Private client section

Back to e-updates                                                                             Download PDF [PDF 125KB]

Issue 18 - May 2007

Contents

Cases
Features

Articles
News
Events
Discounts (how to book and claim discounts)
 Back to top

Cases

1. O'Brien v Seagrave and another
Citation: [2007] All ER (D) 56 (Apr)
Court: Chancery division
Judge: Judge Mackie QC sitting as a judge of the High Court
Hearing date: 4 April 2007
Summary: will – validity – forgery

The claimant had been the partner of the deceased for some 12 years. The second defendant was the former wife of the deceased, and the first defendant was her son, the deceased's step son. Following the deceased's death, a will was produced by the defendants and they subsequently obtained a grant of probate. The beneficiaries under the terms of the will were the first defendant and his issue. The claimant issued the instant proceedings seeking a declaration that the will was invalid, that the deceased died intestate, and that the will be revoked on the grounds that the will was forged by the first defendant or obtained by undue influence. The claimant relied upon various factors in support of her claim. The claimant herself had no entitlement under the terms of the will, and on intestacy the estate was to pass to the deceased's brother, an elderly gentleman well provided for who had no wish to take part in the probate proceedings. The claimant had a claim for provision under the Inheritance (Provision for Family and Dependants) Act 1975, and that claim would have benefited from the declaration of intestacy. Subsequently, the claim was struck out on the ground that the claim form had failed to disclose reasonable grounds for bringing a probate claim, and for a failure to comply with the procedural requirements relating to probate actions contained within the Civil Procedure Rules 1998, SI 1998/3132, and Pt 57.7. The claimant appealed.
The principal issue that fell to be determined was whether a claimant who stood to receive nothing either under the contested will or on intestacy, but whose admitted right to bring a claim under the 1975 Act would be affected by the outcome, had an "interest" in the deceased's estate, within the meaning of CPR 57.7, for the purposes of bringing a probate action.

The appeal would be allowed.

The claimant had a clear and accepted financial interest in the outcome of the dispute, and there existed no authority which precluded a claim under the 1975 Act from being an "interest" in the estate for the purposes of CPR 57.7. Moreover, there was no formulation or definition of "interest" in any decided case with which the broad construction contended for by the claimant would be inconsistent.

It was true that judgment for the claimant in the probate action would not of itself produce an immediate financial reward; that was equally true of other areas of litigation where the claimant was permitted to go ahead, most obviously in claims for declarations. There existed a further practical reason why "interest" should be construed to include a potential 1975 Act claim. If the instant action was not allowed to proceed, but the claimant's 1975 Act action went ahead, then the judge, when considering all the circumstances, might well feel considerable unease about proceeding on the possibly false assumption that the will was in fact valid, thereby causing section 121 of the Supreme Court Act 1981 to be invoked, a course that would cause further delay, expense, and uncertainty to the small estate in question. Against that background, the claimant had a sufficient "interest" to proceed as a claimant under CPR 57.7.

Case annotations: Kipping and Barlow v Ash (1845) 1 Rob Eccl 270; Hingeston v Tucker (1862) 2 Sw & Tr 596 and Green v Briscoe [2005] All ER (D) 96 (May) considered.
Back to top

2. Roberts v Gill & Co (a firm) and another
Citation: [2007] All ER (D) 89 (April)
Court: Chancery Division
Judge: Paul Morgan QC sitting as a deputy judge of the High Court
Hearing date: 4 April 2007
Summary: Solicitor – negligence – duty of care – wills

The testatrix died in July 1995. The claimant was named as a beneficiary in her will, as was his brother, JR. Clause 7 of the will provided that, if on written demand from the testatrix's trustees, JR paid to the trustees such sum as should represent the amount of all estate or other duty payable upon or by reason of her death in respect of all her estate, the testatrix would give a piece of land, known as Coppice, to the claimant absolutely, and the remainder of her freehold property to JR absolutely. Clause 8 of the will provided that if JR did not pay the sum specified in clause 7 of the will, clause 7 of the will should not take effect and, in substitution, the freehold property described in clause 7 would be held upon the trusts declared in clause 9 of the will. Clause 9 of the will contained a gift of residue and provided for the payment of the claimant's death, funeral and testamentary expenses, and then for the residuary estate to be divided equally in three ways, to the claimant, the testatrix's daughter, and JR. The executors named in the will renounced their right to probate and JR was duly appointed administrator of the estate in respect of the period 30 November, 1996, to 30 October, 2000. In June 1997, JR executed a conveyance of some of the freehold property referred to in clause 7 of the will, and, in October 1997, he assented to the Coppice land being vested in the claimant. Consequently, clause 8 of the will did not have the effect of putting the land referred to in clause 7 of the will into the residuary estate to be dealt with under clause 9. However, it appeared that a substantial sum remained due in respect of inheritance tax, which, together with interest, amounted to about £100,000. JR subsequently sold all of the remainder of the freehold property referred to in clause 7 to third parties, and disappeared. On 30 October, 2000, JR was replaced as administrator by a partner in the firm of solicitors that acted for the claimant. In 2002, the claimant commenced proceedings against the two defendant firms, which JR had instructed during his time as administrator of the estate. In the pleadings, the claimant alleged that the defendants owed him a direct duty of care and that they had been negligent in relation to the position in respect of inheritance tax and the administration of the will, and in relation to the title of land sold by JR. The claimant subsequently applied for permission to continue the proceedings in a representative capacity.

The application would be dismissed.

It was well established that the beneficiary had no cause of action against a third party, save in special circumstances which embraced a failure, excusable or inexcusable, by the trustees in the performance of the duty owed by the trustees to the beneficiary to protect the trust's estate or to protect the interests of the beneficiary in the trust estate.

In the instant case, the only way whereby the claimant could put forward a cause of action vested in the estate was by persuading the court that the instant case was one of the special cases where a beneficiary under a trust could act in his own name to advance a cause of action vested in trustees who were not themselves prepared to advance the claim. Having considered the relevant circumstances, they did not amount to special circumstances justifying a derivative action against the defendants.

Case annotations: Field v Firmenich & Co [1971] 1 All ER 1104; Hayim v Citibank NA [1987] AC 730; Braddock Trustee Services Ltd and another v Nabarro Nathanson [1995] 4 All ER 888 considered.
Back to top

3. Halpern and others v Halpern and another

Citation: [2007] All ER (D) 38 (Apr)
Court: Court of Appeal, Civil division
Judge: Waller, Sedley and Carnwath LJJ
Hearing date: 3 April 2007
Summary: Conflict of laws – Contract – Arbitration – Compromise agreement – Non-national system of law

The claimants were the son and grandson of the deceased, the late Rabbi Joseph Halpern and his wife. They brought an action to enforce a compromise alleged to have been reached with the defendants, who were four other sons and a daughter of the deceased. The compromise was of an arbitration before a Beth Din, comprised of three Rabbis, which in the main took place in Zurich. It was said to be subject to 'Jewish law'. The arbitration had been intended to settle issues concerning the inheritance. The first three defendants were the executors of both deceased. The dispute concerned not only the distribution of the estates, but also whether there were other assets which should be brought into account by the defendants in considering the share of the first claimant. A different Beth Din sitting in New York awarded the sister the whole of the estate against the executor brothers, and they later transferred to her some £4m. Under the compromise, if valid, the first claimant was to receive £2.4m. The claimants applied for summary judgment.
The judge decided many of the issues against the defendants (see [2006] 2 All ER (Comm) 251). He held, inter alia, that the applicable law was either English or Swiss law, but not Jewish law. He left the issue of duress to be tried, in relation to which a preliminary issue was heard as to whether rescission was available as a remedy for duress if substantial restitution could not be given. The claimants argued that since all of the documents relating to the compromise agreement had been destroyed, pursuant to cl 4 of the agreement, it was not possible to put the parties back into the position they were in before the compromise was concluded. The judge ruled in favour of the claimants (see [2006] 2 All ER (Comm) 484), holding that the common law remedy of rescission on the ground of duress required an ability to give counter-restitution. Thus, a party could not avoid a contract procured by duress in circumstances where he could not offer the other party substantial restitutio in integrum. The defendants appealed against both judgments.
In relation to the first judgment, the issues included the proper law of the compromise agreement, the effectiveness of cl 4; whether the executor brothers were entitled to avoid the agreement on the ground of mistake. In relation to the second judgment the issue remained as to whether a party could avoid a contract procured by duress in circumstances where he could not offer the other party substantial restitutio in integrum. Since the original judgment, however, it had apparently come to light that not all of the documents had in fact been destroyed.

The court ruled:

(1) There could be no question of Jewish law being agreed expressly or by implication, on the facts. It had to be English law, though Jewish law could have some relevance. The effectiveness of cl 4 could not be determined at the present stage. Nor was it possible to rule out arguments that the defendants might be entitled to relief based in some way on the arguments in relation to duress.

(2) The court was inclined to the view that rescission for duress should be no different in principle from rescission for other 'vitiating factors'. However, the practical effect of counter-restitution would depend on the circumstances of the particular case. In the instant case, if the defendants were able to establish that their consent to the compromise agreement had been procured by improper pressure (whether characterised as duress or undue influence), it would be surprising if the law could not provide a suitable remedy. The form of the remedy was a matter which could not sensibly be decided until the facts were known, not only as to the nature and effect of the improper pressure, but also as to the identity and significance of the documents destroyed. The appeal would therefore be allowed against the judge's ruling on the preliminary issue, but no order would otherwise be made.

Case annotations: Decision of Christopher Clarke J [2006] 2 All ER (Comm) 251 overruled in part. Decision of Nigel Teare QC [2006] 2 All ER (Comm) 484 overruled.
Back to top

4. Allnutt and another v Wilding and others

Citation: [2007] All ER (D) 41 (April)
Court: Court of Appeal, Civil division
Judge: Mummery, Carnwath and Hooper LJJ
Hearing date: 3 April 2007
Summary: deed – rectification – voluntary settlement – intention of settlor – mistake – trust settlement

The settlor wanted to reduce the amount of inheritance tax payable by his estate after his death. He executed a settlement, which created a discretionary trust for the benefit of his three children. He paid £550,000 to the trustees to hold under the discretionary trust. He thought that the payment was a potentially exempt transfer for the purposes of inheritance tax. However, after his death more than seven years later, it emerged that it was not, since the settlement had created a discretionary trust rather than interests in possession. The trustees applied to the court for an order to rectify the settlement so that the intended fiscal effect would result. The judge refused the application on the basis, inter alia, that the court had no jurisdiction to order rectification where the mistake had not been as to the meaning of the document but as to its fiscal effect. The trustees appealed.

They submitted, inter alia, that the judge had erred in taking a too narrow view of the jurisdiction to order rectification. They argued that rectification could be ordered where there had been a mistake as to the effect of the document, as well as the meaning of the document.

The appeal would be dismissed.

A mistake as to the particular fiscal effect of a settlement did not qualify as a mistake permitting rectification, since it was not a mistake as to the recording of the settlor's intentions.

In the instant case, the settlor had intended to execute the settlement, which in fact had been executed. The settlement accurately recorded his intention to benefit his three children through the medium of a trust, rather than through a direct gift in their favour. There was no operative mistake in the recording of the settlor's intentions. The only mistake made by the settlor and his advisers was as to whether the payment to the trustees had been a potentially exempt transfer for the purposes of inheritance tax. It followed that the court had no jurisdiction to order rectification.

Case annotations: Gibbon v Mitchell [1990] 3 All ER 338; Amp (UK) Ltd plc v Barker [2000] All ER (D) 2208; and Wolff v Wolff [2004] STC 1633 considered.
Decision of Rimer J [2006] All ER (D) 375 (Jul) affirmed.
Back to top

5. Arnup and another v MW White Ltd

Citation: [2007] All ER (D) 521 (March)
Court: Queen's Bench division
Judge: Judge Seymour QC sitting as a judge of the High Court
Hearing date: 27 March 2007
Summary: fatal accident – damages – deceased having death benefit scheme and employee benefit trust – accident at workplace resulting in deceased's death – payments under scheme and trust being made to administratrix

K was employed by the defendant company as a yard foreman. In December 2003, he died as a result of a work-related accident. K's son, the second claimant, witnessed the accident and claimed damages in respect of the consequences of his loss. That claim was settled. Following the grant of letters of administration, in light of the fact that K had not left a will, K's wife, M, the first claimant, claimed damages against the defendant in respect of K's death pursuant to the provisions of the Law Reform (Miscellaneous Provisions) Act 1934 and the Fatal Accidents Act 1976, as amended. A trial on the extent of the defendant's liability was pending, when a trial of a preliminary issue was ordered by a district judge.

The preliminary issue that fell to be determined related to the question of whether two payments that had been made to M after K's death, were to be taken into account in the assessment of damages. The first payment was an amount of £129,600 that was paid to M in January 2004. That amount was described as a payment “in respect of [the defendant's] death benefit scheme”. The second payment was an amount of £100,000 paid to M a month later. That amount was described as a payment “in respect of benefits received from [the defendant's] employee benefit trust”.

The position adopted by the defendant was that the two payments were to be brought into account in its favour, in the assessment of damages. M contended that the payments could not be brought into account, by virtue of section 4 of the Fatal Accidents Act 1976, as amended. M contended alternatively, that the two payments fell within the scope of two exceptions established by authority. Those exceptions were the “insurance exception” and the “benevolence exception”. The former exception was the principle that a tortfeasor could not, in an assessment of damages in a personal injury case, rely, in the reduction of damages, upon the proceeds of an insurance policy entered into by a claimant at his own expense. The latter exception was the principle that a tortfeasor could not rely, in the reduction of damages, upon sums paid to a claimant as a result of charity or the benevolence of third parties. Having set out those exceptions, M submitted that both payments could be caught by the insurance exception, and the February 2004 payment could be caught by the benevolence exception, so that the respective payments were not to be brought into account in an assessment of damages.

The court ruled:

On the facts, neither of the two payments fell within the scope of section 4 of the Fatal Accidents Act 1976, given that neither amount became payable to M on the date of K's death. The two exceptions, however, were relevant. There was no logical reason why the public policy reasoning, which had led to the recognition of the exceptions in personal injury cases, could not also be recognised in the instant case of a fatal accident. In the circumstances, both payments had not fallen within the scope of the insurance exception, and the February 2004 payment had fallen within the scope of the benevolence exception.

Accordingly, in assessing the damages of M's claim, the payment of £129, 600 could be brought into account; the payment of £100,000, however, was to be omitted from such an assessment.

Case annotations: Pirelli General plc v Gaca [2004] 3 All ER 348 applied. 

Please note subscribers can go to LexisNexis Butterworths for further details about all the above cases. Non-subscribers can sign up for a free trial of the online service.

Back to top

Features

1. Taking an "interest" in inheritance provision
A claimant — Julia O’Brien — has been given the right to make a statutory claim for provision under her deceased partner’s estate under the Inheritance (Provision for Family and Dependants) Act 1975, despite not being a beneficiary under the will, as it could be said that she has sufficient “interest” in the estate to allow her to continue with a probate claim under Civil Procedure Rules (CPR 57.7 (1)), as seen from the case reports of this Probate Update edition. Ms O’Brien had appealed against an order made in November 2006, which had struck out her probate claim against the two defendants in the case.

The defendants (who are also beneficiaries of the will), the former wife and the son of the deceased, Derek Seagrave, had produced a will some time after Mr Seagrave’s death, and had obtained a grant of probate. In addition to a claim for provision, Ms O’Brien also brought an action against the defendants to seek a declaration that the will was invalid and that the deceased had died intestate. She had also asked that probate be denied to the defendants on the grounds that the will was not genuine or had been obtained following undue influence. In their defence, the defendants argued that the claimant did not have an “interest” to bring a claim under CPR 57.7 (1). They further argued that, even if her claim were successful, it would not be possible for her to gain an interest in the estate, as it would then pass to the deceased’s brother.

John Darnton, a partner at Bircham Dyson Bell, LLP, believes the case is a good demonstration of “judges adopting a practical approach to resolving a dispute and being flexible”. He believes that, in “allowing this order to challenge the will, if it results in the will being set aside”; judges, dealing with similar cases will have been given the discretion to continue to act in this flexible way.

Mr Darnton believes that it is common practice for lawyers, when approached by claimants in connection with inheritance disputes, to first “check whether the person is entitled under the Inheritance Act 1975 to bring a claim” and, if they are, to establish “what is in the estate and what provision there would be for the claimant”. Mr Darnton believes the case is “an interesting one” because, while the wishes of the deceased cannot be disregarded, there remains a question as to whether the will was professionally prepared just before death. According to Giles Harrap (for the defendants), allowing a probate action could lead to the opening of the floodgates with similar claims being brought by all and sundry; Mr Darnton, however, disagrees with this view.

Mr Darnton makes the point that people often do not make a will, or, when they do, usually when they get married and/or buy a property, “they file them away and don’t get around to updating the wills”. Where there is “an old or non-contemporaneous will it may be set aside and people who would benefit under intestacy may not, and the will, where previously it would not have been challenged, would be”.

(24/04/2007)
Back to top

Articles

1. Caught in the crossfire?
Journal name: Taxation
Author: Emma Chamberlain
Citation: Taxation, 19 April 2007, 428
Issue date: 19 April 2007
Summary: Suggests that the aim of the proposed targeted anti-avoidance legislation and its accompanying guidance could be substantially improved. The legislation needs improving, and the guidance notes need clarifying, particularly given that they will be relevant to transactions that have already been carried out. If no serious changes are to be made to the legislation, then one simple improvement (on the assumption that the government does not want to catch ordinary inter-spouse and trustee / beneficiary transactions) is to have a de minimis exemption so that, for example, losses of less than £25,000 realised each year by any individual, trust or estate would not be disallowed, even if they are strictly caught by the legislation.

Please note subscribers can go to LexisNexis Butterworths for further details about all the above articles. Non-subscribers can sign up for a free trial of the online service.

Back to top

Discount offers

How to book and claim discounts
  • Law Society Publishing: quote “Probate Section” to receive a 20 per cent discount off all related titles (excluding directories) via Prolog at The Law Society, PO Box 99, Sudbury Suffolk CO10 2SN, telephone 0870 850 1422, fax 01787 313 995 or email lawsociety@prolog.uk.com.
  • LexisNexis Butterworths: quote “Law Society Section discount offer” when ordering via www.lexisnexis.co.uk, customer.services@lexisnexis.co.uk or 020 8662 2000.

This e-alert is not intended to provide comprehensive records of information concerning the probate sector. If you have any feedback or suggestions, please email probatesection@lawsociety.org.uk. This e-alert was created in conjunction with LexisNexis UK Legal Updater Service. For further information about any of the articles, please contact sabina.smith@lexisnexis.co.uk. The views expressed by the Legal Analysis interviewees are not necessarily those of the proprietor.
Back to top