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You are here: BAILII >> Databases >> High Court of Ireland Decisions >> C. (A.) (A Minor) v. F. (J.) & Ors [2007] IEHC 399 (23 November 2007)
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Cite as: [2007] IEHC 399
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Neutral Citation No: [2007] IEHC 399
THE HIGH COURT
[2005 No. 459 SP]
IN RE V.C., DECEASED AND IN RE THE SUCCESSION ACT, 1965
BETWEEN
A.C.
(A MINOR SUING BY HER NEXT FRIEND J.W.)
PLAINTIFF
AND
J.F., F.G. AND P.McE.
DEFENDANTS
AND
THE HIGH COURT
[2005 No. 603 SP]
IN RE V.C., DECEASED AND IN RE THE SUCCESSION ACT, 1965
BETWEEN
L.B.
PLAINTIFF
AND
J.F., F.G. AND P.McE.
DEFENDANTS
EX TEMPORE JUDGMENT of Mr Justice Clarke delivered on the 23rd day of November, 2007
The deceased named in the title of both of these proceedings died on the 14th September 2004. He was survived by the respective plaintiffs in these separate proceedings who are both non-marital children with different mothers. Both plaintiffs bring the relevant proceedings, alleging that the deceased failed in his moral duty to make proper provision for them in his will. Both seek declarations to that effect and ask the court to exercise its jurisdiction under s.117 of the Succession Act 1965 in a manner such as to insure that proper provision is made for them. As both proceedings involve the same estate and were, therefore, in part potentially dependent one on the other, it was necessary that both be tried together. Happily there was little factual dispute between any of the parties. It is, therefore, to those undisputed facts that I first turn.
The plaintiff LB is elder of the two children of the deceased and was 17 at the date of his death. The plaintiff AC is the younger of the two children and was three when her father died. The deceased made and duly executed his last will and testament on the 30th July 2002 and unfortunately later died on the 14th September 2004. Probate of the will was issued to the defendants in both proceedings as executors. The sums bequeathed to the various parties mentioned in the will were expressed in Irish pounds and for convenience I will retain, in describing the will, that currency.
The plaintiff AC was left a sum of IR£100,000 in her father's will. The mother of the plaintiff AC ("AMG") was left a sum of IR£300,000. The amount left to AMG was left to her absolutely and there is no legal onus, arising out of the will, on the part of AMG to apply any of that sum for the benefit of AC. It was accepted on behalf of AC that, the duty to provide for AC is a joint one on the part of both of her parents but it was further submitted that the moral duty on the part of her father, as established by the Succession Act 1965, had crystallised on his death.
The plaintiff LB was left the sum of IR£250,000 in the will. In addition the deceased left IR£75,000 and the residue of his estate to his mother who had survived him. He also left IR£10,000 to each of his brothers and sisters amounting in total to a sum of IR£60,000 to those siblings. The sums provided for both LB and AC were devised to named Trustees on trust for the respective parties.
The value of the estate of the deceased as of his date of death was somewhat problematic. While the gross value of the estate was estimated at that time as being of the order of €1.3 million, the net value was stated to be just over €700,000. A number of the properties comprised in the estate of the deceased were encumbered with mortgages and because of the circumstances in which the deceased died there were questions as to whether many, if not all, of the insurance companies which provided mortgage protection cover would pay out on foot of those policies. In addition some of the assets have increased in value. However, in the events that have happened, it is now accepted that the amount of assets available for distribution to the beneficiaries as a whole will be approximately €1.6 million, less whatever costs of these proceedings may be directed to be paid out of the estate. As it happens, therefore, there may not be a very great disparity between the gross value of the assets of the deceased as of the date of his death, allowing for the insurance policies now being paid, and what will actually be available for distribution.
The deceased was unmarried and the only persons in respect of whom he owed a direct legal duty were the two plaintiffs in the respective proceedings. There was no legal duty to make provision for either his siblings, his mother or AMG. I will return to the question of whether he owed a moral duty in respect of any of those parties and the effect of any such duty in due course.
So far as LB is concerned the following facts were established at the hearing before me. LB was born in 1987 and is now 20 years of age and is of good health and of full mental capacity. She enrolled as a student in Dublin in the autumn of 2005 but found herself unable to continue with her studies at that time and now resides at home with her mother, her mother's husband and their children. She is in receipt of no income whatsoever other than certain monies which she has received from the trustees of her late father's will as an interim payment.
It would appear that no financial assistance towards the upbringing of LB was provided by the deceased until approximately 1998 when, as a result of actions taken by LB's mother, a modest sum of IR£150 per month was commenced to be paid. That sum increased from time to time reaching ultimately an amount of €350 per month. It would not appear that any other financial assistance was provided by the deceased in favour of LB.
So far as AC is concerned the following facts were established. As indicated earlier AC was only three years of age at the date of the death of her father and is now six years of age. The relationship between the mother of AC, AMG, and the deceased was non-marital and unfortunately unhappy differences arose between those parties which led to family law proceedings which were particularly focused on the provision of maintenance and access. As a result of those proceedings, terms of settlement were entered into which provided for the payment of monthly maintenance for AC, originally agreed at the sum of €856 per month. There were certain other arrangements between the deceased and the mother of AC concerning an interest in property.
Since the death of the deceased, AMG has continued to earn a sum of between €500 and €800 per week. In addition to those sums certain interim payments have been made by the trustees for the benefit of AC and the combination of those two income streams has provided for the support of AC and her mother.
I now turn to the other beneficiaries. It is not suggested that the mother of the deceased is in need of financial support. She owns her own house and would appear to have sufficient income to meet her needs. Neither is any case made that any of the siblings concerned are in need.
Having identified the undisputed facts it is, therefore, appropriate to turn to the legal principles by reference to which the decision in this case must be made. Happily in Re ABC, XC and Ors v. RT and Or [2003] 2 I.R 250, Kearns J. engaged in a significant review of relevant authority and set out the general principles to be derived from those authorities in the following terms:
"(a) The social policy underlying s. 117 is primarily directed to protecting those children who are still of an age and situation in life where they might reasonably expect support from their parents, against the failure of parents who are unmindful of their duties in that area.
(b) What has to be determined is whether the testator, at the time of his death, owes any moral obligation to the children and if so, whether he has failed in that obligation.
(c) There is a high onus of proof placed on an applicant for relief under s. 117, which requires the establishment of a positive failure in moral duty.
(d) Before a court can interfere, them must be clear circumstances and a positive failure in moral duty must be established.
(e) The duty created by s. 117 is not absolute.
(f) The relationship of parent and child does not, itself and without regard to other circumstances, create a moral duty to leave anything by will to the child.
(g) Section 117 does not create an obligation to leave something to each child.
(h) The provision of an expensive education for a child may discharge the moral duty as may other gifts or settlements made during the lifetime of the testator.
(i) Financing a good education so as to give a child the best start in life possible and providing money, which, if properly managed, should afford a degree of financial security for the rest of one's life, does amount to making "proper provision".
(j) The duty under s. 117 is not to make adequate provision but to provide proper provision in accordance with the testator's means.
(k) A just parent must take into account not just his moral obligations to his children and to his wife, but all his moral obligations, eg. to aged and infirm parents.
(l) In dealing with a s. 117 application, the position of an applicant child is not to be taken in isolation. The court's duty is to consider the entirety of the testator's affairs and to decide upon the application in the overall context. In other words, while the moral claim of a child may require a testator to make a particular provision for him, the moral claims of others may require such provision to be reduced or omitted altogether.
(m) Special circumstances giving rise to a moral duty may arise if a child is induced to believe that by, for example, working on a farm, he will ultimately become the owner of it, thereby causing him to shape his upbringing, training and life accordingly.
(n) Another example of special circumstances might be a child who had a long illness or an exceptional talent which it would be morally wrong not to foster.
(0) Special needs would also include physical or mental disability.
(p) Although the court has very wide powers both as to when to make provision for an applicant child and as to the nature of such provision, such powers must not be construed as giving the court a power to make a new will for the testator.
(q) The test to be applied is not which of the alternative courses open to the testator the court itself would have adopted if confronted with the same situation but, rather, whether the decision of the testator to opt for the course he did, of itself and without more, constituted a breach of moral duty to the plaintiff.
(r) The court must not disregard the fact that parents must be presumed to know their children better than anyone else."
It is clear, therefore, that the court must assess, by reference to those principles, whether there has been a failure to make proper provision. If the court is so satisfied, then an appropriate order should be made to endeavour to provide for any claimant in respect of whom proper provision has not been made.
In applying those general principles to the facts of this case, it seems to me that two preliminary points need to be addressed. The first concerns the time by reference to which the various assessments which the court has to carry out needs to be made. Firstly it is clear on the authorities that the date for the assessment of whether the moral duty of a parent to a child has been met, must be the date of death of the parent concerned. The assets available to that parent need to be viewed as of that time. On the other hand, as a matter of practical reality, when the court comes to exercise its role under s.117 in circumstances where it is satisfied that there has been a failure of moral duty, then the court has to deal with the assets as they are at that time, in that the assets as of that time are the pool of resources which are available to make provision for any successful claimant and, indeed, for those who remain entitled to benefit under the will itself.
It is worth noting that that difference in date can be potentially a cause of difficulty for a court exercising its role under s. 117 where there is a significant difference, by virtue of the lapse of time or otherwise, between the value of the assets available as of the date of death and the value of the assets which are available to the court as of the date of trial to meet any obligations which have been established. That difference can, of course, operate in either direction. In recent times, until perhaps this year, it may well have been the case that one could have expected assets to have appreciated, and often significantly so, in value. On the other hand it is almost inevitable that some not insignificant amount of costs will be incurred in course of litigation under s.117, which costs will be directed to be paid out of the estate. There may well, therefore, in some cases, be a difficulty, with which the court can be faced, in attempting to deal with the fact that the value of the assets by reference to which the initial moral duty of the parent concerned has to be assessed may be different, by a significant margin, from the value of the assets which may be available to the court, as of the date of trial, for distribution. This matter may be of particular relevance in cases where there is a distinction to be made between persons who are given a share of the estate or of the residuary estate (the value of which will, of course, therefore, go up and down in accordance with the value of the assets available) on the one hand, and persons who are left a specific sum which is fixed, on the other hand. The relativity between such provision can, of course, alter in cases where there has been a significant change in the value of the assets. It is, however, important to emphasise that there is no question of hindsight being used in relation to an assessment of the making of proper provision. The fact that the assets may now be more valuable does not, of itself, give rise to an entitlement on the part of the court to rewrite a will in circumstances where, as of the date of death, proper provision was made.
However, it seems that this issue is unlikely to be of any great difficulty on the unusual facts of this case. While there were difficulties in assessing the extent of the estate (including the availability of the funds that might have been expected from the insurance policies on the one hand, the increase in the value of property assets on the other hand, and in addition the fact that certain costs will now have to be borne) it appears that, in general terms, the gross value of the estate as of the date of death is not that different from the sums that will now be available for distribution.
The second issue which is perhaps unusual in this case compared with many of the decided cases in this area concerns the position of AMG. It seems to me that two questions arise. The first is as to whether the deceased might be said to have owed a moral duty to AMG. It is clear that he owed no equivalent legal duty, for the Succession Act, 1965 does not make any provision for a partner with whom a deceased has had children but who was not married to the deceased. On the other hand it is equally clear from a number of the authorities that the persons in respect of whom a deceased may owe a moral duty are not confined to those persons in respect of whom a legal obligation arises. A parent of a deceased is not someone who has any entitlement to receive assets from a deceased who dies testate. Nonetheless it is clear from the authorities that, in an appropriate case, a deceased may have a moral duty to make some provision for such a parent which moral duty can be taken into account by the court in assessing what assets might properly be available for claimant children under s.117.
I am, therefore, satisfied that the class of those to whom a moral duty may be owed can go beyond the class of those who might be entitled to make a legal claim on the estate if the deceased did not make provision, or proper provision for them. It seems to me that that category of persons may include, in an appropriate case, a joint parent of a child or children who remain in need of significant care. The reality is that it must be expected that, for the next significant number of years, the care of AC will be entrusted to her mother. AC is a child of the deceased and her upbringing depends in large part on the fact that her mother will be in a position to care for her until she can be established in her own right.
In those circumstances it does seem to me that, on the facts of this case, it can be said that the deceased did owe a moral duty to AMG as its the mother of AC and that that is a factor to be taken into account.
The second aspect of this issue is as to whether it is also appropriate to take into account any bequest to the mother of AC in considering AC's own entitlements. I am satisfied that it is, but only in part. I accept the submissions made on behalf of AC to the effect that the bequest to AC's mother is not attached with any direct legal obligations to provide for AC out of the funds bequeathed. At the same time, however, the practical reality of a case such as this is that the standard of living and care which AC will receive over the next significant number of years is largely dependant on the standard of living that will be available collectively to her and her mother and in those circumstances I am satisfied that it is appropriate to have regard to any bequest to the mother of AC, which is not abated as a result of these proceedings in order to meet the needs of both AC and LB, in assessing the provision that needs to be made for AC. I say that it is so only in part because I am mindful of the fact that, in making proper provision, the deceased had to have regard to the fact that AC needs significant sums in her own right in respect of which no other claims can be made other than that they are required to look after the needs and interests of AC. I would not like what I have said to be in any way interpreted as indicating that it is possible to make provision for an infant solely or substantially by making provision for a parent of that infant, save in the case of a married couple whose child might be a claimant under s.117 but whose claim is debarred in respect of diminishing the entitlements of the parent concerned. Assets left to a non marital co-parent are a matter to be taken into account but such bequests are not a means by which the moral obligation of the other parent can be fully or substantially given effect to.
Having made those general observations it seems to me that, given that there is a broad equivalence between the assets at the time of death and the assets available for distribution now, I can, on the facts of this case, start with accessing what proper provision ought now be made for the two plaintiffs. Provided that that assessment leads to a conclusion that the actual provision that was made in the will falls, to a significant and material degree, short of that standard then I should conclude that the deceased failed to make proper provision and I should go on to use that assessment as the basis of the order to be made.
I propose starting with the case of AC. I had the benefit of the evidence of Mr Lynch, the experienced actuary, who was asked to assess, in a capital sum in today's money, the maintenance needs for AC from the date of the death of the deceased to the time when she will be 17 years and four months, that is when she will be the same age as LB was as of the date of the death of their father. While that evidence was principally designed to deal with what might be contended to be an appropriate differential between AC and LB, it is also of general assistance in coming to a view as to the needs which both plaintiffs might have in respect of maintenance requirements.
Firstly the figures produced by Mr Lynch suggest that the amount actually spent on the maintenance of AC in recent times approximates to €20,000 per annum. It seems to me that that sum represents a significant standard of living but not one which is incompatible with the means of the deceased in this case. It would, for example, if translated into a family, whether marital or non-marital, of two adults and two children, perhaps, suggest overall family expenditure of somewhat in excess of €100,000 a year based on a gross income of somewhat under €200,000 per annum. It is, as I have indicated, a significant but not unreasonable standard of living and, therefore, represents a reasonable basis for the assessment of the maintenance needs for both AC and LB.
The second element of Mr Lynch's calculation was based upon the need to provide housing for AC. However, having regard to the separate provision for the mother of AC which I am satisfied should remain to a material extent, notwithstanding the need to make additional provision for both of the children, that issue seems to me to be of less relevance. I must also take into account the fact that the provision of maintenance for AC is not the exclusive obligation of the deceased as, on the facts of this case, it is unlikely that assets provided by the deceased are going to be, or would have been anticipated to be likely to be the sole source of such maintenance. I would accept that in order to make proper provision a deceased would be required to err on the side of safety, not knowing what might happen over the years, but nonetheless it does not seem to me to be appropriate to assess the maintenance needs of a child, in a position such as AC, solely on the basis of the provision of maintenance being an obligation on the part of her father, the deceased.
Finally I should note that the figures produced by Mr Lynch are really only useful as general guidance as to the broad level of assets that might be needed to make proper provision. It does not seem to me that the assessment of the total amount that requires to be provided is a matter which is capable of anything approximating to exact calculation. The sum calculated by Mr Lynch was in excess of €380,000 but in my view that sum needs to be significantly discounted for the two factors which I have analysed.
In those circumstances I am satisfied that, in order to make proper provision for AC to maintain her up to the age of 17 years and four months, a sum of the order of €200,000 to €250,000 would have been required. It is, of course, necessary to add to that a sum that would be required for her maintenance between that age and the time when she might be established in her own right and not require any further assistance. That time could be for a period of anything from five to eight further years and, in the circumstances, it seems to me that it would be appropriate to regard a further sum of at least €100,000 as being required to provide maintenance during that period. In addition, it seems to me that a person with the means of the deceased would need to insure that there was a capital sum available for the establishment of a child such as AC, whether that sum was required to provide for education, establishment in business, the provision of capital towards the purchase of a house or the like. It seems to me that, having regard to the means of the deceased, it would not be unreasonable to regard a sum of €250,000 as being required in that regard.
From all of those figures it seems to me that in order to make proper provision for AC it would have been necessary to provide a sum somewhat in excess of €500,000 in order that she be provided for in the manner which the Succession Act contemplates having regard to the means of the deceased.
I now turn to the position of LB. Obviously in LB's case the question of her maintenance to the age of 17 years and four months does not arise because that period occurred prior to the death of the deceased. As against that, however, a number of matters need to be taken into account. Firstly, the income that is necessary to provide proper support for LB from 17 years and four months up to whatever date she might become independent is money which needs to be expended now or, indeed, in some part, has already been expended. There is, therefore, no possibility of a fund being provided for LB which would appreciate in value until the time when it was required to be expended. In this regard LB is at a disadvantage relative to AC. Money required to be paid for AC's benefit into the future will be needed, in significant part, perhaps sometime between 12 and 20 years from now. In the intervening period the assets will be available to be invested by the trustees. The court's experience in dealing which actuarial valuations establishes that, notwithstanding inflation, and even allowing for assets being invested in no risk investments, (which investments trustees would be required to make) such investments can, nonetheless, obtain a real rate of return sometimes of the order of two and a half to three per cent. Therefore, it is necessary to have regard to the fact that AC will benefit by having her money now and such money as may be required for her maintenance between the age of approximately 17 or 18 and her coming to her own independent life will be needed at a time when that money will have had a chance to appreciate.
Secondly, while fully accepting the submissions made on behalf of AC that the moral duty of the deceased must be looked at as of the date of death, and that, therefore, it is not possible to compensate for any failure, as such, on the part of the deceased to have provided adequate maintenance for LB in the past, I am, nonetheless, satisfied that the moral duty on the deceased as of the date of his death must include some reflection of making up for the past failure of his moral duty to make adequate provision for LB, particularly in her earlier years. Finally, for the reasons which I have already addressed, it seems to me that some regard, though it be limited, must be had for the fact that provision is being made for the mother of AC which will inure to the benefit of AC in terms of such provision assisting the general family income that will be available for the support of AC.
It is clear from that analysis that the proper provision for both of the plaintiffs would need to be of the order of at least €1 million or perhaps a little more.
It follows that the provision actually made falls short, in both cases, and by a significant margin, from the standard of proper provision mandated by s. 117. In all the circumstances I am, therefore, satisfied that it would be appropriate to direct that 80 per cent of the available assets of the estate, after all liabilities, including the costs of these proceedings, have been paid, should be made available to the two plaintiffs, divided as to 45 per cent to AC and 35 per cent to LB. The difference is one of 10 per cent which is likely to be of the order of perhaps €130,000 or a little more and it seems to me that that difference reflects the undoubted requirement, which I have already identified, to maintain AC up to the time when she is the same age as LB was at the date of death, but also reflecting the other factors that need to be set against that, which I have sought to analyse.
It seems to me that in relation to the balance of 20 per cent of the estate I must have regard to the fact that, for the reasons which I have already indicated, the deceased did owe a moral duty to AC's mother and it seems to me that this requires that there be a smaller abatement in her case than in the other cases in order to reflect that moral obligation. In the circumstances I will direct that 15 per cent of the available assets should be made available to the mother of AC in her own right and 5 per cent of the assets will be available collectively to the mother of the deceased and the deceased's siblings to be provided pro rata as to the pecuniary bequests made to those parties in the will.
Finally I am satisfied that there is little practical benefit in requiring that the monies to be made available to LB should be placed in a trust. Such a course of action is likely to lead to unnecessary costs in bringing the trust to an end with, having regard to her age, no corresponding benefit.
The trust in favour of AC as provided for in the will should continue but with the increased provision I have identified.
Approved: Clarke J.