23 November 2016

Beware of the Perils of Precedents

A recent High Court ruling has demonstrated that the “natural and ordinary meaning” of words trump the “overall purpose” of the Will when it comes to interpretation.

Jump and another v Lister and another [2016] EWHC 2160 (Ch) involved an elderly married couple who made mirror Wills in 2010. Both husband and wife died in 2011 under circumstances in which it was impossible to determine who died first. As in such an event, as per section 184 of the Law of Property Act, the younger spouse (the husband in this case) was deemed to have survived the elder (the wife). Given that both gifted their residuary estate primarily to the other, with provision for pecuniary legacies to only become payable should that primary gift fail, most would assume, naturally, that the estate of the wife would pass to the husband, whose estate in turn would then be distributed as per his Will and the pecuniary legacies paid out from his estate only. However, the inclusion of standard survivorship clause in both Wills threw the proverbial spanner into proceedings and frustrated, what was commonly agreed to have been, the couples’ intentions.

Each Will contained a survivorship clause that stated that the estate “is to be divided as if any person who dies within 28 days of my death had predeceased me.” The crux of the matter revolved around whether the survivorship clause applied to the gift made from wife to husband. If it did not, then her estate would pass, without any pecuniary legacies being paid from it, to her husband. It would then be from the husband’s estate that the pecuniary legacies, totalling some £214,500, would be paid. If, on the other hand, the survivorship clause did apply, then the husband would be deemed to have not survived the wife and the primary gift would have failed, meaning that the pecuniary legacy in the wife’s Will would become payable as well as the pecuniary legacy from the husband’s estate. This means the pecuniary legatees would be raising a glass in celebration as they would have received twice the amount they were originally intended to have expected.

The essence of the matter was that the judge found that the use of the phrase “any person” in the survivorship clause meant that it clearly included the husband. Arguments made by the defence that there was evidence, and common sense, indicating the couple did not intend a double payment for the pecuniary legatees, were ultimately unsuccessful. Despite significant reference to other authorities that illustrated the flexibility when it comes to Will construction and the fact that the judge agreed that extrinsic evidence may be admissible when determining construction, the defendant’s arguments were ultimately ineffective.

At the risk of sounding like my teacher on day one of the ‘Introduction to Drafting’ class, this ruling reiterates the age-old lesson: be careful of using precedents wholesale.

A final thought on the issues this case raises. Whilst there is the sensible reasoning attached to including a survivorship clause to avoid assets passing through probate twice in a short space of time, do the overall advantages of the survivorship clause still outweigh the potential pitfalls? Whilst this ruling could be appealed and overturned, it does highlight that married couples appear most at risk from the inclusion of survivorship clauses in mirror Wills. Coupled with the other significant risk that increased IHT may be due if they both die at the same time, if a survivorship clause is included in a married couples’ Wills, the default position for such couples appears to be to not include one.

Matthew Lewins

Matthew Lewins
Trainee Solicitor