TESTAMENTARY CLASS OF GIFTS TO CHILDREN OR REMOTER ISSUE OF THE TESTATOR:
WHEN DOES STATUTORY SUBSTITUTION OF ISSUE TAKE PLACE?
John Smart considers a recent case, Ling v Ling where the Court has to consider
the application of s.32(2) Wills Act 1 837
(taken from Issue No 19 – April 2002
Readers of the TACT Review will be well aware of the doctrine of lapse, whereby the general rule is that a devise or bequest fails where a beneficiary predeceases the testator. It will be recalled that the doctrine does not apply to where there is a gift to a class (i.e. to a class of persons included or comprehended under some general description and bearing a certain relation to the testator or some other person) or where a gift is construed as being to persons as joint tenants. There is a further exception of somewhat uncertain ambit for what are sometimes described as ‘gifts in discharge of a moral obligation’ – in one case a direction to pay a statute-barred debt was upheld1 – but it is doubtful whether there is a general rule that gifts in discharge of moral obligations are exempt from the doctrine of lapse.
On the other hand, if a gift is construed as being to persons as tenants in common, as opposed to a class gift, the doctrine of lapse will apply to the share of the tenant in common who predeceases the testator.
There are some fine distinctions in the case law as to what does and what does not constitute a class gift, and the cases referred to in Chapter 57 of Theobald on Wills 16th Edn (2001) are essential reading for anyone faced with this sort of problem.
Modification by s.33(2) Wills Act 1837
This article focuses on the limited circumstances in which legislation has altered the usual consequence of a member of a class predeceasing the testator, which is that the member’s estate does not take any part of the gift. The legislation has recently been considered in Ling v Ling (unreported), 21st November 20012. There, Etherton J had to consider the impact of s.33(2) Wills Act 1837, as amended by s.19 Administration of Justice Act 1982. This amendment has effect in relation to the wills of persons dying on or after 1st January 1983. As regards such wills, subsections 33(2) and (3) Wills Act 1837 provide as follows:
`(2) Where – (a) a will contains a devise or bequest to a class of persons consisting of children or remoter descendants of the testator; and (b) a member of the class dies before the testator, leaving issue; and (c) issue of that member are living at the testator’s death, then unless a contrary intention appears by the will, the devise or bequest shall take effect as if the class included the issue of its deceased member living at the testator’s death.
(3) Issue shall take under this section through all degrees, according to their stock, in equal shares if more than one, any gift or share which their parent would have taken and so that no issue shall take whose parent is living at the testator’s death and so capable of taking.`
There is a similar provision, s.33 (1), covering the position of wills containing devises or bequests to an individual child or remoter descendant of the testator. If the intended beneficiary dies before the testator leaving issue and the issue of the intended beneficiary are living at the testator’s death, then, unless a contrary intention appears by the will the devise or bequest takes effect as a devise or bequest to the issue living at the testator’s death.
The facts of Ling v Ling
Malcolm Ling (`the Testator`) was married but his wife predeceased him by a few months. The Testator had two children, a son who predeceased him by about 10 years, and a daughter. The Testator’s son had one son, who survived the Testator and was a minor. By his will, which had been executed in 1961, the Testator appointed Barclays Bank Limited his executor and trustee. By clause 3 of the will the Testator left his residuary estate to Mrs. Ling absolutely provided she should survive him by the period of one calendar month but not otherwise. Clause 4 of the will was in the following terms:
`If my said Wife shall die in my lifetime or shall fail to survive me by the period aforesaid, the Bank shall stand possessed of my residuary estate UPON TRUST for all or any of my children or child living at my death or at the expiry of one calendar month therefrom who attain or shall then have attained the age of twenty one years and if more than one then as tenants in common in equal shares absolutely.`
On 26th May 1999 the Testator died and shortly afterwards probate of the will was granted to Barclays Bank Trust Company Limited, the successor to the executor named in the will. The Testator’s daughter wished to inherit her father’s entire estate to the exclusion of the minor grandson of the Testator and she therefore issued a Part 8 claim form in the style of a traditional pre-CPR construction summons, joining the Testator’s grandson (through a litigation friend) and the Bank as defendants.
The Claimant asked the court to determine whether clause 4 of the Will was to be treated as creating a class gift to:
- both the children of the Testator or
- only those children of the Testator who should survive him (so that the Testator’s son was not a member of the class for the purpose of s.33(2)(b)and, accordingly, his issue were not entitled to take any benefit unders.33(2)).
The focus of the claimant’s submissions at trial was that the Testator showed an intention to exclude the provisions of s.33(2).
First it was argued that the will was professionally drafted and that if the Testator intended to benefit his grandchildren or remoter issue, it was poorly drafted. In 1961, prior to the amendment of s.33 by the Administration of Justice Act 1982, it would have been necessary to provide expressly for the substitution of the issue of a child who was entitled under a class gift but died before the testator. The will was not drafted with any such provision.
Secondly, reliance was placed upon the express wording of clause 4 of the will in three respects as indicating a `contrary intention` for the purposes of s.33(2).
(1) The first was the expression `shall fail to survive me` in the phrase `If my said Wife shall die in my lifetime or shall fail to survive me by the period aforesaid.`
(2) The second was the expression `all or any of my children or child living at my death`.
(3) The third was the expression `all or any of my children or child living…at the expiry of one calendar month therefrom.`
Thirdly, there was an attempt to utilise extrinsic evidence, namely a witness statement made by the Claimant, which gave details of the relationship between the Testator his son, and the Testator and his grandson, and also about the Testator’s character. It was submitted that it was reasonable to assume that the Testator decided not to change his will to benefit his grandson because his level of contact him was limited and because his grandson would benefit from the Testator’s son’s estate. Such evidence was argued to be admissible by virtue ofs.21 Administration of Justice Act 1982, which provides that extrinsic evidence, including evidence of the testator’s actual intention, is admissible to assist in the interpretation of a will if the terms of the will are ambiguous.
Judgment of Etherton J
In his judgment, none of the matters upon which the Claimant relied, taken singly or together, gave rise to a `contrary intention` for the purposes of s.33(2).
The first matter relied upon was given short thrift by the Judge. He held that the fact that the will was not drafted in 1961 so as to give effect to any intention of the Testator that issue of a child who died in the lifetime of the Testator should succeed to the rights of that child under clause 4 of the Will was entirely neutral.s.33, both in its original and amended form, provides substitutional rights for the issue of children who predecease the Testator on the hypothesis that the Testator has overlooked that possibility, regardless of whether the Will has been professionally drafted or not.
The Judge criticised the drafting of the will in question because it produced the somewhat illogical position that, if Mrs. Ling should predecease the Testator, children living at the Testator’s death would be entitled under clause 4 whether or not they survived him for more than a month; whereas if Mrs. Ling survived the Testator, but for less than a month, only those children who survived the Testator for a month would take under the clause. Nevertheless that criticism did not compel him to construe the will in the way contended for by the Claimant.
The Judge considered the extrinsic evidence before him but held that it was of no assistance in the resolution of the issues before him. He held that it provided no support for any conclusion as to whether or not the Testator intended to exclude the effects of s.33(2) (as amended}, which was not of course enacted when the Testator made the Will, or as to whether the Testator was ever aware of its enactment and its consequences or possible consequences in regard to the Will.
The Judge appears to have had in mind that if the Testator had been told, say in 1982, of the enactment of the new s.33(2), and had expressed a view as to the sufficiency or otherwise of his 1961 will, his comments might have been admissible had they cast light upon his understanding of the position. In my view it must be doubtful whether such evidence would have been admissible in order to found a ‘contrary intention’ for the purposes of s.33(2): it seems to me that a will does not become ambiguous, for the purposes of s.21 Administration of Justice Act 1982, simply because the law changes after a will is prepared and substitutionary gifts are implied by statute. Then again, the whole exercise of construing the Testator’s 1961 will to see if a contrary intention could be established for the purposes of a 1982 enactment had something of an air of unreality about it.
(a) Use of the expression: `shall fail to survive me`
As to expression `shall fail to survive me` in the phrase `If my said Wife shall die in my lifetime or shall fail to survive me by the period aforesaid` (the first of the express phrases in clause 4 upon which the Claimant relied) this did no more, in the Judge’s view, than fix the time when any prior interest came to an end, so as to indicate the earliest time on which the gift under clause 4 might vest.
(b) Use of the expression: `my children or child living at my death`
As to the expression `my children or child living at my death`, counsel for the Claimant (Mr Geraint Martyn Jones) had sought to obtain some support from the following passage in Jarman on Wills (8th edition) page 464, with reference tos.33 (before its amendment):
`Mr. Jarman goes on to point out that ‘The application of both the enactments in question is excluded where…the gift to the testator’s child or issue is expressly made contingent on the event of the devisee or legatee surviving the testator; … in such a case, to hold the child or other descendant of the testator to be entitled under section 33 would be in direct opposition to the language of the will.’`
No authority was cited in Jarman or was found by counsel to support that observation. Mr. Ulick Staunton, counsel for the grandson, pointed out, first, that there was, in the context of analysing `contrary intention`, a material distinction between the unamended s.33 and the provisions of s.33(2) in the amended section, and, secondly, drew the Judge’s attention to certain observations in Re Meredith3, which cast some doubt on the soundness of the views expressed by Jarman in this context.
s.33 in its unamended and original form was as follows:
`Gifts to children or other issue who leave issue living at the testator’s death shall not lapse. Where any person being a child or other issue of the testator to whom any real or personal estate shall be devised or bequeathed for any estate of interest not determinable at or before the death of such person shall die in the lifetime of the testator leaving issue, and any such issue of such person shall be living at the time of the death of the testator, such devise or bequest shall not lapse, but shall take effect as if the death of such person had happened immediately after the death of the testator, unless a contrary intention shall appear by the will.`
s.33, in that form, had no relevance to class gifts at all, it was designed to prevent the lapse of an individual gift. In the case of a class gift the death of one of the class before the death of the testator did not result in lapse, but merely in the enlargement of the shares of the remaining members of the class. The original s.33 operated to avoid lapse by the fiction that the devisee or legatee died immediately after the death of the testator. Accordingly, by virtue of the statutory fiction, the gift would form part of that person’s estate. That was the background to the observation of Jarman to which reference was made.
By contrast, the amended s.33(2), was held to operate in a quite different way. The gift to the deceased member of the class does not take effect by a fiction that he or she has survived the testator, so that his or her share of the class gift forms part of his or her estate. The effect of the subsection is that the deceased member’s issue takes the share that the deceased member would have taken if he or she had survived the testator.
Etherton J held that the `contrary intention` to be found for the purposes of the amended s.33(2) is quite different from the `contrary intention` specified in the unamended s.33. He observed that the following passage from the judgment of Romer J. in Re Meredith at page 557 seemed to throw doubt on the observation of Jarman, even in the context of the original unamended s.33:
`I was also referred to a note to p. 448 of Volume I of Jarman on Wills 6th ed. which is as follows: ‘It is submitted that any expression of a contrary intention is sufficient to prevent the operation of s.33.’ So far I agree. But the note goes on: ‘Thus, if a testator bequeathed 100l. to his son A, and proceeded ‘but if my said son shall die in my lifetime, then I bequeath the sum of 200l. to each of his children’, would not this be sufficient to exclude the operation of s. 33, whatever the number of the son’s children might be?’ With all respect, I cannot agree with that.`
The parties agreed that the words `living at my death` in the phrase `UPON TRUST for all or any of my children or child living at my death` in clause 4 of the Will actually achieved nothing in 1961. Even if those words had not been inserted, under the law as it was in 1961 a child who predeceased the testator would fall out of the class of beneficiaries and his issue would not be substituted in the absence of any express provision to that effect.
The Judge accepted the submission on behalf of the grandson that the words were only there to state expressly what would otherwise be implicit, namely that a class is normally composed of those members, if any, existing at the death of the testator, holding that this was the probable explanation for the presence of the words in clause 4, and that they give no indication at all of an intention that the Testator’s son’s issue should be excluded from taking his share under the provisions of s.33(2).
(c) Use of the expression: `living…at the expiry of one calendar month therefrom`
So far as concerned the expression `living…at the expiry of one calendar month therefrom` in clause 4 of the Will, it seemed to the Judge that this was of no relevance since the contingency of Mrs. Ling surviving the Testator, but for less than one month, had not in fact occurred. But in any event, it gave no indication of an intention to exclude grandchildren (as distinct from the Testator’s son himself) from taking the son’s share under the provisions of s.33(2).
It was held that the provisions of s.33(2)(a), (b) and (c) had been satisfied, and no contrary intention appeared by the will.
On the question of whether the grandchild must himself satisfy the 21 years of age requirement in clause 4 of the Will, notwithstanding that his father was over 21 when he died, it was agreed by counsel for both the Claimant and the grandson that he latter must satisfy that age requirement. They were right to do so, according to Etherton J, who held that s.33(2) operates by including issue of the deceased child in the class, and limiting, by subsection (3), their interest to the gift or share which their parent would have taken. The issue within the class must satisfy the contingencies determining the date of distribution, as much as any other member of the class.
Theobald on Wills4 queries whether, if gift to a class is contingent and a person dies before a testator without satisfying the contingency the issue take subject to that contingency. Etherton did not need to decide the point, but to say that, `The issue within the class must satisfy the contingencies determining the date of distribution, as much as any other member of the class` seems to assume thats.33(2) operates whether or not the gift to the original class is contingent. It seems that if gift to a class, i.e. the children of the testator, is contingent and a child dies before a testator without satisfying the contingency, the issue do take in substitution subject to that contingency.
There was an unsuccessful attempt made by counsel for the claimant and for the grandson to disentitle the trust company administering the estate from recovering its costs of attendance at the hearing before Etherton J. The Judge considered that the case was within the second category of case described in Re Buckton5.The first category covered applications by trustees themselves to determine some question arising in the administration of the trusts. The second category covered applications by a beneficiary for the construction of a will which would have justified the trustees applying themselves, but where for some reason or other a beneficiary has begun the proceedings. Such cases are treated the same as if the trustees had commenced the application themselves, where according to Kekewich J all parties have their costs out of the estate on what is now the indemnity basis of assessment. Etherton J ordered the trustee’s costs to be assessed by way of detailed assessment on the indemnity basis.
The Claimant and the 1st Defendant had been publicly funded and so their costs were ordered to be assessed on the standard basis.
Rule 48.4 of the CPR was referred to by Etherton J and provides a general rule for the indemnity basis of assessment of trustees’ costs. It applies where a person is or has been a party to any proceedings in the capacity of trustee or personal representative. The general rule is that where he is entitled to be paid his costs of the proceedings, out of any fund held by him as trustee or personal representative, those costs shall be assessed on the indemnity basis. The court may order otherwise if a trustee or personal representative has acted for a benefit other than that of the fund.
In Ling v Ling there was no attendance by the trustee’s solicitors at the hearing and modest counsel’s fees appropriate to a watching brief were charged. One of the beneficiaries had taken a stance that made it reasonable for the trustee to be represented: matters might have been raised or discussed in the course of argument which might have been of relevance to its conduct of the administration, beyond the simple answer to the question of construction raised in the proceedings. But for this feature attendance could perhaps have been dispensed with in this particular case.
When drafting wills the implications of s.33(2) Wills Act 1837 should be raised where relevant and discussed with the testator. Consideration should be given to as to whether the provision should be excluded expressly where appropriate.
9 Stone Buildings
1 Williamson v Naylor  3 Y. & C. Ex. 208
2 To be reported in WTLR in May or June 2002.
3  2Ch 552
4 Pages 798-9 footnotes 14 and 15.
5  2 Ch 406