When a child is born

 

‘See the child.’ So begins Blood Meridian, the late Cormac McCarthy’s brutal tale of the American Southwest, in characteristically terse prose. To which the modern private client lawyer (or lay pedant, a close relation) may ask: whose child? Born in or out of wedlock, and when? Carried to term by the genetic mother or by another? Born in which jurisdiction? To parents domiciled in which jurisdiction?

In practical terms, the question for trusts and estates practitioners will often be framed as whether a person, by reference to their status as a legitimate or illegitimate child of their parents, has a right to succeed to certain property pursuant to a particular disposition of that property. The question of whether a person is even technically the child of a particular person for these purposes may also arise, particularly in surrogacy cases.

For those responsible for identifying who is entitled to benefit from a disposition, many years after the death of the individual settlor or testator whose subjective intention may not be clear from the choice of words used, this issue can be challenging to resolve.

This article focuses on the difficulties with determining who is a ‘child’ in this context, but similar or self-same difficulties may arise with other terminology used in legal documents, such as ‘issue’, ‘grandchildren’ and ‘descendants’.^[1] It also deals with issues arising from surrogacy arrangements, a relatively recent (in historical terms) medical development with which the law has not yet grappled fully, and issues that arise when the laws of more than one jurisdiction are involved.^[2]

Children

The Anglo-Welsh common-law construction of the words ‘child’ or ‘children’ limits the meaning of those words to the naturally born and legitimate children of a person. For ‘grandchildren’ and ‘remoter issue’, this therefore includes only the descendants of such naturally born and legitimate persons, who are themselves naturally born and legitimate.^[3] The requirement to be the ‘naturally born’ child of the parents excludes, among others, adopted children.

The common-law position is that a naturally born child is legitimate if:

• they are born (or conceived) in wedlock;
• they are not born or conceived in wedlock, by the law of the domicile of each of their parents at the time of their birth;^[4] or
• the child’s parents marry after the birth of the child and, under the law of the father’s domicile at the time of their birth and at the time of the subsequent marriage of their parents, the child is legitimated by that marriage.

A child conceived and born during a marriage, conceived before but born after a valid marriage, or conceived during a marriage but born after their parents’ divorce or after the husband’s death,^[5] may be presumed to be legitimate,^[6] although this presumption has always been rebuttable by contrary evidence in proceedings where a declaration of legitimacy or illegitimacy is sought.^[7]

The position of adopted children, including certain property rights of such children, has been regulated by statute since the Adoption of Children Act 1926 and subsequent replacement legislation, now primarily by the provisions of the Adoption and Children Act 2002 (the 2002 Act). The date of adoption and of any particular dispositions therefore need to be considered carefully in each case; although this, and what follows in relation to illegitimate and surrogate children, is all now subject to consideration of the human rights issues discussed further below.

The common-law position in relation to legitimate children was altered in England and Wales in relation to dispositions after 1 January 1970,^[8] pursuant to s.15(1)(a) of the Family Law Reform Act 1969, which, as originally drafted, provided that in relation to dispositions made after that date:

‘any reference (whether express or implied) to the child or children of any person shall, unless the contrary intention appears, be construed as, or as including, a reference to any illegitimate child of that person’.

This provision^[9] reversed the common-law construction of the words ‘child’ or ‘children’ but limited the temporal effect of this reversal to dispositions made after the relevant date. The right for a person to expressly exclude illegitimate children from benefiting from a disposition was preserved and it is therefore sensible when taking instructions to establish and, if necessary, expressly state a testator or settlor’s intentions in this regard. Of course, for historic dispositions where the words ‘child’, ‘children’, etc., are used, this may be challenging.

As to children born via a surrogate in England, the starting point is that the child will be the child of the surrogate and,^[10] if the surrogate mother is married or in a civil partnership at the time of the birth, the spouse or civil partner will be the other parent of the child (unless they did not give their permission to the surrogacy arrangement). Legal parenthood can then be transferred to the intended parents but only after the birth (and within six months of that date), pursuant to s.54 of the Human Fertilisation and Embryology Act 2008 (the 2008 Act) or, alternatively, by adoption by the intended parents of the child.

Provision is then made for the rights of a child, subject to an order under the 2008 Act,^[11] which are essentially those set out in the 2002 Act. Most relevant for our purposes is that such a child is to be treated as the legitimate child of the parents in whose favour such an order is made and:

‘Subject to the provisions of this Chapter…, this section—

(a)   applies for the interpretation of enactments or instruments passed or made before as well as after the making of the parental order, and so applies subject to any contrary indication, and

(b)   has effect as respects things done, or events occurring, on or after the making of the parental order’.^[12]

Impact of human rights legislation

The statutory position, although arbitrary, was at least relatively clear. Practitioners in England, however, must also now grapple with the impact of the Human Rights Act 1998 (the 1998 Act), particularly s.3(1), which provides that:

‘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.’

This provision gives domestic force to the 1950 European Convention for the Protection of Human Rights and Fundamental Freedoms (the Convention). Article 8 of the Convention provides for a right to respect for private and family life. Article 14 prohibits discrimination on any ground, including by reason of their birth or other status.

In Marckx v Belgium,^[13] a decision of the European Court of Human Rights (ECHR), as a result of certain features of the Belgian Civil Code, the applicant mother and daughter challenged, inter alia, the need for the mother to:

• formally accept parentage, when such a step was not required for children born legitimately; and
• adopt her illegitimate daughter to secure for her certain rights, including inheritance rights.

The majority decision of the ECHR held that matters of intestate succession and dispositions of property between near relatives were a key part of ‘family life’ within art.8. This author doubts there would be many in the field of private client law who would disagree with this proposition. Therefore, taken in conjunction with art.14, the distinctions made between legitimate and illegitimate children in the Civil Code breached the rights of the daughter. As to the temporal effect of this decision, a concern of the Belgian government, the majority judgment stated:

‘The European Court of Human Rights interprets the Convention in the light of present-day conditions but it is not unaware that differences of treatment between “illegitimate” and “legitimate” children, for example in the matter of patrimonial rights, were for many years regarded as permissible and normal in a large number of Contracting States ... Evolution towards equality has been slow and reliance on the Convention to accelerate this evolution was apparently contemplated at a rather late stage … Having regard to all these circumstances, the principle of legal certainty, which is necessarily inherent in the law of the Convention as in Community Law, dispenses the Belgian State from re-opening legal acts or situations that antedate the delivery of the present judgment.’

This at least avoided the effect of the judgment applying retrospectively to the accession of Belgium to the Convention (in 1955), rendering the distribution of all estates since that date open to challenge.

The next key decision is Pla and Puncernau v Andorra.^[14] Here, the ECHR was asked to consider a will that provided for a legacy to a son or grandson of a ‘lawful and canonical marriage’. The relevant will was made in 1939 and the testator died in 1949. The domestic Andorran courts were divided on whether an adopted son could inherit. The appellate court decided he could not. Again, art.8 in conjunction with art.14 were in point.

Pla concerned the interpretation of a private instrument, namely a will. However, the ECHR held that the interpretation of the will by the High Court of Justice of Andorra deprived the adopted son of his right to inherit and that this involved a violation of his art.8/14 rights. The leading judgment said, in short, that as the will in question required interpretation but made no express distinction between biological and adopted children, it was not necessary to interpret that will in such a way as to deprive the adopted child of the same rights as a biological child. This introduced the idea of a ‘dynamic’ interpretation of private documents by a domestic court with a view to protecting an individual’s Convention rights.^[15]

Treatment of the human rights arguments in England

The first attempt to invoke such Convention rights in England was made by Timothy Upton. The relevant will was made in 1930, with one codicil made in 1935. The testator died in 1937. Upton was the illegitimate son of the testator’s eldest son and claimed an entitlement on his father’s death in 2000. The executors considered that, as an illegitimate child, he was not entitled under the 1930 will and codicil.

The court at first instance agreed with the executors.^[16] The provisions of the Adoption Act 1926 then applied, which provided that the words ‘child’ or ‘children’ should not include an adopted child unless the contrary intention appeared.^[17] The terms of the Adoption Act 1949 (the 1949 Act), which reversed the position, did not apply to dispositions before the coming into force of that Act. The England and Wales Court of Appeal refused permission to appeal, primarily on procedural grounds, albeit Lord Justice Parker also noted:

‘I should say that I cannot see that the proposed appeal, even if it were allowed to proceed, has any real prospect of success. Indeed, the judge’s conclusions as to the effect of English statute law are in my judgment plainly right. Nor, for that matter, can I see any substance in the applicant’s arguments in relation to his human rights. The judge construed the Testator’s Will in accordance with English law, as he was required to do.’

Upton’s attempt to appeal directly to the ECHR also failed, although primarily based on his failure to follow domestic procedural rules before coming to the ECHR.^[18]

The first important English case was therefore Re Erskine 1948 Trust,^[19] a decision of Mark Herbert KC sitting as a deputy England and Wales High Court judge. This involved the interpretation of a 1948 inter vivos settlement for, ultimately, the ‘statutory next of kin’ of a beneficiary. Could the adopted nephews of the beneficiary, who died childless in 2010, take under this provision?

On its terms, the provisions of the 1949 Act and subsequent legislation did not assist due to the express limitation in relation to dispositions made before that legislation came into force. Nevertheless, the adopted nephews referred to their Convention rights and the approach adopted by the ECHR in Pla and other cases.

The judge noted that if the settlor had expressly included provisions that discriminated against adopted children, the court would have no right to interfere with such provisions by reference to the adopted children’s Convention rights. He also noted the issue of the potentially ‘retrospective’ effect of such interference in relation to rights and obligations acquired by individuals before any Convention rights were given domestic force in England in 2000. Following Wilson v First County Trust Ltd (No. 2), ^[20] the provisions of the 1998 Act were not generally retrospective but the judge noted that they could be applied retrospectively, in his view, where to do so would not cause unfairness.

The judge had considerable concerns about the way in which the ECHR approached the decision in Pla but noted his obligation to take into account judgments or decisions of that court. The judge decided that, when being asked to construe the provisions of the 1948 settlement ‘now’, he could and indeed should do so (in the absence of any express contrary indications in the settlement) in a way that did not discriminate against the adopted nephews.

Then came Re Hand’s Will Trust,^[21] about which much has already been written. This related to a will made in 1946 by a testator who died in 1947, leaving a one-third share of his estate to each of three children for life, with the remainder to the children of each such child as attained 21 years of age.

One of the testator’s children had two adopted children. Could they be treated as his children under the 1946 will? Under the law applicable at the time the will was made and when the testator died, the adopted children were not to be treated as children for the purposes of the will. The adopted children invoked their art.8/14 rights. In short, Justice Rose held that the adopted children should be treated as equals with the natural born grandchildren of the testator. They were entitled to a remedy ‘reading down’ of the domestic legislation, which limited the temporal effect of such legislation so that any discrimination was avoided.

The decision in Re Hand’s has not been without criticism.^[22] It has been followed in the case of Re Druce (JC) Settlement,^[23] however, in relation to illegitimate children on the same basis as for adopted children in Re Hand’s. In the absence of higher authority to the contrary, this represents the English position. It nevertheless leaves executors and trustees with residual difficulties as to how they should administer the trusts, absent a declaration of the court.

Practical options for trustees

One option to resolve matters, where such powers are available, is for trustees to exercise their powers proactively to resolve any uncertainty around a person’s status.

Where, for example, a person who clearly falls within the category of current beneficiaries has children whose status is less certain, then provision may be made for those children by way of exercise of a power to apply capital for the benefit of the relevant beneficiary. Otherwise, the trustees may have an express power to add beneficiaries or amend the terms of the trust, which can plainly be used to put any particular person’s status as a beneficiary, at least, beyond doubt.

‘Benefit’ in this context has been held to have a wide meaning and is not limited to direct financial provision for a beneficiary, as in Re Clore,^[24] and indeed in cases directly concerning potential provision made for illegitimate children, in circumstances where illegitimate children could not otherwise benefit.^[25] The exercise of a power of appointment to confer benefit on an illegitimate child of a beneficiary was expressly approved by the court in the relatively recent case of PQ v RS.^[26] If the trustees are unsure of the extent of their powers or if the decision is in any event a particularly ‘momentous’ one, they can, of course, seek directions or approval for their decision from the courts. There may be many reasons why such a decision would not be straightforward, including reasons not necessarily considered by parents who, understandably, might not be focused on technical considerations when pursuing their primary goal of having children. For example, certain US states are considered leaders in having well-regulated surrogacy arrangements, which can be attractive for foreign intended parents. A child born to US parents in the US, however, will be a US citizen from birth and this may give rise to additional difficulties from a non-US trust administration perspective.

It is difficult, however, in cases where the trustees do not have the same flexible powers or where there is no beneficiary for whom those powers can be exercised, absent a declaration confirming if the persons concerned are beneficiaries. Many families may, understandably, wish to avoid an ‘all or nothing’ outcome and, potentially, hard-fought litigation.

The international angle

The picture is not entirely clear when it comes to how offshore jurisdictions, whose laws now govern a large number of substantial trusts or are where those trusts are administered, might approach the above issues.

It is possible that the courts of those jurisdictions will be influenced by the approach of the ECHR and English courts, although that will depend to a large degree on the extent to which they have adopted Convention rights or have similar constitutional protections as part of their domestic law.

A key question, in addition to those discussed above, when such cases are dealt with in those courts is whether the determination of a person’s status, for the purposes of determining the effect of the relevant disposition, is determined in accordance with the law of the relevant person’s domicile or the law governing the trust.

The (relatively) settled English private international law position seems to be as follows, as stated in Dicey as rule 120:^[27]

‘(1)  A child born anywhere in an opposite-sex marriage recognised as valid under the English rules of the conflict of laws is (or may be presumed to be) legitimate in England.

(2)  A child not so born is (semble)^[28] legitimate in England if, and only if, he or she is legitimate by the law of the domicile of each of his or her parents at the date of his or her birth.’

This is the approach generally adopted in the English cases when resolving issues of succession to property, with an impressive vintage. In Re Andros,^[29] in determining whether a relative legitimated according to the laws of Guernsey could take under an English will, Judge Kay (referring to even earlier authority) held that:

‘This will being an English will must of course be construed according to English law. That law requires that all who take under a gift to sons of a named father should be legitimate … It must now be treated as settled that any person legitimate according to the domicil of his father as his birth is legitimate everywhere within the range of international law for the purpose of succeeding to personal property.’

What if a child is not legitimate according to the domicile of both parents? In Green v Hon E Alexander,^[30] applying the rule as stated in Dicey, Justice Floyd noted this may be too restrictive, but not being required to determine the point in that case this comment remains obiter dictum.^[31]

The million (or billion) dollar question for offshore cases here is likely to be whether the courts would adopt the same approach in circumstances where the beneficiary is legitimate in the jurisdiction of their parents’ domicile but would not be so considered under the proper law of the trust.

Conclusion

The above, non-exhaustive discussion of issues arising out of the different ways in which children might now be conceived and circumstances in which they are born demonstrates the unsettled state of the law in this area.

As long as any distinction remains between legitimate and illegitimate children, particularly in jurisdictions in which a disposition of property may have a long shelf-life (e.g., where there is no rule against perpetual settlements) and which may need to be reinterpreted for different generations of a family, it is likely to continue to trouble trustees, executors and their advisors for some time yet.