Will Construction – Approach of English Court

In Royal Commonwealth Society for the Blind v Beasant & Anor (2) Benjamin Ho [2021] EWHC 2315 (Ch) (17 August 2021),  Master Schuman summarised the approach of the court to the construction of legacies as follows:

·       Viscount Simon LC said in Perrin v Morgan [1943] AC 399 at 406,

“The fundamental rule in construing the language of a will is to put on the words used the meaning which, having regard to the terms of the will, the testator intended. The question is not, of course, what the testator meant to do when he made the will, but what the written word he uses mean in the particular case – what are the ‘expressed intentions’ of the testator.”

·       Wills are construed in the same way as any other document. This was confirmed by the Supreme Court in Marley v Rawlings [2014] UKSC 2. Lord Neuberger at paragraphs 19 to 22 set out the task for the court when construing a document,

“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. …

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 [2005] 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 [1995] CLC 1396, that “[c]courts 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 [1997] AC 749 , per Lord Steyn at 770C-771D, and Lord Hoffmann at 779H- 780F”.

·       This approach had previously been confirmed by the Court of Appeal in RSPCA v Sharp [2010] EWCA Civ 1474; cited with approval in Marley v Rawlings.

·       Patten LJ at paragraphs 20 to 22 looked at how to approach the construction of the will,

“20. We have therefore to examine the language of the will in its context taking into account the will as a whole; any relevant background circumstances which inform the meaning of the words used; and giving to those words their ordinary meaning unless they are obviously used in some special or technical sense.

21. The divide in this case centres on whether the Testator intended to make a will which excluded IHT unless the Property exceeded the nil rate band in value. In this event the pecuniary legacies under clause 3 would also be eliminated. The judge largely rejected this construction on the will because he considered it incredible (as he put it) to assume that the Testator would have intended to reduce or eliminate the gifts of money to his brother and to the Sharps in the event that the combined value of the non-exempt transfers should exceed the amount of the nil rate band. But, in the absence of any extrinsic evidence about the Testator or his wishes, this is largely speculation. We know nothing about his brother’s financial circumstances; the Testator’s degree of commitment to the RSPCA; or the strength of his desire to avoid any charge to IHT on his assets. It is perfectly possible that the second and third of these elements outweighed any perceived risk that the clause 3 legacies would be reduced to nil.

22. For these reasons it is dangerous to approach the assessment of the Testator’s intentions other than through the language of his will. The first relevant consideration in my view is that the will was professionally drafted by a solicitor who has to be assumed to be competent. Although solicitors do obviously make mistakes, there needs to be something in the language of the document or its admissible background to justify that inference. More importantly, those factors must be such as to permit the court to give the words actually used a meaning which is not strictly in accordance with the usual rules of grammar or vocabulary: see Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896.”

No extrinsic evidence was admissible in that case and no claim for rectification was made. The court was therefore left to examine the language of the will in its context both as to the will as a whole and placing it into the relevant background circumstances. Patten LJ reiterated that it was dangerous to approach the testator’s intentions other than through the language of the will. The Judge had fallen into error by speculating that the testator would not have wished to reduce the amounts to be paid to his brother and the Sharps. To accept the executors’ argument would be to redraft clause 3.

·       The importance of both text and context to the process of construction is usefully summarised by Lord Hodge in Wood v Capita Insurance Services [2017] UKSC 24 and is uncontroversial. The Supreme Court was concerned with construing an indemnity clause in a share purchase agreement, but this is of general application. At paragraph 13, Lord Hodge said,

Textualism and contextualism are not conflicting paradigms in a battle for exclusive occupation of the field of contractual interpretation. Rather, the lawyer and the judge, when interpreting any contract, can use them as tools to ascertain the objective meaning of the language which the parties have chosen to express their agreement. The extent to which each tool will assist the court in its task will vary according to the circumstances of the particular agreement or agreements. Some agreements may be successfully interpreted principally by textual analysis, for example because of their sophistication and complexity and because they have been negotiated and prepared with the assistance of skilled professionals. The correct interpretation of other contracts may be achieved by a greater emphasis on the factual matrix, for example because of their informality, brevity or the absence of skilled professional assistance. But negotiators of complex formal contracts may often not achieve a logical and coherent text because of, for example, the conflicting aims of the parties, failures of communication, differing drafting practices, or deadlines which require the parties to compromise in order to reach agreement. There may often therefore be provisions in a detailed professionally drawn contract which lack clarity and the lawyer or judge in interpreting such provisions may be particularly helped by considering the factual matrix and the purpose of similar provisions in contracts of the same type. The iterative process … assists the lawyer or judge to ascertain the objective meaning of disputed provisions.”

·       As Theobald on Wills, 18th Ed, observes at paragraph 13-001, the first rule of will construction is that every will is different. Whilst it is helpful to see how Lord Neuberger and Patten LJ approached the task of construing the will before them, I must construe the will that is before this court by reference to the clause in question, looking at the natural and ordinary meaning of the words used, its overall purpose, the other provisions in the will and the facts known to or assumed by the testator at the time and with common sense. I ignore subjective evidence of the deceased’s intention. Both counsel accept that this is the task for the court.

Conclusion in this case

‘The issue concerned a nil-rate-band (NRB) gift made by the will to one of the executors, John Beasant, who had been a friend of Arkell’s.

Arkell died in August 2017, having made her final will in June 2016. Her instructions for that will were taken by a chartered legal executive and director at her solicitors, Alletsons, who also drafted the will. Probate was granted in August 2019, but the charities, led by the Royal Commonwealth Society for the Blind, challenged the executors’ interpretation of the will’s fourth clause.

The contentious clauses state: ‘4. I give the Nil-Rate sum to my Trustees on trust for my said friend John Wayland Beasant. 4.1. In this clause ‘the Nil-Rate Sum’ means the largest sum of cash which could be given on the trusts of this clause without any inheritance tax [IHT] becoming due in respect of the transfer of the value of my estate which I am deemed to make immediately before my death.’

Beasant argued that these clauses meant that a sum of GBP325,000 was due to him from the estate, in addition to several other specific legacies that Arkell left him. However, the charities interpreted clause 4.1 as nullifying the effect of the sentence that preceded it, so that the NRB legacy was not payable to Beasant. They contended that clause 4 means the legacy payable is the sum left, if any, after deduction of the value of all other legacies of the will on which IHT is charged at the nil-rate. As the value of the other legacies and devise exceeded the NRB limit, that amounted to zero.

Beasant argued that clause 4 should be construed so that there was a tax-free gift of an amount of the GBP325,000 NRB limit in force at the deceased’s death, without reference to the other gifts of the will. Sub-clause 4.1 should be disregarded as unnecessary, he said, pointing out that it contained no reference to the other gifts under the will or exempt gifts and merely said what the NRB was at the deceased’s death. He argued that it would be ‘whimsical or harsh’ to construe clause 4 as not leaving him the NRB legacy. Beasant asked the EWHC to follow the approach in Re Huntley (Deceased) (2014 EWHC 547 Ch), which construed a will by omitting a clause that had refined the meaning of the NRB sum.

However, Master Shuman in the EWHC disagreed. If Arkell had intended to gift the NRB to Beasant, the will could easily have been drawn up to do that while expressing that it was to be free of IHT, he said, noting the ‘striking similarity’ to the case of RSPCA v Sharp (2010 EWCA Civ 1474).

“Clause 4 clearly contemplates that the ‘nil rate sum’ is to be calculated by reference to the operation of IHT across the whole of the deceased’s estate and the order of the gifts in the will does not matter”, said Shuman.

The legacy left by the clause was accordingly limited to the amount left of the NRB, if any, before tax would become payable, he ruled. He duly accepted the charities’ interpretation of the clause and declared the corresponding gift to be zero.’ STEP Industry News 19.08.2021.