Defending your interests

The judgment of Gill v Woodall & Ors [2009] EWHC 2990 (Ch) handed down in October last year provoked much discussion among lawyers, and the public at large, about how charities should deal with legacy disputes (see Solicitors Journal 153/39, 20 October 2009). It is perhaps an opportune moment to consider with charity clients, particularly those that rely heavily on legacy income, how they deal (or would deal) with a disputed legacy.

This case is particularly significant in that it is one of the few legacy disputes fought all the way to a fully contested trial. It is also one of the relatively rare cases where a will was set aside on the ground of undue influence '“ with an additional twist that the person whom the claimant alleged had coerced the testatrix was not the person who stood to benefit.

Dr Christine Gill was the only daughter of Yorkshire farmers John and Joyce Gill who lived at Potto Carr Farm in Ingleby Cross, North Yorkshire. Upon leaving school, Christine went to study in Leeds and, on completion of her PhD studies some ten years later, commenced a career in academia at the university. However, Christine (and later also her husband) continued to assist with the running of Potto Carr Farm at weekends and in the holidays. In 1986 Christine and her husband bought, with the encouragement of Christine's parents, an adjoining farm, notwithstanding that it was a considerable distance from Christine's place of work and required refurbishment.

In 1993, both John and Joyce Gill each made wills leaving their respective estates to the other. Upon the death of the survivor, that person's entire estate was left to the RSPCA.

The court was told that John Gill was a domineering man with 'traditional' views on the roles of men and women; he was used to getting his own way and would become apoplectic with rage if he sensed any criticism towards him. Joyce Gill, while confident and outgoing in her younger days, later suffered from agoraphobia and panic disorder, becoming increasingly withdrawn and dependent on her husband until his death in 1999. Thereafter, she relied on her daughter both generally and to run the farm.

Following Joyce's death in August 2006, Christine discovered that the will her mother had executed made no provision for her at all and instead left the entire estate, valued at over £2m, to the animal charity. The reason stated in the will for the disinheritance was that Christine had already been adequately provided for.

Christine challenged the validity of the will on two grounds: first on the ground that her mother's agoraphobia and panic disorder affected her so acutely that she had no knowledge of, nor approved, the contents of the will. Secondly, she challenged on the ground that Mrs Gill's husband had coerced her into making a will on those terms.

The court rejected the first ground pleaded, but accepted that John Gill had coerced his wife into making the will.

Christine also advanced a claim on the basis of proprietary estoppel. She citied the fact that her parents had represented to her, and encouraged her in the belief, that she would inherit the farm. In reliance on those representations, she acted to her detriment by devoting so much of her spare time to working on the farm.

The court accepted this argument also, although had already decided to set aside the will on the ground of undue influence.

The case of the RSPCA in some ways is an extreme example of a will dispute: the stakes on both sides were high and (insofar as the validity dispute was concerned) it was an 'all or nothing' case. However, the case illustrates a number of issues which charities should be alive to if they find themselves faced with a legacy dispute.

A good reason not to fight

There are various reasons why many charities shy away from litigation: one of the principal concerns of a charity which relies on legacy income is that of adverse publicity. Naturally, charities will not wish to put off potential donors by appearing greedy or overly aggressive to a family in mourning; that would not be very in keeping with the public perception of charities as 'caring' institutions.

Indeed, the present case provoked various criticisms on the internet where it was suggested, for example, that the RSPCA should not have pursued the claim in circumstances where a 'caring daughter' clearly had a right to her inheritance (the blogger concerned may have been unconcerned with any of the legal niceties, but then again nor will the majority of his readers be).

Another difficulty with cases of this type is evidence. The majority of cases turn on the facts, and, ultimately, whose evidence the court prefers. In the present case, there was a prima facie valid will: it was correctly executed and there was no dispute as to the testatrix's testamentary capacity. However, more than half of the judgment (over 100 pages) was devoted to considering and weighing up the evidence of numerous witnesses of fact and conflicting psychiatric evidence.

Charity clients of course are at a disadvantage. The best person to give evidence is no longer alive (and, in this case, the person who carried out the coercion was also absent). In addition, the charity beneficiary will not usually have any knowledge of the deceased; whereas family, friends and others in contact with the testator will usually have extensive knowledge. Furthermore, the civil burden of proof can leave a lot of scope for uncertainty, rendering it difficult to assess prospects of success.

On top of the uncertainty and potential for adverse publicity, there is also the fact that litigation is time-consuming and expensive.

If the above were not off-putting enough, charities will also wish to bear in mind their trustees' obligations under charity law '“ notably the obligation to use charity funds reasonably, properly and only in furtherance of the charity's objectives. Pursuing costly litigation could be seen as an unreasonable use of funds which could be put to better use within the charity, rather than being put at undue risk by 'gambling' on the outcome of litigation.

Protecting the charity's interests

Notwithstanding the above factors, there are good reasons why charities should not succumb immediately to a disappointed family member who challenges a bequest.

While not making a comment on the merits of the Gill case, it important to bear in mind that there are cases which are advanced by claimants which are spurious. Testators are at liberty to leave their estate to whomsoever they choose, and may conceivably choose to leave a substantial gift to charity rather than a family member with whom there has been little contact.

Charity trustees will also wish to consider compliance with charity law. As already mentioned, trustees are obliged to act in the best interests of the charity and to further its charitable objects. There may be cases where not to pursue a disputed legacy, particularly if it is substantial, would be a breach of that duty.

Managing risk

Deciding whether or not to embark on litigation will require charity trustees to carry out a difficult balancing exercise between their obligations to further the charity's objectives and to act in its best interests by maximising income on the one hand, and inevitable commercial considerations on the other.

Charities can best achieve this balance by carrying out, with the assistance of their legal advisers, a thorough risk analysis at the outset of the dispute and, should it be decided to proceed with litigation, throughout the course of the case.

As with any litigation, careful consideration will need to be given to the merits and available evidence in support of the case. Thought should also be given to the amount in dispute and whether the legal spend incurred in pursuing it is proportionate.

The majority of cases of course settle without reaching a trial. Settlement though raises its own issues. If a charity is considering making an ex-gratia payment to a claimant, consideration should be given as to whether such a payment is permitted by the terms of the charity's governing document. Thought should also be given as to whether authority to make the payment need be sought from the Charity Commission.

Aside from the legal angle, a strategy should be put into place to manage '“ potentially critical '“ publicity of the case. The charity's press department (if one exists) may wish to have a carefully considered 'party line' on the case '“ the most sensible of which for the majority of charity staff may be to make no comment at all. Adverse publicity may also be potentially avoided if the charity and its lawyers show sensitivity to the claimants in handling the case.

As charities rarely know the person making a gift, it is difficult if not impossible to ensure that a testator has explained his or her wishes to the other beneficiaries of the will; however, where charities are campaigning for legacy income, it goes without saying that such campaigns should encourage potential donors to discuss wishes with family.

The RSPCA has been granted leave to appeal against the High Court decision. In the meantime, it will be interesting to see whether the existing decision, where the family of the deceased might be viewed as 'coming out on top', will encourage other would-be litigants to challenge the charity bequests in the wills of their loved ones. It is to be hoped that charities will not be put off by the outcome of the Gill case and will have the confidence to defend their interests in appropriate cases.