Goenka v Goenka & Ors

Yesterday, from about 10.30 in the morning until about 4.40 in the afternoon, I heard the trial of a claim under the Inheritance (Provision for Family and Dependants) Act 1975. This is my extemporary judgment.

The claim raises an interesting, and apparently novel, point as to the true scope of section 8(1) of the 1975 Act: Is a nomination of a person to receive the lump sum payable where a Health Service employee dies in pensionable employment made in accordance with the National Health Service Pension Scheme Regulations 1995 (which were themselves made under powers conferred by the Superannuation Act 1972) a nomination made “in accordance with the provisions of an enactment”? Although strictly concerned with a nomination made under the statutory pension scheme applicable to Health Service employees, the issue is of potentially wider application to statutory pension schemes generally. The case also raises issues as to the correct approach to apply to a claim by a spouse under the 1975 Act.

I begin by setting out the relevant chronology of events. The claim concerns the estate of the late Dr Nirupam Goenka. He was married to the Claimant, Victoria Frances Goenka, on the 31^st August 1997. There were three children born to that marriage, all sons. They are Master Odel Goenka, who is now 16 years of age; Master Kiran Goenka, who is now 14 years of age and will shortly attain his fifteenth birthday; and Master Sachin Goenka, who is eleven years of age. They are respectively the Third to Fifth Defendants to this litigation, and they act through the Official Solicitor as their litigation friend.

On the 9^th May 2012 the Claimant presented a divorce petition. There was a first financial provision hearing for directions on the 24^th October 2012. That followed the making of a decree nisi of divorce on the 15^th August 2012. On the 7^th September 2012 the deceased made his last will. On the same day he wrote a Letter of Wishes, which was supplemented by a further, and less formal, letter three days later on the 10^th September 2012. It is clear from the terms of that latter letter that at that time the deceased was contemplating that he would make a further will following the resolution of the financial matters attending his divorce and the making of the decree absolute. However, and sadly, seven days later, on the 17^th September 2012, the deceased committed suicide. He was just 41 years of age. He was a qualified medical practitioner. I am told that he was a consultant endocrinologist.

A Grant of Probate was made out of the Liverpool District Probate Registry to the First and Second Defendants on the 11^th March 2013. The First Defendant, Dr Gopal Goenka, is the father of the deceased and thus the grandfather of the three infant Defendants, numbered three to five. The Second Defendant is Mr Victor Bernard Welsh, who joined with Dr Goenka in taking out the Grant of Probate. Mr Welsh is the solicitor who was responsible for the drafting of the will. He acts as the solicitor for the First and Second Defendants in this litigation. The claim form seeking financial provision under the 1975 Act was issued in the Liverpool District Registry of the Chancery Division on the 9^th September 2013, just within the six-month period after the Grant of Probate.

The brief details of the claim record the death of the deceased on the 17th September and state that the Claimant is his widow. The claim form refers to the appointment of the Defendants as executors of the will and the estate and the Grant of Probate. The claim form then records that the First Defendant had been nominated by the deceased (it says) “pursuant to the provisions of the 2008 NHS Pension Scheme Regulations” but it is now common ground that (because of the date of the deceased’s entry into service with the NHS) the applicable regulations were the National Health Service Pension Scheme Regulations 1995 (SI 1995/300). Those regulations were, as I say, made under powers conferred by sections 10 and 12 of, and Schedule 3 to, the Superannuation Act 1972.

The nomination of the First Defendant by the deceased was to receive a lump sum payable under the pension scheme upon the deceased’s death, which nomination remained in force at the time of his death. Pursuant to that nomination, the First Defendant received a payment of a death in service benefit of £201,000. It is asserted that by section 8 (1) of the Inheritance (Provision for Family and Dependants) Act 1975 such sum is to be treated, for the purposes of the Act, as part of the deceased’s net estate. The Claimant claims, under section 1 (1) (a) of the Act, on the basis that the disposition of the deceased’s estate effected by his will is not such as to make reasonable financial provision for her. She seeks an order under section 2 (1) (b) of the Act for the payment to the Claimant out of the estate of a lump sum of £201,000, or such other sum as the court thinks just; and an order under section 2 (4) (a) of the Act that the First Defendant should make payment of such sum to the Claimant out of the death in service benefit. There is an alternative claim for relief which, in the event, does not arise. Alternatively, the Claimant seeks further or other relief under section 2 of the 1975 Act.

It is necessary at this point to relate the relevant provisions of the will. It appointed the First and Second Defendants as the deceased’s executors. There was then an appointment of the First Defendant, the deceased’s brother (Dr Anupam Goenka) and a friend of the deceased (Dr Arpana Verma) as trustees of the will. There was provision for the appointment of alternative or additional trustees. By Clause 5 of the will, the personal chattels were given to the Claimant absolutely. By Clause 6.1 the Claimant was given all the deceased’s right, title and interest in 1 Keswick Villas, Huyton, Liverpool L16 2NR. That property was subject to a mortgage; and by Clause 6.2 the deceased gave to his executors and trustees his share in the proceeds of a Clerical Medical Flexible Mortgage Plan on trust to apply the same in redemption of the mortgage against 1 Keswick Villas. In fact, the Mortgage Plan did not form part of the estate. Its terms provided for the proceeds of the Clerical Mortgage policy to be paid to the survivor of the deceased and the Claimant on the death of whichever was the first to die - in the event the deceased; but the intention of the will is clear, even though the machinery by which effect has been given to it is not exactly as the deceased intended. The intention is that the Claimant should have the former matrimonial home free from mortgage, and that intention has been achieved.

Clause 6.3 gave the executors and trustees the proceeds of the deceased’s Barclays Bank current account to be applied in discharge of the deceased’s debts, funeral and testamentary expenses and any Inheritance Tax liability, and any balance was to be paid over to the Claimant. In the event, that money was exhausted and nothing fell to be received by the Claimant from that identified Barclays Bank current account.

There were two pecuniary legacies, each of £1,000, given to Families Needs Fathers, a registered charity, and to Fathers 4 Justice Limited. Clause 7 dealt with the residuary estate after payment of the debts, funeral and testamentary expenses. The residuary estate was to be held on the trusts set out in Clauses 8 through to 11 of the will. Essentially, during the Trust Period of 125 years beginning with the date of the deceased’s death, and subject to an overriding Power of Appointment, the trustees were to accumulate the whole or part of the income of the Trust Fund and add it to the Trust Fund; but they were given the power to pay or apply income to or for the benefit of any beneficiaries as the trustees thought fit. The Beneficiaries were defined in Clause 8.1 as meaning the deceased’s descendants, the Claimant, and at any time during which no descendant of the deceased was living, his father, the First Defendant, and his mother, Hem Goenka.

Clause 10.1 gave the trustees an overriding Power of Appointment for the benefit of any beneficiaries on such terms as the trustees might think fit. There was a default provision in Clause 11 whereby “if the above provisions for the distribution of the Trust Fund fail” then it should be held on trust for the deceased’s brother, Dr. Anupam Goenka, absolutely and if he should fail to obtain a vested interest there was a substitutionary provision in favour of his issue. The will incorporated the Standard, and all of the special, Provisions of the 2^nd edition of the Society of Trust and Estate Practitioners.

The formal Letter of Wishes dated the 7^th September was addressed to the trustees of the deceased’s will. In it the deceased stated that he had created a Discretionary Trust of his entire residuary estate after gifting his interest in the residential property at 1 Keswick Villas in such a way as to be free of mortgage to his wife, Victoria. The beneficiaries of the fund were said to be Victoria and the deceased’s three children and, in default, his parents. The deceased stated that he had chosen his trustees because they were familiar enough with the deceased to know his way of thinking and how he wished his wife and children to be taken care of after the deceased’s death. For that reason the deceased said that he had given them discretion, and therefore flexibility, to deal with the deceased’s estate to meet and deal with situations which the deceased could not reasonably now predict. Without creating any binding trust or legal obligation on the trustees the deceased said that he wished them to give effect to his wishes in relation to the management of the Trust Fund, which he proceeded to set out. The deceased said that he wished the trustees to treat his three children, Odel, Kiran and Sachin, equally and, in due course, to divide the capital of the Trust Fund equally between them and when they each attained the age of 25 to pay them their one-third share subject, in the first instance, to the trustees appointing to Victoria a discretionary sum of £60,000 or one-quarter, whichever amount was less, of the Fund. That was described as “Victoria’s discretionary share”. The trustees were to pay to her at six-monthly intervals the net income derived from that sum. On the youngest of the deceased’s children attaining the age of 25, the deceased envisaged that the trustees would then advance Victoria’s discretionary share to her. The deceased further envisaged that it would be helpful to the three children if on their each attaining the age of 18 the trustees should appoint to each of them one-third of their putative capital share to be applied for their respective benefit, but not made available directly to them, for the purposes of meeting the costs of such things as university fees, the costs of their wedding if they married before the age of 25, and bills relating to health care and/or hospital costs and legal fees. Although the deceased said that he would expect the income derived from the capital of the Fund to be accumulated, he would also envisage the trustees expending up to one-third of the income so earned (after paying the net income from Victoria’s discretionary share of the Fund appointed to her) and for such income to be applied for the benefit of each of the deceased’s children, either through their mother, Victoria, if she had care of them, or their primary carer or carers. Once the children each attained 18 years of age, the deceased said that he would have no objection to the income being paid or applied directly to them for their cost of living expenses. The deceased stated in terms that he had nominated his father to receive the occupational pension death benefit from his NHS pension; and that he wished the father to ensure that that benefit was transferred into the deceased’s residuary estate. The deceased said that the trustees should, on each of the children attaining 25 years of age, determine whether to advance part or the whole of their respective capital share to them, and if they decided to delay such advance he would not expect the distribution to be delayed beyond any child’s 30^th birthday. The Letter of Wishes concluded: “I hope that my beneficiaries will regard the terms of my will as equitable and affording reasonable financial provision for them. If, however, my wife, Victoria, takes a contrary view and elects to challenge my will, I wish my Trustees to meet the costs of meeting such challenge from the part of the Trust Fund appointed to her.” The letter is then signed with the date in manuscript of 10^th September 2012.

That was the same date as the deceased signed a further letter addressed to the trustees of his will. He began by thanking them for taking on their important role. He explained that he had completed a formal legal letter of wishes accompanying his will. That letter contained basic rules on how the deceased would like the fund managed and eventually divided. However, the deceased said that he felt it best to write to the trustees more informally, hence the instant letter. The deceased said: “It is impossible for me to see all eventualities and so I have left you considerable discretion and so you are not legally bound by my wishes, however I trust that in the unlikely event that you all choose to deviate from my wishes then you should have an extremely good reason for doing so. I would prefer any decisions you make to be by agreement of all trustees.”

Having dealt with the appointment of any additional trustees the deceased continued: “At the time of writing I am in divorce proceedings with Vicky. As part of the divorce settlement I anticipate that Vicky will probably ask for the house, a share of our savings (currently standing around £60,000) and part of my income to care of [sic] the children (payable until youngest child leaves school at 18). As a specific bequest, I have left Vicky with our house and I have also ensured that the mortgage on this property will be paid off in full. I have also asked you to provide an income from the fund for herself and for my children. In addition, I have suggested that she may be given a discretionary sum up to (but not exceeding) either a quarter of my residual estate or £60,000 (whichever sum is less) when my youngest child (Sachin) reaches the age of 25 years old. Therefore I have ensured that she has been treated fairly and will receive more than she would have been entitled to as part of our divorce. This will ensure that my will stands up to any legal challenge from her. If there is any legal challenge to my will then I would want it to be defended resolutely by every legal means possible. At the point my divorce is concluded then I plan to redraft my will and this letter to take the new circumstances into account.”

The deceased then proceeded to set out a few things that he wished to communicate to the trustees personally. Amongst them he stated that the first priority of the Trust Fund was to be to ensure the welfare of the deceased’s children. He further stated that a proportion of the Fund (either a quarter or £60,000, whichever amount was smaller) should be set aside for Vicky. He stated that that should be kept in trust and not be directly accessible by her. The capital should be managed by the trustees of the will and kept in a high interest account. The whole of the interest from the capital account should be paid directly to Vicky to provide a small income for her until the deceased’s youngest son (Sachin) reached the age of 25 years old. At that time the capital sum should revert in full to Vicky. The deceased said he did not wish her to receive it sooner than this under any circumstances.

The trustees were said to be free to put aside or give Vicky less than the amount specified if they so wished. However under no circumstances should she be allowed to receive more than that amount. For example should the deceased’s will be contested then he would expect that all legal bills required to defend the will against any such legal challenge should be met from Vicky’s share (rather than reducing the share of the deceased’s children). Also if over the years Vicky made it difficult for any of the trustees to see the deceased’s children or if she remarried, then it would also be appropriate for her share to revert to the children and be divided up equally between them.

Later on, the deceased said that after each child reached the age of 18 the trustees were to have discretion as to whether the payments should be paid directly to them or continue to be paid directly to Vicky (if the children were still living with her). Later still, the deceased said that the children should not be aware of the amount of money left. It was important that they should work hard in school, university, and get good jobs to ensure that they had a good future and did not become lazy as they realised that they would receive an inheritance. In the interests of transparency, the deceased said he was happy for the trustees to be open with the details of his estate and the residual funds with Vicky; but she was to be given no role in the management of the Fund or distribution of monies.

On the same day the deceased sent a letter to his wife in which he informed her of the terms of his will and the formal Letter of Wishes. In it he stated that he considered that he had been very fair to the Claimant. He anticipated that as part of the divorce settlement she would probably ask for the house, a share of the joint savings (currently said to be standing at around £60,000) and part of the deceased’s income to care for the children. He said that he had therefore left the Claimant the house, and made sure that the mortgage would be paid in full, together with all of his possessions. He stated that the rest of his estate would be placed in trust. He indicated that once the youngest child was independent, then the Trust Fund would be divided up and the Claimant would receive her share, which would be a discretionary lump sum which would not exceed £60,000. The deceased stated in terms that that lump sum was purely discretionary and might be reduced by the trustees depending on the circumstances at the time. They would use their judgment. The letter to the Claimant continued: “Therefore you will receive a comparable amount (if not more generous) to what you will be entitled to as part of our divorce as a regular income will be paid for longer (until Sachin is 25 to ensure he is looked after throughout university). However part of the money may be paid directly to the children between the ages of 18 and 25 depending on the discretion of the Trustees.” The deceased stated that he had taken extensive legal advice when drafting the will and was reliably informed that it would stand up to any challenge. Nevertheless in case the Claimant chose to contest any aspect of the will he stated that he had instructed the trustees to defend it vigorously and to meet any legal expenses incurred by doing so from the Claimant’s share of the Trust Fund. The deceased said that he thought it would be unfair to use the children’s share for this. The deceased stated: “I know this will upset you and I sincerely promise you that this is not my intent. I have never wanted to upset you – ever. However I need to ensure I do what I feel is right and also ensure that my children’s inheritance is safeguarded and that you are all looked after by receiving a regular income until the boys are independent. I hope in time you might see, understand and perhaps even one day agree with the reasons for my decisions.” The deceased concluded: “I love you and my children and want you to be provided for. I also want to be fair to you whilst protecting my children. Therefore I have tried my best to ensure that what you will get is extremely fair and generous, particularly given the current circumstances. Also please always always remember that I love you all.”

The details of the deceased’s estate are set out in the second, and substantial, witness statement of the Second Defendant, Mr Welsh, which is dated the 19^th December 2013. In summary, the assets in the estate, including the house (but taking account of the mortgage upon it, which at the date of death was just under £119,000) is said to amount to some £512,230. After deducting the £2,000 legacies, the £1,000 attributed to the value of the personal chattels (which pass to the Claimant) and taking account of the gift of the house to the Claimant, the amount said to be standing to the executors’ credit on their bank account is said to be £422,634.90. That does not include legal costs of the administration in the sum of £3,500 and the executors’ estimated costs of the 1975 Act proceedings which (with Value Added Tax) amount to some £6,450.

That, however, excludes the death in service benefit. The details of that were addressed in a Reply by the First Defendant to a Request (dated the 30^th December 2013) for Further Information raised by the Claimant. The First Defendant’s response, verified by a Statement of Truth, is dated the 24^th January 2014. In it the First Defendant makes it clear that he does not consider himself as being bound by any legal trust arrangement with regard to the nominated monies. He says that that was not his son’s intention, nor does he consider himself to be under any moral obligation to use those monies for his grandchildren. His attitude is said to be that given that the First Defendant and his wife are reasonably financially well-provided for, and knowing his deceased’s son’s plans and hopes for his children, he would want the children financially protected if the Trust Fund set up under the terms of the deceased’s will was exhausted or proved inadequate to meet all the children’s requirements through their infant years. The First Defendant believes that the will created by his son provided financially very well for both the deceased’s wife and his children. The First Defendant says that he also feels that he must consider the extent to which termination by the Claimant of contact by the First Defendant and his wife with their grandchildren since September 2012 was likely to impact upon the First Defendant’s relationship with the children, and how that situation would have been regarded by his son, Nirupam. It is said that if that situation continues and the relationship between the First Defendant’s family and his son’s children is irreparably damaged, the First Defendant would regard himself as much less compelled to apply the monies left to him by his son for the children’s benefit rather than anybody else. The First Defendant says that he strongly believes that the provision made by the will for the Claimant was adequate. He believes that if the Court were to make any order in favour of the Claimant, such provision should be made out of that element of the Trust Fund which the First Defendant’s son clearly indicated should be applied to the Claimant. He concludes: “The Trustees have already indicated to the Claimant that they would be prepared to make a capital advance to her out of the Trust monies, which comprise the residuary estate, to the value of at least £60,000 as this was the sum which [the First Defendant’s] son’s Letter of Wishes indicated should be applied to her in the absence of any serious financial difficulties which she might encounter. Given that [the Claimant] has a house, free of mortgage, occupational and pension income of approximately £70,000 per annum, I think that the proposed capital payment out of the Trust Fund is more than adequate in the circumstances to provide reasonably well for her.”

In the course of his written skeleton argument Mr Andrew Clark (of counsel), who appears for the Claimant, refers to this further information and submits that the First Defendant’s intentions regarding the monies represented by the payment of the death in service benefit remain opaque. It is said that the First Defendant has not responded favourably to the suggestion by Pannone, the solicitors acting for the three children, that the First Defendant should place those monies in a suitable trust for the children.

The claim form was, as I say, issued on the 9^th September 2013. At the date of issue the only named Defendants were Mr Goenka, both in his capacity as executor of the will and as statutory nominee, and Mr Welsh, solely in his capacity as executor. The claim form was accompanied by the witness statement of the Claimant dated the 6^th September 2013, to which she exhibited various documents. At paragraph 4 the Claimant deals with her current employment as a Practice Nurse at Storrsdale Medical Centre in Liverpool and with her income. She is said to receive a gross annual income of £20,436 and net take-home pay of £1,042 per month. In addition, she is said to receive £21,193.70 gross in respect of an NHS Widow’s Pension. The pension scheme also pays a similar annual sum by way of child allowance. She exhibits details of what are said to be her current assets at Exhibit VFG3. They record bank balances as at the 4^th September 2013 totalling some £38,500 but liabilities totalling some £15,400.

At paragraphs 5 through to 11 the Claimant relates the history of her marriage to the deceased. At paragraphs 12 through to 19 the Claimant deals with the will, the accompanying Letter of Wishes, the Grant of Probate, the Inheritance Tax Account filed with Revenue and Customs, the nomination of the death in service benefit in favour of the First Defendant, and she summarises the provisions of the will and refers to the original Letter of Wishes addressed to the trustees. At paragraph 20 the Claimant states: “The letter of wishes is not binding upon the Executors, but their stance to date does not provide any confidence that they will deal with me fairly and make adequate provision from the Trust. I never enjoyed, throughout the course of my marriage, an easy relationship with [the deceased’s] parents.” Following his death relations became further strained, and neither the Claimant nor their three children have contact with the deceased’s family. The Claimant states it to be her opinion that the trust is her late-husband’s method of continuing to exert control over her finances, and the Claimant’s life. At paragraph 21 the Claimant states that “life as a single parent is difficult”. Her own family do not live locally and she is said to have limited support. She has to pay for all child care provision. She says that she has considered two options - first, relocating nearer to her children’s school, which would make life easier, but the costs of a comparable property in the area of the school is said to be approximately £150,000 more than the value of 1 Keswick Villas; secondly, relocating to live nearer the Claimant’s family which would, again, require her to add monies to the proceeds of sale of 1 Keswick Villas. The Claimant, as Mr Nicholas Jackson (of counsel), who appears for the First and Second Defendants, points out, has not provided the address of her family or any valuation evidence supporting her assertion that the cost of any alternative property would be significantly in excess of the present value of 1 Keswick Villas; nor, he says, has she provided any documentary valuation evidence to support the probate valuation of £200,000 for 1 Keswick Villas.

At paragraph 22, in a passage which is strongly disputed by the First Defendant, the Claimant says that all attempts at negotiating with the Defendants appropriate provision for the Claimant from the estate have proved fruitless, with her offer to mediate the matter and avoid the necessity for the issue of this claim not having been taken up. At paragraph 23 the Claimant says that in order to avoid the necessity of joining in as defendants in this matter the trustees of the trust and her children, as beneficiaries of the trust, she is limiting her claim to the death in service payment made to the First Defendant in the sum of £201,000, as set out more particularly in the Claimant’s claim.

That is the evidence in support of the claim, although it has been supplemented by the Claimant’s own response to a Request for Further Information which she made on the 14^th April 2014. In that reply the Claimant deals with her employment at paragraph 1. Her gross monthly income for a 22-hours’ working week is said to be £1,703.61 and her net pay to be £982.47. The Claimant is said to have a pension arrangement in place with the NHS but no additional private pension arrangements.

At paragraph 2 it is said that in the 6 months following her husband’s death the Claimant received £50,304 gross and £38,094 net from the NHS in respect of the deceased’s NHS pension as a consultant endocrinologist. In the course of his submissions Mr Clark made it clear that that payment of a continuing salary took the place, for those 6 months, of the Claimant’s NHS Widow’s Pension. Mr Clark made it clear this morning, however, that even during that 6-month period the Claimant did receive the allowance from the NHS for her children. Adjusting for the non-receipt of the NHS Widow’s Pension during those 6 months would seem to bring the net amount down from £38,094 to £29,521-odd. The Claimant states that the capital sum received has been expended in repayment of car finance and repayment of overpaid child tax credit. In addition, the Claimant is said to have undertaken an upgrading of the family bathroom at 1 Keswick Villas, repaired the ceiling following a leak from the bathroom, undertaken general house maintenance and repaired fencing following storm damage. The Claimant is also said to have paid for family holidays with the children, who are said to be still grieving the loss of their father, and incurred additional expenditure that is incidental with raising three school-age sons.

Later in the Response to the Request for Further Information (at paragraph 7) the Claimant says that she has various bank accounts and investments, and she gives the updated figures as at 31^st March 2014. They total some £25,483. That represents a reduction of some £13,000 on the amount that was standing to the credit of those accounts as at the 6^th September 2013.

It seems to me that the explanation for that variance is in part that the Claimant has repaid the liabilities, totalling some £15,400, recorded in the earlier Exhibit VFG3 to her written statement. From the terms of paragraph 2 of the Response, in which she says that the capital sum received by way of continuing salary for her late husband had been expended in part in repayment of those liabilities, what would have appear to have happened is that the salary was paid into the bank account and the bank account was then used to discharge the liabilities. On that basis, it is reasonable to infer that the amount of capital that the Claimant had, independently of the continuing salary from the NHS, was in the order of the amount standing to the credit of the various accounts detailed at paragraph 7 of the Response, and thus totalling some £25,483. In the absence of any evidence to the contrary from the Claimant, I proceed on the footing that the Claimant’s savings at the time of her divorce from the deceased amounted to something in the order of £25,000. That would, of course, have had to be taken into account as an asset of the family upon divorce.

At paragraph 3 of the Reply to the Request for Further Information the Claimant deals with her receipt of an NHS Widow’s Pension in the gross sum of £21,193.70. She receives a monthly figure of £1,428.78. She also receives widow’s state benefit in the monthly sum of £421 although, in fact, it would appear that the figure may be slightly higher due to the effect of indexation. At paragraph 4 the Claimant states that she receives an annual allowance from the NHS for her children in the sum of £21,193.71, although from the bank statements it would look as though the figure may be slightly higher than that. The Claimant states that she will receive that until the children are 18 years of age, although Mr Clark has indicated that the payments may, in fact, continue until each child attains the age of 23. The Claimant states that she does not, and is not entitled to, receive tax credits. She states that a copy of her projected NHS pension has been requested although none has been supplied. The Claimant then deals with her bank accounts and investments in the manner I have already related. That is the evidence for the Claimant.

The First Defendant relies upon his witness statement of the 12^th November 2013 with the contents of which the Second Defendant agreed in his short first witness statement of the same date. The First Defendant makes it clear that the circumstances giving rise to the claim have caused great anguish and sorrow to himself, his wife, his son, Anupam, and to Dr. Verma, who is the deceased’s friend, as well as to the Claimant and her children. The circumstances are said to have driven a breach between the First Defendant’s family and the Claimant which has led to the deceased’s parents losing contact with their grandchildren as contact is said to have been denied to the First Defendant’s son and daughter-in-law, the First Defendant’s wife and the First Defendant himself by the Claimant since she discovered that the NHS death in service monies arising from Nirupam’s death had been paid to the First Defendant.

The First Defendant deals with the divorce proceedings, the exact tenor of which he says is unknown to him, but he says that he does know that his son, as a loving spouse, was to arrange reasonable financial provision for the Claimant and provide financial protection for his children. The deceased is said to have wished to ensure that his estate did not simply pass to his wife to provide some protection against the capital passing through the Claimant to some unknown third party with whom she might subsequently become involved or marry.

From the beginning of their involvement with the administration of the estate and the subsequent creation of the trust it is said that the major concerns of the executors and trustees have been to ensure, so far as possible, that the deceased’s wishes for the welfare of his wife and his children are their main priorities and to provide financial stability for the whole family. It is said that that stability can only be lessened if the Claimant received the larger part of the estate and subsequently remarried, either without a will (and thereby transferring her estate to a new spouse by intestacy) or with a will which did not deal adequately with protecting the capital position of the children. It is said that the executors and trustees are also concerned to protect themselves from potential claims against them by the children of the family arising from changes to the will provisions which might, without proper legal justification, diminish the monies currently protected for their benefit merely in order to ameliorate the Claimant’s financial position. It is said that every pound diverted from the Trust Fund to the Claimant reduces the financial protection intended for the children of the deceased.

The First Defendant then proceeds to address the evidence of the Claimant. In the course of doing so, at paragraph 23, he observes that the Claimant, given her income, and with a house free of mortgage, is hardly in the lower income percentiles of the population of this country. He also asserts that the Claimant lives about two miles from her children’s school, which is on Childwall Road, Liverpool. The First Defendant concludes by utterly refuting the allegation that he refused mediation. He says that from the start of his dealings with her he offered the Claimant mediation, subject to her making a full and frank disclosure of her financial position. To date it is said that she has simply failed to do so. That, of course, preceded the response to the Request for Further Information. That essentially is the evidence in the case.

As I have indicated, the original Defendants were only the two executors of the will and the First Defendant in his capacity as statutory nominee of the death in service benefit. When it became apparent, however, that the Defendants were challenging the availability of the death in service benefit as part of the deceased’s net estate, it became necessary to address the position of the children. It was also considered appropriate to address the position of those who might benefit under the terms of the Discretionary Trust.

Those matters were addressed at a case management conference conducted by District Judge Sykes on the 31^st March 2014. By paragraph 2 of her Order the three sons of the deceased were joined as Third, Fourth and Fifth Defendants to the claim; and notice of the claim was directed to be given to the First Defendant’s wife, Dr Hem Goenka, and to the two Trustees, Dr Anupam Goenka and Dr Arpana Verma. Notice was duly given. They were joined as parties to the claim but they ceased to be parties as a result of a later Order of District Judge Sykes made on the 15^th May 2014 and nothing more needs to be said about their position. I am satisfied that Mrs Hem Goenka, Dr Anupam Goenka and Dr Arpana Verma will be bound by the result of these proceedings.

Pursuant to paragraph 4 of District Judge Sykes’s Order of the 31^st March the Official Solicitor has been appointed to act as litigation friend for the three infant Defendants. By paragraph 6 of the Order (as subsequently amended) the Official Solicitor is entitled to be indemnified against his own costs incurred in acting for the three children on an indemnity basis, although that does not, of course, affect the court’s ability to direct that those costs should ultimately be borne by one of the other parties to this litigation. District Judge Sykes’s Case Management Order gave provision for the filing of any further evidence in support of the claim by 4 p.m. on the 28^th April 2014. In the event, no such further evidence has been filed beyond the Response by the Claimant to the Request for Further Information.

By paragraph 9 of the Order any evidence on behalf of the infant Defendants was to be filed and served by 4 p.m. on the 12^th May 2014. In the event, no such evidence has been filed or served, and there is no further evidence from any of the other parties as contemplated by paragraph 10 of the Order.

Paragraph 14 directed the trial of the claim for two days before a section 9 Specialist Chancery Judge. This is that trial. The reason why the case was listed before a section 9 Judge, rather than a District Judge, was because of the novel point raised by the nomination in respect of the lump sum death in service benefit and the issue of law concerning section 8 of the 1975 Act. It is unnecessary to refer to the later Case Management Order of District Judge Sykes dated the 15^th May 2014.

The Claimant is represented by Mr Andrew Clark (of counsel) who has produced a detailed written skeleton argument dated the 31^st July. The First and Second Defendants are both represented by Mr Nicholas Jackson (of counsel) who has produced a detailed written skeleton argument dated the 1^st August. The three infant Defendants are represented by Mr Joseph Goldsmith (of counsel). He did not produce a written skeleton argument, but he made it clear at the outset of yesterday’s hearing that the Official Solicitor’s position is (1) that the will does make reasonable financial provision for the Claimant but, if it does not, then (2) any such provision should come out of the £201,000 lump sum death in service payment.

The statutory background against which this claim falls to be determined is to be found in the provisions of the 1975 Act. By section 1 (1) the Claimant, as a spouse of the deceased, is entitled to apply to the court for an order under section 2 of the Act on the ground that the disposition of the deceased’s estate effected by his will is not such as to make reasonable financial provision for the applicant. By sub-section (2) (a) of section 1, since the application is made by a wife of the deceased, reasonable financial provision means “such financial provision as it would be reasonable in all the circumstances of the case for the wife to receive, whether or not that provision is required for her maintenance.”

By section 2 (1) (a), if the court is satisfied that the disposition of the deceased’s estate effected by his will is not such as to make reasonable financial provision for the applicant the court has the power under paragraph (b) to make an order for the payment to the applicant out of the estate of a lump sum of such amount as may be specified. By section 2 (4), an order made under section 2 may contain such consequential and supplemental provisions as the court thinks necessary or expedient for the purpose of giving effect to the order or for the purpose of securing that the order operates fairly as between one beneficiary of the estate of the deceased and another and may, in particular, but without prejudice to the generality of the sub-section, (a) order any person who holds any property which forms part of the net estate of the deceased to make such payment or transfer such property as may be specified in the order and (b) vary the disposition of the deceased’s estate effected by the will in such manner as the court thinks fair and reasonable having regard to the provisions of the order and all the circumstances of the case.

By section 3 (1), in determining whether the disposition of the deceased’s estate effected by his will is such as to make reasonable financial provision for the applicant and, if the court considers that such reasonable financial provision has not been made, in determining whether and in what manner it shall exercise its powers under section 2, the court shall have regard to the following matters – (a) the financial resources and financial needs which the applicant 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 obligations and responsibilities which the deceased had towards any applicant for an order under section 2 or towards any beneficiary of the estate of the deceased; (e) the size and nature of the net estate of the deceased; and (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.

By sub-section (2), where an application for an order under section 2 of the Act is made by a spouse, the court shall, in addition to the matters specifically mentioned in paragraphs (a) to (f) of section 3(1), have regard to (a) the age of the applicant and the duration of the marriage and (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. Further, in the case of an application by the wife of the deceased, the court shall also 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 terminated by a divorce order.

By section 3 (5), in considering the matters to which the court is required to have regard under section 3, the Court shall take into account the facts as known to the court at the date of the hearing. By sub-section 3 (6), in considering the financial resource 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.

Section 8 deals with property which is to be treated as part of the net estate. By sub-section (1), where a deceased person has, in accordance with the provisions of any enactment, nominated any person to receive any sum of money or other property on his death and that nomination is in force at the time of his death, that sum of money is to be treated, for the purposes of the Act, as part of the net estate of the deceased. By section 25 (1), a beneficiary, in relation to the estate of a deceased person, means (amongst others) a person who has received any sum of money or other property which by virtue of section 8 (1) of the Act is treated as part of the net estate of the deceased. By section 25 (1), ‘net estate’, in relation to a deceased person, is defined as including any sum of money or other property which is treated for the purposes of the Act as part of the deceased’s net estate by virtue of section 8 (1) of the Act.

By section 26 (2) of the Act, subject to the provisions of that section, the enactments specified in the Schedule to the Act are repealed to the extent specified in the third column of the Schedule. All of the enactments identified in the Schedule are statutes. There is no reference to any regulation or statutory instrument.

It is appropriate for me, at this point, to consider the death in service payment and whether, by virtue of section 8 (1) of the Act, that forms part of the deceased’s net estate. That issue is addressed at paragraphs 31 through to 38 of Mr Clark’s written skeleton argument. The submission advanced on behalf of the estate is that since the relevant NHS Pension Scheme Regulations are not primary legislation, the nomination is not within the scope of section 8 (1). As Mr Jackson put it in his skeleton argument: “Statutory instruments are not, strictly speaking, enacted.”

Mr Clark submits that the assertion that ‘enactment’ is ordinarily construed to mean primary legislation is not supported by the authorities. He cites two passages from Bennion’s Statutory Interpretation. At page 379 the writer recognises that the term ‘enactment’ may be used with reference to the whole or a part of an item of delegated legislation. This variation of meaning is said to call for care in construing a passage of an Act or other instrument in which the term ‘enactment’ is used. Later, at page 380, it is said that when used in legislation, the term ‘enactment’ includes a provision of delegated legislation, although in some Acts the context may indicate that references to an ‘enactment’ do not include subordinate legislation.

The case of Rathbone -v- Bundock [1962] QB 260 is an example of a case where the context indicated that reference to an ‘enactment’ did not include subordinate legislation. That case was concerned with the question of whether a breach of the Motor Vehicles (Construction and Use) Regulations 1955 was encompassed within an offence against ‘any other enactment’ for the purposes of section 232 (1) (a) of the Road Traffic Act 1960. Mr Justice Ashworth, delivering the leading judgment in the Divisional Court, decided that it did not because the language used in a number of instances strongly suggested that in that particular Act the draftsman was deliberately distinguishing between an enactment and a statutory regulation. The example given by Mr Justice Ashworth was section 267 and Schedule 18. Section 267 incorporated Schedule 18 which was in two parts - Enactments which were repealed, and Orders and Regulations which were revoked. On that basis the Court found that the particular context militated against construing ‘enactment’ within the statute as comprehending subordinate legislation.

Mr Clark cites the decision of the Divisional Court in the later case of Allsop -v- North Tyneside Metropolitan Borough Council [1991] RVR 209 as illustrating the converse situation. There the Court found that a statement in section 111 (1) of the Local Government Act 1972 that the local authority’s powers were subject to any other ‘enactment’ included regulations made under Sections 7 and 24 of the Superannuation Act 1972. That was said to be because the reference to the powers being subject to any ‘enactment’ passed before or after the Act would be meaningless unless it was permissible to look at what the regulations made pursuant to those powers in question provided.

Mr Clark submits that section 26 of the 1975 Act incorporates a schedule of ‘enactments’ repealed, but unlike the position in Rathbone -v- Bundock there is no separate schedule of Orders and Regulations revoked. Mr Clark submits that there is no indication elsewhere from the context of the 1975 Act that ‘enactment’ in section 8 should be construed as being limited to primary legislation. He submits that in the context of nominations, wherein the detailed provisions for nomination are not unlikely to be left to a statutory instrument, it is more likely that the wider construction of ‘enactment’ was intended by the draftsman of the 1975 Act. If that is wrong, however, Mr Clark submits that even if ‘enactment’ is to be construed as referring only to primary legislation, it does not follow that the deceased did not nominate pension monies “in accordance with the provisions of any enactment”. That is because the relevant NHS Pension Scheme Regulations were made by the Secretary of State in the exercise of powers conferred by sections 10 and 12 of, and Schedule 3 to, the Superannuation Act 1972. Thus Mr Clark submits that a nomination under the regulations is a nomination made “in accordance with the provisions of” the Superannuation Act, which as primary legislation clearly is an ‘enactment’. He submits that the position is similar to that in Allsop, in that the inclusion of a nomination made in accordance with the relevant provisions of the Superannuation Act 1972, if it did not include a nomination made pursuant to the regulations made under that Act, would render the provision meaningless. He submits that such a result should be avoided as a principle of statutory interpretation. He submits that a nomination made in accordance with regulations made under a statute is a nomination made “in accordance with the provisions of an enactment”.

In support of his submissions Mr Clark prays in aid observations, admittedly obiter, made by Mr Justice Anthony Lincoln in the case of Re Cairnes (deceased), Howard -v- Cairnes reported at (1983) 4 FLR 225. He took me to a passage at pages 231 to 232. Having referred to section 8 (1) of the 1975 Act, the judge said that the conditions of that section had been wholly satisfied in the case before him save as to the words “in accordance with the provisions of any enactment.” The nomination was not made in accordance with the provisions of any statute or any Act of Parliament. Counsel had argued that the word ‘enactment’ should be construed liberally to include the life assurance scheme rules drafted in accordance with the trust’s scheme arranged by the relevant employer at the airline TWA. The judge recorded that it was true that the word ‘enactment’ had, in the decided cases, been applied on occasion to regulations made in pursuance of an enactment. The Judge said in terms that he could see “that if the rules had been made in accordance with some statute, though themselves not a statute, then of course the condition of s. 8 (1) would be satisfied”; but the judge went on to say that he could see nothing in the authorities that had been presented to him which suggested that the authorities had widened the meaning of the word ‘enactment’ to embrace a scheme and a set of rules of the kind in the case before him. The judge observed that in Rathbone -v- Bundock it had been made clear that the word ‘enactment’ in that case had not even included statutory regulations. A fortiori, it was said that the word was inapt to describe a mere trust deed which was the creature of a contract between employer and employee. The judge said that no dictionary meaning had been put before him to suggest so wide a construction. In his judgment it was impossible to read section 8 (1) as itself being applicable to the case before the judge.

The judge referred to the submission of counsel that Parliament could not have intended to leave in the cold contractual schemes of a kind such as that they were dealing with in the instant case. The judge observed that the words of s. 8 (1) were very plain and Parliament had stopped short of extending its protection to private contractual pension schemes. For those reasons, the judge held that the death benefit in the case before him did not fall into the residue of the net estate for the purposes of the 1975 Act.

Mr Clark submits that the 1995 Regulations were made in accordance with the Superannuation Act 1972. Therefore, if the present case had come before Mr Justice Anthony Lincoln, it is said that he would have regarded the relevant condition in section 8 (1) as satisfied. Mr Clark submitted that although obiter, there was, therefore, judicial support for his contention. Indeed, he emphasised that the judge had said “of course” the condition of s. 8 (1) would be satisfied. Mr Clark submits that it is noteworthy that Tyler’s Family Provision (3^rd edition, 1997) draws a distinction between pension schemes where trustees exercise a discretion, albeit influenced by a nomination, and those in which the pensioner has a power of nomination without the interposition of trustees. He referred me to a passage at page 321 which reads: “If a pensioner can nominate a person to receive benefits after his death and the pension scheme is contained in an ‘enactment’ such as a statutory instrument, as happens with some public sector pensions, then the nominated property automatically forms part of the ‘net estate’ under the provisions relating to statutory nominations. If the pension scheme is not contained in any ‘enactment’, then the only way in which nominated property can form part of the ‘net estate’ is under section 10. Such a nomination probably comes within the wide definition of ‘disposition’, but it may be rare to find the requisite intention in making such a nomination, except where the effect of not making such nomination is that nominated benefits go to the deceased’s estate.”

Earlier, at pages 295 to 297, the editor of Tyler addressed the issue of statutory nominations. At page 295 it is said that: “By virtue of certain statutory provisions property such as Savings Bank accounts and money payable to a member by a Friendly Society (usually limited to specific sums) can be disposed of on death by nominations during the lifetime of the deceased. Any property passing on death as a result of a nomination made by the deceased in his lifetime in accordance with the provisions of ‘any enactment’ is automatically part of the ‘net estate’. The amount of the property or sum of money included in the ‘net estate’ is limited to the value of the property or the sum of money at the date of death, less any Inheritance Tax payable in respect thereof by the nominee.” A footnote to Tyler states that “some provisions are enumerated in the Administration of Estates (Small Payments) Act 1965, Schedule 2.” It then proceeds to set out other enactments providing for nominations. Reference is made to both primary legislation in the form of Acts of Parliament and secondary legislation in the form of regulations made by statutory instrument. At page 297 the editor of Tyler states that: “Because donatio mortis causa and statutory nominations are automatically part of the ‘net estate’ it is submitted that in deciding the incidence of any family provision order, no discrimination should be shown between property passing to personal representatives and statutory nominations and donationes mortis causa and such latter dispositions should be treated as bequests.” Mr Clark submits that there is nothing to indicate that a purposive construction should be applied to section 8 in order to exclude therefrom nominations made under public sector pension schemes that do not involve the exercise of trustees’ discretion.

Mr Jackson indicated in his oral submissions that there was no real difference between him and Mr Clark on this issue. He accepted that there was no reported authority on the point. Rathbone -v- Bundock was authority for the proposition that whether or not statutory regulations constituted an ‘enactment’ depended upon the context. Statutory instruments were not, strictly speaking, ‘enacted’, but there was authority to the effect that in the right circumstances regulations made under an Act might be read as though they were contained in an Act of Parliament. It should be noted, however, that private sector pension schemes would never fall within the scope of section 8 (1) because they were not even regulated by a statutory instrument. Mr Jackson made the point that the statutory draftsman could very easily have made express provision by adding after the words ‘any enactment’ the words ‘or statutory instrument’. Mr Jackson does, however, accept that the nomination in the present case was made in accordance with a regulation contained within a statutory instrument. He submitted that if section 8 (1) was engaged, that did not mean that the death in service monies actually fell into the deceased’s estate so as to form part of the discretionary Trust Fund. The position was that the Court had the necessary jurisdiction to direct that any award could be made out of the death in service benefit, but that did not mean that that payment fell within the deceased’s estate except for the purposes of the 1975 Act. Those were the submissions.

I can see no reason why Parliament should have wished to discriminate between nominations made under a private contractual pension scheme and nominations made under a statutory pension scheme. As to the former, it is clear from the decision of Mr Justice Anthony Lincoln in the case of Re Cairnes that such a nomination falls outwith the scope of section 8 (1). Equally, however, I can see no reason why Parliament should have wished to discriminate between a nomination made in accordance with the provisions of primary legislation and a nomination made in accordance with the provisions of secondary legislation, made pursuant to a power conferred by primary legislation in the form of an Act of Parliament. In the present case there is no immediate statutory context within the 1975 Act, similar to the provisions in Rathbone -v- Bundock, which should lead the court to view the reference to any ‘enactment’ as not extending to secondary legislation by way of statutory instrument.

I have no doubt that in enacting section 8 (1) the draftsman must have had in mind the provisions of the Administration of Estates (Small Payments) Act 1965, to which reference is made in the footnote to Tyler. Section 2 of that Act provides for an increase in the amounts disposable on death by nomination. It refers to the enactments (in the plural) and instrument (in the singular) listed in Schedule 2 to the Act. Schedule 2 contains reference to a number of Acts of Parliament but also to one statutory instrument, the then applicable Trustee Savings Banks Regulations. I can discern no reason why the draftsman of section 8 (1) should have intended that section to apply only to the Acts, and not also to the one statutory instrument, identified in Schedule 2 to the 1965 Act.

In the present case it is possible to give meaning and content to section 8 (1) of the 1975 Act by construing the reference to any ‘enactment’ as limited to primary legislation by way of Act of Parliament, but I can see no good reason for so limiting the meaning of that phrase. There is nothing within the 1975 Act which would justify such a limitation upon the scope of that section. In those circumstances, and consistently with what would appear to have been the clear view of Mr Justice Anthony Lincoln in the case of Re Cairnes, I conclude that since the nomination was made pursuant to rules made by way of statutory instrument made under a power conferred by a statute the nomination should, within the meaning of section 8 (1) of the 1975 Act, be regarded as one made “in accordance with the provisions of any enactment”. I therefore hold that the lump sum death in service payment falls to be treated as part of the deceased’s ‘net estate’.

I therefore turn to consider the various factors to which I am required to have regard under section 3 of the 1975 Act. At the outset of his submissions Mr Clark emphasised that because the Claimant is the widow of the deceased, the question for the court is whether the disposition of the estate effected by the deceased’s will is such as to make reasonable financial provision for the Claimant on the basis that ‘reasonable financial provision’ for this purpose means ‘such financial provision as it would be reasonable in all the circumstances of the case for [the Claimant] to receive whether or not that provision is required for [the Claimant’s] maintenance’. Mr Clark stresses that that is a more generous basis of provision than that in respect of any other category of applicant as in all other cases the court is concerned with what would be reasonable for an applicant to receive for his or her maintenance. When combined with the other special factors to which the court is required to have regard in the case of an application by a spouse pursuant to section 3 (2), Mr Clark submits that it is clear that the court is not restricted to considering the Claimant's financial needs but must also have regard to whether she has received a just share of the deceased’s estate.

Mr Clark proceeds to address the various relevant factors under section 3 of the Act. In the present case the Court can ignore the provisions of section 3 (1) at paragraphs (b) and (f) and focus upon paragraphs (a), (c), (d), (e) and (g), as well as the important provisions of section 3 (2). Mr Clark addresses the present financial resources and financial needs of the applicant. She receives a net monthly income on her own account of £2,832.25 (being part-time earnings and widow’s pensions). She has savings of £25,483.81. She has received the former matrimonial home, which was valued for probate purposes at £200,000, free from mortgage. She may, subject to the discretion of the trustees, receive an income which, based on £60,000 and a return of 2.5% per annum, might represent some £1,500 a year, although the Second Defendant has considered a return of as much as 4% per annum to be achievable. Again, subject to the discretion of the trustees, the applicant might receive a capital sum of up to £60,000 in 14 years’ time. Mr Clark acknowledges that this summary does not include the NHS child allowance of £21,193.71 or thereabouts which is paid to the Claimant in respect of the children. He submits that it is inappropriate to treat this payment as a financial resource of the Claimant, particularly as her resources are being compared primarily with those of her children for whose benefit the payment is made. I accept that submission.

Mr Clark acknowledges that so far as the future is concerned, the Claimant does not appear to have any unmet income needs; but he says that her disposable capital is presently limited to her savings of just over £25,000, and it is to be expected that she will require a more significant capital cushion for contingencies. She also states that she would wish to relocate in order to assist her with coping as a single parent, both in terms of her employment and her child care. She says that a house nearer the children’s school would cost a further £150,000, and that to move near her parents would also require her to find additional, but unspecified, capital. It is said that clearly the Claimant’s savings are insufficient for this purpose, and that her right to be considered as a potential beneficiary of the trustees’ discretion to appoint capital under the trust is both too uncertain and, in the light of the Letter of Wishes and the further letter, is likely to be exercised, if it is exercised at all, too far in the future to be of assistance with this need.

It is now one o’clock. I am not going to finish this judgment within the next few minutes so what I will do is to break now for lunch until five-past-two and resume the judgment then.

Before the short adjournment I had addressed Mr Clark’s submissions on the applicant’s financial resources and financial needs. I now turn to his submissions on the financial resources and financial needs of the beneficiaries. Mr Clark submits that it is necessary to consider separately the financial resources and needs of the children and of Dr. Gopal Goenka. It is said that as to the children’s financial needs, these are and will be met by the Claimant as their mother during their minority. She provides them with accommodation, pays for their child care, and pays for any necessary expenditure for them. The Claimant receives the NHS child allowance of £595.20 each month for that purpose. According to the Letter of Wishes, and the further letter from the deceased to the trustees, upon attaining the age of 18 it was the deceased’s wish that the children should be advanced by the trustees either the income of the Trust Fund directly or for it to be paid to the Claimant for them or for their bills to be paid directly.

The deceased also expressed himself to be content that the trustees might advance part of each child’s intended one-third capital share for specific purposes, such as the payment of university tuition fees. Crucially it is said to have been his intention that each child should receive one-third of the capital which, even assuming that the Claimant were to receive the capital figure of £201,000 which she seeks, would give each of the children just under £120,000. No evidence has been filed on behalf of the children and there is therefore no specific evidence regarding any specific financial needs of their own.

Turning to the First Defendant, since I have held that the death in service payment falls to be treated as part of the net estate of the deceased, Dr. Gopal Goenka falls to be treated as a beneficiary of the deceased’s estate pursuant to the provisions of section 25 (1) of the 1975 Act. He has filed no evidence specifically addressing his own financial resources and financial needs but in his Response to the Claimant’s Part 18 Request the First Defendant admits that he and his wife are reasonably financially well-provided for. In the circumstances, Mr Clark submits, and I accept, that the First Defendant’s financial needs are satisfied from his own resources.

Turning to the obligations and responsibilities which the deceased had towards the Claimant and the other beneficiaries of his estate, Mr Clark submits that since no decree absolute had been pronounced by the time of the deceased’s death, the deceased continued to have the obligations of a husband towards the Claimant. He, of course, also owed the obligations of a father towards his three sons.

Turning to the size and nature of the net estate, I have already held that it should be treated as encompassing the death in service payment. On that footing, the deceased’s net estate, after allowing for the outstanding costs of administration and the executors’ costs of these proceedings, including VAT which will be irrecoverable, is a little in excess of £700,000. That is, of course, after the former matrimonial home has passed to the Claimant.

Mr Clark then addresses the particular spouse guidelines which are set out in section 3 (2) of the 1975 Act. The Claimant is 42 years old; her marriage had lasted for 15 years by the time of the deceased’s death; and her contributions to the welfare of the family had been significant. Those contributions included giving birth to three sons, bringing them up, providing financially for the family by the Claimant’s part-time income, and caring for the children generally, and looking after the family home. I bear in mind all that is said in that regard in the Claimant’s witness statement.

Mr Clark has taken me to the decision of Mrs Justice Black in the case of P -v- G, P & P [2004] EW8C 2944 (Fam) reported at [2006] 1 FLR 431. The facts of the case are set out in the head-note. The husband in that case had made a considerable sum of money, the majority during the course of a 20-year marriage. That marriage had been in considerable difficulty for some years and divorce had been mentioned in correspondence between the couple’s solicitors. Shortly after an attempted reconciliation the husband had died unexpectedly following elective surgery on his knee. The husband’s will provided for the matrimonial home to be held on trust for the widow during her lifetime or until remarriage and then on the same trust as the husband’s residuary estate, that is to say, on discretionary trust, the potential beneficiaries being the widow and the husband’s three children, two of whom were from a former marriage. The two children of the former marriage were aged 40 and 34 at the time of the application, and the child of the marriage between the deceased and the claimant was then aged 19. The claimant, the widow, was then 56 years of age; the husband, at the time of his death, had been aged 63.

The trustees were required to have regard to the husband’s Memorandum of Wishes, which included a statement of the husband’s belief that the wife had been adequately provided for by the right to remain in the property and the pension provision she would receive and the expressed wish that the trustees should not exercise their discretion in her favour other than in the case of particular need or financial hardship which the trustees were satisfied the husband could not have foreseen. The husband’s net estate was valued by his executors at a little over £4.5 million. The joint income of the household before the husband’s death had been over £300,000 per annum gross. The widow’s future annual income from pension provision was calculated as amounting to £90,173 net. The defendants conceded that reasonable financial provision had not been made for the widow and the issue at trial was the quantum of revised provision which should be made. Mrs Justice Black ordered payment of £2,000,000 to the widow by the estate, to include the former matrimonial home which was worth £900,000. In the course of her judgment Mrs Justice Black held as follows: (1) When assessing the relevant assets there was a potentially uneasy interplay between the obligation of the court under section 3 (2) of the 1975 Act to have regard to the provision which the applicant might reasonably have expected to receive if there had been a divorce rather than a death, which might dictate a historical view of the value of the assets, and the obligation to take into account the facts as known to the court at the date of the hearing under section 3 (5). The objective of the statute could be achieved without embarking upon a slavish and wholly artificial comprehensive enactment of the ancillary relief process involving, for example, the sterile process of calculating CGT which it was known would not be payable, or the artificial process of factoring in costs of sale when there was no known intention to sell any of the assets. The more pragmatic approach was to use, for the purposes of section 3 (2), the actual value of the assets as at the date of the hearing. (2) The statute did not contemplate the playing out of the entire fictional ancillary relief case, but rather that the court should simply reach a sufficient conclusion about how it would have been resolved and to take that factor into account in considering what would be reasonable financial provision under the 1975 Act. An over-exact approach to section 3 (2) would provide a thoroughly undesirable opportunity to spend the assets of the estate on litigation, rather than on provision for the family, without materially assisting the court in its task under the 1975 Act. The conclusion that an equal division of the assets would have been the likely outcome on divorce in the instant case was sufficient guidance for the purposes of section 3 (2). (3) A straight 50% division, with the pension treated as payment on account, would not constitute reasonable provision for the wife. The difference between divorce, when there were two surviving spouses for whom to make provision, and death, where there was only one, would not infrequently be reflected in greater provision being made under the 1975 Act than would have been made on divorce, and this might legitimately be so even where the estate was a relatively large one. This was not to ignore the importance of testamentary freedom. The wish to be in a financial position to make provision by will for adult children, while not a financial need, had been recognised as a valid consideration where resources exceeded need.

In the course of his oral submissions I was taken by Mr Clark to paragraphs 61 through to 70 of the judgment. I note in particular (at paragraph 67) Mrs Justice Black’s view that it was not necessary to embark upon a slavish and wholly artificial comprehensive enactment of the ancillary relief process. At paragraph 69 Mrs Justice Black indicated her preference, wherever possible, for the more pragmatic approach of using, for the purposes of section 3 (2), the actual value of the assets as they were following the deceased’s death. She also referred to the utility of carrying out a ‘White -v- White cross-check’ of the figure that the judge had in mind to award the applicant, using the ‘present-day values’ for the assets.

Mr Clark took me to Mrs Justice Black’s discussion of the provision on divorce under section 3 (2) of the 1975 Act at paragraphs 223 through to 236 of the Judgment. I note in particular Mrs Justice Black’s observation (at paragraph 224) that the provision that the applicant might reasonably have expected to receive on divorce was only one of the factors to which the court was required to have regard. I also note her conclusion (at paragraph 236) that “an equal division of assets would have been the likely outcome on divorce” and that such was sufficient guidance for section 3 (2) in the circumstances of that case.

In the case before me Mr Jackson, at paragraph 24 of his skeleton, accepted that, having regard to the length of marriage and the Claimant’s contribution to raising the children, the matrimonial court should approach the exercise on the basis of equality. Mrs Justice Black addressed the Inheritance Act exercise at paragraphs 237 through to 249 of her judgment. At paragraph 238 she stated that it was important to remember that the provision for a spouse was to be such as would be reasonable in all the circumstances of the case for the wife to receive, whether or not that provision was required for her maintenance. In some ways that was said to make the task for the court harder. There was neither the discipline of considering whether this or that sum could properly be said to be required for maintenance nor the straitjacket so often imposed by a scarcity of resources.

At paragraph 241 Mrs Justice Black referred to the executors’ recognition that the reality of the case was that a straight 50% division, with the pension treated as a payment on account, did not make reasonable provision for the applicant. The spotlight that had been turned on the up-to-date figures and financial planning for the future had enabled the judge to look at what the realities of life were likely to be for the applicant. The judge was struck by the force of the repeated observations in the decided authorities about the difference between divorce, where there were two surviving spouses for whom to make provision, and death where there was only one. It seemed to Mrs Justice Black probable that that difference would not infrequently be reflected in greater provision being made under the 1975 Act than would have been made on divorce, and that that might legitimately be so even where the estate was a relatively large one. In saying that, the judge indicated that she had not ignored the importance of testamentary freedom. The wish to be in a financial position to make provision by will for adult children, while not a financial need as such for the purposes of section 25 of the Matrimonial Causes Act 1973, had been recognised in White -v- White as a valid consideration where resources exceeded need. The judge took into account the obvious desire of the deceased to make provision by his will for his children even though they did not seek to put forward a case of need under the 1975 Act.

At paragraph 247 the Judge stated that part of her overview of the provision that she was contemplating involved looking to see, first, what proportion of the net estate that gave the applicant in addition to the pension and, secondly, what sums the beneficiaries would be left with. It is to be borne in mind that in that case the estate was considerably larger than in the present case. The husband had been 63 at the date of death rather than, as in the present case, 41; and apart from the child of the deceased’s marriage to the applicant, the two children of the earlier marriage were clearly advanced in adult life, being aged 40 and 34. Even the child of the marriage had attained his majority, being 19 years of age. Those are significant differences from the facts of the present case.

Mr Clark emphasised that it was clear from P -v- G that the court was not required to embark upon a quasi-ancillary relief exercise in order to calculate the amount that the Claimant would have received on divorce. Rather it was required to consider in general terms what the Claimant might have received as a cross-check to its conclusion on whether she had received reasonable financial provision. In the course of his oral submissions, Mr Clark submitted that the court should look at the value of the assets as at the date of the hearing, and use equal division as a cross-check.

He also invited the court to bear in mind that in considering the deemed-divorce test, that factor was only one among the many factors that the court was required to take into account. Moreover, he invited the court to bear in mind that the divorce test is a hypothetical one, and that the context of death is very different from divorce so that it is extremely difficult to apply it in a meaningful way. Nevertheless, on the basis of the White -v- White line of authorities, the court should have regard to the fact that on divorce a court would have applied the yardstick of equality of division of assets, so that if the provision on death failed to provide the survivor with at least equivalent provision it might properly be regarded as unreasonable.

Mr Clark submitted that in the present case many of the assets had fallen into the estate following, and in consequence of, the deceased’s death. Rather than applying the divorce test literally so as to exclude such assets, he submitted that the correct approach was to take into account all the assets in the estate, and all the assets in the hands of the Claimant, after death in accordance with the approach mandated by section 3 (5) of the Act. He submitted that that was the approach adopted in P -v- G. Further, in applying the deemed divorce test to the facts of this case, there were two particular valuation issues. First, there was the question of the lump sum death in service pension payment. Secondly, there was the question of the valuation of the Claimant’s entitlement to be considered for an appointment of income and capital under the Discretionary Trust Fund. It was the Claimant’s case that this entitlement should be treated as of no value.

Prior to the disclosure of the further letter to the Trustees dated the 10^th September 2012, the Claimant’s position had been that her nomination as a beneficiary, and the terms of the original formal Letter of Wishes, made it not unlikely that she would receive some, or all, of the £60,000, albeit that the Claimant had always been concerned over whether the trustees would act in accordance with the Letter of Wishes given the hostility between herself and her father-in-law. However, the further letter of the 10^th September is said to make it clear that her position is far more vulnerable than she had previously understood. In particular, the £60,000 was to be treated as a maximum, and not a minimum, payment; and it was specified that if the Claimant should, in the view of Dr. Goenka and his fellow trustees, make it difficult for any of them to see the children, or if she should remarry, then she should not receive any capital. Mr Clark submits that it is apparent that the First Defendant has already taken the view that the Claimant is making it difficult for him to see his grandchildren. He complains about it in his witness statement, and he reiterates the complaint in his Response to the Part 18 Request.

In these circumstances, Mr Clark submits that it would appear that the First Defendant and his co-trustees are likely, in the exercise of their discretion, to decide not to appoint capital in favour of the Claimant, and to be able to do so without thereby departing from the wishes of the deceased; and, indeed, in doing so, to act in accordance with such wishes. Mr Clark submits that the estate, together with the pension monies, totals the sum of £705,000 or thereabouts. It is said that the Claimant’s personal assets, excluding her entitlement under the will, comprise her present savings (some £25,000-odd) and the proceeds of the Clerical Medical policy. Together these amount to some £144,000. Taking into account the value of the equity in the house as at the date of death, the Claimant will have assets of some £226,000, or thereabouts, if her potential entitlement under the Discretionary Trust Fund is entirely discounted. On that basis, it is said that the Claimant will hold only less than 27% of the total assets. That, it is said, is a sum far less than she might have anticipated she would receive on divorce.

Finally, Mr Clark addressed any other matters, including conduct. He submits that the Claimant has complaints regarding the conduct of the First Defendant. These relate not only to the conduct of the proceedings, but also to his conduct in relation to the nominated pension monies. Having initially indicated that these were held on trust for the children, it is said that he has then resiled from that position, and has adopted the position that he owns the monies beneficially, so that he is now free to decide how they should be dealt with. It is said that in so doing, the First Defendant has clearly departed from the wishes that the deceased has set out in the Letter of Wishes.

In the course of his oral submissions Mr Clark emphasised that the £60,000 which the Claimant might receive as a discretionary beneficiary of the trust created by the deceased’s will is a maximum sum, it is defeasible, and, in the circumstances that have come about, it is likely to be defeated. It was clear from the Letters of Wishes that the deceased had intended to make provision for the Claimant comparable to that which she would have achieved on her divorce. The Claimant seeks to be awarded the full amount of the death in service pension. She accepts that that should be in substitution for her entitlement to be considered as an appointee of capital under the Discretionary Trust Fund.

Mr Clark emphasised that at the date of death, and thus on the hypothetical divorce, the life assurance policies had no value whereas they do now. He invited the court to have regard to the disparity in the relative incomes of the deceased during his lifetime (some £100,000 per annum) and of the Claimant (something in the order of £22,000 per annum). He submitted that the court should not ignore the assets that had come into the estate as a result of the deceased’s death, and also the loss of the deceased’s income on an on-going basis. The court should consider also what financial remedy the court might have awarded if a divorce had taken place on the basis of the assets as they are as of today’s date. The interest under the trust should be treated as being of no value. The court should take the view that it is most unlikely that the trustees will exercise their discretion to appoint capital in the Claimant’s favour. Such non-appointment would be perceived by the trustees as acting consistently with the deceased’s Letters of Wishes.

Mr Clark accepted that the Claimant’s income under the National Health Service pension scheme exceeded that which she had been receiving before her husband’s death as he emphasised that she was looking after, and continuing to look after, the children. He also invited the court to bear in mind that the deceased no longer requires any income. But for his death, he would have continued to earn in the region of £100,000 a year. So the court should not treat the income presently being received by the Claimant as satisfying the cross-check of the yardstick of equality of division of assets on divorce.

So far as the incidence of any award under the 1975 Act was concerned, Mr Clark invited the court to bear in mind that the pension monies had been expressly intended for the benefit of the children. In the event, they had been appropriated by the First Defendant for his own benefit. To ensure that any order for reasonable financial provision operated fairly as between the children and the Claimant the Court should direct that the entirety of any provision should come from the pension monies. Fairness dictated that that fund should finance the entirety of the award. In all the circumstances, Mr Clark submitted that the will did not make reasonable financial provision for the Claimant. Through the will she had received equity in the house with a value of £81,118 and personal chattels with an estimated value of £1,000. By contrast, the children were likely to receive the benefit of sharing in a Trust Fund which, with the pension monies (if regard were to be had to those even though they formed no part of the Trust Fund) had a value in the region of £600,000.

In view of the likelihood that the Claimant would not receive the £60,000 mentioned in the Letter of Wishes, it was to be expected that the sum of approximately £400,000 in the Trust Fund would be divided equally between the three children, with each receiving about £135,000. Furthermore, either the First Defendant would retain the pension monies of £201,000 for his own benefit, or he would eventually settle them for the benefit of the children, as requested by the Letter of Wishes, thereby adding a further £67,000 each to their entitlement. In those circumstances Mr Clark submitted that reasonable financial provision should be in the region of £210,000. That would provide the Claimant with the capital required in order to move nearer to the children’s school, or nearer to her parents, in order to facilitate her managing both work and child care commitments. It would also provide her with a capital cushion of £50,000 approximately for contingencies, such as further maintenance of any house.

Mr Clark emphasises that as a spouse, the claim by the widow is not limited to her need for maintenance but rather is a claim to reasonable financial provision for her as a former spouse who might, on divorce, have expected that the court would apply the yardstick of equality of division. He submits that on divorce the Claimant might reasonably have expected to receive, or retain, assets to a value of £425,000, taking into account the lump sum pension monies. By contrast, by the division effected by the will the Claimant has received effectively £225,000 (including her savings). It is said that there is, therefore, a shortfall of some £200,000, taking the pension monies into account. The court is, therefore, invited to make an order for a lump sum payment from the estate of £201,000 to the Claimant pursuant to its powers under section 2 (1) (b) of the Act. It is also asked to make consequential orders pursuant to section 2 (4) (a) and (c) requiring the First Defendant to pay the award from the pension monies subject to the nomination, and removing the Claimant as a beneficiary of the trust. He accepts that the £201,000 should be in substitution for, rather than in addition to, the Claimant’s right to be considered for appointments of capital under the Trust.

Mr Jackson addressed the Court for 40 minutes. He did not take issue with much of what Mr Clark had said but he did differ in relation to the application of the statutory hypothesis of provision on divorce. He accepted that the case of P -v- G was authority for the proposition that one should take the value of the assets as at the date of the court hearing; but he submitted that P -v- G was no authority for the further proposition that one should have regard to assets, such as life assurance policies, that only become available as a result of death. He indicated that there was no evidence that such policies had any surrender value, and he (Mr Jackson) knew of nothing to indicate that they had.

In my judgment, Mr Jackson is correct that the life assurance policy monies should not be taken into account insofar as the hypothetical provision on divorce is concerned. But as Mrs Justice Black made clear in P -v- G, the provision that an applicant might reasonably have accepted to receive on divorce is only one of the factors to which the court is required to have regard. In my judgment, the policy monies that have fallen into the estate as a result of the deceased’s death do need to be taken into account when one considers what Mrs Justice Black referred to as “the Inheritance Act exercise”.

As a result of my decision on the effect of section 8 of the 1975 Act, clearly I must also have regard to the death in service payment as constituting part of the net estate of the deceased for 1975 Act purposes. Mr Jackson indicated that even though the divorce court might have had some regard to the value of the deceased’s pension on divorce, it would also have taken into account the fact that that pension would not be received for at least another 19 years, since the deceased was 41 at the date of his death and the normal retirement age as a doctor would appear to be 60, although retirement can, of course, be deferred.

This morning, before I embarked upon delivering judgment, there was some discussion about the lump sum that might have been payable on the deceased’s retirement under the National Health Service pension scheme. It emerged that the lump sum payable on retirement would have been likely to have been some £75,000. That, of course, would not have fallen in before, at the earliest, the deceased attained the age of 60. There was some suggestion as to whether the pension might have been commuted into a lump sum; but on a close evaluation of the relevant provisions of the scheme, it does not seem to me that there would have been any realistic prospect of a divorce court taking the view that it should treat the deceased’s pension entitlement on retirement as having been commuted into a lump sum. In any event, the divorce court would have had to bear in mind that the pension would not become payable for at least another 19 years. This morning Mr Clark also confirmed that whilst the Claimant had been receiving the deceased’s salary for the first 6 months after this death, she had also been receiving the NHS child allowance payment, although not her own NHS widow’s pension.

Mr Jackson also made the point that the Claimant had put in no evidence as to the current market value of the former matrimonial home. He invited the court to take judicial notice of the fact that property prices had risen in the two years since the date of the deceased’s death. He submitted that there was a glaring gap in the Claimant’s own evidence in failing to address the divorce hypothesis on the basis of the correct values of the matrimonial assets. He emphasised that a considerable part of the present value of the deceased’s estate is the result of the payments made under life assurance policies as a result of the deceased’s death. Mr Jackson submitted that the death in service benefit was no part of the divorce hypothesis. If it were, one would have to bring in the Claimant’s own pension income and her widow’s pension, her state pension and her future National Health Service pension prospects.

Mr Jackson emphasised that the Claimant had received some £50,000 of the Claimant’s salary after his death, although he did acknowledge that credit had to be given against that for the fact that whilst she was receiving it she was not in receipt of her NHS widow’s pension. Mr Jackson submitted that the conduct of the First Defendant was not of any relevance. What was relevant was how the Claimant had been provided for. The court should be looking at the conduct of the deceased, and not at the First Defendant’s motivation. So far as that is concerned, it does seem to me that one is entitled to have regard to the conduct of the deceased in having nominated his father to receive the death in service payment. He did so with a view to it being added to the residuary estate; but the deceased failed to ensure that there was any enforceable obligation in that regard, and the First Defendant has made it clear that he regards the matter as one within his own personal unfettered discretion.

Mr Jackson accepted that the court would be entitled to fail to take into account the Claimant’s potential entitlement under the Discretionary Trust Fund; but insofar as she did not receive any payment, there was all the more available to the children. He submitted that it was overwhelmingly likely that the needs of the children, insofar as they were not being met from the NHS children’s pension, would be met out of the assets of the Discretionary Trust Fund. He emphasised the fact that the Claimant accepts that she does not have any present income needs, nor does she have any likely future ascertainable income needs. She has given no evidence of any capital needs, either present or future. He submitted that her case was predicated on a mere desire to move without having provided any hard evidence of the costs involved, or even the place to which she might wish to move if she were to move to be closer to her parents. Mr Jackson reminded the court that, on the basis of the First Defendant’s evidence (at paragraph 23 of his witness statement), the Claimant only lives about two miles from her children’s school.

For all those reasons, and for those set out in his written skeleton argument, Mr Jackson submitted that there was no lack of any reasonable financial provision in favour of the Claimant, and the court, therefore had no jurisdiction to make an award in her favour. If there were to be any award, he submitted that there was no reason why it should come out of the lump sump pension payment. He submitted that that should, as had been indicated from the passage in Tyler, be treated as equivalent to a specific bequest in favour of the First Defendant. The burden of any award should come not from such a bequest, but from the residuary estate in the form of the Trust Fund. Mr Jackson indicated that there was no evidence from the children of their income or capital needs, and there was therefore no reason why the burden of any award should not fall upon the Trust Fund.

Mr Goldsmith, in his oral submissions, addressed the needs and resources of the Claimant. He invited the court to contrast the Claimant’s present position with her life before the death of her husband. At that time she had had no legal interest in the matrimonial home. Her earning capacity then was the same as now. Indeed, the Claimant’s earning capacity may increase as her children grow older. Mr Goldsmith directed my specific attention to what was said at paragraph 8 of the Claimant’s witness statement. There she referred to her husband as controlling most aspects of the marriage, including the finances. She was said to have had access only to her part-time salary, which also had to pay for the child care in order to allow the Claimant to work. Her salary supported herself and the children. She said that she was given no access to her husband’s salary. He refused in any way to help with child care, which allowed the Claimant only to work part-time hours, and she was unable to advance her career further; but she also looked after all the aspects of the household, allowing her husband to advance his career fully. He was said to have refused to provide any support to enable the Claimant to advance her own career and, for that reason, she was still employed in the same capacity, that of a practice nurse, that she had enjoyed some 16 years previously. Had she been able, she would have significantly advanced her career to date, would be on a far better salary, have greater earning potential, and a more substantial pension. She says that she was allowed no say in the finances, or any access to them.

Mr Goldsmith submitted that the Claimant’s financial position has clearly improved from that state. He, too, emphasised the lack of any professional open market valuation of the former matrimonial home, and he directed my attention to a letter written by the Second Defendant to the Claimant’s present litigation solicitors on the 15^th November 2012 where (at numbered paragraph 4) the Second Defendant had invited the Claimant to provide him with some idea of the values of 1 Keswick Villas because he had not wanted to incur the cost of a formal valuation in relation to a property which, since it was specifically devised to the Claimant, was an exempt gift for Inheritance Tax purposes. Mr Goldsmith invited the Court to attach considerable doubt to the £200,000 probate valuation.

So far as the Clerical Medical policy was concerned, Mr Goldsmith indicated that there was nothing to suggest that the Claimant had ever paid or contributed to the premiums on that policy; indeed, her evidence would suggest the contrary. Mr Goldsmith invited the court to find, and I do, that the deceased put that policy in place to provide a method for discharging the mortgage on the matrimonial home. On that footing, one ought not to look solely at the value of the equity in identifying the value of the matrimonial home which passed to the Claimant under the terms of the deceased’s will. Mr Goldsmith invited me to find, and I do find, that effectively the deceased made a gift to the Claimant of the former matrimonial home, free of any mortgage. That home had a probate value of £200,000. Beyond accepting that that is likely to have been a conservative value, and is one that is now two years out of date, it would not be right, in my judgment, for me to arrive at any other conclusion as to the present value of 1 Keswick Villas.

Mr Goldsmith drew my attention to paragraph 2 of the Claimant’s Response to the Request for Further Information. That made it clear that the Claimant had discharged certain capital needs out of the salary she had received during the six months immediately following her late husband’s death. To that extent, he submitted that any capital needs had already been taken into account. Mr Goldsmith accepted that the second Letter of Wishes could give the court some cause for concern, but he invited the court to bear in mind that if it is being suggested that the trustees would fail properly to consider the exercise of their discretion in the Claimant’s favour, then the Claimant’s remedy would be to seek to remove the trustees from office.

So far as the children’s needs are concerned, Mr Goldsmith invited me to bear in mind that the deceased had clearly contemplated that these would include a university education, and such would be consistent with the status of the deceased and his family as medical practitioners. Mr Goldsmith reminded me that the case of P -v- G required the court to refrain from going too far into sterile debates about such matters as Capital Gains Tax. He accepted that the court should look at the position at the date of trial, but that did not require the court to take into account assets that had only become available as a result of the deceased’s death. He accepted that if the death in service benefit formed part of the net estate, as I have held it does, then any award in favour of the Claimant should come out of that death in service provision (as the Claimant herself had recognised in paragraph 23 of her witness statement and in the claim form). The reason for that was that in his Letters of Wishes the deceased had nominated the death in service monies in favour of his father in order to keep them outside the estate for Inheritance Tax purposes, but on the footing that they would form part of the Trust Fund available for the deceased’s children. If the Claimant were to be held to be entitled to any greater financial provision than that contained within the will itself, then the logical source should be the death in service benefit. That would be consistent with the requirement under section 3 (1) (g) of the 1975 Act to have regard to any other matter which in the circumstances of the case the court might consider relevant; and it would also be consistent with the requirement under section 3 (1) (d) to have regard to the obligations and responsibilities which the deceased had towards the Third to Fifth Defendants as his children. In failing to ensure that the death in service payment was subjected to a binding obligation in favour of his children, the deceased should be treated as having failed to have regard to his obligations and responsibilities towards his sons.

In his reply, Mr Clark invited me to bear in mind that the Claimant’s history of employment had been punctuated by absences due to her three pregnancies, so that her pension entitlement had been interrupted and would not be as great as might otherwise have been the case. It would also reflect the part-time nature of her employment due to the Claimant’s child care responsibilities. He invited the court to take the probate valuation of the house as at the date of death. He also made the valid point that if that did not represent the current open market value of the property because of any subsequent appreciation in property values, then any alternative property would have undergone a similar increase in value, and any differential in the price to be paid for such property, as against the present value of 1 Keswick Villas, would be correspondingly increased, thereby increasing the Claimant’s capital needs.

Mr Clark invited me to bear in mind that the children could not be excluded from any benefit under the Discretionary Trust Fund, consistently with either Letter of Wishes, and to contrast that with the position of the Claimant, in relation to whom the trustees might well take the view that she should be so excluded.

Those were the submissions. I have borne all of them firmly in mind. What I have to do, as Mr Jackson submitted, is to consider, first, whether the will does indeed fail to make reasonable financial provision for the Claimant. I must approach the matter objectively and with knowledge of the facts as they presently stand. I must then go on to consider, if I am satisfied that the will does not make reasonable financial provision for the Claimant, what further provision should be made for her. In doing so, I am required to have regard to the matters identified in sections 3 (1) and 3 (2) of the 1975 Act, bearing in mind the facts as known to the court at the date of this hearing.

In the particular circumstances of the present case, the divorce factor, in my judgment, carries little weight. As Mr Jackson identified in his written skeleton, the assets of the marriage effectively comprised the equity in the matrimonial home (some £81,182) and the amounts standing to the credit of the deceased’s bank and building society accounts and his premium bonds (a little over £67,600). I should also bear in mind that the Claimant would appear to have had savings in the order of some £25,000. Given the ages of the parties, and the fact that the deceased would not be retiring for almost another 20 years, and that the Claimant had an earning capacity and a pension entitlement of her own, it seems to me that little additional value would have been attributed to the deceased’s own pension. It is likely that the divorce court would have adopted a clean break solution and would have made provision for the deceased’s greater pension entitlement by increasing the amount of the bank and building society deposits to be attributed to the Claimant, and by awarding her a greater share in the equity in the matrimonial home, probably the entirety.

What is clear to me, however, is that any award made by the divorce court would not have given the Claimant as much as she now enjoys, either in terms of income or in terms of having a home free from mortgage. Therefore, whilst it may be useful as a cross-check, it does not seem to me, in the particular circumstances of the present case, that the divorce provision hypothesis is of particular relevance in the circumstances of the present case.

This is not a case in which the Claimant’s own financial resources and financial needs dictate that reasonable financial provision has not been made for her on a maintenance basis. Mr Clark recognised this. He did not suggest that the Claimant needed any award for her maintenance. What he emphasised was that this is a case in which the standard of reasonable financial provision is not the maintenance standard, but the provision of what it would have been reasonable, in all the circumstances of the case, for the Claimant to have received, even though that provision was not required for her maintenance. I have to bear in mind that this is not a case where I should regard the other beneficiaries of the estate, whether the First Defendant himself (in relation to the lump sum pension payment) or the children, as having any particular financial needs, either present or likely to arise in the foreseeable future, which are not capable of being met, even if I make an award in the Claimant’s favour. I do have to have regard to the Claimant’s age, the 15-year duration of the marriage, and the considerable contribution that the Claimant has made to the welfare of the family by looking after the home and caring for her husband and her three sons. I have borne all of those factors in mind.

I approach the matter on the footing that the Claimant has received the matrimonial home free of mortgage. I attach little weight to the fact that that mortgage was not discharged directly from monies belonging to the estate. I am satisfied that the deceased intended the Claimant to have the former matrimonial home free from mortgage, and that he achieved this by means of the Clerical Medical policy. The Claimant is well provided for in terms of a home, and she is well provided for in terms of her income needs, and those of her children. Should she be entitled to any more?

The deceased recognised that she should receive up to £60,000 or, if less, a quarter of his estate. The £60,000, I am satisfied, was arrived at because, as is apparent from the Letter of Wishes and the further letter to the Claimant herself, the Claimant thought that this represented the approximate value of his savings. In fact, those savings were slightly more than this, £67,651 or thereabouts. The deceased provided that the Claimant should be entitled to the income on this sum, and should be entitled to the capital therefrom once the youngest of the three children reached the age of 25, but only as the result and exercise of the trustees’ discretion. In the events that have happened, it seems to me that there is a very real risk that that discretion will not be exercised in the Claimant’s favour. I am not in any way criticising any of the trustees if that is the case. It is quite clear that the deceased wanted his own family to maintain contact with his sons. That is understandable; and I have every sympathy with it. It is not possible for me to attribute any blame for the situation that has arisen in terms of the lack of contact between the First Defendant and his grandsons since the date of his son’s death. I merely indicate that it would be most desirable, in everyone’s interests, if such contact can be resumed once this litigation is out of the way. That is clearly what the deceased himself would have wanted, and it is something which should, therefore, benefit all of the three grandsons.

So I do not criticise the trustees if they take the view that they should not, consistently with the deceased’s expressed wishes, exercise the discretion conferred upon them in favour of the Claimant. Nevertheless, it does seem to me to be wrong that the matter should have been left as a matter of discretion, rather than entitlement. In my judgment, the Claimant should be entitled to an award of £67,670 to reflect the value, as it actually was, of the monies standing to the credit of the deceased’s bank and building society accounts and his premium bonds. The real issue is whether the Claimant should be entitled to any more.

I have considered whether there should be an equal four-fold division of the monies which form the net estate, some £705,000. I can see some justification for an equal division of those monies between the Claimant and her three sons. That would have amounted to an award of some £176,000. Taken together with the £226,000 represented by the value of the house and of the Claimant’s own savings, that would have represented some 43% of the total value of those assets, amounting to some £931,000. I have, as I say, given anxious consideration to that; but what I have to decide is whether the will fails to make reasonable financial provision for the Claimant.

One of the factors I have to bear in mind is that, but for the deceased’s suicide, the divorce would, no doubt, have proceeded during the course of the following year to a conclusion, and the Claimant would have stood to receive nothing more than, at most, the value of the house, subject to the existing mortgage, and the monies standing to the credit of the deceased’s bank and building society accounts and premium bonds. It does not seem to me to be right, in the particular circumstances of the present case, for the Claimant to seek more than that. True it is that because of the deceased’s suicide, additional assets fell into his estate, and the deceased clearly had in mind the death in service payment because he nominated it in favour of his father. Whether or not he had in mind the proceeds of the other life policies one simply does not know. But if the divorce had proceeded to take its natural course, the Claimant would have had a clean break and would have come away from the marriage without any call upon the death in service payment, or the payments received under the life policies as a result of the deceased’s suicide.

In failing to make any greater provision for the Claimant than I have previously indicated, it does not seem to me that the deceased can be said to have failed to make reasonable financial provision for the Claimant. I am satisfied that the Claimant should receive the sum of £67,670 (or thereabouts) which represented the deceased’s bank and building society account balances and his premium bonds, and she should have those absolutely, and not as a matter of discretion; but it does not seem to me that she should be entitled to anything more. I accept the joint submissions of Mr Clark and Mr Goldsmith that that award should come out of the National Health Service death in service payment. That was clearly intended by the deceased to form part of the Trust Fund available to his children. It would be wrong if his children suffer by the depletion of that Trust Fund as a result of any award coming out of that, rather than out of the death in service payment. I reject Mr Jackson’s submissions to the contrary.

If the Claimant is, after I have heard submissions on costs, entitled to an award of costs in her favour, then it seems to me that that also should come out of the death in service payment; but I await submissions on costs.

For all of those reasons, therefore, I hold that the will does fail to make reasonable financial provision for the Claimant, but only to the extent of an award in the order of £67,670 (or thereabouts), which should come out of the death in service payment. The Claimant is, in my judgment, entitled to no more.

This is my extemporary judgment on the issue of costs. I have already taken some three and a half hours delivering a substantive extemporary judgment in this matter which concluded at about 3.35 this afternoon. I then adjourned to enable counsel to take instructions on issues of costs arising from my extemporary substantive judgment. The court resumed at five-to-four this afternoon, and I have heard some one hour and five minutes by way of submissions on costs. It is now five-past-five and I have to deliver a further extemporary judgment on the issue of costs.

For the Claimant, Mr Clark submitted that the Claimant should recover her costs, and that they should be ordered to be paid by the First Defendant on the indemnity basis. Mr Clark’s alternative submission was that if the First Defendant is not ordered to pay the costs personally, then they should be paid out of the death in service monies, and in advance of the costs of any other party. Mr Clark also sought a payment on account of the Claimant’s costs in the sum of £30,000.

In support of his submissions, Mr Clark took me through a series of letters dealing with the issue of settlement, beginning with, effectively, a without prejudice save as to costs offer of the 8^th January 2013 from the Second Defendant, Mr Victor Welsh, in his capacity as the solicitor for the executors and also, apparently, the trustees. That letter, written on the 8^th January 2013, and thus even before the Grant of Probate, to the Claimant’s solicitors, was an offer from the trustees to advance to the Claimant £60,000 immediately as part of any settlement. That would be in addition to the Claimant’s widow’s occupational pension, her widow’s state pension, the Defendant’s pension, the child benefit, and the potential for her to receive for the children income from the Discretionary Trust Fund, and the Claimant’s own potential earnings. That, on its face, would appear to have been an offer on the part of the trustees. Mr Jackson says that on a true analysis it must have been an offer from the estate because, at that point, there had not even been any Grant of Probate.

The response to that letter, on the 15^th January 2013, was that the offer of £60,000 was not acceptable. The Claimant indicated that she would accept £175,000 in settlement of her claim. That was on the 15^th January 2013.

On the 25^th January, the Second Defendant indicated that the First Defendant was not minded to increase his offer of £60,000 out of the Trust Fund. On the 3^rd May 2013 the Claimant’s solicitors wrote indicating that counsel had settled the Claimant’s claim at £201,000. In an effort to bring the matter to a speedy conclusion, and to avoid any additional costs being incurred by the estate, the Claimant was prepared to repeat her earlier offer of the 28^th January to accept £175,000, inclusive of costs, to settle her claim against the estate.

On the 14^th May 2013 the Second Defendant wrote saying that potentially any monies paid to the Claimant, additional to those provided in the will, would be taken from the Claimant’s own children. The First Defendant repeated his previous offer to settle and rested with the same.

There matters rested until the 14^th April 2014 when the Second Defendant made a without prejudice save as to costs Part 36 offer in the sum of £100,000 in full and final settlement of all claims which the Claimant might have against the executors, the First Defendant as statutory nominee, and the trustees of the will. That offer was expressed to be an “offer” on behalf of the First Defendant as executor of the estate. Mr Clark makes the point that by this stage the Third to Fifth Defendants had been joined as co-Defendants. The money was offered from the residuary estate, and not from the death in service payment. The offer was made without any consultation with the Official Solicitor on behalf of the infant Defendants. Thereafter the First Defendant steadfastly refused to make any offer out of the death in service payment.

Mr Clark contends that the executors could not compromise the claim out of the estate otherwise than with the consent of the Official Solicitor, on behalf of the Third to Fifth Defendants, and the approval of the court. The only way in which the case could be compromised without the consent of the Official Solicitor and the approval of the court would have been if any payment had come from the death in service monies, but such a proposal was never forthcoming from the First Defendant. Rather he was making offers that he had no power to make.

The offer of £100,000 was later increased on the 22^nd May to £120,000 but, again, that was to be borne out of the Trust Fund. The Claimant’s solicitors questioned whether the Official Solicitor had ratified that offer, and it became clear that he was not prepared to do so.

Much later, on the 21^st July, the Claimant offered to settle for £150,000 exclusive of her costs to be borne rateably by the two funds, namely, the residuary estate and the nominated monies, but that would have to be subject to the approval of the Official Solicitor, which was never forthcoming. The First Defendant, at all material times, refused to countenance any payment out of the nominated monies, and he refused to proceed to mediation otherwise than on the basis that no payment would be made out of the death in service payment.

Mr Clark accepts that the Claimant has not recovered as much as any of her offers, but the position of the First Defendant throughout had been that he had been unwilling to make any offer of settlement from the death in service monies. He made it clear that he was unwilling to budge one inch from that position, and he made it a pre-condition of any mediation. Mr Clark submitted that the First Defendant had made offers that he had no power to make, first of all, out of the Trust Fund, and then out of the estate, and in disregard of the interests of the children, whose interests lay in ensuring that the estate and the Trust Fund remained free from any claims of their mother and that the incidence of any award and costs was borne from the death in service payment, rather than out of the estate and the residuary Trust Fund. Mr Clark submitted that all of that took the case out of the norm. He referred me to the commentary on indemnity costs awards at paragraph 44x4.3 (at page 1687) of the current (2014) edition of the White Book. Mr Clark reminded me that although the Claimant had not succeeded in recovering as much as she had claimed, she had been successful in the disputed contention that the death in service payment monies formed part of the deceased’s net estate. For all of those reasons, Mr Clark submitted that the Claimant should be entitled to recover her costs from the First Defendant personally, to be assessed on the indemnity basis; but if not, those costs should be borne out of the death in service monies and should be paid in priority to the costs of any other party. He invited the Court to order an interim payment on account of £30,000.

For the Official Solicitor, representing the Third to Fifth Defendants, Mr Goldsmith reminded me that the court has already ordered that the costs of the Official Solicitor should be paid out of the estate on an indemnity basis. I accept that any order for costs I make in relation to the Official Solicitor should be expressed to be without prejudice to paragraph 6 of the Order of the 31^st March (as amended by paragraph 1 of the Order of 15^th May 2014). Subject to that caveat, Mr Goldsmith submitted that the Official Solicitor’s costs should, in the first instance, be paid out of the death in service benefit rather than out of the estate generally. Alternatively, he submitted that the First Defendant should pay the Official Solicitor’s costs personally. He invited the Court to make an express finding that there was no need for the executor to incur any additional costs in a representative capacity after the date of the costs and case management conference.

In the course of his submissions, Mr Jackson made it quite clear that he and his instructing solicitor were here, not at the expense of the estate, but at the expense of the First Defendant in his capacity as statutory nominee of the death in service benefit payment. I should not make a finding that there was no need for the executors to incur any additional costs since the date of the costs and case management hearing because the executors, as such, will inevitably have been involved in considering and making offers of settlement after that conference; but my order should record that the executors, in their capacity as such, are not entitled to recover any costs for representation at this trial. That is consistent with the position as explained to me by Mr Jackson. Mr Goldsmith finally invited me to order an interim payment on account of costs of £20,000 to the Official Solicitor.

Mr Jackson, for the First Defendant, effectively accepted that the First Defendant should pay the costs of both the Claimant and the Official Solicitor out of the death in service payment. He proposed that the proper costs of all parties should come out of the death in service payment; and he indicated that that should be sufficient, even with the amount of the award in favour of the Claimant to cover the costs in full. To the extent that it did not, Mr Jackson submitted that any balance should be borne by the estate. Mr Jackson emphasised that the First Defendant had not been the author of the disposition which had given rise to this litigation. Everything originated with the authorship and draftsmanship of the First Defendant’s son. Mr Jackson utterly refuted the application for indemnity costs. He made the valid point that the Claimant had done considerably worse than either of the second or third offers from the estate; indeed, she had only just done a little better than the first offer from the estate, which had been made considerably before the Grant of Probate, and thus even considerably more in advance of the actual issue of proceedings. The Claimant’s position had been that she should be entitled to £175,000 initially from the estate. She then indicated that she was prepared to accept £120,000 from the estate, but subject to the approval of the Official Solicitor who, as Mr Jackson put it, “refused to come on board with the proposal.” In that refusal the Official Solicitor was vindicated by events because, as a result of my award, it is clear that it would have preferred the Claimant to too great an extent. Mr Jackson submitted that it was not unreasonable for the estate to take the view that the burden of any award should be borne by the estate. The estate was sufficient to meet the reasonable needs of the children, and the view that any award should be borne by the estate was supported by the statement in Tyler that any statutory nomination should be treated as a bequest, and that the burden of any award under the 1975 Act should be borne by the residuary estate rather than a bequest. Mr Jackson made the point that offers were being made out of the estate of monies to a Claimant who had not disclosed the full extent of her financial resources until April of this year, when she responded to the Request for Further Information. Mr Jackson made it clear that he was not resisting an award of standard costs to the Claimant; and he accepted that because of his special status, and in accordance with the earlier court order, the Official Solicitor should have his costs on the indemnity basis, although that was not due to any issue of conduct on the part of the First Defendant.

In his response, Mr Clark made it clear that the First Defendant could not compromise the claim in his capacity as executor without the consent of the Official Solicitor, but the reason why an application for indemnity costs was made was because the First Defendant had refused to countenance making any offer to the Claimant from the death in service monies. He had made offers he had no power to make, and the Court had ultimately decided that the incidence of the award should, in fact, be borne out of the death in service monies. Those were the submissions.

I must approach the application for costs by reference to the principles in CPR 44.2 and bearing in mind the guidance that indemnity costs are to be awarded only in cases outside the norm. It is unfortunate that in the present case the Claimant has been effectively pitching her case in competition with her children, save to the extent that any award was to be made out of the lump sum death in service payment. The Claimant had limited her claim to that sum in her claim form. To some extent that may be an illusory way of viewing the matter since I have little doubt that the First Defendant would have had recourse to the death in service payment should at any time the Trust Fund have proved inadequate to meet the needs of the children of his late son; but, nevertheless, although I am satisfied that the First Defendant was not intending to keep the death in service payment for his own benefit, without regard to the needs of his grandchildren, the fact is that he did refuse to countenance any payment from that source.

In my judgment, that is not a sufficient reason for awarding costs against the First Defendant personally, nor is it any reason to order the costs to be paid out of the death in service payment on an indemnity basis. I have no doubt that the First Defendant was acting in good faith throughout in what he perceived to be the best interests of his grandchildren, and in a difficult situation that had been created by his own son, who had then compounded the difficulty by taking his own life.

In the event, the First Defendant has, by his opposition, ensured that the estate has benefited because the Claimant has succeeded in recovering less than she was claiming, and less than the First Defendant had offered to settle her claim. To that extent, he has been proved right; indeed, had the Claimant not at the outset responded to an offer of £60,000 by requesting as much as £175,000 and sticking to it, this litigation might never have had to be brought, with unfortunate consequences in terms of costs for all. The effect is that the death in service payment has effectively been exhausted, apart from that part which will go to the Claimant, in legal costs, to the ultimate detriment of the deceased’s children. It would not be just, in accordance with the overriding objective, or a proper exercise of my discretion, to order the Claimant to recover indemnity costs either against the First Defendant or out of the lump sum payment.

My order is that the costs of the Claimant should be assessed on the standard basis and should be paid out of the death in service payment sum. It would appear that that sum will be sufficient to defray the costs of the estate properly viewed, the costs of the Official Solicitor, and the costs of the Claimant; but insofar as there is any difficulty in that regard, the order of payment should be (1) the award to the Claimant, (2) the costs of the estate properly incurred, (3) the costs of the Official Solicitor on the indemnity basis, and then (4) the costs of the Claimant on the standard basis. Insofar as the death in service payment is insufficient to meet any of those costs, then the balance should be borne out of the estate generally.