I am convinced by Paul and Nicholas but it may not be the whole story.
1 The Sharp litigation is a red herring. Primarily because the residue was exempt. The ratio is in the C of A case at paras 29 and 30, the issue being ”simple to identify but….not easy to resolve”. The court favoured the RSPCA argument, that the pecuniary legacy of the NRB was an amount reduced by first allocating it to the value of the separate gift of a property, which acknowledged that the result could have been nil.
The burden of tax was not addressed but as one gift was free of tax and the other not, the former should have been grossed up.
It was common ground that s20 AJA 1982 did not apply, approved by the Court without further explanation, so it was assumed that “the contents of the will properly construed represent what the testator intended”
2 Now to Clauses W X and Y. The issue is one of construction per the established rules, just as in Sharp (paras 19-22). S.20 might be in point here but the testator’s actions and the divergent view of the legatees is not auspicious.
A perfectly tenable construction of X(b) is that the Sum is nil if any tax is payable. The remarkable outcome is that the testator’s apparent intention to benefit A-E significantly is totally defeated by the words used. This incensed Peter Smith J at first instance in Sharp as it might have done Lord Denning, the maverick boundary stretcher, in his day.
3 It is possible that the modern judicial mind will not stick to the literal interpretation even though it cannot completely re-draft a will (Sharp, para 25).
Sharp endorsed Lord Hoffmann in The Investors Compensation case, quoted in Mr Kessler’s book 14thEd at 4.2-3. ”Interpretation is the ascertainment of the meaning which the document would convey to a reasonable man having all the background knowledge which would reasonably have been available” which he said elsewhere meant “anything which a reasonable man would consider relevant”, as long as it was formally admissible.That would not include evidence of the testator’s subjective intention but see 5 below.
4 Patten LJ in Sharp made much of the fact that the will was drafted by a solicitor who must be assumed to be competent though able to make a mistake (para 22).
Clause W is revelatory and delusionary. The testator or his solicitor or both seemed to believe that the TNRB, and so possibly despite different wording the NRB also, was some species of intangible asset that could be bequeathed to a beneficiary or to two in unequal shares in Clause X. It is just a rate of tax applied to the entire chargeable estate. A rate of tax cannot be bequeathed.
5 It is hard to predict what a court might make of the actual words used given the literal outcome. Interpreting it as a pecuniary legacy of the NRB amount at the date of death entails the potential complications in Andrew Jones’ list. Specific treatment of those matters could surely not be read in. But it might fit the intention. Other ways of avoiding the outcome e.g. a gift of £325k would do too much violence to the actual words.
S.20 AJA may not help, even apart from the time limit, as the solicitor may have correctly understood the client’s intention but simply botched the drafting. S.21 might help if there were cogent evidence of intention provided the language is “meaningless” or “ambiguous” and there is no special time limit. But does a wholly unexpected outcome render the wording so? Unless the solicitor’s file as to intention is helpful “recollections may vary” but a court could prefer one of them. Clause W is meaningless in my view. Clause X is not but do its consequences render it “ambiguous”?
6 If the X gift fails, the tax payable falls on residue, just as it would if it vested. The W gift is nonsense unless it can be interpreted as a pecuniary legacy of the TRNB and even so the tax would fall on residue. If both fail F will have an undeserved windfall to meet it.