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IN THE COUNTY COURT AT LEEDS
IN THE MATTER OF THE INHERITANCE (PROVISION FOR FAMILY AND DEPENDANTS) ACT 1975
AND IN THE ESTATE OF STANLEY NAHAJEC DECEAED
||The Court House
Leeds LS1 3BG
||18 July 2017
B e f o r e :
His Honour Judge Saffman
|| ELENA ALICIA NAHAJEC
||- and -
(In His Capacity As Executor of the Estate of Stanley Nahajec Deceased and As Beneficiary of the Estate)
Mr H Menon for the Claimant
Miss M Lloyd for the Defendant
Hearing date: 1, 2 June 2017
Date draft circulated to the Parties 19 June 2017
Date handed down 18 July 2017
HTML VERSION OF JUDGMENT
Crown Copyright ©
- This is a claim under the Inheritance (Provision for Family and Dependants) Act 1975. The claimant, Miss Elena Alicia Nahajec seeks financial provision out of the estate of her deceased father, Stanley Nahajec who died on 19 July 2015 having made a will on 7 July 2015. By his will, the deceased left the whole of his estate to his friend, the defendant, Mr Stephen Fowle and appointed him sole executor. Probate was granted to the defendant on 15 October 2015 and these proceedings were commenced on 12 April 2016.
- It is contended by the claimant that the terms of the will, by which she received nothing, failed to make reasonable financial provision for her. The net value of the estate at the time of the deceased's death was £265,710.
- The claimant was one of 3 children of the deceased but was the only child of his second marriage. One of her half siblings, Mark Nahajec, a child of the deceased's first marriage, has similarly made a claim under the 1975 Act and that has been settled by a payment of £22,000. The circumstances in which Mr Mark Nahajec finds himself differ from those the claimant in that he is unable to work by virtue of ill-health and disability. Albeit that the claimant has recently suffered a health scare, she is able to work and indeed does do so. The claimant's other half sibling Philip Scott Nahajec (Scott) has made no claim under the Act.
- The will was accompanied by a note addressed to his executor and signed by the deceased on the same date as he executed his will in which the deceased sought to explain his reason for making no provision for either of his sons or daughter in his will. The relevant parts of the note are as follows;
"In my said will I have made no provision for either of my sons or daughter.
I have not seen or heard from any of my children in the last 18 years and I do not believe they have any interest in me or my welfare.
All of my children are of independent means and have or have had their own life and family and are, to my knowledge, sufficiently independent of means not to require any provision from me.
In the circumstances I do not feel it appropriate for (sic) necessary to make any provision for them in my will and trust that in this regard you as my executor will respect my wishes and ensure that they receive no benefit whatsoever thereunder"
- In the course of the hearing I have heard from claimant and the defendant and from Scott. The claimant is represented by Mr Menon of counsel and the defendant by Miss Lloyd of counsel.
- The claimant was born on 11 September 1985. She is therefore 31 years of age. The deceased and the claimant's mother separated when the claimant was about 11 years old. The claimant's evidence is that there was thereafter no relationship at all between her and the deceased until about 2007 because the deceased simply cut himself off from the family. He failed even to answer letters which she wrote to him as a child or to even to send her a card at Christmas or on her birthdays.
- In 2007 the claimant asserts that she made contact with the deceased and that as a result a relationship was rekindled between them which continued until about 2009 when, because the deceased disapproved of the claimant's boyfriend, the deceased cut himself off once again from the claimant. There was no contact or relationship between the claimant and the deceased from that point until his death.
- The claimant's evidence is that the absence of a relationship (save for that three-year period) was entirely the choice of the deceased. The claimant asserts that since 2009 she had tried to re-establish a relationship but has been rebuffed by the deceased who simply did not wish to know her, even to the extent of putting the phone down on her when she tried to contact him. Even more hurtfully, in 2012 the claimant's mother died. She says that she contacted the deceased to tell him in the hope, not least, that that might be the catalyst for a resumption of contact and because she hoped that he "might be there" for her now that she had lost her mother. He even put the phone down her on that occasion, without saying a word.
- Her evidence is that except for the 3 years between 2007 and 2009, the deceased was "not there" for her. She has had to make her own way in the world without any assistance from him either financially or otherwise.
- The defendant does not accept that there was any relationship between the deceased and the claimant at all since the breakup of the deceased's marriage to the claimant's mother. His evidence is that the deceased, to whom he was obviously close, never spoke to him of one and the note to the executor to which I have referred above suggests that there was no such relationship because the reference to 18 years therein roughly equates to the period since the deceased and the claimant's mother separated.
- For reasons to which I shall come and which relate to the matters to which the court is to have regard in exercising its powers under the 1975 Act, an issue which falls to be decided is whether there was a resumption of a relationship between 2007 and 2009, how it came to be that that relationship terminated and how it was that at other times there was no relationship between the claimant and the deceased. In other words, was that as result of the claimant's attitude to her father or the deceased's attitude to the claimant or a combination of both.
- Scott's evidence is germane to this issue. His evidence was that the claimant's account of her relationship, or lack of it, with her father resonated with him because he was treated the same way by the deceased. Entirely at the initiative of the deceased his contact with his father was sporadic when the deceased and Scott's mother separated and contact ceased totally in 1995 other than when the deceased made an appearance following the death of Scott's mother. His evidence was that the relationship broke down completely in 1995 because Scott sided essentially with the claimant and her mother when the relationship between the deceased and the claimant's mother broke down. Even in 2002 when Scott made an effort to contact his father on the telephone, his approach was rebuffed. The deceased apparently said that Scott had "chosen his side" and then put the phone down. Scott understood the reference to "chosen his side" to be a reference to the fact that he had retained contact with the claimant and the claimant's mother following the breakdown of the deceased's relationship with them.
- Scott was also able to give evidence of the efforts that the claimant told him that she had made to resume contact with the deceased from 2009. His evidence supports the contention that it was the deceased's choice not to rekindle the relationship.
- The key provisions of the operation of the 1975 Act, which provides for the court to intervene where a disposition of the deceased's estate is not such as to make reasonable financial provision for the applicant, are set out by Lord Hughes JSC in his speech in Ilott v The Blue Cross and Others (2017) UKSC 17 paragraph 2.
"The key features of the operation of the 1975 Act are four. First, it stipulates no automatic provision; rather the will (or the intestacy rules) apply unless a specific application is made to, and acceded to by, the court and a specific order for provision is made. Second, only a limited class of persons may make such an application; they are confined to spouses and partners (civil or de facto), former spouses and partners, children and those who were actually being maintained by the deceased at the time of death. Third, all but spouses and civil partners who were in that relationship at the time of death can claim only what is needed for their maintenance; they cannot make a claim on the general basis that it was unfair that they did not receive any, or a larger, slice of the estate. Those 3 features are laid down expressly in the 1975 Act. The fourth feature is well established by case law both under this Act and its predecessor of 1938. The test of reasonable financial provision is objective; it is not simply whether the deceased behaved reasonably or otherwise in leaving the will he did, or in choosing to leave none. Although the reasonableness of his decision may figure in the exercise that is not the crucial test"
- Section 1(2) of the Act seeks to define "reasonable financial provision". In the context of a child of the deceased (which is the class to which the claimant obviously belongs) such a provision is one as "would be reasonable in all the circumstances of the case for the applicant to receive for his maintenance."
- In Ilott at paragraph 14 Lord Hughes considers the concept of maintenance. He acknowledges that it is a broad concept but it cannot extend to any or everything which it would be desirable for the claimant to have.
"It must import provision to meet the everyday expenses of living"
- Lord Hughes cites with approval in paragraph 14 the observations of Browne Wilkinson LJ in In re Dennis Deceased (1981) 2 All ER 140 at paragraph 145 to 146
"………. The word "maintenance" connotes only payments which directly or indirectly, enable the applicant in the future to discharge the costs 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"
- Browne Wilkinson LJ goes on to say that "maintenance" can extend to payment of existing debts
"to pay the debts of an applicant in order to enable him to continue to carry on a profit-making business or profession may well be for his maintenance".
The claimant's debts figure significantly in this case.
- Lord Hughes makes it clear at paragraph 15 that the level at which maintenance may be provided is flexible but it is not limited to subsistence level nor need it necessarily be provided for by way of periodical payments. Section 2(1)(b) makes it clear that the court can order a lump sum which essentially would reflect a capitalisation of maintenance.
- The Act requires the court not to ask itself whether the deceased acted unreasonably in formulating his will in the way that he did but rather whether, looked at objectively, his disposition or lack of disposition produces an unreasonable result in that it does not make any, or any greater, provision for the applicant. That was the test applied by Oliver J in In re Coventry (1980) Ch 461 and it was approved by Lord Hughes in Ilott where he said (at paragraph 23
It has become conventional to treat the consideration of a claim under the 1975 Act as a two-stage process viz (1) has there been a failure to make reasonable financial provision and if so (2) what order ought to be made? That approach is founded to an extent on the terms of the Act, for it addresses the 2 questions successively in first section 1 (1) and 1 (2) and second, section 2. In In re Coventry at 487 Goff LJ referred to these as distinct questions and indeed describes the first as one of value judgement and the second as one of discretion. However there is in most cases a very large degree of overlap between the 2 stages. Although section 2 does not in terms enjoin the court, if it has determined that the will or intestacy does not make reasonable financial provision for the claimant, to tailor its order to what is in all the circumstances reasonable, this is clearly the objective. Section 3 (1) of the Act in introducing the factors to be considered by the court, makes them applicable equally to both stages. Thus the 2 questions usually become: (1) did the will/intestacy make reasonable financial provision for the claimant and (2) if not, what reasonable financial provision ought now to be made for him?
- In re Coventry also makes reference to the concept of a moral claim. Oliver J had this to say;
"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."
- It is clear however, and was made abundantly so by Lord Hughes in Ilott at paragraph 20, that there is no requirement for a moral claim as a sine qua for all applications under the Act. As the learned Supreme Court Justice stated, what Oliver J meant by his reference to "moral claim" was simply 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……….. Clearly, the presence or absence of a moral claim will often be at the centre of the decision under the 1975 Act"
- This, in my view, follows the line of reasoning set out in Re Hancock (1998) 2 FLR 346 where the Court of Appeal emphasised that there was no additional threshold that had to be negotiated by an adult child claimant to show that he/she had a moral claim although "it may be difficult for a child who is able to earn their own living to show that reasonable financial provision has not been made for them without some special circumstances such as a moral obligation"
- The Act specifies in section 3(1) the matters to which the court is to have regard in exercising its powers to make an order for the benefit of the applicant. They are;
(a) the financial resources and financial needs which the applicant has or is likely to have in the foreseeable future;
(b) the financial resources and financial needs which any other applicant for an order under section 2 of this Act has or is likely to have in the foreseeable future;
(c) the financial resources and financial needs which any beneficiary of the estate of the deceased has or is likely to have in the foreseeable future;
(d) any obligations and responsibilities which the deceased had toward any applicant for an order under the said section 2 or towards any beneficiary of the estate of the deceased;
(e) the size and nature of the net estate of the deceased;
(f) any physical or mental disability of any applicant for an order under the said section 2 and any beneficiary of the estate of the deceased;
(g) any other matter, including the conduct of the applicant and any other person, which in the circumstances of the case the court may consider relevant.
- In addition, by virtue of section 3 (3) in the case of an applicant who applies as a child of the deceased the court must have regard to the manner in which the applicant was being or in which he might expect to be educated or trained.
- As I have said, all of these matters have to be considered in so far as they are relevant both as to the question of whether the will makes reasonable financial provision for the applicant and, if it does not, the actual provision to be ordered and, in the light of these matters, a single assessment of reasonable financial provision must be made (see Ilott paragraph 34 and paragraph 60).
- Not only do these matters have to be considered individually but the court's task involves standing back and assessing their impact when taken together. There has to be a balancing exercise undertaken but, as Lord Hughes has made clear in paragraph 34 of Ilott
"the section 3 factors, which are themselves all variables and which are likely often to be in tension one with another, are all to be considered so far as they are relevant and in the light of them a single assessment of reasonable financial provision is to be made"
- Issues relating to what may in shorthand be described as a "moral claim" may come into play as a result of the application of section 3 (1) (g) above -- as indeed may the issue of the reasonableness or otherwise of the deceased's decisions (although, as I hope I have made clear, the fundamental question that the court must ask itself is not whether the deceased's decision was unreasonable but whether the disposition arising as a result of those decisions has produced an unreasonable result.
The section 3 factors
The claimant's financial resources (section 3 (1) (a))
- The claimant lives by herself in rented accommodation and currently works as a retail assistant for Next Plc working about 23 hours per week. She also has paid employment at a veterinary surgery for 9 hours per week but it is her aspiration eventually to become a qualified veterinary nurse and to gain the necessary experience she works an additional 10 to 15 hours at the surgery for no pay at all.
- She does have a diploma in counselling and a qualification to level 3 in bar management/health and safety and food hygiene. She also has a personal licence enabling her to run licenced premises. She has in the past been an assistant manager in a public house. She is not availing herself of those qualifications at present and she was not pressed as to whether doing so would improve her financial situation.
- Her contract as a retail assistant with Next is apparently a zero hours contract with the result that if she does not work she does not earn. In February 2017 she was diagnosed with cervical cancer but thankfully that appears to have been caught in time. Inevitably however there was time off work which caused financial difficulties.
- However, notwithstanding her zero hours contract, her earnings are fairly constant albeit that even though she has 2 jobs, it is sufficiently modest for her to qualify for working tax credits. She currently has an income from her earnings and from tax credits of about £1240 per month. Currently her outgoings amount to just over £1500 per month but that includes amounts she is repaying in respect of debts that have built up including rent arrears. If these are excluded and account is taken only of what is necessary to meet her monthly expenditure without regard to extraordinary items such as debt repayments and rent arrears then her outgoings are approximately £1100 per month. She currently has debts amounting to about £6600 inclusive of her rent arrears.
- Many of her debts are payday loans because they are, she contends, the only basis upon which she can borrow money other than from her boyfriend occasionally and from Scott both of whom of course need to be repaid. Her indebtedness arose most recently because of the health scare to which I refer above. Inevitably it meant that there was some time off work with the concomitant reduction in income and the gap was filled by taking out more loans. She has however now returned to her pre-diagnosis hours of work.
- The claimant asserts that she suffers from depression from time to time. There is no evidence that, insofar as she does suffer from depression, it has affected her ability to work. There is no medical evidence in relation to this condition.
- She was taken through her outgoings, I do not intend to go through that in any great detail. She was clear that if and when she clears her debts then she should be able to get by and live within her means. Miss Lloyd drew attention to some payments which she suggested were indicative of inappropriately high spending - to some extent financed by these high interest rate payday loans. It is right that some items of expenditure did look high for example her mobile phone bills. But suffice it to say that I did not form the impression overall that the claimant was leading an extravagant or hedonistic lifestyle. On the contrary, in my judgement, it seemed a rather frugal existence with only occasional and modest expenditure on "fun" items.
- As I have mentioned, the claimant aspires to be a veterinary nurse. She believes that she has the academic capacity as well as the will to do so. She will need to retake her GCSEs in maths and dual science and obtain grade Cs in each as a prerequisite to training as a registered veterinary nurse. She does not see passing those exams as a problem. She only fell marginally short of obtaining the necessary grades when she took those exams as two of ten when she was at school. Having cleared that hurdle, she would then have to obtain a diploma in veterinary nursing which can take up to 2 years to obtain and the current cost of which is about £11,350 (although that figure is likely to increase for the academic year beginning September 2017).
- She acknowledges that student loans may be available for at least part of these courses but of course this would only cover tuition fees, she was still have to find funds to meet living expenses and of course a student loan is simply that. It, and the interest accruing on it, have to be repaid by instalments from earnings insofar as such earnings exceed £21,000. If the course had to be financed by student loans therefore that would have an impact upon her net income for some years thereafter as loan repayments would be deducted from her monthly income in so far as her income exceeds the £21000 threshold.
- The claimant's wish is that the outcome of this application will give her sufficient monies to fund these courses and achieve her ambition to become a registered veterinary nurse. She believes that the income that she could ultimately derive from such a profession would put her on a much more stable financial footing than she is currently able to achieve, as well as giving her enormous job satisfaction.
- When her mother died in 2013 the claimant inherited £16,000. Her evidence is that she was unable to use that money to commence a veterinary nursing course. Following her mother's death she was on her own with nowhere to live. The monies that she obtained we used to set herself up in a rented home and furnish it and to pay off some existing debts.
The financial resources and financial needs of any other applicant (section 3 (1) (b))
- Scott is making no claim under the Act. Mark Nahajec's claim has been settled at £22,000 plus his costs.
The financial resources and financial needs of any beneficiary of the estate (section 3 (1)(c))
- In this context it is necessary to have regard to the needs and resources of the defendant as the only beneficiary under the deceased's will.
- He is 53 years old and is married with no dependent children. His wife does not work and he has to support her. He is a director of RS Plastering Contractors Ltd but business has not been good for some years as a result of the combined effect of the recession and the fact that the claimant says that he neglected his work in favour of looking after the deceased who was very ill prior to his death. More recently he has suffered from sciatica which he argues impedes his ability to work as hard or as effectively as he used to. There is no medical evidence to this effect.
- The company accounts to the year ended 31 March 2015 reveal director's remuneration of £29,400 but no dividend payments. In the preceding year, the accounts show a dividend payment of £6500 but the remuneration. There has been a marked reduction in turnover between year ended March 2014 (£225,314) and year ended March 2015 (£131,278). A profit of £12,772 for the year end March 2014 became a loss of £2458 in the year ended March 2015.
- The defendant's evidence is that albeit that the accounts of March 2015 indicate that he received remuneration of £29,400, in reality he did not receive it. His bank accounts and that of his company indicate that there is a failure on a day-to-day level to differentiate between company monies and personal monies although there is no suggestion that the true position is not ultimately reflected in the annual accounts. His evidence is that he earns approximately £2000 per month.
- It seems clear that the defendant has had difficulties with his finances in the past. Arrears built up on the mortgage on his home at Two Hoots Trumfleet Lane, Doncaster and he had himself acquired significant debts to NatWest Bank and credit card companies as well as a £50,000 loan to an unspecified lender whom I believe, but will be corrected if I am wrong, is his father-in-law, Peter Wakefield.
- He has received £264,279 from the estate of the deceased by virtue of 4 separate payments made between November 2015 and December 2016. His evidence is that he has utilised that money not least to pay off his significant debts, to reduce his mortgage liability in respect of Two Hoots and to inject money into his company to ensure its survival.
- He and his wife married in September 2016. He financed the cost of the wedding which he estimates to have been about £13,000. Additionally, £18,000 was spent on 2 Rolex watches for himself and his wife. He contended that it was the wish of the deceased that he did so and in any event they are an investment which can be sold for what was paid for them. These latter payments in respect of his wedding and Rolex watches were made well after the letter of claim made by the claimant which was dated 25 February 2016
- In January 2017 the defendant's home was sold and from the proceeds of sale the balance of his mortgage debt was of course paid off. £70,000 of the proceeds of sale were utilised in the purchase of a plot of land acquired with the intention of it being developed to provide a home for the defendant and his wife. He currently lives on that plot of land with his wife in a static caravan. The sum of £88,269.78 was paid to him by his solicitors as the net proceeds of sale of his home over and above the £70,000 odd utilised in the purchase of the plot of land. Nevertheless his evidence was that he no longer has any capital resources and indeed has been forced to borrow further sums from his father-in-law for the purpose of paying monies agreed to be paid to Mark Nahajek in respect of his 1975 Act claim.
- I do not have up-to-date details of the defendant's monthly expenses. There is attached to his witness statement dated 3 June 2016 a list of outgoings but it does not appear to have been updated to take account of developments since that date but it was not suggested by Mr Menon that the defendant's day to day outgoings were particularly extravagant. Mr Menon's greater complaint was that the defendant's earnings tended to be, to use his expression "opaque" not least because of the intermixing of money from his business with his own personal money.
The obligations and responsibilities which the deceased had towards the claimant and the defendant (section 3 (1) (d))
- The defendant does not assert that the claimant owed him an obligation to leave him his estate save that he argues that he had been a friend of the deceased for many years and had in fact indeed known him since the defendant was a child. The deceased had worked with the defendant's father and then subsequently worked with the defendant and they became close friends.
- In the last 10 years of the deceased's life the defendant estimates that he saw him at least once weekly and more frequently in the final 3 years increasing to almost every other day following the deceased's diagnosis with cancer in November 2014. Even before that however, from about mid 2012, the deceased's health had not been good and the defendant saw him regularly including taking him to, and collecting him from, hospital. Once the deceased was diagnosed with cancer the defendant took him for his tests and checkups and generally did what he could for the claimant even to the extent of neglecting his business.
- As regards the deceased's obligations and responsibilities to the claimant, it is of course true that she is his daughter. It does not necessarily follow that there is an obligation or responsibility to support a child who, like the claimant is of full age and is working. I have cited at paragraph 22 and 23 above the guidance offered by the courts in this respect.
- It is as well to record at this point that the claimant does not assert that it was unreasonable for the deceased to make provision for the defendant. Indeed, her position is that she accepts that it is not unreasonable for him to receive the bulk of the estate, she simply seeks a modest provision from the estate. Of course, I remind myself that the test here is not whether it was unreasonable for the deceased to make provision but rather whether the will objectively fails to make reasonable provision for the applicant.
The size and nature of the net estate (section 3 (1) (e))
- The net estate is £264,279 but I accept that there is a headstone to be purchased which will reduce the net value marginally. It has all been distributed to the defendant, the final payment was made to him in December 2016.
The physical or mental disability of any applicant or beneficiary (section 3 (1) (f))
- I have already referred to the claimant's depression and the defendant's sciatica and I have referred to the claimant's health scare in relation to cervical cancer. It is not part of the claimant's case that she has any physical or mental disability which currently adversely affects her ability to earn. That is not so as regards the defendant who asserts that his sciatica does have an effect upon his earning capacity but, as I have mentioned, I have no evidence of the existence of sciatica or its effect.
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 (section 3 (1) (g))
- It is with regard to this subsubsection of the Act that issues analogous to a moral claim may become relevant.
- It is in this context that in my view it becomes appropriate to determine the factual issues which I identify in paragraph 11 above whilst recognising that, however they are determined, they are simply a factor to go into the scales on one side or the other in determining whether reasonable financial provision has been made for the applicant and if not, what that should be.
- The claimant's clear evidence was that there was no relationship between her and the deceased except for the short period between 2007 and 2009 because that was how the deceased wanted it. She was clear as to the approaches that she had made for contact and that they had been rebuffed save for the 3 year period commencing 2007.
- She spoke of the character traits of the deceased namely that he was essentially stubborn and intransigent and insensitive and a man who found it hard to forgive people who disagreed with him. In this respect her evidence was supported very considerably in my view by that of her half brother, Scott. I recognise that Scott has no axe to grind in his giving evidence. He has not made any claim on his father's estate yet the picture he painted of his father's traits was very similar to the picture painted by the claimant.
- The defendant was not able to gainsay the claimant's evidence save to say that it was clear from his relationship with the deceased that the deceased did not have a relationship with the claimant. He never spoke of her to the defendant except to specifically tell him that he did not want the claimant to benefit from his will.
- There is a course nothing intrinsically irreconcilable between the evidence of the claimant and the defendant in this connection. Other than for that short period up to 2009 there was indeed no relationship, the issue that is of relevance it seems to me is why that should have been?
- I must have regard to the note made by the deceased to which I refer in paragraph 4 above. It is of course a factor to go into the balance that the deceased made this note indicating that he had thought about his children but had made an active decision not to benefit them. That is clearly a factor in itself but I do not overlook that the note goes further and becomes relevant to the question of what relationship the claimant had with the deceased in any event.
- For example, the note indicates that the testator believed that the claimant had no interest in him or his welfare. It might be thought that it would be difficult for him to objectively take this view if he was aware that the claimant was consistently making overtures to make contact with him which were met simply by a wall of silence which he himself had erected. Secondly, the note refers to having had no contact with the children for 18 years. This does not reconcile with the claimant's evidence of a relationship between 2007 and 2009 but it does broadly fit in with the timescale of no contact at all since his relationship with the claimant's mother foundered.
- Nevertheless, I was impressed by the evidence of the claimant and the manner in which she gave it. She did not overly exaggerated difficulties. She accepted that even on her current income she could support herself if it were not for her debts neither did she seek to exploit in any way her diagnosis of cancer. In my view these are all indicative of an honest approach and, as I have said, what she had to say about her father was supported by the evidence of her half brother, Scott.
- It is also right to note that the note itself raises certain issues which detract from its significance and the extent to which it can be relied upon to controvert the claimant's evidence as to why her relationship with her father failed, supported as it is by the evidence of her half brother, Scott. First, and perhaps least importantly there seem to have been some confusion on the part of the deceased as to how long it was since he had heard from his children. Initially he appeared to think that it was 25 years but he amended that in hand to 18 years. Even that would be untrue, leaving aside the claimant's evidence, if he saw Scott immediately after Scott's mother's death as Scott averred.
- Secondly, and perhaps more importantly the note appears to have been premised on the contention that the children are "sufficiently independent of means not to require any provision from me". Since it seems incontrovertible that the claimant who was not leading an extravagant lifestyle was only making ends meet by taking out loans, some of which were payday loans on the basis that was all she could get, it is difficult to see how this description could sensibly be applied to her.
- In all the circumstances therefore in my view the note does not sufficiently undermine the evidence of the claimant as to why she had no relationship with the deceased. I regard this matter not as though the claimant were a prodigal daughter who has only reappeared when there is the possibility of some money to be had but rather a daughter who has very much regretted the absence of a relationship with her father and who, despite the fact that that absence a relationship was one for which she was not at fault, has consistently tried to rekindle it.
- I am also satisfied that the claimant has a genuine wish to become a registered veterinary nurse. There is no issue taken with her evidence that she works substantial periods during the week for a veterinary surgery for no pay. That is evidence of a commitment to make this career change. I also accept her evidence that if she were to qualify that would enhance the quality and the financial stability of her life. That too goes into the scales both it seems to me under section 3 (1) (g) but also then gives rise to the question of whether an additional consideration is that referred to in section 3 (3).
- First, it is worth noting that the facts of the case with which I am concerned are very similar to those which applied in the case of Ilott to which extensive reference has been made above. In that case the claimant was the 46-year-old daughter of the testator who had left the claimant nothing and instead left the whole of her estate to various charities. The estrangement between mother and daughter had occurred because the claimant had formed a relationship, and subsequently married, a man with whom the testator disapproved. But the marriage had subsisted and continued to subsist at the time of the hearing in the Supreme Court. The couple had 5 children. They lived however in straitened financial circumstances. With the aid of state benefits to which they were entitled they were able to live within their means but the clear evidence was that the claimant and her family were distinctly limited in what they could do.
- The estate in issue in Ilott was £486,000 so the estate with which I am concerned is about 45% smaller. At first instance the district judge concluded that there had been a failure to make reasonable provision for the claimant and he awarded her £50,000. He took the view that that represented a capitalisation of the sum which he found to be reasonable in all the circumstances of the case for the applicant to receive for her maintenance.
- The claimant thought that the sum was too low and appealed to the High Court Judge. In the circumstances the defendants in Ilott namely the charities cross appealed on the basis that the district judge had failed to properly apply the law and had he done so he would have concluded that the absence of any provision for the appellant in the will was not unreasonable.
- The High Court judge upheld the cross appeal rendering academic the question therefore of what a reasonable award should have been. An appeal to the Court of Appeal resulted in the reinstatement of the district judge's conclusion that reasonable financial provision had not been made. Thereafter the issue before the Court of Appeal and indeed subsequently the Supreme Court was to identify what would have been reasonable provision by way of maintenance and to award that figure on a capitalised basis if appropriate.
- It is important not to read too much into the decision of the Court of Appeal in so far as it reinstated the district judge's conclusion that reasonable provision had not been made. The court recognised that these are value judgements and the judge had considered all relevant factors and made a value judgment which was not susceptible to an appeal. It may be that other judges may have taken a different view but that does not mean that the decision of the district judge in that case was wrong because the Court of Appeal could find no fault in the manner in which he exercised his discretion.
- The Court of Appeal however concluded that the appropriate figure was not £50,000 but £143,000 representing a capital sum sufficient to enable the claimant to buy the house in which she lived plus an additional £20,000 to enable the claimant to draw it down bit by bit in such a way as to avoid any impact that the award generally had on her benefit entitlement. The appeal to the Supreme Court did not consider the question of whether there should or should not have been an award in principle. The appeal simply focused upon quantum. It reinstated the decision of the district judge and awarded £50,000 by way of capitalised maintenance.
- The first question I have to ask myself is does this will make reasonable financial provision for the claimant? If I find that it did not I must then consider what provision ought to be made.
- The claimant inevitably says that reasonable financial provision was not made. The claimant is in receipt of very modest income and is in straitened financial circumstances. On the assumption that the claimant is honest (which I find to be the case) her lack of a relationship with the deceased was not of her making.
- It is contended that she has the "moral claim" on the deceased that gives rise to something more than merely a qualifying relationship and that, looked at objectively, taking account of all the circumstances mentioned in section 3, the terms of this will fail to make reasonable provision for her and have produced an objectively unreasonable result.
- In addition, it is contended that her aspiration to train as a veterinary nurse is reasonable and realistic and brings into play not only the provisions of section 3 (1) and in particular section 3 (1) (g) but also section 3 (3).
- Mr Menon argues that it does not matter that this veterinary nurses course may be contingent on the claimant passing some preliminary exams. The fact that it is contingent may be grounds for discounting any award found to be due but not for refusing an award in principle. He points out that it is no more a contingent consideration than a consideration on behalf of a child who is expecting to go to university but has not yet completed its A-levels. In addition, in the context of section 3(3), the need for the court to consider matters surrounding the expectation of further education or training are not restricted to situations where the applicant is a minor but simply where the applicant is a child of the deceased.
- Mr Menon argues that objectively a person in the position of the deceased, knowing that his child wished to improve herself by undertaking a course such as that contemplated by the claimant, and knowing that without his assistance she would not be able to do, so would provide such financial assistance in circumstances where the deceased, by reason of his death, had no requirement for the money. He contends that the deceased's failure to do so is unreasonable and whilst that is not the test nevertheless, as pointed out by Lord Hughes in paragraph 17 of Ilott "the reasonableness of the deceased's decisions are undoubtedly capable of being a factor for consideration within section 3 (1) (g)."
- The defendant on the other hand argues that when all the section 3 matters are weighed in the balance there has not been a failure to make reasonable financial provision. As regards resources, the fact is that the claimant is an adult who can look after herself and in so far as she is not doing so present that is because of unnecessary spending on her part and the unnecessary taking of very expensive loans. Furthermore, it is contended that she is not actually exploiting her earning capacity. She has qualifications in the licensed trade business which she is currently not exploiting. It has to be said however that there was no significant cross-examination of her as to why she did not do so or how doing so could improve her financial position.
- As regards the defendant resources, he is by no means well off. He too is in debt, his source of income is an underperforming company (and some of that underperformance is due, he says, to the fact that his ministrations to the deceased caused him to take his eye off the ball) and he says he has health problems which affect his ability to maximise his income in any event.
- It is trite law that matters must be considered as at the date of the hearing and as at that date the defendant is not financially well-placed even if significant sums of money have passed through his hands by virtue of the sale of his own property and the monies received from the winding up of the deceased's estate.
- It is also true that, for whatever reason, the claimant had no meaningful relationship with the deceased but in distinction the defendant had had a very close and long personal friendship with him. These, it was contended, were factors clearly of importance to the deceased who had left his note explaining the rationale of his decision to give everything to his friend and nothing to his family and it is an important consideration to go into the balance that the deceased had specifically set out why his will made no provision for the claimant or any other family member.
Did the will make reasonable financial provision for the claimant?
- The obligation is upon the claimant to establish that the will does not make reasonable financial provision for her. Having taken into account all the factors to which section 3(1) directs that regard must be had I am satisfied that it did not do so. I fully accept that each case is fact sensitive and so I do not reach that decision on the basis that the district judge in Ilott reached that decision essentially on similar facts. The value judgement which must be applied has to be applied on the facts of the case before the court and in accordance with the factors specified in section 3 in so far as they specifically relate to the case in question.
- The fact is that in this case, albeit that the claimant is an adult and is independent nevertheless I am satisfied that this claim is based on something more than simply the qualifying relationship to which Lord Hughes refers in paragraph 20 of Ilott. There was no relationship between father and claimant but I am satisfied that that was not for want of trying on the part of the claimant. She appeared to have had a father who was stubborn and intransigent. That was not her fault.
- Add to that the fact that the claimant was, and is, far from well off yet there is no evidence that she is significantly profligate. Nor, in my view, was there any evidence that she was not exploiting her earning capacity notwithstanding her qualifications in other fields.
- Add further the fact that she has, in my view, a genuine and not fanciful aspiration to improve herself by becoming a veterinary nurse. In my judgment, it is not a fanciful aspiration because she has shown commitment by working a considerable number of hours in a veterinary surgery per week unpaid. In addition, there is no reason to believe that the she is not academically able to achieve her goal. She was after all academically able enough to acquire diplomas in counselling, and a level 3 qualification in bar management and health, safety and food hygiene.
- In addition, the size of the estate is such as to justify provision for her, even when the claims of other parties such as the defendant and Mark Nahajec are taken into account.
- On the other side of the scales there are first the resources of the defendant. And his needs and obligations. I am prepared to accept that he too has money problems but even so, and even if, as he alleges, some of those may have been caused by the fact that he neglected his work to look after his friend and/or because he suffers from sciatica, then in my judgment these factors can only reasonably militate in favour of a significant bequest for the defendant. They do not render reasonable a will which provides nothing for the claimant to improve her life, especially when she has done nothing significant to alienate herself from her father other than to go out with somebody of whom he disapproves. In that regard, it may be thought that a daughter who has been cut off by her father for 10 years or so while she is growing up and who has only come back into her life at her initiative is not acting unreasonably in taking the view that her choice with regard to her boyfriend is a matter for her rather than him.
- I also remark that any criticism that can be laid at the door of the claimant in respect of her spending habits can be levelled with considerably greater force against the defendant. The purchase of two watches for over £18,000 (after he was aware of this claim) is evidence of that.
- Of course, the wishes of the deceased as set out in his note are factors that weigh in favour of the defendant. I have however already commented on this note in paragraphs 65 and 66 above. In any event, the fact that a deceased explained his reasons for leaving his estate as set out in his will does not mean that the resultant provisions in the will are necessarily reasonable – especially where, as here, the reasons include a probable misunderstanding of the claimant's financial position.
What financial provision ought to be made?
- The section 3 criteria also play fundamentally into a consideration of what does constitute reasonable provision and the manner in which such provision is made. I have to bear in mind that the award is either one of maintenance or a sum to reflect capitalised maintenance. It is not limited to subsistence level but it cannot extend to any or everything which it would be desirable for the claimant to have.
- The trial bundle contains a schedule setting out what the claimant seeks by way of capitalised lump sum. It is £70,227. and is made up as follows;
(a) £13,619 in relation to course fees for both her GCSE courses and her veterinary nursing course and equipment that she will need in connection with those. Included in this figure is £11,356 fees for the veterinary nursing course. Mr Menon appeared to accept during his final submissions that that may be covered by a student loan.
(b) £15,867 in relation to transport costs to include the purchase of a car, driving lessons, insurance servicing and fuel. This claim is based upon some guidance given by the College of animal welfare to the effect that some courses consist of a considerable amount of travel, not only to college but to work placements and that entry on the course is dependent upon a candidate having the means to attend college and work placements.
(c) £2300 to discharge existing loans. In fact, her existing loans amount to £6600.
(d) £38,439 for monthly maintenance or living expenses. This appears to consist of a claim for £30,751.92 for 24 months maintenance on the basis that her monthly outgoings amount to £1281.33 and a further 6 months monthly outgoings amounting to £7687.98. It seems to be a claim therefore for 30 months maintenance. It gives no credit for current earnings because it is assumed that there will be no scope for earnings by the claimant while studying for her veterinary qualifications.
- The result of Mr Menon's concession that £11,356 may be covered by a student loan caused him to revise his proposal to one of £59,000 or approximately 22% of the estate. However, it is still the case that a student loan must be repaid by instalments once the relevant earnings threshold has been reached and interest accrues on the balance outstanding at a figure equating to the rate of inflation.
- It is also important to remember that a great deal of the claimant's claim is premised on the basis that she intends to undergo the training to become a veterinary nurse. That applies not just to the costs of the course but also her claim to cover her transport costs and maintenance costs. The latter on the basis that she will not be able to work when studying.
- I have accepted that the claimant has a genuine aspiration to become a veterinary nurse and that this aspiration is not fanciful, nevertheless, as Mr Menon conceded, it is appropriate to recognise that there is a significant contingency aspect to it such as to justify some discounting.
- One factor which both parties are agreed is not relevant here is the fact that the claimant is in receipt of tax credits. The fact that the claimant in Ilott was in receipt of benefits was an important consideration. It is agreed that a capitalised award in this case will not adversely affect the claimant's entitlement to tax credit.
- Miss Lloyd argued that since the claimant has indicated that but for her debts she would be able to manage, the maximum award should be an amount equal to her outstanding indebtedness of £6600. Her position is that the claimant has made it clear that she can live within her means if relieved of the burden of meeting debt repayments.
- Having regard to the section 3(1) factors I am of the view that an award that simply enables the claimant to clear her debts would be too low. I accept that she would then be able to live within her means but it would be a fairly frugal existence and would not provide her with any scope to meet any expenses that would be necessary for her to improve her position. In any event, it is right to observe that in Ilott the claimant could meet her outgoings from her own resources but nevertheless it was considered that that did not disqualify her from an award.
- Equally, the amount sought by the claimant, even discounted to £59,000 is too high. It has to be said that at first blush an award that represents only 22% of the estate is not unreasonable even taking into account that that is 22% of the estate before the provision to Mark Mahajec. That however seems to me to apply the wrong test. It might well inform as to what is reasonable provision in a claim by a spouse where the court is not confined to an award to reflect only maintenance needs but in this case the award must be specifically confined to maintenance needs -- even though the definition of maintenance is fairly broad and, on the authority of In re Dennis to which I refer in paragraph 18 above, can, in my view, include monies that would enable the claimant to undergo her retraining.
- What of the provisions of s3(3) of the Act which specifically import an obligation to have regard to the cost of education and training? In fact I do not accept that section 3(3) assists the claimant in this case. The subsection requires the court to have regard to the manner in which the applicant was being or in which he might expect (my emphasis) to be educated or trained. At the time of the deceased's death the applicant was not being trained and there is no cogent evidence that she might have expected her father to meet the cost of education and training at any future date. It seems to me that the way in which this particular subsection is drafted requires the court to have regard to the manner in which the claimant herself might have expected to be educated or trained. It is not a question of whether it would have been reasonable for a deceased person to contribute towards a claimant's education or training, the question appears to be whether the claimant expected it from the deceased person. This analysis however does not mean however that this claimant's aspiration to become a veterinary nurse is irrelevant, it is clearly still a factor to which regard must be had pursuant to section 3(1)(g), as indeed the opening words of subsection (3) make clear.
- In my view, taking all the section 3 matters into account the financial provision that would be reasonable in all the circumstances of the case for the applicant to receive for her maintenance duly capitalised is £30,000.
- I reach that figure bearing in mind that I am confined to awarding a figure based upon capitalisation of maintenance. £30,000 is my best estimate of the capitalised cost of maintenance for a reasonable time going forward to take into account the possibility, albeit contingent, of the claimant undertaking a course which ultimately results in her becoming a veterinary nurse and which enables her to look after herself financially if such a course is undertaken. In so doing it is intended to take account of the fact that it appears to be conceded that if this course is undertaken some of it may be financed by a student loan but it also recognises that such loans are not grants and that they leave the student with a debt liability. It is not unreasonable in my view for the award to be sufficient to seek to ameliorate that to some extent, if not wholly. It also takes account of the fact that there will be transport costs while also recognising that whilst it may be convenient, there is no necessity for the acquisition of a motor vehicle in order to undertake this course. I suspect that there are many potential veterinary nurses who manage to qualify without having their own car.
- In reaching the figure I have had regard to the fact that the claimant may never go on this course albeit that her aspiration to do so is genuine and I have discounted figures appropriately including amounts for her maintenance on the basis that if the course is not undertaken then she remains free to earn her own living, as she is clearly capable of so doing (subject to what I say below in paragraph 106).
- The award takes account of the fact that she is now currently indebted and that servicing those debts prevents her from currently living within her means. It also has regard to the value of the estate as one of the section 3 factors to which consideration must be given. In my view that is relevant in the assessment of maintenance bearing in mind that maintenance is not limited to subsistence level and the greater the value of the estate, then, subject to other calls upon it, the greater the level of maintenance that it is reasonable for an applicant to reasonably expect. It is also intended to recognise the possibility, albeit fortunately remote, that, although the claimant does not currently suffer any disability that affects her current ability to work, she may not be able to work for periods at some future date for reasons unconnected to training for a veterinary post. I remind myself of her recent cancer scare and the fact that it is not guaranteed that she is permanently out of the woods in respect of that, albeit that is clearly and thankfully the expectation of those treating her.
- I recognise that some judges may have awarded more while others may have awarded less. For what it is worth I note that in terms of the percentage of the value of the net estate, it is 11.3%. Mrs Ilott's award as a percentage of her mother's net estate was within approximately 1% of that. Had my hands not been tied to a capitalisation of maintenance the award would have been greater but my hands are so tied.
- Finally, I should make it clear that I have not overlooked that the defendant argues that he does not have the money. He is having to borrow to meet the award to Mark Nahajec. Of course, the relevant date for the consideration of resources is the date of the hearing but against that has to be considered the fact that, by section 19(1) of the Act, the order speaks from the death of the testator, not the date of the order. Furthermore, as Mr Menon has identified in paragraph 4(4)(c) of his skeleton argument, in his second witness statement the defendant sets out what he has spent of the monies received from the estate and that totals £222,051. On that basis, it appears that there is approximately £44,000 unaccounted for in any event. Even if that were not so however, the order would be the same. In so far as the defendant suffers a shortfall in meeting the award from his cash resources that is because of unjustified spending of this estate and in this case much of that spending occurred when he was aware of the claim.
I am grateful to counsel for their very able assistance in this matter.
Note 1 seeIllot paragraph 17 [Back]
Note 2 In contrast to his capital expenditure such as Rolexes and weddings which he argues is extravagant [Back]
Note 3 I note in fact that in paragraph 65 Lady Hale JSC in the Supreme Court cited the observation of Wall P when the case was in the Court of Appeal to the effect that had the District Judge dismissed the claim “I very much doubt whether the appellant would have secured a reversal of that dismissal on appeal” [Back]
Note 4 £50,000/£486,000 x 100 =10.3% [Back]
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