When a testator decides to bequeath his business to both his widow and former business partner, questions are raised as to exactly how those assets are determined, and whether liability for accrued debts and outstanding taxes are inclusive of such a gift.

Having worked as a house furnisher for many years, the deceased had taken steps to turn his assistant into a partner, so as to enable her to continue running the company after his death, as explained in clause 7 of the will:

“7. I give and bequeath the business of a house furnisher at present carried on by me at 64 Myddleton Road, Bowes Park . . . as to two-thirds to my wife Margaret absolutely and as to the other one-third to Bessie Amy Hull (in consideration of her long and faithful service) for their own use and benefit absolutely and it is my wish that the said Bessie Amy Hull shall carry on and manage the business as she shall think fit.”

As would be expected with any ongoing business, there were a number of financial assets and liabilities, including £6660 in a personal bank account use for private and business transactions, associated stock materials, debts of £608, outstanding client invoices, £252 from a previous commercially used property sale, the freehold property currently used for business purposes and death-related liabilities of £1247.

The question raised by the executors was one in need of clarification regards what constituted business assets and liabilities, and what then lapsed into the residual estate for the benefit of the widow.

Relying upon recent cases such as Re Rhagg and In re Barfield from which to draw lines of demarcation, the judge found himself at odds with how best to separate each from the other, while taking issue with the notion that a testator declares such things as a gesture of goodwill, as opposed to an all-encompassing act of deliberation.

It was also argued that while an air of expectation lay in the mind of the widow, the meaning of residuary was not one of hierarchy, but instead that containing items and assets remaining after dispensation of the estate.

Turning instead to the essence of clause 7, the judge drew note to the testator’s wish for the business to continue, thereby taking a broader view of how each component held within the functioning of any enterprise must be considered as essential to its continued operation, thus ruling that aside from the outstanding taxes owed by the testator, all other items were to fall under the umbrella of the business; and so, nothing would lapse into the residual estate, an ethos underpinned by the words of Simonds J in Rhagg, when he outlined how:

“[T]he substance of the bequest is the assets of the business subject to its liabilities.”


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