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Lynch v. Burke [1999] IEHC 22 (30th July, 1999)

IN THE MATTER OF THE LAST WILL AND TESTAMENT OF ROBERT BURKE LATE OF 9 LEESON VILLAGE UPPER LEESON STREET IN THE CITY OF DUBLIN

BETWEEN

JUDGMENT of Mr. Justice McCracken delivered the 30th day of July 1999

1. These proceedings were commenced by Special Summons seeking the determination of certain questions of construction of the last Will of Robert Burke deceased (hereinafter called "the Testator") which Will was made on 12th June 1996 (hereinafter called "the last Will").

2. By way of background, the Testator died on 23rd March 1998, survived by his wife Elizabeth Burke, from whom he was separated and had obtained a divorce in the United States, and by two children, Nigel Burke (hereinafter called "Nigel") and Orla Burke (hereinafter called "Orla"), being the First and Second Named Defendants herein. Both Nigel and Orla are of full age and neither are married or have children. The remaining Defendants are the persons who would be the next of kin of the Testator had he died without children surviving him. It is accepted by all parties that Elizabeth Burke has a right to her legal right share in the estate of the Testator.

THE LAST WILL

3. By the last Will the Testator appointed the Plaintiffs to be executors and Trustees thereof, and after a gift to the First Named Plaintiff, the portions of the Will relative to these proceedings are as follows:-

"3. Payments of debts and investment.

(a) My Trustees shall stand possessed of the rest, residue and remainder of my Estate and out of the monies to arise from the sale calling in and conversion of my Estate and out of my ready moneys pay my debts funeral and testamentary expenses and any legacies given by this my Will or any codicil hereto and shall divide same into two equal moieties, the first moiety to be held on Trust for my sonNigel subject to the following provisions and to be called "Nigel's Fund" and the other moiety to be held on Trust for my daughter Orla subject to the following provisions and to be called "Orla's Fund" invest each such moiety separately in their names or under their control in or upon any investments of any nature hereby or otherwise authorised with power from time to time at their discretion to vary investments for others of an authorised nature.

(b) The following provisions shall apply separately to Nigel's Fund and Orla's Fund as if each Fund was separately provided for in those provisions.

4. Interpretation.

In the following clauses of this my Will the following expressions shall have the following meanings:-

'The Trust Fund' means as appropriate, Nigel's Fund or Orla's Fund and investments from time to time representing the same and all parts as appropriate of each such Fund for the time being remaining unsold.

'The beneficiaries' means my children, Nigel or Orla, as appropriate.

'The residual beneficiaries' means any grandchild or issue of mine born within the Trust period, and in this context 'issue' shall include adopted issue and issue of adopted issue.

5. Discretionary Trust

(a) My Trustees shall stand possessed of the Trust Fund and the income thereof upon Trust for all such one or more to the exclusion of the others or other of the beneficiaries at such time or times or from time to time in such shares and proportions and subject to such trusts (including discretionary and protective trusts) for their benefit and generally in such manner as my Trustees being for this purpose not less than two in number or a Trust corporation may in their or its absolutediscretion from time to time during the Trust period by deed or deeds revocable or irrevocable but without infringing the rule against the perpetuities appoint.

(b) No appointment hereunder shall be capable of being revoked after the expiration of the Trust period.

(c) My Trustees (being for this purpose also not less than two in number or a Trust corporation) may at any time or times during the Trust period wholly or partially release or restrict the power of appointment conferred by the Clause as if the same were a power conferred upon them as individuals and not as Trustees.

6. Power of Advancement

(a) In default of and subject to any and every such appointment as provided for in Clause 7 hereof my Trustees during the Trust period shall (subject to paragraph (b) of this Clause) pay or apply the whole or such part (if any) as they shall think fit of the capital or income of the Trust Fund to or for the maintenance education advancement or otherwise for the benefit of all or any one or more to the exclusion of the others or other of the beneficiaries for the time being living as my Trustees shall in their absolute discretion think fit.

(b) During the accumulation period my Trustees instead of paying or applying the income of the Trust Fund as aforesaid shall have the power to accumulate the whole or such part (if any) as they shall think fit of such income at compound interest by investing the same and the resulting income thereof in any of the investments hereby authorised and shall hold such accumulations as part of the capital of the Trust Fund."

4. The reference in Clause 6(a) above to Clause 7 is clearly a typographical error and should be a reference to Clause 5.

"7. Expiration of Trust period.

(a) At the expiration of the Trust period my Trustees shall hold the capital and income of the Trust Fund or such part thereof as shall not have been paid or applied under any Trust or power affecting the same upon Trust for such of the residual beneficiaries as shall then be living provided that if any grandchild of mine shall then be dead but with issue then living no issue remoter than a child of such deceased grandchild shall take except in the case of the death of his her or their parent and in the place of such parent.

(b) If there shall be no residual beneficiary living at the expiration of the Trust period, my Trustees shall hold the capital and income of the Trust Fund or such part thereof as shall not have been paid or applied under any trust or power effecting the same, upon Trust for such person or persons who under the provisions of the Succession Act 1965 or any replacement thereto would be entitled to, or to share in my estate as if I haddied on that date intestate and a bachelor and if more than one, in equal shares."

5. The last Will also defined the Trust period and the accumulation period as the period from the date of the Testators death until whichever of the following dates should first occur, namely

(a) the day on which should expire the period of eighty years from the date of his death

(b) The date on which should expire the period of twenty years after the death of the last survivor of the decendants living at the death of Queen Elizabeth II of England; and

(c) Such day, if any, as the Trustees might at their discretion appoint by Deed executed prior to the dates specified in paragraphs (a) and (b) above.

6. Furthermore, the last Will gave very extensive powers to the Trustees thereof, both in relation to the Trust in general and in relation to any private or family company. The Testator left a large Estate in value, but the bulk of his Estate took the form of shares in a highly successful private company which he owned beneficially.

7. As can be seen, paragraphs 3 and 4 of the last Will clearly show an intention to divide the residue of the Testator's Estate into two separate funds, one for each of his children, and that all the provisions of the Will should apply separately to each Fund. However, clauses 5 and 6 of the Will are drafted in such a way as to treat the entire residual Estate as one Trust Fund, and on a straightforward reading of those clauses taken in isolation, it appears to show anintention that that Fund could be applied in its entirety for the benefit of either or both of the Testator's children at the total discretion of the Trustees. Most, although not all, of the directions sought in this summons related to this contradiction.

EXTRINSIC EVIDENCE

8. The Plaintiffs sought during the opening of the case before me to have extrinsic evidence admitted pursuant to Section 90 of the Succession Act 1965. This was opposed by the First and Second Named Defendants, and I decided to treat this as a preliminary issue, and heard arguments on both sides. Having heard such arguments, I ruled that extrinsic evidence was admissible as it might assist in explaining the contradiction in and the construction of the last Will. In making that ruling I emphasised that the primary rule was that the last Will must be construed according to the intention of the Testator having regard to the actual terms thereof, and it would ultimately be a matter for me in the light of this primary rule, to determine what regard could be had to the extrinsic evidence.

9. The extrinsic evidence consisted of an Affidavit from the First Named Plaintiff, who had married the Testator on 3rd July 1996 and had discussed his affairs with him at some length during the previous twelve months and an Affidavit of the Second Named Plaintiff, who is Managing Director the Testator's company and had been employed by that company for some thirty years, and with whom the Testator had also discussed his personal affairs. In addition, there was an Affidavit from Mr. BrianBohan, who had drafted the Will and who, at the time of its discussion and execution was a Solicitor employed by Ernst & Young, Chartered Accountants. The account of the events which led up to the execution of the last Will as contained in these Affidavits was not basically contested by the Defendants. These Affidavits have in fact proved very instructive in showing the intention of the Testator and in assisting in the construction of and explaining the contradictions in the last Will, and are matters to which I am clearly entitled to have regard in the light of the terms of Section 90 of the Succession Act 1965.

THE INTENTION OF THE TESTATOR

10. From the extrinsic evidence before me, certain matters in relation to the Testator's intention are quite clear. The may be briefly summarised as follows:-

1. The Testator at all times intended that there should be a discretionary Trust for the benefit of his children and he did not wish them to have immediate access to any capital. This appears not only from the instructions given to Mr. Bohan, but also from the terms of his earlier Will of 22nd June 1987.

2. The Testator intended to set up two separate Trust Funds. The Testator was very concerned as to the taxation position on his death, and Mr. Bohan's advice to him was that relief from Capital Acquisitions Tax might be available in the case of a Trust for the benefit of Orla, provided a separate Trust was set up for her benefit alone.

3. There were several amendments made to Mr. Bohan's earlier drafts which were made on his advice with the intention of ensuring that the two Trusts would be kept separate.

4. The failure to amend clauses 5 and 6 of the earlier draft to make those clauses consistent with the existence of two entirely separate funds was due to an oversight on the part of Mr. Bohan.

5. The Testator at all times relied upon the advice given to him by Mr. Bohan, particularly with regard to the appropriate wording of the Will to ensure that it would express his intentions in the most tax efficient manner.

THE PLAINTIFFS' SUBMISSIONS

11. While the Plaintiffs have brought these proceedings in their capacity as Executors of the last Will, they have also taken upon themselves the burden of arguing in favour of a construction which would accord with the Testator's intentions as shown by the extrinsic evidence. This was a proper course for them to take as the beneficiaries of such a construction would be the as yet unborn grandchildren of the Testator. They submit that certain words in clauses 5 and 6 were allowed to remain in the last Will by virtue of a drafting error, and should be treated as surplusage. They submit that clauses 5 and 6 should be read as follows:-

"5. Discretionary Trust

(a) My Trustees shall stand possessed of the Trust Fund and the income thereof upon Trust for the beneficiaries at such time or times or from time to time and subject to such trusts (including discretionary and protective Trusts) for his benefit or for her benefit as appropriate and generally in such manner as my Trustees being for this purpose not less than two in number ..."

"6. Power of Advancement

(a) In default of and subject to any and every appointment as provided in Clause 5 hereof my Trustees during the Trust period shall (subject to paragraph (b) of this Clause) pay or apply the whole or such part (if any) as they shall think fit of the capital or income of the Trust Fund to or for themaintenance education advancement or otherwise for the benefit of the beneficiaries as my Trustees shall in their absolute discretion think fit."

12. If one inserts the definitions of "the Trust Fund" and "the beneficiaries" as set out in Clause 4 of the last Will, the above wording would have the effect of setting up two separate and independent Trusts, one for Nigel and one for Orla.

13. The Plaintiffs also contend that the result of striking down clauses 5 and 6 could well be that there could be a partial intensity and that the so-called golden rule as expressed by Lord Esher in In Re. Harrison (1885) 30 Ch D 390 that " you ought, if possible, to read the Will so as to lead to a testacy, not an intestacy" should be applied. They also point to Section 99 of the Succession Act 1965 which provides:-

"If the purport of a devise or bequest admits of more than one interpretation, then in case of doubt, the interpretation according to which the devise or bequest will be operative shall be preferred."

THE DEFENDANTS' SUBMISSIONS

14. It should be said that the Third to Sixth Named Defendants have indicated that they are not making any submissions, as they feel their interest is too remote. However the First and Second Named Defendants submit that clauses 5 and 6 are so inconsistent with clauses 3 and 4 that they must be void for uncertainty and disregarded. The effect of this, in their submission, is that the primary Trusts created by clauses 3 and 4 remain, but as there is no discretionary element, the Trustees are in fact bare Trustees of the property forNigel and Orla in equal shares. He relies in particular on the Northern Ireland decision of Davey -v- Byrne (1942) N.I. 6, where the Will read "I give devise and bequeath onto Reverend Vincent Davey all my property in Trust for my sister Ellen Byrne and the ultimate decision with regard to this property on her decease I leave to him."

15. In that case it was held that this constituted an absolute gift in favour of Ellen Byrne, and Murphy L.J. said at page 12:-

"... before effect could be given to the argument that Ellen Byrne only took her life interest in the property, there must be at least a reasonable certainty as to the intention of the Testator as expressed in the later words of the Clause. We have listened with care to the arguments and cannot avoid the conclusion that these words are 'inept' and 'nebulous', and that far from indicating the Testator's intention with reasonable certainty they are admirably suited to conceal any such intention. We must therefore give effect to the clear words in the first part of the Clause and hold that under them EllenByrne took an absolute interest in the property of the Testator."

16. They also point to the comment of Henchy J. in Rowe -v- Law (1978) I.R. 55 in which he said that Section 90 of the Succession Act 1965 may not be used for the purpose of rejecting and supplanting the language used in the Will.

CONCLUSIONS

17. It is, I think, conceded by both parties that it might be possible by stretching the language of the last Will to construe it as it stands as, in effect, meaning that two separate trusts are to be set up, under which the Trustees would hold each Fund subject to the discretionary power to use either Fund for the benefit of either of the Testator's children. However, neither party is contending for this interpretation, and in my view it would be totally inconsistent with the intentions of the Testator. That being so, I must either disregard the specific words in clauses5 and 6 which are referred to by the Plaintiffs as being surplusage, or alternatively I must disregard the entire of both clauses.

18. As I have said, I have no doubt from the extrinsic evidence admitted that the Testator's intention was that there should be two separate funds, and it would be a matter of discretion for the Trustees in each case as to whether, and when, each respective child would receive any capital from his or her Trust Fund, and as to how the income of each Fund would be applied. The extrinsic evidence is of great assistance in this regard. But of course I also must have regard to the wording of the entire Will. If support for the Testator's intentions as demonstrated by extrinsic evidence cannot be found in any form in the Will itself, then that extrinsic evidence is not being used for the purpose of interpreting the Will, but of rewriting the Will. This, of course, I cannot do. I must take the intention of the Testator as has been shown to me and ascertain whether there is a construction of the Will which is consistent with that intention.

19. It is quite clear from the terms of the Will itself that the Testator did not intend an absolute gift in favour of either of his children. While clauses 5 and 6 may be inconsistent with the existence of two separate funds, they are perfectly consistent with the intention that the benefit of each of these funds forNigel or Orla respectively was a matter to be determined by the Trustees at their discretion. Furthermore, the very detailed and complicated provisions contained in clauses 9 and 10 of the Will which give almost absolute powers to the Trustees over the Trust Funds are quite inconsistent with anything other than a Trust intended to last for a considerable period.

20. I reject the Defendant's submission that clauses 5 and 6 are void for uncertainty. They are not in themselves uncertain, they are simply inconsistent with the earlier clauses, or ambiguous having regard to the earlier clauses. As I am quite satisfied as to the intention of the Testator, I think the uncertainty or ambiguity can be resolved, having regard to the Testator's clear intentions, in the manner submitted by the Plaintiffs. The reason for this ambiguity hasbeen explained as a drafting error and in my view I am entitled to disregard the words which are surplus to the proper construction of the last Will in accordance with the Testators intentions.

21. While that disposes of the major disputes between the parties, there are three other matters of construction referred to in the Summons. There is no real disagreement between the parties on two of these matters, and I will deal with them briefly below.

22. Accordingly, I would determine the questions raised in the Special Summons as follows:-

(a) Clause 3 of the Will and the following provisions should not be construed as having vested in Nigel Burke and Orla Burke an absolute interest in the moieties of the Estate described in the Will as "Nigel's Fund" and "Orla's Fund".

(b) Clause 3 of the Will and the following provisions have created a valid discretionary Trust.

(c) Clause 3 of the Will and the following provisions should be construed as having created two separate Trust Funds each comprised of one of the moieties of the Estate described as "Nigel's Fund" and "Orla's Fund".

(d) Pursuant to Clause 4(c) of the Will the Trustees may appoint a different day or days for expiration of the Trust Fund relating to "Nigel's Fund" and "Orla's Fund".

(e) At the expiration of the Trust period relating to either of the Trust Funds, the balance of investment remaining in such respective Trust Fund will be held on Trust for all of the grandchildren or remoter issue of Nigel in the case of "Nigel's Fund" and Orla in the case of "Orla's Fund".

(f) The underlined words set out in this question may be rejected as being surplusage or as constituting a drafting error.

(g) Does not arise.

(h) The underlined words in the question can be rejected as being surplusage or as constituting a drafting error.

(i) Does not arise.

(j) The definition of "Trust period" in Clause 4 and the provisions of Clause 6(b) relating to accumulation do not offend against the rule against perpetuities and the common law rule against accumulations, respectively.

(k) The Trustees are not empowered under Clause 6(a) or Clause 9(d) or otherwise to make advances to any of the Testator's grandchildren or remoter issue for their maintenance, education, advancement or otherwise for their benefit, as such persons do not come within the definition of "the beneficiaries" in Clause 4.

(l) Nigel Burke and Orla Burke have an entitlement to succeed under Clause 7(b) of the last Will at the expiration of the Trust period if such Clause comes into operation. There is nothing in the phrase "as if I had died on that date intestate and a bachelor" to imply that the Clause was intended to operate as if the Testator had died a bachelor without issue, and such a construction is not inconsistent with the intentions of the Testator.