HIGH COURT RULES: HOMEMADE, UNCLEAR WILL IS VALID AND CREATES TRUST RATHER THAN ABSOLUTE GIFT

In the recent case of Vucicevic v Aleksic [2017] EWHC 2335 the High Court (Bristol District Registry) considered the rules relating to gifts in the context of homemade wills. The court concluded that instead of being an absolute gift, the homemade handwritten (or holographic) will of the testator gifting his properties to the Serbian Orthodox Church (the "Church") created a gift to the Church on trust for the benefit of the people in need in Kosovo, especially children. The case highlights that the courts are often willing to adapt a flexible approach to seek to give effect to the provisions of a homemade will as long as the testator's intentions are discernible, even if certain aspects of the will lack clarity.

Background

Mr Aleksic (the "Testator") was born in Montenegro in 1923 and moved to the UK after World War II and became a British citizen. He died in 2014, aged 91, with no wife, partner or children. He left a homemade handwritten will dated "2012", disposing of his estate worth approximately £1.8 million at the time of his death. The Testator made straightforward pecuniary legacies to his siblings and extended family. The will also contained gifts of three properties the testator owned (two in England and one in Montenegro) to the Church. The will further specified that "all the money" "which is left" after taxes should also go to the Church. The gifts were to be for the benefit of people in need in Kosovo, especially children. The will placed the senior bishop of the Church (Bishop Radovic) in charge of the gift, conveying the testator's "full confidence" that the bishop would ensure that the benefit went to the right place. The testator also ordered that the property in Montenegro should not be sold until 2040.

The Testator's English was "by no means perfect" and there were various problems with its interpretation.

A number of the issues had been resolved through agreement by the time of the hearing and there were only two main issues left for the Court to determine.

The first issue related to the amount of a pecuniary legacy left to a friend of the Testator as part of the wording had been obliterated. However, given that this turned on its particular facts and the Court was able to come to view as to the amount of the legacy after receiving expert evidence from a forensic document examiner, we do not consider this issue further in this posting.

The second issue related to the gift to the Church. The main questions that arose were as follows:

1. Whether the houses were an absolute gift to the Church to use for its own purposes or a gift help on trust for people in Kosovo, especially children;
2. Whether the condition not to sell the property in Montenegro was valid; and
3. Whether the wording of the gift of "all the money" created a partial intestacy.

Decision

Absolute gift or trust?

Firstly the Court had to identify the beneficiary of the gift. "Serbian Orthodox Church" could have meant entities located in Serbia, Montenegro or England. This issue was resolved by the parties through agreement (and a deed of variation) which confirmed that it was the Serbian Orthodox Church in London that was the beneficiary.

In relation to the question of whether this was an absolute gift, the Court concluded that the Testator had not intended to make an absolute gift for the benefit of the Church but had intended to create a trust. The critical question was to determine the Testator's intention. The Court emphasized that in that exercise reference to the words used, in their context and in all the circumstances should be made.

In deciding that the Testator intended to create a trust rather than give an absolute gift to the Church, the Court considered the following elements to be relevant: (1) the statement that the benefit was to "go to Kosovo, for the people in need, especially children"; (2) that Bishop Radovic was "to be in charge"; (3) the statement that the testator has "full confidence in [Bishop Radovic]" that the gift is "going in right place in Kosovo only"; and (4) the imposition of the condition that the house in Montenegro is not to be sold until 2040.

The Court concluded that these statements showed that the gift was not intended to be an absolute gift; the Testator had sought to control what happened to the property in his will. It was clear to the Court that the gift was for the relief of poverty and therefore charitable, and much narrower than the proper purpose for which the Serbian Church in London holds property generally.

The Court also confirmed that the will did not make Bishop Radovic a trustee as he was given no property right (legal or equitable) in the will. If the Bishop had not been available to oversee the administration of the gift, the gift would still have been valid.

The Court found the choice of words of the Testator having "full confidence" in the Bishop problematic as such precatory language expressed a wish in respect of what should happen, rather than an obligation. The Court, however, considered that the language had to be looked at in context. The Testator had no wife, partner or children and made a gift to an institution for charitable purposes. The gift was effectively a gift of residue after making gifts to those friends and family members he wished to benefit. The confidence was not placed in the legatee but in someone who was in a position of authority and whom the Testator trusted to make the right decisions in the administration of the gift. The gift was also long-lasting; the house in Montenegro was not to be sold until 2040. It was clear to the Court that the will created a gift to the Church on trust for people in need, especially children, in Kosovo.

Valid condition?

The Court also confirmed that the condition that the house in Montenegro should not be sold until 2040 was valid. English private international law provides that the validity of a testamentary gift of immovable property is governed by the lex situs; the law of the place where the property is situated. Here that was the law of Montenegro.

Expert evidence on Montenegrin law provided that under Montenegrin law a Testator is able to elect the law of the state of his habitual residence to govern the gift of immovable property. The Court held that the testator did in fact choose the law of his habitual residence (England) to govern the gift in relation to the house in Montenegro, and that under English law such a condition that the property should not be sold is valid.

Partial intestacy?

The Court had to decide whether the wording that "all the money" left after taxes goes to the Church created a partial intestacy. A narrow interpretation of "money" in this context which included money in hand and a deposit in the bank only was likely to create partial intestacy. However, the Court favoured a wider interpretation of the word "money" to incorporate a wider pool of assets.

In reaching this conclusion, the Court took into account the fact that the Testator's clear intention was not to die intestate, that the "all the money" provision came at the end of the will and had the appearance of a residuary gift, that the will was homemade which has in the past been helped courts to expand the meaning of the word "money", and was not in the Testator's own language. Further, it also seemed that a common translation of the English word "money" into Serbian would be a word that would cover non-money assets.

The court concluded that it was clear that the Testator meant to use the word "money" in this part of his will to cover the remainder of his estate, and his non-money financial assets. Accordingly, there was no partial intestacy.

Practical points

The decision highlights that courts can be willing, in certain circumstances, to exercise a degree of flexibility to seek to discern the testator's intentions and give effect to a will, even if the will is unclear. The decision also shows that, as the Court said "bad English can still make a good will, as long as the testator's meaning is understood".

However, although it appears that greater leniency was given here as the will was homemade, the testator did not take legal advice in relation to the will, and did not speak good English, parties should not seek to rely upon making a homemade will in the hope that the Courts will give them greater leniency in interpretation. Not only is there a real risk that a Court will not give effect to a testator's wishes, but there will also be significant legal costs incurred in any court proceedings to seek to interpret the will, and those costs may very well exhaust, or at least significantly decrease, the value of any estate.

The case also provides a good practical example of the interplay between private international law and domestic law in the context of property situated abroad. Although in this case the gift was upheld, testators should act very cautiously and take appropriate legal advice when their estate involves assets in other jurisdictions as the interplay of the rules of private international law can give rise to unexpected outcomes.