Poorly worded trust lead to court case

Just read an interesting synopsis of a law case where a widow ended up not getting the marital home - brief courtesy of threesixtyservices. I find these case studies fascinating reading but I'll let you make your own judgment. It certainly demonstrates that to avoid such situations it's important that qualified professionals are involved in the drafting of legal documents such as trusts and wills.

In 1988 Dr Akash Chopra, a divorced man, and his sister, Angela, bought a house for £231,000 with Dr Chopra contributing £72,000, Angela £2,000, and the rest being mortgaged. Dr Chopra and his sister were registered as joint owners on the basis of tenants in common (upon the trust declared by a deed). It is this deed that the judge in the High Court referred to as "on any footing, a most unusual and unhappily drafted document" that resulted in the Court proceedings.

The deed provided that Dr Chopra and Angela were to hold the property on trust to sell with the power to postpone sale, and upon the sale of the property to hold the net proceeds of sale on trust for themselves as tenants in common in the proportions specified (75% in favour of Dr Chopra and 25% in favour of Angela). This was in clause 1 of the deed.

The problems arose because the trust deed also included a provision that "upon the death before sale of either one of the owners the trustees shall hold the property upon trust for the survivor who shall thereupon be entitled to the whole proceeds of sale absolutely". This was in clause 4 of the deed.

After purchase of the property, Dr Chopra lived in the house. He subsequently met his second wife, Jennifer, who moved in and they married in 2001. In his will he named his wife as his executor and sole beneficiary. He died in September 2004. The house was unsold at his death as it was still their matrimonial home. It was sold in February 2008 for net proceeds of just over £340,000.

Dr Chopra’s widow, Jennifer, claimed that since clause 1 of the trust deed gave Dr Chopra an absolute interest in the share of the house, clause 4 dealing with the trust arising on death should be rejected as repugnant to that disposition. Alternatively, she claimed that clause 4 should be rejected as a purported testamentary disposition but one that was void for want of compliance with section 9 of the Wills Act 1937.

Angela´s claim was that as the house was unsold at her brother´s death she became absolutely entitled to it and its proceeds of sale under clause 4 of the trust deed.

Both the judge in the first instance and the Court of Appeal found in favour of Angela, despite acknowledging that clause 4 did not sit well with the provisions of clause 1. However, the Court decided that it was impossible to focus on clause 1 of the trust in isolation and it was necessary to interpret the trust as a whole. It was obvious that the intentions of the brother and sister were as expressed in clause 4 which was deliberately included in the deed and therefore it could not be treated as void. As things stand, the entire proceeds of the sale went to Dr Chopra’s sister.