Goodman v Goodman & Ors

This is an application under section 20 of the Administration of Justice Act 1982 to rectify the will of Guy Mark Goodman (“Guy”) who died prematurely in a road accident on 29^th March 2004 leaving his wife Jennifer Goodman (“Jennifer”) the claimant and a young son and his father Geoffrey Goodman (“Geoffrey”) in his early seventies the first defendant.

Section 20 under the heading “rectification” provides:-

“20. (1) If a court is satisfied that a will is so expressed that it fails to carry out the testator’s intentions, in consequence—

(a)

of a clerical error; or

(b)

of a failure to understand his instructions,

it may order that the will shall be rectified so as to carry out his intentions.”

Sub-section (2) provides that an application for rectification must be made within 6 months from the date on which the representation with respect of the estate of the deceased is first taken out. This application was made within time.

Clause 3 of Guy’s will contains the following provision:-

“3

I give an allowance of £2,000 per month to Geoffrey Goodman until such time as he ceases to reside at the property known as 44 Denman Drive South London NW11 6RH.”

The application is to rectify the will so as to excise clause 3.

At the time of his death Guy was a highly successful senior City trader who had over his career made substantial sums of money. His estate was certified for the purposes of probate at a value of more than £2.6M. At the same time Geoffrey his father had been long retired. He had very little income derived from pensions following his previous service in the RAF and from a previous business. He had had a chequered marital history having recently emerged from a failed second marriage. However, until the events which concern this case, he had been the owner of the property at 44 Denman Drive South (“No 44”) which had recently been put on the market but had failed to sell at an acceptable price. It is common ground that there was an unusually close bond between Guy and Geoffrey. They had a mutual interest in motor cars particularly fast ones. Guy and Jennifer had provided Geoffrey with financial support. By early 2002 Geoffrey appeared to be in precarious health having suffered a stroke.

The facts from which the dispute in this case emerge are as follows: in early 2002, with the dual purpose of attempting to tie up Geoffrey’s only asset, No 44, to protect it from his recently divorced wife and also to procure an increased income to finance his daily life, Jennifer agreed to purchase No 44 at a price of £390,000. No 44 had been on the market prior to this but had failed to sell at an acceptable price. Jennifer agreed that she would redeem the mortgage of £60,744 and discharge a loan of £37,445 charged on the property. She would pay in reduction of the purchase price, immediately, £24,000 and a further sum of £24,000 on the first anniversary of the date of the agreement the 10^th May 2002. Jennifer would also pay monthly instalments of £3,000 starting on the 10^th June 2002 those instalments to continue even after the whole of the balance of the purchase price had been discharged. Geoffrey would pay to Jennifer a monthly rent of £1,000 in respect of his occupation of No 44. Thus while he continued to occupy that property he received a nett payment of £2,000 per month and Jennifer would have to pay tax on £1,000 rent. Simultaneously Jennifer granted to Geoffrey an assured short hold tenancy of No 44 for a period of 20 years at the rent of £1,000 per month from the 10^th May 2002. Under the provisions of the tenancy agreement Jennifer and Geoffrey undertook conventional landlord and tenant’s covenants. In summary therefore Geoffrey obtained the right to live in the property at a rent of £1,000 a month for 20 years. He was relieved of mortgage and loan indebtedness totalling nearly £100,000. He received two instalments of purchase price of £24,000 and a net monthly payment of £2,000 while he occupied No 44 under the lease.

In January 2003 Guy made enquiries of Messrs Clegg Manuel solicitors with a view to the preparation of wills for himself and Jennifer. By letter of the 29^th January 2003 they received and subsequently completed will questionnaires. Guy attached “notes to wills for Guy and Jennifer Goodman” to his questionnaire. The material passage in those notes reads as follows:-

“Regarding the property 44 Denman Drive South.

Current arrangement stipulates that Geoffrey Goodman will receive £24,000 March 2003 and will continue to receive £2,000 per month until he dies. The agreement is such that he may reside in the property for as long as lives.

In the event of Jennifer’s death ownership of the house will pass to Guy (or Ben if^, Guy decides that this is tax efficient at the time).

In the event of Guy’s death the current agreement remains in place.

In the event of Guy and Jennifer’s deaths ownership will pass to Ben (in trust) with the stipulation that payments to Geoffrey remain in place whilst he lives.

In the event of Guy, Jennifer and Ben’s deaths the house should be treated as part of the estate, and Geoffrey may continue to live there, it should be explained to Geoffrey that the house will be placed in the name of the estate. The estate will continue to pay Geoffrey the monthly income until proceeds have been paid out at which point these payments will cease.

After Geoffrey’s death the house should be sold and the proceeds again divided up equally to any surviving parents/siblings as stated below*.

Regarding 44 Denman Drive South and 7 Dickens Close; these properties do not have any mortgages outstanding, and deeds are held by Guy and Jennifer in safekeeping…”

Guy had asked for a meeting to discuss his and his wife’s wills with Messrs Clegg Manuel. Such a meeting took place on the 26^th March 2003 when the Goodmans met a Mr Simon Wood an employee of that firm. The handwritten notes of Mr Wood of that meeting are in evidence. They appear to show that the Goodmans described to Mr Wood the agreement that Jennifer had entered into with Geoffrey with relation to No 44. At paragraphs 13 and 14 of her witness statement Jennifer describes the meeting. She was not challenged on this evidence. Those paragraphs read as follows:-

“13.

The Deceased and I had a meeting with Mr Simon Wood at Messrs Clegg Manuel’s offices at the end of March 2003. My recollection is that we spent most of the meeting discussing provisions for the guardianship of our son, Ben, but we did also discuss the Property. We went over the supplemental notes which were attached to the Will Questionnaires and the Deceased explained that while we owned the Property Geoffrey was receiving £3,000 per month from us but also paying £1,000 per month as rent for his occupation of the Property.

14.

The Deceased wanted to ensure that our wills would document the arrangement we had in place so that Mr Goodman would not feel that he had not been provided for because the entire purpose of the lifetime arrangement was to provide an income for Mr Goodman for the rest of his life. I do not recall the words that the Deceased used at the meeting with Mr Wood but he was clear that our wills should preserve the existing arrangements.”

Jennifer’s evidence was that no additional legacy or benefits to Geoffrey over and above those produced by the 10^th May 2002 agreement were discussed at the meeting and there is no reference to any such intended benefits in Mr Wood’s notes.

It appears that it was Clegg Manuel’s practice to subcontract the drafting of wills to a Mrs Sarah McCarthy and that was done in this case. On the 3^rd February 2003 she wrote to the Goodmans with enquiries about the wills including an enquiry about No 44. However it emerged that she would be unable to complete this job due to family circumstances and the papers were returned to Clegg Manuel to be dealt with by Mr Wood. In due course he produced draft wills which were sent to the Goodmans accompanying a letter of 5^th August 2003. The drafts of each of Guy’s and Jennifer’s wills contained clause 3. The letter of the 5^th August drew attention to the blanks in the drafts which required completion and then continued:-

“You will see at clause 3 that there is a monthly provision of £2,000 to be made to Geoffrey Goodman. Although this is perfectly valid, it may be more appropriate to set up an annuity policy which would pay the agreed said sum to Geoffrey every month. This would also alleviate any burden from your trustees [sic] to make this payment.”

It was Jennifer’s evidence that she could not remember reading this paragraph.

The blanks in the draft wills were completed. It was Jennifer’s unchallenged evidence that the blank at paragraph 1 of Guy’s will was completed in his handwriting whereas the blank at paragraph 9.3 was completed in her handwriting. It is apparent that the wills were inexpertly drafted and they reveal several drafting mistakes. Each contain a clause 3 in the terms which I have already set out and each also contain the following provisions with relation to No 44:-

“9.

I GIVE free of inheritance tax all my share and interest in the property known as 44 Denman Drive South London NW11 6RH to my Trustees UPON TRUST to sell the same on the following terms and conditions:

(i)

UNTIL THE said house shall be sold my Trustees shall allow my father GEOFFREY GOODMAN to reside therein (or in any house which may from time to time be purchased in lieu thereof in pursuance of the power hereinafter contained) rent-free for so long as he shall desire he paying the Council Tax and other outgoings and keeping the house in good repair and insured against fire and the other usual perils to the full value thereof in some office of repute in the names of my Trustees and as long as my father shall so reside therein my Trustees shall not exercise any of their powers as Trustees for sale without his consent in writing.

(ii)

AT THE request of my said Father my Trustees shall sell the house (or any house purchased in lieu thereof in pursuance of a previous request) and apply the whole or any part of the net proceeds of the sale in the purchase of another house selected by him whether freehold or leasehold but if leasehold having not less than sixty years unexpired and to hold the same upon the trusts declared by this my Will in relation to my said house and the proceeds of sale thereof

(iii)

IN THE event of my said father being unwilling or unable (by reason of mental or physical disorder or any other reason) to reside in the said house (or any other property purchased in lieu thereof as aforesaid) the said proceeds shall be invested by them for the purpose of paying or contributing towards the fees for a residential nursing home or other suitable accommodation for him with the power to my Trustees to resort to the capital of any trust moneys to make up any deficiency in such fees;”

Whereas the completion of the blanks on Guy’s will seems to indicate, as Jennifer says in evidence, that Jennifer and Guy discussed the contents of their wills, they were executed separately, as to Guy’s will, at his place of work, and as to Jennifer’s, at stables which she used. Guys will is undated Jennifer’s is dated the 1^st September 2003.

Geoffrey’s opposition to rectification was supported by the evidence of Mr Geoffrey Wolfarth previously of Messrs Reynolds Porter Chamberlain solicitors who advised the Goodman family at the time of the agreement of the 10^th May 2002. On the 28^th February 2002 Mr Wolfarth wrote to a Ms Newman of S. Newman & Co whom it was proposed to instruct on behalf of Geoffrey to give him independent advice about the proposed transaction. At the third paragraph of that letter Mr Wolfarth says

“Essentially the transaction is a sale of the property to Mrs Jennifer Goodman at market value with the purchase price being payable in instalments. These instalments are intended to secure the father’s income position for the rest of his life. The father will continue living in the property on the terms of an Assured Shorthold Tenancy which will last for 10 years and in respect of which a rent of £1,000 per month will be payable.”

In a further letter dated the 21^st February 2005 Mr Wolfarth wrote to Messrs Farrer & Co, instructed by Jennifer, in which letter he highlights the “very close bond between Guy and his father Geoffrey which was characterised by Guy’s generosity towards Geoffrey both in cash and in emotional terms.” Later in the letter Mr Wolfarth says this:-

“6.2

The increase in the purchase price instalments from £2,000 to £3,000 was motivated by Guy’s wish to ensure Geoffrey had sufficient income (namely net £2,000 per month after paying the rent) for his perceived immediate needs. It was also perceived that at the higher level of £3,000 per month, there could be no question that the property was being acquired by Guy at an under value since the net income of £2,000 per month over a 10 year period would be enough to cover the actual shortfall from the nominal purchase price of £390,000 and the amount to discharge Geoffrey's existing Barclays Bank mortgage. Otherwise, if, as was considered quite possible, Geoffrey was to die within a few years of the arrangement then the whole transaction might be attacked by Laurie [his wife] as a transfer for an under value. Accordingly, the fact that if he survived for a considerably longer time, Geoffrey would make a “profit”, would also show that there was a genuine commercial transaction being undertaken and risk being assumed by both parties.

6.3

Similar considerations applied to the extension of the lease term from 10 years to 20 years and indeed this amendment was prompted by the comments of Ms Newman when advising Geoffrey on the documents. Also it had apparently been pointed out to Guy that the longer the residential Lease granted to Geoffrey, the future value of the property might well be depressed for IHT purposes. Also, the longer length of term might come in useful to provide Laurel with a roof over her head in the event of Geoffrey’s death, since as you will see from the note, Laurel was the principal beneficiary at that time of Geoffrey's Will, although of course it would be subject to the payment of the substantial rent which a priori would be actually payable to Jennifer in full, since Jennifer's liability for the deferred payment would cease on Geoffrey's death. It was not thought that Laurel would be able to afford such a rental in which case the Executors of the Will, who were the writer and Guy could then arrange to surrender the Lease to Jennifer.”

Mr Wood gave evidence for the claimant. Mr Wood described the meeting of the 26^th March at which he received his instructions from the Goodmans for the preparation of their wills between paragraphs 7 and 10 of his witness statement. The material paragraph is paragraph 10:-

“My recollection is that the Deceased and Mrs Goodman wanted their wills to provide that Mr Goodman senior would receive £2,000 a month while he lived in the property. I am now informed by Ms Jessica Duff of Clegg Manuel that Mrs Goodman has stated that she and the Deceased simply wanted to ensure that the existing arrangement with Mr Goodman senior would carry on after their deaths. That was not my understanding of the instructions of the Deceased and Mrs Goodman at the time: I thought they wanted their wills to provide for a monthly payment of £2,000 to Mr Goodman senior. Looking back, I now see that I must have misunderstood their instructions.”

Under cross-examination he said that he had come to realise that he had misunderstood his instructions after looking back through his notes and reading Jennifer’s witness statement.

There is no issue between counsel as to the applicable law. It is accepted on behalf of the claimant that the burden of proof rests on her to establish a case that Guy’s will fails to carry out his intentions because of a failure by Mr Wood to understand his instructions, and that that failure led to the inclusion in the will of clause 3. It is also accepted that because the will in its present form was executed with the necessary degree of formality, it requires convincing evidence to make out such a case. Nonetheless Miss Bryant for the claimant submitted and I accept that my conclusion is to be arrived at on the balance of probabilities but bearing in mind a strong bias in favour of the conclusion that a duly executed will evidences the intention of the testator. In Re Segelman (Decd) [1996] CH 171 at 184 Mr Justice Chadwick said:-

“although the standard of proof required in a claim for rectification made under section 20(1) of the Act of 1982 is that the court should be satisfied on the balance of probabilities, the probability that a will which a testator has executed in circumstances of some formality reflects his intentions is usually of such weight that convincing evidence to the contrary is necessary.”

Mr Wilson for the first defendant submitted that there was insufficient evidence to rebut the conclusion that Guy intended to give his father a legacy of £2,000 a month as provided for in clause 3. In any event, he submitted that it was necessary to look at the intention of the testator at the time he executed the will and not at the time that he gave instructions for it to be prepared. I accept that submission. He then submitted that because of a substantial lapse of time between the instructions to prepare the will and its execution there was ample opportunity for Guy to change his mind and not object to the inclusion of clause 3 when it was drawn to his attention in the letter of 5^th August 2003. As a result of his relationship with his father and his accepted previous disposition to ensure his financial future it is quite likely that he may have changed his mind and decided to execute the will including clause 3 notwithstanding that its inclusion may have conflicted with his and Jennifer’s instructions to Mr Wood.

I have come to the conclusion that there is sufficient convincing evidence to satisfy me that the claimant has made good her claim for rectification by the removal of clause 3 from the provisions of Guy’s will. I have arrived at that conclusion for the following reasons.

In my judgment Mr Wood misunderstood his instructions to draft the wills so as not to affect the 10^th May 2002 arrangements as including a requirement that Guy and Jennifer’s wills contain express provision for the payment of £2,000 to Geoffrey while he continued to occupy No 44 whereas his instructions did not require that to be done because the provisions of the contract between Jennifer and Geoffrey would survive the death of Guy.

For these reasons it seems to me that the claim for rectification of the will of Guy by the excision of clause 3 succeeds.