Bogg & Ors v Raper & Ors

A trustee exemption clause in a will is construed according to the natural meaning of its words, although unclear language is treated restrictively. There is no inherent improbability in a testator intending to protect executors or trustees from liability for negligence. An exemption for omissions made in good faith may therefore cover negligent omissions where excluding negligence is necessary to give the clause practical substance. A clause referring to wilful or individual fraud or wrongdoing may be construed by reading “or” as “and” where that is necessary to make the wording coherent. The fact that a solicitor or accountant helped prepare the will does not, without more, prevent reliance on the clause. On a strike-out application, the court should construe the clause and then determine whether the pleaded allegations fall within it.

The plaintiffs, beneficiaries and executors of the estate of John Thompson Bogg, alleged that the defendant executors and trustees negligently failed to protect substantial shareholdings, including the controlling interest in Hekla Holdings Ltd. The defendants relied on exemption clauses in the testator’s will and an earlier settlement.

The District Judge struck out some claims but allowed the principal claim to proceed. On appeal, the Vice-Chancellor struck out the amended statement of claim against the relevant defendants and dismissed the action, holding that the claims fell within the exemption clauses. The plaintiffs appealed, challenging the construction of the will’s clause and the rejection of allegations that the solicitor and accountant had improperly procured its inclusion. The central questions were whether clause 12 covered the pleaded omissions and whether the defendants could rely on it.

1. Appeal dismissed. The Court of Appeal upheld the Vice-Chancellor’s order striking out the amended statement of claim against the relevant defendants and dismissing the action, with costs.
2. On a strike-out application involving an exemption clause, the court should construe the clause and examine the allegations to determine whether they fall within it. It is inappropriate to ask merely whether the claimant has an arguable case on construction. If the allegations are obscure so that their scope cannot be determined, they may be struck out as embarrassing.
3. Clause 12 contained four limbs. The third limb, exempting loss arising from any mistake or omission made in good faith, covered negligent omissions. The clause would lack practical substance if it covered only inadvertent omissions. The natural meaning of “made in good faith” was an omission not made in bad faith; if negligence were intended to be excluded, additional words would have been required.
4. The fourth limb was not to be read literally as creating incoherent alternatives. The first “or” in “wilful or individual fraud or wrongdoing” could be read as “and”, so that the exception concerned wilful and individual fraud or wrongdoing on the part of the trustee sought to be made liable. The authorities supported reading “or” as “and” where necessary to make a will intelligible.
5. The clause did not confer a benefit on those who advised on the will. It defined the extent of the trustees’ potential liability and did not permit them to profit from their office. The inclusion of the clause was not, without more, a transaction involving conflicting interests or a reason to deny reliance on it. The will had been admitted to probate, and the alleged procurement issue therefore lacked substance.

• Court of Appeal (Civil Division): allowed the defendants’ appeal to the Vice-Chancellor, dismissed the plaintiffs’ cross-appeal, and struck out the amended statement of claim against the relevant defendants.
• Court of Appeal (Civil Division): dismissed the plaintiffs’ appeal, refused leave to appeal, and ordered costs including the costs of the second respondent.