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Where there's a Will, there's a way..

...to save otherwise potentially invalid charitable donations

With abject apologies to George Gershwin; it may not be “Summer time” but thanks to the judgement of  HHJ Paul Matthews (sitting as a Judge of the High Court) in James Francis Knipe v The British Racing Drivers' Motor Sport Charity, The British Racing Drivers' Club, The Royal Society for the Prevention of Cruelty to Animals (RCN 219099), Cancer Research UK (RCN 1089464), World Cancer Research Fund (RCN 1000739), Kathryn Mary Marshall [EWHC 3295 (Ch), 2020 WL] handed down just before Christmas, “the giving is easy” when it comes to charitable legacies.

When drafting charitable bequests, the will writer and the testator are faced with a surprising number of pitfalls which must be avoided.  Aside from concerns about satisfying the inheritance tax exemption requirements, the draftsman must be aware that charities change their names, merge, are wound up and are often known colloquially by something other than their registered names. It is therefore vitally important not only to describe the intended recipient correctly (and many charities provide specific draft clauses on their websites to help avoid these issues) but in the event that the (even correctly) named charity is no longer in existence at the date of the testator’s death, it is helpful to include additional wording to enable the executors to benefit a charity with similar purposes to that chosen by the testator, and if necessary, to help demonstrate his or her general charitable intent.

In this recent case before him, the judge was able to construe a clause in the will which left the deceased’s residuary estate to be divided between a number of beneficiaries including (i) “the British Racing Drivers Club Benevolent Fund” and (ii) “the Cancer Research Fund”, neither of which existed at the date of the testator’s death (or ever), and thereby “save” the gifts.

Unfortunately, it appears that the original will file had been destroyed, and therefore any potential evidence as to the deceased's original instructions has been lost. This, you might have thought, could have jeopardised the beneficiaries’ chances of success, however the executor did have some statutory assistance to construe the provision in the form of Section 21 of the Administration of Justice Act 1982 which provides:

"(1)  This section applies to a will—

(a)  in so far as any part of it is meaningless;

(b)  in so far as the language used in any part of it is ambiguous on the face of it;

(c)  in so far as evidence, other than evidence of the testator's intention, shows that the language used in any part of it is ambiguous in the light of surrounding circumstances.

(2)  In so far as this section applies to a will extrinsic evidence, including evidence of the testator's intention, may be admitted to assist in its interpretation."

The British Racing Drivers’ Club was indeed an existing (albeit not charitable) unincorporated association, of which the deceased, a retired professional racing driver, was a long standing member.  The only benevolent fund connected with the Club was the British Racing Drivers’ Motor Sport Charity. 

In coming to his decision in relation to the first issue, the judge cited Lord Neuberger (with whom all the other Supreme Court judges agreed) in Marley v Rawlings and another [2014] UKSC 2:

"19.  When interpreting a contract, the court is concerned to find the intention of the party or parties, and it does this by identifying the meaning of the relevant words, (a) in the light of (i) the natural and ordinary meaning of those words, (ii) the overall purpose of the document, (iii) any other provisions of the document, (iv) the facts known or assumed by the parties at the time that the document was executed, and (v) common sense, but (b) ignoring subjective evidence of any party's intentions.

20.  When it comes to interpreting wills, it seems to me that the approach should be the same. Whether the document in question is a commercial contract or a will, the aim is to identify the intention of the party or parties to the document by interpreting the words used in their documentary, factual and commercial context."

And His Honour Judge Matthews concluded:

“In my judgment, given the deceased's professional background, his membership of the club and his long familiarity with its affairs, as well as the absence of any other candidate, I cannot believe that the deceased had any institution in mind as the beneficiary of his bounty in clause 8(a) of his will, apart from the first defendant. The opening words of the phrase "the British Racing Drivers Club Benevolent Fund" link the identity of the intended beneficiary to the second defendant and the first defendant is the only benevolent fund administered by the second defendant. This is the simple case of construing the words in the will in the context in which the deceased used them.”

In relation to the second issue, there were two charitable entities (Cancer Research UK and the World Cancer Research Fund), both of which had names which, to some extent, fitted the description in the Will, and who had agreed to split the gift between them, but this would not have protected the executor were another similar charity to bring a claim.  Here the judge found the phrase used by the testator (Cancer Research Fund) “ambiguous” and that although expressed with initial capital letters, did not refer to a particular institution.

“Instead” he opined “it refers to the general charitable purpose of cancer research. It is therefore for the claimant as executor of the will to apply that part of the residue given by clause 8(d) to that general charitable purpose, as for example dividing it between the fourth and fifth defendants [Cancer Research UK and the World Cancer Research Fund]. Even if I were wrong, and it were intended to refer to a particular institution, on this material it is clear that the identity of the particular institution would not be critical to the gift. Given the existence of other charitable elements in the will …. there would be no difficulty in discerning a general charitable intent in this case.”

Needless to say, it is better to draft the clauses correctly and carefully in the first place….

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