PROFESSIONAL NEGLIGENCE. WHITE v JONES LIABILIITY IN CONTEXT OF WILLS, TRUSTS AND TAX

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1 PROFESSIONAL NEGLIGENCE WHITE v JONES LIABILIITY IN CONTEXT OF WILLS, TRUSTS AND TAX A. WHITE V JONES A.1. Nature of White v Jones liability The purpose of this paper is to explore the nature and extent of a professional s liability in negligence pursuant to White v Jones [1995] 2 AC 207. In White v Jones the House of Lords fashioned a new remedy for the benefit of the intended beneficiaries of a Will, who had been deprived of legacies by reason of the negligence of a solicitor. Due to the solicitor s unreasonable delay, the Will was not prepared for execution before the testator s death. Despite the absence of any contractual relationship between the solicitor and the beneficiaries, the beneficiaries were awarded a cause of action in tort to recover damages equal to the value of the legacies to which they would have been entitled under the Will. The key point was that the testator and his estate (who had a claim in contract) had suffered no loss, but that the disappointed beneficiaries (who had suffered loss) otherwise had no claim. There was, therefore, a gap or lacuna, which the House of Lords filled by providing, what they, no doubt, saw as a one-off remedy. White v Jones limits liability to a case where a solicitor, or other professional, has been negligent in failing to give effect to a client s testamentary intentions. There is a retainer to prepare a Will. The Will is not prepared or executed before the death of the client, or after death it emerges that the Will is invalid or defective due to the negligence of the professional. In consequence, the intended or disappointed beneficiaries suffer loss of the testamentary gift which the client had wanted them to have. However, White v Jones has been extended, by analogy, to negligence other than in connection with the preparation of a Will, and to liability to others than the beneficiaries of a Will. The standard elements are as follows: (1) There is a contract between solicitor or other professional (P) and a client (C), the purpose of which is to confer a benefit on a third party (X). The contract may involve the drafting of a document such as a Will, a deed of gift, a trust deed; and/or it may involve the giving of advice. (2) There is no contract between P and X. (3) The intention to confer the benefit may be entirely gratuitous (as in the case of a Will). Alternatively, it may be pursuant to a contract whereby C has agreed to confer a benefit on X, such as security for a loan, as a condition of receiving a benefit in return from X, such as the advance of the loan (see E.8 below). In the latter case, there is a common purpose that X should benefit from the transaction which P is instructed by C to implement. (4) There is no conflict of interest between C and X. Often X will be a member of C s family. If there is such a conflict, then no liability arises. (5) Often the benefit is to be conferred following C s death, e.g. a legacy under a Will or a deathin-service lump sum pension benefit (see E.7 below). However, liability may also arise where there is an intention to confer a benefit on X during C s lifetime in circumstances where, for some reason, that benefit is not conferred and the position cannot be rectified. C may not be able to remedy the situation by perfecting the gift (if, for instance, he has died); or the 1

2 gift may have passed into the wrong hands and be irrecoverable; or a gift may have been made into a trust which is ineffective to confer any benefit on X (see E.5 below). It is essential, however, that neither C, nor his personal representatives, have a claim for substantial damages (see (9) below). (6) P voluntarily assumes responsibility for reward to C to implement C s intention to benefit X. P could have chosen not to have undertaken the task, but does so without any exclusion of liability to X. It is reasonable (objectively) to treat that assumption of responsibility as also extending to X. (7) There is a high degree of proximity between P and X. P knows that the purpose of the transaction is to benefit X, or a class of persons including X. X need not be named, but must be ascertainable (see A.7 below). There is no indeterminate liability to an indeterminate class. (8) P can reasonably foresee that the X will suffer loss if P is negligent in implementing C s instructions. P knows that X is particularly vulnerable because, for instance, X is not party to the instructions or is not independently advised and/or because X is a child and/or because X has no other means of recovering any loss flowing from P s negligence (see E.8 below). In some cases, however, there will be conscious reliance by X on P s exercise of skill and competence and/or direct communication between X and C. (9) Neither C, nor C s personal representatives, has an effective remedy against P. The purpose of the transaction will have been to benefit X. C will not, therefore, have suffered a substantial loss by reason of P s failure to benefit X. At best, C or his personal representatives have a claim for nominal damages. (10) X is the only person who has suffered loss, but does not have a cause of action unless the court provides a remedy. (11) The policy consideration that P, as a professional man, should be held liable to somebody for his negligence, there being a public interest, for instance, in the efficient preparation of Wills or similar documents. P should not be allowed to escape scot-free. However, White v Jones cannot be used to impose a liability in any case on any person who has been instructed, pursuant to a contract, to take a step, the effect of which is to benefit a third party. In Wells v First National Commercial Bank [1998] PNLR 552 a company irrevocably instructed its bank to make a payment of 275,000 to the claimant. The payment was not made. The claimant sued the bank in negligence claiming that the bank owed it a duty of care to pay the claimant the sum of 275,000. The claim was struck out. The Court of Appeal identified two key features of White v Jones which rendered it exceptional: (1) the particular responsibility, or peculiar status, of a solicitor as a professional man to draw up a Will in favour of a third party beneficiary; and (2) the absence of any right of the testator to claim substantial damages if no benefit is conferred on the intended beneficiary. The defendant bank was not a professional, exercising care and skill, in a matter such as a Will. Furthermore, it seems that both the bank customer and the claimant had an effective remedy in contract. There was a chain of agreements or contracts under which the claimant had an effective claim. In any event, the circumstances were not exceptional. It was a commercial situation in which the relationships between the parties were governed by contracts between themselves. There were no dealings or communications between the claimant and the bank giving rise to any liability outside contract. 2

3 A.2. Summary The House of Lords decision in White v Jones itself is analysed at A.3. The nature of the duty to the beneficiaries is analysed at A.4: it is co-extensive with the contractual duty owed to the testator. The requirement that the testator had a fixed, continuing intention, up to the date of death, to benefit the claimants is examined at A.5. The duty is owed by any professional person who has undertaken to prepare a Will (A.6) and can only be owed to ascertainable persons whom the testator wishes to benefit (A.7). In Part B instances of negligence are examined such as delay in preparing the Will (B.1). The case-law is analysed for guidance as to reasonable periods of delay. Other instances of negligence are explored: failure to chase up a client to execute the Will (B.2); inadequate advice as to execution (B.3); failure to supervise execution (B.4); failure to check whether the Will was properly executed (B.5); failure to secure an effective disposition of property, such as joint or trust property (B.6); failure to include a provision in accordance with the testator s instructions, including an examination of the issue of whether it is necessary to mitigate by applying for rectification (B.7); failure to ascertain the testator s intentions (B.8); failure to give competent advice, including tax advice, in connection with the Will (B.9); whether there is a duty to advise beneficiaries of their entitlement (B.10); delay in obtaining a grant (B.11); failure to notify personal representatives (B.12); and breach of duty not to act (B.13). Part C examines the position where the professional s negligence has given rise to a probate claim to set aside the Will on the grounds of lack of testamentary capacity (C.1), want of knowledge and approval (C.2), undue influence (C.3) or lack of testamentary intent (C.4). The allegation will be that the professional ought, in the circumstances, to have declined to act. The relevant loss will be the costs in the probate proceedings of the beneficiaries under the probated Will. As such, the action is distinct from a classic White v Jones claim by disappointed beneficiaries of a defective or nonexistent Will for the amount of their entitlement under such a Will. The nature and extent of a solicitor s duty to inquire into testamentary capacity is examined, as are the circumstances in which a solicitor should or should not refuse to act. Practical advice is given (C.1.7). Consideration is given to the issue of whether the beneficiaries of the probated Will, or the personal representatives, are entitled to claim the costs of the probate action (C.5). The interrelationship between a claim for the costs of a probate action, and a claim by disappointed beneficiaries, is considered (C.5.5). Issues of causation and loss are examined (C.5.7). Part D deals with claims by personal representatives, and the problem of double liability. Cases of liability to personal representatives are explored (D.1). The key characteristic of such a claim is that the estate has suffered loss. In a classic White v Jones case the estate has suffered no loss. The problem of double liability (to personal representatives and beneficiaries) is analysed by reference to the decided cases (D.2). Practical advice is given as to who should be parties to a claim where the estate has suffered loss. Part E examines cases where White v Jones has been applied (or not as the case may be) to lifetime transactions, or otherwise than in the context of the negligent preparation of a Will. The House of Lords in White v Jones made a number of obiter comments to the effect that a solicitor could not be liable for a defective lifetime gift since the client would be able to perfect the gift, or claim damages from the solicitor, during his lifetime (E.1). This principle is examined in the case of imperfect gifts (E.3) and misdirected gifts (E.4). A number of cases are explored where the courts have imposed liability to third parties in respect of lifetime transactions, such as gifts to trusts which fail to confer an intended benefit (E.5), defective pension advice (E.7), advice commissioned by one party affecting another non-contracting party (E.8), failure to advise that notice of severance of a joint tenancy should be served (E.9). Cases in which the courts have refused to apply a White v Jones 3

4 liability are also examined, such as Clarke v Bruce Lance & Co (E.10) and Cancer Research Campaign v Ernest Brown (E.11). In Part F there is a full analysis of the potential liability of tax-advisers to beneficiaries or personal representatives of estates which have incurred IHT liability in respect of defective IHT lifetime planning. The estate will incur an IHT liability where X makes a gift to X s children, but continues to reserve a benefit for IHT purposes. This may give rise to a claim against professionals who have failed to advise as to such a liability, or who have failed to avoid such a liability.the leading cases of Daniels v Thompson and Rind v Theodore Goddard are considered in detail. The issue of limitation is addressed (F.7.4) and practical advice given as to who should bring the claim (F.7.5). Part G considers issues such as limitation in a classic White v Jones claim (G.1), and causation and loss (G.2). Contributory negligence (G.3) and mitigation (G.4) are also explored. Part H examines the issue of whether beneficiaries of a trust can or should sue a professional who has given negligent advice in connection with the trust. A claim by a beneficiary is a claim by a noncontracting party and is, to that extent, not unlike a White v Jones claim. A.3. The decision in White v Jones A solicitor or professional Will draftsman clearly owes a duty in contract and tort to his client to exercise reasonable care and skill in relation to the proposed Will. But is there a duty owed to the beneficiaries of the Will if, for instance, the Will is not executed prior to the death of the client due to negligent delay on the part of the solicitor? Can a beneficiary, who would have received a legacy under the proposed Will, recover damages from the solicitor for the loss of the legacy? It was long thought that no duty was owed to a disappointed beneficiary on the basis that the solicitor only owed a duty in contract, and that there was no privity of contract with the beneficiary. However, in Ross v Caunters [1980] Ch 297 Megarry V-C held that a solicitor (who was responsible for the defective execution of the Will) owed a duty of care in tort to the disappointed beneficiary pursuant to the two-fold test in Anns v Merton [1978] AC 728: the beneficiary, who had suffered loss by reason of the solicitor s negligence, was a person within the direct contemplation of the solicitor as being likely to be injured by a failure to carry out the testator s instructions, and there were no considerations to negative or limit the scope of the duty. In White v Jones [1995] 2 AC 207 the House of Lords, by a majority, confirmed that the beneficiaries of an intended Will may have a remedy in damages against a solicitor by whose negligence they have suffered loss. The defendant solicitor had negligently delayed in implementing his client s instructions to amend the client s Will, so as to include legacies in favour of his two daughters. The client died before a new Will was executed. The daughters sued the solicitor for the amount of the lost legacies. Their claim was upheld. The rationale is set out in Lord Goff s judgment. The assumption of responsibility by the solicitor towards his client extended to the intended beneficiary who (as the solicitor could reasonably foresee) might, as a result of the solicitor's negligence, be deprived of his intended legacy in circumstances in which neither the testator nor his estate will have a remedy against the solicitor. The key point was the extraordinary fact that, if a duty of care to the disappointed beneficiary was not recognised, the only persons who might have a valid claim (the testator and his estate) had suffered no loss, and the only person who had suffered a loss (the disappointed beneficiary) had no claim. If, therefore, the solicitor owed no duty to the intended beneficiary, there was a lacuna in the law which needed to be filled. There was, therefore, an impulse to do practical justice by giving the beneficiary a remedy. It would be unacceptable if, because of some technical rules of law, the wishes and expectations of testators and beneficiaries generally could be defeated by the negligent actions of solicitors without there being any redress. 4

5 It did not matter that the beneficiaries had not relied upon the solicitor, as the foundation of liability is an assumption of responsibility by the solicitor. As Lord Browne-Wilkinson said, what is important is not that A knows that B is consciously relying on A, but that A knows that B s economic well being is dependent upon A s careful conduct of B s affairs (272A). Since the solicitor had assumed a responsibility to do something, it was no objection that there is generally no liability in tort for a pure omission unless the defendant is under a pre-existing duty. A.4. Duty to beneficiaries dependent on duty to testator/exclusion clauses The duty owed to the beneficiaries is not independent of the duty owed to the testator. White v Jones departs in this respect from Ross v Caunters where there was held to be a direct, independent duty of care owed to the disappointed beneficiary. As Chadwick L.J. said in Carr-Glynn v Frearsons [1999] Ch 326, at 337E: The duty owed by the solicitor to the specific legatee is not a duty to take care to ensure that the specific legatee receives his legacy. It... is a duty to take care to ensure that effect is given to the testator's testamentary intentions. In consequence: (a) the duty owed in tort by the solicitor to the intended beneficiary and the duty owed in contract by the solicitor to his client are for all practical purposes one and the same; and (b) the nature and extent of the duty is determined by any terms of the retainer which may exclude or restrict the solicitor s liability to the testator (White v Jones [1995] 2 AC 207, at 268G-H; Trusted v Clifford Chance [2000] WTLR 1219, at 1256). It follows that: (a) conduct on the part of the solicitor which amounts to a breach of his contractual duty towards his client must also amount to a breach of his tortious duty towards the intended beneficiary; and also that (b) unless the solicitor is in breach of his contractual duty towards his client, he cannot be in breach of his tortious duty towards the intended beneficiary. Therefore, it has been said that no tortious duty will arise in favour of the intended beneficiary unless and until the testator has: (a) decided to confer on the intended beneficiary a particular testamentary benefit; and (b) retained a solicitor for that purpose (Trusted v Clifford Chance [2000] WTLR 1219, at ). The proper analysis is that the only duty owed by a solicitor is to the testator, but if (a) he was in breach of that duty; and (b) a claimant did not receive a benefit under the testator s Will which he or she would have received if the defendant had not been in breach of that duty, then at least, on the face of it, the claimant may have a claim for damages arising out of the defendant s breach of duty to the testator (per Neuberger J, X v Woolcombe Yonge [2001] WTLR 301, at 307). In White v Jones [1995] 2 AC 207 Lord Goff considered that the assumption of responsibility by a solicitor would be subject to the terms of the contract between the solicitor and the testator which may exclude or restrict the solicitor s liability to the testator (268G-H). If, therefore, the solicitor and the testator have agreed that no action needs be taken to prepare the Will during a specific period, e.g. because the solicitor will be away from work during that period, the solicitor cannot be liable to the beneficiary if the solicitor dies within that period (Trusted v Clifford Chance [2000] WTLR 1219). It is not so clear whether the same principle applies to a lifetime transaction, e.g. where a firm of accountants have, pursuant to a contract with a company, undertaken a valuation of the shares of a shareholder for the purposes of a buy-back of those shares by the company. In Kilick v Pricewaterhouse [2001] PNLR 1 (see E.8 below) there was a clause in the contract between the company and the accountants limiting liability. The shareholder sued the company alleging loss as a 5

6 result of a negligent undervaluation. Neuberger J declined to hold, on a summary judgment application, that the defendant firm of accountants could clearly not take advantage of the contractual provision, limiting their liability in respect of a valuation of shares, so as to limit its tortious liability to the shareholder. It also follows that a solicitor will not be liable to a beneficiary for failing to prepare a Will where the solicitor has declined to accept the retainer on the grounds of the testator s lack of testamentary capacity (see the Canadian case of Hall v Estate of Bruce Bennett [2003] WTLR 827). A.5. Fixed, continuing intention It may be that the instructions never became fixed and final. In Trusted v Clifford Chance [2000] WTLR 1219 the testator never reached the position where he could give the solicitor definite and comprehensive instructions as to the dispositions of his estate to be effected by his proposed Will (1257G). There was, therefore, no liability. Even if clear and final instructions are given, there may be an issue as to whether the testator s intention remained fixed up to the date of his death. Such an intention may, however, be inferred. In Bacon v Kennedy [2001] WTLR 169 instructions for a Will were given an astonishing 9 years before the deceased s death; no Will was executed in the meantime. The deceased had repeated his instructions, and it seems to have been assumed that his intention remained fixed until his death (there being no evidence to the contrary). This issue has been explored in Humblestone v Martin Tolhurst Partnership [2004] PNLR 26 in the context of a claim that a solicitor was responsible for the defective execution of a Will. It was there argued, on behalf of the solicitor, that the burden was on the claimant to prove that the testator s testamentary intention continued up to his death, and that it was to be inferred that he had changed his mind subsequent to the defective execution of the Will. Mann J saw no reason in principle why, in every case, it should be necessary for the claimant to establish such a continuing intention. Where the testator did intend a disposition in favour of a beneficiary, it did not suffice to show that a degree of equivocation had crept in. It had to be apparent that there was some actual change of mind, rather than the creation of a generally open one. However, it was accepted that in a given case, a change of testamentary intention, coupled with other factors, could break the chain of causation. A.6. By whom duty owed The duty is owed by any professional person who has undertaken the preparation of a Will or has advised in regard to a Will intending to benefit a third-party, or to any company offering itself out as offering a similar Will-making service to a solicitor (Esterhuizen v Allied Dunbar [1998] 2 FLR 668). In this paper, references to solicitors should, therefore, be taken to include Will draftsmen. A.7. To whom duty owed The duty is owed to the testator and by extension to the beneficiaries of the Will. In a normal case where the claim is that the solicitor has delayed in producing a Will, or has been responsible for a defective Will, there will be no difficulty in satisfying this test: the testator will have instructed the solicitor of his wish to benefit identifiable beneficiaries. 6

7 However, in Gibbons v Nelson [1999] Ch 326 the claim was the solicitor had negligently failed to advise the testatrix that she could exercise a power of appointment by her Will over a half share in a trust fund. The claimant claimed that the testatrix, if properly advised that she could do so, would have exercised the power in favour of the claimant. The Judge held that it was not sufficient to give rise to an assumption of responsibility by the solicitor to the claimant that the solicitor was: (1) aware of the trust fund (2) aware of the claimant s existence and (c) aware, if he thought about the matter, that the testatrix might possibly wish to appoint some or all of her share in the trust fund to the claimant. It was necessary that the solicitor should know: (1) what the benefit is that the testator wishes to confer and (2) who the person or persons or class of persons are (in each case ascertainable if not actually named) on whom the testator wishes to confer the benefit. That test was not satisfied in Gibbons as the testatrix had never given any consideration to benefiting the claimant. There was simply no evidence as to her intentions with regard to the power of appointment. This does mean, however, that the test may well be impossible to satisfy in any case where the claim is that the testator did not benefit the claimant due to the solicitor negligently failing to advise that the testator had power to do so. The decision in Gibbons is, therefore, questionable on this point. As to whether a duty is owed to the personal representatives of the Will to the personal representatives of a previous, valid Will, see D.1 below. B. INSTANCES OF NEGLIGENCE B.1. Delay in preparing Will A solicitor, instructed to prepare a Will, is under a duty of reasonable care to present the Will for execution within a reasonable time. If the testator dies or becomes incapable before the Will has been so presented, and the delay is unreasonable in all the circumstances, the solicitor may be liable in damages to an intended beneficiary who has suffered loss by reason of the delay. Time will start to run from the date when the testator makes the solicitor aware that he wants to make a Will (Smith v Claremont Haynes & Co, Times, 3 Sept, 1991, where the testator was suffering from leukemia. The solicitor failed to attend on the testator to take formal instructions for 33 days by which time the testator had become incapable. Such delay plainly amounted to negligence). White v Jones was itself a case of delay in drafting the Will. In that case there was a delay of 59 days between the giving of written instructions and the death of the 78 year-old testator. Such delay, not surprisingly, was held to be unreasonable. However, there was no consideration as to what time period would normally be regarded as reasonable. In the New Zealand case of Gartside v Sheffield Young & Ellis [1983] NZLR 37 the testatrix was 89, and had recently had a fall. She died 10 days after first informing the solicitor that she wished to make a Will, 7 days after giving formal instructions. A claim to strike out the claim failed. In X v Woolcombe Yonge [2001] Lloyds Rep PN 274 a delay of 6 days between request for appointment and death was held not to be unreasonable in the case of a hospitalised 55 year old, terminally ill, cancer sufferer with no imminent expectation of death. Neuberger J emphasised that where the client is old or ill, the delay which may be acceptable will obviously be less than in the absence of age or illness. Where, however, there is a real prospect (which may be less than a 50% chance) of imminent death, it may be negligent not to draw up a Will or Codicil, if necessary by hand, for immediate execution, as a holding operation. In any event, the solicitor had prepared a Will which would have been ready for execution in 8 days. The solicitor took a view, which a reasonable solicitor could perfectly well have taken, that this was not an unreasonable period of delay, given that there was no reason to suspect that imminent death would occur. 7

8 In Doidge v Bright Broad & Skinnard, The Lawyer 20 April 1993, there was a delay of 15 days between the request for an appointment and the Will being engrossed. The testatrix died, before the Will was executed, after 18 days. She was 92, but not obviously in bad health. The delay was held not to have been unreasonable, given the state of the testatrix s health. This may be regarded as a generous decision to the solicitor, given the age of the testatrix. In Carr-Glynn v Frearsons [1992] 2 WLR 1046 the 81-year old testatrix wished to leave her share in a property, owned jointly with her nephew to her niece. The solicitor was in some doubt as to whether the testatrix and her nephew were joint tenants or tenants in common beneficially. The solicitor advised that the deeds should be checked, which the testatrix agreed to do. The Court of Appeal held that this was negligent advice: the testatrix should have been advised to serve a notice of severance in any event. There was nothing to be gained, and much to be lost, by delay. The moral of the tale, particularly in the case of an elderly client, is not to delay any longer than necessary without good reason. However, arguably, there was no compelling urgency in Carr-Glynn that could not have awaited the outcome of the testatrix s investigations. It is dangerous for a solicitor to cancel an appointment with an elderly client, who is in hospital, without making inquiries as to the state of the client s health, so as to be satisfied that any additional delay will not be to the detriment of the client (see Hooper v Fynmores [2001] WTLR 169). In Hooper the solicitor cancelled an appointment, for the Will to be executed, due to his own hospitalisation. However, if (as he should have done) he had made enquiries, he would have discovered that the client was gravely ill, and he could have arranged for another solicitor to attend. There was a delay of about 12 days between the request for an appointment and the death of the client. This amounted to negligence in the case of an 83 year old client, who had been in hospital for about 1 month when the appointment was requested. In Bacon v Howard Kennedy [2001] WTLR 169 the testator gave instructions for a new Will in 1986 and again in He died in It is not clear why he did not follow the matter up between 1987 and He may have thought that a Will had been executed. In any event, it would not be safe for a solicitor to conclude, from lack of any response from the client, that the client no longer wishes to proceed. The solicitor should clarify the position with the client. The solicitor will not be liable to a beneficiary in respect of any period of delay to which the client consents (Trusted v Clifford Chance [2000] 1 WTLR 1219). However, the client should be given the chance to instruct another solicitor if such delay is unacceptable. His consent should also be given in writing. There may be reasons for delay, e.g. the need to take tax advice. If so, the client should be advised as to the possibility of making a holding Will, and there should be an agreed time-frame for the production of the Will based on a full consideration of the tax position. In conclusion, there is no standard period of reasonable delay. However, in the case of a client who is not old or ill, a period of up to 14 days between initial contact and production of the Will for execution might be thought to be reasonable. If, however, the client is either old or ill, 7 days might be more appropriate. If there is a real risk of imminent death or incapacity, it may be negligent not to prepare a Will immediately. B.2. Failure to chase up client to execute Will It is not clear to what extent there is a duty to chase up a client to execute a Will which has been sent to the client for execution. In Atkins v Dunn & Baker [2004] WTLR 477 a draft Will was sent to the client seeking his approval prior to preparing the engrossment. There was no response from the 8

9 client, who died intestate 3 years later. The Court of Appeal held that in the circumstances of this case the Recorder had been entitled to hold that the ball was in the client s court and that the failure to send a reminder did not constitute such a fall below the standard to be expected of a competent solicitor as to amount to negligence. However, it was accepted that there will often be situations where there is a duty to send a reminder to the client. However, the circumstances in which such a duty would arise are not spelt out. It would no doubt be advisable to send a reminder letter if nothing has been heard after, say, 7 days. B.3. Inadequate advice as to execution There is a clear duty to take proper care in advising the testator as to the procedure to be followed for the valid execution of a Will, if the solicitor is not to be present at the execution (Gray v Richards Butler [2000] WTLR 143, at 157D). Clear written instructions (it is suggested, in a standard form) should be given to the testator as to mode of execution. If there is a failure to advise clearly or at all as to proper execution, the breach of which invalidates the Will, there may be a liability to a disappointed beneficiary (see Ross v Caunters [1979] 3 All ER 580 where there was a failure to advise that the witnessing of the Will by the spouse of the beneficiary would invalidate the gift). If the solicitor does actually supervise execution, but fails to ensure that the Will was validly executed, the solicitor will be liable to the disappointed beneficiaries (Hill v Van Earp (1977) 71 AJLR 457). In Corbett v Newey [1998] Ch 57 the testratrix signed, but did not date, her Will. She returned the undated Will to her solicitors who knew that she intended that it should not to be dated and was only to take effect once certain inter vivos gifts had been completed. The solicitors duly dated the Will only after the lifetime gifts had been completed. The Will was set aside on the basis that the testatrix did not have any animus testandi when she signed the Will because she did not intend it to have immediate effect. The costs of the parties were payable out of the estate. An action was commenced by the residuary beneficiaries of the Will claiming that the solicitors owed them a duty of care to ensure that the Will was validly executed. The claim was compromised on terms that the claimant beneficiaries received the full amount of their entitlement under the Will undiminished by the costs of the probate action. The solicitor was liable to the disappointed beneficiaries on classic White v Jones grounds: the testator had intended to benefit the beneficiaries by her Will, but had not done so due to the negligence of the solicitors who had failed to advise her that the Will was not validly executed. There was then a further claim by the personal representatives of the last true valid to recover the costs of the probate action (see C.5.5. below). B.4. Failure to supervise execution B.4.1. Is there a duty to supervise? In Esterhuizen v Allied Dunbar Assurance [1998] 2 FLR 668 it was held that the solicitor has a duty to supervise the execution of the Will personally. In that case the Will, in favour of two friends of the testator, was invalid because it was not attested by two witnesses in accordance with the Wills Act The entire estate passed on intestacy to the testator s adopted daughter. The testator had been advised in writing that two witnesses were required. However, Longmore J determined that to leave written instructions and do no more was not enough. There was a duty to take reasonable steps to assist the testator in the execution of his Will, by inviting the testator to the Will-preparer s offices to execute the Will, or by visiting his home with another member of staff. A testator can 9

10 expect reasonable assistance in regard to the process of execution and attestation, even if no express request for such assistance is made. The decision in Esterhuizen may appear somewhat harsh, given that clear written instructions were given to the testator as to the need for two witnesses; Longmore J commented that the testator probably understood this advice; and the standard attestation clause makes it clear that two witnesses are required. Alternatively, the requirement to supervise execution should be limited to a case where the solicitor has reason to believe that the testator is incapable of arranging execution for himself. Esterhuizen is also inconsistent with Gray v Richards Butler [2000] WTLR 143. In Gray the Will was invalid as the witnesses were not both present at the same time when the testatrix signed the Will. The Will had been left with the client for execution. However, the solicitor had left with the testatrix a standard set of instructions on execution, described by Lloyd J as most comprehensive. The solicitor s conduct was held not to have fallen short of that required of a reasonably competent solicitor. Gray J also commented (158C) that the attestation provision in the Will made clear the vital need for the witnesses to be present together when the testatrix signed the Will (a point supported by Re Groffman, Groffman and Block v Groffman [1969] 2 All ER 108 at 109). B.4.2. Testator s competence to follow instructions There is some difference in view between the first instance High Court Judges in Gray and Esterhuizen as to the relevance of the testator s apparent competence to understand instructions. In Esterhuizen the testator was found to have lacked the intellectual equipment or frame of mind to arrange execution for himself. Longmore J decided that the solicitor should personally have supervised execution. However, he does not seem to have based this conclusion on the client s lack of capacity. He stated that it was not sufficient to leave written instructions even in ordinary circumstances which must, presumably, include circumstances where the testator is clearly capable of following instructions. He also rejected the suggestion that the extent of the duty might depend on how competent or intelligent the testator was perceived to be (but somewhat confusingly conceded that that actual performance of the duty might vary according to the solicitor s perception of his client). In Gray, Lloyd J considered that the extent of the solicitor s duties in any given situation may depend on who the client is and the view that the solicitor has formed, or ought to have formed if acting with reasonable competence, as to the ability of the client to understand and follow advice as to the relevant procedures (157E-F). Although there was evidence from a friend, and also from the son, of the testatrix that executing the Will without expert help would have been an unclimbable mountain for the testatrix, Gray J found that she was not stupid and that she was capable of following procedures, such as those involved in the valid execution of a Will, if they were properly explained to her. In any event, in assessing a person s capacity, the standard to be applied was the knowledge gathered by a competent and careful private client solicitor, and not the insight of one who had known the testatrix socially from time to time, still less that of a close family member. It was, therefore, sufficient to give written instructions as to execution to the testatrix. It is submitted that Lloyd J s approach in Gray is to be preferred. It is generally accepted that the extent of the duty to advise may depend upon the experience or intelligence of the client as it appears to the solicitor (see Carradine Properties v Freeman (1985) 1 PN 41). 10

11 B.4.3. Resolution of Gray and Esterhuizen However, a possible resolution of Gray and Esterhuizen may be that, where the client is reasonably perceived as being capable of following clear guidance as to execution, it is sufficient to give such clear guidance in writing. If, on the other hand, there is any reason to believe that the client is not so capable, the solicitor should supervise execution. Nonetheless, to be on the safe side, a solicitor might reasonably consider that he should, in every case, supervise execution, unless the client agrees in writing that this is not required. B.5. Failure to check whether Will properly executed If the solicitor has not supervised execution, he will be under a duty, if and when the Will is returned to him, to examine it to see whether it appears to be properly executed (Gray v Richards Butler [2000] WTLR 143, at 157D-E). In Gray the witnesses had not, in fact, witnessed the testatrix s signature at the same time in her presence. It was submitted that the solicitor should have been put on notice that there was something wrong with the execution of the Will by a number of circumstances, including the fact that one of the witnesses was a neighbour, and the other witness a financial manager with the testator s bank (Coutts), whose address was in another part of London. However, the Judge regarded those circumstances as minor irregularities which were not such as to put a reasonably competent solicitor upon enquiry that there was any real or substantial possibility that the Will had not been validly executed. The solicitor was entitled to obtain reassurance from the fact that an employee of Coutts was one of the attesting witnesses, since it would be extremely unlikely that such a person would fail to insist on the correct procedures being followed. In Humblestone v Martin Tolhurst Partnership (a firm) [2004] EWHC 151 the Will was checked by a secretary, who found it to be in order. In fact, the testator had not signed the Will. The Judge considered that the normal fulfilment of a retainer would require the solicitor, when the document was returned for safe keeping, to check that, on its face, and on the facts then known to him, its execution was ostensibly valid. Furthermore, as the normal practice of the solicitor s firm was to check returned Wills, it had, in any case, assumed a duty of care to check competently. Whether it is necessary to ask for the return of the Will for checking is not clear. However, it might be a prudent step if the solicitor has not supervised execution. B.6. Failure to secure effective disposition of property B.6.1. Joint property If the testator s instructions are to include a gift of the testator s share in joint property, in which the testator has or may have a beneficial interest passing outside the Will by survivorship on the testator s death, the solicitor is under a duty to advise the testator to sever the joint tenancy, e.g. by serving a notice of severance on the other joint tenant. The service of such a notice is part of the Will-making process. In Carr-Glynn v Frearsons [1999] Ch 326 the testatrix owned a property jointly with her nephew. She instructed her solicitor to prepare a Will leaving her share to her niece. The testatrix (who was 81) died before notice of severance was given. The Will was, therefore, ineffective to pass a half share in the property to the niece. The solicitor was aware that the property was in joint names and might be jointly owned beneficially, but advised that the deeds should be obtained so as to check whether there was a beneficial joint tenancy or tenancy in common. The Court of Appeal found that this 11

12 advice was negligent: the correct advice should have been to sever in any event given that the testatrix was likely to die before her nephew. There was nothing to be gained by waiting, and a real risk that her intentions might be defeated by delay. The Judge had found that if advice to sever immediately had been given, the testatrix would have accepted that advice. The solicitor was held liable to the niece. This conclusion is, perhaps, somewhat harsh on the solicitor. The advice to check the deeds before severance does not seem so unreasonable as to amount to negligence. Furthermore, the testatrix offered to obtain the deeds herself, and then failed to do so. Should the solicitor have insisted that the testatrix serve an immediate notice of severance, rather than taken up the testatrix s offer? The conclusion that the testatrix would have accepted advice to sever in any event is also questionable. She had an understandable reluctance to serve a notice of severance on her nephew, and did not, in fact, serve a notice in the following 4 years before her death. In Kecskemeti v Rubens Rabin & Company, The Times, 31 Dec 1992, the defendant solicitor was held to have acted in breach of duty in failing to ascertain that the interest of the testator in two properties which he wished to dispose of by Will was that of a beneficial joint tenant, and to advise him that, if the gift was to be effective, he would have to sever the joint tenancies. The testator failed to sever the joint tenancies with the result that the testator s interest passed by survivorship. The claimant was someone who would have benefitted under the testator s Will if the joint tenancies had been severed. Both the solicitor and the testator wrongly believed that the properties were subject to tenancies in common. However, it was no defence that the solicitor was acting on his client s instructions. The Court held that it would have been obvious to the solicitor from a look at the Land Registry documents that this was a beneficial joint tenancy. This indicates that there may be a duty to investigate the true position as to beneficial ownership, rather than simply accepting the testator s instructions. However, whether it is sufficient that the correct information is readily available, or whether there must be something to put the solicitor on notice that the testator is mistaken, is a moot point (but see Earl v Wilhelm, at B.6.2 below). B.6.2. Trust property In the Canadian case of Earl v Wilhelm (2000) 183 DLR (4th) 45 the testator instructed his solicitor to prepare a Will including specific bequests of areas of farmland to various persons. The Will was validly executed. However, the specific bequests of land were ineffective, as the testator had no beneficial interest therein: he held the land on trust for a farming company controlled by himself (as the solicitor knew). The solicitor was liable to the beneficiaries for loss consequent upon their failure to receive the specific bequests of land. The Court held that, if the testator had been advised that the beneficial ownership of the land was vested in his farming company, he would have made arrangements to ensure that effect was given to his wishes. Notably, it was not a defence that the lawyer was acting on the testator s instructions in including the specific bequests of the farmland in the Will. The Court commented that it was not a sufficient discharge of a solicitor s duty to a testator in circumstances such as these to simply enquire of him what he wishes and then to record and thereafter prepare the Will without anything further. That would be to relegate a solicitor and his obligations to that of a parts counterman or order-taker. The public is entitled to expect more from the legal profession. Certainly, if the solicitor knows that the testator does not have beneficial ownership of an asset of which the testator wishes to dispose, he must so advise; similarly if the testator only has a limited 12

13 interest (such as a life interest). There is probably also a duty to advise that suitable enquiries be made to ascertain the true position, if the solicitor has notice of any facts which might indicate that the testator is not competent to dispose of the asset. B.7. Failure to include provision in accordance with testator s instructions B.7.1. Duty and breach If a testator instructs a solicitor that he wishes to make a testamentary gift of his interest in an asset to X, and the Will fails to carry out the testator s intention in that regard, the solicitor may be liable in damages to X. B.7.2. Convincing evidence However, the burden is on the disappointed beneficiary to prove, by convincing evidence (Walker v Medlicott & Son [1999] 1 WLR 727, at 731H, 738A) that the testator instructed the solicitor to confer the relevant benefit on the beneficiary, and that the solicitor negligently failed to carry out those instructions. This may provide real difficulty as the decision in Walker v Medlicott & Son illustrates. In Walker there was ample evidence that the testatrix had informed the claimant and 9 other persons, that she had left her house to the claimant. She had even made a note, prior to visiting the solicitor, as a reminder to leave her house to the claimant. However, the testatrix s Will did not include a specific devise of the house to the claimant, only a less favourable gift of a 1/6 share of her residuary estate including the house. The issue was whether the claimant had proven, by convincing evidence, that instructions to include a gift of the house to the claimant had been given to the solicitor. The difficulty was that the testatrix was dead; the claimant was not present when instructions were given; and the solicitor had no specific recollection of the meeting at which instructions were given. The solicitor was found to be honest, had made a detailed attendance note which corresponded with the contents of the Will, and had given reliable evidence as to his usual practice in preparing a Will. Based on that practice and the documentary evidence, the solicitor was convinced that the testatrix must have changed her mind and decided not to give her house to the claimant. The Judge was entitled to attach weight to the solicitor s evidence. It was also possible that there had been a genuine misunderstanding between the testatrix and the solicitor. Therefore, the allegation of negligence was not proved. However, if there is a misunderstanding, the solicitor may be liable if the Court finds that there has been a negligent failure to clarify the instructions which have been given (Gray v Buss Merton [1999] PNLR 882). In Martin v Triggs Turner Bartons [2010] PNLR 3 the claimant succeeded in overcoming the evidential hurdle of proving convincingly that a power of advancement contained in her husband s Will trust had not been drafted in accordance with her husband s instructions. The claimant had attended the meeting at which the instructions were given. There was a conflict between her evidence and that of the solicitor. The Judge preferred the claimant s evidence. The solicitor had not kept a proper attendance note. 13

14 B.7.3. Mitigation by rectification There was a second ground on which the claimant failed in Walker v Medlicott & Son [1999] 1 WLR 727. The claimant had failed to mitigate by bringing rectification proceedings. Pursuant to s. 20 of the Administration of Justice Act 1982 if a court is satisfied that a Will if so expressed that it fails to carry out the testator's intentions, in consequence (a) of a clerical error or (b) of a failure to understand his instructions, it may order that the Will shall be rectified so as to carry out his intentions. An application for an order for rectification shall not, except with the permission of the court, be made after the end of the period of 6 months from the date on which representation with respect to the estate of the deceased is first taken out (s. 20(2) AJA 1982). In Walker v Medlicott the Court of Appeal found that, if, as the claimant asserted, the Will failed to carry out the testatrix s intentions, that must have been in consequence either of a clerical error of the solicitor in recording her instructions in his attendance note, leading to a corresponding error in the Will as drafted; alternatively, of a failure on his part to understand her instructions. On either basis the Will could have been rectified. The key point was that the evidence in support of the negligence claim would be the same as that in support of the rectification claim. Indeed, rectification was easier to establish than negligence (on the basis that there may have been a non-negligent, but rectifiable, misunderstanding by the solicitor of the testatrix's intentions). The claimant should have applied for rectification first, exhausting that remedy, and only sued the solicitor as a last resort. If successful, the claimant would have inherited the house; any damages for negligence would have been confined to the costs incurred in putting right the terms of the Will (there being no bar to a White v Jones claim that the claimant also has a remedy in rectification). If, on the other hand, the application for rectification failed, so would the negligence claim fail. In Walker the solicitor had not offered an indemnity in respect of the costs of the rectification claim. It was also accepted that a claimant need not take the risk of starting uncertain litigation against a third party (Pilkington v Wood [1953] Ch 770). However, in Pilkington, the defendant was admitting negligence and yet contending that the claimant should embark on complicated litigation with only doubtful prospects of success. By contrast, in Walker, the defendant was denying negligence and contending correctly that the claimant would have no greater difficulty in establishing claim for rectification than in establishing liability against him. Walker v Medlicott was distinguished in Horsfall v Haywards [1999] 1 FLR In Horsfall the claimant s uncle instructed the defendant solicitors to prepare a Will leaving his house to X for life, with the remainder to the claimants. Due to the solicitor s admitted negligence, the Will left the house to X absolutely. By the time the mistake came to light, X had sold the house and emigrated to Canada with the sale proceeds. The court was prepared to proceed on the basis that a rectification claim would be likely to succeed. However, the question was whether the claimant had failed to take reasonable steps, in not bringing rectification proceedings and in not seeking to negotiate with X. The claimant had acted reasonably in not instituting rectification proceedings. Such proceedings would have had to have been commenced in Canada; they would have been resisted; and the costs would probably have extinguished the entirety of the fund. The rectification proceedings in themselves would not have resulted in any material recovery of the funds (without further action to recover the sale proceeds). In any event, by the time that the claimant became aware of the mistake, the capital of that trust fund had been made available to X in Canada, and the 6-month time limit for rectification proceedings had expired. The claimant had not taken proceedings within the jurisdiction, within time, as the defendant solicitor, who acted in the administration of the estate, had not advised as to the possibility of rectifying the Will. 14

15 B.7.4. Advice where potential claim to rectify Generally, where the claim is that the Will does not express the testator s intentions due to a clerical error, or a failure to understand the testator s instructions, the claimant should first commence rectification proceedings. If successful, a claim can subsequently be made in negligence against the solicitor to recover the costs of the action. It may also be possible to claim damages equal to the difference between the value of benefits under the Will, following the reasonable compromise of a rectification claim, and the value of such benefits if there had been no negligence (see the special facts of Martin v Triggs Turner Bartons [2010] PNLR 3). Alternatively, negligence and rectification claims could be brought in the same proceedings, with the negligence claim being stayed pending the conclusion of the rectification claim. In any event, the negligence claim should not be commenced in advance of the negligence proceedings (Re Grattan [2001] WTLR 1305, at 1311B). However, negligence proceedings may be commenced if, for any reason, it is unreasonable to expect the claimant first to seek rectification, e.g. because of difficulties of enforcement. B.7.5. Clerical error/failure to understand instructions It is clearly important to identify whether the case is an appropriate for a rectification claim because, if so, that claim should normally be pursued in preference to negligence proceedings. There are 3 relevant questions: (1) what were the testator s intentions with regard to the dispositions in respect of which rectification is sought; (2) whether the Will is so expressed that it fails to carry out those intentions; and (3) whether the Will is expressed as it is in consequence of either (a) a clerical error or (b) a failure on the part of someone to whom the testator has given instructions in connection with his Will to understand those instructions (Re Segelman [1996] Ch 171, at 180). Although the standard of proof required in a claim to rectification is the balance of probabilities, the probability that a Will which the testator has executed in circumstances of some formality reflects his intentions is usually of such weight that convincing evidence to the contrary is necessary (Re Segelman, at 184). Speculation is no basis upon which to interfere with a formal expression of testamentary intentions. Therefore, in the case of both a rectification and a negligence claim, it is necessary to adduce convincing evidence that the Will does not express the testator's intentions. The courts have given a wide meaning to the term clerical error. In Wordingham v Royal Exchange Trust Co Ltd [1992] Ch 412 the testatrix instructed her solicitor to draft a new Will making changes to her previous Will concerning specific bequests, but otherwise leaving the provisions of the previous Will intact. The solicitor drafted the new Will, but by mistake excluded a provision, contained in the previous Will, exercising a power of appointment. A clerical error was defined to mean an error made in the process of recording the intended words of the testator in the drafting or transcription of the Will. The failure to copy the provision exercising the power of appointment, from the previous Will into the new Will, amounted to a clerical error. Where it is alleged that words have inadvertently been omitted, rather than inserted, there may be a greater potential for characterising the error as one of a clerical nature (Pengelly v Pengelly [2008] Ch 375, at 383). There will also be a clerical error where the relevant provision by reason of which the Will is so expressed that it fails to carry out the testator s intentions - has been introduced, or not been 15

16 deleted, in circumstances in which the draftsman has not applied his mind to its significance or effect (Clarke v Brothwood [2007] WTLR 329 where the testatrix had intended to give 20% of her residuary estate to each of her 4 godchildren). The Will provided for gifts to the 4 godchildren of 1/20 (not 20%) of the residuary estate, which had the effect that 60% of her estate remained undisposed of. Even if the testatrix had said 1/20, and the solicitor had correctly recorded 1/20, there would be still have been a clerical error since, if the solicitor had applied his mind to the problem, he would have appreciated that the testatrix could not have meant 1/20. Rectification may be ordered under s. 20(1)(b) AJA 1982 where there is no clerical error, i.e. where the error is caused by the solicitor s deliberate choice of words, if that choice of words is caused by the failure to understand the testator s instructions (see Wordingham v Royal Exchange Trust Co Ltd [1992] Ch 412, at 419). Therefore, if it can be proved by convincing evidence that the Will contained an error caused by a failure to understand instructions, rectification will be available (see Sprackling v Sprackling [2009] WTLR 897). However, it will often be the case that the solicitor has introduced words, to which he has applied his mind with a proper understanding of his instructions, but which (perhaps through failure properly to understand the law) do not achieve the objective which the solicitor and the testator intended (Re Selegman, at 184). Such an error is not caused by a failure to understand the instructions. Nor is it a clerical error. In that event, the appropriate remedy of any beneficiary suffering loss by reason of the error is a negligence claim against the Will draftsman. Rectification will not be available. Nor will rectification be an appropriate remedy where the solicitor has failed to take the testator s instructions, as opposed to failing to understand instructions that have been given (Littlewood v Wilkinson Woodward [2009] PNLR 29, at para. 33; see B.8.3 below). B.8. Failure to ascertain testator s intentions B.8.1. Duty to ascertain testator s instructions on relevant matter The solicitor s negligence may consist in a failure to take the testator s instructions on a material matter, as opposed to a failure to understand instructions that have been given, or a clerical error in recording those instructions. In Gibbons v Nelsons [1999] Ch 326 the testatrix had a power of appointment by deed or Will over a half share in a trust fund, the principal asset of which was a house in which her sister, the claimant, lived with the testatrix. Her Will contained a gift of her residuary estate, including any property over which she might have a general power of appointment by Will, in favour of charities. The solicitor did not advise the testatrix that she had a power of appointment over a half share in a trust fund, nor that the gift of residue effected an appointment in favour of the charities. Indeed, there was some evidence that the solicitor did not appreciate the effect of the residuary gift. The Court found that there was nothing to limit the scope of the solicitor's duty. He should therefore have ascertained what the client's intentions were with respect to her half share of the trust fund. He was aware of the testatrix s power of appointment. It was, therefore, his duty to remind her that she had this power and to ascertain from her whether she wished to exercise it and if so in whose favour; and to remind her of the consequences of not exercising the power. 16

17 B.8.2. Proof of testator s intentions However, the claim in Gibbons v Nelsons failed since there was not sufficiently unequivocal evidence as to the testatrix s intention that the trust fund should go to the claimant. The Judge accepted that convincing evidence was required as to what the testatrix would have done if properly advised. However, there was no real evidence, let alone convincing evidence, that the testatrix intended leaving her half share of the trust fund to her sister, or to anyone else for that matter. There was certainly no written record. The claim, therefore, failed, even though it was a reasonable assumption that she did not intend to leave her half share to the charities. In any case, no duty was owed to the claimant as the there was no evidence that the testatrix made the solicitor aware of any intention that the claimant should benefit from her exercise of the power of appointment (see A.7 above). This conclusion does seem generous to the solicitor. The only reason that the testatrix had not made the solicitor aware of any intention to benefit the claimant was that she was not advised as to the possibility of benefiting the claimant. However, on the balance of probabilities, it must have been likely that the testatrix would have appointed her half share in the property, in which she had cohabited with her sister, in favour of her sister. There may, however, be a distinction between cases such as Gibbons and Littlewood (see B.8.3 below) where the claim is that the testator would, if properly advised, have made some different provision from that in the Will (which would require convincing evidence of a contrary intention); and a case such as Sutherland (see B.8.3 below) where the testator had made no provision at all in the events that had happened (which might require a lower standard of proof). B.8.3. No liability if advice did not or would not have caused change to Will In the New Zealand case of Sutherland v Public Trustee [1980] 2 NZLR 536 the 81 year-old testator left his whole estate to his 65-year old wife. No provision was made as to what should happen in the event that the wife predeceased the testator. The wife did, in fact, predecease the testator. The testator had no children of his own. However, the wife had children by a previous marriage, who sued the Public Trustee for failing to include in the Will a provision that they were to be entitled to the estate if their mother predeceased the testator. The claim failed. The court found that the solicitor had advised the testator that the wife might predecease him, and suggested that provision be made for the step-children. The testator had decided not to make any provision in this event. There was no duty to persuade the testator otherwise. Arguably, the decision would have been different if the solicitor had simply failed to advise the testator to include some provision in the event of his wife predeceasing him. In Littlewood v Wilkinson Woodward [2009] PNLR 29 gave instructions that she wished to make a gift of the sale proceeds of her house to her granddaughter on attaining the age of 21. The solicitor was concerned about the testatrix s mental capacity, in particular that she might have been affected by alcohol when giving her instructions. The solicitor decided to meet with the testatrix again and to make a fresh start in taking her instructions. The testatrix thereupon gave new instructions which did not include a specific gift of the testatrix s house to her granddaughter. There was no discussion relating to the testatrix s previous instructions. The granddaughter claimed that the solicitors had a duty to clarify the testatrix s intentions with relation to her house. The Judge accepted that it might have been better to have made specific reference to the testatrix s previous instructions. However, having regard to the fact that the solicitor had taken reasonable care to obtain comprehensive instructions at the subsequent meetings, their failure to query the testatrix s change of testamentary intention did not amount to negligence. In any event, the Judge was not satisfied that, if the matter 17

18 had been raised, the testatrix would have stated that she wished to leave her house to her granddaughter. B.8.4. Scope of retainer If the claim is that the solicitor has failed to ascertain the testator s intentions, there may be an issue as to whether the solicitor had a duty to advise on the issue in question. In Gibbons v Nelsons [1999] Ch 326 the Court found that, although the burden of proof rests with the claimant to establish what the scope was of the solicitor's retainer, once the claimant establishes that the solicitor was retained to prepare a Will, the burden must shift to the solicitor to show, if he can, that his responsibility for the preparation of the Will did not extend to advising the client on some aspect of the Will relevant to the claim. If, however, there is any dispute between the client and the solicitor as to the extent of the retainer, prima facie the client s version should prevail (Gray v Buss Merton [1999] PNLR 882). B.9. Failure to give competent advice in connection with Will B.9.1. Miscellaneous duties to advise A number of duties to advise have already been discussed, including duties to: (a) advise as to the proper mode of execution of the Will (see B.3 above) (b) advise whether the proposed testamentary dispositions are effective (see B.6 above); (c) ascertain correctly the testator s intentions, and to advise according (see B.8 above) including a duty to point out that the testator has not made any, or any effective, gift in certain circumstance, e.g. if the testator were to survive the donee (see B.8.1 above). There will be a duty to advise that a Will is revoked on subsequent marriage, by virtue of s. 18 of the Wills Act 1838, at least if the solicitor has reason to believe that marriage is a real prospect in the near future (see Hall v Meyrick [1957] 2 All ER 722, at 730). There will be a duty to advise a testator, who wishes to revoke a mutual Will, that the Will will not be effective without the consent of the other person who had made a mutual Will. If such advice is not given, the solicitor may be liable for the litigation costs of setting aside the new Will. There will no doubt be a duty to advise as to the risk of claims being made against the estate, e.g. an undue influence claim if instructions are given to the solicitor with a principal beneficiary being present. There will also be a duty to advise as to the risk of a claim under The Inheritance (Provision for Family and Dependants) Act It may be, for instance, that an adult child of the testator has a claim under the 1975 Act, but that no provision is made for the child (of whom the solicitor is aware) because the solicitor fails to advise as to the possibility of such a claim. The beneficiaries of the estate (or the personal representatives if the costs are payable out of the estate) may have a claim against the solicitor in respect of any reasonable costs incurred in defending or settling the 1975 Act proceedings; or possibly even in respect of some or all of the provision which they may be ordered or agree to pay to the child, if a suitably-worded memorandum by the testator, as to his objective reasons for excluding the child would have given stronger grounds for defending the claim. 18

19 Although there may be a duty to advise, there is no duty to persuade the testator to accept the advice (Sutherland v Public Trustee [1980] 2 NZLR 536). B.9.2. Duty to give tax advice in connection with the Will There is no doubt a duty to advise as to the tax implications of the Will which the solicitor is asked to prepare. In Cancer Research Campaign v Ernest Brown & Co [1997] STC 1425 Harman J said that he did not doubt that a solicitor, in considering a Will he is asked to prepare, must consider what inheritance tax complications will be caused by the bequests in respect of which he had been given instructions. If the solicitor wishes to exclude liability for tax advice, clear, informed and written consent of the testator will be required. The client should be fully informed as to the limited reliance he may place on the solicitor and the reason for it (i.e. the solicitor's lack of any basic knowledge or competence as to tax), that this limitation is not a normal term of a solicitor's engagement, and that the client may be better advised to go to another solicitor who is not so handicapped and can be retained with no such limitation on his duties. Common sense requires that all these matters should also be recorded in an attendance note of the meeting where they are discussed and agreed, and should subsequently be recorded in a letter to the client (Hurlingham Estates Ltd v Wilde & Partners [1997] 1 Lloyd s Rep 525, at 529). In practice, the level of consideration of tax issues may not be that onerous. Consideration should no doubt be given to the issue of whether to include a nil rate band legacy in favour of chargeable beneficiaries, or whether to rely upon the transferable nil rate band. The extent of the duty will, however, vary according to the size and nature of the estate, the age of the testator, the identity of the proposed beneficiaries, and the complexity of the Will. The necessity to give tax advice may have an impact upon the assessment of a reasonable period of delay in preparing the Will. B.9.3. Failure to give post-death planning advice to testator The existence of a duty to give post-death planning advice in respect of the estate of someone other than the testator was denied in Cancer Research v Ernest Brown & Co [1997] STC A brother and sister died within 18 months of each other. The majority of the brother s estate passed to the sister, and the majority of her estate to 7 charities. A legal executive in the defendant firm acted in the administration of the brother s estate, and prepared the sister s Will following the brother s death. It would have been beneficial for IHT purposes for the sister (or after her death, her personal representatives) to have entered into a deed of variation within 2 years of the brother s death, in compliance with s. 142 IHTA 1984, redirecting the brother s estate directly to the charities. There would then only have been one transfer of value, which would have exempt. However, no deed of variation was executed within the 2-year period. The charities claimed that the solicitors were under a duty to the sister to advise her to execute a deed of variation of her brother s estate redirecting his estate directly to the charities, saving IHT on the brother s death. Harman J held that the retainer was to prepare the sister s Will. This was properly carried out. There was no duty to inform an intended testator, who comes in to instruct a solicitor about his or her Will, about tax avoidance schemes in connection with some quite other estate. The duty was limited to carrying out the testator s instructions completely and promptly. Harman J also rejected the claim on the grounds that there was no evidence that the testatrix would have acted on advice to enter into a deed of variation. 19

20 The Judge also rejected a claim that the legal executive was under a duty to advise the charities of their entitlement so that they could execute a deed of variation within 2 years of the testator s death (see B.10 below). The decision was influenced by the Judge s perception that the legal executive could not be expected to give tax-avoidance advice. The Judge commented that tax avoidance is a matter which occurs naturally and at once to any regular practitioner in Chancery matters, and to most- although nowadays not all - members of chambers in Lincoln s Inn. That did not mean, however, that it is an idea that occurs naturally, or that it should be attributed to ordinary people in the ordinary way of business, or to a legal executive in a small firm of high street solicitors. It must, however, be debateable whether: (a) a firm of solicitors, holding itself out as competent to prepare Wills and administer estates, could not reasonably be expected to give advice as to saving IHT by means of a deed of variation; and (b) it would be appropriate in all cases to apply the standard of expertise to be expected of a legal executive in a small firm of high street solicitors. A firm of solicitors, particularly a larger firm with a private client department, would not be safe to conclude that it could be under no liability in similar circumstances for failure to advise as to tax savings to be achieved by deeds of variation. B.9.4. Defective post-death planning advice Furthermore, if solicitors do, in fact, give incorrect advice as to deeds of variation, or fail to act in such a way that the deed is effective for tax purposes, they could be liable to the beneficiaries of the client s Will. In Cotterell v Leeds Day [2001] WTLR 435 a deed of variation was executed by a wife redirecting the husband s half share in the matrimonial home, which had been left to his wife, to their daughter. The solicitors negligently failed to register the deed of variation within 6 months of execution with the result that the deed was not treated as having been made by the husband on his death for IHT purposes. In consequence, the wife made a PET, which became chargeable in her estate on her death. The daughter sued the solicitor for damages equal to the additional IHT payable in the wife s estate on her death. It is not clear whether the daughter sued in her capacity as executor or beneficiary of the wife s estate. In any event, there was an issue as to limitation which was heard as a preliminary issue. The action was held not to be statute-barred. There is no further report of the case. Presumably, the claim was compromised. This does suggest that the solicitors could, in similar circumstances, be liable in respect of the additional IHT liability caused by an ineffective deed of variation. As to whether there can be a liability in respect of lifetime transactions, entered into for estate planning reasons, see F below. B.10. Duty to advise beneficiaries of entitlement In Cancer Research v Ernest Brown & Co [1997] STC 1425 (see B.9.3 above) the charities made a secondary claim that the legal executive in the defendant firm had negligently failed to advise the charities, after the death of the sister, that they were beneficiaries of her estate. The charities claimed that, if they had been so advised within 2 years of the brother s death, they would have executed a deed of variation of the brother s Will redirecting his estate from the sister to the charities. The sister died about 6 months before the expiry of the 2-year period, so that there was ample time to inform the charities of their entitlement. As it was, the charities did not become 20