Analysis
The appellant, Matthew Miles, one of the original beneficiaries under the will of the deceased, appealed from the order of district judge Harper dated 16 December 2016. The application before the judge was for reasonable provision under the Inheritance (Provision for Family and Dependants) Act 1975 made by Marion Miles, Matthew Miles’ mother. The judge had ordered that all of the deceased’s estate should go to Marion.
There was no appeal from any of the other beneficiaries. It was accepted that the deceased had not made reasonable provision for Marion. The sole issue was as to what extent the court should interfere with the deceased’s testamentary wishes.
HHJ Farquhar began by reminding himself of the relevant rules. Although the claim was in the family court, it was a claim under the Inheritance Act and accordingly the CPR applied, specifically CPR r52.21(3). The court could only intervene with the decision of the judge below if he had erred in principle of in law. Moreover, it was only correct to intervene when it was deemed that the decision was outwith the wide discretion available to judges in this area of law.
Factual background
Marion had been married to the deceased for 30 years, but they separated after 28 years. She did not work throughout the marriage and the judge below found that she did not have any earning capacity. The deceased left Marion in January 2010 and lived with his new partner. There was a divorce petition in May 2010 which had proceeded to decree nisi by November 2010. There were financial remedy proceedings.
The deceased drew up his will in October 2011, which made no provision for Marion. The deceased died in February 2012. The appellant and his brother, being the two main beneficiaries of the will, received monies while their father was alive and through death benefits.
The judgment below
HHJ Farquhar then summarised the judgment of the judge below. The judge set out the statutory factors at s3(1) of the Inheritance Act, including the ‘divorce cross-check’. DJ Harper had gone through all the factors at s3(1) and made various findings, including that as regards the divorce cross-check there were too many unknowns to be able to calculate what would have occurred on a divorce but even if it was possible to consider this element, he would not have altered his decision. He found that it was necessary for the respondent to receive all of the estate and at para 54] stated ‘I have to say in this particular case I do find of magnetic importance the fact that even by receiving all of the net estate Marion still has a home and lifestyle which is far below what is reasonable on a maintenance basis let alone the standard that applies in this case’. He further stated that if he was wrong on the issue of the divorce cross check, then even if he was to take it into account it would weigh heavily in Marion’s favour.
There were originally 12 grounds of appeal. The first six in effect amounted to suggestions that the district judge was wrong in relation to the divorce cross check. There was an amendment to the grounds of appeal following the decision in Ilott v The Blue Cross [2017] 2 WLR 979, which decision post-dated the final hearing before the district judge. The essence of this amendment was that the judgment failed to have regard to the testamentary wishes of the deceased.
Three of the grounds of appeal were factual. One was in relation to the judge’s finding that the lifetime transfers had been intended to frustrate the due process of law under the Matrimonial Causes Act 1973. £212,000 had been received on death. HHJ Farquhar held that the district judge had been wrong that ‘they were given away before death and during the course of proceedings… to frustrate the due process of law under the Matrimonial Causes Act’. This was not right in relation to the death benefits. Although Francis on Inheritance Act Claims at §8-20 suggested that the preferable approach was to take into account death benefits when applying the deemed divorce test, there was a difference between taking them into account and basing a decision around an ‘inaccurate portrayal of “giving away” £300,000 when clearly that had not occurred within the lifetime of the deceased’. The judge was therefore satisfied that any calculations as to the likely level of award within financial remedy proceedings should take place in the absence of the death benefits, although this did not necessarily mean that the overall decision was wrong.
The divorce cross-check
The judge had stated at para 73 that the award on divorce does not set an upper or lower limit. HHJ Farquhar held that this was clearly correct, as he had relied upon Lilleyman v Lilleyman [2012] EWHC 821. The district judge had then set out a list of unknowns on the strength of which he concluded that it was impossible to come to any sensible conclusion as to what a judge might do in the financial remedy claim. The judge then stated at para 85 that the ‘divorce cross-check’ was an ‘additional factor to be weighed in the balance with the other factors. It is not worded as a cross-check at all. The court must not disregard what a spouse might expect to receive on divorce. That is not the same thing as checking one’s decision by way of a yardstick of fairness’. The judge concluded that the divorce cross-check did not weigh heavily in this case. However, HHJ Farquhar stated that he could see no authority which stated that ‘despite the difficulties involved the court is absolved from attempting to reach a broad view on what would have occurred in the divorce’. Indeed, the word ‘shall’ in the statute meant that the court was required to have regard to the outcome on divorce. HHJ Farquhar therefore carried out the exercise in the absence of the district judge having done so. HHJ Farquhar held that the total pot would have been £747,000 (adding back the lifetime gifts) and the only reason to depart from equality would have been the behaviour of the deceased in commuting his pensions and possibly the other monies that had not been accounted for.
Did the district judge take this into account?
HHJ Farquhar held that DJ Harper did not take the divorce cross-check into account because ‘in order to take a matter into regard it must be calculated first of all and then considered before reaching a conclusion’. Instead, the district judge had reached the conclusion that Marion should receive all of the estate by considering the other s3 factors and only then considering the figure that would have been achieved on divorce. Moreover, it was not logical of the district judge to say that the divorce cross-check produced a lower award than he was prepared to make and that weighed in Marion’s favour. The approach taken in relation to the divorce cross-check was therefore wrong and based in any event on incorrect figures.
Testamentary wishes
The judge below had noted that testamentary provisions were not to be rewritten lightly. However, he said that in this case there was an ex-husband who was simply disregarding his obligations to his wife. In such circumstances he felt ’no hesitation in rewriting his will’. The appellant argued that this was not a sufficient justification for the wholesale ignoring of the testamentary wishes of the deceased, especially in light of the judgment in Ilott. HHJ Farquahar set out various passages from the judgment of Lord Hughes. He noted that the district judge had approached this matter on two bases: (1) that the deceased had acted in a way that the judge deplored; (2) due to the needs of the respondent in requiring the whole estate to be provided to her.
As to (1), HHJ Farquhar had not been referred to any authority which stated that this was a good reason to ignore the deceased’s wishes; moreover, in Ilott, specific reference was made to being careful about making awards as a result of such conduct.
As to (2), this was obviously one of the facts to be considered but again the Supreme Court had made it clear that the testamentary wishes also had to be considered under the ‘sweeping up’ provision including ‘the circumstances of the case’. HHJ Farquahar held that ‘simply stating that he has no hesitation in re-writing the will fails to give any or any sufficient weight to the wishes of the deceased’.
For all those reasons, HHJ Farquhar could not uphold the decision of DJ Harper in relation to the errors of fact, the approach to the divorce ‘cross-check’ and failure to attach any weight to the testamentary wishes of the deceased. The judge was wrong in his approach and this did not fall within the wide discretion open to judges at first instance.
Decision
The judge held that:
- 1) While the divorce cross-check did not impose a ‘floor or ceiling’, if Marion was to receive the whole of the estate then this would equate to totally ignoring the likely outcome of the financial remedy proceedings, and as such it was difficult to see how that amounted to the court ‘shall… have regard’ to such a figure.
- 2) Moreover, the deceased made a very clear decision when drafting his will to exclude Marion. It was open to the court to rewrite the will but ‘in so doing there again must be some regard that in doing so it is in the teeth of the wishes of the deceased’.
- 3) There was no dispute that the needs of the appellant and the second respondent were met and accordingly there was no need to have regard to those matters.
- 4) There must be some recognition of testamentary wishes and the financial remedy proceedings even though that would eat into Marion’s needs. The deceased had an entirely reasonable wish that his sons should benefit immediately on his death.
- 5) There should be a payment of £100,000 to the appellant and the second respondent and the remainder to the respondent.
Continue reading "Miles v Miles [2018] WTLR 1347"