Madness, madness

Sir Malcolm Arnold was without doubt one of the greatest British composers of the 20th century. For those who love music, his compositions are well-known. For those who do not, think Bridge on the River Kwai, for which he won an Oscar.

He died in 2006 at the fine old age of 85. But, almost immediately after his death, disputes broke out within his estate. They reached the Chancery Division given just before Christmas 2011.

Troubled genius

The case, two actions in fact, but sensibly tried by the same judge, threw up a number of different issues. They included:

• Did his carer have to return any of the annual gifts made to him by Sir Malcolm as part of his IHT planning?

• To whom did the joint accounts in the names of Sir Malcolm and the carer belong?

• What was the effect of various supposed gifts of Sir Malcolm’s valuable manuscripts?

Sir Malcolm was a genius, but at various stages of his life a distinctly troubled one. In the 1970s, he made a number of attempts on his own life. He was bipolar, and then also an alcoholic. In 1979, he came under the jurisdiction of the Court of Protection, which he did not relish.

He particularly resented the fact that his daughter secured – against his firmly expressed wishes – an order that her children’s school fees were paid out of his income. At perhaps the lowest point, he was thrown out of the pub where he was living.

The Court of Protection found him a carer, Anthony Day. Sir Malcolm was at such a low ebb that he was not expected to live for more than a couple of years.

Under what the judge described as Anthony Day’s “truly exceptional care”, the composer flourished. He recovered ?a great deal of his health and his creativity. He was discharged from the Court of Protection, and survived another 22, not two, years. He lived to ?be knighted by the Queen and to compose his 9th Symphony.

Anthony Day was employed by the Court of Protection on Sir Malcolm’s behalf as his chauffeur, cook and companion. They set up home together in Norfolk, eventually buying, with Sir Malcolm’s money and in Sir Malcolm’s name, a relatively modest house. ?Anthony had money of his own, which he was prepared to invest in the house, ?if necessary.

It did not prove so. Sir Malcolm’s earnings from his music similarly thrived when Anthony turned his ?care towards them, too. And Anthony more than paid for himself in the substantial profits he made by investing Sir Malcolm’s surplus wealth on the stock exchange.

In his will, Sir Malcolm described Anthony as his “dear friend”. He gave him, roughly speaking, his house, his car, half his manuscripts and half residue “for giving me back my life and work when nobody else cared”.

In that will, Sir Malcolm left ?the other half of his manuscripts and ?residue to his son, Robert. He left his daughter nothing.

Anthony, however, encouraged Sir Malcolm to make up with his daughter, which resulted in his last will, in which she was brought in to share half of residue, including the valuable copyrights, with her brother, the other half going ?to Anthony.

At the same time, Sir Malcolm gave Anthony his enduring power of attorney (EPA), though it was not registered until more than ten years later.

Gift list

Over the years, a number of things were done, on the advice of various professionals:

• Sir Malcolm gave Anthony £3,000 per year, increasing to £6,000 and then finally £9,000, to make use of the £3,000 annual exemption, as well as the normal expenditure out of income exemption. By death, these totalled £69,000.

• Sir Malcolm gave Anthony first one-half his house, so that they shared it, and then the other half of his house.

• Sir Malcolm signed a record of gift of his manuscripts to Anthony.

On his death, his children tried to set aside pretty well every gift made by their father to Anthony Day. They claimed that as Anthony had been their father’s attorney under the EPA, he was disabled from carrying out any of their father’s instructions to make the gifts.

What is more, they were all – it ?was said – procured by undue influence, which in the circumstances should ?be presumed.

They even extended their claim initially to the second gift of half the house. Since they did not challenge the will, that would have resulted in them being worse off.

The half-share in the house would have fallen back into the estate, but still devolved on Anthony. But the inheritance tax on it would have then have come out of residue, whereas, ?if the gift stood, Anthony had to pay ?the IHT, under the gift-with-reservation provisions.

The judge rejected the claims to repay the gifts on a number of grounds.

First, he said that the EPA was ?not used to pay them. Anthony was ?joint accountholder of Sir Malcolm’s bank account, and so authorised under the bank mandate to draw cheques ?on it. That had nothing to do with ?the EPA.

The limits on attorneys benefitting themselves in the Enduring Powers of Attorney Act 1985 did not therefore bite. The fact that one could not call ‘seasonal’ gifts, made towards the end of the tax year to save tax, did not matter.

Second, he held that undue influence had nothing to do with it. As a joint accountholder where the monies belonged beneficially to Sir Malcolm, Anthony was a fiduciary.

If he benefitted from that account, ?he was required to show that he did so with Sir Malcolm’s full, free and informed consent. The judge was ?satisfied that he had. Even as Sir Malcolm’s cognitive ability reduced, he still remained able to understand simple gifts. The judge weighed up the fact that all the gifts went to one individual, who only received one-half of residue under the will. But that too was explained to the judge’s satisfaction.

Joint account

The judge also rejected Anthony’s claim to another joint account with substantial funds in it. That account was used as a vehicle for Anthony to play the stock exchange, which he did successfully. Anthony’s version of this ‘gift’ by Sir Malcolm had changed from time to time.

In the immediate aftermath of Sir Malcolm’s death, Anthony did not claim the monies in the account at all. He later claimed, on receiving independent advice, that the entire account had ?been given to him, though by trial his case was that he was a joint owner of ?the account, which all passed to him ?by survivorship.

Such disputes over joint accounts ?are becoming much more common. But the judge relied on the basic presumption of resulting trust, and held that it was not rebutted.

It was unlikely that Sir Malcolm, generous as he was, would have given a substantial part of his wealth to Anthony simply as a thank you for investing the money, albeit so well.

The final limb to the dispute between Sir Malcolm’s children and Anthony Day was over a number of manuscripts. The children claimed that Sir Malcolm had made a gift of them at various stages during his lifetime, in particular when he had effectively lost interest in his possessions. The judge rejected those claims.

Anthony claimed that the manuscripts were given to him by Sir Malcolm’s will. The judge accepted that, but only up to a point: the gift in the will was phrased as one of “my household goods and possessions (including manuscripts, scores and musical literary or other written material)”. That, he held, referred only to manuscripts kept in the house.

But then came perhaps the strangest legal wrinkle. Eight years after his last will, but also eight years before he died, Sir Malcolm signed a document purporting to give all his manuscripts ?to Anthony.

It was prepared, and he was advised in relation to it, by a member of STEP. Because it was merely an instrument in writing – ‘under hand’ as we say – and not under seal, it did not transfer ?the manuscripts.

What it did do was to evidence Sir Malcolm’s intention to make a gift. Under the ancient rule in Strong v Bird (1874) LR 18 Eq 315, that failed gift was subsequently perfected eight years on by the appointment of Anthony Day as one of Sir Malcolm’s three executors (and unaffected by his removal as executor a little while later).

The judge himself gave permission to appeal on the Strong v Bird issue. Sir Malcolm’s children are seeking permission from the Court of Appeal ?to argue also that section 7 of the Enduring Powers of Attorney Act 1985 prevents any gifts being made to an attorney, post-registration, even when ?the EPA is not used.

Total costs, probably well in excess of £500,000 already, look likely to increase. The fat lady has not yet sung.

Tom Dumont is a barrister at Radcliffe Chambers