23 August 2022 by Grace Gannon & Selina Atim

Appellant loses appeal against Charities in Will construction claim

Beasant v Royal Commonwealth Society for the Blind & Ors (2022)

On 30 May the Court of Appeal handed down its decision on an appeal from the High Court’s determination that the value of a legacy of the nil rate band must take into account the value of other gifts.

Background

Audrey Thelma Anita Arkell (‘the Deceased’) died on 17 August 2017. Prior to her death she executed a Will on 27 June 2016 (‘the Will’). The Deceased’s net estate was valued at £3,127,174.

The claimant, Royal Commonwealth Society for the Blind (also known as Sightsavers International) was one of 21 residuary beneficiaries, all of whom were described as charities in the Will. On 21 December 2020, the claimant was appointed by the court to represent all the residuary beneficiaries (‘the Charities’).

The defendants were 1) the Deceased’s nephew, Mr John Beasant (‘Mr Beasant’); 2) the executors and trustees under the Will; and 3) the solicitor who drafted the Will.

The Deceased left Mr Beasant a property worth £240,000, shares worth £218,256, and personal belongings worth £1,390. She left £45,000 to friends and gifted the rest of her estate equally between the Charities.

The total value of gifts to Mr Beasant and friends was £504,646 (and the inheritance tax (‘IHT’) due on those gifts was paid out of the residuary estate).

The issue in dispute concerned the construction of clause 4 of the Will which provided

4 I GIVE the nil rate sum to my trustees on trust for my said friend John Wayland Beasant.’

4.1 In this clause the ‘nil rate sum’ means the largest sum of cash which could be given on the trusts of this clause without any inheritance tax becoming due in respect of the transfer of the value of my estate which I am deemed to make immediately before my death.

At the time of the Deceased’s death the nil-rate band (‘NRB’) (being the threshold above which IHT becomes due) was (and remains) £325,000.

In contrast to the wording of clause 4 the gifts which followed were expressed to be made free of IHT.

The Charities argued that clause 4 meant the sum due under clause 4 was the sum left, if any, after deduction of the value of all other legacies of the Will on which IHT was charged at the nil-rate. As the value of the other legacies and gift of property exceeded the nil-rate limit, there was no sum payable to Mr Beasant under clause 4.

Mr Beasant argued that clause 4 should be construed so that there was a tax-free gift of an amount of the nil-rate limit in force at the Deceased’s death, without reference to the other gifts of the Will. So the sum of £325,000 should be paid to Mr Beasant in addition to the other gifts in the Will. He argued that sub-clause 4.1 should be ignored as ‘unnecessary’ and that the Deceased could not have intended to give Mr Beasant nothing under clause 4.

The court rejected Mr Beasant’s arguments and held that if the Deceased had intended to gift the NRB to Mr Beasant the Will could simply have said that. The Will was drafted by a solicitor who could have easily drafted the clause in such a way which gifted an amount to Mr Beasant equal to the NRB and expressed that to be free of IHT just as the other gifts to Mr Beasant provided. There would have been no need to include the definition in sub-clause 4.1. The court held that clause 4 clearly contemplated that the ‘nil rate sum’ was to be calculated by reference to the operation of IHT across the whole of the Deceased’s estate and the order of the gifts in the Will did not matter. The sum was limited to the amount left of the NRB, if any, before tax would be payable.

The court therefore accepted the Charities’ construction of clause 4.

The appeal

Mr Beasant appealed. He argued that the Will was ambiguous on its face (because there was ambiguity in the effect of the words used) or, alternatively, it was ambiguous in the light of the surrounding circumstances.  He said that extrinsic evidence showed the clause was ambiguous – in particular, the solicitor’s attendance notes demonstrated a misunderstanding of how IHT works, the order of bequests in the Will, and the fact the Deceased knew her gifts to Mr Beasant were worth more than £325,000 when making her Will.

Sir Anthony Mann rejected Mr Beasant’s argument that it could not have been the Deceased’s intention to leave him nothing under clause 4. He held that the clause was not ambiguous when placed in the context of the rest of the Will. He stated:

‘In my view a clause is not ambiguous merely because clever lawyers can look at it for long enough to be able to extract more than one potential meaning’ … ‘More is required than that, otherwise the door to extrinsic evidence of intention would be opened much wider than s.21 can have intended.’

The case highlights the importance of careful drafting and construction of clauses in a will. If you would like advice on will drafting, please contact our WEP team. If you would like to dispute the content of a Will, please contact our Disputed Wills and Trusts team.

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