Analysis
The appellant, who was in her mid-80s and in poor health, was the widow of the deceased who had died on 26 June 2005. Both parties had children by previous marriages, and were together for 36 years. The deceased’s estate totalled approximately £7.5m and consisted of a large matrimonial home in Surrey, a half share in a property in Arizona, three properties in London and a controlling holding of shares in a property development company. By his last will (the will) the deceased, after appointing the appellant and his two sons to be executors and trustees, gave his share in the property in Arizona to the appellant absolutely and provided for her to live in the matrimonial home in Surrey for as long as she wished, with the right to request its sale and the purchase of an alternative property. The will also gave to the appellant a life interest in the net residuary estate with remainder over subject to a power for the trustees to pay or apply capital to or for her benefit during her lifetime. There were additional provisions requiring the trustees to invest the residuary estate with a view to maximising the income and, in particular, to manage and promote the company and properties for the benefit of the residuary estate. Besides being an executrix and trustee, the appellant was also a director of the company. Probate was granted on 27 January 2006 and, while concerns were expressed about her income position soon after the deceased’s death, the appellant (who took independent legal advice) then wished to avoid litigation or disputes with other family members. There was no evidence that the appellant was advised that she might have a possible claim under, or even alerted to the existence of, the Inheritance (Provision for Family and Dependants) Act 1975 (the Act). The time limit during which the appellant could have applied under the Act as of right expired six months after the grant of probate. While clearly it was the deceased’s intention that a substantial income be paid to the appellant from the residuary estate, the practice adopted in relation to the company was to retain its properties and refurbish them, with the result that the rental income was limited. However, that practice was based on legal advice to maintain a fair balance between the differing interests of the beneficiaries so that, instead of selling properties and advancing the proceeds, the property portfolio had to be managed proactively in order potentially to pay dividends through enhanced profitability. The company had been paying the salaries of a couple who worked at the matrimonial home in Surrey as housekeeper and gardener until 2009. Thereafter the housekeeper and gardener were paid by the appellant out of her own money but, by 2011, her children encouraged her to do something about it and this led to her instructing accountants and solicitors, culminating in taking advice from counsel. Eventually, nearly six and a half years after the grant of probate, proceedings were brought on 15 June 2012, notwithstanding that the respondents had declined to agree not to take any point on time if a claim were made under the Act. At first instance, the judge concluded that the appellant did not have an arguable case under the Act, taking the view that the will had made reasonable financial provision for her given her age and health, and her failure to act promptly and the lengthy delay thereafter without good reason was fatal to the claim. An order was made on 5 February 2013 refusing permission for the appellant to make an application for an order under s2 of the Act. The appellant appealed.
Held (dismissing the appeal)
There was no doubt that the appellant had an arguable case and that the judge’s assessment of the merits was wrong. Having regard to the provision which might have been made if the parties had been divorced, it was clear that a court would not have limited its ancillary relief order to provision for the appellant’s financial needs for the rest of her life, even if the result of giving her more than that would be a balance remaining at her death which could be transmitted to the next generation as part of her estate. It was at least arguable that the starting point for an ancillary relief order in this case, given the very long period during which the parties had been together, would have been a 50:50 division of the deceased’s assets. Moreover, the judge should have been looking at the facts as known as at the date of the hearing rather than as at the date of death. In fact, he did not set out what his view was about what the appellant might reasonably have expected to receive on divorce, nor indeed about any of the other factors laid down by s3(1) or (2) of the Act. The consequence of the judge having reached a non-tenable view of the substantive merits was to vitiate his decision. Instead of remitting the case for the decision to be taken again by another judge, the application for permission would be determined by the appellate court itself.
On this basis, the judge was right to focus on the very significant delay in commencing proceedings. Section 4, imposing the time limit, was a substantive provision laid down in the Act and not merely a procedural provision imposed by rules of court. Consequently, the burden on the applicant was to make a substantial case for it being just and proper for the court to exercise its statutory discretion to extend the time. In this case, unfortunately, the appellant could not clearly identify any significant change or extraneous trigger for her action in 2011. In distinction to the authorities, the decisions of which were fact-sensitive, the trigger for action after a lengthy delay could not be accounted for by extraneous circumstances, sudden or otherwise, in the months preceding her again consulting solicitors, nor indeed by any deliberate concealment of a material fact, the discovery of which might justify the commencement of proceedings. Accordingly, although the substantive merits of the claim were arguable and the estate, which had not yet been fully distributed, was sufficient to fund whatever award might reasonably be made without prejudice to gifts which had already taken effect, the very substantial delay in bringing proceedings – coupled with the history of taking no steps while the respondents continued actively to manage the estate and the company without any expectation of a challenge to the will while the appellant continued to live in the matrimonial home in Surrey as she wished to do – made it inappropriate for her to be permitted to bring a claim more than six years after the expiry of the time limit in the Act. There was also the additional factor that the respondents had an appreciation of their obligation to give proper consideration to the question whether the trustees should exercise their powers to advance capital or otherwise provide for the appellant’s needs and resolve what she perceived to be difficulties in her financial position.
JUDGMENT BLACK LJ: [1] This is an appeal against an order made by HHJ Hayward Smith QC on 5 February 2013 refusing permission for the appellant to make an application for an order under s2 of the Inheritance (Provision for Family and Dependants) Act 1975 (the Act). The appellant needed permission by virtue of s4 …Continue reading "Berger v Berger [2013] EWCA Civ 1305"