As to intention, the relevant intention is the subjective intention of the maker of the deed: Day v Day [2014] Ch 114 at [22]. It is not, in my judgment, the intention of the person drafting the deed, or even (as in Day v Day) the intention of a person executing the deed on behalf of the maker. It follows that Mr Sharp's intentions in drafting the Deed are relevant only insofar as they reflected his instructions from the trustees as to their intentions."
"It is now firmly established that the fact that the parties intended to use a particular form of words in the mistaken belief that it was achieving their common intention does not prevent the court from giving effect to their true intention. Further, it seems to me that where (as here) the mistake results from the inadvertent omission of a word or phrase from a document, and it is sought to introduce additional words into the document to cure that mistake, it may, in practice, prove easier to discharge the evidential burden of establishing the existence of a mistake than in the case where words have been inadvertently included in the document which it is sought to rectify. This is because parties may not always appreciate the legal effect of the omission of particular words."
The second ground of appeal – analysis
"45. Ms Laird's first witness statement sets out her intention in paragraph 6, where she confirms that she has read Mr Sharp's first witness statement, and continues:
"I confirm that my intention in executing the Deed was as explained in his statement in that the Deed should only have appointed the tax-bearing assets onto the life interest trust, however, there was a clerical error which meant that all of the Deceased's estate was appointed on the life interest trust."
46. Neither this statement nor Mr Sharp's first statement contains any evidence as to:
(1) the information and advice (oral or written) provided by Mr Sharp to Ms Laird in relation to the Deed;
(2) Ms Laird's instructions to Mr Sharp in respect of the Deed.
47. Furthermore, the documents in evidence do not include any correspondence of any form (including internal notes) to or from Ms Laird, nor any attendance notes recording conversations between her and Mr Sharp."
"48. Ms Laird's second witness statement sets out her knowledge and intentions in paragraphs 5 to 8:
"5. I was Mr Sharp's supervising partner so I knew him well, and we had worked together for many years. Mr Sharp was an experienced and longstanding associate solicitor, so it was entirely normal for him to prepare documents without me specifically checking them.
6. I cannot recall precisely what Mr Sharp said to me at the time I signed the deed. I frequently acted as executor and trustee, so was signing and discussing documents with staff, on a daily basis.
7. I think I would have read the document, as I read most of the documents that crossed my desk. However, in this case, I would not have known, just reading and signing the document, whether or not it had been drafted correctly, without seeing the will and discussing the matter at length with Mr Sharp, which I do not recall doing.
8. I would have been reliant upon Mr Sharp to draft the document in such a way so as to appoint the correct portion of the estate, and to advise me as to the effect of the document, not least because I was not dealing with the administration of the estate on a daily basis so would not have had the information at my fingertips."
"49. The effect of Ms Laird's evidence is that, when executing the Deed, she had no knowledge of what was intended to be achieved by it. Although she says that she relied on Mr Sharp to advise her, she does not state that he did. I am not therefore satisfied that she had any intention as to what she was achieving by executing the Deed. Her only intention was to sign the document which Mr Sharp put before her to sign.
50. Her evidence in her second statement is also, in my judgment, inconsistent with that in her first witness statement, such that it is difficult to understand how she could have signed the statement of truth in the first witness statement.
51. Ms Laird's second witness statement also sets out her understanding of the expression "tax bearing assets" as being, unsurprisingly, assets in respect of which inheritance tax would be paid. There is no reference by her to its meaning in the context of the deceased's estate i.e. assets in respect of which APR or BPR was not available, or indeed any indication that she knew that the estate included assets in respect of which these reliefs could be claimed. Indeed, if she had understood what Mr Sharp says he was intending to achieve by the Deed, it is difficult to see how having read the Deed, she could have signed it.
52. I have taken into account that Mr Sharp in his third witness statement (at para 14) says that he recalls telling Ms Laird that the intention of the Deed was to appoint the taxbearing assets only to Catherine on a life interest trust, and that this did not constitute an appointment of the whole estate to her. No details are given, and there are, as noted, no file notes or any other records of any conversations between Ms Laird and Mr Sharp. In my judgment, the inference to be drawn from the evidence as a whole is that Ms Laird delegated matters in their entirety to Mr Sharp, and lacked any relevant intention when executing the Deed."
"13. The Master has then asked as to the information and advice (both oral and written) provided by me to the Claimant, Ms Laird, in relation to the Deed. I recall that the discussion with her immediately prior to her executing the Deed was brief, due to a very busy working period in our department, and I was requesting her to sign several items of paperwork on a number of different files.
14. I recall explaining to Ms Laird that the intention of the Deed was to appoint the tax-bearing assets only to the First Defendant on a life interest trust, and that this did not constitute an appointment of the whole estate to her."
"53. The Master's observation at paragraph [50] of the Judgment is deeply troubling and the parties have no way of knowing the extent to which this has undermined the entire evaluating of the evidence.
54. There is nothing in Ms Laird's 2nd statement that is inconsistent with her 1st, and there is certainly nothing in paragraphs [5] to [8] of her 2nd statement, referred to at Jgt [48] that is inconsistent with the 1st. The Master does not identify any inconsistences. Given the seriousness of the observation at [50] the Master was bound to identify inconsistencies and how, if at all, these amounted to contradictions.
55. What inconsistencies or contradictions led the Master to doubt the truthfulness of Ms Laird's evidence? Why did they make it difficult to understand how Ms Laird was able to verify her evidence as truthful? Does this attack on Ms Laird's credibility go to her 1st or 2nd statement, to some but not all paragraphs of each statement or to the totality of her evidence? What effect if any does this have on Mr Sharp's evidence and what effect if any does his evidence have on the issue? It is completely unacceptable that these and other questions are left completely unconsidered and unanswered in the Judgment.
56. There was simply no basis, or no proper basis, for the Master to reach the view that she did in paragraph [50] of the Judgment."
"3. Throughout 2019 I was represented and advised as Executor and Trustee by SM. Following correspondence from Ben Sharp of SM in December 2019 and relying on SM's advice, I signed and returned a Deed of Appointment which was dated 31 December 2019 ("the Deed").
4. My understanding of SM's correspondence and advice at that time was that the purpose of and intention behind the Deed was to reduce the inheritance tax payable in my late husband's estate. This was possible as I was his spouse.
5. I am a lay Executor and Trustee rather than a legal professional or expert and was happy to sign and return the Deed as requested, and to rely upon SM's advice and guidance. I had no reason to question the advice I was given or the way in which the Deed had been drafted.
6. In response to queries from my sister, Dr Jennifer Stutley, and my current solicitors, Royds Withy King ("RWK"), SM initially confirmed that the effect of the Deed was that the entire residuary estate had been appointed out onto a life interest trust in my favour.
7. At the end of March 2021 SM wrote to RWK to explain that they had identified a drafting error in the Deed and in fact only the tax bearing assets should have been appointed out, not the whole residuary estate.
8. I understand from my solicitor, from SM's correspondence and the Witness Statement filed in these proceedings by Benjamin Sharp that the Deed contained a clerical/drafting error so that the "Trust Fund" was incorrectly defined. The effect of this was that the whole residuary estate was appointed out on a life interest for me rather than only the income from any tax bearing assets.
9. I was not aware of this drafting error until it was notified to RWK by SM at the end of March 2021. My intention in signing the Deed was to mitigate the inheritance tax payable in the estate, following SM's advice. That is: I was guided by and relied upon SM's advice in relation to the Deed and signed it accordingly.
10. As SM have now advised that the Deed contained a drafting error and given that in signing it initially I relied upon their professional advice, I do not contest the claim for rectification."
"54. This in my judgment falls short of showing the specific intention that the trustees are said to have had, namely that only the tax-bearing assets would be appointed to Catherine. The general intention referred to by her was of course achieved by the Deed as executed, because the entirety of the residuary estate thereby became subject to spousal relief."
"55. Catherine's second witness statement confirms that she did not give any instructions to Mr Sharp as to the contents of the Deed. The only written information she received from him was his letter dated 20 December 2019, enclosing the draft Deed. The letter itself contains a confusing error (the omission of the word "relief") and it is clear from Catherine's evidence that she did not understand it. In my judgment it is not possible on this evidence to attribute to Catherine an intention, when she executed the Deed, that only assets which did not attract APR or BPR would be appointed from the discretionary trust to a life interest trust in her favour."
(i) whether they read the Deed before signing it;
(ii) if so, what they understood its effect to be by reference to its wording, including the use of the term "Trust Fund";
(iii) if and to the extent they did not read it, the basis of their understanding as to its effect (including the documents read by them in reaching that understanding).
The outcome of the Appeal
(1) The appeal is allowed.
(2) I will set aside paragraph 1 of the Order, by which the Claim was dismissed.
(3) I will make an order for the rectification of the Deed of Appointment, so that clause 2.1 of the Deed of Appointment will read as follows:
"The income of all that part of the Trust Fund which does not attract any relief from Inheritance Tax given by the provisions of Chapter I or Chapter II of Part V of the Inheritance Tax Act 1984, or any modification or re-enactment of them, shall be paid to Catherine during her lifetime"
Postscript
"As the claim was unopposed, and the parties were not inviting the court to reject evidence, neither Long nor Coyne were cited to the Master at the hearing of the Claim"