Gerling v Gerling & Ors

This is my extemporary judgment in the matter of the estate of the late Catherine Brigid Ryan in proceedings between the claimant, Miss Jacqueline Catherine Gerling, in her capacity as executrix of that estate, and Miss Jacqueline Catherine Gerling as first defendant, in her capacity as a beneficiary of that estate, her brother, Mr Colin Robert Ryan, as second defendant, Mr Daniel Robert Gerling as third defendant, and Mr Alexander James Gerling as fourth defendant (Claim number 0MA30399).

By a Part 8 claim form issued in the Manchester District Registry of the Chancery Division on 3 June 2010 the claimant seeks relief by way of rectification of the last Will of her late mother, Catherine Brigid Ryan. The Will is dated 28 January 2004 and was prepared by a legal executive, Miss Alison Malam, then employed by a firm of solicitors practising under the style or title of Hallows Associates from offices at Mold.

The Will was dated 28 January 2004 and it would appear, from a contemporaneous attendance note dated 16 December 2003 prepared by Miss Malam, to have been made at a time when the testatrix was 78 years of age. The deceased died on 27 April 2004 and probate of her last Will was granted to the claimant, as sole proving executrix, out of the Liverpool District Probate Registry on 19 January 2005.

It was not until the claimant, in her capacity as sole proving executrix, consulted her present solicitors, Aaron & Partners of Chester, that it was appreciated that there was a problem with one aspect of the residuary gift created by the Will. That was discovered when the claimant first went to consult solicitors on or about 16 November 2009. Those solicitors immediately wrote to the firm of solicitors who had been responsible for the drafting of the Will, and who had acted in the initial administration of the estate and the proving of the Will, on 1 December 2009. Thereafter there was some short delay whilst the solicitors’ files were taken out of archive and consulted, and while the insurers acting for those solicitors confirmed that an application should be made to rectify the Will at the expense of those insurers. It was in those circumstances that the application to rectify the Will was initiated by the issue of the Part 8 claim form on 3 June 2010. That was within seven months of the discovery of the potential problem.

Paragraph 1 of the claim form seeks, in those circumstances, an order granting the claimant permission to apply under section 20 of the Administration of Justice Act 1982 to rectify the Will notwithstanding that the period of six months from the date on which representation in regard to the estate was first taken out has ended.

By section 20 (2) an application for an order under section 20 shall not, except with the permission of the court, be made after the end of the period of six months from the date on which representation with respect to the deceased’s estate is first taken out.

There are a number of authorities governing the grant of permission to make a claim to rectify a Will outside the six months’ time limit. The discretion is unfettered; but the burden of establishing a case for making a claim to rectify more than six months after the date on which representation was first taken out lies with the applicant for such relief; and it is a substantive burden, and not merely a procedural time limit. Relevant considerations include the strength of the claim, the length of the delay, the reasons for the delay, the prejudice to which it may have given rise, the promptitude with which the claim was first notified, the existence of negotiations, and whether the estate has been distributed. Ultimately, the court is required to stand back and to ask whether it is just and proper, in all the circumstances of the case, to extend time for making the claim.

In the case of Price v Craig [2006] EWHC 2561 (Ch), reported at [2006] WTLR 1873, Mr Michael Furness, QC, sitting as a Deputy Judge of the Chancery Division, gave permission to apply to rectify a Will out of time in a case where the problem in question had not come to light until after the end of the six month period, and when no-one had been prejudiced by the delay. I followed that decision when sitting as a Judge of the Chancery Division in the case of Pengelly v Pengelly [2007] EWHC 3227 (Ch), reported at [2008] Ch 375: see paragraphs 13-14.

I am satisfied in the present case that it is appropriate, in the exercise of the Court’s discretion, to grant permission to make the application out of time. As in the two cases I have cited, the problem did not come to light, for understandable reasons, until after the end of the six month period. No-one has been prejudiced by the delay; and no-one actively opposes the relief sought. In those circumstances, I am satisfied that it is a proper case for the exercise of the Court’s discretion to allow the application to proceed out of time.

The application is supported, a little surprisingly since this is a Part 8 claim, by particulars of claim. However, those particulars of claim have been verified by a statement of truth made by the claimant and therefore can be treated by the court as evidence. In addition, there is also before the court a witness statement, verified by a statement of truth, from Mr Richard Clive Hallows dated 20 August 2010, together with exhibit RCH1. Mr Hallows is a solicitor and the senior partner in the firm of Hallows Associates which was responsible for the drafting of the Will. He indicates that the draftswoman was Miss Malam, a legal executive at the firm. She has since left the firm and is now practising from offices at Abergele. I am told by Mr Cooney, the solicitor advocate appearing for the claimant, that it has not proved possible to obtain any evidence from her. In those circumstances, Mr Hallows has made a witness statement indicating that his firm is of the view that the testatrix’s Will did not deal with matters properly, and that the Will requires rectification, and that his firm is content with the application to rectify the Will.

He makes it clear (in paragraph 2) that he was not involved in the production of the Will and was not aware of it until having been advised by the claimant’s present solicitors, Aaron & Partners, by letter on or about 1 December 2009. His knowledge is gained from considering the firm’s archived file of correspondence and draft documentation, which he exhibits as exhibit RHC1. His evidence, therefore, is of limited assistance to the Court, being derived essentially from the primary documentary material, and, in particular, the initial attendance note made by Miss Malam on 16 December 2003.

It is appropriate at this point for me to relate the material provisions of the Will, and to identify the problem to which it has given rise as it is presently drafted. The Will was executed on 28 January 2004 by the testatrix in the presence of Miss Malam and another employee of Hallows Associates. By clause 1 the testatrix revoked all former Wills and testamentary dispositions made by her. By clause 2 she appointed the claimant, her daughter, and a third party, Yvonne Ryan, resident in Dublin, to be her executors and trustees. Miss Ryan has not seen fit to join in proving the Will, although the grant of probate reserves power to her to do so.

I should set out the provisions of clauses 3 through to 5 in full. Clause 6 (the final clause) simply provides that the trustees may exercise any or all of the powers and discretions conferred upon them at any time after the death of the testatrix, and whether or not probate of the Will has been granted, and whether or not administration of the estate has been completed.

Paragraph 3 reads as follows:

“I GIVE my freehold property known as 23 Alexandra Road Mold unto my son COLIN RYAN for his life he paying all rates taxes and other outgoings and keeping the same in good repair (fair wear and tear excepted) and insured against loss or damage by fire or other insurable risk to the full value thereof as my Trustees shall approve and after the death of my said son I GIVE the same unto My Daughter the said Jacqueline Gerling absolutely.”

Clauses 4 and 5 provide as follows:

“I GIVE a one half share of the residue of my estate both real and personal to my said Daughter Jacqueline Gerling absolutely BUT IF she should not survive me for a period of 28 days then I DIRECT that her children (meaning a grandchild or grandchildren of mine) shall take by substitution and in equal shares if more than one the share of my estate which such deceased child of mine would have taken had she survived me and attained a vested interest.

5.

MY TRUSTEES shall hold the remaining one half share of my residuary estate both real and personal (after payment from this one half share of all my debts and funeral and testamentary expenses) UPON TRUST (hereinafter called the “Trust Fund”) with and subject to the powers and provisions hereinafter contained in addition to their powers and discretions under the general law:

(i)

power to pay the income thereof to my said Son Colin Ryan during his lifetime;

(ii)

power to insure against loss or damage by fire or from any other insurable risk any property for the time being comprised in my estate to any amount and to pay all premiums for any such insurance at their discretion out of the income or capital of the Trust Fund and so that any money received under any such insurance shall be applicable at their discretion either in or towards making good the loss or damage in respect of which it was received or otherwise as if it were proceeds of sale of the property insured;

(iii)

power to invest trust money and to vary and transpose investments from time to time with the same full and unrestricted freedom in their choice of investments as if my Trustees were a sole absolute beneficial owner;

(iv)

power to apply Trust money at any time and from time to time in the purchase or in the improvement of any freehold or leasehold dwellinghouse within the United Kingdom and to permit any such dwellinghouse to be used as a residence by my said son upon such terms and conditions that in their absolute discretion my Trustees from time to time think fit to require;

(v)

power at any time and from time to time to pay or apply capital money from the Trust Fund to any extent to my said Son or for his benefit as my Trustees in their absolute discretion may think fit;

(vi)

power to appoint from time to time a new or additional trustee or trustees of this my Will shall be vested in my said Daughter during her life;

(vii)

power for any of my Trustees who is a Solicitor or other person engaged in any profession or business to be so employed or act and to charge and be paid all usual professional or other charges for any business transacted or work done by him or his firm in connection with the administration and distribution of my estate.”

As can be seen from that recital of the provisions of the Will, the freehold property of the testatrix was left to her son Colin for his life and, after his death, to the daughter of the testatrix, the claimant, absolutely. One half of the residuary estate was given to the claimant, with a substitutional gift in favour of her children should she not survive for a period of 28 days. That substitutional gift of course never took effect.

The remainder of the residuary estate was to be held upon trust by the trustees with power to pay the income to the son of the testatrix, the second defendant, during his lifetime, and with various other powers. The principal difficulty is that nothing is said about what is to happen to the son’s half of the residuary estate after his death.

In paragraph 12 of the particulars of claim it is pointed out that since the Will does not appoint any remaindermen in relation to the trust fund, the trustees would be required to consider the rules of intestacy as they apply to the estate of the testatrix in order to ascertain the beneficiaries entitled to the trust fund upon the death of Colin. That is said to give rise to two differing outcomes. First, if Colin remains unmarried, childless and intestate at the time of his death, the trust fund will fall to be divided equally between Colin’s estate on the one hand (which will pass to the claimant under the intestacy rules) and the claimant herself (or her children if she has died before Colin). Alternatively, if Colin does marry or has children of his own before his death, or if he makes a will leaving his estate to some third party, such, for example, as a charity, then the trust fund would fall to be distributed between Colin’s children or descendants (if he has not made a will) and/or his widow (if he were to marry) or, if he did make a will, the beneficiaries of his estate as to one half, and as to the other half to the claimant.

That is to be contrasted with the life interest trust in respect of the house itself which is to pass outright to the claimant (or to her children if she were to have predeceased him) upon Colin’s death. It is clear from reviewing the solicitors’ file of papers that, as one might expect, the testatrix never consciously contemplated or instructed the solicitors to draft a will which would create a partial intestacy upon her death.

It is in these circumstances that the claim to rectification is brought, seeking to rectify the Will, effectively, by replicating in relation to the residuary estate the position that pertains in relation to the real property which was specifically devised by clause 3 of the Will.

There is also a further, minor, point which is that, as the Will presently stands, the whole of the incidence of debts, funeral and testamentary expenses falls upon the son’s share, whereas none of it falls upon the one half share of residue given to the claimant.

The third and fourth defendants are the children of the claimant, and thus the only two grandchildren of the deceased. They are both adults. The second defendant is the son of the deceased and the brother of the claimant. He is presently 49 years of age, having been born on 30 April 1961. He currently resides at New Hall Independent Hospital in Wrexham. He is attended by a consultant forensic psychiatrist. The concern of the testatrix had been to ensure that he had somewhere to live during his lifetime but, given her perception of the state of his mental health, the testatrix is said to have been concerned that Colin might spend any inheritance that he might receive outright; and the deceased was therefore keen to protect his inheritance by restricting the money that passed to him. At the time the Will was made, Colin had no children of his own, and that remains the case; and it is said that that was why the testatrix was keen to pass her estate, upon the death of Colin, to the claimant, who has two adult sons in the persons of the third and fourth defendants.

There is before the Court a letter from Dr Chandra Ghosh dated 21 July 2010 and addressed to the claimant’s solicitors. Dr Ghosh is a consultant forensic psychiatrist approved under the Mental Health Act as having special expertise in the diagnosis and treatment of mental disorder.

Dr Ghosh opines that Colin has the necessary capacity in relation to the matter in hand, namely the terms of his mother’s Will. It is said that he understands the information relevant to the decision whether or not to agree to the application to rectify the Will. He is said to be able to retain the information relevant to that decision, and to be capable of using and weighing that information as part of the process of making the decision, and to be capable of communicating that decision. His mental health is said to be “very stable”. The consultant is said to be in the process of reducing his medication as the consultant considers him to be “very well mentally”. It is expected that he can be rehabilitated back into the community over the coming year.

I am satisfied on that evidence that the second defendant does have the requisite capacity under the Mental Capacity Act.

Exhibited to the particulars of claim are formal written consents to the rectification of the Will by each of the four defendants, including Colin. His is dated, as are the others, 3 August 2010. There are acknowledgments of service on the court file from each of the first, third and fourth defendants indicating that they do not intend to contest the claim.

There is no such acknowledgment of service from the second defendant. That is addressed in a witness statement from the claimant which was handed to me this morning. It is undated, but I am told it was made very recently. In it she says that she visited her brother, Colin, the second defendant, very shortly after 13 September, the date the claim form was served upon all the parties, at the independent hospital where he resides. She says that Colin and she discussed her claim for rectification of the Will. Colin signed the acknowledgment of service form and handed it to her, and Colin asked that she post it to the court. She says that she placed the acknowledgment of service form in an envelope and posted it by first class post to the court. She says that she cannot remember the exact date that she posted it but it was around the same time as she posted the forms for her and her two sons, the third and fourth defendants, in the matter. She does not say in terms that the form of acknowledgment of service indicated that Colin did not intend to contest the claim but that is implicit in all that has been done before now. Unfortunately, no copy of the signed acknowledgment of service form was retained, and it has not reached the court file.

In those circumstances, it seems to me that I should proceed to hear the claim.

The matter had initially come before His Honour Judge Pelling QC on paper on 24 November. On 1 December the court sent out an order embodying the result of Judge Pelling’s consideration of the papers. It recited that the court had considered the claim form, the particulars of claim, and the acknowledgments of service filed on behalf of the first, third and fourth defendants, the second defendant not having filed any acknowledgment of service. It then ordered that the case be listed for a hearing today at Manchester before me, with an estimated length of hearing of two hours.

The reasons given by Judge Pelling were as follows: He said that the second defendant was the person potentially affected by the application, but he had not filed an acknowledgment of service. Although he had apparently consented to the application, he had not filed an acknowledgment of service indicating an intention not to defend the proceedings. What was proposed was said potentially adversely to affect him because the proposed rectification created a power to pay him the income of the trust for life but did not impose a duty to do so. It was said that that was not consistent with an intention that he was to have the right to receive the income of half the estate for life. That was said to be all the more of potential concern since, as drafted, the proposed trust would be one in respect of which the claimant was the sole adult beneficiary as well as a trustee. That was said to be all the more important potentially, given the capacity issue that arose concerning the second defendant. All that led the Judge to think that the more appropriate course, in the circumstances of the case, was for there to be a hearing.

Notice of the hearing was sent out on 1 December 2010.

Last Friday, 17 December, the claimant’s solicitors, Aaron & Partners, communicated with the Court, stating that they understood that the second defendant was unwell and unable to attend the hearing. They confirmed that he was unrepresented. In those circumstances, they wanted to know whether the hearing should proceed.

The letter was placed before me; and I inquired as to whether, if he were in good health, the second defendant would wish to attend the hearing. In response to that inquiry, Aaron & Partners wrote a second letter, also dated 17 December 2010, saying that they were unable to confirm whether he would. They were unable to say with certainty that he would attend, although they indicated that the claimant (and the second defendant’s sister) would seek to arrange for him to attend if he did wish to do so.

It seemed to me, when the matter was called on, that the sensible course, in furtherance of the overriding objective, was to hear the claim today, even though the only person appearing before me was Mr Cooney, appearing as solicitor advocate for the claimant. All the indications were that the second defendant did not oppose the claim, but was content with the rectification sought. As to the concerns expressed by Judge Pelling, whilst acknowledging that the proposed rectification only involved a power to pay the income of the residuary estate to the second defendant for life, it seemed to me that that really replicated the position under the existing Will, which in terms simply gave power to pay the income to the second defendant during his lifetime.

As things presently stand, since the second defendant is unmarried and childless, and there is no indication that he has made any Will, his half share of the residuary estate would pass to the claimant anyway on intestacy. It therefore seems to me that the rectification claimed prejudices the second defendant only to the extent that it will prevent him from leaving the capital of his half share of the residuary estate by will, or that it will prevent it passing as part of his residuary estate to next of kin, other than the claimant and her issue, if he were to acquire such next of kin either by marriage or by procreating a child or children. It seemed to me that the appropriate way of addressing that potential prejudice, whilst at the same time saving costs and making effective use of available court time, would be to consider the claim on its merits and, if appropriate, to provide, in any order for rectification, that a copy of the order should be served on the second defendant, together with an approved transcript of my judgment (to be obtained at the expense of the estate); and for the order of rectification not to take effect for an initial period of 28 days after service upon him, giving the second defendant permission to apply to vary or set aside my order within 14 days after such service. If such an application were to be made, then the order would continue to cease to have effect until after the final determination of that application.

That is what I propose to do. My order will therefore direct that a copy of it is to be served upon the second defendant, together with an approved transcript of my judgment to accompany the order, and that it shall not take effect for 28 days after service on the second defendant, or if within 14 days he applies to set aside or vary this order, it shall not take effect until after the final determination of that application. The order will contain provision permitting the second defendant to apply to vary or set aside this order within 14 days after the service of it upon him.

I turn then to consider the merits of the rectification claimed. The jurisdiction arises under section 20(1) of the Administration of Justice Act 1982. That provides that if a court is satisfied that a will is so expressed that it fails to carry out the testator’s intentions in consequence either (a) of a clerical error or (b) of a failure to understand his instructions, then the court may order that the will should be rectified so as to carry out those intentions.

The section was enacted following the 19th Report of the Law Reform Committee (on the Interpretation of Wills), Cmnd 5301 (May 1973). It is important to appreciate that the Law Reform Committee identified at least five different situations in which a will might fail to give accurate effect to a testator’s intentions; and it recommended that rectification should only be available in the first two of those situations, namely clerical error and a failure to understand the intentions of the testator. In particular, the Law Reform Committee did not recommend, and the section did not provide, for rectification to be available where there was a gap or lack of intention on the part of the testator, where he or she had never had any intention relevant to the situation which had actually occurred.

That limitation has been articulated by Blackburne J in his summary of the law in the case of Bell v Georgiou [2002] EWHC 1080 (Ch), reported at [2002] WTLR 1105, in particular at paragraph 8. In that paragraph Blackburne J summarised the law as follows:

“The essence of the matter is that a clerical error occurs when someone, who may be the testator himself, or his solicitor, or a clerk or typist, writes something which he did not intend to insert or omits something which he intended to insert. This is to be contrasted with a failure to understand the testator’s instructions where what is involved is a misunderstanding or breakdown in communication between the testator and his solicitor, or between the testator and the person who is writing out the will… The remedy is only available if it can be established not only that the will fails to carry out the testator’s instructions but also what those instructions were. It will not be available where the mistake occurs, inter alia, because the testator never had any intention relevant to the events which actually occurred or he failed to appreciate the legal effect of the words used in his will.”

In the present case, Mr Cooney submits, in my judgment correctly, that this is not a case of clerical error. He submits, however, that it is a case where the draftswoman of the will failed to understand the instructions of the testatrix. He takes me to the attendance note exhibited to the witness statement of Mr Hallows, which was made by Miss Malam when she first attended upon the testatrix, in the presence of her daughter. The first substantive paragraph records that the testatrix:

“… requested her will be drawn up in which adequate provision was made for daughter and son but with the property being available to her son (mentally unstable) as life tenant. He has no family and so upon his death the property then to be left to Mrs Ryan’s daughter,”

that is to say the claimant.

Mr Cooney acknowledges that at that point the reference to “the property” is ambiguous. It may mean the freehold property which was ultimately devised by clause 3, namely 23 Alexandra Road, Mold, or it might extend to property of the deceased generally. However, the position would appear to be made clear by the next substantive paragraph which reads as follows:

“Savings (currently in the region of £200,000) to be divided equally between Mrs Ryan’s two children but the son’s share to be put in trust for him. (Details of two trustees taken.)”

The rest of the attendance note is not relevant for present purposes. It addresses the possible need for a power of attorney; and it also confirms the testamentary capacity of the testatrix.

It seems to me clear from that attendance note that what Miss Malam was being instructed to do was to leave the property which was to be available to the second defendant to him as tenant for life, with it passing upon his death to the claimant. So far as the remainder of the estate was concerned, which is referred to as “savings”, that was to be divided equally between Mrs Ryan’s two children; but the son’s share of the applicable estate was to be put in trust for him. It seems to me, therefore, that to the extent that the trust in favour of the son was not to be exhaustive of his share, then anything remaining was to pass to the testatrix’s other child, namely her daughter. There is nothing to indicate - and common sense would not suggest - that the testatrix intended that part of her estate should be undisposed of by her Will. The law leans against any partial intestacy being created when someone is giving instructions for a will. It seems to me that Miss Malam failed to understand what she was being instructed to do, which was that, insofar as the son’s entitlement did not exhaust the property left to him, the balance was to be left to the daughter of the testatrix.

Subsequently there was a further meeting, recorded in an undated file note, between Miss Malam and the testatrix alone. In that file note, the writer made it clear that the testatrix did not want the house to be left to the grandchildren by name. She confirmed that it should be Colin for life and Jackie afterwards. Miss Malam then explained that if Jackie, the daughter, died before the testatrix, the interest in the property which she had would go to her children. So it is clear that the substitutional gift was subsequently explained to the testatrix, and that she went along with it, to cater for what might happen if Jackie were to die before the testatrix.

On that evidence, limited though it is, I am satisfied, on a balance of probabilities (but bearing in mind the high standard of proof required in a claim for rectification), that Miss Malam failed properly to understand her instructions, which were that to the extent that the trust interest created in favour of the son of the testatrix, Colin, did not exhaust the property, it should pass to the other child of the deceased, namely the claimant.

I am therefore satisfied that this is not simply a case in which the testatrix never had any intention relevant to what was to happen to the residuary estate after the death of Colin, her son. Rather, there was such an intention, but the draftswoman of the Will failed to understand, and thus to give effect to, it.

So I am satisfied that a claim for rectification has been made out. In those circumstances I will make the order for rectification as claimed. The effect will be, first, the minor one that the incidence of all debts, funeral and testamentary expenses will fall upon the residuary estate as a whole, including the claimant’s share of it. That is something to which she consents. That is something which operates only to her detriment; and I am satisfied that it gives effect to what the testatrix truly intended. Secondly, the rectification claimed will have the effect that the whole of the residuary estate, after the exhaustion of Colin’s life interest, and subject to any payments of capital to him, will, after Colin’s death, pass to the claimant, and will therefore fall to be disposed of as part of her estate if she pre-deceases Colin.

So I make an order in the terms claimed. It does seem to me, however, that the proposed clause 5A subclause (b) (ii) should be prefaced by the words “subject thereto” so as to make it clear that Colin’s half share of the trust fund is held upon trust with power to pay the income to him during his lifetime and subject thereto upon trust for Jacqueline Gerling, and with the power at any time to pay or apply capital money to the son or for his benefit as the trustees in their absolute discretion think fit.

So I think in fact 5A(b)(ii) should be expressed to be “subject thereto and to the provisions hereafter contained” to make it clear that the power to pay or apply capital may also have the effect of eroding the ultimate trust of capital in favour of the claimant.

Subject to those amendments, and subject to the provisions I have indicated for the order to be postponed in its operation until after the second defendant has had an opportunity to challenge it, I propose to make an order in those terms. I assume that there will be no order as to costs because the costs are going to be borne by the insurers acting for the solicitors who drafted the Will.