Probate law
'No-contest' clause
Nathan v Leonard and National Association For Mental Health (2002) LTL, 6 June
This was an interesting decision by Judge John Martin QC on so-called no contest clauses.
The deceased was the beneficial owner of a half-share in a property together with the Leonards, who were the owners of the other half-share.
Her will directed that the Leonards should be permitted to occupy the property for as long as they wished and her residuary estate should be divided into three.
Two-thirds went to the Leonards while the other third was held on a discretionary trust for C, his issue and two named charities (one of which was the third defendant).
In a 'home-made' second codicil to the will, the deceased directed that, if anyone contested her will, her entire residuary estate was to go to the Leonards absolutely.
The final sentence of the codicil read: 'This clause cannot be superseded and will only come into being if at any time during the life of the trust or up to 80 years has elapsed'.
C made a claim under the Inheritance (Provision for Family and Dependants) Act for further provision to be made for him from the estate.
The Leonards contended that this brought the clause into effect.
There were three issues:
l Was the forfeiture clause void either for repugnancy or because it was contrary to public policy?
l If it was valid, had it been breached?
l If breached, was the gift over in favour of the Leonards effective?
Judge Martin QC held that although a claim by C had the result of disinheriting not only him but also the two charities, that did not, in itself, make the condition void on either ground.
A condition is only repugnant if it is inconsistent with ownership.
There is nothing inconsistent about a gift subject to divesting.
Inconsistency only arises if the gift purports to limit the incidents of ownership, such as the ability to sell.
Equally, although the condition might well have a strong deterrent effect on a beneficiary who was contemplating making a claim under the Act, that did not in itself make the condition contrary to public policy.
However, it was clear that some words had been mistakenly omitted from the final sentence of the codicil.
Since it was impossible for the court to say what the omitted words were, the condition failed for uncertainty.
Although not necessary to go further, Judge Martin QC held that C's claim did constitute a breach of the condition, irrespective of whether or not it was successful.
Even if it had been open to him to grant the charities relief from forfeiture, he would not have done so because that would have interfered with the deceased's clearly expressed intention to protect the Leonards.
Obligation to provide for wife
Stephanides v Cohen and Stephanides (2002) LTL, 22 May
This case concerns an Inheritance Act claim by a wife.
She and the deceased married in 1994, when she was 31 and he was 79, after cohabiting for a period of five years.
The deceased had been married before and the second defendant was his son (and only child) of that marriage.
The son was 37 and had been addicted to drugs for many years.
The deceased died in 1999 aged 84 leaving assets worth about 250,000 plus a shop worth 275,000.
The matrimonial home - which was worth 250,000 - was held in the sole name of the son, who had fairly substantial assets of his own.
By his will, the deceased left 25,000 to his wife and the remainder of his estate to his son.
It was common ground that the will failed to make reasonable financial provision for his wife.
Mr Justice Kenworthy-Browne held that the wife's claim on the deceased's estate was considerably more compelling than the son's.
The deceased had a legal obligation to provide for his wife, whereas he had only a moral obligation towards his son.
His wife had 'been a good and loyal wife to the deceased' whereas the son, as a consequence of his drug addiction, had been dependent on the deceased for support for much longer than he should have been.
In addition, the wife had managed the shop since her marriage to the deceased and had transformed and revitalised the business.
He awarded the wife the shop and 80,000 in cash from the estate.
The remainder went to the son.
Estimating asset values
There is a special Inheritance Tax Newsletter from the Inland Revenue dealing with the recent special commissioner's decision in the case of Robertson v IRC [2002] SWTI 766.
The special commissioner held that the Inland Revenue was wrong to impose penalties on a solicitor who submitted estimated values for various assets so that he could obtain the grant quickly.
The solicitor submitted the revised valuations when he received them which were for substantially greater amounts.
The Inland Revenue had argued, unsuccessfully, that Mr Robertson had not 'made the fullest enquiries reasonably practicable' to ascertain the exact value of the assets (as required by section 216(3A) of the Inheritance Tax Act 1984) and criticised him for his 'undue haste' in submitting the inheritance tax form.
In Robertson v IRC (No 2) [2002] SWTI 899 the special commissioner awarded Mr Robertson costs.
Regulation 21 of the Special Commissioners (Jurisdiction and Procedure) Regulations 1994, SI 1994/1811 only entitles the commissioners to award costs if a party acts 'wholly unreasonably'.
The commissioner held that the proceedings should not have been issued.
What Mr Robertson had done was 'in accordance with standard practice' and 'could not possibly be classified as negligent'.
What he had done amounted to 'the fullest enquiries that were reasonably practical in the circumstances'.
The decision is welcome, but the safe advice for a practitioner who wants to obtain a grant on the basis of estimated figures is to apply to the Inland Revenue for guidance and/or to get an indication from the valuer concerned of the likely figures for valuation.
Conflict of interest
Last month we looked at Sherman v Perkins Wills & Trusts Law Reports May 2002, 603 (see [2002] Gazette, 13 June, 32).
This month we have the Court of Appeal decision in Hilton v Barker Booth & Eastwood (2002) LTL, 22 May; (2002) The Times, 6 June.
While not a probate case, this is an interesting decision on conflict and the duty of confidentiality.
The court found that the duty of confidentiality prevented a firm of solicitors from revealing information about one client to another, but that it had committed a breach of duty in continuing to act for the second client instead of advising him to consult other solicitors.
By Lesley King, College of Law, London
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