Berger v Berger
| Jurisdiction | England & Wales |
| Judge | Black LJ,Gloster LJ,Moses LJ |
| Judgment Date | 29 October 2013 |
| Neutral Citation | [2013] EWCA Civ 1305 |
| Docket Number | Case No: B6/2013/0474 |
| Court | Court of Appeal (Civil Division) |
| Date | 29 October 2013 |
[2013] EWCA Civ 1305
Lord Justice Moses
Lady Justice Black
and
Lady Justice Gloster
Case No: B6/2013/0474
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE PRINCIPAL REGISTRY OF THE FAMILY DIVISION
HIS HONOUR JUDGE HAYWARD SMITH QC
FD12F00477
Royal Courts of Justice
Strand, London, WC2A 2LL
Ms Penelope Reed QC (instructed by Adams Remers LLP) for the Appellant
Mr Michael King (instructed by Frydenson & Co) for the Respondent
This is an appeal against an order made by HHJ Hayward Smith QC on 5 February 2013 refusing permission for the appellant to make an application for an order under section 2 of the Inheritance (Provision for Family and Dependants) Act 1975 ("the Act"). The appellant needed permission by virtue of section 4 of the Act because more than six months had elapsed since the date on which representation was taken out in relation to the estate of the deceased.
The deceased, who was the appellant's husband, died on 26 June 2005 and probate was granted on 27 January 2006. The appellant could have applied under the Act as of right during a period of six months from that date but it was, in fact, nearly six and a half years before she sought to bring her application, commencing proceedings on 15 June 2012.
The appellant is in her mid 80s and in poor health. She contends that the disposition effected by the deceased's will, made in April 2005 shortly before he died, is not such as to make reasonable financial provision for her.
The appellant and the deceased were together for 36 years. They began to live together in 1969. They were married in October 1983 and remained together until the deceased's death.
Both spouses had been married before. The appellant has two adult sons and an adult daughter by her first marriage. The deceased had two sons by his first marriage, Jonathan and Julian (whom, for reasons of practicality, I will call by their first names in this judgment). They were small boys when the appellant and the deceased began to live together. They are now both solicitors as was their father before them. One of the sons, Julian, has two children ("the grandchildren") who were 17 and 19 when the matter came before Judge Hayward Smith. The sons and the grandchildren were the defendants to the appellant's application in the court below and are now the respondents to the appeal. As their interests coincide, they have been represented throughout by one counsel, Mr King.
The estate
It is necessary to set out what the deceased's estate comprised. I base the approximate values that I attribute below to the assets on the figures that we were told in argument were given for probate purposes. The judge said that the net probate value of the total estate was £7m. My calculation comes to approximately £7.5m. Nothing turns on the difference.
The main assets were as follows:
i) The matrimonial home in which the deceased had lived with the appellant was in his name and was said to be worth £2.5m. It is a large property in Surrey with substantial grounds.
ii) The deceased owned a half share in a property in Arizona, the other half being owned by the appellant. His half share was said to be worth £467,000.
iii) The deceased owned three properties in London, two in Kennington Road and one in Fentiman Road. Their value was said to be £1.66m in total.
iv) The deceased was the majority shareholder, and effective owner, of a company ("the company"), the principal activity of which is dealing in and developing residential and commercial property. The value of the shares was said to be £2.89m.
The provisions of the will
The will devised one of the Kennington Road properties to the sons in equal shares and the other Kennington Road property to the appellant's adult daughter by her first marriage. Effect has been given to these gifts.
The will provided for the deceased's share in the Arizona property to pass to the appellant absolutely, the deceased expressing a wish that upon sale of the property, the appellant should make pecuniary gifts of £20,000 to each of his sons and to her son Robin and her daughter, and of £10,000 to each of his grandchildren and her grandchildren who should be living at his death. In fact, it is thought that this property possibly passed to the appellant by survivorship rather than under the will. It was sold in November 2006 and the share owned by the deceased was transferred into a trust in the USA for tax reasons. The trustees of that trust have a power to advance capital to the appellant and she receives income from the trust shareholdings (which she puts, in §28 of her second witness statement at approaching £27,450 in 2011/2012, see 2/54). She also has had free access to her own share of the proceeds of sale of the property. She gave $100,000 each to two of her own children in 2007 and she has spent part of the money on living expenses.
The will provided for the matrimonial home to be held on trust for sale but with provision to enable the appellant to live there for as long as she wished or to request that the property be sold and an alternative property bought for her use on the same terms. The appellant now wishes to move from the Surrey property which has been on the market for some time, the asking price being £4.25m. There was an offer of £3.85m but the prospective purchaser withdrew and purchased another property. The appellant's wish is to move to a flat in central London where she will be near her daughter; she estimates this would cost her between £2m and £3m. She set out for the purposes of her application what her income requirement would be following such a move. The judge said that the figure was £222,540 net per annum which he regarded as "a very inflated figure".
The residue of the estate was to be held on trust "to pay the income to [the appellant] during her lifetime" and thereafter on trusts for Jonathan, Julian and the grandchildren, potentially including further grandchildren as yet unborn.
The concluding paragraph of clause 8 of the will provided that:
"notwithstanding the above declared trusts my Trustees shall have power at any time during the lifetime of my said Wife and from time to time to pay or apply the whole or such part or parts as they think fit of the capital of my Residuary Estate to or for the benefit of my said Wife absolutely and freed from the trusts hereinbefore contained"
Clause 9(a) of the will said that the trustees:
"Shall invest and otherwise deal with the balance of my Residuary Estate with a view to maximising the income therefrom for the benefit of my said Wife ….and shall be under no obligation to keep a balance between capital and income"
Clause 9(b) set out the deceased's wish that "my Trustees shall retain my shares in the Company and all freehold and leasehold properties the subject of this clause and shall manage and promote the Company and the said properties for the benefit of my Residuary Estate during such period as they shall consider remunerative so to do" and gave additional powers to the trustees to facilitate the running of the company. They were also given absolute discretion to arrange for the appellant to receive some or all of her income from the residuary estate by way of direct payments from the company or direct payment of rent from any property held on the trusts of the residuary estate if it appeared to be beneficial to do so and the deceased directed that "my Trustees shall use their best endeavours to provide my said Wife with income on a regular (preferably monthly) basis."
The deceased appointed the appellant and his two sons to be the executors and trustees of the will. The appellant and Jonathan are also the directors of the company and, whilst Julian is not formally a director, he is much involved in it and has been described as a "de facto director".
The deceased's intentions
Further information as to the deceased's intentions in making the provision that he did in the will can be found in a letter that he wrote to Julian in March 2005, the month before the will was signed. He said:
"As you will know, I have appointed Jonathan, Rosana and yourself as Trustees of my Will. It would probably have been more convenient to have appointed Rosana and Jonathan alone in view of the fact that you are living in Italy.
However, I would not wish you to feel in any way excluded but would ask that both you and Jonathan ensure that Rosana receives maximum income during her lifetime, and that both Jonathan and yourself make absolutely sure that the Estate is not involved in the arguments and problems that can so often arise in probate. I shall be watching!"
The judge found that "[i]t was clearly the deceased's intention that the Applicant would receive a substantial income from the residue of the estate". It is the way in which the appellant's income has in fact been dealt with that is at the heart of this litigation, the appellant contending that what she has received has been neither sufficient nor the amount she should have received.
The position during the deceased's lifetime
The appellant and the deceased had a high standard of living. During his lifetime, the deceased used to raise income from the company by, from time to time, selling one of the properties that it owned and taking the proceeds as dividends although not, it seems, in later years. However, the judge said that in the year before his death, he had still drawn dividends from the company of £150,000.
Events following the deceased's death: general
A considerable amount of...
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