Marcus v Marcus (2024) EWHC 2086 Ch (Judgement 16 August 2024)
A recent High Court decision highlights the clear importance of context when considering disputes of the interpretation of trust documents.
As was the case here, disagreement over the meaning of a few words can have a potentially dramatic effect on the operation of wills are trusts. Where there is a dispute, care should be taken to act reasonably so that some protection on costs might be afforded to the “losing” party.
Background
On November 29, 2003, Stuart Marcus established the SN Marcus Settlement, a discretionary trust intended to defer capital gains tax through a scheme similar to the 'Son of Melville' tax mitigation plan. Stuart's wife, Patricia, created a similar trust, the PEJ Marcus Settlement, at the same time. The trusts benefitted their children and their spouses.
Stuart and Patricia Marcus were married in 1973 and had two children: Edward and Jonathan. Patricia told Edward for the first time in March 2010, when he was aged 32, that his true father was Sydney Glossop who was a partner in a law firm in Norwich. Stuart never knew that his wife believed Sydney Glossop was Edward's father and he created the Settlement believing that he was Edward's and Jonathan's father.
Jonathan, who learned about Edward's paternity from in 2023, argued that Edward should not benefit from the SN Marcus Settlement if Stuart is not his biological father. This issue does not affect the PEJ Marcus Settlement since Patricia is Edward's mother.
Jonathan also challenged Edward's role as a trustee of both settlements, and a previous ruling in March 2022 mandated that the trustees, including Edward, Jonathan, and another trustee, should be replaced with independent trustees. However, the implementation of this order has was delayed, and Jonathan had also applied to overturn the decision.
The trial focused on resolving issues related to these claims.
Decision
The EWHC determined that, despite Edward “probably” not being the biological child of the deceased, the term “children” in the trust deed was meant to encompass both Jonathan and Edward. Master Marsh stated “A reasonable person in knowledge of the relevant facts would readily conclude that when using "children" Stuart intended this word to be understood as meaning Edward and Jonathan; and not "Edward and Jonathan provided they are in fact my biological sons."
The Judge added crucially there was no reason to consider that Stuart might have intended to treat Edward and Jonathan unequally and that the inequality that would arise between the two settlements by applying the natural meaning of children would have been stark.
The Judge did refer to, as is customary, that the drafter of the settlement opted to create a class of beneficiaries with room for expansion rather than specifically naming Edward and Jonathan. The Judge states this drafting choice should not be overlooked. However, it is overridden by the context, for the reasons he had provided.
Takeaway
The case demonstrates the importance of context in interpreting legal documents. Here, it was clear on the facts that Stuart intended the clause to include both Jonathan and Edward.
Cases such as this one can lead to huge amounts of costs being expended in acrimonious legal proceedings. For this reason it is vital to take specialist legal advice as soon as possible once a dispute of this type has arisen.
Our Will, Trust and Estate Dispute team are specialists at resolving disputes of this kind. If you have any concerns as to the proper meaning of a trust or will, we can offer you the clear advice that you require. We are happy to offer a free 30 minute telephone consultation.
Please get in touch with our Will, Trust and Estate disputes team today on 01484 821500 or email willdisputes@ramsdens.co.uk
The above article is for illustrative purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any part of the information given.