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Recent clarities on the Inheritance Act

Date:30 JAN 2020

Recently there has been a litany of decisions in relation to the Inheritance (Provision for Family and Dependants) Act 1975 (“the Act”) offering clarity as to how the courts will treat such claims. At the end of 2019, another decision in Weisz v Weisz and others [2019] EWHC 3101 (Fam) provided guidance in relation to section 5 of the Act.

Section 5 deals with interim orders and specifically the court’s power to make interim distributions in circumstances where there is an immediate need for financial assistance. The wording is wide and there is a lack of reported guidance as to how the discretion is to be approached.

The claimant in Weisz is the widow of the deceased, with them having married in 2005. The five defendants are the deceased’s adult children from a previous relationship. The net estate exceeds £4 million and whilst the claimant was entitled to a sizeable income from a trust under the will, this income had been reduced and, following the claim being issued, stopped altogether. Furthermore, a vehicle the claimant had been using had been using, which had been leased by the deceased’s company, was removed from her. 

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The claimant then issued an application for interim payment under Section 5. The application itself was divided into 3 sections:

  1. Monthly payments, to be backdated and going forwards;
  2. Payment of £20,000 to repay a loan; and
  3. Payment for legal costs up to and including a Financial Dispute Resolution (“FDR”) hearing.

In deciding the application, Mr Justice Francis expressed that there was no doubt that the court has the power to make the orders sought and that it was open to him to order both lump sum and periodic payments.

It had been argued by the claimant that “immediate need” as stated in the Act was broadly similar to the court’s discretion under section 22 Matrimonial Causes Act 1973, which deals with maintenance pending suit and interim periodical payments. It was not accepted that the sections are even broadly the same, though it was agreed that there are overlaps. It is the view of Mr Justice Francis that the wording of the Act required him to identify “immediate need”, though he declined to set out a list of what could fall within the scope. Instead, he stated that he would do so only in the specific context of this case.

In order to decide the application, Mr Justice Francis looked at the spending in the marriage. With that in mind, he ordered that there be interim monthly payments of £5,200 (to be backdated) and to continue until two months after a FDR hearing (unless the case settled sooner). This was to allow the applicant time to submit a renewed application for interim payments, which may result in the monthly sum remaining the same.

In considering the claimant’s budget, Mr Justice Francis expressed that in his view “immediate need” in the context of the case before him, seemed to be within the next year or so. Accordingly, he did not accept that the sum claimed for interior / exterior decoration amounted to immediate need. He did however accept, despite the defendants’ objections, that a sum for maintenance of domestic machines and central heating was reasonable as it is not unusual for there to be a breakdown of appliances at least once a year.

When examining “housekeeping”, despite noting that the figure of £10,000 was very rounded and could easily have been “plucked out of the air”, it was confirmed that this would be a legitimate expense for the “immediate need” test and that the breakdown should not be dissected at an interim hearing. Instead, it was confirmed, the same would be subject to cross-examination at a final hearing if appropriate.

There was an award towards domestic help, though this was reduced on the basis it was open to the claimant to reduce the hours worked by staff.

With regards to the claimed sum for clothing and accessories, it was considered that this would be an immediate need in the case, though in the circumstances it was observed that the claimant could utilise existing jewellery and accessories for the next year. It was confirmed that any ongoing costs of treatment, such as dental would settle the immediate need test.

It was also accepted that the claimant had an immediate need for a new vehicle, despite having borrowed an old Peugeot 106 that had a leaky roof. Mr Justice Francis observed that deceased would not likely have wanted his wife to be using such a vehicle where there was in excess of £4 million for distribution.

There was significant dispute over holidays and entertainment and whether there was an “immediate need” for the same. In considering this, Mr Justice Francis noted that this was hotly disputed and slashed the sum claimed in the budget. It was however accepted that those embroiled in emotional litigation whilst grieving are entitled to a break.

With regards to the loan, absent any evidence that there was to be any litigation the claimant was not awarded this. It was confirmed that this does not prevent later application for this sum should circumstances change.

When considering legal costs, it was argued by the defendants that there was no immediate need because there was no evidence to suggest the solicitors would not act if no payment was made. Whilst Mr Justice Francis confirmed this was superficially attractive, he observed that it was entirely unreasonable to expect a firm to act as a creditor where there was in excess of £4 million to pay fees.

It was argued that the claimant could find a firm to act on a CFA, though it was expressed that she had no duty to. It was therefore concluded that the claimant would receive in excess of £55,000 for costs, the full amount claimed. It was noted that the costs of the third and fourth defendants were more than double those of the claimant for the application. The costs to include FDR, expected to take place early in 2020. It was confirmed that if the funds were not utilised, any surplus was to be returned to the estate.

In reference to his decision, Mr Justice Francis confirmed it was reasonable in the circumstances to conclude that the claimant would achieve something from the claim. He specifically confirmed that in such circumstances the award of interim payments is less controversial than where a claimant may come away with nothing and could have ultimately spent the money.

Notwithstanding this, the claimant gave an undertaking to repay such sums as the court considered appropriate at the conclusion of the proceedings. The estate also gave undertakings not to make further distribution. The third and fourth defendants were ordered to pay the claimant’s costs of the application.

There was discussion throughout the judgment delivered of the costs of these claims and reference to the proportionality of the application. It was described as “very sad indeed” that the parties had not been able to settle the application. This decision suggests, perhaps unsurprisingly, where there is a claimant likely to receive something, the parties should endeavour to reach agreement about interim distributions, failing which beneficiaries could be left with a sizeable bill.