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England and Wales High Court (Chancery Division) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Brooke & Ors v Purton & Ors  EWHC 547 (Ch) (26 March 2014)
Cite as:  EWHC 547 (Ch)
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IN THE ESTATE OF STEVEN JAMES ANDREW HUNTLEY DECEASED
AND IN THE MATTER OF THE ADMINISTRATION OF JUSTICE ACT 1982
B e f o r e :
sitting as a Deputy High Court Judge
| (1) MICHAEL BROOKE
(2) ARTHUR JENNINGS
(3) IAN CAMPBELL
|(1) LOUISE PURTON
(2) ZOE HUNTLEY
(3) JAMIE HUNTLEY
(4) LEE HUNTLEY
(5) JAKE HUNTLEY (a minor by his litigation friend RICHARD PURTON)
(6) ALFIE HUNTLEY (a minor by his litigation friend RICHARD PURTON)
Crown Copyright ©
"You expressed concern to ensure that your five children would be equally looked after with Louise, i.e. in an ideal world the estate should be divided six ways. We discussed arranging a Discretionary Trust of your estate whereby it would be for the trustees to decide how much and when the beneficiaries would receive their inheritance. You demonstrated concern over your children in the fact you felt they would not be capable of managing a large inheritance. Therefore, a discretionary trust would solve this problem as it would be down to the trustees to decide what age they would inherit. You can offer guidance to your trustees in the form of a Letter of Wishes which I will assist you with drafting when we decide to proceed with your will."
"Nil Rate Band Discretionary Trust
"Within your will I have included a nil rate band discretionary trust. This is a most flexible type of trust and we have written it in such a way whereby any gift of your business will be paid into the settlement at the reduced valuation,
i.e. after deducting the business property relief. This also ensures that any business assets that you have pass to your trustees to deal with and together with the additional powers will enable them to continue the business without having to distribute the business assets to the beneficiaries."
In relation to Clause 6, dealing with the trust, the will summary stated:
"6 Discretionary Trust
- First assets to enter the trust are those applicable to business property relief (or agricultural property relief) to inheritance tax. For example, your business interest under Swift Company, any unquoted shares you may have, etc.
- The value of these business/agricultural assets is then reduced (either by 50%, or 100%, depending upon the asset), giving the "reduced value".
- If there is a shortfall between the "reduced value" and the inheritance tax ceiling ...£312,000 for 08/09) this can be made up of other assets such as cash, etc.
(b) Clause 6 of the will set up the discretionary trust and its proposed contents. It is this clause (or parts of it) that it is sought to revise by construction and/or rectification, and I set it out so far as material in the next paragraph.
(c) Clause 8 provided that the remainder of the estate should be paid to the First Defendant and his children (or further issue) in equal shares. This would give rise to further chargeable transfers.
"6.1.1 "Reduced Value" means the value of the property after reduction in accordance with the Inheritance Tax Act 1984 Section 104 or as the case may be Section 116 [viz. the Business Property Relief of 100% or 50%]
6.1.3 "The Nil Rate Sum" means a sum equal to the amount which is the upper limit at the date of my death of the first band of value ('the nil rate band') shown in the Table referred to in the Inheritance Tax Act 1984 Section 7 (or any modification or re-enactment of it) which applies to determine rates of tax on death [£325,000 since 2009,
£312,000 at the date of the will] less the total of:
18.104.22.168 such part of the value transferred in respect of my estate as is attributable to property (other than the legacy given by this clause) with respect to which the transfer of value on my death is chargeable as opposed to exempt and the value transferred by chargeable transfers made by me within the period of 7 years immediately preceding my death (including potentially exempt transfers which become chargeable transfers)
6.2 I give to my Trustees on the trusts set out in 6.3 such items of relevant business property and agricultural property comprised in my free estate (including a divided or undivided share or a part or parcel of any such property) as my Trustees in their absolute discretion shall select and as have an aggregate Reduced Value not exceeding the Nil Rate Sum.
6.2.1 If all my relevant business property and agricultural property has an aggregate Reduced Value of less than the Nil Rate Sum then I give all my relevant business property and agricultural property to my Trustees on the trusts set out in 6.3 and in addition
6.2.2 I give to my Trustees on the trusts set out in 6.3 such sum as when added to the amount of the aggregate Reduced Value of my relevant business property and agricultural property equals the Nil Rate Sum.
6.2.3 This gift shall bear its own inheritance tax if any."
"19. When interpreting a contract, the court is concerned to find the intention of the party or parties, and it does this by identifying the meaning of the relevant words, (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 (b) ignoring subjective evidence of any party's intentions. In this connection, see Prenn at 1384-1386 and Reardon Smith Line Ltd v Yngvar Hansen-Tangen  1 WLR 989, per Lord Wilberforce, Bank of Credit and Commerce International SA v Ali  1 AC 251, para 8, per Lord Bingham, and the survey of more recent authorities in Rainy Sky, per Lord Clarke at paras 21-30.
20. When it comes to interpreting wills, it seems to me that the approach should be the same. Whether the document in question is a commercial contract or a will, the aim is to identify the intention of the party or parties to the document by interpreting the words used in their documentary, factual and commercial context. As Lord Hoffmann said in Kirin-Amgen Inc v Hoechst Marion Roussel Ltd  1 All ER 667, para 64, "No one has ever made an acontextual statement. There is always some context to any utterance, however meagre." To the same effect, Sir Thomas Bingham MR said in Arbuthnott v Fagan  CLC 1396, that "[c]ourts will never construe words in a vacuum".
21. Of course, a contract is agreed between a number of parties, whereas a will is made by a single party. However, that distinction is an unconvincing reason for adopting a different approach in principle to interpretation of wills: it is merely one of the contextual circumstances which has to be borne in mind when interpreting the document concerned. Thus, the court takes the same approach to interpretation of unilateral notices as it takes to interpretation of contracts - see Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd  AC 749, per Lord Steyn at 770C-771D, and Lord Hoffmann at 779H-780F.
22. Another example of a unilateral document which is interpreted in the same way as a contract is a patent - see the approach adopted by Lord Diplock in Catnic Components Ltd v Hill & Smith Ltd  RPC 183, 243, cited with approval, expanded, and applied in Kirin-Amgen at paras 27-32 by Lord Hoffmann. A notice and a patent are both documents intended by its originator to convey information, and so, too, is a will.
23. In my view, at least subject to any statutory provision to the contrary, the approach to the interpretation of contracts as set out in the cases discussed in para 19 above is therefore just as appropriate for wills as it is for other unilateral documents. This may well not be a particularly revolutionary conclusion in the light of the currently understood approach to the interpretation of wills (see eg Theobald on Wills, 17th edition, chapter 15 and the recent supplement supports such an approach as indicated in RSPCA v Shoup  1 WLR 980 at paras 22 and 31). Indeed, the well known suggestion of James LJ in Boyes v Cook (1880) 14 Ch D 53, 56, that, when interpreting a will, the court should "place [itself] in [the testator's] arm-chair", is consistent with the approach of interpretation by reference to the factual context.
24. However, there is now a highly relevant statutory provision relating to the interpretation of wills, namely section 21 of the 1982 Act ("section 21"). Section 21 is headed "Interpretation of wills - general rules as to evidence", and is in the following terms:
a) "(1) This section applies to a will - in so far as any part of it is meaningless;
b) in so far as the language used in any part of it is ambiguous on the face of it;
c) in so far as evidence, other than evidence of the testator's intention, shows that the language used in any part of it is ambiguous in the light of surrounding circumstances.
(2) In so far as this section applies to a will extrinsic evidence, including evidence of the testator's intention, may be admitted to assist in its interpretation."
25. In my view, section 21(1) confirms that a will should be interpreted in the same way as a contract, a notice or a patent, namely as summarised in para 19 above. In particular, section 21(1)(c) shows that "evidence" is admissible when construing a will, and that that includes the "surrounding circumstances". However, section 21(2) goes rather further. It indicates that, if one or more of the three requirements set out in section 21(1) is satisfied, then direct evidence of the testator's intention is admissible, in order to interpret the will in question.
26. Accordingly, as I see it, save where section 21(1) applies, a will is to be interpreted in the same way as any other document, but, in addition, in relation to a will, or a provision in a will, to which section 21(1) applies, it is possible to assist its interpretation by reference to evidence of the testator's actual intention (eg by reference to what he told the drafter of the will, or another person, or by what was in any notes he made or earlier drafts of the will which he may have approved or caused to be prepared). "
(1) If a court is satisfied that a will is so expressed that it fails to carry out the testator's intentions, in consequence-
(a) of a clerical error; or
(b) of a failure to understand his instructions,
it may order that the will shall be rectified so as to carry out his intentions."
Although there may in theory exist a power under the general law to rectify a will, it is no longer appropriate to invoke it outside the parameters imposed by the statute (see Marley v Rawlings at ).
"the jurisdiction conferred by section 20(1), through paragraph (a), extends to cases where the relevant provision in the will, by reason of which the will is so expressed that it fails to carry out the testator's intentions, has been introduced, or, as in the present case, has not been deleted, in circumstances in which the draftsman has not applied his mind to its significance or effect."
What occurred in the present case fits in my view comfortably within the concept of a "clerical error" as elaborated in that observation.
22.214.171.124. As I have already determined, however, upon its true (albeit liberal) construction the will already has this meaning, so that there is no need, nor indeed logical scope, for rectification. The power to make such an order nonetheless ex abundanti cautela is supported, if somewhat tenuously, by a decision of the Privy Council (see Standard Portland Cement Co Pty Ltd v Good  57 ALJR 151). To that may be added a more extensive Australian jurisprudence (reviewed in Frankins Pty Ltd v Metcash Trading Ltd  NSWCA 407), which has however not so far found any echo in English case law. For my own part, I find it difficult to understand what an order for rectification can contribute in such a case, and do not intend myself to take that course here, whether or not it is theoretically open to me.
"This gift [i.e. the gift to the trust] shall bear its own inheritance tax if any"
and also derived from the precedent used by Ms Greenough. Such a clause reverses the default position that in the absence of contrary words non-residuary gifts generally take effect free of tax. Its practical significance, according to what I was told by counsel, is that any amount transferred in by way of top-up would only reach the trust shorn of a sum equal to the tax thereon. Counsel for the First Defendant proposed that I should also delete this provision by either construction or rectification.
Note 1 Under an order dated 8 April 2013 these defendants also represent spouses, future spouses, issue and their spouses and future spouses. [Back] Note 2 A further point relating to a letter of wishes turned out at the hearing to require no adjudication by the court. [Back] Note 3 I was told that the latter advice was incorrect, but it nonetheless would have represented Mr Huntley's belief at the time of executing the will. [Back] Note 4 There were no assets which qualified for 50% relief. [Back] Note 5 And indeed as the basis for many other Clauses. [Back] Note 6 The current 100% relief might of course be reduced, or some of the assets might be rated at 50%, so that the balance might be 100% of the band or some lesser figure. [Back] Note 7 Arguably that should extend to Clause 126.96.36.199, but the point is academic since there were no chargeable transfers in the seven years preceding the death. [Back] Note 8 Which could have included assets with 50% relief at their reduced value, if the estate had contained any (which it did not). [Back] Note 9 Cf my observations in Kevern v Ayres  EWHC 165 at . [Back] Note 10 Standard Portland Cement was an Australian appeal to the Privy Council. [Back] Note 11 Other perhaps than to render academic, and thus head off, an appeal against the decision on construction (though this could not obtain in the Standard Portland Cement Co Pty Ltd case).
[Back] Note 12 This time-limit cannot be circumvented for the reason I indicated in the last sentence of paragraph 17 above. [Back]
Note 1 Under an order dated 8 April 2013 these defendants also represent spouses, future spouses, issue and their spouses and future spouses. [Back]
Note 2 A further point relating to a letter of wishes turned out at the hearing to require no adjudication by the court. [Back]
Note 3 I was told that the latter advice was incorrect, but it nonetheless would have represented Mr Huntley's belief at the time of executing the will. [Back]
Note 4 There were no assets which qualified for 50% relief. [Back]
Note 5 And indeed as the basis for many other Clauses. [Back]
Note 6 The current 100% relief might of course be reduced, or some of the assets might be rated at 50%, so that the balance might be 100% of the band or some lesser figure. [Back]
Note 7 Arguably that should extend to Clause 188.8.131.52, but the point is academic since there were no chargeable transfers in the seven years preceding the death. [Back]
Note 8 Which could have included assets with 50% relief at their reduced value, if the estate had contained any (which it did not). [Back]
Note 9 Cf my observations in Kevern v Ayres  EWHC 165 at . [Back]
Note 10 Standard Portland Cement was an Australian appeal to the Privy Council. [Back]
Note 11 Other perhaps than to render academic, and thus head off, an appeal against the decision on construction (though this could not obtain in the Standard Portland Cement Co Pty Ltd case). [Back]
Note 12 This time-limit cannot be circumvented for the reason I indicated in the last sentence of paragraph 17 above. [Back]