Larsen & anr v Annan [2023] WTLR 1023

Analysis

The deceased, George, was the father of the three parties. He died leaving a will dated 26 March 2013. It made a gift of £10,000 to each of his three children, with the residue being left to his wife Lilly. In the event she predeceased him (as happened) it was left to his daughter Heather, the defendant, absolutely. It also appointed Heather as executrix. The estate was valued at approximately £480,000.

It was clear from the attendance notes surrounding the drawing up of the will that the deceased did not regard the claimants as having behaved well. Wayne had killed his niece’s partner and served a prison sentence for manslaughter. Russell had a gambling habit which had led to him stealing from other family members.

Wayne and Russell brought the claim each seeking additional provision from the estate under the Inheritance (Provision for Family and Dependants) Act 1975.

Wayne claimed reasonable financial provision in the form of:

1. (1) a lump sum to clear two debts: £20,000 (a bounceback loan) and £40,000 (a statutory charge on his house relating to legal aid bills); and
2. (2) a lump sum to cover a monthly deficit in income v expenditure of £1,100 for a period of three years.

Wayne owned three properties with a combined equity of approximately £244,000. Two of those properties were rental properties producing a gross annual income of £27,200. In addition he had a business which would produce an estimated income of around £15,000 in the current year.

Russell was chronically disabled suffering from Crohn’s disease, anxiety and spondylitis. Help was required for many ordinary daily tasks. He had been living in rental accommodation provided by Wayne, the rent for which was covered by housing benefit. His evidence was that he had moved because he could no longer afford to live there. He now lived with a long-term friend. He received social security benefits. Under cross-examination he accepted he could live within his means. The court heard evidence as to Russell’s gambling addiction, which he claimed was in the past. Under cross-examination he said that he betted purely recreationally on behalf of a syndicate.

Held:

Wayne’s claim

1. (1) The statutory charge was not relevant to maintenance. It did not need to be paid until the property was sold and imposed no financial burden in the meantime. Payment of a past debt did not fall within the broad concept of maintenance unless it would enable a claimant to derive a future income or represented expenses since death. Baynes v Hedger [2009] applied. The bounceback loan was something properly regarded as a business expense which Wayne’s business was capable of paying over time.
2. (2) A substantial part of the monthly payments were to cover voluntary increases in mortgage payments. These were not necessary for current maintenance.
3. (3) Amounts of expenditure referable to the adult grandchildren of the deceased, who were capable of maintaining themselves, did not constitute amounts reasonably needed for Wayne. Standing back from the detail Wayne was able to meet his own reasonable financial needs, both now and in the foreseeable future.
4. (4) Wayne had been in receipt of cash gifts from time to time from the deceased, but these did not give rise to any responsibility on the part of the deceased towards him. The idea that the payments were made due to a sense of parental responsibility was rejected: Wayne was the most successful of the deceased’s children. It was difficult to see how the payments were needed for recurring household expenses.
5. (5) Even if Wayne’s needs had not already been met then, taking into account all of the factors, the provision of £10,000 under the terms of the will was reasonable financial provision for Wayne.

Russell’s claim

1. (1) Russell’s position was different. He was chronically disabled. It was for him to prove that the will failed to make reasonable provision for him. His evidence in cross-examination contradicted his witness statements and was that he was able to cover his modest means. The fact that he had sufficient spare money to spend on gambling meant that the court could conclude he had more than enough to meet his current needs. He had provided no evidence of the his future needs in terms of rent or the housing benefit he could expect to receive.
2. (2) In considering reasonably foreseeable needs in the future, it was accepted that Russell’s condition was likely to deteriorate and account needed be to taken of the likely increase in his care needs. The sum of £25,000 was an appropriate sum (in addition to the £10,000 gift under the will). In arriving at this sum particular account was taken of the size of the estate and the fact that it could never realistically provide for the full cost of private care. In addition it was unreasonable in all the circumstances for these particular needs not to be recognised in the will. The court also considered the impact on Heather of this sum being deducted from the residue.
3. (3) In terms of the form in which the provision should be made, it had been submitted on behalf of Russell that it should be by discretionary trust to preserve his entitlement to state benefits. The court considered that in any event an outright gift would be inappropriate given his past gambling problems and the finding that he was still spending a significant amount on gambling.
4. (4) The fact that the deceased had reasons for excluding both sons was a factor, but of little relevance in the circumstances for either case.

JUDGMENT MR JUSTICE ZACAROLI: Introduction [1] George Alfred Annan (‘George’) died on 6 January 2021. He left behind three adult children: (1) the first claimant, Wayne Larsen (‘Wayne’), now aged 58; (2) the second claimant, Russell Annan (‘Russell’), now aged 59; and (3) the defendant, Heather Annan (‘Heather’), now aged 61. [2] On his death, …

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