COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE CHANCERY DIVISION
MR JUSTICE BLACKBURNE
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE MAY
LORD JUSTICE MANCE
| VENETIA ROBINSON
|- and -
|(1) ROLAND FERNSBY
(2) DUNCAN SCOTT-KILVERT
Gerald Wilson (instructed by Hodge Jones & Allen) for the Respondent
Hearing dates : 16th/17th October 2003
Crown Copyright ©
Lord Justice May:
The Inheritance (Provision for Family and Dependants) Act 1975
"… such financial provision as it would be reasonable in all the circumstances of the case for the applicant to receive for his maintenance."
This is a more restrictive definition than that which applies where an application is made by a husband or wife – see section 1(2)(a).
"Where an application is made for an order under section 2 of this Act, the court shall, in determining whether the disposition of the deceased's estate effected by his will or the law relating to intestacy, or the combination of his will and that law, is such as to make reasonable financial provision for the applicant and, if the court considers that reasonable financial provision has not been made, in determining whether and in what manner it shall exercise its powers under that section, having regard to the following matters, that is to say –
(a) the financial resources and financial needs which the applicant has, or is likely to have in the foreseeable future;
(b) the financial resources and financial needs which any other applicant for an order under section 2 of this Act has or is likely to have in the foreseeable future;
(c) the financial resources and financial needs which any beneficiary of the estate of the deceased has or is likely to have in the foreseeable future;
(d) any obligations and responsibilities which the deceased had towards any applicant for an order under the said section 2 or towards any beneficiary of the estate of the deceased;
(e) the size and nature of the net estate of the deceased;
(f) any physical or mental disability of any applicant for an order under the said section 2 or any beneficiary of the estate of the deceased;
(g) any other matter, including the conduct of the applicant or any other person, which in the circumstances of the case the court may consider relevant."
"It follows therefore that, on every application under the Act, the court is required to consider two questions. First, has reasonable provision been made for the applicant? Second, if not, what financial provision should the applicant receive?"
He pointed out that, for applicants other than a husband or a wife, the purpose of the Act was limited to the provision of reasonable maintenance. It is not the purpose of the Act to provide legacies or rewards for meritorious conduct. It has to be shown, not simply that the deceased acted unreasonably, but that, looked at objectively, his disposition or lack of disposition produces an unreasonable result in that it does not make greater provision for the applicant's maintenance. The judge referred here to the judgment of Oliver J in Re Coventry deceased  CH. 461 at 472. He referred to the same judgment, at page 475, for the proposition that it is not sufficient for an applicant to establish necessitous circumstances which property of the deceased could alleviate. There must be established some sort of moral claim by the applicant to be maintained by the deceased or at the expense of the estate beyond the mere fact of a blood relationship. There must be some reason for saying that in the circumstances it is unreasonable that no or no greater provision was in fact made. The judge then referred to Re Hancock (deceased)  2 FLR 346 to the effect that, in the great majority of contested applications, the court is involved in a balancing exercise of the many factors to which section 3 of the Act requires the court to have regard. No particular fact has to be placed on one side of the scales or the other. Insofar as an adult child might have to establish a moral obligation or some other special reason, that only means that there must be some reason for the court to decide that the scales fall in favour of a conclusion that there has been a failure to make reasonable financial provision. The judge referred again to Re Coventry at page 485 for the proposition that what is proper maintenance must in all cases depend on all the facts and circumstances of the particular case. It must not be given too limited a meaning. 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 the applicant's general benefit or welfare. As was said in a Canadian case Re Duranceau  3 DLR 714, the question is:
"Is the provision sufficient to enable the dependent to live neither luxuriously nor miserably, but decently and comfortably according to his or her station in life?"
The claimant's circumstances:
"The picture is of someone who lived very comfortably and was fully maintained by the deceased while still at Orchard House (until 1988) and who, when she left to set up on her own, was provided by the deceased with a house in which to live (ultimately, in 1992, after she married Neil Robinson, her present house at 8 The Maltings), a car to enable her to get around (together with the cost of learning to drive), a piano (together with piano lessons) to enable her to indulge her interest in music and also earn something from giving piano lessons herself and (until mid-1996) the cost of the claimant's cosmetic surgery. But, apart from those occasional gifts, the deceased left the claimant to pay for her own ordinary day to day expenditure."
The judge rejected suggestions that the deceased had continued to make regular payments towards the claimant's upkeep after she had left Orchard House.
(a) the rent from the cottages (which she sold for £53,000 in 1997);
(b) modest earnings from teaching the piano; and
(c) income from her savings and from two settlements.
The first settlement was established in 1960 by her paternal grandmother, Flora Scott-Kilvert. The second was established under the will of her late father. The Flora Scott-Kilvert settlement is now worth around £32,000. It produces an annual income of £800 gross. For some years the claimant has been the sole recipient of this income. The trustees have never exercised their absolute discretion to appoint capital or to appoint income to Duncan, who is the other potential beneficiary. In August 2000, the value of her father's settlement was just over £¼m. By 31st July 2002, the value had fallen to £177,735. The trustees' policy is to invest the settlement funds with a view to maximising income. The claimant received £12,000 gross annual income from this settlement as at the date of Blackburne J's judgment.
"Neither Dr Cottin nor Dr Muyard has been available to be cross-examined as to their views of Duncan and their gloomy prognosis but the clear tenor of the evidence, supported by what Mrs McCloughan had to say, was that Duncan is suffering from severe behavioural problems which raise very serious doubts about his future welfare and ability to cope."
"Ignoring his share of the deceased's estate and the value of the house in Carcassonne, Duncan, when he attains 18 in fourteen months time and assuming that the value of his savings account is not reduced below its present level, will own assets amounting to roughly £155,000. Apart from whatever income those assets may produce and anything that his mother can spare, he has no source of income. Assuming he outlives the claimant, he can expect to receive whatever remains of the funds which are subject to the trusts established for her benefit under the will of Ian Scott-Kilvert, but since the claimant's current life expectancy is 40 years that is a very remote expectation. There is also the possibility that he may receive something under the Flora Scott-Kilvert trust (which would be by 2020 at the latest when that trust comes to an end), but since the funds are very small in amount and all income from them has been paid to the claimant in recent years it is difficult to attach any value to this possibility.
It is impossible to estimate what his likely future financial needs will be. Even if he is able to overcome his current psychiatric problems and qualifies as a car mechanic (no other occupation is currently in prospect) he cannot expect (at current rates) to earn [no] more than £7,200 per annum."
The deceased's wishes
"All this makes inexplicable why, only five months later (at the time of their initial meeting on 6th May), the deceased … should suddenly have turned against her 13 year old grandson and should be accusing him of being "after her money". So far as the evidence goes, there is no rational explanation for this sudden change of affection."
"It is indeed puzzling that, within the space of just 3½ years, the deceased's testamentary wishes for her only grandchild should apparently alter from a desire to give him half her residuary estate to a wish to leave him a token £500."
The draft and final judgments
"… the 2-stage test required under the Act namely:
(i) was the provision under the will reasonable?
(ii) if not, what provision should be made?"
The first draft judgment:
"For, absent exceptional circumstances, it cannot be the purpose of the 1975 Act to make good a shortfall in resources needed to enable an applicant to discharge the cost of daily living when the shortfall has come about as the result of imprudent expenditure."
"Bearing in mind the meaning of "maintenance" as established by the authorities in relation to claims under section 1(2)(b) of the Act, I consider that £21,000 after tax is amply sufficient to provide for her reasonable maintenance. It is substantially more than the joint expenditure of the claimant and her husband stated in the evidence before the Court of Protection. It assumes that the claimant continues to live at 8 The Maltings and has a car and that her husband, apart from providing out of his own income for his own food and clothing, makes a contribution (in cash or in kind) of £1,500 to the other household expenses."
"Prudent stewardship of that sum and her own investments would have provided her with more than enough taxed income, when added to her income from the two settlements, to meet her stated current expenditure. It ignores any contribution from Mr Robinson."
The judgment as handed down
"Having sent a draft of my judgment coming to such a conclusion, but entertaining doubts about the correctness of my approach, I invited further submissions from counsel. As a result, I am persuaded that my initial view was wrong.
The fact that the claimant's reasonable maintenance requirement cannot be satisfied out of her savings and other sources of financial support currently available to her, including what she can presently expect to receive out of the deceased's estate, is not sufficient, in itself, to justify the making of an order under the Act notwithstanding the closeness of the claimant's relationship with the deceased and the latter's wish to treat the claimant more favourably than Duncan. The question that the court has to consider is not whether it might have been reasonable for the deceased to have made greater provision for the claimant than she did but whether in all the circumstances, looked at objectively, it is unreasonable that the deceased's will did not do so. See Re Coventry at 488F. After reflecting further on the matter I have come to the conclusion that it is not unreasonable that the deceased's will did not do so."
Mr Holbech accepted, as he had to, that, taken alone, this passage correctly states the approach to be taken by the court as derived from Re Coventry at the passage cited.
Grounds of appeal and discussion
"In the present case, the judge recalled the order the day after he had made it. It is not suggested that the landlords in any way, in proper reliance upon the order, acted to their detriment. We are dealing with a case where the judge, practically as soon as he gave judgment, decided that it was wrong. As a matter of sensible administration of justice and fairness between the parties, it seems to me proper in the circumstances that the judge should be at liberty to recall his order. The position can properly be called exceptional."
"It is submitted for the landlords that the decision of this court in [Barrell Enterprises] is to be regarded as a comprehensive exposition of the exceptional circumstances in which it is proper for a court or a judge to recall an order which has been pronounced orally but has not yet been drawn up, registered or otherwise perfected. But I cannot regard In re Barrell Enterprises as overruling or qualifying the earlier decision of this court in Millensted v Grosvenor House (Park Lane) Limited  1 KB 717, which apparently was not cited in In re Barrell Enterprises. In the Millensted case this court approved statements of the law in earlier authority to the effect that a judge can always reconsider his decision until his order has been drawn up or perfected, and more importantly, this court upheld the action of a High Court Judge, who had in an oral judgment awarded a certain sum by way of damages but then withdrew that judgment and substituted judgment for a lower figure, because before his order was drawn up, he was satisfied after serious further consideration that the sum he had originally awarded was excessive. …
The Millensted case is, in my judgment, a close parallel to the present case. It is indeed exceptional for a judge who has pronounced an order in court to be completely satisfied, before the order has been drawn up, registered or perfected, that the order was wrong. That happened, however, in the present case, and accordingly the judge was entitled, taking the view he did, to recall his earlier order. I see nothing unfair in the procedure he followed to do so."
Neill LJ agreed with the judgments of Fox LJ and Dillon LJ.
"When oral judgments had been given, either in a court of first instance or on appeal, the successful party ought save in the most exceptional circumstances to be able to assume that the judgment is a valid and effective one."
This principle must have greater application where the judgment is a formal written judgment in final form, handed down after the parties have been given the opportunity to consider it in draft and make representations on the draft. At least until the coming into force of the CPR, the Barrell decision would have been clear authority binding on this court for the proposition that only in exceptional circumstances could it be proper for a judge to exercise his discretion under the relevant jurisdiction to vary a previous order once such order had been made. It may no longer be strictly binding after the introduction of the CPR. Nevertheless, all the considerations which led the court to decide as it did in that case still applied. The court therefore had to see whether there were exceptional circumstances sufficient to justify the judge in exercising the Barrell jurisdiction.
"As I indicated above, it is my view that this question depends upon the application of the overriding principle [sc. objective] to all the circumstances of the case. I agree with Sir Christopher Slade that Mr Mann QC's submission that it makes no difference to the exercise of that discretion whether the application was made before or after the judge orally announced his order to dismiss the action cannot be accepted. The fact that it was made after and not before he did so is to my mind an important factor in deciding whether to grant permission.
On the other hand, I respectfully differ from the suggestion that this court is bound by Re Barrell Enterprises to hold that permission to amend should only be granted in exceptional circumstances where the application is made after the order is announced orally but has not been drawn up and sealed. In deciding how to apply the overriding objective that factor is simply one consideration to be taken into account, albeit an important one. I am therefore unable to agree that we have to look to see whether in November 1999 there existed exceptional circumstances sufficient to justify the judge in exercising "the Barrell jurisdiction"."
"(4) … because it is inherently contrary to the public interest and unfair on the other side that an unsuccessful party should be able to raise new points or call fresh evidence after a full and final judgment has been given against him, it would generally require an exceptional case before the court was prepared to accede to an application where the applicant could not satisfy the three requirements in Ladd v Marshall  1 WLR 1489.
Clarke LJ considered that this and Neuberger J's other factors would be relevant considerations in considering the application of the overriding objective under the CPR to the facts of the particular case. The question was whether the judge had misdirected himself in reopening the matter. In his opinion, he did not.
In this, Clarke LJ disagreed with Sir Christopher Slade and also with Roch LJ, who agreed with Sir Christopher Slade that the appeal should be allowed for the reasons that he had given. Roch LJ also referred to the fourth principle formulated by Neuberger J in Charlesworth. The claimant's application involved raising a new issue. He would adopt the approach of Neuberger J and apply it to the circumstances of the present case.
"Of course, the reference to exceptional circumstances is not a statutory definition and the ultimate interests involved, whether before or after the introduction of the CPR, are the interests of justice. On the one hand the court is concerned with finality, and the very proper consideration that too wide a discretion would open the flood gates to attempts to ask the court to reconsider its decision in a large number and variety of cases, rather than to take the course of appealing to a higher court. On the other hand, there is a proper concern that courts should not be held by their own decisions in a straight-jacket pending the formality of the drawing up of an order. …
Provided that the formula of "exceptional circumstances" is not turned into a straight-jacket of its own, and the interests of justice and its constituents as laid down in the overriding principle are held closely to mind, I do not think that the proper balance will be lost. Clearly, it cannot be in every case that a litigant should be entitled to ask the judge to think again. Therefore, on one ground or another the case must raise considerations, in the interests of justice, which are out of the ordinary, extraordinary or exceptional. An exceptional case does not have to be uniquely special. "Strong reasons" is perhaps an acceptable alternative to "exceptional circumstances". It will necessarily be in an exceptional case that strong reasons are shown for reconsideration."
"It is clear that when a copy of the judgment is sent to the parties' legal advisers in accordance with this new practice, it is not at that time being given or made within the meaning of C.P.R., r. 40.7 ("a judgment or order takes effect from the day when it is given or made"): compare Holtby v Hodgson (1889) 24 QBD 103. It is also clear that the judge is at liberty to alter the terms of his or her judgment (whether to make minor corrections or for any other reason) before handing it down formally in the court. This, however, is nothing new, because it has always been within the powers of a judge to reconsider his or her decision at any time before it is entered and perfected. … It has also always been within a judge's power to alter at any time his or her judgment if it has been delivered orally, although not so as to contradict the order made on the judgment once it has been perfected. …
It follows that under the new practice the process of delivering judgment is initiated when the judge sends a copy of it to the parties' legal advisors."
"Counsel for the respondents submitted that a court would more readily alter its judgment before it was officially handed down than afterwards. We disagree. Of course culpable delay will be a factor against alteration but, absent such delay, we can see no reason why timing should normally be relevant. In particular there does not appear to us to be any logical reason why a judgment should be more readily altered after delivery to the parties, but before handing down, than during delivery of an oral judgment or immediately after delivery."
The court then proceeded to decide the question in the case before them, saying that the essential difference between the parties' submissions concerned the exercise of discretion by this court to the facts of the particular case. The omission of one paragraph from the draft judgments was uncontentious, but the court declined to make any other alteration.
(a) The judge's draft judgment was correct in concluding that it would not be right to penalise the claimant for the drop in value of her investments resulting from her decision to pursue a medium to high risk investment strategy. This aspect of the claimant's difficulties were not explored before the judge and it had not been suggested that she was acting recklessly. The handed down judgment was wrong to reach an opposite conclusion.
(b) The judge ought to have concluded, as he did in the draft judgment, that a calculated difference between the amount after tax needed for the claimant's reasonable maintenance and the amount of an assumed annual net income available to her should have resulted in a conclusion that it was unreasonable that the deceased's will did not make provision for this difference.
(c) The judge gave little or no weight to the deceased's wishes and to the closeness of the relationship between the claimant and the deceased. There was an imbalance which resulted in Duncan receiving too great a proportion of the residuary estate. The claimant's call on the estate was greater than his.
(d) The judge's conclusion that the claimant did not suffer from mental or physical disability was not justified on the evidence.
(e) The judge ought not to have used at various points in his calculations a Duxbury calculation assuming a net real rate of return of 3.75%, but rather should have used a rate of return more favourable to the claimant, as for instance that prescribed under section 1(1) of the Damages Act 1996.
Lord Justice Mance:
Lord Justice Peter Gibson: