HCMP001060/1983
Headnote
Construction of a will.
Inconsistent gifts of the Residuary Estate.
Principles to be applied in determining how to resolve the inconsistencies.
HELD - The 1st residuary gift took effect as it exhausted the Residuary Estate for the 2nd gift.
Appropriate directions given.
IN THE SUPREME COURT OF HONG KONG
HIGH COURT
MISCELLANEOUS PROCEEDINGS
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IN THE MATTER of the Trusts of the Will dated 20th September 1979 of Peter Halksworth deceased late of 2B, Twin Bay Villas, Clear Water Bay Road, Kowloon, Hong Kong
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BETWEEN
HONGKONG BANK TRUSTEE LIMITED
Plaintiff
AND
BRIAN HALKSWORTH
1st Defendant
MARK HALKSWORTH
2nd Defendant
MATTHEW CALEB HALKSWORTH
3rd Defendant
(a minor)
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Coram: The Hon. Mr Justice Mayo in Chambers
Date of Hearing: 24 March 1986
Date of Delivery of Judgment: 9 April 1986
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JUDGMENT
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1. This is an application for directions arising out of inconsistencies appearing in two sub-paragraphs in a will dated 20th September 1979. The testator was a Mr Peter Halksworth who died on 30th July 1981. He appointed the Plaintiff and his brother Brian Halksworth as executors and probate was granted to them on 12th February 1982. According to my understanding of the directions which are sought the difficulties which have been encountered relate to paragraphs 8(c) and (d) of the said Will. I propose setting out the whole of paragraph 8.
" (a)
UPON TRUST to pay thereout all my just debts and funeral and testamentary expenses;
(b)
UPON TRUST to invest the residue after such payment in their names in any investments hereby authorised and to stand possessed of such investments and all parts of my estate for the time being unsold (hereinafter called 'my residuary estate');
(c)
UPON TRUST as to both capital and half of the income of my residuary estate for such of my children as shall survive me and attain the age of twenty-one years if more than one in equal shares absolutely PROVIDED ALWAYS that if any of my said children shall die in my lifetime or shall survive me and die before attaining a vested interest leaving issue living at my death such child or children if and when he shall attain the age of twenty-one years shall take by substitution and if more than one in equal shares per stripes;
(d)
UPON TRUST as to half of the income from my Residuary Estate unto the said Winnie CHAN Ping-lan during her life and from and after the death or remarriage of my wife my trustees shall hold my Residuary Estate UPON TRUST to divide the same into four equal shares and shall hold 1 of such equal share in trust for Brian Halksworth absolutely and the 3 of such equal share in trust for my children in equal share absolutely. PROVIDED ALWAYS that if any of my children shall die in my life time or shall survive me and die before attaining a vested interest leaving issue living at my death such child or children if and when he shall attain the age of twenty-one years shall take by substitution and if more than one in equal shares per stripes. "
2. Before me the Plaintiff was represented by Miss Cherry Bridges and Miss Emily Choy, a solicitor of Stevenson, Wong & Co. appeared for the 2nd Defendant and Mr Clarke of Deacons represented the 3rd Defendant. The 1st Defendant did not appear before me but there was exhibited to one of the supporting affidavits, a copy of a letter from a firm of solicitors in England who are representing the 1st Defendant's interests. I will deal with the contents of this letter later in this judgment.
3. There would not appear to be any dispute concerning the facts of this case. The deceased left surviving him two sons, the 2nd and 3rd Defendants. The reason for their being separately represented was that the 3rd Defendant is still a minor and sensibly it was thought desirable that he should be separately represented.
4. The Winnie CHAN Ping-lan referred to in paragraph 8 was cohabiting with the deceased at the date of his death. She was not married to the deceased although reference is made in the papers to their having been engaged. The 2nd and 3rd Defendants are the issue of the deceased by a former marriage or marriages. The deceased's last marriage was dissolved prior to his coming to Hong Kong and there appears to be a general consensus of view that the deceased made the disposition referred to in the Will on the assumption that Miss Chan was his wife. No issue has-been taken on this. I therefore propose proceeding on this assumption.
5. At this stage it may be helpful to explore the limited background material which-is available. The solicitor who apparently drafted the Will, Miss Susan Johnson, swore an affidavit which gave particulars of the surrounding circumstances when instructions were obtained and the will was prepared and executed. Miss Johnson was an Assistant Solicitor with Johnson, Stokes & Master, Solicitors in August 1979. It would seem that the initial instructions were taken by a Mr Richard Bryson who was then a partner in the firm. He made a note of the instructions he took and it may be helpful if I extract the typed transcript of the relevant note of the instructions given.
" (4)
Client lives with a woman whom client will probably eventually marry but in the meantime client wishes to provide for this woman as follows. -
(a) Her name is Chan Ping Lan, Winnie, of 2B Twin Bay Villas, Clear Water Bay Road, Kowloon and she is to receive HK$10,000.00 for each year client and his girlfriend have lived together (commencing August 1974) provided, however, that Chan Ping Lan, Winnie is living with client at the date of his death.
(b) In addition to the aforementioned sums, his girlfriend is also to receive the income from one-half of client's residue until such time as she remarries or dies.
(c) Also, Winnie Chan is to take whatever household effects including furniture etc. from the flat in which they reside together that she wants and also she is to get two rings belonging to client, namely, client's sapphire ring and a platinum ring.
(4)
(sic) Client has two children by a former marriage and the residue of the estate is to go to these two children and also to any children that he might have by Winnie Chan. The names of the two children are as follows:-
(1) Mark Halksworth of 28 Saddleback Road, Camberley, Surrey, England, and
(2) Matthew Caleb Halksworth of 23 Brittania Way, Stanwell, Staines, Middlesex.
Such residue to be held on trust until such children are 25. Mark is 18 and Matthew is presently 11.
(5)
However, in the event that Winnie Chan dies before or at the same time as client then the residue is to be divided between client's children as aforesaid and client's brother Brian Halksworth who is to get 25% of the residue. "
There are also some scribbled notes in the margin of the transcript which would seem to me to be unintelligible.
6. It is difficult not to come to a conclusion that the draft clauses, the subject matter of this application are a clumsy and unsatisfactory attempt to incorporate the instructions which were recorded by Mr Bryson. It would appear from Miss Johnson's affidavit that Mr Bryson requested her to draft a Will for the testator and shortly after this proceeded on leave. Miss Johnson attended to the drafting of the Will and then submitted it to the testator for confirmation of his instructions and thereafter obtained his execution thereto. Unfortunately it would appear that neither Mr Bryson nor Miss Johnson appreciated the inconsistencies which existed and further when the engrossment was submitted to the testator he did not notice himself. I am however satisfied that the correct approach to interpreting these provisions is to primarily direct my attention to the sub-paragraphs in the Will - read them in the context of the Will.
7. Various attempts have been made by the Plaintiff and the legal advisers of the beneficiaries or potential beneficiaries to place interpretations upon these sub-paragraphs. Although the 1st Defendant was not legally represented before me I think that it would be fair for me to take cognizance of the observations which were made by the firm of solicitors who are representing him in England.
8. Messrs. Goodalls & Son and Whitfield Son & Hallam wrote to the Plaintiff on 25th March 1982. The relevant part of their letter reads:-
" We have now had an opportunity to read:
1.
The Testators original instructions as taken down by Messrs. Johnson Stokes & Masters;
2.
A draft Will written out by hand by Messrs Johnson. Stokes & Masters sent to the deceased for his approval; and
3.
A typed copy of the hand written Will which was also sent to the deceased for his approval.
The Testator therefore saw three copies of the Will, the last one being the final engrossment which he approved and signed.
We are of the opinion that the draft bill, the typed draft and the final Will do not reflect with the Testator's alleged instructions, that is the instructions written down by his solicitors. It may well be that his solicitors misunderstood his instructions, seeing that he did not raise any comments when he saw three copies of the Will, or it may be that the original instructions were correct and that the deceased had changed his mind.
Our own views on this matter are that there is a patent ambiguity in Clause 8 of the Will. In any interpretation of the Will the Court will have to interpret the words which the Testator has used and through the Testator's words the Court will seek to interpret his intention. His Will will therefore have to be considered as a whole. We are of the opinion that there are three possible interpretations of Clause 8:-
(1)
In any interpretation of a Will the Court will not make a Will by adding words but they may delete words in order to give full meaning to the Will. In Clause 8(c) if the words 'both capital and' were deleted, the Will would make complete sense in that the residuary estate as defined would be invested and held on trust; the Testator's children would be entitled to half the income, Winnie Chan to the other half and on the death of Winnie Chan or earlier remarriage, the interest of Winnie Chan would cease and the whole of the fund would then be divided in four equal shares between Brian Halksworth and the deceased's children. From the wording of the Will there is a good deal of substance in this argument in that the Testator has defined the residue as 'my Residuary Estate'; he refers to 'my Residuary Estate' in Clause 8(c) and once again refers to 'my Residuary Estate' in Clause 8(d).
(2)
Another possible interpretation is that the intention of the Testator from the wording used was to divide the Residuary Fund into two equal parts. One such equal part was to be held on trust for his children as to both capital and income and the other equal part was to be held on trust for Winnie Chan who was to enjoy the income therefrom for her life or earlier remarriage. On the death or earlier remarriage of Winnie Chan the one half of the Fund was then to be divided into four equal parts of which Brian Halksworth would get one such part and the Testator's children the remaining three parts in equal shares.
(3)
That the whole of the capital was to be invested and held on trust for the deceased's children but that until Winnie Chan died or remarried, she was to enjoy the income from half of that Fund. This interpretation would mean striking out the bulk of Clause 8(d) from 'during' to the end of the clause. We think that on the wording of the Will the Courts would be extremely reluctant to do this in that it would be striking out words which the Testator obviously meant to have some effect.
We refer to the letter of Messrs. Johnson Stokes & Masters regarding the inconsistencies of Clause 8 and they allege that the case of Re: Gare deceased [ 1952] Ch. 80 gives authority for the argument expressed in their letter to you of the 8th September 1981. We disagree with this interpretation. If you read the case you will see that it was the case of a home made Will and was decided on its facts and is easily distinguishable. Harman J on page 83 states that the Rule that the latter of two inconsistent phrases will be preferred to the former is a rule of last resort and will only be resorted to by the Court where there is absolute inconsistency from ,which there is no way out. He states that where two phrases bequest or devises cannot be reconciled the Court will follow this Rule, to give effect to the whole document. In the case of Re: Gare, Mr Justice Harman found no inconsistency.
In the present case, we submit that there is a substantial inconsistency and that the interpretation of the Will can only be decided by Court.
We would appreciate your views on the above observations and on receipt thereof we shall discuss this matter further with your co-executor. "
9. It is helpful to also consider the views of the Plaintiff's legal adviers Messrs. Johnson, Stokes & Master. In a letter of 8th September 1981 to the Plaintiff they state at the 4th paragraph onwards:-
"
With regard to the provisions of Clause 8(c) and 8(d) of the Deceased's will, the general rule is that when the clauses are absolutely irreconcilable the later one is to be preferred. However in the immediate case, this rule cannot be applied because it involves two residuary gifts. Clause 8(c) indicates that there is a gift of the capital and one half of the income of the Residuary Estate to the children and Clause 8(d) appears to indicate that there is an absolute gift of ¼ of the Residuary Estate to Brian Haiksworth. Where there are two residuary gifts, a gift to the two children of the Deceased followed by the appointment of the Deceased's brother as residuary legatee, the first gift prevails because it is said that there is no property on which the second gift can operate. There is previous authority to support this rule, notably the case of Re Gare (1952 Ch.80). To quote from the judgement of Harman J. ,
'
(Two bequests appearing respectively in a Will and Codicil) are quite different from those which appear one after the other in the Will, as in this case, and I have no hesitation in holding that the first gift, so far as effective, carried the whole of the estate, and that the second gift.... had therefore no operation. '
This rule may be justified on the basis that if there are lapsed shares of the first gift of residue these would pass under the second gift. Alternatively it may be possible to show that all lapsed legacies fall into residue. On balance we feel that Clause 8(c) will take precedence over Clause 8(d) because the first gift of Residue will exhaust the residue of the Estate for the second gift.
Clause 8(d) provides for one half of the income from the residuary estate to be paid to Winnie Chan Ping Lan during her life and goes on to say, and from and after the death or remarriage of my wife'. Our interpretation of this, in the light of the circumstances in which we took instructions is that the expression 'my Wife' refers to Winnie Chan. At the time the Will was drafted, the Testator referred to Winnie Chan frequently and made no mention to us about his ex wife who lived in England. We proceeded on the natural premise that Winnie Chan was the Wife of the Testator. As you are aware, the Deceased was divorced from his wife in the early 1970's. Since that time he became engaged to Miss Chan and it was intended that they were to marry. It is most probable that the Deceased, in contemplation of this marriage, referred to Winnie Chan as his Wife'. Had it not been for his untimely death, the marriage would have taken place. Notwithstanding this point, after the divorce in the 1970's the Deceased no longer had, strictly speaking, a 'Wife' as such. If it was his intention to make a gift of residue to his divorced wife, he would most probably have referred to her as his ex wife.
We hope that this answers your initial comments and queries upon the Will and if you have any further points to raise, please do not hesitate to contact us. "
I do not propose quoting in full the letters from the other solicitors putting forward their views on the interpretation of the clauses. Suffice it to say that as one might expect they favour Messrs. Johnson, Stokes & Master's interpretation of the matter rather than the 1st Defendant's solicitors. Miss Choy and Mr Clarke both informed me that they adopted Miss Bridges' submission before me.
10. I will now consider the law relating to the construction of Wills and attempt to apply it to the facts of this case. Miss Bridges referred me to paragraphs 417 and 418 of volume 50 of Halsbury's Laws of England 4th Edition and to passages appearing on pages 435 and 436 of Theobald on Wills 14th Edition. The commentary in Halsbury and in Theobald are both in similar form and reach the same conclusions. A distinction is drawn between inconsistent gifts and double residuary gifts. Where there are inconsistent gifts the general practice, all other matters being equal, is to give meaning to the later gift. However this approach is not relevant to the present case. Here we are concerned with conflicts concerning residuary gifts. Para. 418 of Halsbury states as follows:-
" 418
Double residuary gifts. Where two gifts of residue are contained in the same will, they are not treated as irreconcilable so as to bring into operation the rule that the later must prevail, for the second gift is construed as intended to operate on lapsed legacies or shares of residue, and as regards other property the first gift is preferred. Where, however, one residuary gift is in the will and the other in a codicil, the gift in the will is revoked. "
Re Gare [ 1952] Ch. 80 is the authority cited for the proposition that the first gift is preferred. While it is true that the circumstances of that case were different to the present one the underlying principle remains valid. This is borne out by the commentary appearing at p.736 of Theobald which deals with inconsistent residuary gifts. A number of older authorities are referred to in support of the proposition and I am satisfied that it makes sense that where there are inconsistent residuary gifts it is necessary to have regard to the first gift as there will be nothing to support the second gift.
11. The main thrust of the 1st Defendant's solicitors' letter is based on the rule which should be applied to inconsistent gifts which are not gifts of residuary property. I am satisfied that the passages I have referred to in Halsbury and in Theobald on Wills correctly state the position and that it is right that I should apply it to the circumstances of the present application. I also accept that I can derive very little assistance from any of the other surrounding circumstances. When the Will is read as a whole it is clear that paragraph 8(c) must predominate over 8(d) where the two are mutually inconsistent.
12. I do not consider that I should embark upon any attempt to spell out in detail the construction which should be placed upon paragraphs 3(c) and 8(d). I propose to confine myself to the questions which are posed in the originating summons before me. The summons reads:-
"1.
That it may be determined, upon the true construction of the abovenamed Will and in the events which have happened, whether:
(1)
the 2nd and 3rd Defendants are entitled upon attaining the age of 21 years to one half of the income of the Residuary Estate of the abovenamed deceased and after the death or marriage of Winnie Chan Ping Lan to the whole of the income and capital of the Residuary Estate in equal shares;
(2)
the 1st Defendant is entitled to any and if so what share in the Residuary Estate of the abovenamed deceased;
(3)
how else the income and capital of the Residuary Estate of the abovenamed deceased ought to be dealt with.
2.
That provisions may be made for the costs of this application. "
My replies to the questions posed are that the position as stated in Question 1 is correct. The reply to Question 2 is that the 1st Defendant is not entitled to any interest under the Will. As a consequence of these replies, it is inappropriate for me to deal with Question 3. Subject to any submissions which may be made when I hand down this judgment, I would order that the costs of this application shall be borne by the estate.
(Simon Mayo)
Representation:
Miss Cherry Bridges inst'd by Johnson, Stokes & Master for Plaintiff/Applicant
Miss Emily Choy of Stevenson, Wong & Co. for 2nd Defendant
Mr M.H. Clarke of Deacons for 3rd Defendant