A Tale of Two Families & One Small Estate

 In Probate

Disclaimer: LawSkills provides training for the legal industry and does not provide legal advice to members of the public. For help or guidance please seek the services of a qualified practitioner.

Giles Harrap & Andrew Grime

two families one estate

IQBAL v AHMED [2011] WTLR 1351; [2012] FLR 31

This decision of the Court of Appeal on a claim under the Inheritance (Provision for Family and Dependants) Act 1975 addresses the common problem that arises where the deceased acquired a home during a first marriage and must somehow make reasonable provision for a second spouse as well as making such provision as he wishes for the child of the first marriage. Giles Harrap and Andrew Grime of Pump Court Chambers discuss the case and provide comments for litigators.

The facts

The Claimant (C) was the second wife of the deceased. The Defendant (D) was the only child of the deceased by his first marriage. The estate comprised the matrimonial home and cash of at most £28,000. The home had been acquired by the deceased before he knew C. It was worth about £115,000 and needed repairs likely to cost £30,000.

Free LawSkills Newsletter

If you like our articles, why not subscribe to our free monthly newsletter with regular Private Client news, views and advice from leading legal minds. It's quick, easy and you can unsubscribe at any time if you no longer want to receive it.

Sign Up Now

By his Will the deceased directed his trustees to permit C to live in the home from his death until C’s death or earlier re-marriage or cohabitation rent free but subject to such conditions as the trustees should “from time to time consider reasonable”. Subject to that the deceased left the home to D. He gave C a legacy of £8,000 and left residue to D. In a memorandum the deceased stated that C had not been a loving and caring wife but the judge found that she had kept house through the 22 year marriage and cared for him when he was ill.

C was 61, had minimal savings, no income and no hope of income apart from state benefits. D had substantial resources and no immediate needs.

The decision of the trial judge

The judge found that the disposition effected by the Will was not such as to make reasonable provision for C. The judge ordered that the home should be held on trust for C and D as beneficial tenants in common in equal shares on terms that enabled C to occupy rent free so long as she wished. He awarded C the residue of the estate.

Permission to appeal

Arden LJ granted D permission to appeal on the question whether the judge had failed adequately to consider whether reasonable provision would have been made by granting C a life interest in the home and its proceeds. She also adjourned the appeal to allow the parties to pursue mediation.

The decision of the Court of Appeal (“the CA”)

The CA unanimously dismissed the appeal. They emphasised the importance of the exercise of judicial discretion in assessing what constituted reasonable financial provision and that the appellate court would only interfere with such a decision when the judge at first instance had erred in principle or had been plainly wrong.

In a case such as this where the estate was modest, the judge’s options were limited, and practical considerations were more important than the abstract consideration of the competing arguments about the relative attractions of capital provision as against a life interest. The most important practical consideration was to provide the widow with a ‘capital cushion’ to cope with future eventualities, allowing her the option of carrying out repairs to the home or downsizing.

Guidance for those seeking to bring and defend claims by spouses or civil partners

Capital provision versus the life interest

Gross LJ said only that [para17 (ii)] “the question of what is reasonable financial provision is necessarily fact specific. In some cases a capital provision may be appropriate; in other cases such as Krubert a life interest sufficed.”

Comment: Compelling need (the dire state of the home and the cost of making it habitable) probably made the difference here in tipping the balance in favour of C receiving a half share.  The sort of case in which a life interest will be reasonable provision will tend to be the case when the marriage has been short and the Claimant is old.  But it may also be reasonable provision in a second marriage case if the Claimant has no compelling need for access to capital.

Central place of the matrimonial home

Gross LJ not only cited Lord Nicholls’ comments in Miller v Miller [2006] 2 AC 618 that “The parties’ matrimonial home, even if this was brought into the marriage at the outset by one of the parties, usually has a central place in any marriage”, (our emphasis) he also added:
“Whether or not these dicta constitute a proposition of law does not matter; they are on any view of powerful persuasive force”. [para 17 (iii)]

The facts

The Claimant (C) was the second wife of the deceased. The Defendant (D) was the only child of the deceased by his first marriage. The estate comprised the matrimonial home and cash of at most £28,000. The home had been acquired by the deceased before he knew C. It was worth about £115,000 and needed repairs likely to cost £30,000.

By his Will the deceased directed his trustees to permit C to live in the home from his death until C’s death or earlier re-marriage or cohabitation rent free but subject to such conditions as the trustees should “from time to time consider reasonable”. Subject to that the deceased left the home to D. He gave C a legacy of £8,000 and left residue to D. In a memorandum the deceased stated that C had not been a loving and caring wife but the judge found that she had kept house through the 22 year marriage and cared for him when he was ill.

C was 61, had minimal savings, no income and no hope of income apart from state benefits. D had substantial resources and no immediate needs.

The decision of the trial judge

The judge found that the disposition effected by the Will was not such as to make reasonable provision for C. The judge ordered that the home should be held on trust for C and D as beneficial tenants in common in equal shares on terms that enabled C to occupy rent free so long as she wished. He awarded C the residue of the estate.

Permission to appeal

Arden LJ granted D permission to appeal on the question whether the judge had failed adequately to consider whether reasonable provision would have been made by granting C a life interest in the home and its proceeds. She also adjourned the appeal to allow the parties to pursue mediation.

The decision of the Court of Appeal (“the CA”)

The CA unanimously dismissed the appeal. They emphasised the importance of the exercise of judicial discretion in assessing what constituted reasonable financial provision and that the appellate court would only interfere with such a decision when the judge at first instance had erred in principle or had been plainly wrong.

In a case such as this where the estate was modest, the judge’s options were limited, and practical considerations were more important than the abstract consideration of the competing arguments about the relative attractions of capital provision as against a life interest. The most important practical consideration was to provide the widow with a ‘capital cushion’ to cope with future eventualities, allowing her the option of carrying out repairs to the home or downsizing.

Guidance for those seeking to bring and defend claims by spouses or civil partners

Capital provision versus the life interest

Gross LJ said only that [para17 (ii)] “the question of what is reasonable financial provision is necessarily fact specific. In some cases a capital provision may be appropriate; in other cases such as Krubert a life interest sufficed.”

Comment: Compelling need (the dire state of the home and the cost of making it habitable) probably made the difference here in tipping the balance in favour of C receiving a half share.  The sort of case in which a life interest will be reasonable provision will tend to be the case when the marriage has been short and the Claimant is old.  But it may also be reasonable provision in a second marriage case if the Claimant has no compelling need for access to capital.

Central place of the matrimonial home 
Gross LJ not only cited Lord Nicholls’ comments in Miller v Miller [2006] 2 AC 618 that “The parties’ matrimonial home, even if this was brought into the marriage at the outset by one of the parties, usually has a central place in any marriage”, (our emphasis) he also added:
“Whether or not these dicta constitute a proposition of law does not matter; they are on any view of powerful persuasive force”. [para 17 (iii)]

Comment: Contentious probate practitioners will need to take note of these comments, particularly in these second marriage cases. In second marriage cases the court may be more readily disposed towards provision that includes a share in a previously acquired matrimonial home than before. A previously acquired business interest or holiday property may be another matter.

Too much should not be made of the divorce fiction

Gross LJ said that although S3(2) requires the court to have regard to the provision that would have been made on divorce “too much should not be made of this ‘cross check’” [para 17 (iv)]. Caution is needed because divorce involves two living former spouses.

Comment: In life interest cases the divorce fiction often provides little useful guidance – see Davis v Davis [1993] 1 FLR 54.  The importance of the divorce fiction is to avoid the injustice of a widow of a happy marriage receiving less than her divorcing sister. As a result in most cases it provides a floor below which the court will not go where the relief is similar in nature – i.e. a clean break case. In most cases the fact that there is only one surviving party to provide for means reasonable provision on death will be greater than on divorce. See the useful discussion in P v G [2006] 1 FLR 431 by Black J at, paras 223 to 236.

Awards under the Act involve the exercise of discretion – so the CA can only interfere if the judge erred in principle, was plainly wrong or erred as to what he took into account.

Comment: clear law but not understood (whether wilfully or not) by many litigants.

Valuation of the life interest

The CA held that “the valuation of C’s life interest by reference to [tables] is of no practical significance in present circumstances” [para 33]

Comment:  Tables may be informative where the widow’s claim is based on contributions but of no significance when (as here) needs are dominant.

Mediation and costs – a moral for litigators especially in claims against small estates

C failed to respond to Arden LJ’s order adjourning the appeal for mediation. D sought to avoid paying the costs of the appeal on this account. C’s answer was that prior to the trial she had sought ADR and that in numerous letters D had adopted a hostile approach that indicated mediation would never have been successful. The CA decided that in all the circumstances the usual rule should apply and ordered D to pay the costs of the appeal.

Moral: engage early, avoid hostile letters and mediate these claims early – once there is sufficient information but before trial costs begin to accrue.

Contentious probate practitioners will need to take note of these comments, particularly in these second marriage cases. In second marriage cases the court may be more readily disposed towards provision that includes a share in a previously acquired matrimonial home than before. A previously acquired business interest or holiday property may be another matter.

Too much should not be made of the divorce fiction

Gross LJ said that although S3(2) requires the court to have regard to the provision that would have been made on divorce “too much should not be made of this ‘cross check’” [para 17 (iv)]. Caution is needed because divorce involves two living former spouses.

Comment: In life interest cases the divorce fiction often provides little useful guidance – see Davis v Davis [1993] 1 FLR 54.  The importance of the divorce fiction is to avoid the injustice of a widow of a happy marriage receiving less than her divorcing sister. As a result in most cases it provides a floor below which the court will not go where the relief is similar in nature – i.e. a clean break case. In most cases the fact that there is only one surviving party to provide for means reasonable provision on death will be greater than on divorce. See the useful discussion in P v G [2006] 1 FLR 431 by Black J at, paras 223 to 236.

Awards under the Act involve the exercise of discretion – so the CA can only interfere if the judge erred in principle, was plainly wrong or erred as to what he took into account.

Comment: clear law but not understood (whether wilfully or not) by many litigants.

Valuation of the life interest

The CA held that “the valuation of C’s life interest by reference to [tables] is of no practical significance in present circumstances” [para 33]

Comment:  Tables may be informative where the widow’s claim is based on contributions but of no significance when (as here) needs are dominant.

Mediation and costs – a moral for litigators especially in claims against small estates

C failed to respond to Arden LJ’s order adjourning the appeal for mediation. D sought to avoid paying the costs of the appeal on this account. C’s answer was that prior to the trial she had sought ADR and that in numerous letters D had adopted a hostile approach that indicated mediation would never have been successful. The CA decided that in all the circumstances the usual rule should apply and ordered D to pay the costs of the appeal.

Moral: engage early, avoid hostile letters and mediate these claims early – once there is sufficient information but before trial costs begin to accrue.

Free LawSkills Newsletter

If you like our articles, why not subscribe to our free monthly newsletter with regular Private Client news, views and advice from leading legal minds. It's quick, easy and you can unsubscribe at any time if you no longer want to receive it.

Sign Up Now
Recommended Posts