England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM BRISTOL DISTRICT REGISTRY
(HIS HONOUR JUDGE WEEKS QC)

		Royal Courts of Justice Strand London WC2
		12th June 1997

LORD JUSTICE BELDAM: Miss Emma Jane Hocking and Miss Lucy Anne Hocking, daughters of Kenneth John Hocking (deceased), appeal against the provision made for them out of the estate of their father by His Honour Judge Weeks QC, sitting as a Judge of the High Court, at the Bristol District Registry on 27th September 1995. In a carefully considered judgment, which I have found of the greatest assistance in this case, the judge awarded Miss Emma Hocking the sum of £4,000, and Miss Lucy Hocking £8,000. But undeterred by the repeated guidance given by this and other courts, they now appeal, contending that the provision made for them was insufficient.

The appellants' father, Mr Kenneth Hocking, died from a heart attack suddenly at the age of 49 years on 25th January 1994. He died intestate, letters of administration being granted to his widow, Mrs Brenda Hocking, who was his second wife. After the statutory provisions of the Administration of Estates Act 1925, no provision was made for the maintenance of his first wife, Mrs Jennifer Hocking, or for the appellants. So they made application under the Inheritance (Provision for Family and Dependants) Act 1975.

During his working life the deceased had worked for the Central Electricity Generating Board and later for Nuclear Electric Power. He was a member of the company's pension scheme. In 1968 he married the first applicant, Mrs Jennifer Hocking. Emma Jane Hocking was born on 24th August 1973 and Lucy Anne Hocking four years later in August 1977.

In 1981 the deceased and Mrs Jennifer Hocking separated. She was employed as a secretary and worked full time. They agreed on a separation, and a deed of separation was drawn up which provided that Mrs Jennifer Hocking should live in the family home at Wolsery and that the deceased was to pay £15 a week towards the mortgage, as well as £15 maintenance for each of his daughters. The agreement to pay £15 a week for each of the daughters was subsequently made the subject of an order in the magistrates' court in 1982. But, in accordance with the usual practice there, it was only to last until the girls reached the age of 17 years.

In May 1983 their family home was sold, and from the equity of £20,000 Mrs Jennifer Hocking took £11,000 and the deceased £9,000. In 1984 the deceased and Mrs Jennifer Hocking were divorced. There was no agreement between them for the payment of any maintenance, apart from that paid by the deceased for his two daughters. From her share of the proceeds of sale of the family home Mrs Jennifer Hocking made a down payment on a house and raised the balance of the purchase price by loan on a mortgage.

In the following year, 1985, the deceased met his second wife, Mrs Brenda Hocking. She too had been married before and had two children. The deceased went to live with her in her former family home, but shortly afterwards they jointly bought a new family home, No 4, The Limes, at Willerton. It was bought for £36,000, with a loan of £24,000 raised on mortgage. The balance of £12,000 was contributed by the deceased and his second wife in equal shares from the proceeds of sale of their former matrimonial homes.

The deceased continued to pay £15 a week for his two daughters until 1991, when Emma became 18. He then stopped making payments on account of her maintenance, but he increased the maintenance paid for Lucy, then 14 years old, to £20 a week.

The deceased and his first wife, Jennifer, had clearly expressed an intention in a deed which they signed that neither should claim against the estate of the other. But this deed was never registered. In 1984 the deceased had made a will, under which he had made his father and his two daughters joint beneficiaries to share equally in his residual estate. But, as is obvious, this will was revoked by his subsequent marriage to his second wife Brenda, and when he died he had made no further provision by will. So it was that his second wife became the administratrix of his estate.

The estate of the deceased

That estate comprised the half share in the family home, No 4, The Limes, Willerton; cash, which amounted to approximately £68,000, realised from the sale of his car; from insurance policies, death benefit and from wages. Furniture and personal effects amounted to £4,000 and a small amount of interest was earned between death and administration. In total, after making all allowance for debts, funeral and other administration expenses, the net estate was £107,850, or, as the judge took it, £106,000 in round figures.

At the date of the hearing before the judge the first applicant, Mrs Jennifer Hocking, who has not appealed, was 48 years of age. She was employed in the conveyancing department of a well-known building society. She had a responsible full-time job, but her income was insufficient to cover her reasonable needs. The judge found that, due to the mortgage repayments she had to make and other outgoings, she was not making ends meet on her earnings, even though from time to time she had a second job and even though she received contributions from both of her daughters. Because of her job she had had to move from time to time, as the offices in which she was employed by the building society moved. When she had finally moved to Poole she had done so at the height of the property market and was now caught in the negative equity trap, the value of her home being insufficient to pay for the amounts outstanding on mortgage.

At the date of her father's death, Emma Hocking was taking a four-year degree course at Bournemouth University. She had completed that course at the time of the hearing, having obtained a degree in catering. She had supported herself throughout the course without any help from her father or her mother, save that she had lived at home. She had a grant from the local authority, which was approximately £2,300, which she supplemented by taking part-time jobs in hotels or in a local casino, as many students do. After her father's death she also received a grant of just over £1,800 a year for the period while she was at university from her father's employers. That grant and the grant she had received from the local authority was not enough to meet her reasonable expenses during her time in university in the eighteen months after her father's death in January 1994. Further, by the time of the hearing before the learned judge, she had not obtained full-time employment, although she stated that she was expecting to do so quite soon. The judge, for her provision, took a period over which she might be regarded as a dependant of the deceased from January 1994, when he died, to the beginning of December 1995.

Lucy Hocking was in the sixth form of her school when her father died. It was a considerable shock to her, as she said in her evidence, but nevertheless she did well at school. She obtained a place at Newcastle University for a three-year course reading mathematics and sociology. It was her intention to train to be a teacher, and that would involve a further year at the university on a teacher training course. She too, it was estimated, would obtain grants, the judge thought to the extent of £4,213 per annum, whilst she was studying at university or at Teachers' Training College, the grant being made up of a local authority grant and a similar award from her father's former employers to subsidise her education at university of £1,800. According to her evidence, she too had, since she was 16, been taking part-time jobs at weekends and during the holidays, and from the earnings, which were not inconsiderable, though not great, she had contributed to the family expenditure, describing the sums which she had paid to her mother, Mrs Jennifer Hocking, as amounting to loans.

As stated earlier, the judge approached the case on the basis that the value of the estate overall was approximately £106,000. He also took into account the financial position of the administratrix, Mrs Brenda Hocking, who had benefited from an insurance policy which discharged the outstanding loan on the family home, and also provided her with a capital sum of just over £20,000. Her two children were still living at home. Each of them was in full-time employment. They made a contribution to the outgoings of the family home from their earnings because they were living at home. The judge summarised the financial position of the administratrix, saying that her resources were sufficient for her needs, and, indeed, he considered that there was a significant margin of income in excess of expenditure in her case. He did, however, single out the sum of over £20,000 which she had received on the death of her husband as his widow from the pension fund. Most of this sum, he said, had been earmarked by her for the legal costs of the proceedings, which the judge described as "a great misfortune". He expressed his surprise if the costs had at that time already reached the sum of £22,000, as was suggested.

Indeed, this is a tragic case and a great misfortune, for it is clear that the judge formed a very favourable view of all the parties who he saw and who were involved in these claims. It is clear that negotiations or discussions had taken place. One of the particular misfortunes of this case is that the administratrix, no doubt well advised, had made substantial offers to all the applicants, which in the event were either greater than or equivalent to the sums which the judge awarded them. The result of that situation was that they were unable to recover any costs from the estate after the date when those offers were made at the beginning of September 1995. Apart from the sum of £2,500 which was statutorily exempt from the Law Society's lien on the sums recovered, the costs would, no doubt, substantially absorb the sums which the two appellants had been awarded. It is particularly unfortunate in this case that the discussions between the parties had not yielded a successful solution without resort to proceedings. We were told that in April 1995 the parties were called in by the District Judge at Barnstaple; that there is at Barnstaple a procedure for conciliation or mediation, and a three-hour hearing took place before the District Judge. But most unfortunately, as it emerged, no agreement was able to be reached.

Having considered the size of the estate, and the resources available, the needs of the various parties who were before him, and having directed himself in accordance with the requirements of section 3 of the Inheritance (Provision for Family and Dependants) Act 1975 and considered the statements in some of the authorities to which he was referred, the judge awarded Mrs Jennifer Hocking the sum of £18,000. She does not contend that that was an unreasonable sum to award her and she has not appealed. In the case of Lucy Hocking, the judge said:

"...if Mr Kenneth [Hocking] had made reasonable provision for his daughter, that would have started from the date of his death, and going forward to a point of time when I think Lucy can reasonably be expected to look after herself and provide for her own needs out of her earnings,.

A lump sum is sought on behalf of all the parties to the present action in the case of each three applicants. I can see that there are good reasons for having a clean break between the parties, although what I have to consider is an income need, and the sum I propose to award is not intended as a capital provision for the applicant but only to be a capitalisation of a calculation derived from income needs.

An open offer was made at the commencement of these proceedings to Lucy in the sum of £8,000. That seems to me to be more or less correct and to be a proper provision for her maintenance in the period I have mentioned from her father's death until the period in which she can support herself."

In addition to the £8,000 he awarded to Lucy, she had, although he did not at the time appreciate it, received an interim payment of £1,050. So that the total sum which she received from the estate under the provisions of the Act was £9,050.

He then turned to the provision which ought to be made for Emma Hocking. He started by pointing out that her maintenance was for a much shorter period. She had been made an offer of £5,000. But the judge thought that that erred on the generous side and awarded her £4,000 as a capitalised sum of the income provision for her maintenance for the period following her father's death. She too had received an interim payment which increased the total she had received out of the estate under the provisions of the Act.

It is against those two awards that Lucy and Emma Hocking now appeal.

In exercising its powers under section 2 of the Act, the Court has to have regard, as the judge did, to the matters set out in section 3(1). The circumstances relevant to the claims made by the two appellants were the financial resources and financial needs which they had or were likely to have in the foreseeable future, taking into account the financial resources and needs of the other applicant, Mrs Jennifer Hocking. The Court has to take account of the obligations and responsibilities which the deceased had towards them and to any other beneficiary of his estate, which would include the administratrix. It had to have regard to the size and nature of the net estate, and, under section 3(3), the Court had to "have regard to the manner in which the [two appellants were] being or in which they might expect to be educated or trained".

Reasonable financial provision, for which the Act provides, is defined in their case in section 1(2)(b) to mean:

"...such financial provision as it would be reasonable in all the circumstances of the case for the applicants to receive for their maintenance."

The judge adopted, as an exposition of the meaning of "for their maintenance" the observations of Lord Browne-Wilkinson (then Browne-Wilkinson J) in In re Dennis [1981] 2 All ER 140, where at page 145 he said:

"It is now clearly established that claims under the Act by persons other than spouses are limited to maintenance. The applicant has to show that the will fails to make provision for his maintenance: see Re Coventry (deceased). In that case both Oliver J at first instance and Goff LJ in the Court of Appeal disapproved of the decision in Re Christie (deceased) in which the judge had treated maintenance as being equivalent to providing for the wellbeing or benefit of the applicant. The word 'maintenance' is not as wide as that. The court has, up until now, declined to define the exact meaning of the word 'maintenance', and I am certainly not going to depart from that approach. But in my judgment the word 'maintenance' connotes only payments which, directly or indirectly, enable the applicant in the future to discharge the cost of his daily living at whatever standard of living is appropriate to him. The provision that is to be made is to meet recurring expenses, being expenses of living of an income nature. This does not mean that the provision need be by way of income payments. The provision can be by way of a lump sum, for example, to buy a house in which the applicant can be housed, thereby relieving him pro tanto of income expenditure. Nor am I suggesting that there may not be cases in which payment of existing debts may not be appropriate as a maintenance payment; for example, to pay the debts of an applicant in order to enable him to continue to carry on a profit-making business or profession may well be for his maintenance."

In this appeal it is contended that the judge erred in failing to award a higher sum, in failing to increase the award of the first and second applicants (ie, Emma and Lucy) to give them additional lump sums, for example, to reflect their desire to buy homes in the future and to assist towards their wedding costs; and that he paid no or no proper regard to the evidence of Lucy that she was about to start four years of higher education and that, on her estimates, her expenditure exceeded her income by about £2,100.

I should refer at the outset to a point which was taken by Mr O'Mahoney on behalf of the appellants but which is not specifically made a ground of appeal. It refers to the amount of the receipts which Lucy was expecting from her grant and the pension she received from her father's employers. She had put before the court, and supported in her evidence, a statement that her income from her local authority grant was £1,885. The judge in assessing the amount of her income, had taken the higher figure of £2,300 which was the figure which Emma had stated was her local authority grant, she then being in her last year and maybe in accommodation which was more expensive. But Mr O'Mahoney says that, the judge having thus frankly overstated Lucy's grant, must clearly have made an erroneous estimate of her needs, for he had attributed to her an income £500 a year greater than her actual income. The statement showed that Lucy's annual outgoings were approximately £4,859 and if there was added to that the amount which she spent on maintaining her car, the total, she said, was £5,800, leaving a shortfall of approximately £2,000 per annum. Thus, one question which the Court will have to consider is how far this error on the part of the judge invalidates the sum which he awarded to her.

The grounds of appeal state, first, that the judge erred in law, in that he failed to give any or any proper weight to the fact that the deceased had, during his lifetime, failed to pay any or any sufficient maintenance to the appellants. It was the appellants' submission that this circumstance should lead to an award of maintenance at a higher level. Mr O'Mahoney accepted that it was not open to a court under the provisions of this Act to make an award in respect of maintenance which, whether from a legal or moral obligation had not been paid by the deceased during his lifetime. But he said that the Court could take into account the fact that, but for the failure of the deceased during his lifetime to make these payments, the appellants would have been able to put aside more of their part-time earnings and earnings during the school holidays and could have built up a fairly substantial sum which might have provided them with an opportunity, for example, to make a down payment on a house.

As I see it, the difficulty in the way of this argument is that it is simply another way of saying that the Court should make an award reflecting the fact that the deceased had not made payments in the past. On an application of this kind the Court has to consider whether an applicant has been made sufficient provision by the will or on the intestacy. If not, the question then is: what sum should be paid for the maintenance. In short that the disposition of the deceased's estate is not such as to make reasonable financial provision for the applicant. On the face of it, that quite clearly must refer to reasonable financial position for the applicant in the future, after the death. It seems to me that Mr O'Mahoney's submissions are contrary to the decision of this Court in Re Jennings [1994] Ch 286. At page 296 Nourse LJ said:

"Having referred to the legal and moral obligations which the act of procreation brings in its wake, and having observed that it was unnecessary for him to enter into that debate about moral obligations, the judge continued:

'I find as fact that the deceased failed in his legal obligations to the plaintiff during his minority. In my judgment that failure renders the estate incapable of advancing the argument that this is a case where there is simply the relationship of father and son and accordingly that the latter has no claim.'

Thus the judge construed section 3(1)(d) so as to include legal obligations and responsibilities which the deceased had, but failed to discharge, during the child's minority, albeit that they were long spent and would have been incapable of founding a claim against him immediately before his death. In my respectful opinion that is an impossible construction of section 3(1)(d). While it is true that it requires regard to be had to obligations and responsibilities which the deceased 'had', that cannot mean 'had at any time in the past'. At all events as a general rule that provision can only refer to obligations and responsibilities which the deceased had immediately before his death. An Act intended to facilitate the making of reasonable financial provision cannot have been intended to revive defunct obligations and responsibilities as a basis for making it. Nor, if they do not fall within a specific provision such as section 3(1)(d), can they be prayed in aid under a general provision such as section 3(1)(g)."

In my view those observations of Nourse LJ are binding upon this Court, and in any event it seems to me they are incontestable.

But on the question whether or not there was any failure, in breach of moral or other obligation, by the deceased to make provision, it is pertinent to observe that Mrs Jennifer Hocking had given evidence in an affidavit in these terms:

"When Emma reached 18 the maintenance for her ceased. But voluntarily the deceased increased the maintenance payment in respect of Lucy to £20 a week and this payment continued up until the date of his death. I have never made any application to the court in respect of an increase in maintenance payments for our daughters because of the friendly and loving relationship between myself and the deceased. I always knew, as did he, that if either of us wanted and needed help the other would be only too happy to oblige."

I would reject the submission made in ground 1 of the appeal.

Secondly, it is said that the judge erred in law in failing to increase the award in favour of the appellants to take account of their claim to have additional lump sums paid to them to reflect their desire to buy homes in the future and to assist towards their wedding costs.

Mr O'Mahoney told us that before the judge he had drawn attention to a number of decided cases, such as In re Callaghan and in Re Leach, in which it was said that such lump sums could legitimately be made in an award under the Act on the basis that, by making a lump sum award, the Court would be capitalising a contribution to the applicant's future maintenance. Indeed, the Court has, in appropriate cases, made such an award - not of a capital sum as such, but capitalising a future maintenance payment which the applicant, for provision under the Act, would have to make to meet his daily expenses; for example, in In re Callaghan the applicant had an opportunity to capitalise the cost of providing for accommodation for himself and his family because he had been offered the opportunity to buy the council home which he was then renting. He could not afford to do so unless he had a lump sum for the down payment, and Booth J in that case regarded the need for this payment as part of the maintenance which he needed for himself and his family.

That was an entirely different situation to that urged upon the judge in this case. In this case the need for accommodation was met by these two girls out of their local authority and other grants and would be met by any sum which was capitalised as an annual payment to them to provide for their maintenance. Expenditure that, looking far ahead into the future, they might desire to make to buy a house, is not maintenance for something which, in my judgment, the Act makes provision. The judge himself pointed out, as is undoubtedly the case, that the exercise which he was required to do under the Act was not to "redistribute the estate in accordance with what I think is reasonable. My powers are limited to making reasonable provision, if that is right and can be afforded from the estate, for her maintenance." Mr O'Mahoney said that, in effect by rejecting these claims, the judge had closed his mind to possible claims which were in accordance with the reasonable expectation of the dependants.

The judge's view receives ample support in the authorities, and in particular in the leading authority of In re Coventry [1980] Ch 461. In that case, at first instance decided by Lord Oliver (then Oliver J), he said at page 475:

"The court has no carte blanche to reform the deceased's dispositions or those which statute makes of his estate to accord with what the court itself might have thought would be sensible if it had been in the deceased's position. This may seem almost a truism, but I mention it because some of Mr Stephens' submissions--although he did not put it so in terms--seemed to me to be leading to the conclusion that because the deceased's intestacy and the inflation of property values had produced something of a windfall, which could reasonably have been disposed of by the deceased in favour of his son, if he had thought about it, therefore the court ought to step in and divert it to where it would be most useful and appreciated.

That is not the purpose of this legislation at all."

When Re Coventry was before the Court of Appeal Goff LJ at page 485 said:

"What is proper maintenance must in all cases depend upon all the facts and circumstances of the particular cases being considered at the time, but I think it is clear on the one hand that one must not put too limited a meaning on it; it does not mean just enough to enable a person to get by. On the other hand, it does not mean anything which may be regarded as reasonably desirable for his general benefit or welfare."

Later, he said:

"Before turning to the consideration of the judgment, and the criticisms levelled against it, I have to make two preliminary observations. The first is that it has been said, and I would adopt the proposition, that applications in small estates should be discouraged, because the costs tend to become wholly disproportionate to the end in view, although, of course, that does not mean that an application cannot be made in a small estate, nor that when made it should not be duly considered on its merits. My second observation is that at times the argument came near to saying that what the court had to consider was how the available assets should be fairly divided. That, of course, is not the position under the Act, and is not what the court has to decide."

Accordingly, I would reject the submission that the judge ought to have had in mind the expectations of the two girls of the provision they might have received during the deceased's lifetime or if had he made a will disposing of his property. The possibility of their desire to buy homes in the future or to assist in their wedding costs, as it was put, remained in the future. The Act does require the Court, in considering the matters to which it is required to have regard under the section, to take into account these facts known to it at the date of the hearing. It may be, in an appropriate case, where a need is shown for a payment of the type to which Mr O'Mahoney refers, the court could take it into account. But, in my judgment, in present case the need for such a lump sum is speculative.

Mr O'Mahoney made two further submissions. First, he says that the amount awarded to Lucy was substantially less than ought to have been awarded. He said the amount should have been a sum of about £15,000. He said that the amount awarded to Emma was too low and should have been about £10,000. He was, I think, minded at one stage to criticise the awards on the basis that, by awarding Emma approximately 50% of the sum awarded to Lucy, the judge had awarded her a disproportionate sum.

That seems to me inconsistent with the assessment which he made of the respective sums he said should have been awarded to them. But be that as it may, I can find no disproportion between the two awards. The judge, in effect, took a period of two years for Emma and a period of four years for Lucy. In fact it is possible to rationalise the sums that he awarded in many ways. The fact remains that the award to Lucy included, as a capital sum, payment in respect of a period which was four or five years in the future. One way of rationalising the figure she received is to divide it between the period up to the time when the case was heard and the future. A sum of £2,000 for the two years to the hearing would give a figure of £4,000. For the future, and discounting the £2,000 figure for the fact that Lucy was receiving a capital sum, he could have awarded two-and-a-half years, making £5,000, to arrive at a total of £9,000.

It is true and I do not lose sight of the fact that the judge, in arriving at the figure for Lucy, did assume that the amount of her grant from the local authority was the same as that which had been received by Emma in her last year, whereas it was £500 less, but at the same time it is clear that, when fixing the amounts which he would award from the estate, he did not at that time have in mind the fact that she had already received the sum of £1,050 as an interim payment. Taking the matter as a whole, I cannot see that it is demonstrated that the judge erred in any way in arriving at these figures, bearing in mind he had not just to consider their needs but had to consider the needs of Jennifer, and the amount of the estate, which, from an account which we have been shown today, will have been substantially depleted by the costs the estate will have to bear. Accordingly, I would dismiss these two appeals.

LORD JUSTICE MILLETT: I agree.

In this case the net estate was a little under £108,000. The appellants and their mother were offered a total of £34,000. They were awarded a total of £31,000. The costs, which the judge directed to be paid out of the estate, amounted to £37,000, reducing the value of the estate available to the widow to under £39,000. Thus at the conclusion of the proceedings below over one-third of the net estate had gone in costs in order to obtain less than one-third of the estate for the appellants and their mother. If the case had stopped there, as in my opinion it certainly should have done, it would still have been lamentable. It would have been enough to make the deceased turn in his grave. After all, the widow would have been better off if she had offered and prevailed on the appellants and their mother to accept double the amount they were eventually awarded rather than see the estate eaten up by legal costs. But now still further costs have been incurred by the appellants in a completely hopeless appeal which should never have been brought. I regard this as unacceptable. I agree that the appeals should be dismissed.

LORD JUSTICE OTTON: I agree.

ORDER: Appeals dismissed. The provision for the Court of Appeal costs should be made out of public funds; that the two appellants have no present liability to satisfy any part of the Court of the Appeal costs; that the Court of Appeal costs be paid by the Legal Aid Board subject to paragraphs (b) and (c) of the normal order, which is that the order remains for ten weeks from the date of the sale, suspended in its operation; and that if no representations are made by the Legal Aid Board within that ten weeks then the order takes effect without further order and that is on payment by the Legal Aid Board of the costs of the appeal to the respondents that the sum of £5,000 be released. That, in effect, makes provision for it. Legal aid taxation.