Walters v Olins

Norris J held that in 1998 Mr Harold Walters (Mr Walters) and his late wife, Freda (the Deceased) made a mutual wills contract pursuant to which they executed similar codicils amending their wills. The Deceased died in 2006 leaving her will and codicil unrevoked. Mr Walters inherited her estate, but disputed the application of the mutual wills doctrine to him or to the Deceased’s estate in his hands.

The judge applied the principles summarised by Dixon J in Birmingham v. Renfrew [1937] CLR 666 at 683-

“It has long been established that a contract between persons to make corresponding wills gives rise to equitable obligations when one acts on the faith of such an agreement and dies leaving his will unrevoked so that the other takes property under its dispositions. It operates to impose upon the survivor an obligation regarded as specifically enforceable. It is true that he cannot be compelled to make and leave unrevoked a testamentary document and if he dies leaving a last will containing provisions inconsistent with his agreement it is nevertheless valid as a testamentary act. But the doctrines of equity attach the obligation to the property. The effect is, I think, that the survivor becomes a constructive trustee and the terms of the trust are those of the will he undertook would be his last will.”

This appeal is about (1) the sufficiency of the evidence for the finding of a mutual wills contract between Mr Walters and the Deceased, and (2) the sufficiency in law of its terms. The litigation is regrettable. A family apparently united around the grandparents is now divided on the question whether they made a mutual wills contract. The decision on this appeal may not bring the dispute to an end. If the appeal fails, further issues may arise about the effect of the mutual wills on the ability of Mr Walters to deal with the assets derived from the Deceased’s estate. As recent cases have shown this equitable doctrine dating from the 18^th century (Lord Camden’s judgment in Dufour v. Pereira (1769) Dick 419) continues to be a source of contention for the families of those who have invoked it. The likelihood is that in future even fewer people will opt for such an arrangement and even more will be warned against the risks involved.

In its 22^nd report (1980) the Law Reform Committee noted particular problems with the mutual wills doctrine. It recommended that the difficulties would “be better clarified by judicial development than by legislation.” The novel aspect of this case is that the survivor of the alleged contract is alive and gave evidence denying the alleged contract and disputing the application of the doctrine and its consequences. This feature was absent from all the authorities cited to the court: Re Oldham [1925] Ch 75; Birmingham v. Renfrew (see above-High Court of Australia); Re Cleaver [1981] 1 WLR 939 (Nourse J); Re Dale [1994] Ch 31 (Morritt J); Re Goodchild [1996] 1 WLR 639 (Carnwath J); affirmed in [1997] 1 WLR 1216 (CA); and Birch v. Curtis [2003] 2 FLR 847 (Rimer J).

The declaration made by Norris J on 18 January 2008 was that the codicils executed by Mr Walters and the Deceased on 18 May 1998 take effect as mutual wills so as to bind the Deceased’s estate “in the hands of the Defendant” and of his personal representatives. The judge made another order which has not been challenged on this appeal. He pronounced in solemn form of law for the Deceased’s last will dated 11 March 1988 and for its codicil dated 18 May 1998.

Ward LJ granted permission to appeal on 19 March 2008. There are two grounds of appeal. The first is one of law: that the judge wrongly granted a declaration as to the existence of mutual wills binding the Deceased’s estate in the hands of Mr Walters without determining with sufficient particularity the terms of the contract. The second is one of fact: that the evidence of a mutual wills contract was not as “clear and satisfactory” as the case law requires and that the judge should have concluded on the evidence that no such contract was in fact ever made.

Mr Alan Steinfeld QC, who appeared for Mr Walters, sometimes treated the two grounds as one. They are, however, distinct and require separate consideration.

Mr Walters was born in 1912. He is now aged 96. In 1934 he and the Deceased got married. They have 2 daughters and 5 grandchildren. On 11 March 1988 they each made a will in almost identical terms replacing wills made by them in February 1953. Each appointed the other and the respondent Mr Andrew Olins (Andrew), who is a solicitor and one of their grandsons, as executors. After a settled legacy each left the other their entire residuary estate absolutely, subject to surviving by 30 days. On 18 May 1998, by which time the Deceased’s health was failing, they made codicils in similar terms. They were drafted by Andrew.

Andrew has a younger brother, Edward. He was present at a meeting in the morning of Saturday 21 February 1998, when the grandparents executed enduring powers of attorney drafted for them by Andrew. Following the meeting Andrew also drafted two codicils and sent them to his grandparents under cover of a letter.

Clause 2 of the Deceased’s draft codicil was in the following terms:

“This codicil is made pursuant to an agreement made between my husband and me for the disposal of our property in a similar way by mutual testamentary dispositions.”

Clause 2 of Mr Walters’ draft codicil was in similar terms.

Andrew’s evidence was that instructions for the codicils drafted by him had been given at the meeting on 21 February. On 31 March 1998 he wrote to his grandparents enclosing draft codicils to their wills. In the covering letter he drew their attention to clause 2 of the codicil explaining it in the following terms-

“The other main change to your Wills is at clause 2 of your Codicils. By clause 2 you agree that neither of you will, at any time in the future, seek to make any further changes to the testamentary arrangements for distributing your estates without the consent of the other. Obviously after one of you dies no changes at all will be possible. You told me that you wanted this agreement in place so that the survivor of you, especially if it is Grandma, does not come under any pressure from family members to change the testamentary arrangements.”

In the event of one of them failing to survive the other, the codicils reduced the provision in the 1988 wills for their two daughters from gifts of capital of 2/3^rd of the estate to life interests in the 2/3^rd , subject to which the capital was to be divided equally amongst the grandchildren, who also took, free of any life interest, the remaining 1/3^rd. The codicils were returned to Andrew at a meeting on 23 May 1998. He wrote to them on 28 May informing them that the codicils were to be placed with their wills for safekeeping.

By the time that the Deceased died on 20 May 2006 at the age of 93, relations between Mr Walters and Andrew had deteriorated. The main asset in the Deceased’s estate is the house in Mill Hill, in which they lived and which was in her name. We were told that it is estimated to be worth about £1.5m.

Andrew produced the codicils and contended that there was a mutual wills agreement. Mr Walters said that he had no recollection of the meeting on 21 February 1998, or of the codicils, or of the agreement referred to in clause 2 of the codicils. He also denied that the Deceased’s codicil and her 1988 will were validly witnessed.

On 16 March 2007 Andrew began these proceedings to have the Deceased’s 1988 will and the 1998 codicil proved in solemn form and for a declaration that the Deceased’s codicil takes effect as a valid and effective mutual will. Mr Walters counterclaimed for the Deceased’s 1953 will to be proved in solemn form and also claimed damages from the respondent for breach of duty. The judge dismissed the counterclaim. Mr Walters has not appealed against that.

The judge held that the Deceased’s 1988 will and the 1998 codicil were validly executed and that Mr Walters and the Deceased made a contract to create mutual wills.

The judge summarised the evidence given by Mr Walters, Andrew and Edward. He said that all evidence was given in a straightforward fashion, with each witness doing his best to tell him the truth as he recollected it. He added in a passage, which has not been and could not be criticised,-

“10.

….The key task for me has been an assessment of the reliability of that recollection, and in that connection I have of necessity placed considerable reliance upon contemporaneous documents and the inferences that may properly be drawn from them, and the inherent probabilities weighed by reference to the characters of the participants as I measured them when they gave evidence.”

The judge summarised the relevant part of Andrew’s evidence about the meeting on 21 February as follows-

“19.

It is Andrew’s evidence that at the meeting Mr Walters and the Deceased stated that after the first of them died they did not want the survivor to come under pressure to change the testamentary arrangements; in particular Mr Walters wished to protect the Deceased from such pressure (though he did not state from what direction the pressure might come.) He has a clear recollection of Mr Walters raising this topic. Andrew says that in the course of the next 10 minutes he advised that there was a method of dealing with that difficulty in such a way that the survivor could say “Back off: even if I change my will, it will make no difference.” In layman’s language he told them that they could make an agreement referred to in their wills which, once made, could not be changed after one of them died: but that while they were both alive they could do what they liked by agreement. He gives evidence that upon being instructed to implement such an arrangement he drafted clause 2 of the codicil in these terms..[see paragraph 10 above] . He then says that he sent an engrossment of this Codicil to Mr Walters and the Deceased under cover of the letter ….one paragraph of which reads [see paragraph 12 above]…”

The judge summarised his findings (paragraph 23). He found that during the last 10 minutes or so of the meeting on 21 February 1998 a discussion took place between Mr Walters and Andrew in the presence of the Deceased in the terms recorded in paragraph 19 of his judgment (quoted in paragraph 19 above). He added that Andrew’s evidence on this was clear and unshaken by cross-examination and that neither of the other surviving participants in the meeting had any positive recollection to the contrary. He commented on the omission from the attendance notes made by Andrew and Edward of any reference to the discussion. He then held that:

“(g)

The discussion led to an agreement between Mr Walters and the Deceased that the solution that Andrew offered should be adopted and that Andrew be asked to implement the arrangement under which their respective wills in the agreed form could only be changed by agreement during their joint lives and could not be changed by the survivor.”

He had no doubt that the letter of 31 March 1998 recording this arrangement was received by Mr Walters and the Deceased, because they signed the documents that it enclosed.

The judge considered the effect of the agreement made between Mr Walters and the Deceased. He held that a valid mutual will was made. He rejected submissions on behalf of Mr Walters that the agreement was not intended to be a binding agreement and that it did not satisfy the requirements for mutual wills, because it did not record any express agreement not to revoke the wills so made. He held that, as a matter of construction, the agreement described in clause 2 of the codicil was a reference to an agreement to dispose of property in a particular way and by a particular method. He did not regard the absence of any explicit mention of revocation as rendering “the mutual testamentary dispositions” incapable of enforcement as mutual wills, a reading which was reinforced by a consideration of the surrounding circumstances, in particular the covering letter of explanation.

As for the form of the relief to be granted on the mutual wills aspect of the case, the judge held that the declaration should be that the codicils executed by the Deceased and Mr Walters on 18 May 1998 “take effect as valid and effective mutual wills so as to bind the Deceased’s estate.” He explained the italicised words by the fact that he had made no findings or holdings as to the scope of the agreement relating to mutual wills, which he regarded as a question of construction of the agreement embodied in clause 2 of the codicil. He confirmed that, as reflected in the form of declaration, the Deceased’s estate was bound by the agreement “when in due course it passes to Mr Walters or his executors.” He added that he regarded the issue of Mr Walters’ own estate as simply not before him. The declaration was made as to the Deceased’s estate, but nothing else.

On the first ground of appeal – the insufficiency of the terms of the contract, Mr Steinfeld QC submitted that it was vital to know all the terms of the contract for mutual wills. How else could the subject matter and terms of the the constructive trust arising from it be determined? The judge had erred in failing to decide with sufficient particularity the scope and terms of the contract. The survivor was entitled to know exactly what he could or could not do with the assets that he acquired on the death of the Deceased, or, indeed, with his own assets.

On the judge’s findings it was unclear what property was affected by the supposed constructive trust and what Mr Walters was entitled to do with the Deceased’s property, which had been left to him absolutely under the 1988 will, and even what he was entitled to do with his own property during the rest of his life. There was a range of possibilities as to the scope of the contract which the judge had failed to determine. Was Mr Walters prevented from dealing with the Deceased’s estate at all in his lifetime? Or did the constructive trust only extend to the part of the Deceased’s estate left when he died? Did it extend to his estate at the date of the Deceased’s death? Or as at the date of his death? What was the position in relation to the Mill Hill house? What, if anything, could be done in relation to it?

The problem arising from lack of contractual certainty was, Mr Steinfeld submitted, well illustrated in two ways: first, by the form of the quia timet injunction originally sought in the claim form, but later abandoned because of the difficulty of formulating it; and secondly, and more immediately, by a very recent exchange between the parties about whether, if Mr Walters lost his appeal and was ordered to pay the costs, he would be entitled to use property coming to him absolutely from the Deceased’s estate to pay those costs. It was said on behalf of Andrew that Mr Walters would not be entitled to make that use of the Deceased’s property or make any other disposition of it inter vivos that would subvert the purpose for which the constructive trust was imposed to give effect to the contract.

It was also submitted by Mr Steinfeld that the terms of the declaration made by the judge were incorrect. The constructive trust did not affect the Deceased’s property in the hands of Mr Walters at all. The estate was expressly left to him absolutely. The trust would only bind his personal representatives as regards any property left by him on his death. The words “of the Defendant” should be omitted from the declaration to make it clear that the constructive trust did not affect the assets of the Deceased’s estate in his hands.

On the second ground – the insufficiency of the evidence for a contract - it was submitted that the judge was not entitled make a finding of a mutual wills contract. The judge ought not to have accepted the evidence of Andrew, who was one of the major beneficiaries. His evidence related to a single meeting 9 years previously. There was no evidence of an in-depth discussion of mutual wills or what a contract would entail. There was only a general discussion about the method of protecting the Deceased from being pressured to change her will.

Further, Andrew had not addressed important aspects on the scope or extent of the contract on which he relied. It was also pointed out, that the attendance notes that Andrew and Edward his brother made of the meeting omitted any reference to a mutual wills contract. In his evidence Edward said that he had no recollection of any such discussion. Mr Walters had no recollection of the meeting or of the codicils and denied that any such contract was made. Mr Steinfeld also made criticisms of the terms of the letter of 31 March 1998 and disputed clause 2 of the codicil as evidence of a mutual wills contract, as it said nothing about an agreement not to revoke the testamentary dispositions.

I agree.

I also agree.