Probate law

Negligence

Perotti v Collyer-Bristow (2003) EWHC 25 (Ch), is a negligence action brought by Angelo Perotti (the claimant) against solicitors who acted for him for a relatively short period in connection with the administration of an estate in which he was a beneficiary.

The claimant achieved some limited success in the administration action but the bulk of the estate was exhausted in legal costs.

The claimant himself incurred 700,000 in costs and has run 17 actions over 11 years.

Collyer-Bristow was instructed at a late stage to produce a properly constructed statement of claim.

This was in response to a court order that the claimant's 'home-made' statement failed to comply with the rules and he must file a proper statement of claim within 14 days or have the application struck out.

The amended statement of claim was prepared by counsel and served within time.

Despite the firm's repeated advice, the claimant was under the impression that all his costs would be recoverable if he won the action.

He failed to appreciate that substantial costs ordered against him during the interlocutory stages remained payable in any event.

The claimant had wanted Collyer-Bristow to act for him on the basis that all his costs would be recoverable.

The firm refused.

The claimant then raised a complaint under the firm's complaint-handling procedures.

Eventually, the firm informed him that it could not continue to act in view of his continual questioning and apparent lack of confidence and terminated its retainer.

The claimant alleged that he had suffered loss as a result of various negligent acts on the part of the firm.

The judgment makes the following points:

- The claimant had suffered no loss as a result of the failure to plead specifically that the administrator was not entitled to charge in the absence of a charging clause.

The claimant alleged that, had it been pleaded, a speedy settlement out of court would have been achieved.

However, it was clear that no such settlement would have been obtained.

- In any event, the firm had instructed appropriate counsel and was entitled to rely on his advice.

- The claimant alleged that the firm was negligent in not pleading that the administrator had caused loss to the estate by failing to invest in equities.

The judge commented that nothing in Nestle v Westminster Bank Plc [1993] 1 WLR 1260, suggests that personal representatives must always invest in equities.

Estates vary.

This was a difficult estate with unknown liabilities and the threat of litigation which would need to be funded.

There was also the possibility that the litigation might be settled leading to consensual distributions.

Mr Justice Lindsay said: 'While some personal representatives would, perhaps, have put parts of the estate for some periods into some equities, I cannot see that there was in late 1992 and early 1993 a visible and lively case in contract or in negligence against [the personal representative] for not having done so.'

Sales of land on behalf of charities

Bayoumi v Women's Total Abstinence Educational Union Ltd and Another [2003] 1 All ER 864, is significant for personal representatives who are proposing to appropriate land comprised in an estate to a charity in order to sell on its behalf and obtain the capital gains tax exemption available where gains are applied for charitable purposes.

In addition to ensuring that the land has been properly appropriated to the charity, the personal representatives must ensure that the requirements of the Charities Act are complied with or the sale will be void.

The Charities Act 1993 imposes certain requirements on sales, leases or other disposals of land by a charity, with which failure to comply renders the transaction void.

Section 36 provides that such a transaction is void unless it is made with an order of the court or Charity Commissioners or complies with the requirements of section 36(3).

Sub-section 3 requires the charity trustees to:

- Obtain and consider a written report on the proposed disposition from a qualified surveyor instructed by the trustees and acting exclusively for the charity;

- Advertise the proposed disposition for such period and in such manner as the surveyor has advised (unless he has advised that it would not be in the charity's best interest to advertise; and,

- Satisfy themselves on the basis of the surveyor's report, that the terms on which the disposition is proposed to be made are the best that can reasonably be obtained for charity.

In this case, no such report had been obtained and therefore, the contract was void.

Application for financial provision by adult child

Robinson v Bird [2003] All ER (D) 190, is an application for reasonable provision by an adult child under the Inheritance (Provision for Family and Dependants) Act 1975.

The deceased's will divided her residuary estate equally between her daughter (the claimant) and her grandson (the only son of her dead son).

The deceased had executed an enduring power of attorney towards the end of her life in favour of two solicitors.

After the registration of the enduring power of attorney, with the consent of the Court of Protection and at the request of the claimant, the whole of the sale proceeds of the deceased's house (205,000) were advanced by way of gift to the claimant.

A settlement of 25,000 was set up for the grandson at the same time.

Each gift was expressed to be paid in or towards satisfaction of their entitlement under the will.

The claimant stood to inherit a further 75,000 and the grandson 255,000.

The claimant contended that this was not reasonable.

There was evidence that the deceased had expressed the wish to benefit her daughter at the expense of her grandson.

However, her capacity was in doubt.

The claimant had a history of anorexia which had disrupted her education; she had no qualifications, little prospect of paid employment and had relied heavily on her mother for support.

She suffered from body dysmorphic syndrome and had undergone extensive cosmetic surgery much of which had been paid for by her mother.

She had invested the money she received under the enduring power of attorney in 'moderate to high risk' investments which had lost about 80,000.

She had spent much of her other capital on maintaining a rather lavish lifestyle and on cosmetic surgery and treatments.

Her expenses exceeded her income.

The grandson suffered from a serious psychiatric disorder and was unlikely to be able to provide for himself.

He and his mother were in poor financial circumstances.

Mr Justice Blackburne refused the application for the following reasons:

- The claimant had requested the advance during her mother's lifetime.

She could have invested this prudently and lived within her means.

She chose to maintain an excessive lifestyle and to invest in speculative investments.

- The grandson's needs were substantial.

- The deceased's wishes as expressed could not be relied on as her capacity was in doubt.

By Lesley King, College of Law, London