COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM CARDIFF COUNTY COURT
HHJ BIDDER QC
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE JACKSON
LORD JUSTICE GROSS
| MRS MUSSARAT BANO IQBAL
|- and -
|MR ZULFKAR AHMED
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Mr Michael Brace (instructed by Hugh James Solicitors) for the Respondent
Hearing dates: 30th June 2011
Crown Copyright ©
LORD JUSTICE GROSS:
" 1. This is a renewed application by Mr. Ahmed for permission to appeal the decision of HHJ Bidder QC on an application under…..[the Act]….that the respondent (that is the appellant's stepmother) should, in substitution for the sum of £8,000 and the right to occupy the former matrimonial home, receive out of her late husband's will firstly the right to occupy the home for life and half the proceeds of sale (the other half being held by Mr. Ahmed), the whole of the residuary estate and the agreement of the appellant to pay half the insurance and the structural repairs of the property.
2. The way the order is drafted is as follows.
'The property (92 Penarth Road, Cardiff) shall be held by Mr Jatinder Hans and the claimant, Mrs…Iqbal, upon trust for the claimant [that is Mrs Iqbal] and the Defendant, Mr …Ahmed, as beneficial tenants in common in equal shares upon the statutory trusts of land declared by the Trusts of Land and Appointment of Trustees Act 1996 and upon the following terms and conditions.'
….The principal point is that in contrast to the will Mrs Iqbal was to receive a half beneficial share outright in relation to the former matrimonial home. The total estate comprised the house, valued at approximately £115,000, and a residuary estate of some £28,000. There also had to be taken into account a loan of £21,500, which was treated as a gift by the deceased and which was made by the deceased to Mr. Ahmed on Mr. Ahmed needing a home. The house needed repair of some £30,000. Under the will the claimant had to repair the house and had only a life interest in the property. She herself only had savings of some £3,000 and she lived on state support and pocket money from the deceased of some £5 a week. "
" permission to appeal is granted on the 'reasonable financial provision' point only, that is to say whether the judge failed to consider or adequately to consider whether reasonable financial provision would have been made by granting the respondent a life interest in the property and any proceeds of sale thereof, and otherwise making the same orders as for the payment of repairs and insurance and as to the residuary estate as are contained in his order, and whether the judge's order should therefore be set aside by this Court"
i) The son does not pursue an appeal against the Judge's dismissal of his claims based upon constructive trust and proprietary estoppel.
ii) It is not in dispute on this appeal that the deceased did not make proper financial provision for the widow.
i) The deceased died on the 25th March, 2009.
ii) He was survived by the widow, to whom he had been married for 22 years and the son (by an earlier marriage). It may be noted that the widow was born on the 22nd October, 1949 and is now 61.
iii) The deceased left a will dated 28th January, 2009 ("the will"). By cl. 2 of the will he appointed the son his sole executor and, by cl. 3 thereof, he appointed the son and a Mr. Hans (a friend) as his trustees.
iv) By cl. 5, he gave the widow a right to occupy the matrimonial home at 92 Penarth Road, Grangetown, Cardiff ("the property") rent free but subject to a number of conditions which, in practical terms, rendered that occupation precarious in the event of a dispute with the trustees (the son and Mr. Hans). It may be noted that the widow was to be liable for "payment of outgoings insurance repair decoration and other matters as the Property Trustees shall from time to time consider reasonable" (cl. 6b of the will).
v) Subject to the widow's right of occupation, the property was given to the son absolutely as was the residuary estate.
vi) Cl.10 of the will contained a "Non-Provision Declaration". The deceased declared that he had not made any greater provision for the deceased and referred to the "Memorandum of Wishes" accompanying the will. The Memorandum of Wishes stated that, by his will, the deceased had chosen to exclude the widow, because:
"…..she has not been a loving and caring wife before and during my illness. She also acts compulsively and repetitively and gives me verbal abuse and physical abuse."
vii) Probate of the will was granted to the son on the 12th June, 2009. The grant certified that the net value of the estate did not exceed £178,000. The main asset in the estate is the property.
i) The approximate current market value of the property was £115,000.
ii) The property had been maintained to a poor standard; significant repair was now required, at a cost in excess of £30,000.
iii) The best estimate of the residuary estate, before payment of the £8,000 bequest to the widow, was about £28,000.
iv) From the time she came to Wales, the widow was entirely dependent financially on the deceased. For instance, when she received income support, the deceased collected it and gave her "pocket money" and, for a time, contributions towards housekeeping. The widow had, nonetheless, accumulated some £3,000 in savings; she had done some work as a seamstress but was otherwise dependent on Employment Support Allowance of £64 per week.
v) The Judge described the position of the widow in these terms:
" She has been diagnosed as suffering from depression. Her grasp of English is poor. She has no history of employment in the UK. She has virtually no earning capacity."
Later in the judgment, the Judge observed that the widow spoke very poor English, did not appear to be well integrated into "the wider society around her" and had been very substantially financially dependent on her husband during her marriage. All that said, it was not likely that the widow would now return to live in Pakistan.
vi) With regard to the criticisms made by the deceased of the widow, set out in the Memorandum of Wishes (see above), the Judge was prepared to accept that she may not have been an easy person to live with and may have irritated the deceased, particularly in his last years when ill. Further, she was somewhat eccentric and inclined to "compulsive and repetitive behaviour". That said, the Judge accepted the widow's evidence that she looked after and cared for the deceased when he was ill; throughout a long marriage, she had kept house and cooked for him. Her conduct was largely irrelevant.
vii) So far as concerns the son, the deceased had given him a loan of £21,500, converted to a gift in his lifetime. In the event, the Judge found that the son was now comfortably off, had a reasonable business, a number of properties and a home. He was a man of substantial resources and no immediate needs. Overall, he was "an independent, determined and reasonably successful business man"; there was no evidence that his needs would increase.
" 100. I cannot accept that a mere life interest in addition to the small bequest (even a life interest that gives a right to occupation in another house bought from the proceeds of sale and a right to income from the proceeds of sale) is reasonable in these circumstances. The repair works necessary on the house are so extensive that there is a real and substantial risk that if they are not done soon, the house will become uninhabitable. The claimant simply does not have the necessary capital to fund those repair costs and there is no current obligation on the trustees to fund them. If the house falls further into disrepair and has to be sold the claimant has no capital reserve to put towards a small property, say, a flat or to have capital to help her keep herself in rented accommodation. She has no share in the ownership of the home to allow her to obtain a secured loan to assist in the works of repair, with the loan and interest paid back out of her very small income……
101. On the other hand, a complete transfer of the property substantially ignores the testator's wishes and still leaves the claimant without the capital resources even to come close to effecting the repairs to the property. If the house has to be sold, there would be more capital available to her, but still not sufficient in all probability, to provide a home for her having regard to the value of the property and the necessity for costly repairs. "
" In all the circumstances I consider that the appropriate course balancing all the various factors and giving ….due weight to the testator's wishes but reflecting what appears to be the most important of the various factors, namely the needs and resources of the claimant, is to settle the property, giving a full life interest to the claimant, but imposing on the trustees of the will a trust to sell the property, postponed during the claimant's life or until she agrees to a sale, with the net proceeds of sale being held by the trustees on equal shares for the claimant and the defendant but also ordering that the entire residuary estate ….be transferred to the claimant. She may use that if she wishes, to put the property into as good a state of repair as she can, or she can agree that the property can be sold and put it, with her half share, to provide a capital cushion for her when attempting to obtain some other suitable accommodation. "
THE RIVAL CASES
i) First, given that the estate comprised very limited resources, the Judge had failed to deploy them to their best effect. It was wrong to dispose of part of those resources to outsiders, as would happen on the widow's death when her beneficial interest would pass to and benefit her relatives in Pakistan. A life interest would have made for a better tailored order. The Judge's order had been harsh on the son; double counting was involved in giving the widow both residue and a half share of capital. It was not for the Court to rewrite testamentary provisions lightly but only to the extent required to make reasonable financial provision for the widow; the Judge had gone beyond that. In any event, giving the widow a half share of the property would be "useless" if the property came to be sold. This Court could and should interfere; the Judge had erred in principle or was plainly wrong in splitting the very limited resources of the estate.
ii) The Judge had failed to appreciate the value of a life interest to a widow of 60 (or 61). Mr. Harrap (rightly) did not seek to introduce fresh evidence but, by reference to published tables contained in The Intestate Succession (Interest and Capitalisation) (Amendment) Order, SI 2008/3162, he contended that a life interest to the widow would be worth some £65,000; as a cross-check, that revealed that even on an order for a life interest, the widow would receive comfortably in excess of half the estate. The Judge's order meant that she received something like 72% of the estate.
iii) The Judge had failed to take the history of the property into account. It had been acquired prior to the husband's second marriage (to the widow) and had, at one time, been the son's home.
"The key point is that as it was the house was not a decent home to meet her needs and capital provision was essential…..The residuary estate was not sufficient for the essential repairs taking into account other capital requirements."
The Judge was right to order that the widow should have a share of the matrimonial property; this would give the widow financial freedom following a long marriage. Mr. Brace underlined the importance of the "capital cushion" (the Judge's wording), in the event that the widow moved house or rented accommodation. An order for a life interest, as contemplated by Mr. Harrap, would mean that there could never be a clean break – whereas, on the Judge's order, there could be - in the event that the property was sold. There had been no error on the part of the Judge entitling this Court to interfere even were we attracted to a different conclusion.
" 1 Application for financial provision from deceased's estate
(1) Where…..a person dies domiciled in England and Wales and is survived by any of the following persons –
(a) the spouse….of the deceased;
that person may apply to the court for an order under section 2 of this Act on the ground that the disposition of the deceased's estate effected by his will……is not such as to make reasonable financial provision for the applicant.
(2) In this Act 'reasonable financial provision' –
(a) in the case of an application made by virtue of subsection (1)(a) above by the husband or wife of the deceased……means such financial provision as it would be reasonable in all the circumstances of the case for a husband or wife to receive, whether or not that provision is required for his or her maintenance….
2 Powers of court to make orders
(1) Subject to the provisions of this Act, where an application is made for an order under this section, the court may, if it is satisfied that the disposition of the deceased's estate effected by his will…..is not such as to make reasonable financial provision for the applicant, make any one or more of the following orders –
(c) an order for the transfer to the applicant of such properly comprised in that estate as may be so specified;
(d) an order for the settlement for the benefit of the applicant of such property comprised in that estate as may be so specified;
3 Matters to which the court is to have regard in exercising powers under s2
(1) 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…..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, have 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;
(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.
The court shall, in addition to the matters specifically mentioned in paragraphs (a) to (f) of ….[subsection (1)]…, have regard to –
(a) the age of the applicant and the duration of the marriage….
(b) the contribution made by the applicant to the welfare of the family of the deceased, including any contribution made by looking after the home or caring for the family.
In the case of an application by the wife or husband of the deceased, the court shall also……have regard to the provision which the applicant might reasonably have expected to receive if on the day on which the deceased died the marriage, instead of being terminated by death, had been terminated by a decree of divorce. "
i) It is common ground that on every application under ss. 1 and 2 of the Act, the Court must ask itself two questions. In In re Krubert, decd.  Ch 97, at p.102 D-E, Nourse LJ put the matter this way:
" …first, has reasonable financial provision been made for the applicant; second, if not, what financial provision ought he or she to receive? But in answering those questions a distinction is to be made between the wife or husband of the deceased and any other applicant. In the latter case the provision referred to is such financial provision as it would be reasonable in all the circumstances of the case for the applicant to receive for his or her maintenance. In the former it is such financial provision as it would be reasonable in all the circumstances of the case for a husband or wife to receive whether or not it is required for his or her maintenance. Thus ……in the former case maintenance is not the only, or even the dominant, consideration to be taken into account by the court."
This appeal is only concerned with the second question; it is not in dispute that the first question is to be answered "no". As explained by Nourse LJ, the answer to the second question in the case of a spouse (as here) is not confined to reasonable financial provision for his or her maintenance.
ii) The question of what is reasonable financial provision for a surviving spouse is necessarily fact specific. In some cases a capital provision may be appropriate; in other cases, such as Krubert (supra), a life interest sufficed.
iii) The observations of Lord Nicholls of Birkenhead (admittedly in a somewhat different context) in Miller v Miller  UKHL 24;  2 AC 618, at , underline the importance of the matrimonial home:
" The parties' matrimonial home, even if this was brought into the marriage at the outset by one of the parties, usually has a central place in any marriage. "
Whether or not these dicta constitute a proposition of law does not matter; they are, on any view, of powerful persuasive force.
iv) S. 3(2) of the Act imposes a "statutory cross-check" in proceedings brought by a widow: per Wall LJ (as he then was) in Cunliffe v Fielden  EWCA Civ 1508;  Ch 361, at . Thus the Court is required to have regard to the provision which the applicant might reasonably have expected to receive had the marriage terminated by divorce instead of by the death of the husband. But too much should not be made of this "cross-check"; as Wall LJ went on to observe in Cunliffe v Fielden, at :
" Caution, however, seems to me necessary when considering the ….cross-check in the context of a case under the 1975 Act. Divorce involves two living former spouses, to each of whom the provisions of section 25(2) of the Matrimonial Causes Act 1973 apply. In cases under the 1975 Act a deceased spouse who leaves a widow is entitled to bequeath his estate to whomsoever he pleases: his only statutory obligation is to make reasonable financial provision for his widow. In such a case, depending on the value of the estate, the concept of equality may bear little relation to such provision."
v) Testamentary provisions are to be respected, subject to the need to ensure that reasonable financial provision is made for the applicant. As Thorpe J (as he then was) observed in Davis v Davis  1 FLR 54, at pp. 59-60, cited with approval in In re Krubert, decd. (supra), at pp. 104-105:
" …It is not for this court to rewrite the testamentary provisions of deceased persons lightly. …"
vi) Decisions under the Act as to what would constitute reasonable financial provision involve the exercise of judicial discretion; on appeal, this Court should only interfere on well established grounds – for example, if the Judge erred in principle or was plainly wrong. There is unlikely to be a single "right" figure and an appeal should not be allowed simply because the Court of Appeal, had it heard the case at first instance, might have taken a different view. See: In re Krubert, decd. (supra), at p.102; Cunliffe v Fielden (supra), at  – , per Mummery LJ.
i) This was a long marriage. Given the significance of the matrimonial home, as commented upon by Lord Nicholls in Miller v Miller (supra), the award of a capital share in the property to the widow, in the circumstances of this case, seems to me appropriate – the more especially as it is by this means, if at all, that reasonable financial provision (and hence security) can be made for her. In taking this view, I do not overlook Mr. Harrap's third point, recorded above. However, the importance of this provision to the widow easily outweighs any attachment to the family home enjoyed by the son, arising from the fact that the property had been acquired by the husband before his second marriage and that it had once been his home.
ii) Given the deeply hostile relationship between widow and son, it is only by making the capital provision which the Judge ordered, that there is the prospect of a clean break – if the property is sold. By contrast, the provision of a life interest would have precluded any such break.
i) So far as concerns the value of the life interest, as Pill LJ demonstrated in argument, the figure (assuming its correctness) is theoretical rather than practical. It would not have given the widow resources either to maintain herself or carry out repairs.
ii) In the course of argument, I canvassed with both parties the possibility of a variant on the theme of Mr. Harrap's proposal – namely, whether either party would be in favour of conferring a (secure) life interest on the widow, transferable to the proceeds of any disposal of the property, plus the residuary estate but placing the entire burden of the insurance and structural repairs on the son (rather than half the burden, as provided for in the Judge's order). Neither party was attracted to this alternative and, with respect, I can understand why. But that left as the only options for consideration, Mr. Harrap's life interest alternative or the Judge's order for the provision of a capital share. As between the two and for the reasons already given, I cannot begin to say that the Judge's conclusion was not one he could properly reach.
iii) Given the conclusion to which I have come, no question arises as to restoring the son as a trustee, so no more need be said of that application.
LORD JUSTICE JACKSON:
LORD JUSTICE PILL: