Tragic strangers
First published in STEP Journal in January 2021.
Scott Taylor analyses the successful claim by the daughter of the deceased, despite long-term estrangement, in a recent England and Wales High Court case
Scott Taylor is a Partner in the Contentious Trusts and Estates Team at Moore Barlow LLP
What is the issue?
Re H (Deceased) involves an estranged adult child claiming financial provision from her father’s estate despite not being a beneficiary of his will.
What does it mean for me?
The case is an important reminder of the factors the court will consider when assessing claims under the Inheritance (Provision for Family and Dependants) Act 1975 (the 1975 Act), including funding arrangements.
What can I take away?
The extent to which estrangement impacts the merits of 1975 Act claims, the possible recoverability of uplifts pursuant to conditional fee agreements (CFAs) and the implications of failing to comply with court directions.
The recent case of Re H (Deceased)[1] was heard by Justice Cohen in the Family Division of the England and Wales High Court on 23–24 April 2020. The case involved an adult claimant who was successfully awarded financial provision from her estranged father’s estate, pursuant to the Inheritance (Provision for Family and Dependants) Act 1975 (the 1975 Act).
The case has been widely reported, not only for the success of the claimant, but also because the judgment considers the issue of recoverability of ‘uplifts’, pursuant to conditional fee agreements (CFAs), as part of awards in 1975 Act claims.
This case is particularly relevant to practitioners advising testators in respect of their testamentary affairs, as well as those advising on contentious matters where estranged adult children are involved. The issue of funding and recovery of costs where funding arrangements are involved is also an important factor for anyone advising on private wealth litigation.
The background
The claimant’s father died under tragic circumstances in a house fire at the family home in West London on 6 August 2016.
The deceased’s last will, dated 25 June 1998, provided for his entire estate to pass to his surviving spouse, the claimant’s mother. The executor named under the will was the claimant’s brother, the only other child of the deceased. The will was validly executed, rational on its face and prepared by solicitors. There were no grounds upon which to question its validity.
The deceased’s estate, including jointly owned assets as at the date of death, was valued in the region of GBP1.2million. However, at the date of the trial, the most recent estate accounts suggested the deceased’s net estate, including his severable share of joint assets, was approximately GBP555,000.
The claimant sought relief by bringing an application for reasonable financial provision for her maintenance, pursuant to the 1975 Act. The claim included an application for relief, pursuant to s.9 of the 1975 Act, for the deceased’s severable share of this estate to be included for the purpose of the claim.
The claim
The claimant was experiencing unsustainable financial strain by the time the matter came to trial. Although she was in receipt of state benefits, including a housing allowance, she was otherwise entirely dependent on the income of her long-term partner and father to her two young children. The claimant was facing increasing levels of debt and, due to medical reasons, was unable to work.
At the time of the trial, the claimant was aged 50 and living with her two young children, aged five and eight, in a small two-bedroom property provided by the housing association. The claimant was regularly in rental arrears and feared eviction from the property.
The surviving spouse
The sole beneficiary of the will, the deceased’s surviving spouse of over 50 years and first defendant to the claim, was living in a residential care home by the time of the trial and was aged 83. She was partially deaf and suffering from ill health, with no intention of ever returning to the family home (and took steps to place the property on the market while the claim was ongoing). It was alleged that the surviving spouse had significant wealth in her own right, although no disclosure was ever provided.
Procedural points of interest
The first defendant failed to file an acknowledgment of service in time in response to the claim and no formal defence to the claim was ever lodged at court or served on the parties. The first defendant took no active role in proceedings, despite instructing lawyers for various interim hearings to seek permission to respond to the claim, as well as the fact that there had been a number of stays for her to respond to the claim. The court ultimately made an order debarring the spouse from the proceedings, to allow the claim to progress to trial.
The only other party was the second defendant, who was the executor and maintained a neutral position throughout the claim.
Expert evidence
In August 2017, the claimant was diagnosed with a dissociative disorder and obsessive compulsive disorder. The claimant experienced dissociative episodes because of traumatic memories from her childhood and these episodes were severely impairing her daily life as well as preventing her from maintaining employment.
An expert report was prepared for the court who confirmed the claimant’s diagnosis and the existence of memories of trauma in childhood, for which she recommended:
- weekly therapy sessions with a psychotherapist for three years at a cost of GBP9,900–19,800 depending on the therapist; and
- occasional supervision of a consultant psychiatrist and medication at a total cost over the three years of between GBP600–3,600.
The expert confirmed that the claimant would not be able to re-enter the workplace for at least three years and might never be able to do so if her condition did not improve through sustained therapy.
Funding the claim
The claimant had limited resources and therefore, in order to fund the litigation, she had entered into a CFA with her legal team who would benefit from an uplift on their fees in the event that her claim succeeded. If the claim did not succeed then her legal team would not be paid.
Since the implementation of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, which came into force on 1 April 2013, the general rule in litigation has been that for parties funding their litigation via CFAs, the CFA success fee is not usually recoverable from the losing opponent if the case is successful.
The trial and judgment
The trial proceeded remotely via video link before Cohen J on 23–24 April, because of the UK being in lockdown at the time.
The day before the hearing, on 23 April 2020, the first defendant sent a handwritten letter to the judge in an attempt to defend the claim. Despite the debarment, the claimant’s legal team had taken steps to ensure the first defendant was provided with all the documentation for trial and was able to access and attend the trial remotely.
At the outset of the trial, Cohen J gave due consideration to the first defendant’s letter, received the day before, in which she expressed her concerns for her own financial position, ability to pay care home fees and ill health. He responded to the letter at trial by explaining that, in accordance with s.3(1)(c) of the 1975 Act, the court must take her financial needs and resources into consideration as beneficiary of the estate.
The judge assessed the claimant’s financial needs as considerable and was persuaded that the first defendant would have sufficient resources to meet her financial needs from her share of the joint assets. Having chosen to exercise his discretion, pursuant to s.9 of the 1975 Act, he awarded the claimant GBP138,918. This award was intended to provide for the claimant’s therapy, meet her income shortfall for a period of three years, and provide a lump sum for the replacement of household white goods and a deposit for alternative accommodation. Significantly, the award also took into consideration the claimant’s obligations under the terms of her CFA, for which he allocated approximately GBP16,000 of the total award.
Whether CFA fees should form part of an award under the 1975 Act is a controversial issue and one that is attracting much publicity in the private wealth litigation arena. It is understandable that without CFA arrangements many claimants simply would not be in a position to fund litigation. Although, as mentioned above, the rule in litigation since 2013 is that success fees emanating from CFAs are not recoverable, so there is an inevitable tension between public policy and what exactly constitutes financial need for the purpose of a claim under the 1975 Act. This issue will require clarification at some stage, which will doubtless be well received by those advising on claims under the 1975 Act.[2]
#CONTENTIOUS TRUSTS AND ESTATES
#ESTATE PLANNING
[1] [2020] EWHC 1134 (Fam)
[2] Scott Taylor acted for the successful claimant in Re H.