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Childhood Cancer

Animal-free Research andResearch Support Paediatric Oncology Ward Support and Support for Children for Children with Cancer for childhood cancer in-patients. with Cancer 3600 children in the UK are diagnosed with Cancer each year. Childhood Cancer Research Help us to help them!

We provide comforts and amenities for

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Charity Number 1159886

HELP OUR DONKEYS

Isle of Wight Donkey Sanctuary CIO There will always be old, unwanted, neglected and sometimes abused donkeys in need of a home. Here at the sanctuary we have over 90 such donkeys in our care. Their lives really do depend on us. Large or small a legacy, donation or 'in memoriam' gift will make a big difference and help us to continue our work. Thank you. A Charity registered with the Charity Commission for England & Wales

Contents...

1 January Drafting and the unintended consequences of mirror image wills ............................................................................................................................. 12

Practice point......................................................................................................................... 12

Exemption clauses for trustees.............................................................................................. 14

Insolvent estates..................................................................................................................... 18

Jurisdiction of Court of Protection........................................................................................ 18

Does the High Court have jurisdiction over vulnerable adults who have

mental capacity?................................................................................................................... 20

Who should have the power to appoint new trustees?.................................................... 20

8 August Lasting powers of attorney........................................................................................ 68

GO (Case No 12918069)........................................................................................................ 76

CW (Case No 12946813)........................................................................................................ 78

GD (Case No 1294678T)......................................................................................................... 80

Can an attorney under a LPA maintain the donor and other persons?......................... 80

9 September Can a mistake affect the validity of a will?................................................ 84

2 February IHT and Trustee Act 1925 s 31.................................................................................. 24

Mutual wills.............................................................................................................................. 85

Inheritance (Provision for Family and Dependants) Act 1975........................................... 88

Can an omission have IHT consequences?........................................................................ 28

Revocation of powers of attroney....................................................................................... 30

Sham trusts............................................................................................................................... 32

10 October Do trustees owe duties to a person they have been asked to . make payments to?........................................................................................................ 90 BPR............................................................................................................................................ 91

3 March Capacity, knowledge and approval of a will ......................................... 36

Contract, estoppel, delay in transferring assets................................................................. 37

Rectification............................................................................................................................ 38

What can be done if a local authority should be funding care home fees but does

not do so?................................................................................................................................ 39

4 April Capacity to make a will.............................................................................................. 42

CGT and main residence relief............................................................................................. 96

“222 Relief on disposal of private residence....................................................................... 97

223 Amount of relief............................................................................................................... 97

“224 Amount of relief: Further provisions.............................................................................. 97

28 Time of Disposal and acquisition where asset disposed if under contract................ 98

Section 43 Assets derived from other assets........................................................................ 98

Death of applicant under the Inheritance Act 1975......................................................... 43

11 November BPR and livery stables.................................................................................................... 100

Disclosure of trust documents............................................................................................... 44

End of life decisions................................................................................................................ 45

Trustee accounts..................................................................................................................... 45

12 December Equity’s darling.................................................................................................................... 108

5 May Estranged children and claims under the Inheritance (Provision for Family and Dependants) Act 1975................................... 48

Co-ownership and declaration of trust/equity of exoneration......................................... 103

Trustees must not profit from a trust...................................................................................... 109

Estoppel by convention and promissory estoppel............................................................. 110

Domicile................................................................................................................................... 111

Contracts for the sale of land and constructive trusts....................................................... 50

6 June Always read a will through carefully!............................................................... 54 Capacity.................................................................................................................................. 55

Equitable accounting and the right to occupy a property.............................................. 56

Removal of executors............................................................................................................ 58

7 July Equity of exoneration..................................................................................................... 60

Joint tenants or tenants in common?.................................................................................. 62

Statutory wills........................................................................................................................... 63

Final comments....................................................................................................................... 67

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Conferences / Webinars / CDs / DVDs / E-Publications / InHouse / Consortium

For legacies For Cancer, Prevention is Key DO!

DONâ&#x20AC;&#x2122;T!

P Be physically active

O Smoke

P Practise safe sex

O Expose yourself excessively to the sun

P Eat five to nine servings of fruit and vegetables daily

O Consume excessive amounts of red meat

P Drink green tea

O Drink excessive amounts of alcohol

P Maintain a healthy body weight

O Use talcum powder

P Avoid job-related chemical exposures

O Consume excessive amounts of animal fats

We eagerly await the day when people donâ&#x20AC;&#x2122;t wait until they have cancer before giving up smoking

Our sacred mission: the prevention of cancer For donations, in memoriam gifts, legacies

Cancer Prevention Research Trust 231 Roehampton Lane, London SW15 4LB Tel: 020 8785 7786 Fax: 020 8785 6466 E-mail: cprt45@yahoo.co.uk Registered Charity No. 265985

www.cancerpreventionresearch.co.uk 8

HELP US BUILD A BRIGHTER FUTURE People who left a gift in their Will to the GLFB in the past are playing a significant Doorstep fundraising team part in the lives of people dealing with sight loss.

Doorstep fundraising team

Our team of door to door Although some of these supporters foresight in leaving a fundraisers would likemay to sayhave a big passed on, their Our team of door to door ‘Thank you!’ to everyone who legacy is making a real and lasting difference to visually impaired children andto adults fundraisers would like say a big opened their door to them and ‘Thank you!’ to everyone who today. This is because gifts areabout helping to provide services that reduce took the left time in to Wills learn more opened their door to them and theso charity and brings, start up aenabling new the isolation sight loss often people to live happier, more tookmuch the time to learn more about regular gift to the GLFB! the charity and start up a new

fulfilling and independent lives.

regular gift to the GLFB!

Isn’t that the kind of legacy we would all love to leave? Please accept our heartfelt thanks if you have already remembered the work of the GLFB in your Will. Thank you for supporting the Greater London Fund our for If you haven’t already done so, please do consider whether you could support the Blind. Ourloved work is only work in this very special way once you have made provision for your ones. All legacies, be they large or small, help to change lives. made possible because of committed friends like you. If you would like more information about gifts in Wills, please call us on telephone number 020 7620 4918 or by writing to us at the address below: Every donation you make

another blindRoad, or Greater London Fund for the Blind, 12 Whitehorse Mews, 37means Westminster Bridge London, SE1 7QD. Email: info@glfb.org.uk Website: www.glfb.org.uk partially sighted person has an increased chance of a The Greater London Fund for the Blind was established in 1921 tobetter providequality blind welfare services in of life. Greater London Fund for the Blind

London. Today, the services weMills fund, Sir John Housemade possible through voluntary donations including gifts in Wills, Greater London Fund for the Blind Mewsvulnerable people in society. enable us to reach some 12ofWhitehorse the most Sir John Mills House 37 Westminster Bridge Road London SE1 7QD

Every day 100 people in the UK start losing their sight – that’s one person every 15 minutes. Sight loss affects people of all ages and it can strike at any time. A legacy gift to the GLFB will help ensure that we can provide specialist from the Registered Charity No.care 1074958 point of diagnosis. Thank you.

12 Whitehorse Mews 37 Westminster Bridge Road London SE1 7QD

Registered Charity No. 1074958

Thank you Greater Lo the Blind. made poss committed

Every don means ano partially si an increas better qua

Charity Begins at home, and justice begins next door. Charles Dickens

THE BARRISTERS' BENEVOLENT ASSOCIATION The Barristers’ Benevolent Association exists to support, help and comfort those members of the Bar in England and Wales and their families and dependants who are in need, in distress or in difficulties. During the recent past we have helped barristers and their families in every circuit, often saving not only dignity but careers.

Please do not hesitate to bring potential cases to our attention and remember us when things are going well and you can afford to make a gift. The BBA office staff will be more than happy to answer queries, either by telephone or by email – details are given on the Contact Us page of our website.

We are not nearly as well-known in the profession as we would like, and there are possibly people who qualify for our help but aren’t aware of our existence… we also feel that there are other people who would be willing to contribute to the welfare of their less fortunate colleagues but who are also unaware of us.

Terence Mowschenson QC Chairman

THE BARRISTERS' BENEVOLENT ASSOCIATION 14 Gray's Inn Square London WC1R 5JP Tel: 020 7242 4761 Fax: 020 7831 5366 www.the-bba.com Registered Charity No: 1106768 Company limited by guarantee: 5284271 10

â&#x20AC;&#x153;This is the first place I have ever described as home, the first place I have ever felt safe in.â&#x20AC;? A resident of The Sheppard Trust

Please consider a legacy to help us continue to provide a home for elderly ladies.

Today, investment income just covers basic maintenance costs. But inevitably facilities have to be improved, and costly structural maintenance is necessary from time to time. We are also anxious to extend the work of the Charity by obtaining additional properties, where the same help can be given to the many other elderly ladies, living often in conditions of great hardship, who need our help.

Two houses near Holland Park in west London have been converted to provide 29 self-contained, two-room flatlets, where residents can live their own lives in comfort and security; with their own furniture around them and with the reassurance that a warden is available in any emergency.

If you can help us, both we and our residents will be enormously grateful.

All our residents greatly value their independence, but there is also a strong sense of community among them; the small gardens belonging to each house are very popular; and river trips and occasional theatre visits are enthusiastically attended.

12 Lansdowne Walk London W11 3LN Tel: 020 7727 5500 Fax: 020 7727 7730 E-mail: chiefexec@sheppardtrust.org

www.sheppardtrust.org Registered Charity No. 1133356

First published January 2017 Drafting and the unintended consequences of mirror image wills

The next case is one where there were mirror image Wills. Both spouses gave their estates to each other, but if that gift failed there were pecuniary legacies totalling ÂŁ214,500, and two nieces were entitled to the residue. There was also a general survivorship clause. Both spouses were found dead on the same day, and it was not possible to determine who had died first. As the wife was older than her husband, she was deemed to have predeceased him. The question was whether the survivorship clause applied to the gift to the husband. If it did, it meant that the pecuniary legatees were paid twice over. If it did not, then the wifeâ&#x20AC;&#x2122;s assets would have vested in the husband, and the pecuniary legatees would have been paid from his estate. It was held that the survivorship clause did apply, with the result that the pecuniary legatees were paid twice. Rectification was not pleaded, but there was some discussion about it.

Practice point: If you are drafting mirror image wills like this, make it plain that the pecuniary legatees only benefit under one estate.

A lasting way to be rememberedâ&#x20AC;&#x201D;leaving a charitable donation. Our services are reliant upon your support. Please consider a gift or legacy, for Age UK Derby & Derbyshire. Thank you Age UK Derby & Derbyshire has information to help you decide on the best way to leave a charitable donation. Contact us

For more information or to discuss this in more detail, please call us on 01773 766922 768240 or email administration@ageukderbyandderbyshire.org.uk administration@ageukdd.org.uk Age UK Derby and Derbyshire is a registered charity (no. 1068550) and company limited by guarantee. Registered in England and Wales No. 3510613. Registered Office: 29a Market Place, Heanor, Derbyshire DE75 7EG. VAT Registration No. 598 3226 02.

The legacy of Amersham.

Will you remember the survivors? In 2008, Redwings gave a home to over 60 survivors of the horrors of Spindle Farm, one of our largest rescues. Ten years later, 58 are still living at the Sanctuary â&#x20AC;&#x201C; just like little donkey Esther. A gift in your Will can help us care for survivors like these for decades to come.

Please remember Redwings Call 01508 481030 or email legacies@redwings.co.uk

Jump & anr v. Lister & anr [2016] EWHC 2160 HC. Mr and Mrs Winson executed mirror image Wills in August 2010 whereby they gave their estates to each other, but if the gift failed, then there were pecuniary legacies totalling £214,500 to the same 13 named individuals and 10 named charities. The residue was left to 2 nieces. There was also a general survivorship clause which stated:

‘My estate is to be divided as if any person dies within 28 days of my death

had predeceased me.’

On 6 October 2011 Mr and Mrs Winson were both found dead at their home. The circumstances were not such that it was possible to determine who had died first. As Mrs Winson was the older, she was deemed to have died first. The issue was whether the survivorship clause applied to the gift to Mr Winson. If it did not, then Mr Winson took the whole of Mrs Winson’s estate. If it did, then it meant that pecuniary legatees received their legacies twice, once under Mrs Winson’s will, once Mr Winson’s will. It was held that it did apply to the gift to Mr Winson. Rectification was not pleaded, but there was some discussion as to whether that remedy would be available.

Exemption clauses for trustees Barnsley & ors v Noble [2016] WTLR 1501. Michael and Philip Noble were brothers who were successful businessmen, and built up a substantial property empire. Michael died in 2006, leaving a will appointing Philip, his widow, Gillian, and John Barnsley, an accountant, as his executors. It was agreed that the business should be split with Gillian taking the property assets and Philip taking the business assets. Philip was subsequently successful in claiming £30 million of VAT. When Gillian and John became aware of this, they commenced proceedings against Philip alleging breach of contract, deceit, negligent misstatement, breach of duty as an executor

Cruelty Free International • 16a Crane Grove, London, N7 8NN • Tel: 0300 003 0577 (calls charged at local rate) • Fax: 020 7700 0252 • Email: legacy@crueltyfreeinternational.org • Website: www.crueltyfreeinternational.org Cruelty Free International, previously known as the BUAV, works to create a world where nobody wants or believes we need to experiment on animals. Through undercover investigations, political lobbying, the promotion of cruelty free products, legal and scientific expertise and media activities, Cruelty Free International campaigns tirelessly and peacefully to end animal testing. Cruelty Free International works alongside its charitable arm, Cruelty Free International Trust (registered charity number 1081183). Cruelty Free International Trust exists to educate people about animal testing, research alternatives to animal testing and ensure that laws controlling animal experiments are properly enforced in the UK and globally. Cruelty Free International receives no government or lottery funding and relies solely on the generosity of supporters to continue its work. Legacy gifts are especially vital, constituting around 50% of Cruelty Free International’s total income. Our dedicated and experienced Legacy Officer provides a professional, sensitive and strictly confidential service to Executors, extracting solicitors and bereaved family and friends. 15

and trustee of the will by infringement of the prohibition on self-dealing and by failure to make full disclosure of the information that he had about the refund of VAT. Philip relied upon exemption clauses in the will. Paragraph 18 of schedule 1 to the will contained the following clause:

‘My trustees shall have power to enter into and complete contracts or

other transactions with themselves or any of them (acting in their own interests

as individuals or in some other fiduciary capacity) for the sale purchase

exchange or otherwise of any part or parts of my residuary estate

provided that: –

(i)

every trustee personally interested therein shall have acted in good faith

and either:

(ii)

at least one of my trustees shall have no interest in the contract or transaction

(as the case may be) save as one of my trustees or

(iii)

(In the case of a sale purchase exchange or like transaction) an independent

and duly qualified valuer instructed by and acting exclusively for my trustees

in their capacity as such shall have certified that in his opinion my trustees will

receive full value in money or money’s worth pursuant to such transaction.’

It was held that this clause did not apply as whilst Philip may have acted in good faith, the other trustees did have an interest in the contract or transaction, and no valuer have been instructed. Clause 14 also provided:

‘In the professed execution of the trusts and parts hereof no trustee shall be

liable for any loss to the trust premises arising by reason of any improper

investment made in good faith or for the negligence or fraud of any agent

employed by him or by any other trustee hereof although the employment of

such agent was not strictly necessary or expedient or by reason of any other

matter or thing except wilful and individual fraud or wrongdoing on the part

of the trustee who is sought to be made liable provides always but in the

case of any trustee who or whose firm for remuneration renders legal

accountancy or other professional or business services to my Trustees nothing

in this clause shall exonerate such trustee or his firm from liability for negligence

or other wrongdoing in relation to the services so rendered.’ 16

Do you have the will to beat Prostate disease?

My dad survived prostate cancer. You can help more men survive too.

Prostate cancer is the most common cancer for men in Scotland with one in ten men at risk of it and nearly 1 in 2 men may be affected by prostate disease. Prostate Scotland works to develop awareness of prostate cancer and disease, providing information, advice and support to men and their families affected by it, as well as promoting research and treatment developments.

By leaving a gift in your Will you can help protect future generations like me. prostatecanceruk.org/legacies 0800 082 1616

www.prostatescotland.org.uk

3773

Please help us continue our good work. For further information please call 0131 603 8660 or email info@prostatescotland.org.uk

Prostate Cancer UK is a registered charity in England and Wales (1005541) and in Scotland (SC039332). Registered company 02653887.

Registered Scottish Charity No: SC037494

Suffolk Owl Sanctuary

Last year we helped over 80,000 wild birds and animals like Rudolph

3773 Wills and Probate The Procedure Publication 2015 advert_FINAL.indd 1

30/09/2015 10:54

Dedicated to the conservation of wild owl populations the kind thought of a gift in your Will would help enormously in: * The rescue & rehabilitation of injured wild owls and other birds of prey * Running a Raptor Hospital for injured wild birds of prey * Operating a Wild Owl Nestbox Scheme * Taking our Wise Owl Roadshow to Schools * Promoting the “Saving Britain’s Owls” campaign * Distributing free Raptor Conservation literature * Operating a support website at www.owl-help.org.uk Regd. Charity No. 1086565

Please help me get better Our late friend Dame Thora Hird actively encouraged others to help us secure funding for our lifesaving work. In her words "All the little wild creatures and I thank you so very much". For more information please contact: Jenny Babb, Tiggywinkles, Aylesbury, Buckinghamshire HP17 8AF

p O la In w ns c l N fo lu es r de tin bu s g ild B in ox g es

Not only do we treat more hedgehogs than any other wildlife hospital, but our caring team saves lives every day. Our aim is simple; to treat injured British wildlife, then return them to the wild - like Rudolph, who arrived badly injured at just five days old. Our specialist care saved this little deer and he is now facing a brighter future. But it is only with your support we can help casualties like Rudolph. Please remember Tiggywinkles in your Will.

01844 292 292 mail@sttiggywinkles.org.uk www.tiggywinkles.com Registered Charity No. 286447

A guide to the lifestyles & habitats of Britain’s Owls, with details of what YOU can do to help preserve those species which are under threat.

The Suffolk Owl Sanctuary Stonham Aspal Suffolk IP14 6AT Tel: 0345 680 7897 www.owl-help.org.uk

Come and have a look around our Visitor Centre. Opening times can be found on our website www.tiggywinkles.com.

is the busiest wildlife hospital in the world.

SAVING BRITAIN’S OWLS

Please support the cause and

ADOPT-AN-OWL

See inside back cover for details....

sponsored by the

SUFFOLK OWL SANCTUARY

Charity Registration No. 1086565

It was held that ‘wilful and individual fraud and wrongdoing’ meant that there was a knowing and deliberate breach of equitable duty or reckless indifference as to whether it was a breach. On the facts of this case, it was held that the clause protected Philip.

Insolvent estates If you are dealing with an insolvent estate, should you apply the bankruptcy order in paying the creditors? Berry v Child Support Agency [2016] WTLR 1327. There were various issues in the next case, but it was pointed out that rule 4.1 of the Administration of Insolvent States of Deceased Persons Order 1986 provided that certain provisions of the bankruptcy regime will apply to the insolvent estate of a deceased person. However, it was unclear if they applied where there had been no formal bankruptcy process. Notwithstanding this case, if you dealing with an insolvent estate, it is advisable to pay the debts in accordance with the bankruptcy order. If you do not, almost certainly the creditors will object.

Jurisdiction of Court of Protection Court of Protection only has jurisdiction if the person the subject of the application lacks mental capacity. This was an issue in the next case. X (No.2. Declaration that X has capacity) 2016 EWCOP 50. X had suffered a traumatic brain injury, and wanted to return to his home. His local authority was unwilling to fund this care as he needed two carers round the clock, and this could cost approximately £500,000. A further quote for £338,000 per annum had been obtained, but again the local authority was reluctant to fund this. It was believed that an Independent Local Resolution Panel had decided that the patient’s care should be funded by the NHS through the local Clinical Commissioning Group.

N.E.D.D.I -

New European Distressed Donkey Initiative

He needs your help… He needs your help… “Byremembering remembering “By N.E.D.D.I.ininyour yourwill will N.E.D.D.I. you enable us to you enable us to continueto tocare carefor for continue donkeys like like donkeys Butterworth.” Butterworth.” legacy, of ofof enormous help to to AA legacy, ofwhatever whateversize, size,will willbebe enormous help NEDDI’s work caring for rescued donkeys in our sanctuary. NEDDI’s work caring for rescued donkeys in our sanctuary. We also also work conditions for donkeys in Britain, We worktotoimprove improve conditions for donkeys in Britain, Europe and Africa. Established in 1990 we are based in UK, Europe and Africa. Established in 1990 we are based in and operate a sanctuary in northern France. We also support UK, and operate a sanctuary innorthern France. We also road-side clinics for working donkeys in Kenya. support road-side clinics for working donkeys in Kenya.

01208 816640 www.neddi.org N.E.D.D.I.

The New European Distressed Donkey Initiative Ltd. A NON-PROFIT MAKING COMPANY, The New Distressed Donkey Initiative Ltd. POEuropean Box 56, Wadebridge, Cornwall PL27 9BJ LIMITED BY GUARANTEE. PO Box 56, Wadebridge, Reg. No. 3098847 Cornwall PL27 9BJ

01208 816640 A NON-PROFIT MAKING COMPANY, LIMITED BY GUARANTEE.

Talk to the hand because deafblind people need to know…

Reg. No. 3098847

www.neddi.org

Dorrie, described her life as like living in a cupboard with the door closed. “Occasionally someone comes along, opens the door and uses the deafblind manual to communicate on my hand. Then the communication stops, the door closes and I don’t know if they have left the room, building or even the world. Then I wait for someone else to come along and open the door.”

Find out more www.deafblindscotland.org.uk

Please support

Deafblind Scotland to open doors for

Deafblind People

Scottish Charity SC031167

1 Neasham Drive, Kirkintilloch, G66 3FA fundraising@deafblindscotland.org.uk 0141 777 6111

Deafblind Scotland, an award winning national charity, enables deafblind people to communicate meaningfully with the world around them providing a range of support and services. We greatly depend on the generosity of supporters to help us with this life changing work.

At one time, medical opinion was that X did not have the capacity to decide where he should live, but recent medical evidence indicated that he did have capacity to make this decision. It was held that he did have capacity, and accordingly the Court of Protection had no jurisdiction.

Does the High Court have jurisdiction over vulnerable adults who have mental capacity? The answer given in the next case was yes. DL v. A Local Authority and others [2012] WTLR 1713. An elderly married couple were living in their own home with their middle aged son. They did not lack mental capacity within the definition in the Mental Capacity Act 2005. However, the local authority was concerned about alleged threatening and controlling behaviour on the part of the son, and obtained an injunction protecting the couple from their son. The son appealed arguing that the Mental Capacity Act and its supporting code was a comprehensive statutory provision, and that the High Court had no jurisdiction over persons who did not come within the legislation. It was held that the High Court did have jurisdiction over adults whose ability to make decisions for themselves has been compromised by matters other than those covered by the Mental Capacity Act.

Who should have the power to appoint new trustees? The next case is concerned with who should have the power to appoint new trustees â&#x20AC;&#x201C; the trustees with the right of veto for the principal beneficiary or the principal beneficiary with a right of veto for the trustees. It was held that it should be the principal beneficiary. Bathurst v Bathurst [2016] EWHA 3033 (Ch) A scheme of arrangement under the Variation of Trusts Act 1958 was approved, but there was a dispute about who should have the right to appoint new trustees. The original settlement provided that the settlor had the power to appoint new trustees,

Ensure a brighter future: Remember Age UK London in your will

Age UK London is the voice of older people in our capital. We campaign to improve the lives of the 2.2 million older people in London. You can ensure a brighter future for older Londoners and for generations to come by remembering Age UK London in your will. Age UK London - 6th Floor, Tavis House, 1-6 Tavistock Square, London, WC1H 9NA Contact us by emailing: legacies@ageuklondon.org.uk w: www.ageuk.org.uk/london t: 020 7820 6770 Twitter: @ageuklondon You can donate online at: www.justgiving.com/ageuklondon Registered charity no. 1092098 . Age UK London, the working name for Age Concern London, is a company limited by guarantee, registered in England and Wales number 4407861

but he was dead. The trustees argued that they should have the power, but that it would be subject to veto by the principal beneficiary. The principal beneficiary wanted the power, but subject to veto by the trustees. It was held that the principal beneficiary should have the power. Master Matthews said:

‘As it seems to me, a senior beneficiary, knowing the situation of all the

beneficiaries (members of his extended family), and having enjoyed a

long relationship with the land part of the trust assets held in his family for

many generations, is in at least as good a position as anyone and better

than most, decide what qualities are needed in a new trustee. Moreover,

given the purposes for which the settlement was set up and the important

role that the principal beneficiary plays in them, the principal beneficiary in

each generation is the obvious candidate.’

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Over Over 40 40 people people in in the the UK UK lose lose their their sight sight each each day day The gift of sight is precious. The gift of sight is precious. Your gift gift today today and and aa legacy legacy when when the the Your time comes will help fund vital research time comes will help fund vital research into into the the causes causes of of blindness blindness and and treatments for eye treatments for eye disease. disease. Please Please make make a a donation donation today. today.

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First published February 2017 IHT and Trustee Act 1925 s 31

If s 31 Trustee Act 1925 applies to a trust, and minors are entitled, the trustees have to accumulate any income and pay it to the children when they become absolutely entitled. This can have IHT consequences. If minor children have an interest in possession under the terms of the trust, and s31 applies, then they do not have an interest in possession as far as IHT is concerned which means that the trust would be subject to the relevant property regime. This was the issue in the next case where the settlor entered into the double trust scheme. She assigned the debt to an interest in possession trust for her children. No problem if the children were adults, but they were minors and if s 31 applied, then they did not have an interest in possession. It was held s 31 did apply, but the judge ordered rectification of the settlement so as to exclude s 31. Bullard v Bullard & anr [2017] EWHC 3 (Ch). The claimant entered into a â&#x20AC;&#x2DC;double trustâ&#x20AC;&#x2122; arrangement with regard to her house. She assigned the resultant debt to a trust which she believed created an interest in possession, and at that time it would not have any immediate IHT consequences as it was a PET. Her children were the beneficiaries of this trust, and there would have been no problem if the children were of full age. However, they were under age, and if section 31 of the Trustee Act 1925 applied to the trust, then there was no interest in possession, and the trust would be subject to an immediate charge on creation, and to principal and exit charges. 24

The Psychiatry Research Trust Mental illness and brain disorders will affect everyone’s life at some time. One in four of us as direct sufferers. Here at The Psychiatry Research Trust our sole aim is to raise funds for mental health and brain disease research being carried out at the internationally renowned Institute of Psychiatry, Psychology & Neuroscience (KCL), Bethlem and Maudsley hospitals. We aim to support research by young scientists in a wide range of mental health topics, including Alzheimer's and Motor Neurone Disease, Eating Disorders, Psychotic Illness, Addictions and Childhood Problems Our target is not just to find better treatments for sufferers but also to understand the underlying causes of mental illness and brain disease with the goal of finding means of preventions and cures for these illnesses. For further information or to make a donation contact:

The Psychiatry Research Trust

PO 87, De Crespigny Park, Denmark Hill, London SE5 8AF Tel: 0207 703 6217 Web: www.psychiatryresearchtrust.co.uk Email: psychiatry_research_trust@kcl.ac.uk Donate on line at www.justgiving.com/psychiatryresearchtrust Registered Charity Number 284286

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It was held that section 31 did apply, but the judge was prepared to order rectification so that s 31 did not apply. He said:

“The necessary conditions for the remedy of rectification to be available were

expressed recently by Barling J in Giles v Royal National Institute for the Blind

[2014] EWHC 1373, summarising the effect of the Court of Appeal’s decision in

Racal Group Services Ltd v Ashmore[1995] STC 1151, as follows:”

(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);

(4)

There must be an issue capable of being contested between the parties

notwithstanding that all relevant parties consent. This criterion has been much

criticised: the purpose of it, and its actual content and scope, are by no

means clear. In Racal Peter Gibson LJ expressly approved the following

summary of the principle by Vinelott J in the same case. Vinelott J stated that

the court must be satisfied:

“that there is an issue capable of being contested, between the parties

or between a covenantor or a grantor and the person he intended to benefit,

it being irrelevant first that rectification of the document is sought or

consented to by them all, and second that rectification is desired because

PAIN RELIEF FOUNDATION RELI EVIRELIEF NG CHRO NI C PAI N THR O UG H RESEAR CH PAIN FOUNDATION PAIN RELIEF FOUNDATION RELI EVI NG CHRO NI C PAI N THR O UG H RESEAR CH

  

RELI EVI NG CHRO NI C PAI N THR O UG H RESEAR CH CHRONIC PAIN THE SILENT EPIDEMIC CHRONIC PAIN THE EPIDEMIC CHRONIC PAINchronic THEpainSILENT SILENT EPIDEMIC 43% of the population experience which is a staggering 28

million 43% of adults the population experience chronic pain which is a staggering 28 43% of adults the population experience chronic pain which is a staggering 28 million  Over half of sufferers endure chronic pain all day, every day. million adults

    

        

Over half of 10 sufferers chronic pain all day, everyofday. Around 1 in peopleendure suffer from such extreme levels pain it is that is Over half of sufferers endure chronic pain all day, every day. either moderately or severely disabling. Around 1 in 10 people suffer from such extreme levels of pain it is that is Around 1 in 10 people suffer from such extreme levels of pain it is that is either moderately or severely disabling. Chronic pain is the silent epidemic either moderately or severely disabling.because it isn't as visible or as measurable conditions, despite the fact thatasit visible can have Chronic painasis other the silent epidemic because it isn't or asa Chronic painimpact theonsilent epidemic because it isn't or asa devastating quality of life.despite measurable asis other conditions, the fact thatasit visible can have measurable as other conditions, devastating on quality of jobs life.despite the fact that it can have a Thousands ofimpact sufferers lose their devastating impact on quality of life. because the pain is so bad that they cannot work. Thousands of sufferers lose their jobs because the pain is so bad that they Thousands of sufferers lose their jobs because the pain is so bad that they cannot work. Pain stops sufferers enjoying walking, shopping, sleeping; even playing cannot work. with their children. Pain stops sufferers enjoying walking, shopping, sleeping; even playing Pain stops sufferers enjoying walking, shopping, sleeping; even playing with their children. Here an example with istheir children.of chronic pain and how patients suffer? Here is an example of chronic pain and how patients suffer? Here is an example of chronic pain and how patients suffer?

Patients suffering from a chronic pain condition called Complex Regional Pain Syndrome. This pain often occurs following an accident in picture number 1 seecalled how the affected foot is Pain swollen, twisted and Patients suffering from….. a chronic pain condition Complex Regional Syndrome. This distorted. pain often In occurs Patients suffering from a chronic pain condition called Complex Regional Pain Syndrome. This pain often In occurs picture number 2, see ….. howinthe affected hand1 is swollen. following an accident picture number see how the affected foot is swollen, twisted and distorted. following an accident ….. in picture number 1 see how the affected foot is swollen, twisted and distorted. In picture number 2, see how the affected hand is swollen. picture seeCancer how the affected is swollen. We also number research2,on Pain, manyhand cancer research charities are prevented from funding work on cancer

pain.also Their Trust Deeds specify ‘research the research cause andcharities cure of cancer’ and this,from of course, excludes pain. Yet We research on Cancer Pain, many into cancer are prevented funding work on cancer We also research on Cancer Pain, many cancer research charities are prevented from funding work on cancer for every £50,000 donated to cancer research, chronic pain research receives donations of less than one (1p) pain. Their Trust Deeds specify ‘research into the cause and cure of cancer’ and this, of course, excludes pain. Yet pain. Their£50,000 Trust Deeds specify ‘research into thechronic cause and of cancer’ and this, of course, excludes Yet penny. for every donated to cancer research, paincure research receives donations of less than pain. one (1p) for every £50,000 donated to cancer research, chronic pain research receives donations of less than one (1p) penny. Research penny. costs money, and there is always an urgent need to provide more funds for more research. The Pain Relief Foundation DOESand NOTthere receive funding theneed NHStoorprovide any other Government body.research. Instead, The our Pain vital Research costs money, is always anfrom urgent more funds for more Research costs money, and there is always an urgent need to provide more funds for more research. The Pain work depends entirely on donations and the generosity of people like you. Relief Foundation DOES NOT receive funding from the NHS or any other Government body. Instead, our vital Relief Foundation DOES receiveand funding from the of NHS or any Government body. Instead, our vital work depends entirely onNOT donations theisgenerosity people likeother you. Please help us to end the suffering!! There a serious lack of funding for chronic pain research and you can help work depends entirely on donations and the generosity of people like you. by making today. Just sendisyour donation tofunding the address below,pain or make an and on-line Please help us us atodonation end the suffering!! There a serious lack of for chronic research youdonation can help Please help us to end the suffering!! There is a serious lack of funding for chronic pain research and you can help through our web-site at www.painrelieffoundation.org.uk. You could also make a regular monthly donation by by making us a donation today. Just send your donation to the address below, or make an on-line donation by making us a donation today. Just send your donation to the address below, or make an on-line donation standing order from your bank!! through our web-site at www.painrelieffoundation.org.uk. You could also make a regular monthly donation by through web-site at www.painrelieffoundation.org.uk. You TODAY could also make a regular monthly donation by MAKE A DONATION standing our order from your bank!! standing order from your bank!!

MAKE A DONATION TODAY Please leave a Legacy in your will. For help and advice, contact us. Our details are below. MAKE A DONATION TODAY Please leave a Legacy in your will. For help and advice, contact us. Our details are below. Please leave a Legacy in your will. For help and advice, contact us. Our details are below.

Pain Relief Foundation Clinical Sciences Centre Pain Relief Foundation University Hospital Aintree Pain Relief Foundation Clinical Sciences Centre Liverpool Clinical Sciences Centre University Hospital Aintree L9 7AL University Hospital Aintree Liverpool Liverpool L9 7AL L9 7AL

Telephone: 0151 529 5820

Telephone: 0151 529 5820 E-mail: lorraine.roberts@painrelieffoundation.org.uk Telephone: 0151 529 5820 E-mail: lorraine.roberts@painrelieffoundation.org.uk Registered Charity No. 1156227 E-mail: lorraine.roberts@painrelieffoundation.org.uk Registered Charity No. 1156227 Registered Charity No. 1156227

it has beneficial fiscal consequences. On the other hand, the court will not

order rectification of a document as between the parties or as between a

grantor or covenantor and an intended beneficiary, if their rights will be

unaffected and if the only effect of the order will be to secure a fiscal

benefit.” (1155c-1158b).”

Can an omission have IHT consequences? What is the position if a member of a pension scheme fails to claim a pension, and the consequence is that it benefits the children because the benefits have been put in Trust for them? An omission can constitute a transfer value for inheritance tax purposes, but if there is no intention to confirm gratuitous benefit, then it does not have any inheritance tax implications. This was the issue in the next case. Parry and others v HMRC [2014] UKFTT 419(TC). Mrs Staveley and her then husband established a company called Morayford Ltd. She was a director of a company, and had a large pension fund with the company’s occupational pension scheme. There was an acrimonious divorce, and it was ordered that her share in the pension found should be transferred to her. She was advised that if there was any surplus in the fund it would be returned to Morayford. As she did not want this to happen, various steps were taken to prevent this which included transferring the funds in the pension scheme. Mrs Staveley was advised that she had terminal cancer, and shortly before she died she signed a form with an expression of wishes that the death benefits should be paid to her two sons. She did not claim any lifetime benefits, and the trustees of the pension scheme exercised their discretion and paid the death benefits equally to her two sons. Under the Inheritance Tax Act 1984 there is no question that an omission can constitute a transfer of value. However, section 10 (1) provides that a disposition is not a transfer of value if it is shown that it was not intended, and was not made in a transaction intended, to confer any gratuitous benefit by any person and either: –

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29 The Solicitors Group Private Client Line Yearbook h277 x w190.indd 1

20/07/2018 11:41:32

(a)

that it was made in the transaction at arm’s-length between persons not

connected with each other, or

(b)

that it was such as might be expected to be made in a transaction at arm’s-

length between persons not connected with each other.

The Revenue argued that this was part of a scheme, and was caught by the antiavoidance rules to do with associated operations. It was held that the transfer of funds was not intended, and was not made in a transaction intended, to confer a gratuitous benefit on any person and was a transaction at arms length between unconnected persons. However, it was held that her omission to claim any pension benefits during her lifetime was a disposition. The Commissioners for Her Majesty’s Revenue and Customs v Parry and ors [2017] UT2014/0051 and UT 2014/0053. On appeal, it was held: 1.

The transfer of the policy was a disposition for the purposes of section 2 of the

Inheritance Tax Act 1984, but it did not intend to confer any gratuitous benefit

and so was within section 10 of the Act.

It was not an associated operation as the trustees had a discretion as to

where they paid the money due on the death of the policyholder.

Note that IHTA 1984 has been amended so that failure to claim pension benefits may not now be a disposal for IHT purposes.

Revocation of powers of attroney. SAD and ACD v SED (Unreported, Case no. 12791319 (4 November 2016) DJ Glentworth 39 4ssex Street newsletter December 2016. The question in this case was whether mother who had granted a lasting power of attorney appointing her daughters as attorneys had capacity to revoke that lasting

The Heartbeat Home for Horses Limited is a registered charity, whose aim is to care for horses who otherwise would face a very uncertain future. Our aim is to provide a lifeline for these needy, homeless animals, allowing them to relax in comfortable surroundings in retirement, with lots of tender loving care. • Heartbeat horses are often large, 16hh+ - it can be difficult to find a retirement home for them • Heartbeat Horses are NOT re-educated, or re-homed, or adopted • Heartbeat Horses retire to enjoy a good quality of life • Heartbeat will not put a healthy horse to sleep • We need to expand, due to the long waiting list of horses waiting to retire, or worse • We have CCTV in the stables, to monitor horses who are unwell Many of Heartbeat guests would not be alive today, if they had not been able to retire to the Heartbeat Home for Horses. www.retiredhorses.org.uk Telephone 01986 798387 (Home) 01728 602 739 (Shop) Email woodyates@hotmail.co.uk Registered Charity No.1106722

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power of attorney. It was held that she did not have capacity to revoke that lasting power of attorney, but it was held that as the daughters were not giving effect to their motherâ&#x20AC;&#x2122;s current wishes and feelings, the power should be revoked. DJ Glentworth held that the information relevant to a decision to revoke was: 1.

Who the attorneys are;

What authority they have;

Why it is necessary or expedient to revoke the power;

The foreseeable consequences of revoking the power;

The reasons for the original decision to appoint the attorneys.

Sham trusts. When is a trust not a trust but a sham? This was one of the issues in the next case. It was held that the Rainbow Foundation in which Liechtenstein was not a sham. Hamilton v Hamilton & anr [2016] WTLR 1699. David Hamilton had escaped from Germany on the Kinder transport, but his older sister had been rejected. Both she and his parents perished in the concentration camps. David left a will giving each of his two children, Alan and Carolyn, a life interest in one half of his residuary estate, with the remainder going to their respective children. He also established a foundation in Liechtenstein which was called the Rainbow Foundation. David was entitled to the enjoyment of the assets of the foundation and its income during his lifetime, but after his death, Carolyn was to be solely entitled. However in 2004, the assets of the foundation were divided into two parts, A and B. David was still entitled to the enjoyment of the whole of the assets in the Foundation

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during his life, but on his death, Carolyn would be solely entitled to Part A, and Alan would be solely entitled to part B. Alan discovered that Carolyn’s share was worth approximately twice his share. David did not disclose the existence of the Rainbow Foundation to HMRC, and when he died Carolyn failed to disclose her income to HMRC. Subsequently, both Alan and Carolyn made disclosure under the Liechenstein Disclosure Facility. HMRC decided that no inheritance tax was payable on Carolyn’s or Alan’s half share. Alan then alleged that the Rainbow Foundation held the assets as nominee for David, or that it was a sham, and that the assets of the Rainbow Foundation were part of his estate. It was held: 1.

David had been traumatised by the Holocaust, and wanted to ensure that if it

happened again, his family would have some offshore wealth they

could access.

The validity of the transfer to the Rainbow Foundation was governed by

English law under the Rome convention.

The Law of Liechtenstein governed the validity of the Rainbow Foundation,

and it was valid under that law.

Any presumption of resulting trust was rebutted.

It was not a sham under either English Law or Liechtenstein law.

Henderson J said:

‘The classic statement of doctrine remains that of Diplock LJ in Snook v

London and West Riding Investments Limited [1967] 2QB 787 at 802:

“I apprehend that, if it has any meaning in law, it means acts done or

documents executed by the parties to the sham which are intended by

them to give to third parties or to the court the appearance of creating

between the parties legal rights and obligations different from the actual

legal rights and obligations (if any) which the parties intend to create. But one

thing, I think, is clear in legal principle, morality and other authorities... That for

acts or documents to be a sham, with whatever legal consequences follow

from this, all the parties thereto must have a common intention that the actual

documents are not create the legal rights and obligations which they give the

appearance of creating.”’ 34

First published March 2017 Capacity, knowledge and approval of a will.

The next case is one where there was a challenge to the validity of a will on the grounds that the deceased lacked capacity and also knowledge and approval of the contents. The will had been drafted by a solicitor, and witnessed by two members of the staff of the solicitor. The claimant applied for probate in solemn form. Both the claimant and the defendants, who were his second wife and the children of his first marriage, instructed separate consultant geriatric psychiatrists who were of the view that the deceased did have capacity to make the will. The judge also placed some emphasis on the detailed attendance note made by the solicitor, and held that the deceased did have capacity to make the will. With regard to knowledge and approval of the contents of the will, although there was some evidence that the deceased was very vulnerable when he made the will, and the claimant who was a major beneficiary under the will had considerable influence on the deceased, on the facts it was held that the deceased did know and approve of the contents of the will. Edkins v. Hopkins and ors [2017] WTLR 39. The deceased had a business manufacturing cattle grids, Hopkins Steel Limited. and the claimant began working for him in 1990. The two became close friends. The deceased first marriage had broken down by 1995. There were three children of the marriage, Richard, Alistair and Colin. Richard had become a drug addict, and had spent some time in prison for possession of drugs. The deceased had married again, but had a serious alcohol problem.

In 2014 he made a will appointing the claimant and a partner in a firm of solicitors to be his executors and trustees. Under the will, he gave his shares in Hopkins Steel Limited to the claimant, his interest in a flat to his wife, and the residual estate was to be divided as to 75% for the claimant and as to 25% between his wife and his three sons from his first marriage. The deceased died in August 2014 leaving a substantial estate. The claimant applied for probate of the will in solemn form. The defendants, who were his second wife and the children of his first marriage, challenged the validity of the will on the grounds of lack of capacity and lack of knowledge and approval. The will had been drafted by a partner in a firm of solicitors, who produced a detailed attendance note about what happened. Both the claimant and the defendants instructed consultant psychiatrists, who on the basis of the notes of the deceasedâ&#x20AC;&#x2122;s general practitioner were of the view that he did have mental capacity. On the fact it was held that he did have capacity to make the will. With regard to knowledge and approval, the judge said that the first stage was to ask whether the circumstances were such as to â&#x20AC;&#x2DC;excite suspicionâ&#x20AC;&#x2122; on the part of the court. If so, the burden of proof is on those who want to obtain a grant of probate to establish that the testator knew and approved of the contents of the will. If there was nothing to excite suspicion, then the court assumed knowledge and approval. The judge said that in the weeks leading up to the execution of the 2014 will, the deceased was very vulnerable both physically and mentally. He was also reliant on the claimant and his wife for his physical needs. In addition he did have some control over the deceased. Notwithstanding these factors, the judge held that the deceased did know and approve of the contents of the will.

Contract, estoppel, delay in transferring assets. The next case is one where there was a dispute between brother and sister about the administration of the estate of their father. Both parties did sign a letter in 2006 dealing with various issues concerning the administration of the estate. Was this a binding contract? The defendant argued that the claimant could not rely on this contract because of estoppel by convention. 37

The judge stated that for this to apply there have to be some common assumption, and that the defendant could show some detriment or benefit to the claimant which made it unjust or unconscionable for her to rely on the agreement. There was considerable delay in transferring the portfolio of stocks and shares left to the claimant. Was the defendant liable for this? In the matter of the estate of Edwin Lindsay Townsend deceased, Crabbe v Townsend [2017] WTLR 13. The deceased died in 2004, leaving a will to which a grant of probate was extracted in May 2007. The claimant was his daughter, and the defendant was his son. Various issues arose with regard to the administration of the estate of the deceased, and in 2006 a document was signed by both the claimant and defendant purporting to deal with most of the issues in relation to the administration of the estate. The deceased left a portfolio of stocks and shares, and the claimant was entitled to them under the will of the deceased, but it was not until February 2013 that the portfolio was transferred to the claimant. The claimant actually assented to the transfer herself without the consent of the defendant. It was held that the 2006 document was a binding contract. The defendant argued that this contract could not be enforced because of the existence of an estoppel by convention. The judge stated that for this to apply there had to be a common assumption as to the state of affairs, and that there must be some detriment to the defendant or benefit to Claimant which made it unconscionable or unjust for her to rely upon the 2006 agreement. This argument was rejected. It was held that the claimant could not object to the failure to transfer the portfolio to her until December 2008 when the claimant had notified the defendant about the consequences of the failure to transfer the portfolio.

Rectification. Will a court order rectification of a document which does not carry out the intention of the parties? In view of the writer, the answer should be yes anyone can make a mistake! 38

The next case is one where trustees executed deeds of revocation and appointment which did not carry out the intention of the trustees. Rectification of the deeds was ordered. RBC Trustees (CI) Limited and ors v Janatha Stubbs and ors [1027] EWHC 180 (Ch). Trustees of a settlement executed two deeds of revocation and appointment in 2008 and 2014. It was alleged that the deeds were wrong because they affected a revocation and reappointment of the trusts relating to two of the settlorâ&#x20AC;&#x2122;s children whereas they were only intended to revoke successive life interests of the spouses of the children. Rose J said that there was convincing evidence of the subjective intention of the trustees, that there was a flaw in the deeds of revocation and appointment, that the trustees had intended to achieve something different from what was done, and that there was an issue capable of being contested before rectification could be ordered. Rectification was ordered.

What can be done if a local authority should be funding care home fees but does not do so? Is it possible to claim money from the local authority? It seems that it may be possible as a result of the next case. In my experience, if local authorities should have been paying care home fees and have not done so, they will usually refund them. Kenneth John Richards (by his deputy and litigation friend Anne Minihane) v Worcestershire County Council and anr [2017] WTLR 117. The claimant sustained head injuries in a traffic accident in 1984. He was detained under the Mental Health Act 1983, but was discharged after the responsible medical officer had completed a supervision application. Under this, it was stipulated that after-care under supervision was necessary. He was discharged from hospital in October 2004, and the organisations responsible for his care were identified as Worcestershire County Council and Worcestershire Mental Partnership NHS Trust.

The claimantâ&#x20AC;&#x2122;s deputy paid the cost of after-care services out of his personal funds. He then sued the defendants seeking ÂŁ644,645.87p as reimbursement of this expenditure. There were two issues to be decided: 1.

Whether it was possible in principle for the claimant to bring a

restitutionary claim:

If so, whether the claim should have been brought by way of judicial review.

Normally, a failure to perform a public law duty not give rise to a claim in unjust enrichment or for any other restitutionary claim. However, on an application to strike the claim out, it had held that the plaintiff was asserting a private law claim, although it did raise the question of whether defendants had performed public law duties.

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First published April 2017 Capacity to make a will

The next case is one where there was a challenge to the validity of a will mainly on the grounds that the deceased was suffering from terminal cancer, and that this affected his ability to make a will. The will have been drafted by a solicitor, who was of the view that the deceased had capacity. One consultant geriatric psychiatrist was of the view that he did have capacity, but another expressed doubts. On the facts, it was held that the deceased did have capacity to make the will and knew and approved of the contents will. White v Philips [2017] EWHC 386 (Ch) The deceased executed a Will in June 2010 under which he directed that the home he had shared with the claimant, his wife, should not be sold during the lifetime of the claimant without her consent or unless she cohabited with another person. It also provided that she would be entitled to live there rent free on the basis she paid the other outgoings on the property and kept it insured and in good repair. On the sale of the matrimonial home, the net proceeds were to be paid to the daughter of the deceased, the defendant, and she was also entitled to the residuary estate. The deceased died on 22 July 2010 as a result of terminal rectal cancer which had been diagnosed in July 2009. The claimant challenged the validity of the will or the grounds that he lacked capacity when made it.

The will had been drafted by a solicitor who had no doubt that the deceased had capacity. One consultant geriatric psychiatrist was of the view that he did have capacity, but another suggested that there was doubt about whether the deceased had capacity. The judge held that the deceased did have capacity to make the will, and knew and approved of the contents will. Death of applicant under the Inheritance (Provision for Family and Dependants) Act 1975 Does a under the 1975 Act survive the death of the claimant? This was one of the issues in the next case, and following earlier cases, the decision was that it did not survive. However the first claimant, who was a child of the deceased, and possibly a child of the family of his marriage, could claim for the variation of a nuptial settlement under the s 2(1)(f) 0f the Act. Roberts v Fresco [2017] EWHC 283 (Ch) The deceased married his second wife in 1973. Both had a child or children from previous marriages. The first claimant was the deceasedâ&#x20AC;&#x2122;s daughter from his first marriage, and the second claimant was his granddaughter, her father, the deceasedâ&#x20AC;&#x2122;s son, having died in 2004. The defendant was the only child of the second wife. The wife died in January 2014, and the deceased died in October 2014. The estate of his wife was sworn for probate with a net value of almost ÂŁ17 million. There was also a property in London which was held in trust for the wife for life with remainder to the first claimant. The first claimant sought to begin proceedings against the estate of the wife of the deceased under the Inheritance (Provision for Family and Dependents) Act 1975, but it was held that any claim her father had under the 1975 Act died with him. However, the first claimant might be able to prove that she had become a child of the family. In view of this, it was held that the first claimant could apply under section 2 (1) (f) of the 1975 Act to vary the settlement of the former matrimonial home. Section 2 (1) (f) provides: 43

â&#x20AC;&#x2DC;Any anti-nuptial or post nuptial settlement (including such a settlement made

by will) made on the parties to a marriage in which the deceased was one of

the parties, the variation being for the benefit of the surviving party to

that marriage or any child that marriage, or any person who was treated by

the deceased as a child of the family in relation to that marriage.â&#x20AC;&#x2122;

Disclosure of trust documents The next case is one where beneficiaries under a trust sought disclosure of trust documents held by solicitors who had acted for the trustees. They made a subject access request under the Data Protection Act. The judge at first instance refused to make the order, but on appeal it was held that this was wrong. So if you are acting for trustees, you could be faced with one of the subject access requests. I think it is fair to say that earlier cases had established that beneficiaries whether under a life interest trust or members of a class of beneficiaries under a discretionary trust do have a right to see most but not all the trust documents. Dawson-Damer & ors v Taylot Wessing LLP [20178] WTLR Civ74 The appellants, who were beneficiaries under trusts, served a subject access request under section 7 ( 2) of the Data Protection At 1998 on the respondent seeking personal data relating to themselves held by the respondent as solicitors for the trusts. The respondent resisted the application on the ground that they were covered by legal professional privilege, that it would involve disproportionate effort, and that the judge was entitled to refuse to exercise his discretion under the section because the real motive of the appellants was to use the information in legal proceedings against the trustee. The judge at first instance had refused to order disclosure, but on appeal it was held that this was incorrect.

End of life decisions. The next case is one where the judge was asked to make a choice between life and death. Such decisions are very difficult, and the writer has always been very impressed with the sympathetic and careful way judges deal with such issues. One important factor is of course the wishes of the person the subject of the application. Abertawe Bro Morgannwg University Local Health Board v RY and anr [2017] EWCOP 2 The person subject of this application suffered a cardiac arrest in June 2016, and because of a prolonged delay before CPR commenced, it was originally considered that he was in a vegetative state, but that there had been an improvement and he was now in a minimally conscious state. It was also accepted that he did have the capacity to feel pain, and that it must be accepted that he did have capacity for pleasure. In addition, his general physical condition was deteriorating, and would continue to do so. His family gave evidence that he would want his life to be preserved for as long as possible. The court had sanctioned a tracheotomy, but he required deep suctioning to clear secretions caused by his incomplete cough function. The Health Board wanted an order that it was in his best interest to continue the deep suctioning. In a long and careful judgement, the judge refused to make this order. The report also states that shortly after the judgement was delivered, he died peacefully.

Trustee accounts. Two issues of note in the next case: 1.

Was the court bound to order an account from trustees?

Held it had a discretion.

Did the Limitation Act apply? Held no.

The judge also provided some guidance as to the form of the accounts. Henchley and ors v Thompson [2017] EWHC 225 (Ch)

The defendant was the trustee or de facto trustee of two trusts, the Henchley Trust, and the Childrens’ Trust. The main asset of the Henchley trust was a house occupied by the widow of the settlor. With regard to the Childrens’ Trust, the defendant maintained that by 1991 it had no assets left. Concerns had been expressed about a possible conflict of interest with regard to the defendant’s dealings with the trust assets. The claimants argued that the court was bound to order the defendant to provide accounts, but it was held that the court had a discretion as to whether an account should be ordered. It was also held that no limitation period applied to the claim, and that it was not barred by the doctrine of laches. The defendant was ordered to produce accounts with regard to the Childrens’ Trust. Chief Master Marsh provided some guidance about the form of the accounts: “I have earlier in this judgment made some observations about the nature of trusts and accounts. They are different to trading accounts for a business entity. In the case of the latter, the accounts, in accordance with accounting conventions, provide a balance sheet which gives a snap shot as to the asset position on a date and a trading report covering a period. Trust accounts, particularly where there are beneficiaries with interests which have not vested, must be able to show from period to period (the frequency of accounts is not fixed) how the trust assets have been dealt with, including what distributions and disposals have taken place. A beneficiary reading trust accounts must be in a position to assess whether the trust assets conform with the trust instrument, that the class of assets held is appropriate for the trust. The style of the accounts, and the level of detail provided will necessarily vary. The accounts produced for 1990 and 1991 may have been suitable for submission to the Inland Revenue, as it then was, for the purposes of assessing tax liability and providing a general summary of the trusts position. However, they were not suitable to provide a beneficiary with an adequate understanding of how the trustees had managed the trust assets in the relevant periods. If, as seems very likely, the accounts for the preceding periods were prepared in a similar form, I do not consider it can be said that at any time adequate trust accounts have been prepared. Nevertheless, the accounts went some way to providing the beneficiaries with relevant information and the 1990 and 1991 accounts certainly gave rise to questions which could have been asked. Indeed, it may well be that questions were asked because there is reference to the beneficiaries of The Childrens’ Trust being unhappy at the time.” 46

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First published May 2017 Estranged children and claims under the Inheritance (Provision for Family and Dependants) Act 1975

I think that everyone is aware that the Supreme Court has overturned the decision of the Court of Appeal, and restored the original award of the judge at first instance. It had been suggested that as a result of the decision of the Court of Appeal, a testator or testatrix could not cut out a child from his or her will. However, the Supreme Court has made it plain that this is a factor to be taken into account in deciding what order should be made. Ilott v The Blue Cross & ors [2017] UKSC 17 The Supreme Court has overruled the decision of the Court of Appeal, and restored the decision of the judge at first instance. Lord Hughes gave the leading judgement (with whom all the other judges agreed), and made the following points: 1.

Maintenance under the 1975 Act is not limited to subsistence level.

If an award is going to be made under the Act, it could be of income or

capital. Maintenance could include giving capital to an applicant to enable

the applicant to purchase a car so that he or she can travel to and from work.

The test under the Act is not did the deceased act unreasonably, but whether

the deceased had made reasonable financial provision for the applicant.

The convention was to treat the consideration of a claim under the 1975 Act

as a two-stage process, (1) was there a failure to make reasonable financial

provision for the applicant and if so (2) what order ought to be made. Lord

Hughes said that the two questions will usually become: (1) did the will/

intestacy make reasonable financial provision for the claimant and (2) if not,

what reasonable financial provision ought now to be made for him.

A claimant does not need to show a moral claim.

It may not be possible to meet all the needs of a claimant because of

competing claims on the deceasedâ&#x20AC;&#x2122;s estate.

The Court of Appeal had criticised the judgement of the judge at first instance

on the grounds that whilst the judge had stated that because of the

claimantâ&#x20AC;&#x2122;s lack of expectancy and her ability to live within her means, an

award should be limited. However, he had not explained how he had limited

the award.

The judge at first instance had also been criticised for not taking into account

the effect of any award on the entitlement of the claimant to state benefits.

The Supreme Court rejected both these grounds of criticism.

10.

Lord Hughes said:

â&#x20AC;&#x153;The District Judge did not make the suggested or any error in taking into account the nature of the relationship between the deceased and the claimant. In many cases this will be of considerable importance. If, by contrast with the present case, the claimant were a child of the deceased who had remained exceptionally and confidentially close to her mother throughout, had supported and nurtured her in her old age at some cost in time and money to herself, and if she had been promised many times that she would be looked after in the will, it could not be said that the judge was required first to assess reasonable financial provision on the basis of some supposed norm of filial relationship, neither particularly close nor particularly distant, and then to lift the provision by an identified amount to recognise the special closeness between the two ladies. But without going through any such exercise, and yet adhering to the concept of maintenance, a judge ought in such circumstances to attach importance to the closeness of the relationship in arriving at his assessment of what reasonable financial provision requires. In the paragraphs leading up to the one criticised by the Court of Appeal, this Judge had dutifully worked his way through each of the section 3 factors. The long estrangement was the reason the testator made the will she did. It meant that Mrs Ilott was not only a non-dependent adult child but had made her life entirely separately from her mother, and lacked

any expectation of benefit from her estate. Because of these consequences, the estrangement was one of the two dominant factors in this case; the other was Mrs Ilott’s very straitened financial position. Some judges might legitimately have concluded that the very long and deep estrangement had meant that the deceased had no remaining obligation to make any provision for her independent adult daughter - as indeed did Eleanor King J when it appeared that she had scope to re-make the decision. As it was, the judge was perfectly entitled to reach the conclusion which he did, namely that there was a failure of reasonable financial provision, but that what reasonable provision would be was coloured by the nature of the relationship between mother and daughter.”

Contracts for the sale of land and constructive trusts. I think that all practitioners are aware that the contract for the sale of land must be in writing. However, this does not apply to resulting constructive or implied trusts. In the next case, there was an oral agreement for the sale of a meadow for £80,000, and the prospective purchasers paid the £80,000. There was no written contract. It was held that as all the terms of the contract had been agreed, the vendors held meadow on constructive trust the purchasers. Matchmove Limited v Dowding and anr [2017]WTLR 265 The appellant was a property developer, and the respondents had been a couple for many years, and had three children. The male respondent was a builder turned car dealer. The appellant accepted in evidence that his word was his bond. In 2002, the appellant began negotiations for the purchase of a plot of land and meadow. He intended to divide the land into two plots which would be sold separately. By the end of 2003 the appellant had agreed orally with the respondents that they would purchase plot 1 and the meadow from him for £200,000 which was apportioned as to £120,000 for plot one and £80,000 for the meadow. When the original purchase was completed, the respondents paid £66,600 towards

the purchase price of plot 1 and the meadow. Between 2004 and 2006 there was a dispute between the appellant and another couple about a right way over the meadow. Ultimately, there were legal proceedings, and the respondents paid the appellant £5000 towards his legal costs. Planning permission was granted, and in April 2005 solicitors were instructed to deal with the conveyancing, but before contracts were exchanged the appellant permitted the respondents to start building a house on plot 1.Contracts were duly exchanged in September 2005 stating the purchase price for plot one as £120,000 less the deposit of £66,600. Special condition 6 of the contract provided:

‘The buyer admits that he has inspected the property and that he enters into

this agreement solely as a result of his inspection of the property, and on

the basis of the terms hereof, and not in reliance on any warranty statements

representation otherwise whether oral or implied, and whether made by or

on behalf of the seller other than written replies by the seller’s solicitors to

enquiries made by the buyer’s solicitors prior to the date hereof.’

The respondents made payments totalling £80,000 for the Meadow, but in February 2007 the appellants told the respondent’s they could only have half the meadow and sent them a cheque for £40,000. The respondents did not cash the cheque. At first instance, it was held that special condition 6 only applied to plot one, and that the appellant held the meadow on trust for respondents because proprietary estoppel applied and there was a constructive trust. On appeal, it was argued that section 2 (5) of the Law Reform (Miscellaneous Provisions) Act 1989 applied. This provides that nothing in this section affects the creation or operation of resulting, implied or constructive trusts. Section 2 (1) of the Act provides that a contract for the sale or other disposition of an interest in land can only be made in writing and only by incorporating all the terms which the parties have expressly agreed in one document or, where contracts are exchanged, in each. Counsel for the respondents did not rely upon proprietary estoppel, but relied upon constructive trust thereby avoiding the issue of whether section 2 (5) can apply to claims based on proprietary estoppel. The Court of Appeal clarified the judgement of Arden LJ in Herbert v. Doyle [2010] EWCA Civ 1095 and stated that it “was a case where the parties reached an agreement in principle, but intended to make a

formal agreement setting out the terms of the acquisition, further terms remained to be agreed and the parties did not regard the agreement principle as immediately legally binding.” Section 2(5) did not apply in these circumstances. It was accepted by “the parties that a common intention constructive trust could arise where (i)

there was an express agreement between parties as to the ownership

of property

(ii)

which was relied upon by the claimant

(iii)

to his or her detriment and that

(iv)

it would be unconscionable for the defendant to deny the claims ownership

of the property.

The court held that there was a concluded agreement here, and accordingly it came within section 2 (5). It was also held that special condition 6 only applied to plot 1. What is included in the residuary estate? The next case is one where an English will specifically stated that it only applied to assets in the United Kingdom. The testator had bank accounts in Jersey and the Isle of Man. Were these included in the will? The Royal Society v Robinson & ors [2017] WTLR 299 The testator was a distinguished scientist. He Had been married, but his wife had predeceased him. There were no children of the marriage. He had a younger brother who had predeceased him leaving two daughters, one of whom had predeceased the testator leaving two children. At the date of his death the testator had a Swiss bank account with over £500,000 in it. He also had an offshore account in the Isle of Man with over £250,000 in it and an account in Jersey with over £600,000 in it. He executed a Will in Switzerland in 2006 giving his assets in Switzerland to the Royal Society, and there was no dispute about that will. 52

He also made a will in England in 2009. Clause 1 of this will was as follows:

‘I hereby revoke all former Wills and testamentary dispositions made by me

with the exception of my Swiss will dated 13th of February 2006 and I

declare that:

(a)

I am domiciled in England.

(b)

This will and any codicil to it shall be construed and take effect according

to English law: this will and any codicil shall extend only to property of mine

which is situated at my death in the United Kingdom.’

He left certain legacies, but the Royal Society was the residuary beneficiary. The question arose as to whether the money In the offshore accounts in the Isle of Mann and in Jersey were part of the residuary estate, or whether there was a partial intestacy. It was held: 1.

The technical meaning of the United Kingdom does not include Jersey or the

Isle of Man.

Section 21 of the Administration of Justice Act 1982 provides:

‘this section applies to a will – a)

insofar as any part of it is meaningless:

insofar as the language used in any part of it is ambiguous on the face of it:

insofar 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)

Insofar as this section applies to a will extrinsic evidence, including evidence

of the testator’s intention, may be admitted to assist in the interpretation.

In view of this, extrinsic evidence was admissible to assist in the interpretation of the will, and it was clear that he intended to include the accounts in Jersey and the Isle of Man in the 2006 will. 3.

Although it was not necessary for the decision, the judge would have been

prepared to extend the six-month time limit for applications for rectification of

a will, and to order rectification. 53

First published June 2017 Always read a will through carefully!

The next case is where a clause in a will did not name any beneficiary. This is a mistake which it is very easy to make when you are following a precedent. Slattery & anr v Jagger & ors [2017] WTLR 321 The testator made a will in 2011 which contained the following clause: 3.

I give devise and bequeath my beneficial share (defined as “my Share’) in

(or in the future proceeds of sale of) any freehold or leasehold property

(defined as ‘the Dwelling’) which my wife and I co-own as principal residence

at my death and I declare that this gift is to be free not only of any money

charged or otherwise secured on my share but also any money charged or

otherwise secured on the dwelling itself (and that all such money should be

paid free of tax out of my residuary estate and I shelve the cost of discharging

any security and any interest falling.

The problem was that no beneficiary was named under this clause. It was held that clause 3 was either meaningless or ambiguous, and the court could correct the clear mission from clause 3 by adding the words ‘to my wife’. In addition, there had clearly been a clerical error here, and the judge was of the view that the will could be rectified so as to give effect to the intention of the testator. With regard to costs, the solicitors who had drafted the will had given the claimants an indemnity, and accordingly the proper order was no order for costs.

Capacity. In the next case the question was whether the subject of the application had capacity to conduct litigation. It was clear that the subject of the application did have capacity to manage her affairs, and to take on the tenancy. It was accepted by the judge that someone might have capacity to make decisions about the subject matter of an application to the court, but not have capacity to conduct litigation. On the facts of this case, it was held that the person the subject of the application did not have capacity to conduct litigation. London Borough of Brent v SL and NL [2017] EWCOP 5. SL is 60. She had been diagnosed as suffering from schizophrenia and obsessivecompulsive disorder. She had come to the attention of mental health/social services professionals in about 2012 because of concerns about self-neglect. She lived with her mother, but when her mother died in 2014, her condition deteriorated with the result that she was admitted in hospital under the Mental Health Act 1983. She wanted to return home. An independent expert was of the view that SL was suffering from paranoid schizophrenia. He was also the view that SL lacked capacity to make decisions about where she should live, to make a decision about the nature of her care, and did not understand that she was suffering from schizophrenia, and accordingly it was doubtful whether she had capacity to consent to anti-psychotic medication. On the other hand, she did have capacity to enter into a tenancy agreement, and did have capacity to manage her property and affairs. He found it difficult to reach a conclusion as to whether SL had capacity to conduct litigation. Glenworth DJ said that a person may have capacity in respect of certain matters but not others. He was also of the view that a person may not have capacity to litigate, but may nevertheless have capacity with regard to the subject matter of the litigation. On the facts of this particular case, it was held that SL lacked capacity to conduct the proceedings.

Equitable accounting and the right to occupy a property. Estranged spouses do not live together. The wife purchases a house in her sole name, but signs a declaration of trust stating that she held the property on trust for her husband and herself in equal shares. The husband never lives at the property, and the wife pays all the mortgage instalments and other household expenses. The husband is made bankrupt, and his trustee in bankruptcy sues the wife. It is held both at first instance and on appeal that the parties are joint tenants in equity. It was argued on behalf of wife that she was entitled to all the proceeds of sale of the property because the husband had paid nothing towards the property. It was held that the principal of equitable accounting applied, and that the wife was entitled to credit for one half of the mortgage instalments she had paid. Under the Trust of Land and Appointment of Trustees Act 1996 a co-owner of a property who excludes the other co-owner can be ordered to pay rent to the other co-owner. It was held that this did not apply here as the trustee in bankruptcy had no right to occupy the property. Davis v Jackson and anr [2017] EWHC 698 (Ch). Mr and Mrs Jackson were married, but were estranged and lived apart. In 2003 Mrs Jackson purchased a property in London for ÂŁ196,000 with the aid of an interest only mortgage. Mrs Jackson moved in with the children of the marriage, and Mr Jackson never lived at the property. The property was vested in the sole name of Mrs Jackson, but in April 2003 Mrs Jackson executed a deed entitled â&#x20AC;&#x2DC;Declaration of Trustâ&#x20AC;&#x2122;. This provided that Mrs Jackson held the property on trust for herself and Mr Jackson in equal shares, that she would at the request of Mr Jackson sign transfer or convey the property to such persons as Mr Jackson might direct and that both parties had full power to sell or

charge the property with the consent of the other. It also included a term that Mr Jackson agreed to pay half of the mortgage payments, which he never did. Mrs Jackson paid all the interest payments under the mortgage and other household expenses. Mrs Jackson could not keep up with the repayments under the mortgage as they fell due, and the mortgagee took possession proceedings obtaining an order for possession of the property in April 2005. Mr Jackson, who was a mortgage broker, arranged for the property to be remortgaged, and the new lender required the title to the property to be transferred into the joint names of Mr and Mrs Jackson. That was achieved by the execution of a land registry TR1 form on which Mr and Mrs Jackson indicated that they held the property on trust for themselves as joint tenants. Mrs Jackson continued to make all the payments under the new mortgage. In June 2012 Mr Jackson was made bankrupt. It had been held that the parties did hold the property as joint tenants in equity because of the execution of the Land Registry transfer indicating that they were joint tenants. On appeal, this decision was confirmed. It was argued on behalf of Mrs Jackson that she was entitled to all of the proceeds of the sale of the property because Mr Jackson had paid nothing towards the mortgage. Snowdon J referred to the judgement of Lightman J in Murphy the Gooch (2007) EWCA Civ 603 when he said at para 10:

‘To resolve questions between co-owners of the character raised in this case

Equity developed the doctrine of ‘equitable accounting’ to facilitate the

striking of the balance between the co-owners. This too consisted of a body

of (non-binding) guidelines or rules of convenience aimed at achieving justice

between the co-owners. The thrust of these guidelines was that, where it is

just to do so, co-owners may be given credit monies paid and expenditure

incurred on the jointly owned property, a co-owner in sole occupation of

property may be charged with or required to give credit to his co-owner for

an occupation rent and these credits may be offset against each other.’

It was held that Mrs Jackson was entitled to claim an additional credit one half of the payments of interest which she made under mortgage of the property.

It was also argued that she should pay an occupation rent for her use and occupation of the property. The judge referred to sections 12 to 15 of the Trusts of Land and Appointment of Trustees Act 1996, and held that it did not exclude the old common law rules, and that the sections did not apply here as the trustee in bankruptcy did not have any right to take up occupation of the house. It was held that the court had a broad equitable jurisdiction to do justice between co-owners. In this case, there never had been any intention that Mr Jackson should occupy the property, and accordingly Mrs Jackson was not liable for any rent. It was held that the correct apportionment of the proceeds of property would be first to split the net proceeds equally between the trustee and Mrs Jackson, and then to give Mrs Jackson additional credit for one half of all the payments she had made under the mortgage from the date the property was purchased up-to-date on which the property was sold.

Removal of executors. Thornton & ors v Woodhouse & anr [2017] EWHC 769(Ch) The testator was a wealthy man, who was divorced. There were three adult children of marriage, and he had married again. There were no children of that marriage. There was a challenge to the validity of a will made in 2009 on the grounds that there had been non-compliance with the formal requirements for wills, lack of knowledge and approval of the will and undue influence. There was also an application to remove the executors and trustees. All these claims failed. In a lengthy judgement, Richard Spearman QC reviewed the evidence. It is an unhappy story of tensions in a family. He said:

“Mr Dew contended that further discussion of the jurisdiction was not fruitful.

However, he extracted the following propositions on the use of that jurisdiction

from Lewin on Trusts (19th Ed) 2015 (“Lewin”) at para 13-064ff, Alkin v Raymond

[2010] WTLR 1117 and Kershaw v Micklethwaite [2011] WTLR 413:

(1)

It will require an extreme case before the Court will remove an executor or

trustee who has been expressly chosen by the testator, especially (but not

only) where the grounds of that removal were ones which existed at the time

the decision was made.

(2)

In such cases, hostility from, or disagreement with, the beneficiaries will not

amount to a ground for removal of the trustee.

(3)

It will usually require some evidence of positive wrongdoing, usually in the form

of an actual or anticipated breach of trust, to remove such an executor

or trustee.

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First published July 2017 Equity of exoneration

The next case is concerned with whether a wife had an equity of exoneration. Husband and wife were co-owners of the family home. The husband was a solicitor and charged the family home as security for a loan to prop up his practice. The practice failed and he was made bankrupt. If the wife was entitled to an equity of exoneration, it took precedence over the rights of the trustee in bankruptcy of the husband. Lord Justice David Richards in the Court of Appeal said that equity of exoneration was part of the law relating to sureties. A surety is entitled to an equity of exoneration unless the surety receives some benefit from the loan, for example the loan used to pay the debts of the surety. On the facts of this particular case, it was held that the wife was entitled to an equity of exoneration as any benefit was indirect. Armstrong (as Trustee in Bankruptcy of Andre Obinna Kalu Onyearu v Onyearu and anr [2017] EWCA Civ 268. Mr Onyearu was a solicitor, and his wife was a business development lecturer. It was accepted that they owned the matrimonial home jointly. Mr Onyearuâ&#x20AC;&#x2122;s practice started to experience financial problems, and he obtained a loan secured by a charge on the matrimonial home. His wife was aware of this charge. Mr Onyearuâ&#x20AC;&#x2122;s practice closed at the end of September 2010 and he was declared bankrupt in March 2011.

It was argued that Mrs Onyearu was entitled to an equity of exoneration. Lord Justice David Richards said:

“The most common example of jointly-owned property is a house or flat

owned by a co-habiting couple, married or unmarried. For this reason, the

cases in which the courts usually encounter the equity of exoneration are

those in which, first, an unmarried couple separate and their interests in the

property must be determined; second, a co-habitee, whether married or

unmarried, becomes bankrupt and the trustee in bankruptcy seeks to realise

the bankrupt’s share of the property; and, third, a judgment creditor of

one co-habitee, married or unmarried, seeks to enforce the judgment against

the property. But the equity is not confined to co-habiting couples and may

arise in the case of any joint owners of property: see, for example, Gee v

Liddell [1913] 2 Ch 62 and Re a debtor (No 24 of 1971); Ex parte Marley v

Trustee of the Property of the Debtor [1976] 1 WLR 952.

This appeal concerns the circumstances in which the equity will or will not be

available to the co-owner, and in particular the part that benefit to the

co-owner from the secured indebtedness plays. The authorities establish that

the availability of the equity is a matter of the actual or presumed intention

of the parties. If the actual intention is that the equity is to apply or, conversely,

is not to apply, this determines the issue. In many cases, however, there is

no evidence of actual intention, and the law will arrive at the parties’

presumed intention from an examination of all the relevant circumstances.

Without confining that enquiry, the common touchstone is to determine

whether the co-owner was intended to receive benefits from the debts

secured on the property. It is the nature of those benefits that lies at the heart

of this appeal, and in particular the effect of indirect, as opposed to direct,

benefits. As counsel for the appellant observed, this is the first occasion on

which any issue on the equity of exoneration has arisen for decision by the

Court of Appeal since Paget v Paget [1898] 1 Ch 470.”

Lord Justice David Richards said that he considered that the equity of exoneration was part of the law relating to sureties. If a surety receives a benefit from a loan, the equity of exoneration may be defeated. Counsel for the Trustee in Bankruptcy argued that different rules should apply to couples, but Mr and Mrs Onyearu had clearly kept their money’s separate.

It was held that Mrs was entitled to an equity of exoneration. The judge said:

“Coming back to the facts of the present case, it follows from what I have said

that I consider that the decisions of the Deputy Registrar and of the Deputy

Judge on appeal were correct. The purpose of the bank loan secured by the

charge on the matrimonial home was to pay the creditors of Mr Onyearu’s

practice. The creditors, and Mr Onyearu, were the people directly benefitted

by the loan. Any benefit that might have been anticipated for Mrs Onyearu

was subject to a double contingency: first, that Mr Onyearu’s practice

would survive and, secondly, that it would make profits from which he could

make drawings. Any benefit to Mrs Onyearu was too remote to provide

a basis for inferring or presuming that her intention was to bear the burden

of the loan equally with her husband. Further, as at the date of the secured

loan, any anticipated benefit was, as in Parsons v McBain, incapable of

valuation and unlikely to bear any relation to the amount of the loan “was

entitled to an equity of exoneration.

Joint tenants or tenants in common? A property is conveyed to father and son. Neither signs the transfer, but it indicates that they are to hold the property as joint tenants in equity. The relationship breaks down. There is a dispute about the shares in which they own the property. LPA 1925 requires a declaration of trust to be in writing and signed. It was held that a signature by a vendor was sufficient. The signature of a notice of severance by one party also satisfies the LPA. There was no evidence of any intention to vary the trusts. Taylor v Taylor and anr [2017] EWHC 1080 (Ch). This case is a dispute between father and son. It concerned a small hotel and camp site near St Austell which was transferred to the father and son in 2012. There was some dispute as to the respective contributions of father and son, but the land was transferred to them using Form TP1. This stated that they were to hold the property on trust for themselves as joint tenants. Neither father nor son executed this transfer. Subsequently, a notice severing the joint tenancy signed by the father was served on the son. It was also argued that the equitable interest had been varied.

On behalf of the father, counsel relied upon section 53 (1) (b) of the Law of Property Act 1925 which provides:

‘Subject to the provisions hereinafter contained with respect to the creation of

interests in land by apparel –

(b)

a declaration of trust respecting any land or any interest therein must be

manifested and proved by some writing signed by some person who is able to

declare such trust or by his will.’

It was held: 1.

When the transfer was signed by the transferor, that amounted to a

declaration of trust satisfying section 53 (1) (b) of the 1925 Act.

If that was not correct, the signing of the severance amounted to a

declaration of trust satisfying section 53 (1) (b).

The evidence clearly indicated an intention that they should hold the property

in equal shares.

There could be a subsequent variation of the shares, but for a common

intention constructive trust to exist there must be detrimental reliance. There

was no evidence of this here.

Statutory wills. The next case is one where the facts are complicated, but the Charles J did review the cases concerning the content of statutory wills. ADS and DSM JKS (by her litigation friend the Official Solicitor) [2017] EWCOP 8. This case concerns an appeal from an order made by a Tier 2 Court of Protection Judge about a statutory will. The facts are very complicated, but Charles J set out the approach to be taken by the court (and the parties) to the making of a statutory will. He said:

“The COP judge refers to the main authorities namely In re P (Statutory Will)

[2010] Ch 33 (in which Lewison J refers with approval to In re S (Protected

Persons) [2009] WTLR 315 and [2010] 1 WLR 1082), In re M (Statutory Will) [2011]

1 WLR 344 and Re G(TJ) [2010] 3005 (Fam) in which these cases were cited

from and applied.”

10.

In P, Lewison J at paragraph 39 refers to the need for the decision maker after

he has gone through the steps required by the statute to form a value

judgment giving effect to the paramount statutory instruction that any

decision must be in P’s best interests. This is endorsed by Munby J in M and

applied by Morgan J in G(TJ). It also accords with my approach in a very

different area in Briggs v Briggs [2016] EWCOP 53 and so in my judgment with

the approach taken by the Supreme Court in Aintree University Hospitals NHS

Trust v James [2014] AC 509. At paragraphs 57 and 58 of Briggs I said:

“57. Pausing there, it is clear and important to stress that a conclusion on

what P would have done is not determinative of the MCA best interests

test and so, by stating that the MCA enables the court to do for the patient

what he could do for himself if of full capacity, the Supreme Court is not

saying that a conclusion on what the patient would have done is decisive.

The test is not a “what P would have done test”, it is a best interests test and so

a test that requires the decision maker to perform a weighing or balancing

exercise between a range of divergent and competing factors.

58. In that exercise the force, clarity or certainty of conclusions that found

competing factors will affect the weight to be given to them and that

weighing exercise is not a linear or binary exercise.”

I went on to also approve paragraphs 55 and 56 of the judgment of HHJ Marshall in S. 11.

My reference to the weighing exercise not being linear or binary accords with

the comments on the approach taken by Lewison J in P (in which he broadly

agrees with the approach taken by HHJ Marshall in S) set out by Munby J in

M at paragraphs 34 to 38 of his judgment. He emphasises the fact and issue

sensitive nature of the approach that a decision maker applying the best

interests test set by the MCA must take. As he points out, and as the

cases show:

in some cases, P’s wishes and feelings when he or she had capacity can have

great weight in determining what would be in P’s best interests, and

ii)

in other cases, P’s expressed wishes and feelings after he or she has lost

capacity to make the relevant decision can have great weight.

12.

Cases in which the reaction of P to a proposed solution are likely to affect its

successful implementation are examples of situations in which P’s wishes and

feelings (and so preferences) after he or she has lost capacity may well carry

great weight.

13.

However, the approach taken in the cases of P, and S and confirmed in M

(with the comments I have referred to) means that an approach to the

weight to be given to expressions of the wishes and feelings of P that fails to

take account of P’s capacity when they were made and so of P’s ability to

take account of relevant past and present circumstances would not comply

with the approach dictated by the MCA.

14.

When a decision falls to be made under the MCA for P, by definition, P does

not have capacity to weigh all the factors that are relevant to that decision.

This inability is a circumstance that must be taken into account in determining

the weight, and so respective weight, to be given to P’s wishes and feelings

expressed before and after P loses the relevant capacity.

15.

So, in my judgment an approach to the respective weight to be given to

expressions of P’s testamentary wishes that failed to take account of P’s

capacity when they were made and so, amongst other things:

P’s ability at the relevant times to take account of relevant past and

present circumstances,

ii)

the factual accuracy of reasons expressed by P at the relevant times,

iii)

any influences to which P may be subject at the relevant times, and

iv)

the way in which P’s wishes and feelings had been obtained

would not comply with the approach dictated by the MCA. 16.

So, for example, an approach that placed weight on the number of times

has expressed conflicting wishes without also taking into account other factors

that may affect their weight would not comply with the approach dictated

by the MCA.

17.

At paragraph 35 of his judgment in M, Munby J mentions the extent to which

P’s wishes and feelings are or are not rational sensible and responsible. He

does not define what he meant by “rational”, but in S at paragraph 57 (which

was cited by Lewison J in P) HHJ Marshall does so by reference to it being a

wish which a person of full capacity might reasonably have held. In my

judgment, if Munby J had disagreed with that definition he would have

said so.

18.

Munby J at paragraphs 37 and 38 endorses the conclusion reached by

Lewison J that a decision maker is entitled to take into account how P will be

remembered after his or her death and so whether P will be remembered for

having done the right thing. In the particular circumstances of G(TJ) Morgan

J did not attach weight to this factor but this does not mean that in other

cases it will not be a factor that the decision maker is entitled to and should

take into account.

19.

Accordingly, in my view the COP judge was wrong to conclude, in the

general way that she did, that not much, if any, weight should be given to this

factor because some members of a family will think that the court has done

the right thing and others that it has done the wrong thing. No doubt when

there is a contest between members of a family this is likely and in some cases

it may mean that “doing the right thing” is too subjective to carry weight but

in others it may not.

20.

The perception of others and so how P will be remembered links back to

the need to consider whether wishes expressed by P are rational (and so

could be reasonably held by P if he or she had capacity), sensible and

responsible and to the point made by Munby J that the fact that a

circumstance is not expressly mentioned in s.4 of the MCA does not mean that

it is not relevant or should not be given weight.

21.

Paragraphs 37 and 38 of the decision of Munby J in M also provide

confirmation of the importance of adult autonomy. This is not expressly

mentioned in s. 4 of the MCA but underlies the need to examine P’s wishes

and feelings and could lead to a view, in line with the approach in the Aintree

case, that as P has made it clear when he or she had capacity that he or she

wanted to make a will that many would regard as being irrational,

unconscionable or unfair and so which many would regard as the wrong thing

to do, a will in those terms was in P’s best interests.

22.

But the approach in cases shows that this approach to doing for P what he or

she would be able to do for themselves is necessarily founded on Pâ&#x20AC;&#x2122;s

intentions when he or she had capacity and that such views are not

necessarily the determinative factor (see for example Briggs at, for example,

paragraphs 43 and 57).

He also said:

Final comments 159. In my view there are a number of lessons to be learnt from this case they include: i)

the need to identify the issues of fact and law,

ii)

the need to carefully consider how professionals who are asked to ascertain

the wishes and feelings of P should be instructed and approach their task,

iii)

when a settlement of civil proceedings is approved on behalf of a protected

party who will or may become the subject of proceedings before the COP,

the need to consider carefully what should be explained to a civil court

asked to approve the settlement on behalf of P, what that court should be

invited to consider and explain about its approach to the approval of the

settlement, how that is to be recorded, whether the settlement is dependent

on a particular outcome in the COP and more generally how the COP will be

invited to approach the settlement that P has entered into with court

approval, how Pâ&#x20AC;&#x2122;s wishes and feelings (as a protected party) about the

settlement should be sought and recorded, and who the likely parties to the

COP proceedings will be, and

iv)

although I understand that the approach taken in this case of joining P as a

respondent and inviting the Official Solicitor to act as Pâ&#x20AC;&#x2122;s litigation friend works

well in a great number of applications for a statutory will, there may be a

need in some cases for the COP when making that invitation to the Official

Solicitor and for the Official Solicitor when deciding whether or not to accept

it to consider whether a professional deputy should make the application for P

or act for P at least until it is made clear whether there is or is not a dispute.

First published August 2017 Lasting powers of attorney

This newsletter will concentrate on one case where the Court of Protection considered various conditions or instructions in lasting powers of attorney. In the past, the Public Guardian has challenged many conditions or instructions, and the best advice to donors has always been not to impose any conditions or instructions. It still is as if the Public Guardian objects to any conditions or instructions, the Public Guardian has to apply to the Court. It is different if there is an immaterial difference in the form – the Public Guardian can still register it. The Public Guardian’s severance application [2017] EWCOP 10 This case is concerned with an application by the Public Guardian for severance of some conditions included In a Lasting power of attorney. Paragraph 3 of Schedule 1 to the 2005 Act deals with irregularities in the prescribed form of an LPA: Failure to comply with prescribed form 3 (1) If an instrument differs in an immaterial respect in form or mode of expression

from the prescribed form, it is to be treated by the Public Guardian as

sufficient in point of form and expression.

(2)

The court may declare that an instrument which is not in the prescribed form

is to be treated as if it were, if it is satisfied that the persons executing the

instrument intended it to create a lasting power of attorney.

Eldergill DJ said:

“To my mind, the defects embraced by a ‘differs in an immaterial respect in

form or mode of expression’ saving provision of this kind include minor

misspellings of names and addresses, entering a person’s last name in the first

names box and vice-versa, omitting a person’s title (Mr, Ms, etc), using and

attaching continuation sheet 1 but not crossing the ‘More replacements’ box,

and so on, all of which fall squarely within the ‘pettifogging’ category

of defects. ...

Paragraph 3 is concerned only with the prescribed form of an instrument. Therefore there are other kinds of defect that it cannot be relied on to rectify. For example, the donor may have inserted bespoke conditions, restrictions or other terms in ‘the instrument’ which are unlawful or ineffective. Because this is so, paragraph 11 of Schedule 1 to the 2005 Act deals with instruments ‘not made properly or containing ineffective provision’: Para 11 provides: Instrument not made properly or containing ineffective provision 11 (1) If it appears to the Public Guardian that an instrument accompanying an

application [for registration] is not made in accordance with this Schedule, he

must not register the instrument unless the court directs him to do so.

(2)

Sub-paragraph (3) applies if it appears to the Public Guardian that the

instrument contains a provision which—

(a)

would be ineffective as part of a lasting power of attorney, or

(b)

would prevent the instrument from operating as a valid lasting power

of attorney.

(3)

The Public Guardian—

(a)

must apply to the court for it to determine the matter under section 23(1), and

(b)

pending the determination by the court, must not register the instrument.

(4)

Sub-paragraph (5) applies if the court determines under section 23(1)

(whether or not on an application by the Public Guardian) that the instrument

contains a provision which—

(a)

would be ineffective as part of a lasting power of attorney, or

(b)

would prevent the instrument from operating as a valid lasting power

of attorney.

(5)

The court must—

(a)

notify the Public Guardian that it has severed the provision, or

(b)

direct him not to register the instrument.

(6)

Where the court notifies the Public Guardian that it has severed a provision, he

must register the instrument with a note to that effect attached to it. ...

Perhaps surprisingly, where an instrument contains an ineffective provision the court procedure is different from that which applies in the case of instruments not made in accordance with Schedule. There is no need for the donor or donee to apply to the court for a determination. Rather, paragraph 11(3) requires the Public Guardian to apply to the court for it to determine the matter under section 23(1) — by which the court may determine any question as to the meaning or effect of a lasting power of attorney or an instrument purporting to create one — and, pending the court’s determination, the Public Guardian must not register the instrument. If the court agrees that the instrument contains a provision which would be ineffective as part of a lasting power of attorney, or would prevent the instrument from operating as a valid lasting power of attorney, it must either notify the Public Guardian that it has severed the provision or direct him not to register the instrument. The purpose of ‘severance’ is to sever the bad from the good, putting a ‘blue pencil’ through that part of the LPA that is ineffective or illegal and leaving the remainder of the LPA to stand..” It was held that the following were in order: MC The donor ticked the box indicating that the attorney were to act jointly and severally.

“Any financial decisions up to the value of £150.00 can be made

independently by my attorneys. However any financial decisions over this

amount must be agreed upon by both my attorneys.”

“I would like my attorneys to consider Thomas G (my son) as my main priority

when making decisions.”

“I would like my Grandchildren to be each given, £1,000, I would like any

funds left over, to be equally shared between my children S, P and C.”

Eldergill DJ said: In my view, because Mr DH expresses all of this as a wish in the preferences box (what he would ‘like’), rather than as a binding condition on his donees in the

instructions box (what they must do), it does not require severing. It is a statement of his wishes which the donees must consider when making decisions on his behalf. At the relevant time they will need to decide whether to apply to the court for authority to carry out the wishes expressed by him in what is a section 4(6) written statement on the basis that such gifts are in his best interests. Given that he has expressed a wish to give away all of his liquid funds, the court (and the donees) will need to consider at the time what weight to give to that statement when deciding whether such gifts and a court application are in his best interests, particularly given the ambiguity as to precisely what he intended by his statement. SHH

â&#x20AC;&#x2DC;If I am:

(A)

Unconscious and it is unlikely that I shall ever regain consciousness; or

(B)

Suffering from an incurable or irreversible condition that will result in my death

within a relatively short time; or

(C)

So severely physically or mentally disabled that I shall be totally dependent on

others for the rest of my life;

Then (i)

I would wish my attorneys to ensure that any medical treatment (which is to

be regarded as including artificial feeding/hydration and ventilation and all

that these procedures involve) to be limited to keeping me comfortable and

free from pain

(ii)

I would wish my attorneys to refuse all other medical treatment or surgical

treatment if:

(a)

Its burdens and risks outweigh its physical benefits;

(b)

It involves any research or experimentation which is likely to be of little or no

therapeutic value to me; or

(c)

It will prolong my life or postpone the actual moment of my death with no

further benefit to me.

(iii)

If I am on a life support machine I wish that the machine be switched off. If I

am in a coma I do not wish to be resuscitated.

77.

On reading the whole LPA form, the person who witnessed SHH sign the

Option A box of section 5 was her solicitor, LD. However, she did not print her

name and address next to her own signature in the space provided for the

witness to do so. She did do so elsewhere on the LPA form, so her printed

name and address are accurately recorded on the face of the instrument. 71

78.

Because of this failure to execute Option A properly, the Public Guardian

states that no Option A authority to give or refuse consent to life-sustaining

treatment was given to the attorneys ‘and as a result the chosen option with

regard to life sustaining treatment defaults to Option B [the donor does not

give her attorneys authority to give or refuse consent to life-sustaining

treatment on her behalf]. Because Option B applies, it is necessary to sever

the emboldened and underlined words in paragraphs (i) and (ii) of section 7

(‘my attorneys to ensure’; ‘my attorneys’: see relevant passage above) on the

ground they are incompatible with Option B.

79.

Given that LD twice printed her name and address next to her signature

elsewhere on the LPA form, I take the view that her omission to print her name

and address next to her signature in section 5 is a defect in the prescribed

form of the instrument that falls within paragraph 3. It is material given that it

relates to life-sustaining treatment but can be rectified by the court under

paragraph 3(2) given her clear intention. I would also make an appropriate

declaration under section 23 in terms of the meaning or effect of the

instrument, and in particular that Option A has effect.

“Whereas I have appointed VVVE to be my Replacement Attorney in the

event of my son TWG being unable to continue to act as my Attorney, I

DIRECT that my Replacement Attorney VVVE shall only act as my

Replacement Attorney if she remains legally married to my son TWG at the

point he becomes unable to act as my Attorney.”

“My attorneys can act severally except on investment decisions of £50,000 or

more where they should act jointly”

“I would also like my replacement attorneys to consider making monthly

assistance payments, in the region of £50 to my Granddaughter MIA, whilst

she is in full time education and they may also consider assisting her with the

repayment of education loans, up to a maximum of £4,000 per annum,

including the monthly payments. I would also like my replacement attorneys

to consider continuing the monthly assistance payments and annual

payments to LA in relation to his education loan repayment fund, up to a

maximum of £5,000 per annum, including the monthly payments.”

“Whilst I am not making any payments to my son KS at the time of making

this power, if there has been a reconciliation between myself and KS in the

future, I would like my replacement attorneys to consider making gifts to KS at

the same rate and frequency as my other children.”

RH 102.

In this health and welfare case, RH ticked the ‘Jointly for some decisions, jointly

and severally for other decisions’ box in section 3 on page 4. The ‘instructions’

box in section 7 then includes the following words:

“I consent to the disclosure to my attorneys of all relevant information

concerning me.

My attorneys must not decide that I am to move into residential care unless my doctor says that I can no longer live independently.” 103.

He then completed ‘Continuation Sheet 2 — Additional Information’ to

provide additional information concerning decisions which his donees should

make jointly:

“My attorneys must act jointly in relation to decisions about where I live and

may act jointly and severally for everything else.”

104.

The Public Guardian noted that some sections of the form had been

executed in the wrong order. Following re-execution, the dates on which the

relevant sections were executed seem to me to be as follows:

Donor

Section 5

Life-sustaining treatment

24 May 2016

Donor

Section 9

Doner’s statement

24 May 2016

Replacement Donee 1

Section 11

Donee’s statement

30 May 2016

Donor

Continuation Sheet 2

Additional Information

30 May 2016

Certificate

Section 10

Certificate provider’s statement

30 May 2016

Donee 1

Section 11

Donee’s statement

28 July 2016

Donee 2

Section 11

Donee’s statement

28 July 2016

Replacement Donee 2

Section 11

Donee’s statement

4 June 2016

Application

Section 15

Application to register the instrument

29 July 2016

105.

If I understand it correctly, the Public Guardian’s submission is that the

continuation sheet is invalid because it was executed by the donor on 30 May

2016, six days after he had signed sections 5 (life-sustaining treatment) and

9 (donor’s statement) of the form. The effect, says the Public Guardian, is

that the donor has given no instructions as to which decisions are to be made

jointly and which may be made jointly and severally. The default statutory

position is that donees act jointly. Therefore, the cross in the box in section

3 of the form needs to be severed by the court because it indicates the

donees are to act ‘Jointly for some decisions, jointly and severally for other

decisions’. Once severed, the form takes effect as a joint appointment.

106.

The legal issue is what to make of the fact that the continuation sheet was

signed by the donor six days after he signed sections 5 (life-sustaining

treatment) and 9 (donor’s statement) of the form? Is the error

beyond rectification?

107.

Sections 5 and 9 and the continuation sheet were all signed on or before the

date when certificate provider gave and signed his certificate, the

continuation sheet does not require a witness as drafted, and in my view the

intention of the donor is clear. On balance I would direct registration on the

basis that the donor added the additional information before he had the

instrument certified.

JG2

“My Attorneys must make decisions jointly in respect of the sale of my property

at X Lane, Leicester … including any property that I may be residing in that is

considered as my main residence, jointly.”

111.

The Public Guardian accepts that it is lawful for a donor to authorise their

attorneys to act jointly and severally in respect of some decisions and jointly

in respect of others. The objection is that the donor ticked the box on page 4

which states that her attorneys are to act jointly and severally (presumably

thinking this meant that some decisions were joint and some several), rather

than the box lower down the page to the effect that some decisions would

be made jointly and some jointly and severally.

112.

However, the donor’s intention is clear because section 7 is headed

‘Instructions (Your attorneys will have to follow your instructions exactly)’ and

JG2’s instruction is, ‘My Attorneys must make decisions jointly in respect of

the sale of my property at X Lane, Leicester … including any property that I

may be residing in that is considered as my main residence, jointly.’

113.

The material facts are therefore identical to the MC case. The question in

this case is what weight to give to the fact that the wrong box on page 4

has been ticked and the answer, in my view, is not much. It was simply an error

in completing the form. I do not think that the donor’s intention is ambiguous

and to me it is wrong in principle to excise the condition or restriction in section

7 when it is the box on page 4 which is the error.

The donor ticked the box in Section 3 of page 4 which states that her two

attorneys are jointly and severally authorised to make health and welfare

decisions on her behalf. In section 5 of the LPA form (‘Life-sustaining

treatment’), she authorised her attorneys ‘to give or refuse consent to life-

sustaining treatment on my behalf’. This is Option A.

116.

The donor then wrote the following words in the instructions box within section

7 (‘Your attorneys will have to follow your instructions exactly’):

‘If it is case of making a life or death decision then please make that

decision together’.

117.

The Public Guardian asks the court to sever the words in the instructions box

because they are incompatible with the nature of the appointment of the

attorneys to act jointly and severally.

118.

Again, the donor’s intention is clear. The question in this case is what weight

to give to the fact that the wrong box on page 4 has been ticked and again

the answer, in my view, is not much, the more so given that this is a life

or death matter. It was simply an error in completing the form and it is far more

important to give weight to the donor’s intention that both donees agree on

life or death decisions than it is to give weight to ticking the wrong box.

GO (Case No 12918069) 155.

By his instrument GO authorised five persons jointly and severally to make

decisions concerning his property and affairs.

156.

In section 5 of the instrument (‘restrictions and conditions’) the donor provided

as follows:

‘1.

My said wife LLO shall be entitled to act as my attorney without any restrictions

or conditions being imposed.

The other four appointed Attorneys, AWO, SEO, HJT and LOR shall only be

entitled to act as my Attorneys for the purpose of using my debit cards on my

behalf. They shall not be entitled to act in relation to any other matter

appertaining to my Property and Financial Affairs’

157.

The Public Guardian asks the court to sever the underlined words because

they are incompatible with the nature of the appointment of the attorneys to

act jointly and severally. More particularly, the condition restricts the power

given to the second, third, fourth and fifth attorneys.

158.

In substance this is a JF type case. There is nothing objectionable in the

arrangement and it should not be necessary to create two instruments in

order to achieve a simple objective that can easily be achieved in one

instrument with a few simple words. However, I am bound by current case law

to make one of two decisions: either not to sever and to direct the Public

Guardian not to register the instrument (given that the result goes against

GO’s manifest intention) or to sever and direct registration. Given his consent

to severance, with reluctance I have decided on the latter course.

PG By her instrument Mrs PG authorised her attorneys jointly and severally to make decisions concerning her property and affairs. 127.

The Public Guardian submits that the following words in the instructions box

within section 7 of the instrument require severing because they are ‘incompatible with the requirements in section 1(5) of the MCA that any act done or decisions made must be done or made in the donor’s best interests’:

‘My attorneys must ensure that IBG [the donor’s daughter, I believe] who is unable to make decisions for herself because of her disabilities that her needs are met.’ GB 159.

By her instrument GB (‘Mrs B’) authorised her husband JB (‘Mr B’) to be her

attorney in relation to decisions concerning her property and affairs. 160.

She also appointed two replacement attorneys (JHLB and DJLB) and (clearly

in relation to them) completed the preferences box within Section 7 as follows: ‘I would like them to act jointly for the sale or rental of properties and investments.’ 161.

She then completed Continuation Sheet 2 (‘How replacement attorneys step

in and act’) so as to provide that: ‘I want my replacement attorneys to act jointly and severally. Jointly for sale or rental of properties and investments.’ JB By his instrument JB authorised his wife GB (see case immediately above) to be his attorney in relation to decisions concerning his property and affairs. 167.

He appointed two replacement attorneys and (clearly in relation to them)

completed the instructions box in Section 7 as follows: “My attorneys must act jointly when deciding either sale or rental of my properties also what action to take regarding investments.” 168.

He then completed Continuation Sheet 2 (‘How replacement attorneys step

in and act’) so as to provide that: “I want my replacement attorneys to act jointly and severally. Jointly for sale of rental properties and investments”

CW (Case No 12946813) 177.

By her instrument CW authorised her mother EJW to be her attorney in

relation to decisions concerning her property and affairs. She also appointed

one replacement attorney, GD.

178.

In the preferences box in section 7 of the instrument the donor stated:

‘I wish that my attorney considers not only the use of my money for my own

benefit but also to consider the use of my money for the benefit of my mother

EJW and my daughter LAAW.’

It was held that the following should be severed: JF

The donor appointed three attorneys jointly and severally (her husband or

partner, OM, and her two daughters, it appears).

121.

The Public Guardian submits that the following words in the instructions box

within section 7 of the instrument require severing because they ‘are

incompatible with the nature of the appointment of the attorneys to act

jointly and severally’:

‘My two daughters (if surviving) must always agree on any decision jointly

before any actions regarding my estate can be implemented. OM may act

as an attorney independently of my daughters.’

122.

The problem with severing the condition is that it creates or brings into

existence a Lasting Power of Attorney which is contrary to the clear intention

of the donor. She only wished to authorise her daughters to deal with her

property if they agreed that a particular decision or intervention was in her

best interests. Severance overrides that and empowers them to act

unilaterally which is the opposite of what JF intended.

123.

On the basis of the Public Guardian’s advice that the condition needs to

be severed in order to be registered, JF consents to severance. I do not know

if she was advised that she could achieve her desired end by creating two

LPAs (one appointing her daughters jointly and the other her husband or

partner solely).

124.

I cannot see that there is anything objectionable in the arrangement devised

by JF or that it should be necessary to create two instruments in order to

achieve a simple objective that can easily be achieved in one instrument with

a few simple words. It is certainly not desirable. Under the general law of

agency, a principal may appoint co-agents, giving power to a quorum to

act on her or his behalf. It seems virtually eccentric that a person must

authorise (say) four attorneys to all act jointly or all separately and cannot

specify anything in between. The aim should be a statutory scheme that gives

as much flexibility to donors to set out how they wish their affairs to be dealt

with as possible.

125.

However, I consider that I am bound by current case law to make one of

two decisions: either not to sever and to direct the Public Guardian not to

intention) or to sever and direct registration. Given the donor’s consent to

severance, with considerable reluctance I have decided on the latter course.

“While my attorneys are authorised to act jointly and severally I specifically

direct that all decisions must be made by at least two of my attorneys and

that no attorney has the power to make decisions individually.”

‘My attorneys must ensure that PH receives £10,000 from my life

insurance policies.

My attorneys must ensure my funeral service is a cremation only and provide food and drink accordingly at a venue of their choice. My ashes to be placed in a casket next to Mrs NH’ The attorneys had been appointed jointly and severally. The judge expressed doubts about the validity of the following:

‘My attorneys must ensure that PH receives £10,000 from my life

insurance policies.

My attorneys must ensure my funeral service is a cremation only and provide food and drink accordingly at a venue of their choice. My ashes to be placed in a casket next to Mrs NH’ 79

GD (Case No 1294678T) 172.

By her instrument GD authorised two persons jointly to be her attorneys in

relation to decisions concerning her property and affairs. She also appointed

one replacement attorney.

173.

In section 5 of the instrument (‘When do you want your attorneys to be able to

make decisions?) she ticked the box ‘As soon as my LPA has been registered’,

rather than the box ‘’Only when I don’t have mental capacity’.

174.

In section 7 of the instrument the donor then completed the preferences box

as follows:

‘This power shall only come into effect when my Attorneys have reason

to believe that I am becoming or have become incapable of making

decisions and managing my property and financial affairs and such

incapacity has been confirmed in writing by my General Practitioner (GP)’

175.

The Public Guardian asks the court to sever these words because they are

incompatible with the option chosen in Section 5 which states that the

attorneys are able to make decisions as soon as the LPA has been registered.

176.

Clearly section 5 or 7 requires correction. The Public Guardian has kindly made

enquiries of GD who states that her intention was that the attorneys be

authorised to make decisions on her behalf as soon as the instrument is

registered. Therefore it is section 7 that requires severing and I shall make an

order accordingly.

Can an attorney under a LPA maintain the donor and other persons? An attorney under am EPA does have a statutory power to do so, but there is no similar power with LPAs. EldergilL DJ said: “152. Having regard to the above considerations, I would be of the view that the

legal position is as follows:

An act done by an attorney is in general to be treated as one done by the

person themselves.

An attorney’s primary duty is to act only within the scope of the actual

authority conferred by the power.

The extent of an attorney’s authority turns primarily on the wording of the

power and the authority given to them is a matter to be decided upon by the

donor in consultation with the attorney.

There is nothing to prevent a donor who does not wish their estate to be used

to meet the needs of family members or dependants from inserting in the

instrument a condition or restriction to that effect. Likewise, a donor may

impose conditions or restrictions in relation to gifting.

If a general power to manage the donor’s property and financial affairs is

granted to an attorney then the attorney has authority to make decisions

about ‘all or any’ matters concerning the donor’s property and affairs,

including therefore meeting the needs of other persons and making gifts,

subject to:

A statutory duty to comply with section 1 of the Act (principles) which,

inter alia, requires an attorney to act in the best interests of an

incapacitated donor;

ii)

A statutory duty to comply with section 4 of the Act (best interests) which, inter

alia, requires an attorney before deciding that a decision or payment is

in the best interests of an incapacitated donor to consider the donor’s past

and present wishes and feelings (and, in particular, any written statement

made by them, including statements in the LPA itself), their beliefs and values,

the factors which the donor would be likely to consider if s/he were able to do

so, the views of any co-attorneys, the views of any non-professional carers,

and any other relevant considerations such as the donor’s current financial

position and own needs.

iii)

A statutory duty not to make gifts of the donor’s property without court

authority if they exceed the level permitted by section 12.

iv)

A duty to act in good faith.

A fiduciary duty not to use the power for personal advantage in a way that is

not in the donor’s best interests upon a proper application of section 4.

vi)

A duty to use such care and skill of care when carrying out their functions

under the power of attorney as the attorney would in the management of

their own affairs.

It is not possible to define precisely the boundary between a gift and a

payment to meet a person’s needs because each person’s situation,

circumstances and resources are unique. However, marriage and equivalent

relationships typically create a relationship of interdependence and mutual

support, and dependence is commonly created by the presence either of

children or a family member with a significant disability. Such relationships

commonly generate needs met by other loved ones within the circle. In

very general terms, gifts lack the regularity of weekly, monthly and other

periodic payments to meet the needs of family members and dependants,

and often are not supported by a history of frequent similar periodic payments

predating the onset of incapacity.

Where a spouse or partner attorney applies part of the donor’s funds to

meet their own continuing needs and those of other dependents in a way

which —allowing for any reduction in family income and assets caused by

care home fees or loss of earnings and any increase in the donor’s own

needs — is consistent with the donor’s historical expenditure prior to the onset

of incapacity then this is likely to be an indicator that it is a need that is being

met, not a gift. Because the donor has entrusted such decisions to their

attorney, rather than leave them to a court, the courts are likely to be

reluctant to interfere without good evidence that the attorney has not

applied the requirements of section 4 when making their best interests

decision. Such expenditure is consistent with the donor’s historical expenditure

which acts as a barometer of their wishes, feelings, beliefs and values, and the

lifestyle enjoyed prior to the onset of incapacity sets a benchmark that

is relevant to the assessment of need. In order not to allow for any doubt at

all, a prudent donor may wish to make the matter explicit by including a

condition or statement in their LPA about future provision for the needs of

specified persons.

Payments on customary occasions such as birthdays will generally be gifts, not

payments to satisfy a need. Likewise, the making of one-off payments in the

absence of good evidence of a sudden present need which historically the

donor would have met or be likely to meet from their own funds may be

construed by a court as a gift. Therefore, given that an attorney who

breaches any of their duties is personally liable to compensate the donor for

any loss thereby sustained to the donor’s estate, the prudent course would be

to apply for the court to authorise such a payment.

153.

To return to PG’s case, to me this clearly a case of meeting a need and

without more would not require a court application under section 12.

Requiring her donees to ensure that her estate continues to be used as

necessary to help provide for her disabled daughter’s needs is her wish. It is in

her best interests that she knows that her wishes and feelings for her daughter

will be honoured if she becomes incapacitated. In my view, there is nothing to

prevent her from imposing that condition on her attorneys. 82

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First published September 2017 Can a mistake affect the validity of a will?

This was one of the issues in the next case. Ball & Ors v Ball & Ors [2017] EWHC 1750 (Ch). The deceased was born in 1935, and died in November 2013. Her husband was born in 1934, and died in about 2004. There were 11 children of the marriage. In 1991 the three claimants, a son and two daughters, reported their father to the police for sexually abusing them when they were younger. He was prosecuted, and pleaded guilty to indecent assault upon the second claimant, and incest and indecent assault upon the third claimant. He was given a suspended prison sentence. The deceased accepted that there was some truth these complaints, but considered that they were exaggerated, and was annoyed that the complaints had been made public. In 1991, the deceased executed a Will cutting out the three claimants. It was alleged that the deceased lacked capacity to make a will because she had made a mistake which was sufficient to remove her testamentary capacity. There was also an allegation of undue influence. The claimants also claimed under the Inheritance (Provision for Family and Dependents) Act 1975. With regard to mistake, HHJ Paul Matthews said: â&#x20AC;&#x153;In my judgment, this case makes clear that mistake does not by itself operate to invalidate a will. What it can do, however, is to provide a basis upon which to say in an appropriate case that the testator either is suffering from an insane delusion or does not possess a sufficiently sound memory for the purposes of making a will 84

(compare the case of Walters v Smee, where the judge discusses Boughton v Knight, at [36]-[37] above). But a mere mistake without more is not enough. In the present case, I am quite satisfied that, even if the testatrix had been acting in the mistaken belief that her husband was innocent of the charges against him, when in fact he was guilty, that would not be enough by itself to show that either she was suffering from an insane delusion, or that she did not have sufficient memory for the purposes of making a will. In the event, of course, I have in fact found that she was not suffering from such a mistake at that time. Strictly, therefore, the point does not arise.” With regard to undue influence, he said: “In my judgment, the testatrix having capacity to make a will was entitled to decide not to benefit the three claimants under it. In circumstances where they were the cause of her husband having to face serious and potentially life-changing criminal proceedings, albeit justified at least in part, that was not irrational, even though I accept that not every parent would have behaved in the same way, and some people might criticise her for doing so. But it was her property to dispose of, and her right to choose. The choice she made does not demonstrate that she must have been acting under undue influence. The other evidence shows that her husband was not putting pressure on her, even though I have no doubt that she took his wishes, or supposed wishes, into account in deciding what to do. Therefore this part of the claim also fails.” It was held that the claimants were entitled to apply under the 1975 Act, but needed to prove that they required something for their maintenance. The estate of the deceased was worth about £157,000, and none of the children were very well-off financially. In the circumstances, it was held that the claims failed.

Mutual wills. The next case is one where it was held that parents had agreed to make mutual wills. The judge stated what he considered to be the law. There had been some suggestion in previous cases that any agreement must be in writing or evidenced in writing if it related to land.

He also said that the doctrine was based on constructive trust so an oral agreement was effective. He also considered the effect of mutual wills on the assets of the survivor, and stated that there was an implied agreement that the survivor could spend the capital if it was necessary. Legg & anr v Burton & ors [2017] EWHC 2088 (Ch). The deceased and her husband executed mirror image wills in July 2000 giving all their property to each other, but on the death of the survivor, then it went to the two claimants in equal shares absolutely. The will stated: ‘My trustees shall pay my residuary estate to my wife/husband absolutely and beneficially and without any sort of trust or obligation.’ The husband died in May 2001, and the deceased beginning in 2004 made no further than 13 further wills. The 2000 wills were executed in the presence of the solicitor who drafted them and his clerk. The first claimant gave evidence that her father asked the solicitor if everything was ‘set in stone’ because neither he nor the deceased wished to change their wills again. The solicitor had replied that the law cannot stop someone from changing their will in the future. When the second claimant arrived subsequently, the deceased and her husband explained the terms of the will, and also stated that the wills were “set in stone” and that they had decided to make a promise to each other never to change the wills again. The first claimant had queried why there was no mention of the agreement in the wills, but her queries had been dismissed by her father. It is clear that the mere fact that spouses execute mirror image wills does not mean that they have agreed to make mutual wills. HHJ Paul Matthews said: “A number of authorities were cited to me. These include Re Cleaver deceased [1981] 1 WLR 939, Re Dale deceased [1994] Ch 31, Re Goodchild deceased [1997] 1 WLR 1216, CA, Lewis v Cotton [2001] 2 NZLR 21, CA of NZ, Olins v Walters [2009] Ch 212, CA, Charles v Fraser [2010] EWHC 2154 (Ch), and Fry v Densham-Smith [2010]

EWCA Civ 1410. From these authorities I deduce the following propositions. In order to succeed in a claim that a will falls within the equitable doctrine of mutual wills, and is accordingly binding on the estate of the testator despite a subsequent change in that will, the claimant must prove, on the balance of probabilities, that the testator made a legally binding agreement with the other testator that both would make their wills in a particular form (not necessarily the same) and that they would not revoke them or (depending on the terms of the agreement) change them without notice to the other or others sufficient to enable that other or others to change their own wills as well, that they made their wills in that particular form and that they did not revoke them (or change them without such notice), and the first of the testators to die did so, not having revoked (or changed) his or her own will. In previous cases, there had been some discussion as to whether an agreement to make mutual wills was a contract which had to comply with section 2 of the Law of Property (Miscellaneous Provisions) Act 1989. The judge stated that he considered that this was a case of proprietary estoppel which meant that a constructive trust was imposed which did not need to be in writing or evidenced in writing. He said: “But I cannot help thinking that, when Leggatt LJ in Re Goodchild deceased [1997] 1 WLR 1216, 1225G, referred to the necessity of an agreement, in order to justify a constructive trust being imposed, not on the property passing from testator 1 to testator 2, but on testator’s 2’s existing beneficially owned property, he cannot have had in mind the possibility that testator 2 might make a promise, intended to be relied upon, to deal in future with her own beneficial property in a certain way, on which testator 1 relied to his detriment by making his will as (informally) agreed, and then dying, so putting it out of his power to alter his will in future. In other words, that judge was not excluding the possibility that the necessary equitable obligation to bind the conscience of testator 2, and so call into existence the constructive trust of mutual wills, might arise from a proprietary estoppel rather than from a contract. It seems to me that he must instead have been thinking either of the difference between mutual wills and secret trusts (mere communication of the gift being enough in the latter case), or alternatively of the distinction to which I have already alluded between a legally binding obligation and an “honourable engagement”. But a proprietary estoppel, if established, is legally binding. It was held that there was an agreement to create mutual wills which bound the deceased.

He also considered the effect of mutual wills. He said; “There is no trust imposed on the death of the first to die, unless that is so agreed. How far the survivor may deal with the assets which come from the first testator and with the assets which remain in the second testator’s estate is a matter of construction of the agreement (or other binding promise) between them. In the ordinary case, one may imagine that their agreement would allow for the survivor to spend capital (or some agreed amount or fraction of the capital) on herself if that should prove necessary, but, on the other hand, not to give it away to third parties during her life. It may be that, if the survivor attempts to give away (or otherwise deal with) such property in breach of the agreement, that too is an event which would justify the imposition of a constructive trust on the purported gift (see eg Lewis v Cotton [2001] 2 NZLR 21, [43]). But it is not necessary to deal with that now. That did not happen here. The consequence is that there is no uncertainty of subject matter for the trust imposed by virtue of the mutual wills doctrine.”

Inheritance (Provision for Family and Dependants) Act 1975. Yet another case where there is a claim by an estranged child. Nahajec v Fowle [2017] C30LS199. The deceased had two children by his first marriage, and daughter, the claimant, by his second marriage. The claimant was born on 11 September 1985, and the deceased and the mother of the claimant separated when she was about 11 years old. She gave evidence that there was no contact between the deceased and his family. She wrote to him, but he did not reply, or send her birthday or Christmas cards. In 2007 she stated that she made contact with the deceased, and the relationship between them was rekindled until 2009, when again the deceased ignored her. The deceased died on 19 July 2015 having made a will on 7 July 2015 giving the whole of his estate to the defendant, and appointed him sole executor. Probate of the will was granted on 15 October 2015. His net estate was £264,279, which would be reduced by a small amount by the cost of a headstone. The deceased left note as to why he had made no provision for his children:

“In my said will I have made no provision for either of my sons or daughter.

I have not seen or heard from any of my children in the last 18 years and I do

not believe they have any interest in me or my welfare.

All of my children are of independent means and have or have had their own

life and family and are, to my knowledge, sufficiently independent of means

not to require any provision from me.

In the circumstances I do not feel it appropriate for (sic) necessary to make

any provision for them in my will and trust that in this regard you as my

executor will respect my wishes and ensure that they receive no benefit

whatsoever thereunder”

The claimant applied under the Inheritance (Provision for Family and Dependants) Act 1975. She stated that the deceased was a stubborn and intransigent and insensitive man. She was not very well off financially, and wished to qualify as a veterinary nurse. To this end, she was working part-time for a veterinary practice voluntarily. The judge held that the claimant was not at fault for the lack of relationship with her father, and held that his will had not made reasonable financial provision for her. Having considered all relevant factors, the judge ordered that it would be reasonable in all circumstances of the case for the applicant to receive for her maintenance £30,000.

First published October 2017 Do trustees owe duties to a person they have been asked to make payments to?

In the next case a firm of solicitors had acted for the claimant in unconnected matters. She became intimate with the man who was the beneficiary under a trust with assets in excess of $300 million. The man instructed the firm of solicitors to arrange for trustees to pay the claimant £10 million. The trustees were reluctant to do so, but agreed to pay to pay £5 million by instalments. The trustees only paid two instalments. The claimant sued the solicitors for breach of duty, that it was held that they did not owe her any duty of care. Joseph v Farrer & Co LLP [2017] EWHC 2072 (Ch). The claimant had had an intimate relationship with Mr Peter Cundall. He was a beneficiary under a trust with assets in excess of $300 million. The defendants had acted for the claimant in relation to her will and estate planning and were currently involved in giving advice about potential investments, mainly in Nigeria. A partner in the defendants, who had not acted for the claimant, was instructed to act for Mr Cundall. He wanted the trustees to pay the claimant £10 million, but the trustees were reluctant to do so. The trustees agreed to pay claimant £5 million by instalments, but stopped payments because of concerns that the claimant was interfering with the care arrangements for Mr Cundall. 90

The claimants sued the defendants alleging breach duty of care, but it was held that they did not owe any duty in the circumstances.

BPR. Yet another case where a claim to business property relief in respect of furnished holiday lets failed, even though handyman was employed full-time to maintain the properties. One factor that the judge took into account was that profit was small but that there had been considerable capital appreciation in the value of the properties. Executors of the estate of Marjorie Ross deceased v The Commissioners for HMRC [2017] UKFTT507 (TC). The deceased died in November 2011. Judge Rachel Short stated: “Her estate included a two-thirds share in a partnership, the Green Door Cottages Partnership, which owned eight holiday cottages and two staff flats, known as Green Door Cottages and a property in Weymouth known as UpsideDown House. During the relevant period the eight cottages were rented out as holiday cottages. Of the two flats, one was on a long lease to the hotel across the road and used for occupation by the hotel’s staff. Another was rented out to the only employee of Green Door Cottages, the handyman, Mr Howell. Mrs Ross occupied one of the cottages for the period from 1992 until August 2007. UpsideDown House was also rented out as holiday accommodation. 18.

The total value of all the properties held in the Green Door Cottages

Partnership was valued by an external valuer as £1.5 million in April 2012.

19.

Mrs Ross had originally owned the nearby hotel, the Port Gaverne Inn (“the

Hotel”) with her husband and acquired Green Door Cottages in 1985. These

were seen as a perfect fit with the existing Hotel business However, the Hotel

was subject to an agreement for sale dated 7 January 2002, when Mrs Ross

was no longer fit enough to run this aspect of the business.

20.

After the sale of the Hotel, the new owner, Mr Sylvester agreed to provide

certain services to Green Door Cottage guests. As part of this agreement a

tenancy was granted of the two flats and an adjoining laundry for the

Hotel business.

21.

Mrs Ross’ daughter, Mrs Oldrieve, took over running the Green Door Cottages

in 2002. Mrs Oldrieve lives in Exeter, about 60 miles from Port Gaverne, but was

brought up in Port Gaverne and views the Green Door Cottages Partnership

as her family’s business.

22.

In 2009 one of the Green Door Cottages was sold to a third party purchaser to

finance Mrs Ross’ care costs.

23.

UpsideDown house in Weymouth was fully managed by an agency on behalf

of the Appellants for which a commission of 21% was paid. This property was

sold in 2012 to pay an advance payment of the inheritance tax claimed on

Mrs Ross’ death

24.

Mrs Oldrieve is involved in other property businesses which are not part of

this appeal.”

It was argued that this was a trading business and qualified for Business property relief. It was held that it did not. One of the factors considered by the tribunal was that the profit was modest, but there had been considerable capital appreciation. The next case is one where it was argued that a livery business was a trading business, and qualified for business property relief. Apparently, there are four levels of livery in this country. Services above those which would normally be included in grass and/or DIY livery were also included. It was held that it was a trading business and qualified for business property relief. The Personal Representatives of the Estate of Maureen W. Vigne (deceased) [2017] TC/2016/05196, TC06068. The husband of the deceased ran a DIY livery business on 30 acres, and when he died in 2005, the deceased took over the running of the business. It was then let to a tenant who remained in occupation until 2008 when he agreed to become the Yard Manager for the business which the deceased then decided to operate. There was evidence that there are commonly four levels of livery in this country:

(a)

Grass livery â&#x20AC;&#x201C; where a horse has a right to reside in a field, but is not provided

with a stable.

(b)

DIY livery- where the horse, in addition to having the right to reside in a field,

is additionally provided with a stable with day to day care wholly provided by

the horseâ&#x20AC;&#x2122;s owner.

(c)

Part livery - where day-to-day care for the horse is shared between the livery

operator and the horse owner.

(d)

Full livery - where the day-to-day care of the horse and all its associated needs

are supplied by the livery operator.

When the business was relaunched in 2008, services over and above those which would not usually be included in grass livery and/or DIY livery were included. These services were: (1)

The provision of worming products, including administering them where and

when necessary (if an owner was unable and/or unwilling so to do), on a

quarterly basis.

(2)

Providing the horses with hay feed during the winter months when the grass

might not provide a sufficient food source. A hay crop was grown on part of

the land referred to as the hayfield.

(3)

Removing horse manure from the fields in which the horses spent most of

their time.

(4)

Undertaking a daily check of the general health of each horse.

With regard to 3, each individual horse owner would normally be responsible for clearing away the manure deposited by his/her horse. With regard to 4, the daily health check initially would be a visual inspection of the horses, and if it appeared that there was a problem, closer inspection would be undertaken. Over the years, there were various yard Managers, each of whom were selfemployed and part time. The profits of the business were modest. The judgment of the Tribunal stated:

13.

The respondents drew attention to paragraph 27 in the judgement of Lord

Justice Carnwath in support of the proposition that property management

is, or at least can be, part of a business which is involved in holding property as

an investment. It is to be noted that the learned judge went on to say that

property management which might be necessary in maintaining the

investment property must be distinguished from the provision of additional

services or facilities to occupants of the property, regardless of whether they

were or were not contractually entitled to such services or facilities under

the lease or licence agreement. The judge also commented, in paragraph

28 of his judgement, that the characterisation of any services provided

depends on the nature and purpose of the activity, not on the terms of

the lease or licence. Lady Justice Hale agreed with the lead judgement but

commented, importantly, that “It is usually unfortunate to try to gloss clear

statutory language, with additional judicial tests”. In other words, each case

will be fact sensitive and the facts, once agreed or found, are then applied to

the statutory words or test.

15.

We were also directed to McCall v HMRC [2009] STC 990, a decision of Special

Commissioner Hellier which went to the Court of Appeal (Northern Ireland).

That Court of Appeal endorsed what had been said by the Special

Commissioner in George and added its endorsement to the previous

endorsement of Lord Justice Carnwath and Lady Justice Hale. The decision

made by the Special Commissioner in that case was that the letting of the

relevant land for grazing did not have the necessary business activity

component to allow it to be said that the land was held other than as an

investment. Although the point does not appear to have been properly

argued in that case, Mr. Justice Deeny observed at paragraph 3 of his

judgement “However, if one applies the maxim noscitur a sociis then one can

see the possibility that Parliament intended a business more akin to one

dealing in and holding securities, shares or properties in a portfolio to be

excluded from this form of business relief rather than, as here, the

management by widow of a single farm business, which might otherwise

be inherited intact by a daughter or son paying inheritance tax on a far which

had development value because of its location may well lead to the breakup

of the farm unit by the necessity to sell and to pay the tax. Taking a purposive

approach to the provision might therefore yield a different outcome from a

literal approach.” He went on to say that he would wish to reserve his position

if such a case arose. The same judge went on to observe that on the facts of

the case then under appeal the landowner had not provided any services

which, he said, “on the authorities may very well have properly led to a

different conclusion than that arrived at by the Special Commissioner here.” 94

16.

Thus, with such guidance in mind we approach this matter by primarily having

regard to the plain words of the statute, but being mindful that the outcome

of this appeal is essentially fact sensitive because it is on the basis of the

facts (agreed or found) that we have to apply the statutory language.

In so doing we keep in mind that section 105 of the 1984 Act is essentially

driving at businesses which can properly be characterised as investment

businesses, that is, where there is little or no element of trading or the provision

of services in consideration of monies received. We are in no doubt that the

cited analysis of the Special Commissioner in George (paragraph 13 above

must be adopted as the guiding principle. We consider it implicit in that

principle that the eventual outcome cannot be dictated by simply looking at

the comparative value to be attributed to the occupation of land when

compared to the provision of services (if any) but must include such things

as the subjective intention of the landowner, any manifestations on the part

of the landowner as to whether the relevant land is being held purely as a

long or medium term investment and what, if any, components of business

activity existed (at the time of the deceasedâ&#x20AC;&#x2122;s death) before a decision is

made as to whether, on the facts, the outcome falls one side or the other side

of what, in many instances, might be a very fine dividing line.

The Revenue argued that the factual situation on the ground amounted to no more there a land letting or licensing land for the use of others. The Tribunal held and that it was a trading business and qualified for business property relief. It was also held that it did not qualify for agricultural property relief.

Comment. It is possible that HMRC will appeal this decision. However, it is welcome and does perhaps conflict with the Ross case. The writer has always considered that running even one furnished holiday let where agents are not employed is a trading business, and the property should qualify for BPR. This is subject to the qualification that if the owner has the furnished holiday let primarily a holiday home, and is only trying to recover some of the cost of running it, it is arguable that it is not a business.

CGT and main residence relief. Private residence reliefâ&#x20AC;&#x201C;when does the period of ownership Begin? If the property does not exist, is it the date of contract or when completion takes place? This was an issue in the next case where the taxpayer agreed to purchase an apartment which did not exist. As soon as it was ready for occupation, he moved in. Did you calculate the gain on a straight line basis from the date of the contract, or from the date of actual occupation? Section 28 of TCGA provides that an asset is deemed to be acquired at the date of the contract. It was held that this did not apply when the property was not in existence. Higgins v The Commissioners of HMRC TC/2016/03057. The taxpayer paid a reservation deposit of ÂŁ5000 in 2004 to secure a right to be granted a lease of an apartment in St Pancras Chambers Kings Cross. In October 2006 the taxpayer entered into a contract to buy the apartment. At that stage, the apartment did not exist. It was substantially physically complete by December 2009, and legal completion took place on 5 January 2010. The taxpayer occupied the apartment as his principal private dwelling from 5 January 2010 until completion of its sale on 5 January 2012. In July 2007 the taxpayer had sold his former residence, and thereafter his residential arrangements varied. HMRC argued that his period of ownership began at the date of the contract to acquire the lease of the apartment. The taxpayer argued that the whole gain should be exempt because of private residence relief. Sections 222, 223, 224, 28 and 43 TCGA provide as follows:

“222 Relief on disposal of private residence 222(1) This section applies to a gain accruing to an individual so far as attributable to the disposal of, or an interest in

(a)

A dwelling-house or part of a dwelling-house which is, or has at any time in his period of ownership been, his only or main residence, or

(b) …

(7)

In this section and sections 223 to 226, “the period of ownership” where the

individual has had different interests at different times shall be taken to begin

from the first acquisition taken into account in arriving at the expenditure

which under Chapter III of Part II is allowable as a deduction in the

computation of the gain to which this section applies, and ……”

223 Amount of relief “223(1) No part of a gain to which section 222 applies shall be a chargeable gain if the dwelling-house …. has been the individual’s only or main residence throughout the period of ownership, or throughout the period of ownership except for all or any part of the last 36 months of that period. (2)

Where subsection (1) above does not apply, a fraction of the gain shall not be

chargeable gain, and that fraction shall be-

(a)

the length of the part or parts of the period of ownership during which the

dwelling-house or parts of the dwelling-house was the individual’s only or main

residence, but inclusive of the last 36 months of the period of ownership in any

event, divided by

(b)

the length of the period of ownership.”

“224 Amount of relief: Further provisions “(3)

Section 223 shall not apply in relation to a gain if the acquisition of, or of the

interest in, the dwelling-house or part of the dwelling-house was made wholly

or partly for the purpose of realising a gain from the disposal of it, and shall

not apply in relation to a gain so far as attributable to any expenditure which

was incurred after the beginning of the period of ownership and was incurred

wholly or partly for the purposes of realising a gain from the disposal.”

28 Time of Disposal and acquisition where asset disposed if under contract “(1)

Subject to section 22(2), and subsection(2) below, where an asset is disposed

of and acquired under a contract the time at which disposal and acquisition

is made is the time the contract is made(and not, if different, the time at

which the asset is conveyed or transferred).

(2)

If the contract is conditional (and in particular if it is conditional on the

exercise of an option) the time at which the disposal and acquisition is made

is the time when the condition is satisfied.”

Section 43 Assets derived from other assets “If and in so far as, in a case where assets have merged…….., the value of an asset is derived from any other asset in the same ownership, an appropriate proportion of the sums allowable as a deduction in the computation of a gain in respect of the other asset under paragraphs (a) and (b) of section 38 shall, both for the purposes of computation of a gain arising on the disposal of the first mentioned asset and, if the other asset remains in existence, on a disposal of the other asset, be attributed to the first mentioned asset.” HMRC argued that section 28 applied so that the taxpayer was deemed to acquire the apartment at the date of contract when it did not physically exist. HMRC’s arguments were rejected. The judgment of the Tribunal states” “(1)

We consider that the ordinary meaning of “period of ownership” should be

applied in both section 222 and 223 TCGA 1992. A period of ownership of

a dwelling house will ordinarily be said to begin on the date the purchase of

the dwelling house has been physically and legally completed and the

purchaser has the right to occupy. ESC D49 does not affect the legal position

as it us a mere concession.

(2)

We consider the ordinary meaning of the term is consistent with the purpose

of the legislation as identified by Brightman J in Sansom which is to exempt

from tax a gain realised on a disposal of a principal private dwelling-house

which is an economic necessity where one dwelling is disposed of and

another must be acquired in inflationary times.

(3)

We also consider that when the legislation is construed purposively and

applied to the facts viewed realistically per BMBF Mr Higgins is entitled to the

relief. He acquired the Apartment which was a dwelling which he occupied

as his principal private residence as soon as he was legally and physically able

and did so until he completed the sale in January 2012.

(4)

We consider that section 28 TCGA is not a provision which determines liability

but is a deeming provision which identifies the time of acquisition and disposal

of a chargeable asset. Where it applies it deems the time of disposal to be a

date of a contract. That concept is not directly involved in determining

the meaning of “period of ownership” of a dwelling house in the context of

the availability of the principal private residence relief. When sections 222

and 223 are read together what is critical is that the period of ownership

and the period of occupation of the dwelling house coincide. To say the

period of ownership begins when a contract to acquire a dwelling is entered

into, at which time it would be highly unusual for a purchaser to have a right

to occupy, would be perverse in the context of providing relief to individuals

for gains realised on the sale of a private principal residence. The same would

be true for the time of disposal. If an individual agrees to sell his dwelling house

but for reasons out of his control the purchaser is unable to complete for a

significant period, in a thin market it is in the seller’s interest to agree to

postpone completion until the purchaser is able to complete. Following

HMRC’s analysis the period between contract and completion is disregarded

and a proportion of the gain referable to that period is taxed notwithstanding

that ownership and occupation coincide.

First published November 2017 BPR and livery stables

The next case is one where it was argued that a livery business was a trading business, and qualified for business property relief. Apparently, there are four levels of livery in this country. Services above those which would normally be included in grass and/or DIY livery were also included. It was held that it was a trading business and qualified for business property relief. The Personal Representatives of the Estate of Maureen W Vigne (deceased) [2017] TC/2016/05196, TC06068. The husband of the deceased ran a DIY livery business on 30 acres, and when he died in 2005, the deceased took over the running of the business. It was then let to a tenant who remained in occupation until 2008 when he agreed to become the Yard Manager for the business which the deceased then decided to operate. There was evidence that there are commonly four levels of livery in this country: (a)

Grass livery â&#x20AC;&#x201C; where a horse has a right to reside in a field, but is not provided

with a stable.

(b)

DIY livery- where the horse, in addition to having the right to reside in a field,

is additionally provided with a stable with day to day care wholly provided by

the horseâ&#x20AC;&#x2122;s owner.

(c)

Part livery - where day-to-day care for the horse is shared between the livery

operator and the horse owner.

(d)

Full livery - where the day-to-day care of the horse and all its associated

needs are supplied by the livery operator.

100