The Binding Contract Requirement: The County Court considers the test for mutual wills

The County Court has recently examined the law on mutual wills as well as providing a brief reminder of the law of testamentary capacity and undue influence. This decision provides a helpful summary of the law on mutual wills and explains the requirements and formalities in order to create a mutual will.

Simply put, mutual wills are wills made by two or more persons where there is an agreement between those persons that the wills are irrevocable and have the intention of benefitting a third party. As a result of the mutual will, the relevant property is held for the third party on an implied trust. If the survivor revokes or changes their will, then an equitable remedy can be sought to ensure the terms of the original will are adhered to and the relevant property continues to be held for the third party.

In Ian Paul McLean and Ors v Brett McLean, H10CL283 (unreported), it was held that the two wills executed by the Claimants' father and stepmother in 2017 were not mutual wills and consequently the Court refused to grant the declaration that the estate of the deceased was to be held on trust for the Claimants. In making his decision, the Recorder considered that a binding contractual agreement was required for the doctrine of mutual wills to apply, in particular the Recorder noted that proprietary estoppel would not be sufficient to engage the doctrine. The Recorder also held that the 2017 wills were validly made and were not void for lack of testamentary capacity or undue influence.

Hussein Mithani, an associate in our disputes and private wealth team, considers the decision in further detail below.

Background

The Claimants were siblings whose father is Reginald McLean ("Reginald") and whose stepmother is Maureen McLean ("Maureen"). The Defendant was the Claimants' half-brother, his father is Reginald and his biological mother is Maureen.

The claim concerned the 2017 wills of Reginald and Maureen (the "2017 Wills"). In the 2017 Wills Reginald and Maureen left their estates to each other as survivors and the residuary estate of the surviving spouse to the Claimants and the Defendant in equal shares. Then, after Reginald passed away in 2019, Maureen revoked her 2017 Will and executed a new will which left the entire estate to the Defendant (the "2019 Will"). Maureen shortly passed away after signing the 2019 Will.

The Claimants sought to argue that the 2017 Wills were mutual wills and brought a claim seeking a declaration that the estate of Maureen should be held on trust for the benefit of the Claimants and the Defendant in equal shares in accordance with the terms of the 2017 Wills. On the basis the 2017 Wills were mutual wills, the Claimants sought directions for the sale of the family home which formed the bulk of the estate and claimed damages from the Defendant for his use and occupation of the family home after Maureen's death.

In response, the Defendant argued that the 2017 Wills were invalid as either Reginald lacked capacity or because Maureen had been unduly influenced. The Defendant also contested that the 2017 Wills were mutual wills and were simply mirror wills.

Judgment

The Recorder first considered whether or not the 2017 Wills were invalid due to any lack of testamentary capacity by Reginald or any undue influence in respect of Maureen.

Capacity and Undue Influence

In respect of testamentary capacity, the Recorder set out the test in Banks v Goodfellow (1870) LR 5 QB which, in brief, requires that the testator understands: (i) the nature of the will and its effect, (ii) the extent of the property of which will be subject to the will; and (iii) which people they would usually be expected to provide for under the will and are free from any delusion of the mind that would affect their dispositions to those people.

The Recorder noted the evidential burden is initially on the Claimants to prove capacity. However, that burden would shift to the Defendant to show there was a "real doubt" as to capacity in circumstances where the will, prima facie, appears rational and duly executed.

In applying this test, the Recorder held that Reginald had testamentary capacity at the time the 2017 Wills were executed. In particular, the Recorder relied upon the evidence of the solicitor ("Mr McKie") who advised Reginald in executing his will and held that the Defendant had failed to raise a real doubt.

In respect of undue influence, the Recorder considered the test as set out by Lewison J in Re Edwards [2007] EWHC 1119. In summary, this test has a high threshold and requires one to show the will was changed by coercion or by fraud. The Recorder held that the Defendant had not met the high burden required and had failed to show the Court that Maureen's 2017 will had been procured by undue influence.

Mutual Wills

After considering that the 2017 Wills were valid, the Recorder then turned to the issue of mutual wills.

The Recorder considered the authorities and noted that there was a requirement in the vast majority of the authorities that there be a legally binding agreement between the persons making mutual wills. The Recorder went on to address HHJ Matthews' obiter comments in Legg v Burton [2017] 4 WLR 186 which suggested that such an agreement could be formed via proprietary estoppel. However, the Recorder found that the balance of authority required a legally binding contract and proprietary estoppel would not engage the doctrine.

The Recorder then considered whether there was such a binding agreement. He considered a letter written by Reginald and Maureen to the Claimants and Defendant and the evidence of Mr McKie who assisted Reginald and Maureen in executing the 2017 Wills.

The letter referred to a will and the collective belongings of Reginald and Maureen. The Recorder held that this was not sufficient to demonstrate there was such a binding agreement. In particular, the Recorder noted there was no express mention of an agreement between Maureen and Reginald.

Mr McKie's evidence showed that he did not advise the couple on mutual wills and Reginald noted in the meeting with Mr McKie that he trusted his wife implicitly not to change her will. The Recorder considered that no agreement arose at the time the 2017 Wills were entered into. The Recorder noted that there was no reference to an agreement and the evidence showed that Reginald and Maureen were willing to rely on trust alone. The Recorder commented this may have given rise to a moral obligation on Maureen, but not a legally binding one.

Comment

This case demonstrates the importance of detailing a legally binding agreement between individuals who wish to form a mutual will. It is worth noting that an oral agreement may not be borne out from the evidence and these issues arise after the relevant individuals are deceased.

Another point to note is that there may be some difficulties in demonstrating a legally binding agreement was formed between family members wishing to execute a mutual will. This is because such a mutual will could also be attacked on the basis that it was a family agreement with no intent to form legal relations.

There is an outstanding application for permission to appeal by the Claimants. If granted and the appeal is pursued, it will be interesting to see what decision the appellate courts come to in respect of mutual wills and whether proprietary estoppel can, by itself, engage the doctrine of mutual wills.