Domicile and wills interpretation

The recent case of Clarke-Sullivan v Clarke-Sullivan [2021] EWHC 4 (Ch) is an excellent example of the court’s approach to the construction of a will of a deceased foreign domicile. It is also a reminder to practitioners that an order under section 48 of the Administration of Justice Act 1985 – the power of the court to authorise action to be taken in reliance on counsel’s opinion –may only be made in clear cases and should not be used where more complicated issues of construction arise.

Background

The case concerned the estate of a New Zealand national who died in a tragic skiing accident in February 2019. The deceased was survived by her husband and their young daughter. Several years before her death, she had set up a family trust in New Zealand. The deceased’s will, executed in New Zealand several months later, provided for her residuary estate to be paid to the trustees of that family trust. At the time of her death, the residuary estate included a valuable property in London. Prior to her death, the deceased and her husband executed a deed, the effect of which was to declare that the family trust had been wound up.

Following her death, an issue arose as to whether the gift of the residuary estate in her will failed. Counsel’s advice was obtained as to the effectiveness of the clause in the will dealing with the residuary estate. An application was made under s.48 of the Act to authorise the executor to distribute the estate on the basis that the effect of the will was to settle the residuary estate on the trustees of the family trust and subject to those trust provisions, notwithstanding the fact the trust had already been wound up.

Worldwide estate

The deceased's estate in England consisted of a London property valued at over £1.7m, as well as cash and shares. She also owned property in Switzerland, Germany and New Zealand.

In July 2019, probate was obtained in respect of the deceased's property in England and the grant of probate stated that she was domiciled in New Zealand.

The court proceedings

An application was made by the deceased's husband as executor under s.48 of the Act. Section 48 of the Act allows a court to authorise executors to take action in reliance on counsel's opinion.  

The central issue subject to the application concerned whether the gift of the deceased's residuary estate to the family trust failed as the trust had been wound up prior to her death. If it did, then it would be necessary to determine the correct way to administer the residuary estate.

The judgment

The judgment of Master Clark concluded that the issue in the case was not an issue as to the material or essential validity of the will. It was, instead, an issue of interpretation, which did not involve material or essential validity. In his view, the wording of the will clause was clear — the deceased had intended to give her residuary estate to the trustees of the family trust. However, since at the date of her death there were no longer any such trustees, the issue which arose was whether the clause could be construed more widely as intending to create a trust on the terms of the family trust deed.

Master Clark held that questions of construction or interpretation are governed by the system of law intended by the deceased, which is presumed to be the law of their domicile at the time when the will is made, unless a contrary intention appears from the will. The proper law regulating the disposition of immovable property by will is the law of the country where the property is sited. However, there is an exception if a question arises as to the interpretation of the will, in which case the law of the deceased’s domicile at the time of making the will is applied.

Domicile at the date of making the will

The court summarised the relevant principles in relation to domicile, including in relation to express statements or declarations as to domicile. In this case, there was an email from the deceased to the will draftsman at the time of making the will that she and her husband were currently non-domiciled in New Zealand for tax purposes.

The court heard that the deceased’s father had been domiciled in New Zealand throughout his life and accordingly the deceased’s domicile of origin was New Zealand. The court had to decide whether the deceased had acquired a domicile of choice in another country by living there and intended to live there permanently or indefinitely. The deceased had spent substantial time living in both Dubai and the UK.

The court concluded that New Zealand remained the deceased’s domicile when she made the will. She had a strong connection to New Zealand. She had grown up there, been educated there and had married her husband there in 2010. Whilst the deceased had lived in London from 2006 to 2010 and in Dubai from 2010 to 2015 and returned to London in December 2015 and remained there until her death in 2019, she had only returned to London as her work was based there.

The deceased had not acquired a permanent right to remain in the UK and had always considered New Zealand as her home and it was always her intention to return there.

Although the deceased had stated that she was non-domiciled in New Zealand for tax purposes in the email provided to the court, Master Clark held that such a statement was not determinative and has to be evaluated in the context of all the circumstances. The statement had been made with reference to tax only, and there was no reference to her being domiciled in another country. The court concluded that the deceased had not formed the requisite intention permanently to reside in England.

Key take aways for practitioners

The case is a useful demonstration as to the court’s approach to the construction of a will of a foreign domicile. Despite the fact there was a clear statement from the deceased that she was not domiciled in New Zealand, the courts will not always place a strong reliance on such statements. As a consequence, practitioners should note that statements made, for example, in a will as to a person’s domicile will not be definitive and other evidence will be needed.

In this case, the court looked to the wider circumstances and the strength of the deceased’s connection with New Zealand. Although she had purchased a property in London of significant value, this was after the will had been made and she had been present in London for work purposes only, without acquiring a permanent right to remain there.  

However, I suspect the fact the deceased had lived in Dubai from 2010 to 2015 sandwiched between her two stays in London was significant, as otherwise an unbroken period of 13 years in London might well have provided more support for an English domicile and the court may well have reached a different conclusion.

Matthew Duncan is a partner at Druces druces.com