How wide is the court’s discretion to vary an order previously made under IPFD?

 In Comment

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Variation of Periodical payment orders IPFDVariation of Periodical Payments Orders pursuant to the Inheritance (Provision for Family and Dependants) Act 1975

In this article I want to look at the recent first instance decision in the case of Taylor v. Bell and Haworth [2015] All ER (D) 208 (Feb) which is the first case dealing with the extent of the court’s discretion to vary an order for periodical payments under Section 6 the Inheritance (Provision for Family and Dependants) Act 1975 (hereafter referred to as ‘the 1975 Act’).

The facts

The case concerned an application by Mr Taylor to vary the terms of a periodical payments order made following the compromise of his application under the 1975 Act, section 2(1)(a). Mr Taylor’s father, Peter Gardiner, died in 2006 leaving a net estate of £2 million. At the time of his father’s death, the claimant was 17 years old. The last Will of Mr Gardiner made no provision for the claimant. £350,000 was left to two named charities; Mr Gardiner’s personal possessions were left to his other son, Lee Gardiner, the residue of the estate was passed to a discretionary Trust set up on the same day as the date of the Will. Mr Taylor was excluded as a beneficiary under the Discretionary Trust. The beneficiaries were Mr Gardiner’s other son (excluding Mr Taylor) and remoter issue, any charity and a number of named individuals.

Outcome

Mr Taylor made an application under the 1975 Act for reasonable provision out of his father’s estate which was compromised with the executors and the terms embodied by consent in the periodical payments order approved by Judge Langan QC on 27 May 2008.

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The purpose of the order was to provide reasonable financial maintenance throughout the claimant’s Sixth Form College and University period. The order set out in considerable detail the maximum amount of payments that were to be made and provided that the payments came to an end on 31 August 2014. The maximum payable under the order was £210,000.00 and the order specified that that sum had been set aside in a separate bank account.

Reasons for Variation

Mr Taylor was a keen and talented singer and had, from an early age, desired to become an opera singer. However, he did have some learning difficulties based upon underlying weaknesses within his working memory and information processing speed. In addition the court noted that it was significant that some seven weeks prior to the approval of the consent order, Mr Taylor was involved in road traffic accident in which he suffered multiple chest injuries and liver laceration. He was an inpatient for some 8 days and was in receipt of treatment in respect of the injuries suffered until at least August 2008.

For a number of reasons his education did not progress as envisaged. The Claimant had not finished his University education by August 2014 (expected completion August 2015). Furthermore, in order to further his career prospects he wished to pursue a two year post-graduate course at either the Royal College of Music or Guildhall School of Music in London. Mr Taylor sought a variation of the periodical payments order beyond August 2014 and for the post graduate music course.

By the date of trial he had received payments from the estate amounting to £112,443 (some £97,556.79 less than the £210,000 provided for in the consent order) and claimed a further £90,000.00 over three years.

Unusually the executors chose to resist the application rather than remaining neutral. There remained £38,479.00 in the estate account as distributions had been made to the discretionary beneficiaries when it became apparent that the full amount of the award was not going to be claimed by Mr Taylor. By the date of trial he had no capital and had received some financial support from his mother.

Grounds for opposition

The executors opposed the application on a number of grounds which can be summarised as follows:-

  1. At one stage they sought to argue that the Claimant did not have sufficient musical talent to undergo the post graduate course (Mr Taylor had not been accepted on the course as at the date of trial), however, this was subsequently disproved by the Defendant’s own expert report;
  2. As this application related to a consent where both sides were legally represented, such an order should only be varied if the circumstances set out in Barder v. Caluori [1988] AC 20 were made out.
  3. The executors made submissions as to the importance to be attached to agreements referring to X v. X [2002] 2 FLR 508 and that Mr Taylor could not surmount these obstacles with the result that his application must fail;
  4. If the court deemed it appropriate to vary the order they contended that the expenses sought were exaggerated and that other sources of funds were available to him including from his mother, government loans, maintenance grants and income from earnings.
  5. Finally, the executors pointed out that only £38,479 remained in the estate account.

The Judge’s view

The court was critical of the line of authorities relied upon by the executors to suggest that the claimant had specific hurdles to surmount before it could be satisfied that it should exercise its discretion under section 6 [See para 39 of the judgment]. None of the authorities relied upon by the executors were decisions on applications to vary a periodical payments order or, in fact, even decisions under the 1975 Act and as such the court derived little assistance from them. In particular in respect of Barder v. Caluori (supra) HHJ Behrens stated:-

‘[33] The short answer to this authority is that it relates, As Lord Brandon made clear, to applications for leave to appeal out of time against an order for financial provision order on divorce. Mr Taylor’s case concerns an in time application to vary a periodical payments order made under section 1(1)(a) of the 1975 Act. As section 6(3) of the 1975 Act makes clear the application can be made at any time up to 6 months after the expiration of the order. Thus conditions (b) and (c) are inconsistent with section 6(3). Condition (a) is inconsistent with section 6(7). The discretion under section 6 is not so circumscribed.’

HHJ Behrens concluded that section 6 of the 1975 Act was expressed in quite general terms. Save that the order must be made out of “relevant property” the discretion ‘appears to be quite general’ [See para 29 of the judgment]. Further, the court must have regard to all the circumstances of the case including any change in matters that the court had taken into account when the original order was made [See paras30-39 of the judgment].

In the circumstances the court deemed the following the most important circumstances of the case:-

  1. The expressed purpose of the order was to provide maintenance for Mr Taylor until the conclusion of his post graduate studies;
  2. A maximum of £210,000.00 out of an estate of £2 million was set aside for that purpose;
  3. The timetable assumed that Mr Taylor would have completed his post graduate education by August 2014;
  4. The anticipated timetable had proven to be inaccurate;
  5. There was no suggestion that the claimant was a malingerer or that he had not devoted himself to his singing. Further, there were a number of legitimate reasons as to why the timetable had proven inaccurate, the accident, his learning difficulties and the fact that his undergraduate course lasted 4 years rather than the 3 years anticipated in the original order.
  6. The claimant was plainly a talented and committed singer who had good prospects of being offered a post graduate place;
  7. Only just over half (circa 53%) of the monies set aside for Mr Taylor’s maintenance had in fact been used for that purpose;
  8. His financial circumstances were such that financial provision was reasonably required by him to enable the completion of his post graduate studies.
  9. Monies amounting to £38,479 remained in the estate accounts
  10. There was no evidence of need on the part of any other beneficiary.

Taking all the above factors into account the court awarded Mr Taylor £6,500 for the year to August 2015 and a further £7,500 for the following two years, the latter being conditional on him attending a full time post graduate course of training. In the event that his place was deferred it would be necessary to apply for a further variation of the order.

Conclusion

In summary, there is no requirement for a claimant to satisfy the conditions in Barder v. Caluori (supra) before the court can exercise its discretion under section 6 of the 1975 Act. The court’s discretion is unfettered and it should have regard to all the circumstances of the case, including any change in any matters that the Court was required to take into account at the time of the approval of the earlier consent order.

The case also contained a salutary warning of the need for practitioners to keep a close eye on the level of costs as to whether or not they could be deemed disproportionate. The Defendants’ costs schedule amounted to £23,267.99 which HHJ Behrens stated “in light of the sums in the estate account I have to say that I regard such expenditure is both unfortunate and disproportionate”[See para 12]. In particular the court was concerned at the extent to which the claim had been defended (including the instruction of an expert as to the claimant’s musical capability) and the actual costs incurred. Whilst executors would normally be entitled to an order for their costs out of the estate, in light of the above concerns, HHJ Behrens was only prepared to allow the executors to take costs amounting to £15,000.00 inclusive of VAT and disbursements out of the estate. He held that any costs over and above this figure were disproportionate and unreasonable!

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