H (Deceased), Re

I have been trying the Claimant’s (whom I shall call “C”) claim under the Inheritance (Provision for Family and Dependants) Act 1975 for provision from the estate of her late father. C is aged 50 and is the daughter of the deceased.

The other parties to the proceedings are C’s mother (the 1^st Defendant) and her brother (the 2^nd Defendant), the latter of whom is the personal representative of the estate of his deceased father. C and her brother are the only two children of the deceased. Their mother is the sole beneficiary of the estate of the deceased.

C has been present throughout the remote hearing and represented by solicitors and Ms Rogers of counsel.

C’s mother was previously represented in the proceedings but was declared to be automatically debarred from participating in the hearing as a result of multiple breaches of orders to file acknowledgement of service and evidence. Her solicitors have come off the record. The order debarred her from relying on any written evidence in response to the claim but the day before the hearing she sent a six page hand-written letter which I have read and which can only be seen as an opposition to the claim. It was accompanied by a short letter from the home manager of the care home where she resides.

C’s mother was in attendance throughout this remote hearing. She is profoundly deaf and did not hear anything that was said but had the assistance of a worker in the home who sat with her and passed her notes so that she had at least some idea of what transpired. I did not hear from her during the hearing.

C’s brother listened in throughout the hearing and assisted me on matters relating to the administration and size of the estate, his knowledge of his mother’s finances and circumstances, and his approach as executor to the litigation.

C’s father died in 2016 in a domestic house fire. Subsequently his widow moved out of the family home and now lives in a care home.

Apart from a short break in her early 20s, C largely lived at home with her parents until late 1999 when aged 30 she accepted a place at university to undertake a post-graduate diploma. At about that time she experienced a breakdown and began to see a psychotherapist. C says that between 2000-2010 she would see her parents every two to three weeks when she would go home to help with domestic tasks. In late 2000 C met a man who became her partner. They have been in a committed relationship for most, if not all, of the time since then.

From 2000-2007 C lived independently in East London. In 2007 she was accepted on a MA course in Sheffield. C’s father set up a standing order to help fund her through her 3 year post-graduate studies by a monthly payment of £400. He also provided

In 2011 C and her partner decided to have their first child. C told me that her father did not approve and at that time he took her off the account. It may well be that an additional factor affecting C’s father’s thinking was that from 2010 C had broken off contact with her parents. Whilst she would take her father’s phone calls, she did not ring her parents nor go to their home.

In the medical report prepared for the purposes of the hearing the reporting psychiatrist (Dr S) describes C as virtually estranged from her family since 2000. C says that this is inaccurate and that the proper date is 2010.

In October 2011 C and her partner had their first daughter and a second daughter was born in 2014.

C’s health had plainly been problematic before 2011 when she suffered pre and postnatal depression and became unable to work. I shall revert to her health issues later in this judgment. However, her health difficulties increased, and she has not worked since the birth of her first child.

In 2017 her health problems became so profound that her partner had to leave the home which he shared with C and their children to sleep overnight elsewhere. C was unable to tolerate somebody else being in the house overnight, but he continues to visit every day and spends most of his waking hours, when not at work, in the home. It is their hope that C recovers to the extent that full cohabitation can be resumed.

On a date unknown to me but subsequent to her husband’s death, C’s mother moved into a care home. She is visited there approximately monthly by her son. She will spend the rest of her life in residential care and is not capable of living independently. It is plain from her communication to the court that it is a matter of great sadness to her that she does not see her daughter or grandchildren. Indeed, as I understand it C has not seen either of her parents in the last decade save at and around the deceased’s funeral.

If I exercise my power under s.9 of the Act and treat the deceased’s severable share of property jointly held with his wife as part of his net estate, the estate consists of the following:

Thus, I take the estate inclusive of the deceased’s interest in the jointly held property, on the assumption of the home being worth £700,000, as being £350,000 + £63,000 + £141,000 = £554,000. The position of the parties

Claimant:

Next in her order of priorities was a fund to provide for continuing psychological therapy which she has been advised is essential. It is thought likely that this would take 3 years at a cost of between £9,900 – 19,800 with possible psychiatric oversight at a further cost of £600 - 3,600. Only with such help is it thought that C would be ready to face the world again and regain her earning capacity.

Her third requirement was for a small capital sum to replace her car which is ancient and unreliable and to purchase new white goods, which is likely to be unnecessary if she moves into a property in which they are fitted.

Her fourth requirement was for an income fund to meet the shortfall in her living expenses. At the moment her income is limited to child benefit and universal credit in the total sum of just over £1,000 per month. This calculation by the Benefits Agency assumed that her partner is living with her and able to contribute his wages towards their expenses. However, he is not living with her for the reasons explained and most of his income goes on his own accommodation and living costs. I deal with this further at paragraph 66(ii) of this judgment but without a contribution from him, her shortfall is running at £1,338 per month. As a result, she asks for a 3 year maintenance fund of some £48,000. If I am against C on her wish for a home, C asks for an enhanced income fund to provide for a more comfortable standard of living.

C has incurred substantial costs in these proceedings. Excluding the sum of £14,587 which C’s mother has been ordered to pay as a result of her various non-compliances, there is an additional sum of £84,729 which is owed to her solicitors and a CFA success fee calculated as an uplift of 72% of £48,175. The agreement was only entered into

To the extent that any award exceeds £325,000, and on the assumption that the full nil tax rate band is available as I am told is the case, the estate will have to pay inheritance tax at 40% on the excess.

It can readily be seen that C’s claim would be unaffordable, in the sense of exceeding the maximum that the estate has in it, unless the family home was to be sold at the upper end of the valuation.

She has filed no evidence and I know very little about her finances. She lives in a care home and Ms Rogers agreed that I could take the cost of her care as being the sum quoted by the manager, namely £52,000 per year. It is almost inevitable that those costs will rise faster than inflation both because of increased costs of staff but also the likely increase in C’s mother’s needs.

It is obvious that C’s mother is worried about finances, but I have no means of knowing whether her anxieties are justified. I can see no reason why her share of the jointly held accounts, namely some £63,000, should not be released to her at once. Other than the need to meet her care home costs I am unaware both of any other financial needs that she has and of her resources other than a state retirement pension.

C’s mother’s health problems are extensive. The care manager describes her as being nearly 80 years old, very frail and in deteriorating health including suffering from cancer. She lost her husband in tragic circumstances and is worried about her ability to fund her care.

C’s brother understandably felt conflicted by his position of being on the one hand the executor of the estate and on the other hand a close family member. It is obvious from his job description that he has a successful business career and he did not in any way, to his credit, seek to say that his particular financial circumstances were of any relevance to the issues before me.

He has had no contact with his sister for a prolonged period of time, and he is anxious to protect for his mother that to which she is entitled.

One of the unsatisfactory aspects of this case has been that because of the lack of involvement by C’s mother I have precious little information about the case that might be made against C’s claim. Indeed, it was only as a result of my own enquiries that I was able to elicit the information that:

C described to Dr S having had a breakdown when she was 30 and then pre and postnatal depression in 2011. Following her father’s death, she was assessed and given a diagnosis of Dissociative Disorder Not Otherwise Specified (DDNOS). She was referred to a psychotherapist specialising in trauma and dissociation. She has been seeing the therapist weekly or fortnightly for the past two years. It is unnecessary in this judgment for me to go into the symptoms of her current condition, but they are very intrusive upon her life.

C describes various vivid memories of traumatic events that she believes occurred in her infancy and childhood, some of which she has uncovered during therapy.

Dr S agrees that C suffers from what would now be called Other Specified Dissociative Disorder and also suffers from severe Obsessive Compulsive Disorder (OCD). Dr S reports that there can be no doubt that the conditions have a severe impact on C’s daily life and ability to work and that she is almost constantly preoccupied by images and thoughts which overtake her.

Dr S makes the point that although C may well believe the truth of the events which she had described, Dr S cannot say with any certainty that any of them actually happened, albeit that childhood events have had a lasting impact on C’s psychological development.

Dr S is of the view that C is likely to need continued weekly psychotherapy for up to 3 years for sustained improvement at a cost, if such therapy does take 3 years, it will cost somewhere in the bracket £10,500 - £23,400 as set out at paragraph 19. Without therapy and psychiatric supervision Dr S says that C would be unlikely to continue to make progress. Whilst her symptoms may never resolve completely, with treatment they may become manageable and enable her to return to work, although that cannot be certain.

I have to undertake a two-stage approach by asking two questions:

In answering both questions I must have regard to the factors set out at Section 3(1) of the Act, in particular I must have regard to the following matters:

I have read but do not set out for the purposes of this judgment the other sub-sections to section 3.

Lord Hughes in Ilott acknowledged that the section 3 factors are applicable equally to both stages and there is in most cases a very large degree of overlap between them. He confirmed that in terms of addressing the stages in a judgment:

“There can be nothing wrong, in such cases, with a judge setting out the facts as he finds them and then addressing both questions arising under the act without repeating them”.

The standard for what is reasonable financial provision (in cases other than spouse claims) is defined in Section 1 (2) (b) of the Act as:

“Such financial provision as it would be reasonable in all the circumstances of the case for the applicant to receive for his maintenance”.

At paragraph 14 of Ilott, Lord Hughes explained that, “the concept of maintenance is no doubt broad but the distinction made by the differing paragraphs of section 1 (2) shows that it cannot extend to any or everything it should be desirable for the claimant to have. It must import provision to meet the everyday expenses of living”.

Lord Hughes then cited with approval the extract from Re Dennis (Deceased) [1981] 2 AR 140, where at paragraph 145 Browne-Wilkinson LJ (as he then was) said:

“… the word "maintenance" connotes only payments which, directly or indirectly, enable the applicant in the future to discharge the cost of his daily living at whatever standard of living is appropriate to him. The provision that is to be made is to meet recurring expenses, being expenses of living of an income nature. This does not mean that the provision need be by way of income payments. The provision can be by way of lump sum, for example, to buy a house in which the applicant can be housed, thereby relieving him pro tanto of income expenditure. … “

Specific guidance for claims by adult children were considered in Ilott. At paragraph 19 Lord Hughes said this:

“19.

For all other claimants [other than spouses], need (for maintenance rather than for anything else, and judged not by subsistence levels but by the standard appropriate to the circumstances) is a necessary but not a sufficient condition for an order. Need, plus the relevant relationship to qualify the claimant, is not always enough. In In re Coventry the passage cited above was followed almost immediately by another much-cited observation of Oliver J at page 475:

“It cannot be enough to say ‘here is a son of the deceased; he is in necessitous circumstances; there is property of the deceased which could be made available to assist him but which is not available if the deceased’s dispositions stand; therefore those dispositions do not make reasonable provision for the applicant.’ There must, as it seems to me, be established some sort of moral claim by the applicant to be maintained by the deceased or at the expense of his estate beyond the mere fact of a blood relationship, some reason why it can be said that, in the circumstances, it is unreasonable that no or no greater provision was in fact made.

“20.

Oliver J’s reference to moral claim must be understood … There is no requirement for a moral claim as a sine qua non for all applications under the 1975 Act, and Oliver J did not impose one. He meant no more, but no less, than that in the case of a claimant adult son well capable of living independently, something more than the qualifying relationship is needed to found a claim, and that in the case before him the additional something could only be a moral claim”. (Emphasis added).

Thus the first question before me is whether, in the circumstances, C’s financial position, difficult as it is, caused by reason of her suffering from a severe and debilitating mental illness which makes her unable to support herself and her two primary school age children, and which makes her dependent on state benefits and precarious financial support from her partner, means that the will did not make reasonable financial provision for C.

The more that I have contemplated this matter, the harder I have found it. There is no doubt that C is in a position of real need. But, on the other hand, C had cut herself off from her family some 10 - 20 years ago and has had no financial support from them for over 20 years save for the period 2007 - 2011. For these purposes I ignore the minor gifts that they provided her with on birthdays and other festivals.

How do I factor in the fact that C’s treatment of her family is largely to be explained by her psychiatric illness which she, rightly or wrongly, blames upon their treatment of her?

This is not a large estate and the priority must be to ensure that C’s mother, the beneficiary under the will, has sufficient funds properly to be maintained for the rest of her days. She is aged almost 80 and would have a normal life expectancy of 10 - 11 years. She has very severe health problems which do not bode well for her future, but the world contains many who have lived beyond their life expectancy.

The parties have not been able to agree that I should know of any Part 36 offers and so I will need to deal with costs as between the parties separately, but it is right that I

The effect of it is that C’s solicitors and counsel will be entitled to nothing from C if her claim fails. In order to balance that risk, C has entered into an agreement with her lawyers that they will have an uplift of 72% in the event that the claim succeeds.

As a matter of law, the other party to litigation cannot be ordered to pay the uplift. Yet, C asks me to make an order that the additional £48,175 success fee should fall on the estate as part of her award. As a result of the agreement which C had to enter into to fund the continuation of the litigation, she has incurred a liability which her solicitors can enforce so that her needs-based claim will be correspondingly reduced.

There are only two authorities which Ms Rogers has been able to trace where this appears to have been considered. The first in time was Re Clarke [2019] EWHC 1193 and 1194 (Ch), a decision of Deputy Master Linwood sitting in the Chancery Division. In an Inheritance Act case he declined to increase his award to include a success fee on 5 grounds:

The second case is Bullock v Denton, an unreported decision of His Honour Judge Gosnell in the Leeds County Court in a judgment given just 9 days before this hearing. In that case the claimant had entered into both a Damages Based Agreement with her first set of solicitors and a Conditional Fee Agreement with her second solicitors and arguably might be liable under both agreements. The judge disregarded the potential DBA liability and considered the CFA. In that case there was a success fee representing a 50% uplift on costs which as at 7 June 2019 (i.e. almost a year before trial) stood at approximately £24,000 + VAT with a substantial (but unquantified) increase as a result of the trial. The judge allowed a figure of £25,000 in total in respect of the CFA by way of contribution. That was added to the claimant’s award.

As it is impossible for me to know how much the true liability by way of success fee was, I can only surmise, but it seems to me that what was awarded was bound to have been less than half the uplift to which the solicitors were entitled under the CFA.

It does not appear that HHJ Gosnell was referred to the decision in Re Clarke.

I accept that it is appropriate for me to consider this liability as part of C’s needs. I do so largely for case specific reasons. I am not making a large award (unlike in Re Clarke).

I refer also to the obiter comments of Briggs J (as he then was) in Lilleyman v Lilleyman [2012] 1 WLR 2801 where the judge was faced with the risk in an Inheritance Act claim of the award being undermined by the effect of undisclosed negotiation offers. He said this:

It was, of course, for that main reason that the making of Calderbank offers in matrimonial financial remedy cases was outlawed.

I intend to adopt the same approach as HHJ Gosnell. I think that it would not be fair on C for me to ignore completely her liability to her solicitors. But, I recognise that there is a risk of injustice to the estate, in particular if an appropriate Part 36 offer had been made, of which I am necessarily unaware at this stage of proceedings. In addition, I flag up that I do not know the precise terms of the agreement and what is the definition of “success”. If my award does not bring about the operation of the uplift, I will revisit this element of the award.

I cannot see how I can avoid some potential (and it is only potential) injustice to either C or the estate. All I can do is mitigate the potential by taking a cautious approach towards this liability.

Bearing that approach in mind and knowing what I do of the case, I cannot envisage how it could reasonably be thought that the chance of failure was a high chance. I propose to allow the figure, as part of C’s needs, of £16,750, which approximates to a 25% uplift.

I had been minded at one stage of the case to accede to C’s list of priorities and to provide for her a flat at the bottom end of the bracket and the necessary sum to meet her medical costs and other capital, but not income, needs. But this alone would consume a minimum of some £410,000 and when the inheritance tax payable on the award and C’s legal costs are added to the total there is next to no headroom against the maximum that C can recover in law and a risk, depending on the sale price of the family home, that the award cannot meet the purpose for which it is given.

More fundamentally, I have concluded that such an award would be wrong in principle. I bear in mind the following points in particular:

I have read and re-read the evidence and submissions made on C’s behalf. I recognise that C and her partner want a new home, and that C’s wish is to buy her home on her own without her partner having any financial interest in it. When I asked whether she might buy with the assistance of a mortgage taken out by her partner, that was expressly disavowed.

C submitted that if I did not allow a housing fund, I should make an award of an income fund for life and, applying the Duxbury tables, I should allow a figure of £25,000 pa so as to require a capital sum of £438,000. I cannot see how such an approach could be fair or reasonable.

I have therefore arrived at the conclusion that:

My award will comprise the following matters:

To the extent necessary to meet the orders in this case, I exercise my power under s.9 of the Act to facilitate the making of the necessary provision.

This meets all her claimed needs except the cost of a new property. For reasons that I hope I have explained, I have decided that it would not be reasonable on the facts of this case to expect such provision to be made.