Author: Wellers

Court of Appeal Analyses Will Revocation Clause in Guideline Decision

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Included in most people’s wills is a clause that has the effect of revoking all their previous wills. Such straightforward provisions are usually uncontentious but, as a guideline Court of Appeal ruling showed, they can give rise to difficulties where a testator has assets both in England and abroad.

A businessman had substantial assets in England and India when he died at the age of 72. He made a will in 2007 dealing with all of those assets. However, he made another will in 2016 which disposed only of his Indian assets. The 2016 will was declared to be his last and included a clause that revoked all such previous documents.

After an inheritance dispute broke out between members of his family, a judge found that the meaning of the revocation clause could not have been clearer and that it revoked the 2007 will in its entirety. That meant that the businessman died intestate – without having a valid will in place – save in respect of his Indian estate.

A more senior judge, however, subsequently took a different view on appeal: he found that the revocation clause was only effective to revoke the 2007 will to the extent that it dealt with the businessman’s Indian assets. That meant that his English assets would be distributed in accordance with the 2007 will.

Upholding a challenge to the latter ruling, the Court noted that, given the clear and unambiguous terms of the revocation clause, the businessman was, on the face of it, to be taken as having intended the 2016 will to be not only his primary will but his only will. Circumstantial and other evidence before the Court fell short of displacing such a conclusion.

The businessman may well have assumed that all but a relatively modest lump of his English assets had already been dealt with by way of lifetime gifts. He may have regarded his English estate as less pressing and something that could be dealt with at a later date. The legal presumption that he did not intend to die intestate was quite weak in the circumstances and insufficient to overcome the natural meaning of the revocation clause. The Court’s ruling meant that the 2007 will had been wholly revoked.

Inheritance Dispute Focuses on Successful Family Catering Business

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When making your will, the general rule is that you are free to leave your assets to whomsoever you wish. However, as a High Court case concerning ownership of a thriving family business showed, such testamentary freedom may be restricted by agreements reached, or promises made, during your lifetime.

During their marriage, a man and woman established a successful catering company in which they were equal shareholders. Following their divorce, they signed a deed by which they agreed that any shares in the company that they continued to hold when they died would pass to their two children.

The man did not comply with that agreement. Less than a year after entering into the deed, he made a new will bequeathing his shares in the company to his second wife. After he died suddenly, aged 66, his first wife and her children launched proceedings with a view to enforcing the deed so that, regardless of the terms of his will, his shareholding would pass to the children.

In upholding the claim, the Court found that, when the man signed the deed, he freely accepted his obligation to leave his shares to the children. The document was in plain terms and would have caused him no confusion as to its effect. His widow’s arguments that the deed had been superseded or revoked by a subsequent agreement were rejected.

For experienced legal advice on a dispute over a will or probate, please do get in contact with us

Even Acts of Generosity Should Be Properly Documented – Cautionary Tale

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Even acts of generosity can lead to litigation if the basis for them is not professionally documented. That was sadly so in the case of a businessman who stepped forward to rescue close family friends from the threat of homelessness.

A couple with five children found themselves in dire financial circumstances. After the man was made bankrupt, an enforced sale of the family home was threatened. Their repeated attempts to obtain loan finance were rejected. The businessman came to their rescue by himself raising a £205,000 mortgage against the property.

Pursuant to an informal agreement between them, the property was transferred into the businessman’s name and the mortgage advance was paid to the couple, who used it satisfy their creditors and stave off possession proceedings. The couple thereafter met the mortgage repayments and continued to live in the property.

About eight years later, they sought to buy back their home from the businessman for the unchanged sum of £205,000. In resisting their request, however, he asserted that it had been agreed at the time that their entitlement to repurchase the property from him at that price would lapse two or three years after the transaction.

Ruling on the matter, the High Court noted that all involved had acted in great haste to face down the imminent financial peril that the couple faced. The businessman generously found a solution that could be implemented speedily and that secured the couple’s ability to carry on living in their family home.

In nevertheless upholding the couple’s case, the Court found on the evidence that the buyback agreement was open-ended and not time limited. Whilst that would be a very surprising outcome in a commercial context, it reflected the imminence of the possession proceedings and the close and affectionate relationship that the couple and the businessman had enjoyed at the relevant time.

It would, the Court found, be unconscionable for the businessman to go back on his assurance that the couple could, at any time, buy back their home from him for £205,000. They had relied on that assurance to their detriment. The ruling opened the way for the couple to repurchase their home from him at that price, plus any costs associated with discharging the mortgage and transferring title to the property.

Is Your Landlord Harassing You? You Don’t Have to Just Grin and Bear It

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Tenants have a right peacefully to enjoy their homes, free from harassment by their landlords. A judge succinctly made that point in awarding substantial compensation to a couple whose landlord was anxious to see the back of them so he could refurbish and sell their home with vacant possession.

The couple were tenants of a studio flat within a house in multiple occupation. Their landlord wished to convert the property back into a single dwelling and market it without any residents in situ. All the property’s other occupants had moved on, but the couple for a long time steadfastly declined to leave. Following their eventual departure, they launched proceedings.

Ruling on the matter, the judge found that the landlord was prepared to use whatever means were at his disposal to secure their departure. He conducted a campaign to make their lives uncomfortable enough to drive them from their flat. Amongst other things, he cut off their internet service, switched off their gas boiler and installed CCTV in the property for no good reason. He made vile and malicious allegations against them and regularly reported them to the police, who unsurprisingly took no action.

He and others made frequent, unnecessary visits to the flat, gaining unwarranted entry, often without notice. There was no desistence from such conduct, even after he was told that the couple were expecting their first child. When they still did not move out, he took matters into his own hands and decided to eject them himself.

He or his agents changed the locks whilst the couple were out and dumped some of their belongings outside. Having nowhere else to go, they regained access and tried to continue living in the flat, placing cardboard on the floor in lieu of a bed. Only after they were offered temporary council accommodation did they finally move out.

The court found that the landlord’s reprehensible conduct was designed to oust the couple by unlawful means by doing whatever was necessary, however improper, to secure that end. It constituted harassment and trespass to both property and goods. He repudiated the lease and breached the couple’s right to quiet enjoyment of their home. He delayed performance of his legal obligation to protect their deposit.

The landlord was ordered to pay the couple more than £45,000, including £25,000 for the anxiety they endured and £10,000 in aggravated and exemplary damages. Such an award was, the court found, amply justified.

Making a Will? You Mustn’t Forget Your Family and Financial Dependants

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When making your will, you may, for one reason or another, choose to distribute your estate unevenly between your loved ones. However, as a High Court ruling showed, you are under an overriding duty to make reasonable provision for members of your family and anyone else who depends upon you financially.

By his will, a man bequeathed £10,000 to each of his three adult children. He left the remainder of his estate, which was worth about £475,000 in total, to his daughter. His two sons subsequently launched proceedings under the Inheritance (Provision for Family and Dependants) Act 1975 on the basis that the will did not provide for their reasonable needs. They valued their claims against the estate, in total, at more than £250,000.

Ruling on the matter, the Court noted that the man had evidently decided to leave the lion’s share of his estate to his daughter because he regarded his sons as not having behaved well. He was only deterred from cutting his sons out of his will altogether by a solicitor’s sensible advice.

Rejecting the younger son’s claim, the Court noted that he owned his family home and two other properties, with combined equity in the region of £240,000, together with his own profitable business. His income was relatively modest but was sufficient to meet his reasonable needs both now and in the foreseeable future. The gift of £10,000 was sufficient to make reasonable provision for him.

The older son was in a very different position in that he was chronically disabled and dependent on others’ help for many day-to-day tasks. In receipt of benefits, he lived with a friend in her housing association property. From the fact that he had sufficient spare cash to spend on gambling, the Court inferred that he had more than enough money to meet his current, modest needs. On the other hand, his condition was likely to deteriorate in the future, resulting in an increasing need for care.

In awarding the older son an additional £25,000 from the estate, the Court found that it was unreasonable for his particular needs relating to his disabilities not to have been recognised in the will. The money would be placed in trust to cover his care costs. Any sum remaining in the trust fund on his death would revert to his sister.

Religious Leader’s Employment Contract ‘Was Illegally Performed’

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Those who seek the protection of the law with metaphorical dirty hands are likely to receive short shrift. An Employment Tribunal (ET) powerfully made that point in the case of a religious leader who had engaged in tax evasion.

The man launched proceedings after his engagement as a temple’s head priest was terminated. Following a hearing, the ET found that he was an employee and that his dismissal was unfair. His complaints that he had not received the National Minimum Wage or holiday pay to which he was entitled were also upheld.

The ET found, however, that he and the employer had agreed at the outset that he would be treated as self-employed. That was a mischaracterisation of their true relationship. He either knew or ought to have known that he was, in truth, an employee.

The ET was satisfied that he knew from the start that the employer would not be deducting Income Tax or National Insurance Contributions (NICs) from his pay via the PAYE system. Over a period of three years, he took no steps himself to declare his income from his work at the temple to HM Revenue and Customs (HMRC). His failure to pay tax and NICs on that income was neither careless nor inadvertent, but deliberate and seriously wrong.

The employer turned a blind eye and its failure to take steps to ensure that he was declaring his income to HMRC, in circumstances where it knew that it was not doing so, was at best reckless and seriously wrong. However, the man was, if anything, more at fault in that he knew for a fact that no tax or NICs were being paid on his income, either by the employer or by him. His conduct was extremely serious and amounted to tax evasion.

Although there was no suggestion that his employment contract was itself illegal, the ET found that it was performed in an illegal manner. On that basis, the entirety of his claim was dismissed. Given that his complaints were otherwise meritorious, the ET recognised that this was a severe sanction.

However, when his receipt of voluntary donations from his congregation was taken into account, the sums in unpaid tax and NICs were very substantial and were likely to far exceed any compensation he might have been awarded. There was thus a real risk of him being unjustly enriched were he to succeed in his claim. Given the central public importance of upholding the integrity of the tax and justice systems, the outcome of the case was, the ET ruled, proportionate.

If you have an employment law dispute of any kind please do get in contact.

The Validity of a Pre-Nuptial Agreement Often Depends on Top-Quality Legal Advice

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Pre-nuptial agreements (PNAs) which are not entered into freely or which have unfair results will generally not be worth the paper they are written on. However, as a High Court case showed, judges are far more likely to treat them as valid if they are signed after taking independent legal advice.

The case concerned a PNA executed by a couple about three months before they married. The husband, an extremely successful financier, had a net worth of about £32.5 million at the time and had continued to prosper mightily since. The wife had not much more than £60,000 in assets. Their marriage lasted about 14 years, yielding two children, before the wife petitioned for divorce.

In accordance with the terms of the PNA, the husband offered the wife £11.75 million with a view to achieving a clean break. That represented a housing fund of £4.75 million and income-producing capital of £7 million. In contending for more extensive provision, however, the wife boldly argued that the PNA should be wholly ignored.

Ruling on the matter, the Court noted that, prior to signing the PNA, the couple had each received independent legal advice from highly regarded family solicitors. The equal sharing principle was not ignored and the PNA, which also made very generous provision for child maintenance, would have been torn up had the marriage lasted 25 years.

The Court acknowledged that the couple had had what was described as ‘the mother of all arguments’ prior to signing the PNA. However, it was a two-way argument and they had time to cool off prior to signing the document. The husband had made it plain that there would be no marriage without a PNA, but that was commonplace. Overall, the Court was not satisfied that the wife had been placed under undue pressure to enter into the PNA.

In reaching the very clear conclusion that the PNA could not be ignored, the Court found that a fair deal had been struck. It certainly did not represent a capitulation by the wife. The ruling meant that the wife and children would be provided for in accordance with the husband’s offer.

Giving guidance for the future, the Court noted that litigants should be aware that it is a significant step to instruct lawyers to prepare a PNA. Such agreements are intended to bring certainty and minimise the risk of subsequent dispute. In the absence of something fundamental that undermines their validity, judges are highly likely to give them full effect.

Find out more about our experience in drafting and advising on prenuptial agreements.

Neighbours’ Disputes – Negotiate Now or Pay a High Price Later

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Many neighbours’ disputes may, at least to an outsider, appear trifling. However, as a High Court ruling showed, they matter very much to those involved and, in the absence of amicable negotiation, they can very easily become ruinously expensive.

A landowner asserted that his neighbours’ right of way over a track that crossed his land was limited to a width of 2.15 metres. The neighbours, however, asserted that the correct figure was 2.5 metres. The dispute blew up into full-scale litigation after the landowner erected steel bollards at each end of the track that only permitted vehicles the width of a quad bike to pass by.

Following a trial, the neighbours succeeded on the principal issue concerning the track’s width. Although certain other issues were decided against them, the judge ordered the landowner to pay 75 per cent of their legal costs. Both sides sought to challenge aspects of the judge’s ruling but, after detecting no legal flaw in his conclusions, the Court rejected their appeals.

The Court noted that the neighbours had incurred legal costs of £427,000 in fighting the case, not including the costs of the appeal. The landowner’s costs budget was £218,000, but his bill was estimated to be up to 10 per cent higher than that. Emphasising that the dispute had been conducted in an entirely disproportionate way, at entirely disproportionate cost, the Court hoped that any further disagreements arising could be resolved in a sensible and amicable fashion, without further expense.

You Are Duty-Bound Reasonably to Provide for Your Dependants in Your Will

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Making reasonable provision in your will for those who depend upon you financially is a duty, not a choice. A judge made that point in coming to the aid of two sisters who were left in acute need when their father bequeathed them nothing.

In a will made four months before he died, their father left the entirety of his estate – consisting of his home, which was worth £355,000 – to their brother, who lived in the property. The sisters launched proceedings under the Inheritance (Provision for Family and Dependants) Act 1975.

Ruling on the matter, the judge noted that both sisters were in their 60s and in poor health. Their father had, from time to time, helped them out with gifts of money and their disinheritance had left their finances in a parlous state. Their brother, aged in his 70s, had almost entirely failed to engage in the proceedings.

The judge found that the father, whilst anxious to ensure that his son continued to have a roof over his head, had also stated his intention to make provision for his other children. In failing to reflect that intention in his will, he had failed to make reasonable provision for the sisters. In order to meet their reasonable needs, the judge ruled that one sister should have £70,000 from the estate and the other £90,000.

Adopted Pensioner’s Quest to Find Her Birth Parents Finally Bears Legal Fruit

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Many adopted people feel driven to embark on long and demanding quests to find their birth parents. In one case, decades of painstaking research paid off when a woman in her late 70s was granted a court order that completed her sense of identity.

The woman was placed with adoptive parents within days of her birth in 1945. The couple told her at an early age that she was adopted and that her birth parents were each married to someone else, making it impossible for her to remain with them. The woman grew to adulthood, left home, married and had children and grandchildren of her own.

She was in middle age when she began her hunt for her birth parents. She had little success in the early days, but the advent of the internet changed all that. With her son’s help, she found out her mother’s name and that she had migrated to Australia soon after the Second World War. She had since engaged positively with members of her mother’s large family and had travelled to Australia to meet them.

Identifying her birth father, who, together with her birth mother and adoptive parents, was long-since deceased, posed a more difficult challenge. Via a genealogical website, she obtained a DNA match with a third cousin who put her in touch with other members of the family. The niece and nephew of the man she believed to be her birth father consented to DNA testing, which confirmed a 98.32 per cent probability that they were blood related.

In granting the woman a declaration of parentage, the High Court found that the man was, on the balance of probabilities, her birth father. For her own sake and that of her children and grandchildren, it was important to her to establish a sense of familial identity. To her great joy, she had formed a bond with members of her birth father’s family with whom she was in regular contact. The declaration opened the way for her to seek the man’s formal recognition as her father on her birth certificate.

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