Lilleyman v Lilleyman & anr [2012] EWHC 821 (Ch)

Analysis

Mrs Barbara Lilleyman applied for reasonable financial provision from the estate of her late husband Mr Roy Lilleyman pursuant to the Inheritance (Provision for Family and Dependants) Act 1975 (1975 Act). Nigel and Christopher Lilleyman, who were Mr Lilleyman’s sons from a previous marriage, were the executors of Mr Lilleyman’s estate under his will dated 20 May 2008. Nigel and Christopher Littleman were the principal beneficiaries of Mr Lilleyman’s estate and were the defendants to Mrs Lilleyman’s application.

Mr and Mrs Lilleyman had each been married previously and each had two sons from those marriages. They had met in spring 2004 at a social club and become friends before marrying in September 2007. Throughout their life together, Mr Lilleyman had suffered from heart problems and his health had deteriorated until he had died aged 64 on 6 January 2010. Mr Lilleyman had run several successful companies in the steel stockbroking business. Mrs Lilleyman had two part time jobs when she had met Mr Lilleyman, both of which she eventually gave up at his request.

Both Mr and Mrs Lilleyman had their own houses when they met. A new house for them to live in together had been purchased by Mr Lilleyman at 34 Water Meadows, Worksop (Water Meadows) in December 2005. Water Meadows was eventually transferred into Mr and Mrs Lilleyman’s joint names as tenants in common in equal shares. A further property called Lea Court was purchased by Mr and Mrs Lilleyman as joint tenants in common in equal shares in July 2006. Lea Court was occupied by Mrs Lilleyman’s son Robert at a rent of £200 (subsequently increased to £300) per month. A typed memo recorded the rental agreement and entitled Robert to purchase Lea Court for £125,000 in 2014. In April 2007, Mr Lilleyman purchased an apartment known as 25 Dunhome Manor, Bournemouth (Dunhome). In June 2007, Mrs Lilleyman sold her former home for £223,000 and paid £175,000 to Mr Lilleyman, which she described as comprised of £100,000 representing her contribution towards Water Meadows and £75,000 by way of part-repayment for Mr Lilleyman’s funding of Lea Court. Mrs Lilleyman made further payments designed to reduce her residual liability to Mr Lilleyman in respect of Lea Court of £50,000. An acknowledgment of debt signed by Mrs Lilleyman provided that the Lea Court liability should cease to be repayable in the event of Mr Lilleyman’s death. There was no transfer of Mr Lilleyman’s beneficial half share of Lea Court to Mrs Lilleyman and it had been claimed as an asset of Mr Lilleyman’s estate.

Mr Lilleyman’s will left certain chattels to Mrs Lilleyman and conferred on her a limited right to occupy Water Meadows and Dunhome and a fund that provided her with a fixed annuity of £378.72 per month.

Held (allowing the application)

1. (1) The 1975 Act imposes a twostage test. Firstly, the question is whether the will make reasonable financial provision for the claimant. Secondly, which arises only if the first question is answered in the negative, is whether and to what extent the court should exercise its own wide powers (para 34). It is necessary to consider the seven matters contained in s3(1) of the 1975 Act (paras 3738). It is also necessary to have regard to the provision that the applicant would have received had the marriage been terminated by divorce on the day on which the deceased died instead of death pursuant to s3(2) of the Act, referred to as ‘the divorce crosscheck’ (para 39).
2. (2) The reference to ‘financial obligations and responsibilities’ in s3(6) of the 1975 Act is not limited to matters that are legally binding and includes moral obligations and responsibilities (paras 4043).
3. (3) This is a short marriage – big money case and consequently the distinction between Mr and Mrs Lilleyman’s matrimonial and nonmatrimonial property is of undoubted importance. The following principles have emerged:
4. (a) the onus lies on the person asserting that property is nonmatrimonial to prove it;
5. (b) a matrimonial home is usually to be regarded as matrimonial even if contributed solely by one of the spouses;
6. (c) property acquired during the marriage is usually matrimonial property but may not be if it has not been acquired for family use;
7. (d) property preowned by one of the spouses is usually not matrimonial property unless it is committed to longterm family use;
8. (e) where one spouse brings to the marriage an existing business and develops it during the marriage, its value at the beginning of the marriage may be regarded as nonmatrimonial whereas its increase may be part of the fruits of the partnership, even if wholly derived from the activities of one spouse;
9. (f) it may be positively unfair to have recource to a preexisting family business where it might cripple the business or deprive it of much of its value (para 52).
10. (4) Mrs Lilleyman currently suffers from an income shortfall of about £20,533 per annum (paras 6264). Mr Lilleyman’s net estate appears to be worth marginally in excess of £6m, of which £5,085m is represented by the value of the estate’s shareholding in Mr Lilleyman’s companies (paras 6871). It appears that one of the companies has increased in value during the marriage by £550,000 (para 77). While there is force in the submission that the increase was attributable to passive economic growth, a business that held stock as a commodity in a volatile market makes profits from that volatility by judicious decisions as to when to buy, hold or sell stock, so that the realisation of value attributable to market movements depends on the application of skill. Accordingly, £250,000 will be attributed to Mr Lilleyman’s activities rather than passive economic growth (para 78). The matrimonial property that would have been available on a hypothetical divorce is £1,475,000. The shortness of the marriage impacted on Mrs Lilleyman primarily by removing all but a very small part of the value of the companies (para 79).
11. (5) Any form of life interest in Water Meadows is inherently unattractive because it prevents a cleanbreak between the parties (para 81). The present value of the executors’ interest in both Water Meadows and Dunhome is illiquid and uncertain (para 90).
12. (6) It is manifestly clear that the will fails to make reasonable provision for Mrs Lilleyman (para 83). A transfer of value to Mrs Lilleyman of £500,000 gross would provide reasonable financial security and reflect a fair application of the divorce crosscheck. The most reasonable provision would be outright transfer to Mrs Lilleyman of the estate’s share of Water Meadows and Dunhome or a lump sum representing its present market value of £330,000 (para 88).
13. (7) Subject to Robert’s option to purchase for £125,000 in 2014, Lea Court is beneficially the property of Mrs Lilleyman. It is implicit in the arrangements that Mr Lilleyman’s participation was as lender rather than equity investor (para 23). There should also be outright transfer of the estate’s interest in Lea Court since it already belonged in substance to Mrs Lilleyman (para 89).

JUDGMENT MR JUSTICE BRIGGS: INTRODUCTION [1] This is an application by Mrs Barbara Lilleyman for reasonable provision out of the estate of her late husband Roy Lilleyman. The defendants Nigel and Christopher Lilleyman are the deceased’s two sons by an earlier marriage, and are both the executors and principal beneficiaries under his last will dated …

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