Wesley v Chantler & Ors

This judgment follows the trial of two of six issues raised in CPR Part 8 proceedings concerning the estate of the late Eighth Earl Bathurst (‘the Eighth Earl’), who died on 16.10.11. the Eighth Earl had made a Will on 22.5.98 (‘the 1998 Will’) in addition to which the Court of Protection made a statutory codicil (‘the 2008SC’) as an interim measure on 5.11.08 and in final form on 21.11.08.

The claimant, the Dowager Countess Bathurst (‘Lady Bathurst’), is the widow of the Eighth Earl. The first to third defendants (‘D1-3’ and respectively ‘D1’ etc) are the trustees of the Earl’s Fund, a trust created under the 2008SC (‘the EFT’); D1-2 are the original trustees and D3 was appointed an additional trustee by D1-2 on 16.4.15. The fourth to seventh defendants (‘D4-7’ and respectively ‘D4’ etc) are the trustees of the Earl Bathurst 1963 Estate Settlement (‘the 1963S’).

The relief sought by Lady Bathurst on the two issues the subject of this trial and judgment is :

At trial, the claim was supported by two witness statements made by Lady Bathurst, a witness statement made by Mr Richard White concerning in particular certain events in 2014, and a witness statement made by Ms Claire-Marie Cornford of Mishcon de Reya, the solicitors instructed by Lady Bathurst. It was opposed by witness statements by each of D1-3 and by D4. The witness statements reveal disagreement as to the facts and contain differing opinion evidence. Since the proceedings began there have been four case management orders by Master Bowles and one by a Deputy Master. By the first order, D1-3’s application objecting to the claim continuing under CPR Part 8 was dismissed and the court did not require or permit any party to give oral evidence.

The Eighth Earl became the Eighth Earl Bathurst in 1943, when aged 16 years. His inheritance included a large estate comprising some 15,000 acres in Gloucestershire, a mansion house on the estate known as Cirencester Park, and very valuable chattels. The Eighth Earl married his first wife in 1959 and his heir, now the Ninth Earl Bathurst (‘the Ninth Earl’), is one of the children of that marriage. The Eighth Earl’s first marriage was dissolved in 1976 and he married Lady Bathurst in 1978. In the meantime, in 1963 the Eighth Earl established the 1963S into which he transferred some 11,000 acres of the estate; later, Cirencester Park mansion was purchased from the Eighth Earl by D4-7 for the 1963S. The 1963S was created primarily for the benefit of the Eighth Earl’s children, in particular his heir and his issue. The Eighth Earl retained some 4,000 acres and the chattels.

The chattels include some very valuable works of art and collections of documents. For the purposes of this trial, and for other purposes as between the parties, the chattels have been referred to as comprising two categories : ‘exempt chattels’ and ‘non-exempt chattels’. The exempt chattels comprise 68 items or collections of items plus a collection of documents all of which are conditionally exempt from inheritance tax. For the purposes of this trial and judgment, reference to the non-exempt chattels is to all other chattels owned by the Eighth Earl at his death located at Cirencester Park, whether in the mansion or elsewhere at Cirencester Park.

In about 1988 the Eighth Earl and Lady Bathurst moved from Cirencester Park mansion to Manor Farm, which is on the land retained by the Eighth Earl. Since then a number of important exempt chattels have been used and enjoyed at Manor Farm.

The Eighth Earl’s last Will, the 1998 Will, appointed Lady Bathurst and another named individual as his executors. In December 1997 the Eighth Earl had appointed Lady Bathurst and the other named executor as his attorneys under an Enduring Power of Attorney.

As to the devises and bequests under the 1998 Will, clause 3 made provision in respect of the Eighth Earl’s chattels :

“3 Gift of Chattels

I give free of all taxes and duties payable on them by reason of my death all my personal chattels (as defined by section 55 (1)(x) of the Administration of Estates Act 1925) which have not otherwise been specifically and effectually disposed of by my Will or any codicil to it to my Trustees (Footnote: ¹) to hold them as follows:

3.1

I request that my Trustees (without creating any trust or imposing any binding obligation on them in law or in equity) dispose of my said chattels within the period of two years from my death in accordance with any existing or future memorandum (Footnote: ²) written or signed by me and deposited with my Will or left among my papers at my death; and

3.2

subject to that for Lady Bathurst absolutely if she survives me by thirty days; and

3.3

subject to that upon the trusts declared below concerning my Residuary Estate”.

At the relevant time s.55(1)(x) of the Administration of Estates Act 1925 defines personal chattels as meaning :

“carriages, horses, stable furniture and effects (not used for business purposes), motor cars and accessories (not used for business purposes), garden effects, domestic animals, plate, plated articles, linen, china, glass, books, pictures, prints, furniture, jewellery, articles of household or personal use or ornament, musical and scientific instruments and apparatus, wine, liquors and consumable stores, but do not include any chattels used at the death of the intestate for business purposes, nor money or securities for money”.

Clause 4 of the 1998 Will provided for pecuniary legacies totalling some £250,000.

Clause 5 made provision for woodlands :

“5 Woodlands

I give subject to all taxes and duties payable thereon by reason of my death all my woodlands to the trustees for the time being of [the 1963S] to be held by them as an accretion to the Younger Descendants’ Fund thereof and upon the trusts and with and subject to the powers and provisions referred thereto”.

Clause 6 made conditional provision for Lady Bathurst as residuary beneficiary :

“6 Residuary estate – Gift to Lady Bathurst

I give all my estate not otherwise disposed of to my Trustees upon trust with power to either sell it or to postpone sale and after payment of all my debts funeral and testamentary expenses and all taxes and other duties payable in respect of my estate to hold the residue (“my Residuary Estate”) upon trust for [Lady Bathurst] absolutely if she survives me by 30 days”.

Clause 7 made provision for the eventuality that Lady Bathurst did not survive the Eighth Earl by 30 days.

Clauses 8 and 9 provided for extended powers of maintenance and accumulation and of advancement. Clause 10 provided for the powers of the 1998 Will Trustees by reference to a detailed schedule. Clause 11 provided for the appointment of new trustees of the 1998 Will (by Lady Bathurst) and their retirement.

The schedule to the 1998 Will addressed the administrative powers of the trustees under the 1998 Will in detail under 21 paragraphs including, at paragraph 2, a wide power to permit use and enjoyment of property in kind :

“Power to purchase acquire or retain any real or personal movable or immovable property (including chattels) for the beneficial occupation use or enjoyment of any beneficiary and to permit any beneficiary to have the beneficial occupation use or enjoyment of such property upon such conditions as to payment or non-payment of rent rates taxes and other outgoings and the keeping of inventories and generally upon such terms (if any) as my Trustees think fit”.

On the evidence, at the time the 1998 Will was made, and subsequently, there was an understanding between the Eighth Earl and Lady Bathurst, at least in relation to the exempt chattels, that upon Lady Bathurst’s death they would be kept in the Bathurst family.

The Eighth Earl made three codicils to the 1998 Will. The first, dated 12.12.05, bequeathed specified follies and chattels together with sufficient curtilage for their future maintenance to the 1963S and the sporting rights for game and deer in respect of the woodlands to Lady Bathurst for life. Those of 5.3.07 and 7.9.07 revoked previous codicils and revoked clause 5 of the 1998 Will and provided for the Eighth Earl’s woodlands to pass, subject to all taxes and duties, to Lady Bathurst.

In or about October 2008 the Eighth Earl became gravely ill. There was also concern as to the Eighth Earl’s capacity. In addition, in about 2006, it had been realised that because Lady Bathurst was a US citizen her outright inheritance would give rise to a future estate duty liability under US law. The potential adverse impact on the Eighth Earl’s estate was material. On 3.11.08 Lady Bathurst was advised that it was open to her to renounce her US citizenship and she decided to follow this advice.

D4, on behalf of himself, D5 and the other then trustee of the 1963S, Michael Stanford-Tuck, applied to the Court of Protection (‘CoP’) on the basis that the acuteness of the Eighth Earl’s physical condition rendered it necessary to make an application for revision of the 1998 Will. In the application D4 alleged that, in contravention of the understanding at the time of the 1998 Will, Lady Bathurst did not intend to pass the Eighth Earl’s personal estate which she would inherit to younger generations of the Bathurst family, that Lady Bathurst was unable to separate her own interests from those of the Eighth Earl and was unable to fulfil the role of an attorney, that Lady Bathurst and her co-attorney lacked both the knowledge and experience to manage the Eighth Earl’s estate, and that the Eighth Earl was under the influence of Lady Bathurst such that D4-7 could not address the matter with the Eighth Earl. This took the subject matter of the application beyond tax efficient estate management.

D4 sought an urgent interim order for assessment of the Eighth Earl’s testamentary capacity, approval of a proposed statutory codicil to address D4-7’s concerns, and the appointment of an unbiased and experienced attorney to run the Eighth Earl’s property and affairs. Lady Bathurst did not have time to apply herself to answering the allegations, which she denied, not least because she was preoccupied with caring for and being with her husband.

An interim hearing was fixed for 5.11.08 at which D4, Lady Bathurst and the Eighth Earl, by the Official Solicitor as his litigation friend, were all represented by counsel. On 4.11.08, through her then solicitors, Lady Bathurst attempted to resolve the potential tax problem by proposing a statutory codicil of temporary effect to allow time for Lady Bathurst to renounce her US citizenship. This led to a measure of agreement with D4’s solicitors. On 5.11.08, the hearing took place albeit that Lady Bathurst was with the Eighth Earl in hospital. The CoP judge, DJ Rogers, made clear in his judgment that the parties had spent much of the day in discussions. DJ Rogers accepted that Lady Bathurst wished to answer, but had not had time to be in a position to answer, D4’s accusations and left those matters open for future argument if necessary. By reference to the evidence of the Eighth Earl’s treating consultant psychiatrist, DJ Rogers was satisfied that the Eighth Earl lacked capacity to manage his property and affairs and lacked testamentary capacity. On that basis, DJ Rogers invoked the court’s power to execute a will for the Eighth Earl and referred to being invited by the parties to approve “a holding codicil”, as an interim measure, to the 1998 Will. Having regard to the “serious tax ramifications” in the event of the Eighth Earl’s death caused by Lady Bathurst’s citizenship, and placing himself in the Eighth Earl’s armchair for the purpose (which was then thought to be the correct approach), DJ Rogers concluded that the Eighth Earl would want to make some change to the 1998 Will.

In his judgment, DJ Rogers stated at [16]-[17] :

“16…. I am quite satisfied here that in relation to [the Eighth Earl] and his love and desire to provide for Lady Bathurst that he would want to make sure that in relation to making provision for the Bathurst Estate and the Bathurst family name that he would also want to make sure and ensure that the appropriate provision was made for Lady Bathurst.

17 In considering the codicil and the schedule which has been put before me, I am assured and I can be reassured by the presence of the team acting for Lady Bathurst that there is a provision that [the Eighth Earl] is making in relation to the [EFT], still makes proper appropriate adequate provision for Lady Bathurst. That there is the income being provided for life; there is excluded from this certain personal land and chattels for which [the Eighth Earl] would wish they are to be retained and kept by Lady Bathurst and to be at her discretion. That is the determination and to that extent therefore, the fund which is set up I think achieves both his duty but also deals with his personal affection and love for Lady Bathurst”.

The reference to the exclusion of personal land and chattels is to Manor Farm and other land and to all the chattels there other than the exempt chattels at Manor Farm.

The 2008SC approved as a holding measure by DJ Rogers revoked clause 5 of the 1998 Will and revoked the codicils thereto. It then substituted in place of that clause a new trust, the EFT, of which D1 and D2 were appointed trustees. Creation of the EFT affected clause 3 of the 1998 Will and Lady Bathurst’s interest in the Eighth Earl’s personal chattels. So far as relevant, clause 2 of the 2008SC provided :

“(a)

I declare that the following shall apply in place of clause 5 of the [1998 Will].

(b)

In this clause of this Codicil the following expressions shall where the context so admits have the following meanings:

(i)

“Earl’s Fund Trustees” means [D1] and [D2]

(ii)

“Earl’s Fund” means:

(A)

all my personal chattels as defined in section 55(1)(x) of the Administration of Estates Act 1925 which are:

1

currently situated at Cirencester Park, Gloucestershire GL7 2BU; or

2

all those which are heirlooms of the Bathurst family which are at the date hereof subject to conditional exemption from estate duty as now governed by the Inheritance Tax Act 1984;

(B)

all those my legal and equitable interests in the land buildings and property situate in the county of Gloucestershire details of which are set out in the Schedule to this Codicil (Footnote: ³); and

(C)

accumulations thereto and the property investments and monies from time to time representing the same respectively.

(c)

I give the [EFT] to [D1 and D2] to hold the capital and income of the same upon the following trusts:

(i)

[D1 and D2] shall pay the income of the [EFT] to Lady Bathurst during her life;

(ii)

from and after the death of Lady Bathurst [D1 and D2] shall hold the [EFT] upon the trusts and subject to the powers and provisions mutandis mutatis contained in sub-clauses 7.1 to 7.6 (b)(i) of the [1998 Will] as amended by [the 2008SC] (and any subsequent) except that for those purposes “the Beneficiaries” shall include the person holding the title of Earl Bathurst whether or not such person shall be my issue. …………”.

By clause 3 of the 2008SC the power of advancement under s.32 of the Trustee Act 1925 was excluded and express powers were conferred on D1 and D2 equivalent to those conferred on the trustees under the 1998 Will. Such powers include the power to permit use and enjoyment of property including chattels.

By clause 4 of the 2008SC it was declared that it was not a purpose of the 1998 Will to make land comprised in the Eighth Earl’s estate available for occupation by one or more beneficiaries but also recognised that D1 and D2 had an absolute discretion to permit any beneficiary to occupy or enjoy all or any part of any property comprised therein and to acquire property for that purpose.

Pausing here, the effect of clause 2 of this codicil was to exclude from Lady Bathurst’s outright inheritance the exempt chattels and all chattels at Cirencester Park. At the hearing in the CoP the then counsel for D4-5 and Mr Stanford-Tuck, when explaining his clients’ view of the holding position under what became 2008SC, expressly submitted :

“ … there could be no question of Lady Bathurst’s interest being cut down during her lifetime”.

To put that in context, at the time and for many years before several of the exempt chattels were kept and enjoyed at Manor Farm. At the Eighth Earl’s death and subsequently, 14 of them have continued to form part of the furnishing of Manor Farm. Further, during the Eighth Earl’s lifetime, he and Lady Bathurst used to permit the exhibition of chattels from Cirencester Park at museums.

By letter dated 20.11.08 the US Embassy in London acknowledged Lady Bathurst’s renunciation of her US citizenship.

The CoP proceedings came before Norris J for a final hearing on 21.11.08. By then, D4, D5 and Mr Stanford-Tuck, as trustees of the 1963S, had signed or agreed to sign a letter stating that the main reason for their application had been the fear that substantial US estate tax would have been payable on Lady Bathurst’s death to the detriment of the Eighth Earl’s estate on land forming part of the historic Bathurst estate and the valuable collection of chattels at Cirencester Park, and further stating :

“We accept that, by reason of your renunciation of US citizenship this reason no longer exists. … we unreservedly accept that your intention has always been that if you inherit the heritage land and chattels you would ensure that on your death they passed to descendants of your husband and that they would not pass to anyone else.

We accept that, by bringing the [CoP] proceedings at a time when your husband was thought to be about to die, we caused you a great deal of anxiety and stress which we wish had been avoided”.

In consequence, Norris J was asked to approve and make an order in a form agreed by the parties. The essence of the agreement was that the 2008SC should remain in place, the trustees of the 1963S would pay Lady Bathurst’s costs in the agreed sum of £200k plus VAT within 14 days and would bear their own costs, with no recourse to the Eighth Earl’s estate, and the Official Solicitor’s costs would be paid by the Eighth Earl’s estate. In his judgment, at [4] – [5], Norris J expressed himself satisfied that he could approve the agreed compromise which he considered to be in the best interests of the Eighth Earl. Briefly stated, Norris J’s reasons included that, in a lucid moment, the Eighth Earl would be relieved that tensions within his family had been eased by the agreement and that the outcome satisfied both his duty to his children and his desire to provide for Lady Bathurst :

“4 On this application also hard things have again been said. By the good work of the legal representatives on either side, these points of contention have been resolved in a compromise the terms of which are placed before me for approval. As on many occasions in this jurisdiction, compromises which are in the best interests of the contending parties are not necessarily compromises which are in the best interests of the protected person. It is agreed that my role is to approve the compromise if satisfied that its terms are in the best interests of [the Eighth Earl]. I am satisfied that I can properly approve the compromise and that the order whilst reciting the terms of consent may also contain a recital that the Court considers it to be in the best interests of the protected person.

5 The essential dispute is between the children of a first marriage and the wife of a second marriage, a situation frequently productive of tension. Commendably, the parties have overcome that tension. I am satisfied that [the Eighth Earl] in a lucid moment if asked whether he wished to revoke the codicil or to continue it in place to the satisfaction both of his children and of his wife would be grateful that the tensions between his children and his wife would be eased by leaving matters as they are. He would be relieved that neither his children nor his wife would be compelled to continue with proceedings in which each would be cross-examining the other as to their foibles and failings. He would be relieved that he could receive the undivided attention of his wife rather than her being distracted by attendance on solicitors and the court in the conduct of proceedings. He would be content that in the conflict between his duty to his children and his desire to provide for his wife the parties themselves had agreed a sensible disposition of his estate which satisfied them both. Each of these is a powerful consideration and compels me to the view that this compromise ought to be approved”.

The Eighth Earl lived on for a further three years until 16.10.11.

Following the Eighth Earl’s death, Lady Bathurst engaged Christie’s to prepare an inventory and valuation as at 16.10.11 of the chattels the subject of the EFT. Christie’s produced a valuation report for tax purposes as at 16.10.11 dated 25.5.12. Christie’s report listed 326 items or collections (69 exempt and 257 non-exempt), comprising pictures drawings and prints, miniatures, furniture, sculpture, porcelain and glass, and books and manuscripts. The aggregate value attributed by Christie’s was almost £11.5million, of which the exempt chattels were valued at £9.67million and the non-exempt chattels located at Cirencester Park were valued at almost £1.83million.

Lady Bathurst obtained a grant of probate as sole executrix on 12.9.12. The gross value of the estate exceeded £45million. The EFT accounts as at 5.4.13 noted that the EFT comprised chattels and approximately 3,400 acres of land on the Bathurst estate. The chattels were recorded as unassented assets having a value in excess of £15.1million and the land was described as comprising residential, commercial, and agricultural property and park and woodlands valued in total at almost £20million of which property valued at some £1.85million then remained to be assented. Unaudited accounts of the Eighth Earl’s estate drawn as at 31.10.12, a year after the Eighth Earl’s death, disclosed EFT gross income in excess of £250k from rents, woodlands and events and net income of £74k.

Since the Eighth Earl’s death Lady Bathurst has sought to perform her duties, including compiling a full inventory of the estate. At present the chattels remain vested in Lady Bathurst. Lady Bathurst does not wish to execute a deed of assent in relation to the chattels unless she can be sure that it will vest the correct chattels in D1-3.

By reference to other inventories and valuations, and because Lady Bathurst understands that incorrect information about non-exempt chattels belonging to the Eighth Earl was given to Christie’s by the Ninth Earl, and yet further because of her own detailed knowledge, Lady Bathurst has reason to believe that the Christie’s inventory is not accurate. This much is common ground and, as Mr Cooper QC, counsel for D1-3, observed, any assent is potentially incomplete because the possibility of further assets coming to light can rarely, if ever, be excluded. On the other hand, a dutiful personal representative will strive to execute an accurate assent and that is Lady Bathurst’s professed aim.

Various proposals for arriving at a finalised and complete list have been discussed. There is no issue as to the exempt chattels, which were agreed at a meeting between Lady Bathurst and D1-2 on 20.2.13. For a number of reasons, including that different descriptions are used, Lady Bathurst has not accepted that a comprehensive list may be compiled from the various valuations that exist. In addition, D1-3 have instructed Christie’s to re-inspect the chattels at Cirencester Park mansion and Lady Bathurst has proposed that she should be present at that time. Lady Bathurst has also proposed that a complete photographic record be taken. However, relations between Lady Bathurst and the Ninth Earl are not harmonious and Lady Bathurst has been denied access to Cirencester Park mansion.

Lady Bathurst is concerned that, notwithstanding their professed position that they have tried unsuccessfully to facilitate arrangements for Lady Bathurst to inspect the chattels, D1-3’s true position is that they suspect Lady Bathurst of wanting to embark on a “fishing expedition” which “must be resisted”. Lady Bathurst’s concern is supported by attendance notes of meetings between D4 and D1-3’s solicitor. Lady Bathurst’s position is that this has made her all the more anxious about executing an unqualified assent. As to what Lady Bathurst might fish for, the only proffered explanation is the assertion by Mr Cooper QC that Lady Bathurst’s wish to be involved personally in the taking of an inventory at Cirencester Park :

“ … is, in reality, a flimsy pretext to try to gain personal access to Cirencester Park, the home of [the Ninth Earl] and his family”.

A further point of concern to Lady Bathurst is that by a deed dated 15.1.15 made between D1-2, D4-7 and the Ninth Earl, D1-2 agreed to lend or let the chattels at Cirencester Park mansion to D4-7 for an initial term of five years from 1.1.14 and thereafter from year to year for an annual rental of £18k, reviewed at five yearly intervals (‘the Chattels Agreement’). Given the legal experience of D1-2 and D4-7 aspects of the making and terms of this document are surprising. Lady Bathurst does not wish any assent to appear to legitimise or endorse this agreement. That said, her position as stated through her counsel is that she would not object to the agreement, which requires the chattels at Cirencester Park to be kept there, provided her right to use and enjoy the chattels was recognised and accepted, but otherwise she does object to the Chattels Agreement.

Lady Bathurst has said in evidence that she is :

“not prepared to assent to the exempt chattels in Manor Farm until I obtain some assurance that I will not be deprived of the use and enjoyment of them regardless of the outcome of the construction issue concerning my life tenancy”.

On Lady Bathurst’s evidence, many chattels which have furnished Manor Farm since the 1980s are within the chattels the subject of the 2008SC and now subject to the EFT. Christie’s valuation identifies 14 such items having an aggregate probate value in excess of £2.8million as being located at Manor Farm. Thus, an important practical outcome of the construction issue will be the determination of whether Lady Bathurst may continue to use and enjoy those chattels, and others comprising the chattels the subject of the EFT, as of right or whether her continued use and enjoyment is subject to the discretion of D1-3 as trustees of the EFT.

On Lady Bathurst’s evidence, she and the Eighth Earl shared a number of interests, including a deep interest in art, and they each enjoyed and appreciated the chattels the Eighth Earl owned. In addition, Lady Bathurst and the Eighth Earl were in a position to and did lend chattels to museums and other institutions as part of their use and enjoyment of the same. It is Lady Bathurst’s case that the Eighth Earl would not have contemplated inhibiting the right of use and enjoyment during her lifetime and Lady Bathurst wishes to continue to exercise the full right of use and enjoyment.

The uncertainty or dispute as to the meaning and effect of the 2008SC on Lady Bathurst’s continued use and enjoyment of the chattels has prompted Lady Bathurst to seek clarification as to its correct construction. Lady Bathurst is fearful that, if the 2008SC is construed as the defendants contend, she will be required to part with the use and enjoyment of the chattels which have furnished Manor Farm over the past 30 years and which have an important non-monetary significance to her.

The most recently stated position of 4-7 by letter dated 21.9.17 in relation to finalising a list of chattels to be assented to, which position has remained unchanged for some time, was that (1) 4-7 and the Ninth Earl will permit access to Cirencester Park mansion by Christie’s (instructed by D1-3) and, if necessary, a professional valuer instructed by Lady Bathurst as executrix to accompany the Christie’s team and (2) the Ninth Earl will not permit personal inspection by Lady Bathurst. Lady Bathurst’s concerns include that this proposal does not address how missing chattels may be identified.

Section 25 of the Administration of Estates Act 1925 (‘AEA 1925’) provides :

“The personal representative of a deceased shall be under a duty to-

(a)

collect and get in the real and personal estate of the deceased and administer it according to law;

(b)

when required to do so by the court, exhibit on oath a full inventory of the estate and when so required render an account of the administration of the estate to the court;

(c)

when required to do so by the High Court, deliver up the grant of probate or administration to that court”.

Section 44 AEA 1925 provides :

“Subject to the foregoing provisions of this Act, a personal representative is not bound to distribute the estate of the deceased before the expiration of one year from the death”.

Thus, the AEA 1925 affords personal representatives a period of one year, deemed a reasonable period by Parliament, for getting in and for ascertaining the debts, liabilities and obligations of the estate so that distribution of the net estate may follow. In a complex estate or where there are claims, such as under the Inheritance (Provision for Family and Dependants) Act 1975, the fund for distribution may not be capable of ascertainment within that period. Where claims are made the court is likely to wait until the claims are settled or definitively quantified, at least as to a maximum value arguably claimed. Where there will undoubtedly be a surplus in the estate there may be partial distribution provided the actual and potential liabilities are not jeopardised. The one year period, or so-called ‘executor’s year’, provides a minimum protected period for personal representatives and longer periods may be necessary or justifiable depending on the circumstances.

Ms Angus QC, who appeared with Mr Holland as counsel for Lady Bathurst, submitted that a personal representative must act diligently, timeously and reasonably in the fulfilment of his/her duty, which is to administer the estate, and, where the time taken is said to be excessive or unreasonable, may have to explain any failure to distribute after the year has passed. I agree with that submission.

Mr Cooper QC referred to Grayburn v Clarkson (1867-68) LR 3 Ch App 605 for the proposition that after the executor’s year the onus is on the personal representative to explain further delay; Buxton v Buxton (1835) 1 Mylne & Criag 80 for the proposition that delay must be occasioned by an honest and reasonable exercise of discretion; and, Re Marshall [1914] 1 Ch 192 for the proposition that a personal representative is under an obligation to assent (on the facts, where absolute owners called for an assent of shares which had been retained by trustees who were directors of the company and, when aggregated with their own holdings, thereby had a preponderating influence).

Mr Moeran QC, counsel for D4-7, drew attention to In re Tankard [1942] 1 Ch 69, a case which concerned alleged delay in payment of debts calling for explanation by the personal representative, for the proposition that the ultimate object of the administration of an estate is to place the beneficiaries in full possession of their interest.

Ms Angus QC did not take issue with any of Mr Cooper’s or Mr Moeran QC’s propositions in context and drew attention to the different facts of those cases, three concerning delay in payment of debts and the fourth concerning executors hanging on to assets in the estate for their own purposes to the disadvantage of the beneficiaries. These cases provide specific illustrations of the general principle as submitted by Ms Angus QC.

In this case, the estate is significant and complex. A grant of probate was not obtained until almost a year after the Eighth Earl’s death and no suggestion has been made that the obtaining of the grant was delayed. No genuine issue could be taken that distribution did not follow on or shortly after 16.10.12. However, a further five years have passed since the grant of probate. Debts and liabilities are not relevant or a cause of delay in this case. With the exception of a small area of land on which a telecommunications mast stands, all the real property has been assented as has one of the exempt chattels, namely the collection of documents and papers on long term loan to the British Library. There is no doubt as to the exempt chattels, these were agreed by Lady Bathurst with D1-2 on 20.2.13. Lady Bathurst’s concerns about an inventory are confined to the non-exempt chattels and both the fact that the Christie’s valuation omits some chattels and the possibility or probability that others may not be at Cirencester Park, having been lost or sold, or are damaged.

Mr Cooper QC, on behalf of D1-3, criticised Lady Bathurst’s position as inconsistent, confused, incoherent and indefensible. Mr Cooper QC based his inconsistent charge on the fact that Lady Bathurst has executed assents as noted above. The criticisms that Lady Bathurst’s position is confused and incoherent were not explained nor, in my view, are they justified and I reject those criticisms. The submission that Lady Bathurst’s position is indefensible was based upon the premise that she has been and is seeking to use her assent as a bargaining chip both to gain access to Cirencester Park and to secure a favourable outcome to the construction issue by unjustifiable means.

As to Lady Bathurst’s reasons, in my judgment it is not open to her to withhold the execution of an assent as a bargaining chip in order to secure agreement in line with her view of the construction issue. No proper reason has been put forward for not executing an assent in relation to the vesting of the exempt chattels in the EFT. Subject to that, in general terms Lady Bathurst’s reasons for distinguishing between classes of assets and executing limited assents were reasonable and not inconsistent or otherwise objectionable.

The position in relation to the non-exempt chattels is less straightforward. Ms Angus QC submitted that it would be open to Lady Bathurst, as a last or extreme resort, to call for delivery up of all of the chattels in order to prepare an accurate inventory for an assent. That may be so in theory but it is unrealistic as a practical option. That is not to diminish the important point that Lady Bathurst should have a reasonable opportunity to prepare an accurate inventory of all the chattels. Although less valuable in monetary terms, the non-exempt chattels are far more numerous and monetary value is not the only consideration.

The barrier to personal inspection or involvement by Lady Bathurst is the strained relationship between herself and the Ninth Earl and the Ninth Earl’s long maintained refusal to allow Lady Bathurst to cross the threshold of Cirencester Park mansion. The Ninth Earl is neither a party nor a witness (there is no statement from him) at this trial. As I see it, it is neither appropriate nor possible to express a view as to where fault may lie for the barring of Lady Bathurst from Cirencester Park. That said, I make clear that I make no finding adverse to Lady Bathurst and, on the material before me, I reject as fanciful the proposition that Lady Bathurst might wish to embark on some unspecified fishing expedition if admitted to Cirencester Park for the purpose of participating in the compilation of an inventory of non-exempt chattels the subject of the 2008SC.

The practical solution is not to grant Lady Bathurst the permission as sought (namely to permit Lady Bathurst, in her capacity as executrix of the 1998 Will and the 2008SC, to decline to execute any deed assenting any chattels to D1-3, in their capacity as trustees of the EFT, until she has been given an opportunity personally to inspect and make a full inventory of the chattels in the EFT that are located at Cirencester Park that should form part of the EFT) but to permit Lady Bathurst to execute a qualified assent in relation to the non-exempt chattels limited to those of the non-exempt chattels listed by Christie’s and any other non-exempt chattel known to Lady Bathurst subject to D1-3 exonerating Lady Bathurst from any and all liability in the event that any such chattel is not in fact located at Cirencester Park, for whatever reason, or is damaged.

As to an unqualified deed of assent in relation to the chattels and the possibility of other non-exempt chattels being located at Cirencester Park at the date of the Eighth Earl’s death, unless some reasonable solution can be agreed which would enable Lady Bathurst as a diligent and reasonable executor to execute such a deed of assent, Lady Bathurst’s continued refusal so to do is not unreasonable. During the hearing before me the possibility of making a video of the contents of Cirencester Park mansion for approval by Lady Bathurst was considered as a possible way forward and there may be other possibilities.

The further ground raised by Lady Bathurst for refusing to execute an assent was that she did not wish to be thought to endorse or inadvertently legitimise the Chattels Agreement. The legitimacy or otherwise of the Chattels Agreement is an issue in these proceedings but not one live at this trial. Nothing in this judgment should be taken as making a determination one way or the other on that issue or of resulting in Lady Bathurst’s position being adversely affected.

Accordingly, I decline to give the direction sought by Lady Bathurst. I do not consider Lady Bathurst to have good reason for refusing to execute an assent of the exempt chattels. The position in relation to the non-exempt chattels is less straightforward and, as explained above, while I accept that Lady Bathurst has reason not to execute an unqualified assent of the non-exempt chattels unless and until she has a reasonable opportunity to obtain a comprehensive inventory of the non-exempt chattels at Cirencester Park, I do not see that a qualified assent could reasonably be withheld provided D1-3 agree to provide a suitable exoneration from liability.

Ms Angus QC referred in her opening submissions to chapter 13 of Theobald on Wills, 18^th Edition, and to a number of cases cited in that chapter including Marley v Rawlings [2015] AC 129. It is common ground between Ms Angus QC, Mr Cooper QC and Mr Moeran QC that the approach to construing a will is the same as that of interpreting contracts and other documents.

In Marley, the outcome of which was determined by the Supreme Court’s decision on the claim for rectification, at [19], Lord Neuberger, PSC, summarised the court’s approach to contracts
“When interpreting a contract, the court is concerned to find the intention of the party or parties, and it does this by identifying the meaning of the relevant words, (a) in the light of (i) the natural and ordinary meaning of those words, (ii) the overall purpose of the document, (iii) any other provisions of the document, (iv) the facts known or assumed by the parties at the time the document was executed, and (v) common sense, but (b) ignoring subjective evidence of any party’s intentions”.

Lord Neuberger then considered s.21 of the Administration of Justice Act 1982 (‘AJA 1982’) at [24] – [26]

“24However, there is now a highly relevant statutory provision relating to the interpretation of wills, namely [s.21 AJA 1982]. Section 21 is headed “Interpretation of wills – general rules as to evidence”, and is in the following terms:

“(1)

This section applies to a will – (a) in so far as any part of it is meaningless; (b) in so far as the language used in any part of it is ambiguous on the face of it; (c) in so far as evidence, other than evidence of the testator’s intention, shows that the language used in any part of it is ambiguous in the light of the surrounding circumstances.

(2)

In so far as this section applies to a will extrinsic evidence, including evidence of the testator’s intention, may be admitted to assist in its interpretation.”

25 In my view, section 21(1) confirms that a will should be interpreted in the same way as a contract, a notice or a patent, namely as summarised in para 19 above. In particular, section 21(1)(c) shows that “evidence” is admissible when construing a will, and that includes the “surrounding circumstances”. However, section 21(2) goes rather further. It indicates that, if one or more of the three requirements set out in section 21(1) is satisfied, then direct evidence of the testator’s intention is admissible, in order to interpret the will in question.

26 Accordingly, as I see it, save where section 21(1) applies, a will is to be interpreted in the same way as any other document, but, in addition, in relation to a will, or a provision in a will, to which section 21(1) applies, it is possible to assist its interpretation by reference to evidence of the testator’s actual intention (eg by reference to what he told the drafter of the will, or another person, or by what was in any notes he made or earlier drafts of the will which he may have approved or caused to be prepared)”.

Thus, a precondition to having regard to the testator’s intention is that the will, or a provision therein, should be meaningless or contain a patent or latent ambiguity.

On the general approach to construction, Ms Angus QC also drew attention to the Supreme Court’s more recent decision in Wood v Capita Insurance Services Ltd [2017] 2WLR 1095 and in particular the judgment of Lord Hodge, with whom the other JJSC agreed, at [8] to [15] which include

“10 The court’s task is to ascertain the objective meaning of the language which the parties have chosen to express their agreement. It has long been accepted that this is not a literalist exercise focussed solely on a parsing of the wording of the particular clause but that the court must consider the contract as a whole and, depending on the nature, formality and quality of drafting of the contract, give more or less weight to elements of the wider context in reaching its view as to that objective meaning. …

11 … Interpretation is … a unitary exercise; where there are rival meanings, the court can give weight to the implications of rival constructions by reaching a view as to which construction is more consistent with business common sense. But, in striking a balance between the indications given by the language and the implications of the competing constructions the court must consider the quality of drafting of the clause … ; and it must also be alive to the possibility that one side may have agreed to something which with hindsight did not serve his interest …. Similarly, the court must not lose sight of the possibility that a provision may be a negotiated compromise or that the negotiators were not able to agree more precise terms.

12 The unitary exercise involves an iterative process by which each suggested interpretation is checked against the provisions of the contract and its commercial consequences are investigated … it does not matter whether the more detailed analysis commences with the factual background and the implications of rival constructions or a close examination of the relevant language in the contract, so long as the court balances the indications given by each.

13 Textualism and contextualism are not conflicting paradigms in a battle for exclusive occupation of the field of contractual interpretation. … There may often be provisions in a detailed professionally drawn contract which lack clarity and the lawyer or judge interpreting them may be particularly helped by considering the factual matrix and the purpose of similar provisions in contracts of the same type”.

In the present case, should the circumstances bring the construction issue within the scope of s.21(1) AJA 1982, it will be important to remember that the 2008SC was approved by and executed following the order of the CoP. In so doing the CoP will have applied s.1(5) of the Mental Capacity Act 2005 (‘MCA 2005’) which requires that

“An act done, or a decision made, under this Act for and on behalf of a person who lacks capacity must be done, or made, in his best interests”.

S.4 MCA 2005 prescribes the approach to be taken when making a ‘best interests’ decision. So far as relevant s.4 provides

“(2)

The person making the determination must consider all the relevant circumstances and, in particular take the following steps. …

(6)

He must consider, so far as is reasonably ascertainable –

(a)

the person’s past and present wishes and feelings (and, in particular, any relevant statement made by him when he had capacity),

(b)

the beliefs and values that would be likely to influence his decision if he had capacity, and

(c)

the other factors that he would be likely to consider if he were able to do so.

(7)

He must take into account, if it is practicable and appropriate to consult them, the views of –

(a)

anyone named by the person as someone to be consulted on the matter in question or on matters of that kind,

(b)

anyone engaged in caring for the person or interested in his welfare, …

as to what would be in that person’s best interests and, in particular, as to the matters mentioned in subsection (6). …..

(11)

‘Relevant circumstances’ are those –

(a)

Of which the person making the determination is aware, and

(b)

Which it would be reasonable to regard as relevant”.

The power of the court to make decisions on behalf of a person lacking capacity, including as to the execution of a will, is conferred by ss.16 and 18 MCA 2005

“16(1) This section applies if a person (‘P’) lacks capacity in relation to a matter or matters concerning –

(a)

P’s personal welfare

(b)

P’s property and affairs.

(2)

The court may –

(a)

by making an order, make the decision or decisions on P’s behalf in relation to the matter or matters …

(3)

The powers of the court under this section are subject to the provisions of this Act and, in particular, to sections 1 (the principles) and 4 (best interests). ….

(7)

A order of the court may be varied or discharged by a subsequent order”;

and,

“18(1) The powers under section 16 as respects P’s property and affairs extend in particular to – ….

(i)

The execution for P of a will”.

The application of MCA 2005 to testators lacking capacity was considered in In re P (Statutory Will) [2010] Ch 33 in which Lewison J at [39] held that the decision to be made was not a substitute decision for the judgment of the incapacitated person but was governed by MCA 2005 which required a value judgment to be made in the light of the approach stipulated by s.4 MCA 2005 and applying the best interests principle. This marks an important distinction between a codicil made by a person having testamentary capacity and a statutory codicil made pursuant to an order of the court for a person lacking such capacity. Lewison J acknowledged that adult autonomy is an important part of the overall picture, but also considered that a best interests decision-maker is entitled to take into account, in the assessment of best interests, how the testator will be remembered after his death.

I also keep in mind that Lady Bathurst’s claim is as to the true meaning of the 2008SC and that there has been neither an application to the CoP for its variation nor a claim in the High Court for rectification. A claim for rectification would have had to have been brought within the constraints of s.20 AJA 1982

“(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. …”.

It is convenient at this point to address two points which will arise should I conclude that the criteria under s.21 AJA 1982 are met and it becomes appropriate to consider extrinsic evidence, including the testator’s intention. First, and as submitted by Mr Moeran QC referring to In re Williams decd [1985] 1 WLR 905, extrinsic evidence cannot support the attribution of a meaning which, notwithstanding a liberal approach to construction, the word or phrase cannot bear; that would be to contradict and rewrite the will which is a result only capable of being achieved, if at all, through rectification. Secondly, there is the question of whose intention is to be considered as “the tesator’s intention” at s.21(2) AJA 1982. Ms Angus QC submitted that the CoP’s intention is the relevant one. Mr Cooper QC answered this point by submitting that the CoP would attribute an intention applying its own judgment. Mr Moeran QC posited three candidates : the testator, the person executing the statutory will, or the court ordering the statutory will and submitted that it is the court. Mr Moeran QC’s reasons included that the testator necessarily lacks capacity which presents an impassable obstacle. The person executing the will is simply performing a function at the direction of the court and may have no intention at all and certainly has no relevant intention in that capacity. That leaves the court, which has taken on the task otherwise falling to the testator but is subject to criteria specified by statute governing its intention. I agree. The short answer is that the court is the person forming the intention as to the testamentary document and that intention is made following the approach under s.4 MCA 2005 and applying the best interests principle.

Turning now to the submissions of counsel, Ms Angus QC and Mr Holland for Lady Bathurst focussed on the context in which clause 2(c) of the 2008SC falls to be construed. It is convenient to set them out in tabular form.

Ms Angus QC further submitted that the ordinary or natural meaning of income depended upon the context in which the noun was used, including in particular the nature of the asset from which income is to be derived. The essence of the right to income is that it is the right to whatever is produced by or derived from the corpus or capital without depletion of that corpus or capital. Money or monetary value is one way of identifying income but not the only one.

Ms Angus QC referred to Perrin v Morgan [1943] AC 399, in which case the phrase “all moneys of which I die possessed” was held to include all personalty. The alternative construction, confining “moneys” to cash and balances at bank, would have resulted in a partial intestacy of a substantial investment portfolio. Viscount Simon LC (p.412-3) emphasised the importance of context as a “main guide” to interpretation of a word or phrase in a will and observed that while it would “often be going too far” to extend “money” to including realty as well as personalty, “everything turns on the language and circumstances of the particular will”; Viscount Simon also considered it significant that if “moneys”, as left to the testator’s nephews and nieces, did not include the substantial portfolio of investments the alternative was that the testator must have deliberately intended to die intestate in respect of the investments. Lord Atkin (p.414) noted that the word “money” then had a diversity of meanings so that no presumption as to a particular meaning arose with the result that interpretation by the court was to be

“guided by the other provisions of the will and the other relevant circumstances, including the age and the education of the testator, his relations to the beneficiary chosen, whether of kinship or friendship, the provision for other beneficiaries, and other admissible circumstances. Weighing all these, the court must decide on the most probable meaning”.

Ms Angus QC drew attention to the emphasis placed on context by Lord Russell (p.418) and by Lord Romer (p.420)

“ … I take it to be a cardinal rule of construction that a will should be so construed as to give effect to the intention of the testator, such intention being gathered from the language of the will read in the light of the circumstances in which the will was made. To understand the language employed the court is entitled, to use a familiar expression, to sit in the testator’s armchair”.

Pausing here, Lord Romer also said at p.420

“ … the court is not entitled to make a fresh will for the testator merely because it strongly suspects that the testator did not mean what he has plainly said …”.

Ms Angus QC submitted that when considering the meaning of a word or phrase in a will case and applying common sense, the court assumes that the testator did not mean to act capriciously; and, further, in the rare circumstances where, as here, the will or codicil is the product of negotiation, there is a world of difference between a document the product of a hasty negotiation outside court and a document submitted to professional scrutiny and deliberation over weeks or months.

As to definitions of “income” and “pay”, Ms Angus QC referred to the very broad meanings ascribed to income in Stroud’s Judicial Dictionary

“(1)

“Income” signifies “what comes in” … “It is as large a word as can be used” to denote a person’s receipts” ….

“(2)

So, under the Income Taxes Acts, a person’s “income”-means money, or money’s worth, received by him, and (in this connection, at least) money’s worth must be something that “can be turned into money”.

She also referred to the wide ambit of the meaning of “pay“ in the Oxford English Dictionary

“1.a. trans. To appease, pacify, satisfy, content, please, gratify; to be acceptable to, gain or meet with the approval of …

2.a. trans To give to (a person) what is due in discharge of a debt, or as a return for services done, or goods received, or in compensation for injury done; to remunerate, recompense …

3.

Fig. or gen. To reward, recompense, requite, give what is due or deserved to (a person) …”,

And submitted that, in the context of a trust, what constitutes its income and payment thereof must depend upon the composition of the fund.

Turning to s.21 AJA 1982, Ms Angus QC submitted that, in the event that the court concludes that the 2008SC is ambiguous, the decision to be made had to be approached from the standpoint of the Eighth Earl’s best interests. It was common ground before the CoP that Lady Bathurst should have a life interest or be life tenant and that her interest during her lifetime should not be otherwise cut down. Ms Angus QC submitted that in this context, and in the absence of a transcript of the submissions made to DJ Rogers in the CoP on 5.11.08, regard could also be had to the hearing attendance note made by Lady Bathurst’s solicitor which included counsel for D4-5 informing the judge that the purpose of the proposed codicil was to enable Lady Bathurst to “enjoy assets in lifetime ensure ongoing stewardship and avoidance of US tax on this asset”. Mr Moeran QC, counsel for D4-7, objected to account being taken of this note and submitted that it was inadmissible being the equivalent to a note of negotiations between the parties and reflecting the subjective understanding of one party. Of course, if admissible, a formal transcript would have been a better source. The note is of what the CoP was told and it is only relied on in the event that s.21 AJA 1982 is in play. In my view it is admissible as extrinsic evidence. I therefore reject Mr Moeran QC’s objection and will keep it in mind if the provisions of s.21 AJA 1982 come into operation.

Ms Angus QC submitted that the right to use and enjoy a chattel is an incident of its ownership. Accordingly, if not addressed in the language of clause 2 of the 2008SC, it must have passed from the Eighth Earl’s ownership to Lady Bathurst under clauses 3 and/or 6 of the 1998 Will. D1-3 were not intended to have personal use of the chattels and no discretionary trust arises until Lady Bathurst’s death. Ms Angus QC submitted that this reinforces the interest in possession argument, that only Lady Bathurst can have been intended to use and enjoy the chattels.

Summarising Lady Bathurst’s case in a nutshell, Ms Angus QC submitted that the gift of chattels to Lady Bathurst was a specific gift; under the 1998 Will it was an outright gift and under the 2008 SC it has become a lifetime interest; the chattels will not become the subject of a discretionary trust until Lady Bathurst dies; during Lady Bathurst’s lifetime D1-3 have no power to cut down Lady Bathurst’s interest; Lady Bathurst’s interest was intended to be an interest in possession for inheritance tax purposes; an interest in possession carries with it a present right to enjoyment; there could not have been a reasonable expectation that the chattels would be sold or let and so generate income; a significant proportion of the chattels (at least in value) were being enjoyed by Lady Bathurst in her own home; the other chattels had also been enjoyed by her (e.g. by lending to museums for exhibitions). So, viewing the circumstances relevant to the chattels in the round, only Lady Bathurst was to have the right to enjoy the chattels.

Mr Cooper QC, counsel for D1-3, referred to the Supreme Court’s decisions in Marley and in Wood, but based his submissions on the Supreme Court’s decision in Arnold v Britton [2015] AC 1619, which concerned a lease, and in particular to Lord Neuberger’s judgment at [15] (which is in terms almost identical to those in Marley at [19])

“When interpreting a written contract, the court is concerned to identify the intention of the parties by reference to “what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean” … And it does so by focussing on the meaning of the relevant words … in their documentary, factual and commercial context. That meaning has to be assessed in the light of (i) the natural and ordinary meaning of the clause, (ii) any other relevant provisions of the lease, (iii) the overall purpose of the clause and the lease, (iv) the facts and circumstances known or assumed by the parties at the time that the document was executed, and (v) commercial common sense, but (vi) disregarding subjective evidence of any party’s intentions”.

As to the words used and their natural and ordinary meaning, Mr Cooper QC submitted that there is very little to add to the Oxford English Dictionary definition of income

“6.a. spec. That which comes in as the periodical produce of one’s work, business, lands, or investments (considered in reference to its amount, and commonly expressed in terms of money); annual or periodical receipts accruing to a person or corporation; revenue”.

The dictionary definition focuses on that which is produced or accrues for receipt and neither states nor suggests that a right to use or enjoy is income. Moreover, clause 2(c)(i) of the 2008SC was confined to payment of income to Lady Bathurst.

Mr Cooper QC also drew attention to the pre-action protocol letter written by Lady Bathurst’s solicitors to those acting for her before the CoP which complained that the 2008SC expressly only dealt with the right to income. As to that last point, it is of no weight in my view because it was written to protect a position in other proposed litigation that might or might not be taken.

Turning to any other relevant provisions, Mr Cooper QC submitted that the powers of D1-3 plainly incorporated the powers under the schedule to the 1998 Will, which include the power to permit any beneficiary to use and enjoy any property the subject of the EFT. Mr Cooper QC agreed with Ms Angus QC that the power did not allow trustees, for this purpose D1-3, to override the rights of a life tenant. Mr Cooper QC drew attention to the wide power conferred on trustees to impose conditions as to use or enjoyment whether as to payment of “outgoings” or “generally … as [they] think fit”. In this case, D1-3 had invoked those powers through the Chattels Agreement to produce an income which was accountable to Lady Bathurst on the basis that she has an interest in possession in that income.

Mr Cooper QC also drew attention to what is not expressly provided for and submitted that had the 2008SC been intended to give Lady Bathurst a right to enjoy the chattels it would also have been expected to have dealt with insurance and security, probably by making Lady Bathurst liable for those obligations. I pause here to note the evidence that as a matter of fact D1-2 did initially pay the full insurance premiums in respect of the chattels out of the EFT although the position now is that the premium is split as between the EFT and the 1963S with D1-3 paying the premium attributable to the chattels at Manor Farm.

As to the overall purpose of clause 2 of the EFT, Mr Cooper QC submitted that it is to provide an income for Lady Bathurst. He referred to Mr Stanford-Tuck’s attendance note of a meeting with the Eighth Earl on 31.5.06 which includes that the Eighth Earl thought it would be wrong to give Lady Bathurst the significant collection of chattels held in Cirencester Park mansion and that at that time Mr Stanford-Tuck assessed the Eighth Earl to be in good health and alert throughout their meeting. The note also refers to D4 drafting some documentation and a further meeting being arranged for 28.6.06. On the material drawn to my attention it appears that this and any further discussion came to nothing, not least because the discussion(s) would otherwise have been taken into account in and have impacted on the codicils executed by the Eighth Earl on 5.3.07 and, possibly, 7.9.07.

In addition, Mr Cooper QC drew attention to the effect of the 1998 Will which, as DJ Rogers took into account in his judgment at [17], bequeathed and devised outright to Lady Bathurst all chattels at Manor Farm (other than the 14 exempt items) and substantial real property interests and monies. As to the exempt chattels, Mr Cooper QC acknowledged that it would be capricious for D1-3 to request the delivery up of any of the 14 items at Manor Farm unless Lady Bathurst were to place them in jeopardy; and, submitted that there has not been any request from Lady Bathurst for the personal use of any additional item or for any item to be lent to a museum or for an exhibition. As to the practicality of meeting any such request, Mr Cooper QC accepted that the Chattels Agreement (assuming it is valid) could or would cause temporary difficulties because there was no reservation by D1-3 in the agreement and they would have to invoke the break clause. The Chattels Agreement post-dated and could not assist in the construction of the 2008SC.

As to the facts and circumstances known or assumed by the parties, or context, Mr Cooper QC submitted that the CoP will have viewed the testator’s circumstances as if from his point of view, and will have acted in his best interests after taking everything relevant into account.

Mr Cooper QC submitted that the following were relevant facts and circumstances. The vast majority of the chattels, both in number and value, have been and are housed at Cirencester Park mansion. Lady Bathurst and the Eighth Earl had moved out of the mansion some 20 years before the 2008SC was executed and had not had the use or enjoyment of the majority of the chattels over that long period of time. It was a condition of the insurance that chattels remained housed at Cirencester Park mansion, a point known to and insisted on by the Eighth Earl. The Eighth Earl was also of the view that the furniture and chattels should remain and be available to be viewed in situ. Moreover, Manor Farm is far too small to accommodate more than a small number of the large collection of chattels in the EFT.

As to commercial common sense, Mr Cooper QC submitted that the practical matters and constraints referred to above were of equal significance here.

In response to Ms Angus QC’s reliance on the submissions made to the CoP by D4-5’s then counsel, Mr Cooper QC submitted that Lady Bathurst does have an interest in the assets which include considerable land and investments. The reference to investments is a little puzzling if it is intended to refer to assets of the EFT; as I understand it the EFT comprises (or is to comprise) chattels and land, the investments in the Eighth Earl’s estate at death all passed outright to Lady Bathurst. Mr Cooper QC further submitted that D1-3 have done and will do exactly what the 2008SC requires them to do, namely hold all the capital for Lady Bathurst’s lifetime and pay the income arising to Lady Bathurst.

Mr Cooper QC further submitted that clause 4 of the codicil is telling. S.12 of the Trusts of Land and Appointment of Trustees Act 1996 gives the beneficiary with an interest in possession in land subject to a trust of land an entitlement to occupy the land if the purposes of the trust include making the land available for his occupation, hence the requirement for the exclusion at clause 4 of the 2008SC that it is not a purpose of the 1998 Will that any land in the Eighth Earl’s estate should be available for occupation by a beneficiary and the corresponding power conferred on D1-3 to permit occupation or enjoyment of any property (which would include chattels). Mr Cooper QC submitted that the trustees have the power to enable Lady Bathurst to enjoy assets on appropriate terms and that this is a sensible safeguard against, for example, the emptying of Cirencester Park mansion of chattels in the EFT and their being deposited in a storage facility. On the clause 4 point Mr Moeran QC made a further submission that, if there was no intention to give Lady Bathurst a right to use and enjoy land, there should not be any different intention in relation to chattels; one possible answer to this submission is that the land transferred to the EFT included land occupied by third parties on residential or commercial tenancies.

Mr Cooper QC’s primary submissions were, in summary that, upon applying the correct approach to construction as stated in Arnold (and Marley), the natural and ordinary meaning of the direction to D1-3 to pay the income of the EFT to Lady Bathurst for her life is confined to monetary payments and does not include allowing use and enjoyment of assets which do not produce income; that is consistent with both the terms of the 2008SC as a whole and the purpose of the 2008SC as communicated to and approved by the CoP; there are no relevant facts or circumstances known to or assumed by the parties at the time which undermine that conclusion; the contrary conclusion, that paying income extends to allowing use and enjoyment, would not make sense in the light of relations between Lady Bathurst and the Ninth Earl, would cause practical difficulties for D1-3, and would offend longstanding commercial arrangements (insurance policy terms); and, unless s.21 AJA 1982 is invoked, which it should not be, subjective intentions are irrelevant.

Mr Moeran QC, making his submissions after Mr Cooper QC, endorsed without repeating Mr Cooper QC’s submissions. Mr Moeran QC emphasised, as a general point, that it is impermissible to rewrite a document when construing or interpreting it.

Turning to the structure of clause 2 of the 2008SC, Mr Moeran QC identified as the key words “shall pay the income of the [EFT] to Lady Bathurst” and posited the choice to be made as to construction : either Lady Bathurst is entitled only to payment of actual income arising from the EFT or she is also entitled to use and enjoy assets of the EFT which, ordinarily, do not produce income.

Mr Moeran QC submitted that the choice to be made is clear from the language of clause 2(c) of the 2008SC. First, D1-3 are given and directed to “hold” the “capital” and “income of the same”; “capital” is identified as (A) the exempt chattels and all other chattels owned by the Eighth Earl currently at Cirencester Park (B) legal and equitable interests in land and buildings identified in a schedule, and (C) accumulations; “income” can only be that arising on the “capital”. Then, D1-3 are directed to “pay the income of the [EFT]” to Lady Bathurst. It must have been apparent to all that a substantial proportion of the “capital” could be, and had been for decades, used and enjoyed and not exploited to produce income. D1-3 could easily have been, but were not, directed also to permit use and enjoyment of non-income earning capital. Moreover, “pay” requires a transfer from one person (trustee) to another (beneficiary); it does not permit the payee (beneficiary) to claim or bring to him/herself. In other words, the 2008SC specifies what D1-3 are to do not what Lady Bathurst is entitled to claim.

As to what may constitute “income”, Mr Moeran QC relied on the Oxford English Dictionary definition, submitted that it is not used as a term of art in the EFT and that the characteristic of income is that it is the produce of labour or the use or exploitation of capital (a business, land, investments, other assets) expressed or measured in monetary value (money or money’s worth); it is that which is received from the use or exploitation of capital.

Mr Moeran QC submitted that, accordingly, there is no scope for ambiguity as to the ordinary and natural meaning of the direction to D1-3 to “ … pay the income of the [EFT] to Lady Bathurst”.

As to the overall purpose of the document, Mr Moeran QC submitted that it was to make testamentary provision to address a tax difficulty resulting from Lady Bathurst’s citizenship and vary the Eighth Earl’s 1998 Will applying the statutory regime imposed by MCA 2005 where a testator lacks capacity, which activates consideration of factors different from those where a testator has capacity. The overall intention was to ensure that Lady Bathurst received all the income from the assets transferred into the EFT and to address practical problems that would arise were the chattels to pass to Lady Bathurst outright (it being accepted that Lady Bathurst’s intention was to keep them within the Bathurst family upon her death); those practical problems included periodic inspection, inventory, insurance, storage and security which were not merely theoretical given the impasse between Lady Bathurst and the Ninth Earl and they were not inconsequential given the value and importance of the chattels. Mr Moeran QC submitted that that was understood by the CoP when sanctioning the negotiated compromise between the parties.

As to other provisions of the 2008SC, Mr Moeran QC referred to clause 4 thereof, as noted above in the context of Mr Cooper QC’s submissions. Mr Moeran QC also drew attention to D1-3’s express power, by incorporation of paragraph 2 of the schedule to the 1998 Will, to allow a beneficiary to use and enjoy any property, which would include the chattels.

As to the facts known to or assumed by the parties at the time, Mr Moeran QC submitted that all parties were aware of the strained relations between Lady Bathurst and the Ninth Earl and difficulties in the relations between Lady Bathurst and some at least of D4-7. Under the 1998 Will, Lady Bathurst was to receive the chattels outright and the land and buildings now listed at the schedule to the 2008SC. It was also a fact that Lady Bathurst had not, for many years, used and enjoyed, and could not expect to use and enjoy, all the chattels. It would be illogical to remove them from their historic ‘home’ and unrealistic to expect Lady Bathurst to be able to manage them effectively given the poor relationship between her and the Ninth Earl.

As to common sense, in the context of a will the common sense should be practical not commercial common sense. The points already made were relevant under this consideration.

Mr Moeran QC submitted that the words under consideration are neither meaningless nor ambiguous and, therefore, s.21 AJA 1982 cannot be invoked and the testator’s intention is irrelevant. However, if that submission is rejected, Mr Moeran QC submitted that the relevant intention was that of the CoP and that DJ Rogers expressed the view that the Eighth Earl would want to make “appropriate provision” for Lady Bathurst and expressed himself reassured that the 2008SC made “appropriate adequate provision” for Lady Bathurst by the provision of income for life, bearing mind also Lady Bathurst’s outright inheritance under the 1998 Will.

As to Ms Angus QC’s submission that Lady Bathurst was intended to have an interest in possession in the entirety of the capital of the EFT, Mr Moeran QC submitted that that was agreed by all and, further, that that objective was achieved by obliging D1-3 to pay all income to her for life; thus and to the extent that the chattels are turned to account to generate income that income is payable to Lady Bathurst. In support of this proposition Mr Moeran QC referred to the speech of Viscount Dilhorne at pp.773-4. At p.773 Viscount Dilhorne cited a passage from the speech of Lord Reid in Gartside v IRC [1968] AC 553 at p.607 where Lord Reid said

“’In possession’ must mean that your interest enables you to claim now whatever may be the subject of the interest”;

and at 774C-D and H

“ … an interest may be terminated by the exercise of a power of revocation or of an overriding power of appointment … . the existence of such a power does not prevent the holding of an interest in possession prior to the exercise of the power and until it is exercised, the holder of the interest has a present right of present enjoyment.

A distinction has in my opinion to be drawn between the exercise of a power to terminate a present right of present enjoyment and the exercise of a power which prevents the right of present enjoyment arising. …

… A life tenant has an interest in possession but his interest only extends to the net income of the property ”.

Mr Moeran QC drew attention to the facts that under the EFT D1-3 had no power to accumulate or appoint away from Lady Bathurst.

Mr Moeran QC also submitted that it was futile to consider Lady Bathurst’s position in the context of a Settled Land Act 1925 strict settlement life tenancy for reasons including that the 2008SC was drafted and approved in 2008, more than a decade after the abolition of strict settlements. That is certainly fair comment and must be right; for that reason I have not referred to Ms Angus QC’s submissions on strict settlements.

I come now to my decision, and I confess that I have found the answer rather less obvious than it is to Mr Cooper QC and Mr Moeran QC.

First, as to the natural and ordinary meaning of the phrase “pay the income of the [EFT] to Lady Bathurst during her life”, the immediate thought as to the meaning of “income” is, or is likely to be, of money generated by labour or capital and is, thus, consistent with the Oxford English Dictionary definition. I accept that, as Mr Moeran QC submitted, “pay” is a direction to D1-3 rather than the conference of a right on Lady Bathurst. However, it is common ground that Lady Bathurst was intended to have an interest in possession and, as observed by Lord Reid in the passage from Gartside referred to by Mr Moeran QC, an interest in possession entitles the beneficiary to claim now whatever may be the subject of the interest and, therefore, obliges the trustee to pay. Further, and as appears from Stroud’s Judicial Dictionary, “income” has been construed very widely in the context of legal documents; in tax cases, and the 2008SC was entered into with tax consequences in mind, it is taken to mean not just ‘money’ but also ‘money’s worth’ which connotes an asset which may be turned to account and/or ascribed a monetary value for use and enjoyment whether or not that is the case.

In my view, the words “pay … the income” as used in the 2008SC are not free from ambiguity and could bear the meaning contended for by Lady Bathurst. Such a meaning would not amount to, or border on, contradiction or rewriting the 2008SC.

The overall purpose of the 2008SC was initially the provision of a holding mechanism to avoid the then real risk to the Eighth Earl’s estate of the disadvantageous tax consequences that would flow from the death of the Eighth Earl before Lady Bathurst renounced her US citizenship; but, the 2008SC was not a single purpose document. The Eighth Earl lacked testamentary capacity, the jurisdiction of the CoP was invoked and, necessarily, the court had to concern itself with the Eighth Earl’s best interests. D4-5 and Mr Stanford-Tuck had raised other matters in their application to the CoP. Those matters had to be compromised or decided; they could not simply be ignored by a court charged with safeguarding the best interests of a person lacking testamentary capacity. Ultimately, the 2008SC was submitted to the CoP as a negotiated compromise document for independent scrutiny by the CoP and, if satisfied that it was in the Eighth Earl’s best interests, an order for its execution. The overall purpose of the 2008SC obviously included altering Lady Bathurst’s inheritance under the 1998 Will, as altered by codicils made by the Eighth Earl, by cutting down her outright interest in the chattels and specified land, buildings and woodlands. Taken with the letter written by D4-5 and Mr Stanford-Tuck and the agreed costs order, the 2008SC was (1) to protect the tax position of certain chattels and land otherwise passing outright to Lady Bathurst but intended by the Eighth Earl and Lady Bathurst to remain part of the Bathurst family inheritance and (2) to dispose of the various complaints made against Lady Bathurst in relation to the management of the Eighth Earl’s property and affairs.

As to other provisions in the 2008SC, Mr Cooper QC and Mr Moeran QC drew attention to clause 4 of the 2008SC, to the powers under the schedule to the 1998 Will conferred on D1-3 as trustees of the EFT, and to the juxtaposition in clause 2 of the 2008SC of the gift to D1-2 on the trusts of the EFT of “capital” and “income” and the direction to D1-2 in respect only of “income”. Clause 4 is relevant in that in respect of the EFT’s trustees’ obligations and powers a distinction is drawn between “land” (declaration : not to be made available for occupation by a beneficiary) and “property” (discretionary power to permit occupation or enjoyment by beneficiaries). Of themselves, these provisions do not point unequivocally to the answer to the construction issue. They do, however, carry some weight against the construction contended for by Lady Bathurst.

The facts known or assumed by the parties, in other words the context, is significant. The need for the 2008SC was triggered by the Eighth Earl’s grave illness, his incapacity, and Lady Bathurst’s then citizenship. However, good administration of the Eighth Earl’s estate was properly referable to the CoP given the difficult relationship between Lady Bathurst and the Ninth Earl. There were negotiations between the opposing parties’ solicitors. Each side had a very experienced legal team, however it would be fair to conclude that Lady Bathurst was at a practical disadvantage because, unlike D4, she was not a very experienced private client solicitor and, because of the Eighth Earl’s grave illness, she was not able to devote anything like her full attention to the CoP proceedings which, at least initially, were intended only to secure a holding position. Both sides continued actively to negotiate and seek to reach an agreement. Both sides knew that the difficulties in the relationship between Lady Bathurst and the Ninth Earl were entrenched and unlikely to evaporate. The parties agreed upon a short term holding position on 5.11.08. By 20.11.08 Lady Bathurst had renounced her US citizenship. On 21.11.08, both sides intended to bring an end to the CoP proceedings by making the 2008SC a long term solution, not merely a holding position, and by agreeing the terms of a letter to be written to Lady Bathurst by D4-5 and Mr Stanford-Tuck, and further by agreeing a costs order favourable to Lady Bathurst.

It is common ground that the parties intended that Lady Bathurst should have an interest in possession and the defendants have subsequently made representations to HMRC that that is the fact. Whilst that is an important factor when considering the overall purpose of the 2008SC and the facts assumed by the parties, it cannot be determinative of what the relevant words actually mean. Similarly, statements made by D4-5’s counsel to the CoP may form part of the extrinsic evidence to be considered, and doubtless they were taken into account by the CoP, but they do not evidence the relevant intention.

As to common sense, given the strained relationship between Lady Bathurst and the Ninth Earl, the practical difficulties of managing the chattels (including, for example, insurance), and the physical limitations on Lady Bathurst using and enjoying all the chattels, it made good practical sense to place the ownership of the chattels in the hands of trustees and to give them wide powers as to their preservation and their use and enjoyment by Lady Bathurst during her lifetime. The assurance that Lady Bathurst’s interest would not be cut down in her lifetime might well have led Lady Bathurst, who was not present at court, to believe that her position in relation to the chattels would remain unchanged, however the subjective views of Lady Bathurst do not assist in construing the words in issue. That said, and although of no assistance to determination of the construction issue, it is not clear to me that in practical terms Lady Bathurst’s position has changed. Since the Eighth Earl’s death Lady Bathurst has continued to enjoy the same 14 items of exempt chattels that have long furnished Manor Farm and Mr Cooper QC has put D1-3’s position on the record; and, on the evidence drawn to my attention, there has been no request by Lady Bathurst for personal use or enjoyment by herself of any additional item or for any item to be lent to a museum or for an exhibition.

As to the consequences of the competing constructions, there are potentially extreme consequences. If Lady Bathurst’s case is correct her life interest would confer on her the power to remove all chattels owned by the Eighth Earl at his death from Cirencester Park for the remainder of her lifetime; I make clear that there is nothing in the evidence drawn to my attention which renders this more than a theoretical possibility. Further, it is common ground that Lady Bathurst could not house and enjoy anything like all the chattels.

On the other hand, on the defendants’ construction, D1-3 could deny Lady Bathurst the use and enjoyment of all of the chattels, including those which have furnished and been enjoyed at Manor Farm for decades; however, there is nothing in the evidence that renders this a realistic possibility, and Mr Cooper QC observed that any such conduct could properly be criticised as capricious and would be likely to be set aside on an application to the court. Mr Cooper QC also said, on instructions in relation to the chattels, that without good reason there will be no change to the status quo prevailing at the Eighth Earl’s death. Of course, these assurances are not relevant to determination of the construction issue, but they may provide some reassurance to Lady Bathurst.

In deciding upon the meaning of a word or phrase or document, further factors to bear in mind, as pointed out by Lord Hodge in Wood, are that one side may have agreed to something which with hindsight did not serve its interest, that a provision may be a negotiated compromise, or that the negotiators may not have been able to agree more precise terms. Reviewing the evidence as to the negotiations which led to the final CoP order on 21.11.08 and the aftermath, my view is that all three factors are relevant to the construction issue in this case.

Having found that the meaning of the phrase in the 2008SC the subject of the construction issue is not free from ambiguity, I am entitled to consider extrinsic evidence including the testator’s intention. In this case, because the 2008SC was made by the CoP I should look to the testator’s intention as expressed by the judge, Norris J, and the reasons underlying the decision as made in the Eighth Earl’s best interests.

There was strong evidence, accepted by both DJ Rogers and Norris J, of the Eighth Earl’s love and affection for Lady Bathurst. There was also a finding that the Eighth Earl would have wanted to ease the tension between his wife and his heir and a recognition that the terms of the 2008SC would go some way towards achieving that objective. These considerations are both reflective of the testator’s intentions and also entirely in accord with the approach stipulated by s.4 MCA 2005 and the best interests principle.

Implicit in the CoP’s expressed intention, in my judgment, is a recognition that orderly management of the chattels should be placed in the hands of independent professional trustees who were empowered to continue the long established arrangements flowing from the Eighth Earl’s personal ownership of the chattels and also charged with the preservation of the EFT’s capital.

Drawing these strands together, I am bound to find that the most probable meaning of the 2008SC is that contended for by the defendants and that correct construction of the phrase directing D1-3 to “pay the income of [EFT] to Lady Bathurst” does not entitle Lady Bathurst to enjoy the possession and use of any of the property the subject of the EFT.