Tom Wright MRICS, Associate , Residential Auction, Allsop
Understanding the probate process and why auction works
Handling the estate of a loved one who has passed away is often a sensitive issue at a difficult time.
Hand and another v George
The recent case of Hand and another v George  EWHC 33 (ch) has brought into focus the implications of the European Convention of Human Rights on some older trusts and wills that import statutory terms that could be potentially discriminatory. These could have a far reaching effect on classes of potential beneficiaries who have previously been excluded from trusts and wills.
Henry Hand died on 9 June 1947. Mr Hand had three children, namely Gordon Hand, Kenneth Hand and Joan George who survived him. By his will dated 6 May 1946, Henry Hand left the residue of his estate to his three children in equal shares for life with the remainder to each of their child or children who attained the age of 21, if more than one then in equal shares.
The Claimants in this case were David Hand and Hilary Campbell who were the two adopted children of Kenneth Hand. David was born on 16 September 1947 and adopted by Kenneth and his wife on 5 March 1948. Hilary was born on 22 December 1949 and adopted on 9 June 1950.
Gordon Hand did not have any children and Joan George had two natural children. Pursuant to the domestic law in force, the Claimants as adopted children of Kenneth would not benefit from their father’s share in the Henry Hand trust which would pass entirely to the Defendants who were their cousins.
The Claimants claimed that they could rely on their rights under Article 14 of the European Convention of Human Rights in conjunction with Article 8 to override the discriminatory effect of the domestic law so that they would be treated as equals with the birth-grandchildren of Henry Hand.
The Defendants argued that there was no justification for the court to apply the Convention to interpret an instrument that was drawn up before the Convention came in to effect and could subvert the intention of Henry Hand.
The relevant clause in Henry Hand’s will was clause 6 which reads:
“…….my Trustees shall hold my residuary estate upon trust (a) as to one equal third part thereof (hereinafter called “Kenneth’s Share”) to pay the income thereof to my said son Kenneth Hand during his life and on his death as to both capital and income thereof for his child or children who attain the age of twenty one years (subject to the proviso hereinafter contained) and if more than one in equal shares but if there be no such child then I declare that (subject to his life interest therein) my Trustees shall stand possessed of Kenneth’s Share…”
The remainder of the clause states that if Kenneth has no children, then his share passes on his death to his siblings Gordon and Joan.
In 1946 when Henry Hand wrote his will, the law relating to adoption was set out in the Adoption of Children Act 1926 (‘the 1926 Act’). The 1926 Act provided broadly that a child remained the child of his or her birth parents rather than becoming in law the child of their adoptive parents. Section 5(2) dealt with an adopted child’s entitlements to the estate of his natural and adoptive parents:
“5(2) An adoption order shall not deprive the adopted child of any right to or interest in property to which, but for the order, the child would have been entitled under any intestacy or disposition, whether occurring or made before or after the making of the adoption order, or confer on the adopted child any right to or interest in property as a child of the adopter, and the expressions “child,” “children” and “issue” where used in any disposition whether made before or after the making of an adoption order, shall not, unless the contrary intention appears, include an adopted child or children or the issue of an adopted child.”
However, this position was reversed by the Adoption of Children Act 1949 (‘the 1949 Act’) which provided that adopted children should be treated as the children of their adopters and not of their birth parents:
“9.-(1) The provisions of this and the next following section shall have effect for securing that adopted persons are treated as children of the adopters for the purposes of the devolution or disposal of real and personal property.
(3) In any disposition of real or personal property made, whether by instrument inter vivos or by will (including codicil), after the date of an adoption order-
(a) any reference (whether express or implied) to the child or children of the adopter shall be construed as, or as including, a reference to the adopted person;
(b) any reference (whether express or implied) to the child or children of the adopted person’s natural parents, or either of them shall be construed as not being, or as not including, a reference to the adopted person; and
(c) any reference (whether express or implied) to a person related to the adopted person in any degree shall be construed as a reference to the person who would be related to him in that degree if he were the child of the adopter born in lawful wedlock and were not the child of any other person,
unless the contrary intention appears.
(5) References in this section to an adoption order shall be construed as including references to an adoption order made before the date of the commencement of this Act; but nothing in this section shall affect the devolution of any property on the intestacy of a person who died before that date, or any disposition made before that date.”
The end of section 9(5) therefore contains two time-based restrictions on the application of the 1949 Act – the will had to be made after the adoption order and the disposition had to be made before the commencement of the 1949 Act. However, neither of those conditions were satisfied in this case.
The Adoption Act 1976 (‘the 1976 Act’) also provides that an adopted child shall be treated in law as the child of the adopter and not the child of any other person. Section 39 provides:
“(1) An adopted child shall be treated in law—
(a) where the adopters are a married couple, as if he had been born as a child of the marriage (whether or not he was in fact born after the marriage was solemnized);
(b) in any other case, as if he had been born to the adopter in wedlock (but not as a child of any actual marriage of the adopter).
(2) An adopted child shall, subject to subsection (3), be treated in law as if he were not the child of any person other than the adopters or adopter.”
“39(5) This section has effect—
(a) in the case of an adoption before 1st January 1976, from that date, and
(b) in the case of any other adoption, from the date of the adoption.
(6) Subject to the provisions of this Part, this section—
(a) applies for the construction of enactments or instruments passed or made before the adoption or later, and so applies subject to any contrary indication; and
(b) has effect as respects things done, or events occurring, after the adoption, or after 31st December 1975, whichever is the later.”
“6 (1) Section 39—
(a) does not apply to an existing instrument or enactment in so far as it contains a disposition of property, and
(b) does not apply to any public general Act in its application to any disposition of property in an existing instrument or enactment.”
An existing instrument is one that was made before 1 January 1976: see section 72(1) of the 1976 Act. This therefore prevents the interpretation provision from applying to Henry Hand’s will.
The Adoption and Children Act 2002 repealed much of the 1976 Act but did not repeal sections 36-49 or paragraph 6 of Schedule 2. It contains parallel provisions to the 1976 Act but applies only to children adopted after it came into force on 30 December 2005.
The parties to the claim all agreed that if this case were to be settled on the basis of domestic law alone, the claim would fail.
The European Convention on Human Rights
Article 8 of the Convention provides:
“1. Everyone has the right to respect for his private and family life, his home and his correspondence.
Article 14 provides:
“The enjoyment of the rights and freedoms set forth in this Convention shall be secured without discrimination on any ground such as sex, race, colour, language, religion, political or other opinion, national or social origin, association with a national minority, property, birth or other status.
Article 1 of the First Protocol to the Convention provides:
“Every natural and legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law … The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest …”
The Human Rights Act 1998 and domestic case law
For the Claimants to succeed they had to show not only that they were victims of an infringement of the Convention but also that the Human Rights Act 1998 (‘HRA’) conferred on them a right to seek a remedy for that infringement in the domestic court.
The HRA came into effect on 2 October 2000. Section 2(1) provides:
“2. (1) A court or tribunal determining a question which has arisen in connection with a Convention right must take into account any —
(a) judgment, decision, declaration or advisory opinion of the European Court of Human Rights, . . .”
Section 3(1) provides for how the court must interpret legislation:
“3. (1) So far as it is possible to do so, primary legislation and subordinate legislation must be read and given effect in a way which is compatible with the Convention rights.”
Section 6(1) of the HRA provides that it is unlawful for a public authority to act in a way which is incompatible with a Convention right, and under section 6(3) the court is a public authority.
The Judge in this case considered the case law on the application of the Convention to adopted and illegitimate children, as well as the issue of retrospective application of the HRA, and then considered the following three questions:
(1) What was the act alleged to breach the Convention rights?
The Judge confirmed that people’s rights are infringed not by other individuals but by the actions of an organ of the state, including the legislature. Adopted children have no more right to inherit the estate of their parents than any other child; parents remain free to disinherit some or all of their children for good reason or bad (though the law may step in to alleviate the effect of this in some circumstances).
The Judge considered what could therefore constitute an infringement of the Claimants’ Convention rights in this case. The Judge determined that it cannot be the wording of Henry Hand’s will as that was not on its face discriminatory and was in any event a private act, not an act of the State.
The Judge set out, having considered the applicable case law, that the conduct of which the Claimants were complaining was the failure of the 1949 Act and the 1976 Act to overturn section 5(2) of the 1926 Act in so far as it still applied to Henry Hand’s will. To express it more precisely, it was paragraph 6 of Schedule 2 to the 1976 Act which was the allegedly discriminatory provision. In the absence of that provision, the reference to ‘child or children’ in Henry Hand’s will would have included the Claimants pursuant to section 39(6) (a) of the 1976 Act.
(2) Does the domestic legislation infringe Article 14 in conjunction with Article 8?
The next question for the Judge was whether the domestic legislation as it applied to Henry Hand’s will infringed the Convention. In the Judge’s view it was clear from her analysis of applicable case law that it did.
The ECtHR has consistently held that Article 14, in conjunction with Article 8, precludes legislation which confers more limited rights on adopted children to their adoptive parents’ estate, than are conferred on natural children. The ECtHR has also consistently rejected arguments put forward by respondent governments that the discriminatory law should remain applicable to instruments that pre-date the change in social attitudes which now requires equal treatment for adopted children. The ECtHR addressed the problem of retrospectivity of the Convention in this regard in the case of Marckx v Belgium (appn 6833/74) which found that arguments based on legal certainty or the need to protect the expectations of the deceased and their families must be subordinate to the imperative of equal treatment. Discrimination cannot therefore be regarded as a proportionate response to such concerns.
In this case, the Judge held that the Claimants would succeed in a claim before the ECtHR that the United Kingdom Government had infringed their rights under Article 14 in combination with Article 8 by failing to legislate to ensure that the interpretative provision in section 5(2) of the 1926 Act had no continuing effect where a will falls to be construed after the Convention came into force.
(3) Should the Court decline to follow the ECtHR’s jurisprudence?
The Defendants sought to rely on a line of authority which establishes that there are rare occasions in which an English court may decline to follow the jurisprudence of the ECtHR. In R v Horncastle and another  UKSC 14, Lord Phillips said that the requirement in section 2 of the HRA to ‘take into account’ the Strasbourg jurisprudence will normally result in the domestic court applying the principles that are clearly established by the ECtHR. But he went on:
“11 … There will, however, be rare occasions where the domestic court has concerns as to whether the decision of the Strasbourg court sufficiently appreciates or accommodates particular aspects of our domestic process. In such circumstances it is open to the domestic court to decline to follow the Strasbourg decision, giving reasons for adopting this course. This is likely to give the Strasbourg court the opportunity to reconsider the particular aspect of the decision that is in issue, so that there takes place what may prove to be a valuable dialogue between the domestic court and the Strasbourg court.”
The Supreme Court held that that case, which concerned the admissibility of hearsay evidence in criminal trials, was such an occasion.
Counsel for the Defendant submitted that the case law of the ECtHR was concerned not with an interpretative provision like section 5(2) of the 1926 Act but with domestic provisions which mandated what entitlement the testator’s children should have, regardless of the wishes of the testator. Furthermore, it was submitted that the ECtHR case law would not necessarily apply in the same way to a provision like section 5(2) which does not apply if the testator makes express provision to the contrary.
The Judge did not consider that this case constituted one of the rare occasions on which the court should decline to follow the Strasbourg case law. The Judge referred to the case of Pla v Puncernau v Andora (Appn no 69498/01) (“Pla”) as authority that a breach of the Convention can arise from precisely the kind of domestic interpretative rules applicable to an ambiguous clause in a private instrument. The issue before the Andorran court and before the ECtHR was precisely the issue that arose in this case and reference was made to paragraph 58 of the judgment in Pla where the ECtHR acknowledged that the testatrix could have expressly excluded adopted grandsons but did not do so. The ECtHR did not treat the interpretative effect of the underlying Andorran law as having been incorporated into the wording of the will so as to take that law beyond the bounds of the Convention.
The Judge in this case did not accept that English law’s respect for freedom of testation is necessarily greater than the respect shown in other jurisdictions. English law also enables the testator’s wishes to be set aside in certain circumstances, such as where the beneficiaries all agree to a different disposition or where the testator has failed to make reasonable financial provision for his next of kin in certain circumstances.
The Judge accepted the Claimants arguments that the importance that the ECtHR case law places on treating adopted children as fully the equals of natural children is consistent with the current position under English law.
Is the breach of the Claimants’ Convention rights enforceable under the HRA?
The Judge considered that the crux of this case was whether ‘reading down’ the domestic legislation so as to uphold the Claimants’ rights not to be discriminated against would be giving retrospective effect to the HRA in a way that was inconsistent with the decision of the House of Lords in Wilson v First County Trust Limited (No.2)  UKHL 40.
Wilson is authority for the proposition that the HRA does not generally have retrospective effect and that the HRA was not intended by Parliament to operate retrospectively. However, the Judge carefully examined whether reading down the 1976 Act really would amount to the retrospective application of the HRA.
The more recent case of Re Erskine 1948 Trust  EWHC 732 (Ch) (“Erskine”) was also considered by the court. Erskine concerned a settlement deed made in 1948. The relevant clause provided that the trustees should hold the trust property for the statutory next of kin of the beneficiary at the date of her death if she died unmarried. She died without children. A dispute over the inheritance arose between her adopted nephews and her cousins. Mark Herbert QC sitting as a deputy High Court Judge held that the definition of ‘statutory next of kin’ in the applicable legislation did not include adopted children.
In Erskine, Mr Herbert QC referred to the issue of retrospectivity in applying the Convention to a statutory definition enacted many decades before the HRA came into force and to a private disposition of property rights made even before the Convention was signed. He recognised that if the settlor had expressly excluded adopted children from the trust then the court would be bound to enforce that and would not be infringing the Convention when doing so: “There will however be an infringement if the court creates a discrimination which was not effected by the settlor”.
The Claimants’ submissions focused on Erskine as the leading domestic case on the effect of the HRA on the interpretation of testamentary dispositions and, within Erskine, the reliance on a strongly worded statement of policy of the ECtHR in paragraph 62 of Pla. The Claimants submitted that the Convention could only operate retrospectively if that was fair in the individual case. They then compared the facts of the Henry Hand will trust with factors listed by the judge in Erskine.
The Defendants did not challenge the correctness of Erskine but rather sought to distinguish it on the basis that the judge there had said that if any one of the special features identified in the case had been absent, he would have decided the case differently. The important difference between the facts in Erskine and those in the present case was that in Erskine there were no vested rights whereas under Henry Hand’s will, the Defendants had vested rights in the form of a remainder interest (rather than just an expectancy). More generally the Defendants pointed to differences between the facts in Erskine and the facts in this case to argue that the balance of fairness between these parties came down in favour of the Defendants.
The Judge considered the question of whether it could make a difference in this case that Kenneth died in 2008 (i.e. after the HRA came into effect)? In the Judge’s view, this did make an important difference because the interpretation of Henry Hand’s will was not over and done with before the HRA came into effect. The question of whether Kenneth had any “children” within the meaning of the will only fell to be determined on his death, after the HRA had come into force. This means that to apply the HRA in combination with the wording of the will was not, in the Judge’s view, truly a retrospective application of the HRA. Following the coming into force of the HRA, if the question of whether a beneficiary in the will has children or not arises for consideration, that question must be addressed having regard to the HRA as well as having regard to the wording of the will. Under domestic legislation, the answer is that the adopted children are not included. But the Judge determined that that must now be read in a way which is compliant with the rights that adopted children have not to be discriminated against by domestic legislation because of their adopted status.
The Judge held that it is not a retrospective application of the HRA to apply it to determine whether on the proper construction of the Henry Hand will, Kenneth was to be treated as having died in 2008 with two children or without any children. The only point in time at which that question falls to be asked is when Kenneth dies. The change in the Claimants’ rights brought about by the coming into effect of the Claimants’ right to equal treatment in October 2000 is not so unfair as to lead to a presumption that Parliament did not intend them to be affected in the manner for which the Claimants argued in this case.
The Judge considered that if the 1926 Act remained in effect today in its original form, there would be considerable difficulties in using section 3(1) of the HRA simply to reverse the interpretative force of the last lines of section 5(2) of the 1926 Act. That is because the scheme of that legislation was that adopted children remained the children of their natural parents as a matter of law and did not become the children of their adoptive parents. To revise one aspect of that scheme could well be described as going against the grain of the legislation or being inconsistent with a fundamental feature of the 1926 Act. However, the scheme of the 1976 Act is entirely the opposite. The judge considered that it affirms that adopted children are in all respects to be treated as the children of, and only of, their adoptive parents. It is not going against the grain of that legislation to remove perhaps the last legacy of the old 1926 Act.
The Judge considered that it is well within the court’s power to read down paragraph 6 of Schedule 2 of the 1976 Act to make it compliant with the Claimants’ Convention rights.
The Judge found that the Claimants’ action succeeded and they, and not the Defendants, were entitled to inherit the part of their father’s estate that derived from Henry Hand’s will. The Judge made it clear that the court must respect their Convention right under Article 14 in conjunction with Article 8 of the Convention not to be discriminated against by the application of a legislative provision which caused the ambiguous reference in Henry Hand’s will to his grandchildren to be construed as excluding them as his adopted grandchildren.
The application of the HRA to achieve that result did not, in the Judge’s view, amount to the retrospective application of the HRA in a way which was inconsistent with the decision of the House of Lords in Wilson.
The impact of this case could have a significant effect on potential beneficiaries of wills and trusts who may be adopted or illegitimate children and have historically been excluded from benefiting from wills and trusts.
It is anticipated that the Defendants will seek to appeal this decision and the outcome of any appeal could provide greater certainty on this are of law for practitioners.
Tom Wright MRICS, Associate , Residential Auction, Allsop
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