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Justice must strike probate and divorce equally, judge rules

3rd June 2016
Justice must strike probate and divorce equally, judge rules

The Court of Appeal granted permission to appeal to a man seeking to challenge the validity and legacies of his former mother-in-law, despite not being a beneficiary in the will and no longer married to the deceaseds daughter.

The appellant Colin Randall and the respondent Hilary Randall divorced in 2006. During negotiations for a financial settlement it was mutually agreed that Mrs Randall would receive a larger proportion of the matrimonial liquid-assets, and that if she was bequeathed more than £100k from her mothers estate, Mr Randall would receive half the balance. He therefore agreed in the settlement to only retaining his small pension in expectation of a lump sum payable from his mother-in-laws estate.

Mrs Randalls mother left her a gift of exactly £100k and left the balance of the estate, approximately £150k, to her grandchildren. Mr Randall therefore sought to bring a probate claim challenging the validity of the will, considering it to have been signed in bad faith contrary to the requirements of s.9 Wills Act 1837 in order to defeat his entitlement from the consent order. If successful, Mr Randall would be entitled to approximately £75k from the estate.

The consent order agreed by the parties in 2006 included an undertaking given by Mrs Randall to the court that:

in the event that the Petitioner receives hereafter…from her mother by way of inter vivos gifts and/or inheritance, the Petitioner shall retain the first £100,000…and the balance shall be divided equally between the Petitioner and the Respondent.

This undertaking did not bind Mrs Randalls mother as to her future testamentary wishes or considerations, but if it was proved that Mrs Randall and her children sought to defeat Mr Randalls claim through influencing the mothers testamentary dispositions, it would invalidate the will and Mrs Randall would have breached the undertaking.

At a preliminary hearing, Deputy Master Collaço Moraes determined that even if Mrs Randalls mother had not intended to give effect to her will as it stood, Mr Randall would still have no interest in the will and therefore would not qualify to bring a probate claim. This decision was due to the scope of the Civil Procedure Rules (CPR) in such cases. In particular, rule 57.7 states that the claim form must contain a statement of the nature of the interest of the claimant and of each defendant in the estate.

As considered in his appeal judgment, the Master of the Rolls Lord Dyson states that therefore the central issue in this case is whether the creditor of a beneficiary of an estate has an interest in the estate. If Mr Randall has an interest as required by r.57.7 he would be able to bring a probate claim.

Deputy Master Collaço Moraess in reaching his decision, compared the position of a beneficiary to an estate with a creditor to an estate, drawing a distinction between having an interest in an estate, and being interested in the estate:

Just as the creditor of an estate, while interested in the estate, has no interest in the estate, so in my judgment a creditor of a beneficiary of the estate has no interest in the estate, though he is possibly interested in the estate.

His judgment was concluded by considering that widening the scope of r.57.7 to include creditors would dilute its effectiveness and the ability to administer estates.

Lord Dyson further gave great weight to the comparison of whether this issue was one of substantive law or practice and procedure.

Probate Case Law

The appeal reviewed multiple probate cases, including Kipping and Barlow v Ash (1845). A case Lord Dyson considered in detail in his judgment was the influence of Menzies v Pulbrook and Kerr (1841), in which a creditor of an estate challenged the validity of a will and opposed passing probate to the executor. In that case the creditor was unsuccessful, as case-law had established as a matter of practice that such persons had no right to oppose a will, as:

(i) a creditor cannot administer an estate if there is another person who has an apparent right to do so;

(ii) the court was applying a rule which had been acted on for so long that it ought not to be disturbed; and

(iii) the rule was in any event founded in reason and sound sense, because, were it otherwise, the administration of estates would create infinite trouble, expense and delay to executors.

This case is a well established precedent clear authority for the proposition that the creditor of an estate does not have a sufficient interest in the estate to allow him to challenge the validity of a will.

Further case law analysis covered Dixon and Dickenson v Allinson (1864), and The Goods of Timothy White, deceased (1893), which in contrast to Menzies (1841), creditors were considered to have sufficient interest in the estates to be able to bring a claim.

In Green v Briscoe , an ex-wife was not able to bring a claim under r.57.7 as she did not have sufficient interest in the estate, despite qualifying to bring a claim under the Inheritance (Provision for Family and Dependants) Act 1975. In the similar case of OBrien v Seagrave , Judge Mackie alternatively determined that the term interest did include a right to bring a claim for financial provision under the 1975 Act.

Conclusions

Lord Dyson determined that it is incorrect to assimilate the position of a creditor of a beneficiary of an estate with that of a creditor of an estate. Therefore the case law is not inconsistent between the judgment in Menzies and that of Timothy White, as the interests are fundamentally different in nature.

The interest of the creditor of a beneficiary is to ensure that the beneficiary receives what is due to him or her under the will or on an intestacy. The interest of a creditor of an estate is to ensure that there is due administration of the estate

Following the judgment in OBrien, Lord Dyson considered that a broad construction of the term interest should be adopted, as justice requires that it should extend to a person such as as this is the only way his claim that the will is invalid can be brought before a court, and consequently his only route to justice. Therefore, although the validity of a will is determined by substantive law, Lord Dyson considered that these circumstances were a procedural matter.

If this claim did not fall within the probate jurisdiction but fell within the general jurisdiction of the court, it is obvious that would have a sufficient interest in the subject-matter of this litigation to bring the claim.

Lord Dyson concluded in his judgment that Mr Randall has a real interest, and should therefore be able to challenge the validity of the will, thereby granting the appeal.

Lord Justice McCombe agreed with the Master of the Rolls that the appeal should be allowed in this instance as the issue is one of procedure rather than substantive law. Rule 57.7 of the CPR does not succinctly define interest, so McCombe LJ considered that practice and procedure are the determinative tools. If a claimants interest is to be determined on a case-by-case basis, courts would need a level of flexibility in this area. He further stated by way of comparative example that:

it appears to me to be highly unjust that if, in circumstances similar to the present, a will had been forged in an attempt to defeat an order made in divorce proceedings, the party affected could not challenge the validity of the will in probate proceedings.

Therefore, McCombe LJ considered Mr Randall should be able to challenge the validity of the will in order to uphold the consent order, and prevent an imbalance of justice between probate and matrimonial proceedings.

Similarly, Lady Justice King agreed that Mr Randall has an interest in the claim, and should be able to bring a claim for set-aside, primarily because the order reached during the parties divorce proceedings, was reached by mutual consent which the courts promote. King LJ, emphasised that the consent order the parties reached may not have been the conclusion a court may have ruled, but that it is the courts role to encourage negotiation in financial proceedings. To deny Mr Randall the ability to oppose the will, and consequently uphold the consent order would be to undermine the validity and surety of consent orders in financial proceedings on divorce, and dissuade others from reaching their own settlements privately.

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