Bathurst v Chantler [2018] EWHC 21 (Ch) 

WTLR Issue: Winter 2018 #170











The claimant was the second wife and widow of the Earl Bathurst (Eighth Earl). The first to third defendants were the trustees of the Earl’s Fund (EFT) created under a statutory Codicil made on behalf of the Eighth Earl by the Court of Protection. The fourth to seventh defendants were the trustees of the Earl Bathurst 1963 estate settlement (settlement). When the Earl succeeded to his title in 1943, his inheritance included a large estate comprising 15,000 acres and a mansion house known as Cirencester Park. There were also chattels that included valuable works of art and collections of documents, some of which were entitled to conditional exemption from inheritance tax (exempt chattels) whilst the remainder were not so exempt (non-exempt chattels). The Eighth Earl married his first wife in 1959 and one of the children of that marriage was his heir (Ninth Earl). The settlement was created in 1963 primarily for the benefit of the Eighth Earl’s children, into which he transferred 11,000 acres of the estate and Cirencester Park. He retained 4,000 acres and the chattels. The Eighth Earl’s first marriage was dissolved in 1976 and he married the claimant in 1978. They moved from Cirencester Park (later the residence of the Ninth Earl) to Manor Farm which became the location of some of the chattels. By his last will dated 22 May 1998 the Eighth Earl appointed the claimant and another as his executors and, inter alia, 
gave his chattels in trust for the claimant absolutely. At that time, there was an 
understanding between them that on the claimant’s death the exempt chattels would 
pass down the line for the benefit of the Eighth Earl’s family. In October 2008 the 
Eighth Earl became gravely ill and there were concerns as to his capacity. In addition, it had been realised that because the claimant 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 Eight Earl’s estate was material and, on advice, the claimant decided to renounce her US citizenship. In these circumstances, the then trustees of the settlement applied to the Court of Protection for an assessment of the Eighth Earl’s testamentary capacity and, subject thereto, to revise his will. The judge accepted that the Eighth Earl lacked testamentary capacity and invoked the court’s power to make a statutory Codicil that had the effect of cutting down the claimant’s absolute interest in the chattels to a life interest with remainder on discretionary trusts for the benefit of the Eighth Earl’s family. The statutory Codicil directed that the trustees ‘shall pay the income of the [EFT] to Lady Bathurst during her life’. The statutory power of advancement was excluded and express powers were conferred on the trustees, including the power to permit use and enjoyment of property. Unfortunately, the proceedings were accompanied by a number of allegations that caused tension between the claimant and the Eighth Earl’s family and, eventually, a compromise was reached that included approving the statutory Codicil on the grounds that it was considered to be in the best interests of the Eighth Earl. After the Eighth Earl died on 16 October 2011 the claimant engaged Christie’s to prepare an inventory and valuation of the chattels comprised within the EFT. Their aggregate value was almost £11.5m of which the exempt chattels were valued at £9.67m and the non-exempt chattels valued at almost £1.83m. In endeavouring to carry out her duties as executrix, the claimant was unwilling to assent to the vesting of the chattels in the trustees of the EFT unless she could be sure that it would vest the correct chattels but, for this purpose, the Ninth Earl was not prepared to give her access to Cirencester Park. Accordingly, the claimant sought the following relief: (i) a direction permitting her as executrix to decline to execute a deed assenting any chattels to the trustees of the EFT until she had been given the opportunity to inspect and make a full inventory of such of them as were located at Cirencester Park that should form part of the EFT; and (ii) determination of whether, on a correct construction of the will and the statutory Codicil, she was entitled to enjoy the possession and use of any of the property that was the subject of the EFT. 

Held (declining for relief sought): 
In relation to the assent issue, the claimant could not withhold its execution as a bargaining chip in order to secure agreement in line with her view of the construction issue. No proper reason had been put forward for not executing an assent to the vesting of the exempt chattels in the EFT. Subject to that, in general her 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 was less straightforward. She could call for their delivery up in order to prepare an accurate inventory for an assent but that was not a practical option. The barrier to personal inspection or involvement by the claimant was the strained relationship between herself and the Ninth Earl who would not grant her access to Cirencester Park. A practical solution was not to grant the claimant the permission as sought but to permit her to execute a qualified assent in relation to the non-exempt chattels limited to those listed by Christie’s and any other non-exempt chattel known to her subject to the trustees of the EFT exonerating the claimant from any and all liability in the event that any such chattel was not in fact located, or was otherwise damaged, at Cirencester Park. As regards the construction issue, In re P (Statutory Will) marked an important distinction between a Codicil made by a person having testamentary capacity and a statutory Codicil made pursuant to the order of the court for a person lacking such capacity. In this case, the Court of Protection had made a best interests decision on behalf of the Eighth Earl when it approved the making of the statutory Codicil. Although the natural and ordinary meaning of the phrase ‘pay the income of the [EFT] to Lady Bathurst during her life’ denoted money generated by capital, this was a direction rather than the conference of a right on the claimant. However, it was common ground that the claimant was intended to have an interest in possession and that entitled a beneficiary to claim whatever may be the subject of the interest. Moreover, it appeared from Stroud’s Judicial Dictionary that ‘income’ has been construed very widely such that, in tax cases, it has been taken to mean not just ‘money’but also ‘monies worth’, which connoted an asset which may be turned to account and/or ascribed a monetary value for use and enjoyment whether or not that was the case. Whilst the words ‘pay… the income’ were not free from ambiguity and could bear the meaning contended for by the claimant, it was necessary to consider extrinsic evidence including the testator’s intention and, in this case, because the statutory Codicil was made by the Court of Protection, this referred to the testator’s intention as expressed by the Judge and the reasons underlying the decision as made in the best interests of the Eighth Earl. The evidence demonstrated the Eighth Earl’s love and affection for his wife and that he would have wanted to ease the tension between her and his heir which the approval of the statutory Codicil would go some way towards achieving. Implicit in that best interests decision was 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 arrangement flowing from the Eighth Earl’s personal ownership of the chattels and charged with the preservation of the capital of the EFT. On balance, the most probable meaning of the statutory Codicil was that contented for by the defendants and that the correct construction of the phrase directing the trustees to ‘pay the income of the [EFT] to Lady Bathurst’ did not entitle the claimant to enjoy the possession and use of any of the property that was the subject of the EFT.

 I direct that pursuant to CPR 39APD6 paragraph 6.1 no tape recording shall be made of this judgment and that copies of this version shall stand as authentic and be treated as the official transcript.
 The parties and the claim
 [1] This judgment follows the trial of two of six …
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Counsel Details

Tracey Angus QC (5 Stone Buildings, Lincoln’s Inn, London WC2A 3XT, tel 020 7242 6201, e-mail and Jordan Holland (5 Stone Buildings, Lincoln’s Inn, London WC2A 3XT, tel 020 7242 6201, e-mail instructed by Mishcon de Reya LLP (Africa House, 70 Kingsway, London WC2B 6AH, tel 020 3321 7000) for the claimant.

Gilead Cooper QC (Wilberforce Chambers, 8 New Square, Lincoln’s Inn, London WC2A 3QP, tel 020 7306 0102, e-mail instructed by Charles Russell Speechlys LLP (5 Fleet Place, London EC4M 7RD, tel 020 7203 5000) for the first to third defendants.

Fenner Moeran QC (Wilberforce Chambers, 8 New Square, Lincoln’s Inn, London WC2A 3QP, tel 020 7306 0102, e-mail instructed by Boodle Hatfield LLP (240 Blackfriars Road, London SE1 8NW, tel 020 7629 7411, e-mail for the fourth to seventh defendants.

Cases Referenced

Legislation Referenced

  • Administration of Estates Act 1925, ss25, 44 & 55
  • Administration of Justice Act 1982, ss20-21
  • Mental Capacity Act 2005, ss1, 4, 16 & 18
  • Trusts of Land and Appointment of Trustees Act 1996, s12