The litigous erosion of freedom of testamentary expression continues ….

 In Wills

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wills litigiation

…. with the third successful mutual Wills case in just under a century….

Mr. Jonathan Gaunt QC sitting as a deputy Judge of the Chancery Division decided the matter of Charles v Fraser [2010] EWHC 2154 (Ch) on the 11th August 2010 in favour of the Claimants following their challenge to the last Will of surviving younger sister based on the doctrine of mutual Wills.

The facts:

In 1991 two elderly sisters aged 76 and 78 orally entered into an irrevocable agreement that the first sister to die would inherit the estate of the other, and the cumulative estates would pass to 15 specific individuals in various shares on the death of the survivor. In the event of any beneficiaries predeceasing the surviving sister, their shares would lapse and be taken by the remaining residuary legatees whose shares would be increased proportionately.

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The eldest sister died in 1995 and her estate passed to the surviving younger sister, who in 2003 altered her Will to add two individuals as beneficiaries, each entitled to shares under the earlier Will, and thus, albeit inadvertently, altering allocation of the other shares. No reliance was placed upon the surviving sister having changed her Will again in 2006, it being accepted that in all probability, she lacked testamentary capacity.

The issue:

Could the Court be satisfied from the evidence as a whole that the sisters had committed themselves to testamentary dispositions which, so far as the survivor was concerned, were to be irrevocable? Mr Jonathan Gaunt QC reminded himself that in approaching this question he should bear in mind that people do not usually want to give up their freedom of testamentary disposition and preclude themselves from changing their Will in the light of later events.

In Re Goodchild, Goodchild v Goodchild [1997] 1 W.L.R. 1216, Leggatt LJ emphasised this when he said:

“The test must always be, suppose that during the lifetime of the surviving testator the intended beneficiary did something which the survivor regarded as unpardonable, would he or she be free not to leave the combined estate to him? The answer must be that the survivor is so entitled unless the testators agreed otherwise when they executed their Wills. Hence the need for a clear agreement.”

The law:

The Deputy Judge succinctly and helpfully identifed nine steps to consider:

  1.  Mutual Wills are Wills made by two or more persons, usually in substantially the same terms and conferring reciprocal benefits, following an agreement between them to make such Wills and not revoke them without the consent of the other,
  2. For the doctrine to apply there has to be what amounts to a contract between the two testators that both Wills will be irrevocable and remain unaltered. A common intention, expectation or desire is not enough.
  3. The mere execution of mirror or reciprocal Wills does not imply any agreement either as to revocation or non-revocation.
  4. For the doctrine to apply it is not necessary that the second testator should have obtained a personal financial benefit under the Will of the first testator (albeit that in the present case this had been done).
  5. It is perfectly possible for there to have been an agreement preventing revocability as to part of the residuary estate only, in which case the doctrine only applies to that part.
  6. The agreement may be incorporated in the Will or proved by extraneous evidence. It may be oral or in writing.
  7. The agreement must be established by clear and satisfactory evidence on the balance of probabilities.
  8. The agreement is enforced in equity by the imposition of a constructive trust on the property which is the subject matter of the agreement [Cleaver (Deceased), Re [1981] 1 WLR 939 applied]. The beneficiaries under the Will that was not to be revoked may apply to the Court for an order that the estate is held on trust to give effect to the provisions of the old Will.
  9. The action relates only to the disposative part of the Will. The new Will is fully effective to deal with non-disposative matters, such as the appointment of Executors. Accordingly where the doctrine applies the Executors appointed under the final Will hold the assets of the estate on trust to give effect to the earlier Will.

The two sides of the coin:

The Claimants contended that:

(i) the Wills themselves suggested that they had been the subject of a sort of negotiation and an agreement; evidenced by the careful division of the assets in equal shares between the sisters’ chosen beneficiaries,

(ii) the existence of an agreement was attested by eight witnesses whose evidence as to the nature of the relationship of the two sisters and their discussions about “the Will” were consistent,

(iii) the terms of the agreement were clear: the estate of the first sister to die would pass to the second sister and the property of both would pass thereafter to the agreed beneficiaries,

(iv) when the surviving sister made a new Will in 2003 (which was 12 years after the 1991 Wills were made and 8 years after the elder sister’s death) she viewed this as a “tidying up” operation and thought she was abiding by the agreement in that the Will remained in substantially the same form and the bequests to her sister’s chosen beneficiaries were not altered, and

(v) taking the evidence as a whole, the terms of the Wills, the surrounding circumstances, the close relationship between the sisters and the evidence of number of witnesses, there was the strongest evidence of an agreement not to revoke in the absence of a contemporary document evidencing it.

The Defendant submitted that:

(i) the Claimants bear the onus of establishing both that there was an agreement between the sisters and that an element of that agreement was that the Will of the survivor was to be irrevocable,

(ii) the fact that the sisters’ 1991 Wills were in reciprocal terms, while relevant to that question, is not sufficient,

(iii) neither the Wills nor the codicils contained any language suggesting that the sisters had agreed that their Wills were to be mutual or irrevocable, and

(iv) the fact that the surviving sister had made a new Will in 2003 clearly showed that she had not regarded herself as having made an agreement not to alter or revoke her Will after her elder sister’s death.

The decision:

Mr Jonathan Gaunt QC considered a number of points before reaching his judgment:

(i) It is inherently improbable that a testator would be prepared to give up the possibility of changing his or her Will in the future, whatever the change of circumstances.

(ii) A Court has to approach oral evidence of the kind that was given by and on behalf of the Claimants in this case warily and with appropriate scepticism; a number of the Claimants and their witnesses who gave evidence that the sisters said they had made an agreement and that the Wills could not be changed had a financial interest in the outcome of the case. Whilst he was sure that all were being candid and frank he was aware, from experience, of the ability of the human mind to “remember” what a person wishes to remember.

(iii) Again from experience, he commented that one is only too well aware of how easy it is, when witness statements are being drafted by solicitors, for the recollections of the witnesses to be subtly improved by the party calling them. He asked rhetorically whether evidence should be given in chief viva voce instead of by carefully drafted witness statements.

(iv) It is remarkable that the sister’s solicitor did not include any recital of the agreement (for mutual Wills) in the Wills he drafted for them or make any other record of it. He goes further and states obiter that a solicitor had a duty of care when faced with two sisters wishing to make reciprocal Wills, to ascertain their intentions as to revocation, to advise as to the effect of making mutual Wills and to ensure that any agreement the testatrices wished to make was clearly and accurately recorded. And the fact that Mr. Collins, the solicitor, does not appear to have done this in 1991 is a powerful point in the Defendant’s favour. It cannot, however, be conclusive because it is perfectly possible that Mr. Collins did not have the requirements of the law clearly in mind, did not do a very good job or did make some record which has been lost (no notes from the original file survived).

The court found as a fact that there was an agreement between the sisters in 1991 that:

(i) the first sister to die would inherit the estate of the other,

(ii) thereafter the cumulative estates would pass to 15 specific individuals in various shares on the death of the survivor,

(iii) in the event of any beneficiaries predeceasing the surviving sister, their shares would lapse and be taken by the remaining residuary legatees whose shares would be increased proportionately, and

(iv) the respective Wills were not to be altered after the death of the first of the sisters.

Accordingly, the Claimants had established the requirements for mutual Wills and the Defendant held the proceeds of the surviving sister’s estate on trust to give effect to the provisions of the surviving sister’s 1991 Will.

A word of warning:

There is a rising need for solicitors to advise lay clients on the differences between mirror Wills and mutual Wills in terms of requirements in the instrument itself, the effect on both parties freedom of testamentary expression (this is likely to require separate legal advice) and whether the Will is revocable or irrevocable.

Many lay clients are still not aware of even the basic legal and practical requirements of section 9 of the Wills Act 1837, as amended; this lacuna is not helped by the plethora of Will writing agencies currently in practice. Those advising on and drafting Wills should note the persuasive comments of Mr Jonathan Gaunt QC as to their duty of care. With probate litigation on the increase and, particularly that against solicitors for professional negligence following White v Jones [1995] 2 AC 207, it is imperative that solicitors ensure that they amend their “checklists” when advising clients on Wills in light of all significant precedents that flow out of our recognisable Courts of Justice. In my view this is one such case.

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