Lilleyman v Lilleyman

This is an application by Mrs Barbara Lilleyman for reasonable provision out of the estate of her late husband Roy Lilleyman. The defendants Nigel and Christopher Lilleyman are the deceased’s two sons by an earlier marriage, and are both the executors and principal beneficiaries under his last will dated 20 May 2008.

Mr and Mrs Lilleyman were married for only two and a quarter years before his premature death from heart-related illness aged 64 in January 2010. It is common ground that his net estate for the purposes of Sections 8 and following of the Inheritance (Provision for Family and Dependants) Act 1975 is worth a little in excess of £6m. The result is that this case is, in the language of divorce litigation, a ‘big money – short marriage’ case. The result of those two features, and the requirement under Section 3(2) of the Act to have regard to the provision which the applicant might reasonably have expected to receive if the marriage had been terminated by divorce on the day of the deceased’s death, is that the parties have approached this case with fundamentally different views as to its appropriate outcome which have, most unfortunately, proved to be irreconcilable.

There is recent Court of Appeal authority as to the proper approach to the resolution of big money - short marriage Inheritance Act cases such as the present, in the form of Cunliffe v Fielden [2006] Ch 361. Judgment in that case was handed down (in December 2005) shortly before either the hearing or the publication of the decision in the leading big money – short marriage divorce case, namely Miller v Miller [2006] 2A C 168. The Cunliffe case was referred to in argument in Miller v Miller, but not mentioned in their Lordships’ speeches.

The essential difference separating the parties in the present case was whether, as Miss Evans-Gordon for the defendants submitted, reasonable provision was to be identified solely by reference to the claimant’s reasonable needs, including a need for financial security for the rest of her life or whether, as Mr Sartin submitted for the claimant, reasonable provision called for her to be given a substantial share in what had been their matrimonial property, in excess of her reasonable needs. For the purposes of those opposing submissions Miss Evans-Gordon relied mainly upon Cunliffe v Fielden, whilst Mr Sartin relied primarily on Miller v Miller.

There were only limited areas of factual dispute between the parties. Mrs Lilleyman herself provided four witness statements and was cross-examined at length. She was a quiet and generally impressive witness, prepared in particular to be realistic rather than to exaggerate about her needs. Generally, I found her evidence to be reliable in relation to the matters upon which she was challenged, save for an apparent mis-recollection in her written evidence on one aspect of the chronology during the period between the commencement of her relationship with Mr Lilleyman and their marriage, which was cleared up in cross-examination.

Mrs Lilleyman relied upon the written evidence of her sons Andrew and Robert. Robert’s evidence was accepted without cross-examination. Andrew was briefly cross-examined. Again, he seemed to me to be a reliable witness, doing his best to assist the court.

Mrs Lilleyman called a number of other witnesses, none of whom were cross-examined, but whose evidence added nothing of substance to the resolution of the small areas of disputed fact.

Both the defendants gave evidence and were cross-examined. Subject to one matter, I found the evidence of both of them to be reliable. My reservation concerned a payment of £160,000 to Christopher by cheque on 16 July 2004, drawn on his father’s bank account. The relevant chequebook stub described it as a loan, whereas (save for £10,000) Christopher had described it as a distribution from his mother’s estate by his father as her executor. For reasons which will become apparent, I have not found it necessary to resolve that issue, but I did not find Christopher’s explanation for the description on the cheque stub convincing.

The defendants did not rely upon other witness evidence in relation to the matters of factual dispute. They did however rely upon, and call for cross-examination, the expert evidence of Mr Peter Kennan FCA, a partner in Hawsons, a long-standing Sheffield-based firm, concerning the value at various relevant dates of the main assets in the estate, namely shareholdings in three private companies. Mrs Lilleyman relied upon a report prepared by Annette Barker FCA, a director in KPMG, but she was not tendered for cross-examination. I found Mr Kennan to be a well-qualified, independent and reliable expert, upon whose opinion as to the value of those shares I could, as in the event both parties did, rely with confidence. The only slight shortcoming in his evidence was that, through pressure of time which was in no sense his fault or that of the defendants, he was obliged to rely in his supplemental report upon his own understanding of relevant historical commercial property values, rather than, as he would have preferred, upon the assistance of a qualified independent real property valuer. That did not detract from the reliability of his evidence to any significant extent.

As frequently happens in disputes between the surviving spouse of a second marriage and the children of an earlier marriage about the deceased’s estate, the parties did in their written evidence descend into a limited exchange of irrelevant and unfortunate allegations about aspects of the deceased’s and the claimant’s conduct which, I have no doubt, contributed to their inability to compromise their differences. To their credit however, they resolutely avoided descent into allegations about those irrelevant matters in oral evidence during the trial. Furthermore, sensible co-operation and hard work between their respective legal teams, and counsel in particular, led to a very substantial narrowing of the apparent differences of relevant fact during the course of the trial, with the consequence that it was concluded in only three-quarters of the originally estimated time.

Mr and Mrs Lilleyman were born within three months of each other, in September 1945 and January 1946 respectively. They were each previously married, and each had two sons by those first marriages. Mrs Lilleyman’s first marriage ended in separation in 1999, decree nisi in August 2005 and decree absolute one month later. Mr Lilleyman’s first marriage ended with the death of his wife Judith in January 2004. He was by then a successful and, by all accounts, hardworking businessman, and the 100% shareholder in two companies engaged in the steel stockholding business. The first (in time) Rigby Wireworks & Co (1982) Ltd had been formed to acquire part of the business of family companies which had gone into liquidation in 1982. The second, John Shackleton (Sheffield) Ltd (“Shackleton”) was acquired in 1990. Mr Lilleyman formed a third company, Apollo Metals Ltd (2004) as a joint venture company with his two sons during the year after his first wife’s death. Nigel Lilleyman had made his career working full-time in the family business from 1990. Christopher Lilleyman started working part-time in the business in 2004, and increased his commitment as his father’s health declined. The business also provides employment for their uncle Ian and their cousin Jonathan, with a total workforce (by 2011) of about 30.

Mr and Mrs Lilleyman met each other in the Spring of 2004 at a social club. They were at that time each living in their former matrimonial homes, Mr Lilleyman at Draycott Place, Dronfield, Sheffield (“Draycott”) and Mrs Lilleyman at 12 Robinson Drive, Worksop (“Robinson Drive”). Following the breakdown of his marriage, Robert King (Mrs Lilleyman’s son) was also living at Robinson Drive. Mrs Lilleyman was earning a modest income from two part-time jobs. She eventually obtained sole ownership of Robinson Drive as part of the divorce settlement with her former husband, although this was not finalised until December 2005.

Mr and Mrs Lilleyman soon became friends after their meeting in 2004. They had formed a relationship by the end of the year, and went on holiday together in January 2005, when Mr Lilleyman suffered what then appeared to be a mild heart attack for which he later had stents fitted, and from which he appeared then to make a full recovery. In April 2005 Mrs Lilleyman gave up one of her two jobs at Mr Lilleyman’s request, so as to be able to spend more time with him. By the end of the year they had decided to get married. In December 2005 they became engaged. They decided to find a new house to live in together, rather than to live in either of their respective homes. For that purpose they found 34 Water Meadows, Worksop (“Water Meadows”). In December 2005 Mr Lilleyman acquired it for £267,500, initially in his sole name, with the assistance of a bridging loan from his companies.

Water Meadows required considerable renovation, which was carried out mainly at Mr Lilleyman’s expense but with a contribution of some £3,500 from Mrs Lilleyman. There is an issue whether the renovations cost £35,000 or £67,000. To the extent that it matters, I consider it probable that the higher of those two figures is the more accurate. The progress of the renovations, together with the need to find somewhere else for Robert to live, delayed the Lilleymans’ move into Water Meadows until June 2006. There is an issue when, for the purposes of measuring the duration of their marriage, they began co-habiting together with a view to marriage, otherwise than on a trial basis: see GW v RW (unrep 18 March 2003) per Nicholas Mostyn QC (sitting as a Deputy Judge) at paragraph 33. Mrs Lilleyman said that they co-habited at Robinson Drive from December 2005. Christopher said that his father maintained a presence at Draycott, including keeping his clothes there, until he helped him move to Water Meadows in June 2006. In cross-examination Mrs Lilleyman accepted that, at least for part of that six month period, Mr Lilleyman was living only part-time with her at Robinson Drive. Bearing in mind that the delay in their moving into what was to become their matrimonial home was occasioned mainly by the need to renovate it, I consider it reasonable to treat most of that six month period as one of cohabitation between them, although it is unrealistic and unnecessary to put any precise date upon its commencement.

The problem of what to do about Robert was resolved by the purchase in Mr and Mrs Lilleyman’s joint names as tenants in common in equal shares of a property called Lea Court for £138,000, in late July 2006. There is a dispute about the beneficial ownership of Lea Court, the resolution of which requires me to deal with the facts concerning its purchase, subsequent occupation and the payment by Robert of rent for its occupation, in some detail.

There is a typed memo dated 28 July 2006 referring to Lea Court, of which a copy signed by Robert survives, recording what Mrs Lilleyman described in evidence as the arrangement which had been reached between the three of them. It describes the “Value Paid” of £138,000 as having been contributed as to £125,000 by Mr and Mrs Lilleyman (she then being described as Mrs B King) and as to £13,000 by Robert (described as Mr R J King). It records that Lea Court was to be rented to Robert at £200 per month and continues:

“This is on the understanding that after eight (8) years (2014) or before, the loan of £125,000 is repaid to the above, i.e.

Mr R J King to –

Purchase property at £125,000 by way of Mortgage etc

Or

Property goes on market to sell.”

The document concludes with a prohibition on sub-letting, alterations or repairs without ‘owners consent’.

At the time of the purchase of Lea Court, Mrs Lilleyman was unable to make a substantial contribution of her own, because she had yet to find a buyer for Robinson Drive, an earlier attempted sale having fallen through. Thus Mr Lilleyman funded the whole of the £125,000 referred to in the note as having been provided by them jointly.

Robert moved into Lea Court on completion and commenced paying the agreed rent to a joint account of Mr and Mrs Lilleyman, from which it was initially paid out to Mr Lilleyman. I will return to the legal consequences of these arrangements later in this judgment.

By the time that Mr and Mrs Lilleyman had moved into Water Meadows, Mr Lilleyman had already transferred it into their joint names, again as tenants in common in equal shares. He had also made payments amounting to £35,000 to enable her to redeem a mortgage over Robinson Drive. She had in the meantime paid him the proceeds of a Friends Provident endowment policy in the sum of £17,500.

In April 2007 Mr Lilleyman purchased an apartment in Bournemouth known as 25 Dunhome Manor (“Dunhome”) in his sole name. There is a dispute as to the purpose for which it was bought. Mrs Lilleyman said that he bought it as a second home for them, to live in between April and September, while continuing to live at Water Meadows between October and March. The defendants say that it was purchased as a holiday home for all the family, by which they meant Mr and Mrs Lilleyman, them, their wives and their children. I accept Mrs Lilleyman’s evidence as to the reason for its purchase. This did not exclude Mr Lilleyman from inviting his sons to make occasional use of Dunhome with their families, but that was not why it was purchased. In the event, it is clear that Mr and Mrs Lilleyman did not spend more than about three weeks at a time at Dunhome, about three times a year. Mrs Lilleyman put this down to the deterioration in Mr Lilleyman’s health which became more marked in mid 2007. I accept that evidence.

In June 2007 Mrs Lilleyman managed to sell Robinson Drive for net proceeds of £223,000 odd. From this she paid £175,000 to Mr Lilleyman, which she described as comprised of £100,000 as her contribution towards Water Meadows and £75,000 by way of part-repayment for Mr Lilleyman’s funding of the bulk of the purchase price of Lea Court. Later in 2007 she made further payments to him, or at his direction, which she described as designed to reduce her residual liability to him of £50,000 in connection with Lea Court, and signed an acknowledgment of debt to him in the sum of £20,000, containing a provision that it should cease to be repayable in the event of his death.

The precise details of these further arrangements by which Mrs Lilleyman said that she discharged her obligation to Mr Lilleyman in relation to Lea Court do not matter, since I accept her evidence that, whether or not he was fully repaid, they both later agreed that nothing further was to be treated as owing by her to him in that respect. Unfortunately, this was not followed by any transfer by Mr Lilleyman to Mrs Lilleyman of his beneficial half share in Lea Court, with the result that the defendants as his executors have claimed it as an asset in his estate.

I consider nonetheless that, subject to Robert’s option, Mrs Lilleyman ought to be regarded as the sole beneficial owner of Lea Court to the exclusion of her husband’s estate, because of her payments to him on account of it during his lifetime, and their agreement that he was to be regarded as having been fully repaid his outlay in respect of that property. It was implicit in those arrangements that his participation in the Lea Court project was, or was later agreed to have been, as a lender rather than an equity investor.

Mr Lilleyman suffered further heart trouble in mid-2007, which led to him being fitted with a pacemaker and to what turned out (with the benefit of hindsight) to be a temporary respite. The Lilleymans were married in September. By then Mrs Lilleyman had, at his request, given up her remaining part-time job.

In 2008 Robert began co-habiting at Lea Court with his girlfriend and, because she was also earning, it was agreed that his rental payments should be increased to £300 per month.

In May 2008 Mr Lilleyman made his last will. He did not inform Mrs Lilleyman of its contents, a summary of which, for brevity, I will defer until the point in the chronology at which it took effect.

Mr Lilleyman’s health began its final descent towards his death in late 2008. It is convenient first to describe the pattern of life which the Lilleymans had established by then, before it became increasingly distorted by his failing health. They lived mainly at Water Meadows, a three bedroom recently re-fitted, comfortable but not ostentatious bungalow, and enjoyed the occasional use of a well-furnished apartment in Bournemouth. In addition to that they took two holidays a year, one of which was usually a cruise. Mr Lilleyman worked full time at the family’s re-established steel stockholding business, and their lifestyle was largely funded from his remuneration as a director of the companies through which it was carried on. They ran two cars. They had each committed a substantial proportion of their assets to the marriage, although for the most part they did not mingle their cash in joint accounts, save for one through which they paid part of their housekeeping expenditure.

In early 2009 the Lilleymans decided to start accumulating Robert’s rent payments, together with an additional £200 per month contributed by Mr Lilleyman, in a fund designed eventually to assist Robert in raising a deposit as the basis for his eventual purchase of Lea Court. They did this without telling Robert what they were doing.

Mr Lilleyman’s health deteriorated continuously during 2009, although he continued for as long as he could to attend the company’s offices each day, albeit becoming increasingly reliant upon his sons’ work there. After admission to hospital in November, he died aged 64 on 6 January 2010.

Mr Lilleyman’s will provided as follows. By Clause 2 he appointed his sons to be his executors and trustees. By Clauses 3, 4 and 5, he gave his gold watch, china collection and car to them. By Clause 6 he gave his first wife’s jewellery to his four granddaughters. By Clause 7 he gave the remainder of his personal chattels, including a Dinky toy collection worth some £17,000 odd, to Mrs Lilleyman. By Clause 8 he gave £25,000 to each of his then living grandchildren.

By Clause 9 he gave limited rights of occupation to Mrs Lilleyman in respect of both Water Meadows and Dunhome subject (a) to her paying all outgoings in respect of Water Meadows and keeping it repaired and insured and (b) to losing her rights of occupation should she re-marry, co-habit or fail to reside there, or in the Trustees’ view cease to perform her obligations under (a) above.

Subject to those limited rights of occupation, by Clause 10 he gave his interest in both those properties, and the remainder of his residuary estate, to his two sons.

Mr Lilleyman had also set up a fund from which, in the event, Mrs Lilleyman is entitled to receive a fixed (rather than index linked) annuity amounting (at her present tax rate) to £378.72 per month.

It is well settled, and common ground, that the Act imposes a two-stage task upon the court when addressing a claim for financial provision. Leaving aside cases of total or partial intestacy, the first question is whether the will made reasonable financial provision for the claimant. The second question, which arises only if the first is answered in the negative, is whether and to what extent the court should exercise its own wide powers in that respect.

In relation to applications by a surviving husband or wife of the deceased, the expression “reasonable financial provision” means:

“Such financial provision as it would be reasonable in all circumstances of the case for a husband or wife to receive, whether or not that provision is required for his or her maintenance.” See Section 1(2)(a).

No issue turns in the present case upon the nature of the court’s wide powers conferred by Section 2 of the Act. Nor is there any issue as to the legal meaning of the definition of the deceased’s net estate, which is the aggregate of the assets in relation to which the court’s powers are conferred.

Section 3(1) requires the court, in conducting both stages of its analysis, to have regard to a list of the following seven matters:

“(a)

the financial resources and financial needs which the applicant has or is likely to have in the foreseeable future;

(b)

the financial resources and financial needs which any other applicant for an order under section 2 of this Act has or is likely to have in the foreseeable future;

(c)

the financial resources and financial needs which any beneficiary of the estate of the deceased has or is likely to have in the foreseeable future;

(d)

any obligation and responsibilities which the deceased had towards any applicant for an order under the said section 2 or towards any beneficiary of the estate of the deceased;

(e)

the size and nature of the net estate of the deceased;

(f)

any physical or mental disability of any applicant for an order under the said section 2 or any beneficiary of the estate of the deceased;

(g)

any other matter, including the conduct of the applicant or any other person, which in the circumstances of the case the court may consider relevant.”

It is evident from sub-section (g) that there is no limit to the matters to which, in any particular case, the court may have regard.

Neither Section 3 nor any other part of the Act imposes any hierarchy among the matters to which the court must have regard. Each of them may be of infinitely variable weight, on the particular facts of any given case.

In relation to an application by a surviving spouse, Section 3(2) requires the court additionally to have regard to:

“ (a) the age of the applicant and the duration of the marriage;

(b)

the contribution made by the applicant to the welfare of the family of the deceased, including any contribution made by looking after the home or caring for the family;”

Section 3(2) also requires the court, in the case of an application by a surviving spouse, to:

“Have regard to the provision which the applicant might reasonably have expected to receive if on the day on which the deceased died the marriage, instead of being terminated by death, had been determined by decree of divorce.”

For brevity, I shall refer to this requirement as “the divorce cross-check”.

Section 3(5) requires the court to take into account the facts as known to the court at the date of the hearing. Section 3(6) requires that, in considering the financial resources of any person, the court shall take into account his earning capacity and in considering the financial needs of any person, the court shall take into account his financial obligations and responsibilities.

It is not suggested in the present case that Mrs Lilleyman retains at the age of 66 any significant earning capacity. There was, however, a sharp dispute as to whether the expression “financial obligations and responsibilities” included moral or merely legal obligations and responsibilities. The expression “obligations and responsibilities” appears in both Sections 3(6) and 3(1)(d), but by contrast with Section 3(6) it is not in the earlier provision preceded by the word “financial”.

It is well established that the phrase “obligations and responsibilities” in 3(1)(d) includes moral rather than merely legal obligations and responsibilities. That is best exemplified by the Court of Appeal’s decision in Re Goodchild dec’d [1997] 1 WLR 1216, where the moral obligation which the deceased assumed in favour of his first wife’s only son, by their making of mirror rather than mutual wills, was successfully prayed in aid by the son in an application under the Act.

In my judgment the same liberal interpretation should be applied to Section 3(6). I consider that the addition of the word “financial” may, for the particular purposes of identifying a person’s obligations, limit the currency of the obligation, but it does not serve as a pointer towards limiting the basis of the obligation solely to that which is legally binding.

A much more extended legal debate between counsel centred around the consequences of the requirement to have regard to the divorce cross-check and, above all, to the consequences arising from the requirement to have regard to the relatively short duration of the Lilleymans’ marriage. The duration of the marriage is a relevant consideration both directly under Section 3(2)(a) and indirectly, because of its importance in the jurisprudence about financial provision on divorce. It is I think convenient to address the general consequences of the divorce cross-check first, and the consequences of a relatively short marriage, in the context of a big money case, second.

To a chancery judge, for whom the jurisprudence about financial relief on divorce is not the bread and butter of his daily fare, the divorce cross-check introduces a range of additional legal complications, arising from the still developing principles originating in the epoch-making decision of the House of Lords in White v White [2001] 1 AC 596. Quite separately, there arises the difficulty of applying those principles, as required by the divorce cross-check, to the undeniably different circumstances surrounding the termination of a marriage by death, rather than breakdown of the relationship. In that respect, the chancery judge may suffer from a lesser disadvantage.

Taking those matters in turn, I would tentatively summarise the divorce principles relevant to the present case as follows. First, the fundamental principle which illuminates all the detail is that a marriage is now recognised to be an essentially equal partnership. In consequence, the division of the available property upon breakdown of the marriage must be conducted upon the basis of fairness and non-discrimination, arising from the basic concept of equality permeating a marriage as is now understood. But equality of treatment does not necessarily lead to equality of outcome.

That basic concept gives rise to three requirements, which may be summarised as financial needs, compensation and sharing. Meeting each of the divorcing parties’ frequently different financial needs is the first call upon the available property, and frequently exhausts it. Compensation addresses prospective economic disparity between the parties arising from the way they conducted their marriage and usually, but not invariably, compensates the wife rather than the husband. Sharing is applied when there is property still available after the first two requirements have been satisfied, and in principle extends to all the parties’ property but, to the extent that the property is ‘non-matrimonial’, there is likely to be better reason to depart from it. The concept is particularly applicable to what is sometimes described as the “fruits of the partnership” in relation to which the yardstick of equality is applied as an aid, but not as a rule. It will be apparent that I have derived the above summary of the essential principles from an attempt to assimilate the speeches of Lord Nicholls and Baroness Hale in Miller v Miller [2006] 2 AC 618, in which they summarise the effect of the change in thinking brought about by White v White, and also from Charman v Charman [2007] EWCA Civ 503, in particular at paragraph 66.

Miller v Miller is also vital to an understanding of the effect of a short marriage upon those principles. The heart of the dispute between the parties in that case, as is apparent from a review of the report of counsel’s submissions, was whether what Lord Nicholls called the “equal sharing” principle established in White v White was inapplicable (or of greatly reduced effect) in short marriages, White v White having been a case about a marriage which had endured for 33 years before breakdown. At paragraph 17 Lord Nicholls said this in relation to the sharing principle:

“This principle is applicable as much to short marriages as to long marriages: see Foster v Foster [2003] 2 FLR 299, 305, para 19 per Hale LJ. A short marriage is no less a partnership of equals than a long marriage. The difference is that a short marriage has been less enduring. In the nature of things this will affect the quantum of the financial fruits of the partnership.”

At paragraphs 18 to 19 Lord Nicholls expressly disapproved the earlier conclusion in GW v RW [2003] 2 FLR 108 that an entitlement to an equal division accrued only over time.

At paragraph 24 Lord Nicholls added that:

“In the case of a short marriage fairness may well require that the claimant should not be entitled to a share of the other’s non-matrimonial property. The source of the asset may be a good reason for departing from equality. This reflects the instinctive feeling that parties will generally have less call upon each other on the breakdown of a short marriage.”

At paragraphs 26 to 29, under the heading ‘Flexibility’, Lord Nicholls warned against allowing a jurisdiction designed to achieve fairness to be rigidified into inflexible rules, whether for the purpose of distinguishing between matrimonial and non-matrimonial property, or otherwise.

Baroness Hale adopted a more nuanced approach to the relevance of a short marriage, at paragraphs 147 to 153. She recognised a general perception that the size of the non-business partner’s share (on divorce) should be linked to the length of the marriage, which she described as being strong enough to be unwise for the law to ignore completely. Having summarised the competing arguments she said that in most cases the differences between them would be irrelevant. In relation to assets which were not ‘family assets’ (a slightly narrower category than Lord Nicholls’ matrimonial property) she said that the shortness of a marriage might justify a departure from the yardstick of equality of division, in terms of a “reduction to reflect the period of time over which the domestic contribution has or will continue” (paragraph 152). She recognised that there was still some scope for one party to acquire and retain some property during the marriage which is not automatically to be shared equally between them. She recognised that the nature and the source of the property and the way that the couple have run their lives should be taken into account in deciding how it should be shared. She said that what might seem fair and sensible at the outset of a relationship might seem much less fair and sensible when it ends.

Lord Hoffmann agreed with Baroness Hale. Lord Hope agreed with both Lord Nicholls and Baroness Hale. Lord Mance gave his own reasons for inclining towards Baroness Hale’s analysis. I need go no further in examining, let alone choosing between, these differences of emphasis. In Charman v Charman, at paragraph 85, the Court of Appeal described Lord Nicholls’ approach as the more logical, but the approach of the majority as more pragmatic. This is an Inheritance Act case, not a divorce case, in which the divorce principles are only a cross-check.

The distinction in the present case between the Lilleymans’ matrimonial and non-matrimonial property, or their family and non-family assets, is of undoubted importance, precisely because this is a short marriage – big money case, and it was subjected by counsel to close analysis, both as a matter of legal principle and in its application to the facts. Dealing at this stage with the legal principles which have emerged from and after Miller v Miller, I would summarise them as follows. First, the onus lies upon a person asserting that the property of one or other of the spouses is non-matrimonial to prove it. Secondly, a matrimonial home is usually to be regarded as matrimonial and family property, even if contributed solely by one of the spouses. Thirdly, property acquired during the marriage, otherwise than by inheritance or gift, is usually matrimonial property, but part of it may not be family property if it has not been acquired for family use. Fourthly, property pre-owned by one of the spouses is, usually, not so regarded, unless it is then committed to long-term family use. Fifthly, where one spouse brings to the marriage an existing business, and develops it during the marriage, then its value at the beginning of the marriage may usefully be regarded as non-matrimonial, whereas its increase in value thereafter may be part of the fruits of the partnership, even if wholly derived from the activities of one of the spouses. Sixthly, where one spouse brings a pre-existing family business to the marriage, it may be positively unfair to have recourse to it for the purposes of equal sharing, in particular if to do so might cripple the business or deprive it of much of its value.

Further enlightenment as to the extent to which the increase in the value of a business brought to the marriage by one of the parties may properly be regarded as matrimonial property is to be found in Jones v Jones [2011] 3WLR 582, in particular in the passage from paragraphs 44 to 46, concerning the appropriateness of excluding from matrimonial property that part of any increase in value during the marriage which is attributable to passive economic growth. At paragraph 46 Wilson LJ said:

“Passive growth is to be contrasted with growth as a result of contributions of one sort or another made during the marriage, i.e. of activity, irrespective of whether such is achieved with the assistance of a springboard already in position.”

I turn to the question of how the divorce principles which I have summarised are to be applied to an Inheritance Act claim by means of the divorce cross-check, and the significance of the separate requirement in Section 3(2)(a) to have regard in any event to the duration of the marriage. Here, the leading (and binding) authority is Cunliffe v Fielden, which was a big money case about a marriage between a 48 year old woman and a 65 year old man which lasted only just over a year, leaving the applicant widow, who had made no significant financial contribution to the marriage, in occupation of a house far larger than she needed. The Court of Appeal focussed upon what was regarded as her legitimate expectation that a consequence of her marriage, however long or short, was that she should obtain financial security for the rest of her life without being forced back to the standard of living which she had enjoyed pre-marriage, but without guaranteeing her the exceptional standard of living briefly enjoyed during the marriage. After applying the Duxbury Tables for the purpose of identifying an appropriate capital sum to meet her income needs, a capital amount for accommodation and an additional amount for contingencies, the resulting figure was, on the divorce cross-check, still 43% of the gross estate and more than 50% if legal costs were taken into account as a burden on the estate.

It is important to distinguish the Court of Appeal’s statements of relevant principle from its application of them to the singular facts of that case. At paragraph 20 Wall LJ acknowledged that the effect of the divorce cross-check made it appropriate to introduce the White v White approach to an Inheritance Act case. He continued at paragraph 21:

“Caution, however, seems to me necessary when considering the White v White cross-check in the context of a case under the 1975 Act. Divorce involves two living former spouses, to each of whom the provisions of Section 25(2) of the Matrimonial Causes Act 1973 apply. In cases under the 1975 Act a deceased spouse who leaves a widow is entitled to bequeath his estate to whomsoever he pleases: his only statutory obligation is to make reasonable financial provision for his widow. In such a case, depending on the value of the estate, the concept of equality may bear little relation to such provision.”

Under the heading “White v White and the short marriage point” he continued, at paragraph 30:

“As I have already indicated, there is self-evidently a profound difference between a marriage which ends through the death of one of the spouses, and a marriage which ends through divorce. For present purposes, some elementary facets of that difference suffice. A marriage dissolved by divorce involves a conscious decision by one or both of the spouses to bring the marriage to an end. That process leaves two living former spouses, each of whom has resources, needs and responsibilities. In such a case the length of the marriage and the parties’ respective contributions to it assume a particular importance when the court is striving to reach a fair financial outcome. However, where the marriage, as here, is dissolved by death, a widow is entitled to say that she entered into it on the basis that it would be of indefinite duration, and in the expectation that she would devote the remainder of the parties’ joint lives to being his wife and caring for him. The fact that the marriage has been prematurely terminated by death after a short period may therefore render the length of the marriage a less critical factor than it would be in the case of a divorce.”

In paragraph 31 he continued:

“The consequences of a short marriage for any award under the 1975 Act will, of course, depend upon the facts of the individual case. It may well be that, as here, the brevity of the marriage is part of a powerful argument against equality of division. Whilst, therefore, there is an inevitable degree of artificiality in conducting the exercise required by Section 3(2) of the 1975 Act, I am in no doubt at all that the brevity of the marriage is an important factor and has to be brought fully into the equation when deciding what is reasonable financial provision for Mrs Cunliffe from the deceased’s estate.”

At paragraph 99 he acknowledged that his analysis laid him open to the charge that “in assessing reasonable financial provision for Mrs Cunliffe, I have concentrated on “needs”. In practical terms, however, Mrs Cunliffe’s needs seen in the context of the case seem to me the major factor within the statutory framework.”

Earlier, at paragraph 77, while rejecting what used to be known as the Besterman cushion as outdated, he added:

“The case remains nonetheless, I think, authority for the proposition that the blameless widow of a wealthy man is entitled to look forward to financial security throughout her remaining lifetime, and that “reasonable provision”, which is not limited to maintenance, must be viewed accordingly.”

Miss Evans-Gordon submitted that Cunliffe v Fielden laid down, as a principle, that in short marriage – big money Inheritance Act cases the governing criterion was provision for the surviving spouse’s reasonable needs, so as to give her financial security for the rest of her life. I do not consider that the Court of Appeal went that far. In a very strong case on the facts, the court did indeed regard the very short marriage, coupled with the lack of any significant financial contribution to it by the applicant, as factors suggesting that the provision of lifetime financial security for her was the predominant aspect of the making of reasonable financial provision. It was a case in which provision for the widow’s reasonable needs exhausted nearly half (or if costs were taken into account more than half) of the entire estate. But it by no means follows that in cases on different facts, and in the context of a less extremely short marriage, considerations of compensation and sharing, as identified in Miller v Miller, do not remain a valuable aspect both of the divorce cross-check and of the identification of reasonable financial provision more generally.

I must finally mention P & P [2006] 1 FLR 431, a decision of Black J in December 2004, in which the divorce cross-check was closely analysed in the context of an Inheritance Act claim by a widow. Her conclusion, with which I agree, is that the cross-check should be treated neither as a floor nor a ceiling in relation to the relief available under the Inheritance Act, nor as something which requires a meticulous quasi-divorce application to be analysed side by side with the application of the separate provisions in Section 3 of the Act. The divorce cross-check is just that, a cross-check, no more and no less. It is, like all the other matters to be taken into account under Section 3, of infinitely variable weight on the facts of each particular case.

I turn therefore to the matters to which I must have regard, as required by Section 3 of the Act.

Mrs Lilleyman’s financial resources are as follows. First, she is the 50% beneficial owner of Water Meadows. Leaving aside the occupation rights granted to her under the will, her share, it is agreed, is currently worth £165,000. Secondly, she is at least the 50% beneficial owner of Lea Court, but subject to Robert’s tenancy, and to what I regard as his option to acquire the whole property for £125,000 in 2014. In the meantime, she has a rental income from that property of £300 per month, albeit that she regards herself as morally obliged to save it for Robert’s benefit pursuant to the arrangement made with Mr Lilleyman. It is common ground that the present vacant possession value of Lea Court is £130,000, but Robert has a right to buy it for £125,000 in 2014. Thirdly she has a 50% beneficial interest in the house occupied by her mother which, with vacant possession, would yield £77,500. Mrs Lilleyman’s mother is 90 years of age and, so I was told, in rude health. Mrs Lilleyman reasonably recognises a moral obligation not to seek to realise the value of her share for as long as her mother needs the property. Nonetheless, it is an asset which is very likely to become available to Mrs Lilleyman during her own lifetime, since she is some 24 years younger than her mother. In addition, Mrs Lilleyman is entitled, under the will, to her husband’s collection of Dinky toys and coins, which the defendants are prepared to purchase from her, for sentimental reasons, for £16,790. She has an investment worth £20,000, and £7000 in her current account. She has a limited occupation right under the will in relation to Dunhome, which is not capable of being turned into money, except perhaps by seeking a payment from the defendants for its release.

Apart from Robert’s rent, Mrs Lilleyman’s current income resources consist of her annuity and her state pension, which amount in the aggregate to £11,237.04 per annum. The pension may reasonably be expected to increase broadly in line with price inflation. The annuity is fixed.

Mrs Lilleyman’s financial needs amount to a housing requirement, which it is common ground would be met if she were provided with undisturbed occupation of Water Meadows, coupled with a right to apply its proceeds of sale for the purchase of any alternative accommodation that might prove more appropriate in the event of disability and/or old age. Her income needs were the subject of considerable cross-examination and analysis, but were in the event almost agreed between counsel, subject to issues about expenditure on food, holidays and a car. Having considered the evidence, I am minded to accept her figure for holidays, to split the difference between the parties’ figures for food, at £350 per month, and to accept her figure for the aggregate income cost of a car at £500 per month (to include depreciation, fuel and all running expenses). To this must be added, as a one-off item, the initial cost of replacing her present car, so as to acquire a car suitable for longer journeys, and for transporting her mother with the assistance of a wheelchair. That produces a recurring annual income requirement of £31,770. I am not prepared to treat Robert’s rent as part of her resources, because of her moral obligation to save it for him. The result is that Mrs Lilleyman currently suffers from an income shortfall of about £20,533, since her annual income is £11,237. That shortfall is likely to increase at a little above the rate of inflation, since her expenditure is effectively index-linked whereas her income is only to be regarded as partly index-linked. She is nonetheless significantly protected against contingencies by the prospect of obtaining at least £125,000 for Lea Court in or after 2014, and the value of her share in her mother’s home, probably at some rather later date.

There is no such other applicant, so this heading can be ignored.

It is not suggested that any beneficiaries of the estate other than Mrs Lilleyman have an excess of financial needs over resources which requires to be taken into account for present purposes. Christopher and Nigel Lilleyman have declined to disclose their own financial positions, and it is evident that significant lifetime provision was made in their favour by Mr Lilleyman. Nonetheless it is evident that the future careers and financial security of the defendants, and the financial security of their families, may well be dependant, to an extent which the court cannot precisely measure, upon preserving the three companies whose shares constitute the most valuable assets in the estate from undue attrition by the consequences of any award made in Mrs Lilleyman’s favour. But in that context I bear in mind that the companies have been able during the last two years to make pension provision for the defendants in the region of £1 million, without either having to borrow for that purpose, or otherwise prejudice the successful conduct of their businesses.

Plainly Mr Lilleyman had a responsibility to make reasonable financial provision for Mrs Lilleyman. I consider that he also had a degree of moral obligation not unnecessarily to undermine his sons’ future careers in the family business, to which he had encouraged them to devote their working lives, albeit at separate stages as I have described. By “unnecessarily” I intend to qualify that obligation to the extent necessitated by the fulfilment of his obligation to make reasonable financial provision for Mrs Lilleyman.

This is now largely agreed, subject to three matters in dispute. They are:

In my view, for the reasons already given, the estate is not entitled to a 50% beneficial interest in Lea Court. I attribute no realistic value to the debt due from Gemma King. Nor do I regard the supposed loan to Christopher of £150,000 as having any real value. If, as Mr Sartin suggested in cross-examination, it was indeed a debt, then Christopher has not been paid what he should have received from his mother’s estate, so that a similar sum was due to him from his father, who conducted the administration of his mother’s estate without the assistance of lawyers. That obligation largely cancels out the value to the estate of any loan which might be due to be repaid by Christopher. Finally, I lack the evidential material with which to form any reliable view about whether interest is owed by the estate to Mr Lilleyman’s first wife’s estate. There are also uncertainties about the estate’s inheritance tax liability into which it would be disproportionate for me to delve. In summary, inheritance tax has been paid on account on an assumption, which appears likely to prove to be well-founded, that the shares in the companies attract business relief.

The result is that the net estate appears to be worth marginally in excess of £6m. Of that sum, £5.085m is represented by the agreed present value of the estate’s shareholding in the three companies. The balance of slightly less than £1m consists mainly of bank account surpluses (£316,348), investment in quoted shares and unit trusts (£296,000 odd), 50% of Water Meadows (£165,000) and the value of Dunhome (£330,000). Those assets are all, other than the shares, Water Meadows and Dunhome, readily realisable, as are the remaining assets which I have not specifically mentioned.

The above summary of the net estate ignores the parties’ agreement that the four legacies of £25,000 each should be paid to Mr Lilleyman’s grandchildren (as at the date of his death) regardless of the outcome of these proceedings. It also ignores the contingent liability for the costs of these proceedings, which I am unable either to quantify or to guess as to their likely incidence, as between the estate and Mrs Lilleyman. Counsel were united in submitting that I have no alternative but to leave the contingent costs liabilities entirely out of account, however unrealistic in the real world that might prove to be.

There are, at present, no such disabilities.

It is not suggested that the conduct of Mrs Lilleyman or anyone else is relevant to my determination of this claim, save to the extent that she contributed her time, homemaking abilities and care of her husband to the marriage, as well as the bulk of her own assets, and that she gave up her part-time jobs at his request. The latter point might, in the divorce context, have entitled her to some element of compensation. It may be more accurate to say that it is not suggested that any misconduct by Mrs Lilleyman or anyone else is material to the outcome of these proceedings.

Mrs Lilleyman is now 66. The marriage lasted, de jure, for two and a quarter years. De facto, taking into account the parties’ prior cohabitation, it lasted slightly less than four years.

Mrs Lilleyman did look after the matrimonial home, but Mr Lilleyman’s family (distinct from himself) did not derive any significant benefit from that contribution.

A divorce in January 2010 between the Lilleymans would, even taking into account Mr Lilleyman’s hypothetical reasonable needs, still have been a big money – short marriage case. The matrimonial property prima facie available for sharing would have included at least Water Meadows and Dunhome. It may well have included the bulk of the £1m of assets in the net estate excluding the shares in the three family companies. It would prima facie not have included the value of Mrs Lilleyman’s share in her mother’s home, or the value of the family companies as at the date of the commencement of the marriage. Lea Court was acquired during the de facto marriage, but not in substance for family use. It was acquired as a home for Robert, who was not a child of the marriage, and by agreement between Mr and Mrs Lilleyman his financial contribution was treated as having been fully repaid by her during his lifetime. It might well not have been treated as available for sharing on a divorce in January 2010.

There was an issue as to the extent to which any part of the value of the family companies should be included within the notional matrimonial property. Mr Kennan’s evidence suggested that one of the companies (Shackleton) may have increased in value during the marriage (but excluding the period of cohabitation) by approximately £550,000, but that this was largely attributable to a rise in the market price of steel stock. The absence of any evidence about increase in value during the period of cohabitation was a consequence of Mrs Lilleyman’s advisers’ choice of the de jure date of the marriage as the valuation date rather than the potentially earlier date when cohabitation began. There was force in Miss Evans-Gordon’s submission that the increase in value was largely attributable to passive economic growth.

I am not however persuaded that the whole of the increase ought so to be attributed. A business which holds as stock a commodity in a volatile market makes profits from that volatility by judicious decisions as to when to buy, hold or sell stock, so that the realisation of value increases attributable to market movements depends to a significant extent upon the application of skill (in this case Mr Lilleyman’s skill). Doing the best I can, I would attribute £250,000 of the increase in value during the marriage to Mr Lilleyman’s activities, rather than passive economic growth, and thereby add that to the other available matrimonial property.

Doing the best I can, the matrimonial property may be supposed to have been valued on a hypothetical divorce at approximately £1,475,000, (or £1,600,000 if Lea Court is included) so that a full sharing on the basis of equality would have yielded £737,500 (or £800,000) for Mrs Lilleyman. The shortness of the marriage would have impacted on Mrs Lilleyman primarily by removing from sharing all but a very small part of the value of the three companies, leaving only a modest proportion of the increase in value during the marriage to be included. On Baroness Hale’s analysis, Lea Court would probably fall to be excluded. Thus, the divorce cross-check may have given rise to a maximum sharing entitlement of £737,500, against which of course Mrs Lilleyman’s interest in half Water Meadows would fall to be taken into account, leaving a net amount of £572,500 as the subject of a property adjustment order. Some additional discount for the shortness of the marriage might also have been allowed. Alternatively if Lea Court is to be included, the sharing entitlement of £800,000 would reduce to a net amount to be transferred of £510,000. The much higher value of the property available for distribution in that hypothetical divorce (which would include non-matrimonial property) would have ensured that the requirement to accommodate Mr Lilleyman’s reasonable needs would not have impacted adversely upon Mrs Lilleyman’s sharing claim.

Returning to the requirement (which Miss Evans-Gordon acknowledged) to provide a roof over her head and financial security for Mrs Lilleyman for the rest of her life, my calculations are broadly as follows. She would need to be provided either with a fully fledged life interest in the estate’s share of Water Meadows, coupled with an ability to re-invest the proceeds of its sale on the same terms in different residential property to suit any altered future needs. She would need to be provided with a capital sum to meet her income shortfall. Using the Duxbury Tables this would require about £235,000. This is, of course, an amount designed to produce an index-linked equivalent of the present income shortfall on the assumption of an average life expectancy, assumed rates of return on capital and inflation, and the use of all the capital for that purpose. It provides no security of its own against any of those assumptions proving to be incorrect. Nor does it provide for the probability that Mrs Lilleyman’s income shortfall will rise at a rate a little above the rate of inflation. Nonetheless, as Miss Evans-Gordon submitted, Mrs Lilleyman’s expectation of obtaining a substantial value from Lea Court in 2014, and of realising her share in her mother’s home at some more remote future date provide in the aggregate a very real cushion against those and other contingencies.

In my view, provision of any form of life interest in the estate’s share of Water Meadows is an inherently unattractive means of dealing with Mrs Lilleyman’s reasonable housing needs, because it would prevent a clean break between parties who have unfortunately fallen out, and would impose a real fetter on Mrs Lilleyman’s ability to provide, for example, private care for herself in a residential home, either by selling or obtaining a substantial equity release from Water Meadows. Furthermore, the net present value of the estate’s reversionary interest in Water Meadows subject to a life interest for Mrs Lilleyman, who has an average life expectancy of more than 20 years, is of itself not of great value, viewed as part of the estate as a whole. Accordingly, it seems to me fairer to make provision for Mrs Lilleyman’s reasonable housing needs by requiring an outright transfer to her of the estate’s half share in Water Meadows.

The aggregate of the agreed value of that half share, together with a Duxbury capital amount to meet income needs, of £235,000, adds up to £400,000. This falls short of the full sharing analysis on a hypothetical divorce by £110,000 if Lea Court is included, and £172,500 if it is not. There are however some one-off costs which Mrs Lilleyman needs reasonably to incur in the immediate future, including the obtaining of a new car (which is not itself factored into the income requirement necessary to run a car and deal with its depreciation). But these are unlikely to exceed the value of the toy and coin collection, coupled with her remaining investment.

The defendants’ case was opened on the basis that the will did do so. Nonetheless, very sensibly in my judgment, Miss Evans-Gordon abandoned that unrealistic assertion very early in her closing submissions. It is in my view manifestly clear that the will did not do so, but since that much is now agreed, I need give no reasons for that conclusion.

The parties’ submissions may be summarised thus. Mr Sartin said that I should provide a minimum of £1 million, but that £1.5 million would be fair and reasonable. He asked that it be satisfied by a transfer of the whole of the estate’s interest in Water Meadows and (if any) in Lea Court, together with a lump sum for the difference. He emphasised the desirability of bringing about a clean break. Providing full life time financial security would still amount to transferring roughly £1 million from the estate, broken down as £200,000 to £300,000 to fund the income shortfall and defray one-off costs, an additional £300,000 to £500,000 to provide financial security, £65,000 on account of Lea Court (if not already beneficially owned by her) and £165,000 representing the estate’s share of Water Meadows.

Miss Evans-Gordon said that Mrs Lilleyman should receive a full life interest in Water Meadows (with power to trustees of her choice to re-invest), a lump sum of £128,000 to fund that part of her income shortfall not capable of being funded from her other capital resources, and that her occupation right in relation to Dunhome should continue as per the will. Her divorce cross check suggested that the matrimonial property was £1.2 million, and that she would receive a fair share of it by the award proposed, once aggregated with her share of the matrimonial property, having regard to the short marriage. She said that Lea Court should lie where its present beneficial interests fell, her case being that it was owned by Mrs Lilleyman and the estate in equal shares. She criticised Mr Sartin’s figures as plucked from the air. For his part Mr Sartin described Miss Evans-Gordon’s approach as failing to provide security, and failing to recognise the need for a fair sharing of the matrimonial property.

I remind myself that these questions must be addressed objectively, by reference to everything known now, rather than merely at the date of death. An important feature in that analysis is the unfortunate breakdown in relations between Mrs Lilleyman and the defendants and the consequential need to bring about, as far as possible, a clean break between them, if that can be done without any unfairness. It is clear from the evidence that a clean break needs to be achieved both in relation to Water Meadows, for the reasons already given, and in relation to Dunhome, where the evidence shows an unfortunate squabble over its occupation following Mr Lilleyman’s death, about the rights and wrongs of which it is not necessary for me to rule. To that extent I prefer Mr Sartin’s approach to that of Miss Evans-Gordon.

There is considerable force in both counsel’s criticisms of the remainder of each other’s submissions. £1.5 million is in my view plainly too much, and would be hard for the estate to fund without putting a burden on the family business, which I consider should if possible be kept free from the consequences of this claim. £128,000 plus a life interest in half Water Meadows is, equally plainly, too little. Even when aggregated with her own assets it would barely even provide basic maintenance for Mrs Lilleyman, whereas her claim to reasonable provision is by no means so limited. Nor would it provide a clean break, but rather leave her and the defendants locked into shared ownership and use of two properties for the foreseeable future. Furthermore it would deny her any sharing even in the matrimonial property, beyond that which she already has by virtue of her beneficial interests in part of it, at the end of a nearly four year de facto marriage to which she devoted her full time (rather than remaining employed), almost all of her assets, and which did not end in breakdown, but in her husband’s premature death.

I consider that a transfer of value from the estate to Mrs Lilleyman of something in the region of £500,000 gross would both provide reasonable financial security (including as to accommodation) for the rest of Mrs Lilleyman’s life and substantially reflect a fair application of the divorce cross-check, in which the relative shortness of the marriage is appropriately recognised in this particular case by excluding from sharing almost the whole of the family business. The fairest and therefore most reasonable provision which should now be provided to Mrs Lilleyman out of the estate should consist of the outright transfer to her of the estate’s share of Water Meadows, and the outright transfer to her of Dunhome or, at her option, a lump sum representing its present agreed market value of £330,000. Should Mrs Lilleyman elect to take the market value of Dunhome, rather than a transfer of it, then she would be required as a condition of that payment to give up any continuing rights of occupation in relation to it, conferred by the will. She should also retain the gift of chattels under the will, including the toy and coin collections. All tax consequences of the transfers to Mrs Lilleyman should be for the account of the estate. It may well be that the effect of any transfer of value from the estate to Mr Lilleyman’s surviving spouse will, of itself, have the effect that approximately 40% of its cost will be funded by the Revenue, by way of a credit against what would otherwise be the estate’s IHT liability.

There should also be an outright transfer of the estate’s apparent interest in Lea Court since, for the reasons already given, I regard it in substance as already belonging to Mrs Lilleyman, subject to her son’s rights in relation to it. Even if I were wrong about the present beneficial ownership of Lea Court, I would regard the transfer of the estate’s interest in it to her as a necessary and separate part of fair and reasonable financial provision, having regard in particular to the Lilleymans’ dealings in relation to it during their de facto marriage. As between them, they clearly regarded his large contribution to its purchase as having been fully repaid by her before he died.

Transfers of the type which I have described would, upon analysis, constitute a very modest burden on the value of the defendants’ interests in the estate. In gross terms it amounts to just over 8% of the net estate, but its real cost to the defendants will be considerably less. The present value of their indirect interests in both Water Meadows and Dunhome, subject to Mrs Lilleyman’s occupation rights under the will, is highly illiquid and uncertain. The transfer of Lea Court involves, for the reasons given, no transfer of value at all. By contrast, those transfers will represent substantial value to Mrs Lilleyman by conferring upon her the unfettered right of enjoyment or re-investment of Water Meadows, the full use, or market value, of Dunhome to provide financial security, and the ability to honour what she regards as her obligations to her son Robert in any manner which she should think fit.