Update: charity

Legacy matters

It has been another pretty active six months for charity legacy cases in which the appeals of Gill v Woodall [2010] EWCA Civ 1430 and RSPCA v Sharp [2010] EWCA Civ 1474 were decided.

The facts of Gill were, as the Court Appeal noted, exceptional, and it is hoped the court's decision will not provoke a raft of 'copycat' claims. The decision in Sharp should offer some comfort to charities '“ particularly the court's comments that the indemnity costs order made by Peter Smith J was inappropriate '“ whatever the outcome.

Outside the charity sphere, there have been a few other cases of interest to the legacy world. In Marley v Rawlings & Other [2011] EWHC 161 (Ch) the court confirmed that it cannot rectify mirror wills where a couple have signed each other's will. It was held that such wills were invalid as they did not comply with section 9(b) of the Wills Act 1837 because the testators did not intend to give effect to the wills which they signed.

Even if the wills were valid, it would not be possible to rectify them as rectification could only relate to the wording of the will. In this case, there was no failure of drafting, just a mistake on execution. It is now likely that there will be a negligence claim by the disappointed beneficiary of the wills against the solicitors who supervised execution.

The decision in Hope v Knight [2010] EWHC 3443 (Ch) is the most recent reported case under the Inheritance Act 1975. The judge dismissed the claims of an estranged spouse and a daughter suffering from disability. The couple separated almost 20 years before the testator died and had entered into a written separation agreement to deal with their financial affairs. This provided capital provision for the wife and maintenance for the daughter. Following their separation, the testator began a new relationship which lasted almost 20 years, until his death. In his will he left everything to his new partner and nothing to his spouse or daughter.

Neither the wife, daughter or partner were particularly wealthy but none of them were obviously unable to provide for themselves. The main factors that appear to have swung the judge towards rejecting the claims were:

• The separation agreement executed in 1991 had given the testator a legitimate belief that he had fulfilled his financial obligations to the wife and daughter, and an expectation that his remaining assets were his to deal with as he wished.
• The testator's main asset '“ a house worth £450,000 '“ had been his partner's home for years and she had looked after it.
• The length of time that had passed since the testator and his wife divided their assets by agreement.

The daughter's claim failed, even though she suffered from intermittent depression and obsessive compulsive disorder. The judge said: 'I acknowledge that Laura (the daughter) has an aspiration to live in her own place, but that is only likely to come about if her financial position improves significantly. It is not the object of the 1975 Act to bring about such an improvement.

A parent is under no general obligation to house an adult child and does not come under one at death.'

This case is likely to be of relevance in today's complicated family situations. The judge's comment about housing and adult children is particularly helpful to those sorts of claims.

Another interesting case was that of Thorpe v Fellowes Solicitors LLP [2011] EWHC 61 (QB). This was a negligence claim brought by the claimant's son as her 'litigation friend' against her solicitors. He claimed that they had breached their duty in acting for his mother in the transfer of her property to her daughter for an alleged undervalue at a time when her capacity was in doubt.

The fact that the case was brought at all is very strange and seems to have been motivated more by the son's grudge against his sister than any real desire to benefit his mother. The most notable part of the judgment is the judge's comment that there is no duty on a solicitor to obtain a report on capacity in every case involving an elderly client. In this case he held that there was nothing obviously wrong with her capacity which should have put the solicitor on notice and therefore no reason why they should have obtained a report.

In light of the recent decision in Key v Key [2010] EWHC 408 (Ch), where the solicitor was criticised for not having followed the golden rule when making a will for a testator, this decision provides a crumb of comfort for practitioners.

Finally, the case of Ferneley v Napier & Others [2010] EWHC 3345 (Ch) concerned an alleged lost will. The facts of this case are very strange as the main witness was an electrician who had overheard a conversation about the contents of the deceased's will while working on the deceased's house. He thought that the family had discovered a will while clearing out the property. The will was alleged to benefit the deceased's partner. No will or even a draft could be found and there was suspicion that the family (who would benefit on intestacy) had destroyed the will. This allegation was not accepted by the judge.

The family sought to argue that a lost will should only be admitted to probate if the evidence proved beyond reasonable doubt that it had been validly executed and had not been revoked. The judge rejected this submission and held there was no authority requiring him to apply the criminal standard of proof, beyond reasonable doubt. He felt, however, that in order to admit a reconstructed will to probate based on oral evidence, he would need very clear proof.

In the end, the judge concluded that the partner had not proved on the balance of probabilities that the will which was overheard by the electrician was an executed will (rather than a draft will) and therefore declined to admit it to probate. The judge refused to order that there was an intestacy, however, because he wished to allow the beneficiaries of a different draft will a chance to prove that it had been executed.

Amateur sport

The Charity Commission has just registered the first charity which has the object of advancing amateur sport by promoting a game of mental skill and exertion. The Charities Act 2006 paved the way for games clubs within England and Wales, such as bridge and chess clubs, to become charities by providing that the advancement of amateur sport as a charitable purpose could include sports or games involving mental (as opposed to physical) skill and exertion (section 2(3)(d) of the Charities Act 2006).

Hitchin Bridge Club has become the first such charity to be registered. In its decision about the club, the Charity Commission considered what it should take into account before it could register a charity under this head. It came up with three considerations:

• the level and degree of mental skill and exertion required in a particular sport or games;
• he potential health benefits arising from the exercise of mental skill or exertion; and
• the public benefit requirement.

The commission was satisfied that bridge involved high mental skill and exertion. It was the type of game which parliament would have contemplated as coming within the category of the advancement of amateur sport when debating the legislation.

The club also produced evidence that bridge had health benefits in relation to alzheimer's disease and dementia. The commission was therefore satisfied that bridge could have health benefits arising from the mental skill and exertion.

The commission then considered the public benefit requirements. The club's facilities were open to all. Any fees charged were low and reduced fees applied to those on low incomes. The participants of the club received a benefit from the mental stimulation of bridge and the social contact of playing with other people. The club therefore operated for the public benefit.

This decision opens the door for other organisations involving games with a high level of mental skill to apply for charity registration. It also illustrates some of the complexities which the Charities Act 2006 has created. Mindful of this, the commission has just launched a consultation on the advancement of amateur sport as a charitable purpose. The consultation closes on 31 May and the results will lead to commission guidance.

Catholic Care

Finally, as this article goes to print, the sector awaits the decision of the Charity Tribunal on the latest stage of the Catholic Care adoption case (Solicitors Journal 154/36, 28 September 2010).

The commission's original decision not to allow the charity to discriminate on the grounds of sexual orientation was quashed last year by the Administrative Court because of flawed reasoning and referred back to the commission. On further consideration the commission made the same decision (albeit for different reasons) and the charity appealed to the Charity Tribunal. A decision is expected next month.