Can you make a claim for financial provision where you have financial means?

The purpose of the Inheritance (Provision for Family and Dependants) Act 1975 is to make ‘reasonable financial provision’ for a person in circumstances where a will (or, where there is no will, the intestacy rules) fails to do so.

Traditionally, the Inheritance Act has been used as a mechanism for those who find themselves in particularly precarious financial circumstances as a result of someone’s death to apply to the court for financial provision to be made from an estate.

The Act is not “designed to correct acts of unfairness, or to alter dispositions which are unreasonable, or to reward the just and deserving, or even to correct wills which are in some way ‘perverse’”. However the decision in the recent case of Lewis v Warner [2017] EWCA Civ 2182 has arguably widened the scope of the Act somewhat whilst bringing into question the meaning of reasonable financial provision.

Although the case did involve “unusual” and “exceptional” circumstances and was the first time that an application by a cohabitee under the amended s1(1)(ba) and 1(1A) of the Inheritance Act reached the Court of Appeal, the most interesting feature is perhaps the fact that a ruling was made in favour of a claimant who did not lack financial means.

Facts

Mr Stanley Warner (91) was an elderly but financially comfortable cohabitant of Mrs Audrey Blackwell. Mrs Blackwell and Mr Warner had lived together for nearly twenty years prior to Mrs Blackwell’s death in 2014 in Mrs Blackwell’s property, Green Avon.

Mrs Blackwell had made a will but it could not be found and in the circumstances her daughter, Mrs Lynn Lewis, was the personal representative and sole beneficiary of the estate (which primarily comprised Green Avon).

On 30 January 2015, Mrs Lewis, in her capacity as personal representative of her mother’s estate, issued a claim against Mr Warner. The proceedings sought, among other things, possession of Green Avon and damages for trespass or mesne profits.

In turn, Mr Warner issued an application for relief under the Inheritance Act, asserting that he fell within s.1(1)(ba) and s.1(1A).

Both sets of proceedings came before Mr Recorder Christopher Gardner QC.

The arguments

Mr Warner had the means to buy a house or alternative accommodation, if necessary. It was also accepted that there was never any understanding that Mr Warner would have an interest in Mrs Blackwell’s estate, nor did he claim any. Mr Warner admitted himself that he would have been surprised if Mrs Blackwell’s will made any provision for him at all. Mr Warner accepted that he was significantly better off than Mrs Blackwell, and had sufficient financial resources to provide for himself. Similarly, there was no understanding that he would be able to stay in the house or be able to purchase it in the event of her death.

However, Mr Warner advanced the argument that he wanted to remain in Mrs Blackwell’s home as he was in poor health and was assisted by the neighbours. Mr Warner said that he would be very unhappy and very stressed if he had to move from the house where he had spent the happiest 20 years of his life. He was also lucky to have a doctor as a neighbour, Dr. Walton, who had arranged for him to have an emergency button around his neck and is first on call if he pushes it.

Mr Warner’s evidence was accepted by the court at first instance as frank, direct and credible.

The Recorder noted that Mrs Lewis’s intentions in relation to the house had varied from time to time and that she did not want the house for herself, but rather she simply wished to maximise its sale value. Therefore Mrs Lewis wanted vacant possession, with the option to consider renovating and placing it on the open market to get the full market value. In her evidence, she said that she was willing to sell the house to the highest bidder, including Mr. Warner, if he was that person.

The judgment

At first instance, Recorder Gardner found that Mr Warner had been maintained by the deceased, prior to her death and that accordingly the will did not make reasonable financial provision for him.

Having summarised the parties’ submissions, the Recorder said, at paragraph 22 of his judgment:

“Looking at the matter objectively, I am unable to see why the maintenance of a roof over the head of an applicant for 20 years cannot come within the definition of ‘maintenance’ in s.1(2)(b) of the Act.”

Recorder Gardner added that such provision had a financial value because, without it, Mr Warner would have had to rent or buy alternative accommodation. Without this provision the will failed to make reasonable financial provision for him. Recorder Gardner therefore concluded that the first stage of the test under the Inheritance Act was satisfied, enabling the court to proceed to the second discretionary stage of deciding what additional provision was required.

Accordingly, the Recorder concluded that Mr Warner should be given an option to have Green Avon transferred to him in exchange for £385,000 (based on a valuation obtained by Mrs Lewis). The order was framed in terms of a transfer of property falling under s.2(1)(c).

The Recorder further ordered Mrs Lewis to pay Mr Warner’s costs from 30 June 2015 (subject to a specific exception).

As such, Mr Warner was successful in his claim. Mrs Lewis appealed the decision.

The appeal

Mrs Lewis’s appeal was dismissed in the High Court. It then proceeded to the Court of Appeal.

Mr Bernard Weatherill QC advanced a large number of grounds of appeal on behalf of Mrs Lewis and submitted that the Recorder had erred by:

• treating Mr Warner’s claim as made under s.1(1)(e) of the Act;
• failing to apply the law correctly, because Mr Warner had no need for financial provision; and
• making an order which he had no power to make.

In response to point (1), sitting in the Court of Appeal, Justice Newey commented that, had the recorder treated Mr Warner’s claim as made under s.1(1)(e) then there is no doubt that he was wrong to do so, but he had not.

In response to point (3) it was held that the recorder was entitled to exercise his discretion in the way he had. The Court of Appeal referred to s.2(1)(c) and s.2(1)(e) of the Act, noting that those sections granted the power to transfer property, or indeed for property to be acquired for the benefit of an applicant.

Most interesting, however, are the comments made by Mr Justice Newey in response to point (2).

Mr Weatherill argued that the Act imposed a practical requirement that the claimant had to demonstrate a financial need. He argued that Mr Warner did not have financial needs.

Objectively speaking, Mr Warner had no financial need to continue to live at Green Avon. The fact that he wished to do so in order to avoid the upset and stress of a move did not render it unreasonable that no provision was made for him to remain there.

As such, the question raised is whether a will can have failed to make reasonable provision for an applicant who is in no need of anything being done for him otherwise than for full consideration.

Mr Justice Newey made the observation that whilst the word “maintenance” suggests the provision of assistance to enable a person to meet the requirements of his daily life, and accepted that someone of ample financial means will not normally need any such help, he commented that, in principle, “maintenance” is not necessarily confined to support with a person’s “cost of … daily living”.

Newey added that:

“[Maintenance] is capable, in my view, of referring to other forms of assistance with the requirements of daily life…A person can potentially (albeit only very rarely) be in need of ‘financial provision’ for his ‘maintenance’ without being in any way short of money: his money may not be able to secure him what he requires. As a result, there appears to me to be no absolute bar on the provision of something for full consideration representing ‘financial provision’ for a person’s ‘maintenance’”.

Conclusion

The judgment raises some very interesting points and arguably skilfully reinforces a number of comments made in the only Supreme Court case in this area of law, Illot v Blue Cross [2017] UKSC 17.

Whilst it is clear that this case turns upon its own “unusual” and “exceptional” facts, and indeed the result is perhaps the right one in the circumstances of the case, arguably the primary feature is that the judgment perhaps widens the scope of the Inheritance Act and permits applications on the part of claimant’s with ample financial means.

It will be interesting to see how the courts approach the concept of “reasonable financial provision” going forward and ultimately whether the court will be minded to make similar orders in cases which are perhaps not so “unusual” or “exceptional”.