Analysis
The testatrix (T) died in 2004 leaving an adult daughter (C) from whom she had been estranged for 26 years. C had left home aged 17 to live with her boyfriend (B), of whom T disapproved. B later became C’s husband and they had five children. At the time of T’s death, C and her family lived in straitened financial circumstances: they lived in a house rented from a housing association, were reliant on benefits save for the husband’s intermittent work as a supporting actor and could not afford new household equipment or family holidays.
During the lifelong estrangement there had been three attempts at reconciliation, but all had foundered. T’s will left her estate, worth around £486,000 to charities with which she had no particular connection. The long estrangement was the reason T decided not to make any provision for C.
C brought a claim under the Inheritance (Provision for Family and Dependants) Act 1975 (the 1975 Act) for provision from T’s estate. At first instance, the district judge awarded her £50,000. C appealed and the charities cross-appealed challenging the decision that there had been a failure to make reasonable provision for C. The Court of Appeal upheld the judge’s decision that there was a failure to make reasonable provision. On the issue of quantum, the Court of Appeal held that the judge had made two errors of principle:
- (1) the judge held that the award should be limited in light of the long estrangement and C’s independent life and lack of expectation of benefit but he failed to identify what the award would have been without these factors and thus the reduction attributable to them, and
- (2) he made his award of £50,000 without knowing what the effect would be upon C’s benefits.
The Court of Appeal set aside the judge’s order and awarded C (1) £143,000 to buy the house in which she lived and (2) an option to receive a further £20,000 in installments. The Court of Appeal commented that the benefits received by C must be preserved. This is the appeal of the Court of Appeal’s decision on quantum.
Held
- 1) The district judge did not make either of the two errors on which the Court of Appealed relied to revisit his award.
- 2) Regarding error (1), the 1975 Act requires a single assessment by the judge of what reasonable financial provision should be made. It does not require the judge to fix some hypothetical standard of reasonable provision then either add to it or discount from it, by percentage points or otherwise, for variable factors. The judge did not make an error in taking into account the nature of the relationship between T and C – in many cases that will be of considerable importance.
- 3) Regarding error (2), the judge did not fail to address the impact of benefits on the order. On the contrary, he did so despite not having been provided with materials at all on this. The order was not only not done in ignorance; it was not an award of little or no value to C. It enabled the necessary replacement of essential household items in the maintenance of daily living.
- 4) C also argued that the district judge’s award was vitiated by errors other than those identified by the Court of Appeal. For example, that he wrongly took the level of tax credits and child benefit as a benchmark of basic maintenance income. However, he did not make his award on this basis.
- 5) The Court of Appeal clearly cannot have meant in para 60 of the judgment that dependence on benefits increases the claimant’s needs, as a disability is likely to do. Benefits are part of the resources of the claimant and it is relevant to consider whether they will continue to be received.
- 6) The observation at para 61 of the Court of Appeal judgment that because the charities had no needs to plead, they were not prejudiced by an increased award to C is erroneous; their benefit was reduced by any such award. It cannot be ignored that an award under the 1975 Act is at the expense of those whom the testator intended to benefit.
- 7) The order of the Court of Appeal should be set aside and the district judge’s order restored.
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