Jonathan Ewan Marcus v Edward Quintin Marcus

Sir Anthony Mann: Introduction

1. This appeal requires consideration of the following question. A deed of settlement operates in favour of the “children” of the settlor. There are and were two apparent sons, Jonathan and Edward, but unknown to the settlor at the time he was not the biological father of one of them (Edward), and they were both accordingly treated as his sons. In those circumstances are they both “children”, or does only one of them (the biological one, Jonathan) qualify? In the decision appealed from ( [2024] EWHC 2086 (Ch) ) Master Marsh (sitting in retirement) decided this point of construction in favour of its meaning both individuals in the circumstances of this case. He made a declaration to that effect, and dismissed the action of Jonathan which sought other relief which depended on the contrary conclusion. That meant that the claimant (Jonathan, the biological son) failed in his attempt to exclude his half-brother (as he was found to be – Edward) from the settlement. Jonathan now appeals that determination pursuant to permission given by Richard Smith J in an order of 11 th March 2025.

2. On this appeal, as below, Jonathan was represented by Mr Thomas Braithwaite and Edward was represented by Mr Matthew Mills. They are to be commended for the brevity and clarity of their respective arguments.

3. The facts for the purpose of this appeal are within a narrow compass now that paternity (decided by the Master) is no longer in issue.

4. The settlor, Stuart Marcus, married Patricia on 29 th September 1973. Edward was born on 11 th March 1978 and Jonathan was born on 23 rd December 1981. Stuart died in 2020. The two boys were brought up believing themselves to be full brothers, and Stuart believed that too. He never knew that in fact Edward was fathered by another, with whom Patricia had had an ongoing relationship for a time. As an adult Edward was in fact told about his paternity by his mother in 2010 but this was not passed on to either Stuart or to Jonathan. Jonathan was not told until 2023, by which the time the brothers (as I shall call them) were estranged and litigating over the family company.

5. The settlement in question was created by Stuart on 29 th November 2003. Its subject matter is shares in a family companies which are very prosperous. It is a discretionary settlement and the “Beneficiaries” are defined as follows: “ … (subject to Clauses 5(b)(i) and (ii) below) the following persons whether now living or born hereafter during the Trust Period: (i) the children and remoter issue of the Settlor now in being or born hereafter (ii) the spouses, widows and widowers of such children and remoter issue (iii) any charities”

6. No other provisions of the settlement would seem to be relevant to the construction issue that arises; nor are most of the events which have occurred thereafter. There is one other contemporaneous event which is said to be relevant, which is that Patricia created a settlement in identical terms to her husband’s, both settlements having been brought into being as part of a tax planning scheme. That is relevant because the expression “children” in that settlement would undoubtedly include Edward as her biological child, and it is said that that informs the construction of the same word in Stuart’s settlement deed. The disputes between the brothers over the affairs of the trust and the running of the companies are not relevant to the issue on this appeal. They are set out in the judgment of the Master in the context of wider issues which he had to decide but which are not the subject of, or relevant to, this appeal.

7. The Master actually had before him the issue of paternity, which he decided in favour of Jonathan, holding that in fact Edward was not the biological son of Stuart. He did that after thoroughly considering a significant body of evidence which is described in his judgment but to which I do not need to refer to because his paternity finding is not challenged. He also had before him some estoppel arguments and a technical argument on a subsequent deed of appointment which he did not need to decide, and did not decide, because of his decision on the construction point, which was that the word “children” within the beneficiaries definition encompassed both brothers in the circumstances of this case.

8. The Master reached his decision after considering what can be regarded as standard authorities on the construction of wills (even though this was not a will case) and the relationship of that exercise to the construction of commercial documents – Marley v Rawlings [2014] UKSC 2 at paras 17-23, applying the “testator’s armchair” from Boyes v Cook (1880) 14 Ch D 53 at page 56 as a useful metaphor when considering factual context. It was submitted to him that the expression “children” was, or had become, a term of art, which it was said gave it a presumptive meaning of biological children unless that meaning was displaced by admissible context. At paragraph 97 of his judgment he considered that question was of very limited assistance, preferring to start from the natural and ordinary meaning of the word, which he derived from Lewin on Trusts (20 th Edition) at paragraph 7-023: “Relatives who are not children strictly so called: The expression “children” in a trust for the children of a given person does not at common law include that person’s grandchildren or stepchildren or any persons under a wider understanding of children found in family law (such as a “child of the family”), in the absence of an express provision to that effect or an extended meaning arising from the context. This principle has not been affected by statute in relation to the interpretation of trusts for children.”

9. He considered the principal elements of the factual background to be as follows: “100. Relevant background information that is admissible includes the following: (1) Edward and Jonathan were both raised as Stuart and Patricia’s children. Both children were born within their marriage. (2) Edward’s birth certificate describes Stuart as Edward’s father. (3) Stuart believed Edward was his biological child. (4) There is no indication that Stuart believed he had any other biological children in addition to Edward and Jonathan. (5) In 2003 Stuart was aged 66 and Patricia was aged 60. Patricia accepted in giving evidence that in 2003 she was past an age at which she could produce any more children. The likelihood of Stuart having further children was very small. (6) Stuart had no reason in 2003 to treat Edward and Jonathan differently. Jonathan tried to suggest otherwise when he gave evidence and said he did not agree with the suggestion that Stuart would not have given everything to him. However, he had immediately before that said that “he was fortunate to have kind and loving parents who were fair to both of us.” The evidence is overwhelming that the rifts that emerged later were not present in 2003. (7) Patricia executed a Settlement in materially identical terms and the effect of using the term “children” in her settlement is that both Edward and Jonathan benefit under her settlement.”

10. The Master then considered what the exercise required of him involved: “103 … The test for the court is to take the natural meaning of children and to consider what a reasonable person in possession of the facts and circumstances known or assumed by the parties at the time that the document was executed, and appreciating the overall purpose of the clause and the contract would understand Stuart to have meant by the word. Put another way are the facts and circumstances sufficient to lead the court to move away from the natural meaning of children?” He concluded : “ 106 I consider that the surrounding circumstances point overwhelmingly in favour of a wider meaning than biological child being adopted. A reasonable person in knowledge of the relevant facts would readily conclude that when using “children” Stuart intended this word to be understood as meaning Edward and Jonathan; and not “Edward and Jonathan provided they are in fact my biological sons.” The surrounding circumstances that resonate powerfully when looking at the Settlement through objective eyes are Stuart and Patricia’s age, the apparent stability of their marriage, which had lasted for thirty years, and the family unit, the way in which Edward and Jonathan were treated within the family unit and the purpose for which the Settlement was created. Crucially there was no reason to consider that Stuart might have intended to treat Edward and Jonathan unequally. The inequality that would arise between the two settlements by applying the natural meaning of children is stark. It is right, of course, that in time honoured fashion the person who drafted the settlement provided for a class that left room for expansion rather than using the more direct choice of naming Edward and Jonathan. That drafting decision cannot be ignored. However, it is displaced by the context for the reasons I have given.”

11. In prosecuting this appeal Mr Braithwaite’s skeleton argument centred on the term “children” being a term of art, being presumed to mean biological children. He submitted that there was not sufficient evidence to displace the “strong presumption” that that was its meaning in this settlement and that the factors relied on by the judge in paragraph 100 are at best neutral and certainly not displacing. He therefore submitted that the Master arrived at the wrong answer. “Children” meant biological children in this settlement.

12. His oral argument was differently focused. He started from the premise that the word “children” connotes a class which was potentially variable – it was capable of being widened in number by childbirth and adoption, and it might be unexpectedly widened by the appearance of a hitherto unknown biological child. It is not an appropriate way of describing two particular existing people (Jonathan and Edward). First one has to identify the scope of the class, and then secondly ascertain who in fact is in it. He submitted the Master elided those two questions in concluding, as he did, that “children” meant Jonathan and Edward. A class word which described a class which could be widened in terms of numbers from time to time could not be taken to comprise (“meaning” in the Master’s words) only two specified existing persons.

13. He submitted that once one approached the matter the right way then one then had to look at the matter through Stuart’s eyes. Stuart was (like everyone else at the time apart from Patricia) assuming that Edward was his biological son. That is one of the common assumptions which, even if mistaken, can inform a question of construction – “ … there is no conceptual limit to what can be regarded as background. It is not, for example, confined to the factual background but can include the state of the law (as in cases in which one takes into account that the parties are unlikely to have intended to agree to something unlawful or legally ineffective) or proved common assumptions which were in fact quite mistaken.” (per Lord Hoffmann in BCCI v Ali [2002] 1 A.C. 251 )

14. That being the case, Mr Braithwaite submitted that if one had asked Stuart at the time what he meant by “children” in his settlement then he would inevitably have said “biological children” because he had no reason to question that that would include Edward. So there was nothing there to displace the natural meaning of the word in this settlement. None of the other factors in the Master’s paragraph 100 would be sufficient to displace that either. Contrast that with what his answer to the same question would be had he known that Edward was not his biological child. In those circumstances he would be likely (or at least arguably – Mr Braithwaite did not concede the point) to have said it meant Jonathan and Edward and not biological children, because on this hypothesis, he would be treating his two sons equally even though one of them was not his biological son so he cannot have actually meant “biological children”. Putting this point a different way, since Stuart did not know that Edward was not his biological son, by “children” in the settlement he would have meant biological children but mispredicted the effect of that chosen word. He did not intend his chosen word to have any meaning other than its natural one. It was simply that it just did not work in the way he expected.

15. Based on this reasoning, Mr Braithwaite submitted that the Master asked himself the wrong question. He should have asked to whom the word “children” referred in a context in which it would be assumed to have its normal meaning, and should have found that it would have been intended to mean biological children because Stuart knew nothing that would displace that meaning. That being the case, in answer to the next question, which is who is within the class, he should have answered in terms of just Jonathan because only he fitted within the concept of biological child.

16. Mr Braithwaite submitted that in that way one preserved an effect for the word which must have been intended, namely the possible introduction of newcomers to the class (future adopted, future conceived or future discovered children). As it was, the Master ruled that out as an element of the possible meaning because he held that the expression “meant”, not just “included”, Jonathan and Edward (see paragraph 106).

17. Cleverly constructed though Mr Braithwaite’s argument is, I do not consider it to be right. I start with his original starting point – that “children” is a term of art. Although in the end I do not think it matters, I do not consider it is the right starting point. Like the Master, I am far from convinced that the word “children” should be viewed as a term of art for these purposes. It is true that in Siddall v Castings [1967] 1 QB 302 at p 316 Diplock LJ described it as a term of art, which he had previously defined as being a term which, over time, had acquired a meaning through successive rulings by the court. I am not convinced that in the modern social environment that is any longer correct. However, like the Master, I do not think that that is fruitful debate to have in this case, because even if its artistically determined meaning excludes non-blood related apparent juniors, it is capable of giving way to a wider meaning if the circumstances require it – see Siddall at p 316: “Descendant" is but one of a number of nouns which have been used in countless legal documents for a century or more to identify persons between whom and the deceased a particular family relationship existed. Like "son," "daughter," "children," "issue," "father" and " ancestor," it is one of those nouns denoting family relationship which have become terms of art. In the case of many of these other nouns, it has been laid down in well-known decisions of the courts that, unless there is something in the context of the document or in the surrounding circumstances to indicate the contrary , their meaning does not include persons whose only claim to the described relationship to or through a male is based upon birth outside the bonds of wedlock.” [my emphasis]

18. The same is true of a word with a natural meaning – that meaning can give way to context. So like the Master, I would prefer to start from the normal meaning of the word “child”, which I would accept would not, without more, include someone who is not the biological child of a spouse of the instanced potential parent. Like the supposed term of art, that meaning is capable of being displaced by context, so the all important question is whether in the present case there is or is not something in the surrounding circumstances to indicate another construction.

19. Before going further I should deal with one submission made by Mr Mills. He characterised the Master’s decision as an evaluative one which should only be upset on appeal if the court finds the sort of factors which are necessary to upset such a decision. I do not agree with that analysis. The Master’s decision required him to evaluate evidence in order to decide what he did and did not accept, but when that evidence has been evaluated and findings made then the question of their technical effect on construction of the document in question, and the construction itself, becomes a question of law on which an appellate court is entitled, and indeed obliged, to form its own view.

20. In my view there plainly is a context which displaces the normal meaning and the Master’s conclusion is correct in including Edward as described by the Master. One can look at the situation from various notional viewpoints. From the viewpoint of the settlor, who might be thought to be analogous to a testator viewing the matter from a notional armchair, the position was as the Master saw it. At the date of the settlement he considered both apparent sons to be his biological sons. He treated them as equals and therefore as if they were his biological sons. He would naturally have described them as his biological children and as far as he and everyone else was concerned (apart from his wife and possibly Edward’s father) that is exactly what they were (though it is his personal view which is important for these purposes). If one looks at it from the position of the trustees, who are likely to be privy to the arrangements, the position is the same. And the same is true from the viewpoint of a notional outside observer, if such a notional person is relevant.

21. In that context Stuart chose to use a word (“children”) which, in the real world, described both Edward and Jonathan perfectly. This settlement was intended to operate in the real world, and in that real world (Stuart’s real world in particular) Edward was Stuart’s child. That conclusion is not displaced by the use of a class-defining word. It was a word which Stuart will have considered to be perfectly apposite and which made sense in that world.

22. Mr Braithwaite’s sophisticated argument does not displace that conclusion. He accepts that if Stuart had known of Edward’s parentage but the circumstances were otherwise the same then the class-defining would (or could) encompass Edward as well as Jonathan. The prima facie meaning would be displaced. I struggle to see why the conclusion should be different where Stuart does not know that the “son” he treated as his biological child was not in fact such. The position is the same. Edward was treated for practical, familial and all other purposes as a biological child nothwithstanding the true fact that he was not. Stuart’s intention is exactly the same. If it is a relevant matter (and I am not convinced that it is) he did not “mispredict” the effect of the use of the word “children” more in one instance than in the other. He predicted in both cases that it would include Edward, though in fact the more relevant point is that he intended the word to include Edward. The relevant question is who was Stuart describing, not what was Stuart predicting. I agree fully with the Master in this conclusion, with the result that Edward is one of the settlor’s “children” on the true construction of the settlement.

23. The only point at which I would, with respect, take issue with the Master is his conclusion that the word children “meant” (his word was “meaning”) Jonathan and Edward, apparently to the exclusion of others. I would be minded to acknowledge Mr Braithwaite’s point that the class word is capable of including future born children (unlikely though that might seem) or previously unknown biological children, and possibly adopted children, though I do not need to decide that point. I prefer the analysis to be that the word “includes” Edward. But that leads to the same result – Edward is within the class of Beneficiaries under the settlement.

24. I therefore dismiss this appeal.