Private client section
  


Back to e-updates     
                                                                     

Issue 43 – December 2009 

News
Features


Cases
  • Perrins v Holland and others
    Costs – Contentious probate action. Following the court making a pronouncement in favour of the will of the deceased, a judge of the Chancery Division held, inter alia, that the costs should lay where they fell as between the claimant and first and second defendants
  • Sutton v Sutton
    Land registration – Transfer. In proceedings relating to the deceased's transfer of a property to the first defendant in 1997, a deputy judge of the Chancery Division held, inter alia, that the transfer had been invalid as the deceased had lacked the capacity to enter into the transaction
  • Hinton and another v Leigh and another
    Will – Testator. In proceedings where the claimants' challenged the purported revocation of a will by the testator, a deputy judge of the Chancery Division held that the testator had lacked the testamentary capacity to execute the deed. Accordingly, probate would be granted to the first claimant as executor of the will
Legislation

Journals
  • More than meets the eye
    Solicitors Journal, Private Client Focus, November 2009: What factors need to be considered in cases involving testamentary capacity?
  • Protectors beware
    Trust and Estates Law & Tax Journal, October 2009: Where a protector/appointor fails to retire promptly where such a blatant conflict of interest arises, the court will have no hesitation in awarding indemnity costs against them
  • A detailed examination
    Taxation, Issue 4228: The benefits and tax implications of an inheritance tax planning product
    product
  • Wills & Probate: Families at war
    New Law Journal, Issue 7389: Why challenges based on testamentary capacity are becoming more common
  • Wills & Probate: Baynes v Hedger & anor: A lesson for charities?
    New Law Journal, Issue 7389: What are the potential pitfalls for charities in processing inheritance claims?

Articles
  • Cohabitation law now more open to debate
    Law Commission proposals to modernise inheritance law to help protect unmarried couples where one partner dies without leaving a will may be 'unworkable', family lawyer Christina Blacklaws tells Grania Langdon-Down
  • Badly drafted homemade wills likely to be invalid
    The Law Society and Mencap have joined forces to warn vulnerable people of the risks of wills drawn up by unregulated, unqualified and uninsured will writers. North East solicitor Patrick Purves gives Grania Langdon-Down examples of shoddy and invalid wills
  • After the event insurance recommended to protect charities from bigger players
    A woman who contested her parents' will after they left their £2.3m estate in North Yorkshire to the RSPCA won her battle to inherit their farm after securing third-party litigation funding to take the case to court. Neil Hodge talks to Matthew Amey, director at The Judge, about how such innovative funding is beneficial for similar cases
Events

Discounts

Cases

 
Perrins v Holland and others

Citation: [2009] All ER (D) 124 (Nov)
Alternative citations: [2009] EWHC 2558 (Ch)
Hearing date: 21 October 2009
Court: Chancery Division, Birmingham District Registry
Judge: Lewison J
Representation: James Quirke (instructed by Tyndallwoods Solicitors, Birmingham) for the claimant. Andrew Charman (instructed by Sydney Mitchell) for the executors. Angus Burden (instructed by Williamson and Soden, Birmingham) for the third defendant.
Keywords: Costs – Contentious probate action – Claim on estate – Dispute between parties as to whether deceased knowing and approving of contents of will – Whether claimant having been justified in challenging will.

Summary: The judgment is available at: [2009] EWHC 2558 (Ch)
On 31 July 2009, the court pronounced in favour of the will of the deceased (see [2009] All ER (D) 30 (Aug)). The parties aggregate costs exceeded the value of the estate. It was common ground that CPR 44.3 applied to an award of costs in contested probate proceedings, and that the general rule was that the unsuccessful party should pay the successful party's costs.
The claimant argued that he was exonerated from paying costs and sought his costs of the action. Specifically, he argued that the litigation had been induced by, inter alia, the uncertainty over the testamentary capacity of the deceased which was compounded by deficiencies in the defendants' evidence.
 
The court ruled:

It was established law that a positive case had to be made for departing from the general rule that the successful party was entitled to his costs. Under CPR 44.3(4) the court had to have regard to all the circumstances, including the conduct of all the parties and whether a party had succeeded on part of his case, even if he had not been wholly successful. Further, under CPR 44.3(5), the court had to consider the conduct of the parties, which included whether it was reasonable to raise, pursue or contest a particular allegation or issue; the manner in which a party had pursued or defended his case or a particular allegation or issue; and whether a claimant who had succeeded in his claim had exaggerated his claim. Moreover, in contested probate cases there were two recognised exceptions to the general rule that an unsuccessful party should pay the successful party's costs, namely: (i) if a person who had made a will, or persons who had an interest in the residue, had been the real cause of the litigation a case was made out for costs to come out of the estate; and (ii) if the circumstances led reasonably to an investigation of the matter, then the costs could be left to be borne by those who had incurred them. Neither of the established exceptions, however, went so far as to entitle an unsuccessful challenger of a will to have his costs paid by the executors personally (see [3], [6], [7] and [9] of the judgment).

On the facts, the claimant's points, taken individually or cumulatively, did not entitle him to have his costs paid by the defendants. There was however, justification for an investigation of the matter that led to a conclusion, inter alia, that the costs should lay where they fell as between the claimant and first and second defendants (see [14] and [17] of the judgment).

Parker v Felgate 8 PD 171 considered; Spiers v English [1907] P 122 considered; Larke v Negus [2000] WTLR 1033 considered; Kostic v Chaplin [2007] All ER (D) 119 (Dec) considered.

Gareth Williams, barrister
Published date: 18/11/2009
 

Sutton v Sutton

Citation: [2009] All ER (D) 35 (Nov)
Alternative citations: [2009] EWHC 2576 (Ch)
Hearing date: 29 October 2009
Court: Chancery Division
Judge: Christopher Nugee QC sitting as a deputy judge of the High Court
Representation: Philip Jenkins (instructed by Saulet Ashworth LLP) for the claimant. Richard Dew (instructed by Donnelly & Elliott LLP) for the defendants.
Keywords: Land registration – Transfer - Validity – Deceased transferring property to first defendant in 1997 – Deceased dying intestate in 2005 – Deceased's widow claiming deceased lacking capacity to enter into 1997 transfer – Whether deceased lacking capacity – Whether declaration should be made that transfer void.
 
Summary: The judgment is available at: [2009] EWHC 2576 (Ch)
The first defendant was the son of the deceased and the claimant. In August 1997, the deceased transferred the ownership of the freehold property in issue to the first defendant. Despite the transfer, the claimant and the deceased continued to live at the property. In 2002, the first defendant transferred the property into the joint names of himself and his wife, the second defendant, as trustees of a trust. The deceased died intestate in November 2005. The claimant, supported by medical evidence, challenged the validity of the 1997 transfer and sought a declaration that the transfer had been void.

The claimant contended, inter alia, that the deceased had lacked capacity at the time of making the 1997 transfer.

The claim would be allowed in part.

(1) It was established that the degree or extent of understanding required in respect of any instrument was relative to the particular transaction that it was to effect. In the case of a will the degree required would always be high. In the case of a contract, a deed made for consideration or a gift inter vivos, whether by deed or otherwise, the degree required varied with the circumstances of the transaction. Thus, at one extreme, if the subject-matter and value of a gift were trivial in relation to the donor's other assets a low degree of understanding would suffice. However, if its effect was to dispose of the donor's only asset of value and thus for practical purposes to pre-empt the devolution of his estate under his will or on his intestacy, then the degree of understanding required was as high as that required for a will, and the donor had to understand the claims of all potential donees and the extent of the property to be disposed of (see [11] of the judgment).

In the instant case, the deceased had been required to have been capable of understanding that he had given away his house to the first defendant, and that the effect of his transfer would be to deprive himself and the claimant of any entitlement to the property or legal right to stay there. On the evidence, the deceased's ability to make significant financial decisions in August 1997 had been impaired and he had lacked capacity to understand the nature and effect of what he was doing (see [27] of the judgment).

The 1997 transfer was invalid. It would be set aside and the register of the Land Registry rectified (see [28] and [31] of the judgment).

Beaney, Re [1978] 2 All ER 595 applied.

(2) A declaration was a discretionary remedy and, when considering whether to grant a declaration or not, the court should take into account justice to the parties, whether the declaration would serve a useful purpose, and whether there were any other special reasons why, or why not, the court should grant the declaration (see [48] of the judgment).

In the instant case, justice to the parties only required the resolution of the position between them which was done by declaring the 1997 transfer invalid (see [49] of the judgment).

Financial Services Authority v Rourke [2001] All ER (D) 266 (Oct) considered.

Gareth Williams, barrister
Published date: 04/11/2009
 
Hinton and another v Leigh and another

Citation: [2009] All ER (D) 311 (Oct)
Alternative citations: [2009] EWHC 2658 (Ch)
Hearing date: 26 October 2009
Court: Chancery Division
Judge: Kevin Prosser QC sitting as a deputy judge of the High Court
Representation: Peter John (instructed by LE Law) for the claimants. Tony Oakley (instructed by Barlow Robbins) for the defendants.
Keywords: Will – Testator – Testamentary capacity – Testator purporting to revoke will made in favour of second claimant – Claimants contending testator lacking testamentary capacity and/or unduly influenced by the defendants – Whether testator having capacity to revoke will.

Summary: The judgment is available at: [2009] EWHC 2658 (Ch)
On 11 November 2006, the testator executed a will appointing the first claimant and his solicitors as executors and trustees. The will left nothing to the first defendant and £5,000 to the second defendant, his adoptive children, but gave the bulk of his estate to the second claimant, his niece, and her daughter. On 28 November, the testator was admitted to hospital where he was diagnosed with terminal cancer. The first defendant was told of the testator's illness. In April 2007, he was visited by an employee of a firm of solicitors at the request of the first defendant. On the testator's instructions, the employee drafted a document, that the testator executed, that purported to revoke the will. The revocation was not witnessed or approved by a medical practitioner who had satisfied himself of the testator's testamentary capacity and understanding. The testator died aged 85 on 17 June 2007. The claimants issued proceedings contending the revocation was invalid. In support of their claim, the claimants relied on expert evidence to the effect that between the testator's admittance to hospital and his death he had lacked testamentary capacity.

They submitted: (i) that the testator had lacked testamentary capacity; (ii) that he had not known and/or approved of the contents of the revocation; and (iii) in purporting to execute the revocation, the testator had been acting under the undue influence or fraud of the first defendant.
The claim would be allowed.

On the evidence, when the testator executed the revocation on 24 April 2007 he lacked testamentary capacity (see [154] of the judgment).

The revocation had been of no legal effect. Probate would be granted to the first claimant as executor of the will (see [180] of the judgment).

Gareth Williams, barrister
Published date: 02/11/2009
 
Legislation

Perpetuities and Accumulations Act 2009

LNB News 13/11/2009 57
Published date: 13 November 2009
Jurisdiction: England; Wales
Enactment citation: 2009 chapter 18
Royal assent date: 12 November 2009
Commencement date: Partially 12 November 2009; Remainder To Be Appointed
Legislation affected: Perpetuities and Accumulations Act 1964 amended; Law of Property Act 1925, Perpetuities and Accumulations Act 1964, Pension Schemes Act 1993 repealed in part

Summary: Provides for the rule against perpetuities to apply if an instrument:
- limits property in trust so as to create successive estates or interests the rule applies to each of the estates or interests;
- limits property in trust so as to create an estate or interest which is subject to a condition precedent and which is not one of successive estates or interests, the rule applies to the estate or interest;
- limits property in trust so as to create an estate or interest subject to a condition subsequent the rule applies to, (a) any right of re-entry exercisable if the condition is broken, or (b) any equivalent right exercisable in the case of property other than land if the condition is broken;
- which is a will limits personal property so as to create successive interests under the doctrine of executory bequests, the rule applies to each of the interests; and
- creates a power of appointment the rule applies to the power.
Contains exceptions to the rule against perpetuities and allows the Lord Chancellor to provide that the rule against perpetuities does not apply in specified circumstances. The perpetuity period provided in the Act is 125 years.
Abolishes the existing exceptions to the rule against perpetuities in the Law of Property Act 1925, sections 121(6), 162 and the Pension Schemes Act 1993, section 163. The Act also amends and partially repeals the Perpetuities and Accumulations Act 1964.
 
Journals

 
More than meets the eye

LNB News 18/11/2009 18
Published date: 18 November 2009
Author: Victoria Jones
Journal name: Solicitors Journal
Journal date: 1 November 2009
Journal citation: Solicitors Journal, Private Client Focus, November 2009, 7
Jurisdiction: England; Wales

Summary: Highlights the fact that cases involving allegations of a lack of testamentary capacity are becoming increasingly common and complex. The recent surge in will validity cases may indicate that disappointed beneficiaries are aware of the grounds to challenge the validity of a will. Changing social dynamics might further contribute towards this trend.

Protectors beware

LNB News 04/11/2009 13
Published date: 4 November 2009
Author: Paul Stibbard
Journal name: Trusts and Estates Law & Tax Journal
Journal date: 1 October 2009
Journal citation: Trust and Estates Law & Tax Journal, October 2009, 15
Jurisdiction: England; Wales

Summary: Explains the term "protector" may occasionally be used simply as a convenient name for a given person but more commonly it refers to an office created by the trust instrument, with provisions for a succession of persons to fill it. If the power is conferred on a protector of that latter kind, it will ordinarily be impossible to construe the power as beneficial. The protector will be there for the protection of the beneficiaries and his powers will be fiduciary.


A detailed examination

LNB News 22/10/2009 40
Published date: 22 October 2009
Author: Simon McKie
Journal name: Taxation
Journal date: 22 October 2009
Journal citation: Taxation, 22 October 2009, 394
Jurisdiction: England; Scotland; Northern Ireland; Wales

Summary: Looks at the details of an inheritance tax planning product. An Isle of Man assurance company offers an arrangement using a bond consisting of a group of endowment assurance policies. These are issued to a policyholder, who then assigns the policies on trusts.
www.taxation.co.uk: A detailed examination
 

Wills & Probate: Families at war

LNB News 21/10/2009 7
Published date: 21 October 2009
Author: Michael Tringham
Journal name: New Law Journal
Journal date: 16 October 2009
Journal citation: 159 NLJ 1429
Jurisdiction: England; Wales
Related cases: Ritchie, Ritchie and Others v National Osteoporosis Society and Others [2009] EWHC 709 (Ch)

Summary: Looks at several recent cases that dealt with testamentary capacity, including Ritchie, Ritchie and Others v National Osteoporosis Society and Others. Mrs Ritchie left her entire £2.5m estate to the charity, apart from a £5,000 legacy to her local church. The Ritchie children claimed that their late mother suffered from a disorder of the mind which had poisoned her affections against them and these delusions had caused her to disinherit them.

Wills & Probate: Baynes v Hedger & anor: A lesson for charities?

LNB News 21/10/2009 8
Published date: 21 October 2009
Author: Emily Campbell
Journal name: New Law Journal
Journal date: 16 October 2009
Journal citation: 159 NLJ 1431
Jurisdiction: England; Wales
Related legislation: Inheritance (Provision for Family and Dependants) Act 1975
Related cases: Baynes v Hedger & anor [2009] EWCA Civ 374
Summary: Considers claims brought by alleged dependants under the Inheritance (Provision for Family and Dependants) Act 1975 following the decision in Baynes v Hedger & anor, with a focus on the impact on charities. The first consideration is that a charity ought always to think over carefully the question of the claimant's standing to make a claim. Charities are frequently under pressure at the early stages of litigation to concede standing in favour of a claimant with an obvious close nexus to the deceased.
 
 
Articles

Cohabitation law now more open to debate

LNB News 10/11/2009 49
Published date: 10 November 2009
Jurisdiction: UK
Related digests: Learning from experience LNB News 24/08/2009 9; Consultation Paper: Intestacy and Family Provision Claims on Death LNB News 29/10/2009 22; Family Law Firms Object to Law Commission Proposals on Intestacy and Family Provision Claims LNB News 02/11/2009 30; Badly Drafted Homemade Wills Likely to Be Invalid LNB News 04/11/2009 60; Inheritance tax – Acceptance in Lieu scheme – latest additions LNB News 05/11/2009 74; LSC Proposes Option of Collaborative Law from 2010 LNB News 05/11/2009 60

Analysis: Blacklaws, senior partner of London family lawyers Blacklaws Davis, is the childcare representative on the Law Society Council. She says family lawyers will be looking at the proposals with keen interest. "It is rather ironic, however, that the commission has come up with recommendations which give unmarried couples greater rights on death than they have in life."
Under the current law, cohabitees who are unmarried and are not in a civil partnership have no automatic rights to inherit their partner's assets if they die intestate.

The commission is recommending in its consultation paper Intestacy and Family Provision Claims on Death unmarried childless couples who live together for two years should be automatically entitled to half the share of the estate a surviving spouse would receive. Those who have been together for five years should have equal rights to those of a spouse. However, a cohabitant would receive nothing if his or her deceased partner was still married or in a civil partnership at the time of death, however long they had lived together.

Other areas highlighted for potential reform include the entitlement of a surviving spouse where the deceased also left children, perhaps from another relationship, or there are other relatives; trusts for children on intestacy and the effect of adoption on a child's entitlement; family provision claims by adult children; and the distinction made in the intestacy rules between full brothers and sisters and half-brothers and sisters.

Blacklaws says she welcomes the debate the commission's proposals will provoke. "It is incredibly important that we review our laws in relation to unmarried couples--both in life and in death. What we have at the moment is a hotchpotch of different, cobbled together areas of law of contract, trust, even land law, to try to bring some fairness and equity but we fail to do that in the vast majority of situations--either on separation or on death.

"What we need to come up with are workable solutions. My worry is that the commission's proposals will be unworkable centres around proof--how do people prove that they have lived together continuously for five years? If they are challenged by other potential beneficiaries it could lead to satellite litigation, which is exactly what the proposals are trying to avoid."

She says couples can have very solid relationships where they don't live under the same roof. "The trigger should be a committed relationship," she continues. "Were they a couple when the partner died? What we have at the moment is the terribly unfair situation where the grieving partner is left having to deal with all sorts of uncertainties in relation to money and even their home. If there are children, it can be even more unjust."

Two years ago the Law Commission proposed legislation to allow cohabitants to make applications for financial relief if their relationship broke down. However, the government postponed any decision until after a review of the impact of similar changes made in Scotland.

In the meantime Lord Lester of Herne Hill QC introduced the Cohabitation Bill into parliament with the support of the family lawyers' group Resolution. It proposes the court should be able to make orders such as maintenance orders of up to three years duration, assistance with child care costs, lump sum orders, pension sharing orders and orders for sale or transfer of ownership of properties, provided the cohabitants comply with the eligibility criteria.

Blacklaws says: "The government sees reform for unmarried couples as a huge bear trap. Even though everyone is convinced that we must change the law, the government hasn't been brave enough to go near it. If this commission paper reopens the debate, it is very much to be welcomed."
 
Badly drafted homemade wills likely to be invalid

LNB News 04/11/2009 60
Published date: 4 November 2009
Jurisdiction: UK
Related legislation: Wills Act 1837
Related digests: Press Release: Law Society and Mencap Join Forces to Protect Vulnerable People from Unregulated Will Writers LNB News 30/10/2009 37
Analysis: New research among Law Society members specialising in will writing, trusts and probate has found badly drafted wills that result in the deceased's estate being wholly or partially intestate, poor tax planning and "vanishing wills", as well as hidden charges which inflate the initial advertised price of the will. People with a learning disability are particularly vulnerable and risk being left without a trust or adequate provision following their parent's death.

The Law Society's findings follow the recent Hunt Review into the regulation of legal services which raised concerns about the unregulated 'fringe legal market' in will writing and probate services.
Purves, partner and joint head of the private client department of North East regional firm Bridge McFarland, says their concerns are not "sour grapes" that will writers are taking work away from solicitors. "We have enough work to do and we get extra work when we have to sort out the mess left behind by some of them--but it grieves me to see the problems that are created for people at what is already a very difficult time"'

He continues: "The practice of will writing has taken quite a hold locally, especially in the remoter towns where will writers leaflet-drop into what are obviously retirement bungalows. They also advertise in newspapers offering will writing for £19.99, including 'tax advice'. They always offer to go and see the client which the client thinks is a better service than solicitors offer. But we will always go and see housebound clients and don't charge extra.

"These will writers also sell the client storagem--about £140 for one will and £280 for a couple. They usually manage to dial in other alleged services, such as a nil-rate band discretionary trust to save inheritance tax for which they charge £300-400. But that is a tax avoidance gambit which was only applicable to those over the nil-rate band and, most of the time, the estates weren't at that level.
"We have picked up the pieces from one will writer--one will wasn't dated but I managed to prove it by proving the envelope the client had received the copy in. Another will was witnessed and dated properly but not signed and another was signed and dated but not witnessed. His company then went bust and those wills being kept in storage disappeared.

"Compare that with our charges for a basic will of £100 and £150 for a couple, with free storage. I am not saying solicitors don't make mistakes--they do--but they are insured. And if a firm closes down its strong room is transferred to another firm because solicitors' practices are regulated."
He is also concerned about DIY wills being offered via the internet. "I have a simple philosophy. I am handy round the house but if it needs re-wiring, I get a professional in. If someone wants to create their own will or lasting power of attorney online, I hope they are familiar with the provisions of the Wills Act 1837 and subsequent legislation. Out of the homemade wills I have seen, a third have been invalid and more than a third haven't achieved what the testator intended."

Purves says wills are a loss leader for law firms and practitioners need to "up their game" in terms of specialisation and outreach. "We did a free wills campaign earlier this year and raised thousands for local charities. We were swamped. Solicitors' firms tend to have a negative image but those who came to us now regard us as their solicitor and we received new instructions as a result. The campaign was good not just for our image as a firm but for the image of solicitors at large."

After the event insurance recommended to protect charities from bigger players

LNB News 27/10/2009 60
Published date: 27 October 2009
Jurisdiction: UK
Related digests: Daughter wins over RSPCA in battle for will LNB News 09/10/2009 56; Classified Check LNB News 21/09/2009 41
Analysis: Christine Gill, 58, a lecturer from Northallerton, started a legal action in July to challenge the will, which she said her father had forced her mother into making. Gill, an only child, had helped out on Potto Carr farm, near Northallerton, part of Joyce and John Gill's estate, during her spare time over three decades. At a high court hearing in Leeds, the judge, James Allen QC, said it would be "unconscionable" if she did not inherit the farm, and he set aside the will.
At previous hearings Allen heard how Gill was given repeated reassurances that she would inherit the estate. Her mother was said to have had "an avowed dislike" of the RSPCA, but had deferred to pressure from her husband to make the will. The RSPCA is considering an appeal. The charity said that it was "concerned at any implications this could have for charities and other groups".
Lawyers say that the case highlights the role that mechanisms such as litigation insurance and third party funding are increasingly playing in providing access to justice in the UK's costly litigation system.

Matthew Amey, director at The Judge (The Judge), a broker of litigation risk transfer solutions, says that "this case is an example of the litigation insurance market promoting access to justice. The judgment illustrates how innovative funding models can ensure that costs need not be a barrier for those who find themselves fighting larger, and more experienced, opponents such as the RSPCA.
"Many will not be aware of the role that litigation insurance can play in assisting individuals who are caught up in a dispute over a will or the administration of a trust," says Amey. "These products can make a life-changing difference to those who face losing their right to inherit or benefit from trust monies, particularly when they have lived their life in reliance on realising their entitlement," he adds.
Amey says that deferred and contingent (upon success) "after the event" (ATE) insurance premiums allow individuals to gain access to justice against opponents with far better liquidity.
"Whether the individual has to finance a claim against a richer family member or a charity, purchasing a policy says to the opponent that you cannot stifle my claim through excessive cost estimates and that a third party insurance company has risk assessed my case and believes that I am going to prevail."

Moreover, he says the recoverability of the premium from the opponent also places a financial incentive on the opponent to settle early where that premium is discounted for early settlement.
But Amey adds that charities also have every right to purchase ATE insurance themselves where they enjoy good prospects to prove their entitlement in trust and probate disputes. "Indeed, firms are specifically tailoring ATE insurance and funding arrangements to give trustees comfort that they can use charity funds to pursue access to justice where they have good claims," says Amey. "It is all too often in the past that charities have lost or compromised valid entitlement through fear of incurring legal costs that ultimately lead to criticism of the trustee were the case to lose despite expectations to the contrary," he says.


 
If you have any comments about this or any other news item or feature, please respond via e-mail to: news@lexisnexis.co.uk


The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor