Bimson, Re the Estate of

This is an application under section 20 of the Administration of Justice Act 1982 for rectification of the Will of the late Mrs Patricia Bimson who died on 10^th September 2008. She was survived by her husband Mr David William Bimson, who is the Second Claimant and to whom I will refer as David. She was also survived by her two sons, Adam and Mark, who are respectively the Second and First Defendants. They are both adult and they have filed acknowledgements of service indicating that they do not intend to oppose the claim. Adam and Mark each have a child of their own. Mark has a son, Luke, who was born on 17^th August 2000 and is therefore now nine years old, and Adam has a daughter, Philippa, who was born on 15^th June 2008, shortly before Mrs Bimson’s death. Those two children were not joined originally as Defendants, but they were subsequently added by order of Master Moncaster and are now represented before me by counsel instructed on their behalf, Ms Bedworth. Their litigation friend, Mr Brian Stokes, is, as I understand it the brother of the deceased and therefore their great uncle. They too, through counsel, do not oppose the application, but Ms Bedworth has very properly considered on their behalf whether there are any grounds of opposition which should be advanced and she has come to the conclusion, which I can already indicate I share, that this is indeed a clear case for rectification.

Mrs Bimson’s last Will was made on 8^th July 2008. In it she named as her executors David, Mark, Adam and the partners at the date of her death in the firm of Ashton Graham, the solicitors who had acted for her in the preparation of the Will. For present purposes one of the most important provisions in the Will is the definition in clause 3.4 of “the Beneficiaries”, who are defined as meaning “Mark, Adam and remoter descendants, whether living at my death or born thereafter.” It will be noted that David is not included in that class, and it is his omission from the class of Beneficiaries which gives rise to the application before me. Other relevant definitions were of the Trust Period, defined as meaning the period of 80 years beginning with the date of the Testatrix’s death, and the Accumulation Period, meaning the period of 21 years beginning with her death. Subject to various bequests on which nothing turns for present purposes, Mrs Bimson gave all of the residue of her estate to her Trustees on trust to pay her debts and funeral and testamentary expenses and so forth, and to hold the remainder, defined as “my residuary estate”, upon the trusts thereinafter set out.

Clause 8 then set out the trusts of residue under the heading “Residuary Trusts.” It provided that “subject to the overriding powers below,” and I interpose that those are the powers set out in clause 9, the Trustees were to pay the income of the residuary estate to David during his life. So David had a full life interest in the income of residue. Subject to that, and subject also to the overriding powers in clause 9, the Trustees were then directed to hold the residuary estate on trusts whereby they had power to accumulate the whole or any part of the income of the Trust Fund during the Accumulation Period, subject to which there was a discretionary trust of income to or for the benefit of any of the Beneficiaries during the Trust Period, followed by a default trust of both capital and income of the Trust Fund for such of the Beneficiaries as should be living or in existence at the expiry of the Trust Period, and if more than one in equal shares absolutely.

It should be noted that those gifts in remainder all take effect subject to the prior life interest of David, so the Beneficiaries for the purposes of those provisions would, at least in normal circumstances, not include him, because he would, of course, be dead before they came into effect. I say “in normal circumstances,” because had he surrendered his life interest during his lifetime the question might then have arisen whether the powers were exercisable in his favour during his lifetime; but that has not occurred, and the possibility can therefore be ignored.

I now move on to the overriding powers. Clause 9 is headed “Overriding Powers,” and states that the Trustees are to have the following powers during the Trust Period, which are then set out. They include a power to appoint any trust property for the benefit of any of the Beneficiaries on such terms as the Trustees think fit; power to transfer trust property to a new settlement under which every Beneficiary is, or would if living be, a beneficiary; and, perhaps most materially, a power of advancement in the following terms:

“The Trustees may pay or apply any trust property for the advancement or benefit of any Beneficiary.” (Quote unchecked)

It is then provided that the overriding powers are to be exercisable only during the Trust Period, and only where there are at least two Trustees or the Trustee is a trust company. It will be noted that David is not an object of any of those powers, because he is not included in the defined class of Beneficiaries, and that is so even though the powers are plainly exercisable at any time after the death of the Testatrix.

The circumstances in which the Will came to be executed are set out in a witness statement by Mrs Elizabeth Jane Dunn, who is a solicitor employed by Ashton Graham, and her witness statement is the only evidence before the court. She says that she acted for Mr and Mrs Bimson in drafting their Wills in 2008, and that Ashton Graham had previously prepared Wills for both of them in March 2007. She exhibits a copy of the 2007 Will of Mrs Bimson. I need not set out the provisions of that Will in any detail. It is enough to say that it contained a nil rate band discretionary trust, in the kind of form which was then regarded as a sensible piece of tax planning, subject to which it provided for the residue to be held in trust for David absolutely if, as of course happened, he survived his wife. Overriding powers were then conferred upon the Trustees in, I think, identical terms to those contained in her last Will of 2008. However, for the purposes of the 2007 Will the Beneficiaries were defined in clause 3.6 as including David, and then at 3.6.2 “my children, Mark, Adam and remoter descendants, whether living at my death or born thereafter”, and also a stepson and stepdaughter of Mark, named respectively Ricky and Samantha.

On 1^st May 2008 Mrs Dunn attended on Mr and Mrs Bimson with a view to discussing possible changes to the Wills which they had made in March 2007. Her attendance note is exhibited to her statement. In it she records the updating information that they gave to her, including the fact that Mark had separated from his wife and a divorce was expected to follow in the near future, and various financial circumstances connected with that unfortunate development in Mark’s matrimonial affairs. The discussion then moved on to the nil rate band discretionary trusts, and Mrs Dunn explained that following changes in the law these were no longer an obvious piece of inheritance tax planning, because of the availability of a double nil rate band on the death of the first spouse. There was also discussion about the advantages of retaining the protection of a trust while Mark’s divorce was pending. It was agreed at the end of the meeting that Mrs Dunn would consider the best course of action and then write to the Bimsons setting out the options and the likely costs before any further action was taken.

She duly wrote to them a little over a week later, on 9^th May, and set out her considered advice in the light of the matters which had been discussed between them at the recent meeting. She reiterated that in the light of recent legislation she would no longer advise the inclusion of a nil rate band discretionary trust, but she pointed out the advantages of retaining a trust as a means of protecting assets on a possible future divorce of Mark, and she then continued in a passage which I should quote:

“If you were keen to protect the estate of the first to die from forming part of the capital of the surviving spouse and thereby being subject to assessment in calculating nursing home or care charges, you could replace the nil rate band discretionary trust in the Will with a life interest of all your residuary estate in favour of the surviving spouse. This would be simpler to administer and under the terms of the trust capital could be advanced if needed from the Trust Fund to the surviving spouse.” (Quote unchecked)

I point out the obvious fact that this advice clearly envisaged that under the terms of the proposed trust it would be possible to advance capital to the surviving spouse during his or her lifetime; and this is, of course, precisely the kind of provision which one would expect to find if the surviving spouse is given a full life interest.

Having discussed various other matters, Mrs Dunn then said in summary that the Bimsons could consider five options, the fifth of which was to remove the nil rate band discretionary trust and create life interests in favour of each other, with the gift of residue to be held upon discretionary trusts for Mark, Adam and the grandchildren. This advice was then considered by the Bimsons and on 23^rd May David sent an email, on behalf of himself and his wife, saying that, having given the matter a lot of thought, they had concluded that the fifth option was the one best suited to their requirements, and they asked Mrs Dunn to proceed with the preparation of their Wills on that basis. She then replied saying that she would prepare drafts and send them on to the Bimsons for them to consider following her return after a short absence.

On 4^th June, Mrs Dunn sent the Bimsons drafts of Wills for each of them together with accompanying notes to the Trustees (and also a draft promissory note, on which nothing turns for present purposes). She then made comments on the draft Wills. She made them by reference to the draft prepared for Mr Bimson, but pointed out that since the Wills were in identical terms, mutatis mutandis, the comments would apply equally to the Will prepared for Mrs Bimson. She referred to the clauses in the draft, and having pointed out that clauses 7 and 8 settled the residuary estate on trust for the spouse for life, she continued:

“The powers in clause 9 would enable the Trustees to give capital to your spouse if required or to allow your spouse to pass on the capital in a tax efficient way by, for example, adding all or part of your residuary estate to another trust. On her death what is left of the capital will go into a discretionary trust.” (Quote unchecked)

Again, I comment that it was here expressly envisaged that the powers in clause 9 would enable the Trustees to pass capital to the spouse who had the life interest.

At the same time, as I have already said, a draft note to the Trustees was enclosed, paragraph 1 of which said this:

“By my Will I have settled my residuary estate on my husband, David William Bimson, for his life. The Will contains the right to advance capital and I would expect you to exercise this power in the first instance to ensure that David always has sufficient for his needs having regard to all the circumstances and even if this substantially depletes the capital remaining for the remainder beneficiaries.” (Quote unchecked)

Once more, it is absolutely plain from this passage that it was intended that the Trustees should have power to advance capital to David during his lifetime, and it was assumed to be the wish of the Testatrix that the power should be exercised in order to ensure that he always had sufficient to meet his needs. Again, that is exactly what one would expect to find with a Will of this nature.

The drafts were then considered by the Bimsons, and on 30^th June an undated letter was received by Ashton Graham from Mr Bimson confirming that the drafts had been approved by him and his wife, subject to some minor alterations on which nothing turns. He then discussed arrangements for execution of the Wills, which had become a matter of some urgency in view of the rapid deterioration in Mrs Bimson’s health. I should have said that Mrs Bimson had unfortunately been diagnosed with terminal cancer shortly before the meeting on 1^st June. It was then agreed that Mrs Dunn would send both of the engrossed Wills to the Bimsons at home for them to execute, and that is what then happened. Both Wills were duly executed on 8^th July, with no further amendment to them.

The problem which now arises, as I have already indicated, is the exclusion of David from the class of the Beneficiaries in whose favour the clause 9 overriding powers can be exercised. As the Will stands, he has only a bare life interest and the Trustees have no power to release or advance capital to him. It seems to me quite plain that this was not what the Testatrix intended. That conclusion follows inevitably from a consideration, firstly, of the 2007 Will, which did contain such a provision; secondly, from the limited reasons for departing from the scheme and structure of the 2007 Will, which did not include any change in the Testatrix’s obvious primary wish to benefit her husband after her death; thirdly, from the express terms of Mrs Dunn’s letter of 9^th May, advising on the options open to the Bimsons; fourthly, from her further letter of 4^th June, enclosing the drafts; and fifthly, from the note of wishes. All of these documents expressly envisaged the possibility of capital being released to David by the Trustees after Mrs Bimson’s death.

In paragraph 17 of her statement Mrs Dunn recognises that it is, unfortunately, impossible to give effect to the intention set out in paragraph 1 of the letter of wishes, given the terms in which Mrs Bimson’s Will was in fact expressed. She then says:

“This was a simple clerical error in that I did not realise that Mr Bimson was not included among the class of Beneficiaries in whose favour the overriding powers could be exercised. At the time I prepared the Wills I believed that they did give effect to the wishes of the clients.” (Quote unchecked)

As Ms Bedworth points out in her skeleton argument, that explanation is somewhat ambiguous in that it is not entirely clear from it quite how the mistake arose. One possibility is that Mrs Dunn deliberately used the defined term “Beneficiaries” in clause 9, but failed to appreciate that it was not appropriate for use during David’s lifetime; whereas she might well have taken the view that the trusts in clause 8, which were trusts in remainder taking effect after his death, would not need to include him in the relevant class. Another possibility is that she was fully aware of the need for the class of Beneficiaries to include David’s name, but simply forgot or omitted to include it in the definition in clause 3.4. Either of those possibilities may have occurred, although I suspect the former is the more probable of the two. I say that because it seems to me quite likely that Mrs Dunn borrowed the definition of the Beneficiaries in clause 3.4 from clause 3.6 of the 2007 Will, but removed from it the reference to “my husband,” because she had in mind that he was now to be given a life interest and the discretionary trust would arise only after his death. In any event, I do not think it matters for present purposes which is the correct explanation, because I am satisfied that either way there was a clerical error, which the court can and should correct.

That brings me on to the relevant law which is contained in section 20 of the Administration of Justice Act 1982. I will read the first two subsections of that section, which provide as follows:

“(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.

(2)

An application for an order under this section 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 estate of the deceased is first taken out.

In the present case it is only clerical error which is relied upon, because it is not credible to suppose that Mrs Dunn could have failed to understand the simple instructions which were given to her, or that she could somehow have supposed that the overriding powers were exercisable in David’s favour even though his name was not included in the definition of Beneficiaries.

Apart from Re Segelman, two other authorities to which I have been referred by Ms Bedworth are the decision of Mr Edward Evans-Lombe QC, as he then was, in Wordingham v. Royal Exchange Trust [1992] Ch 412 and the more recent decision of His Honour Judge Hodge QC in Pengelly v. Pengelly [2008] Ch 375. It is not necessary for me to refer to those authorities in any detail. I would merely point out that in Re Wordingham at 419 the learned judge expressed the view that the words “clerical error” as used in section 20(1)(a) of the 1982 Act:

“are to be construed as meaning an error made in the process of recording the intended words of the testator in the drafting or transcription of his will.”

He contrasted that meaning with an error occasioned by a failure to understand the testator’s intentions, followed by a deliberate choice of words which was mistakenly intended to put those intentions into effect. Errors of this second kind are covered by section 20(1)(b).

In Re Segelman Chadwick J pointed out that the formulation adopted by the judge in Wordingham should not be taken as exhaustive, and at 186 he said that the jurisdiction under paragraph (a):

“... extends to cases where the relevant provision in the will, by reason of which the will is so expressed that it fails to carry out the testator's intentions, has been introduced, or, as in the present case, has not been deleted, in circumstances in which the draftsman has not applied his mind to its significance or effect.”

It follows, therefore, that a clerical error can include a mistake in wording which was caused by a simple failure to apply the draftsman’s mind to the significance or effect of the wording which was actually used.

Finally, in the Pengelly case Judge Hodge expressed the view at 383 that where a word or words have been mistakenly omitted there may well be greater potential for characterising the error as one of a clerical nature. This reflects a natural, almost intuitive, reaction that it is easier to find a clerical error where something has simply been left out.

With the benefit of that guidance in the authorities, I am amply satisfied that this case falls comfortably within the scope of clerical error within the meaning of section 20(1)(a). It appears to me plain that David was always meant to be included in the class of Beneficiaries for the purposes of the overriding powers in clause 9, and that the omission of his name from the Beneficiaries, in the context of that clause at any rate, was simply an oversight. It was a drafting slip, which both as a matter of ordinary language, and on the authorities, can readily be classified as a clerical error; and it is therefore one which the court happily now has jurisdiction to put right.

The only remaining question is how the will should be rectified. The suggestion advanced by counsel is that the simplest solution is simply to amend the definition of Beneficiaries in clause 3.4 so that it expressly includes David as well as Mark, Adam and remoter descendants. They also suggest, and I agree, that it would be sensible for the avoidance of doubt to insert the word “my” before “remoter descendents,” thereby making it plain that the descendants in question are those of the Testatrix. I agree that this is the simplest and most appropriate way of bringing about the necessary rectification and I will therefore make an order in those terms. I will also direct that the Third Defendant, Luke, should be appointed to represent the interests of any other unborn or unascertained beneficiaries who may hereafter become interested under the trusts of residue.

It only remains for me to mention that the solicitors have very properly agreed to pay all the costs of this application, and although the order which I am invited to make simply provides that the costs of the parties are to be costs in the estate, I am told that the agreement to which I have referred will have the result that the costs are all borne by Ashton Graham. That is, of course, appropriate, since it was Mrs Dunn’s unfortunate mistake which gave rise to the problem and necessitated this application. But, for the reasons which I have given, I am satisfied that this application should succeed and I will make an order in the terms requested.