As the dust settles on 2015, Roman Kubiak takes a look at some of the most notable recent cases in the contentious trusts and probate field.
It seems that barely a week goes by now without a trust, estate or will dispute hitting the headlines. There have been a few cases in particular that have been especially important in 2015.
Sharp v Hutchins  EWHC 1240 (Ch)
Summary: High Court affirms use of single-stage test for determining knowledge and approval of a will, but cross-checks the conclusions reached with reference to the two-stage test.
Sharp was a challenge to the last will dated January 2013 (‘the 2013 will’) of Mr Butcher on the basis of want of knowledge and approval brought by one of the beneficiaries of an earlier, 2011 will.
The judgment offers a useful reminder of the law on the validity of wills generally and confirms that, whilst the burden of proof in establishing that a testator understood the nature and effect of their dispositions initially lies with the person seeking to propound the will, in an ordinary case where capacity and due execution are both present, knowledge and approval are to be assumed (see Fuller v Strum  1 WLR 1097 at ).
However, where the circumstances relevant to the preparation and execution of the will ‘excite the suspicion of the court’ (Fuller at ), positive evidence of knowledge and approval is required.
Historically, a two-stage test was applied (Barry v Butlin (1838) 2 Moo PC 480), namely:
1. has the person challenging the will established sufficient grounds to excite the court’s suspicion; and
2. if so, have those seeking to propound the will allayed those suspicions on the balance of probabilities?
However, in Gill v Woodall  EWCA Civ 1430 a single-stage approach was applied, namely whether, having considered all the evidence and drawing such inferences as they can from that evidence, those propounding the will have discharged the burden of proof of establishing that a testator knew and approved the content of their will.
In the present case, the court held that the correct approach was, in the first instance, to apply the single-stage approach and then to cross-check it with the two-stage approach. In either case, the answer should be the same.
In the event, the 2013 will was upheld.
Seals v Williams  EWHC 1829 (Ch)
Summary: Court commends parties’ engagement in judge-led early neutral evaluation (ENE), which is subsequently incorporated into the Civil Procedure Rules.
This case involved a claim by two brothers against their father’s estate under the Inheritance (Provision for Family and Dependants) Act 1975 for reasonable financial provision.
The matter had previously come before the court in Williams v Seals  EWHC 3708 (Ch). That particular case serves as a useful reminder of the circumstances in which it may or may not be appropriate to use a caution to protect estate assets.
By the time the matter reached the court a second time, Mr Justice Norris noted that:
‘It is clear that those proceedings and the subsequent Inheritance Act claim generated a great deal of acrimony and that the positions of the parties are in danger of becoming entrenched.’
Whilst the parties had sought to engage in mediation, this was ultimately unsuccessful.
As such, the parties’ lawyers suggested an ENE of the case. ENE evolved from the Family Division financial dispute resolution (FDR) process and involves a non-binding, judge-led evaluation of the respective parties’ cases on a without prejudice basis.
Mr Justice Norris felt that this was ‘part’ of the judge’s judicial function in enabling the parties to resolve the dispute and in discharge of the obligation to abide by the overriding objective’, and he referred to CPR 3.1(m), as it then was, for authority.
The Civil Procedure Rule Committee considered ENE to be such an effective ADR tool that, following this case, it has now explicitly incorporated it into the Civil Procedure (Amendment No 4) Rules 2015, which came into effect on 1 October 2015.
CPR 3.1(m) therefore now provides that the court’s case management powers include the ability to take ‘any other step or make any other order for the purpose of managing the case and furthering the overriding objective, including an Early Neutral Evaluation with the aim of helping the parties settle the case’.
Ilott v Mitson  EWCA Civ 797
Summary: District Judge Million’s award increased by £100,000.
The facts of this case are well-known by now to most practitioners, given its significant coverage both in the legal and national press.
By way of reminder, this was the case’s fifth outing before the courts and involved a claim under the Inheritance (Provision for Family and Dependants) Act 1975 by Heather Ilott against the estate of her late mother, Melita Jackson.
Mrs Jackson died in 2004, leaving a net estate worth £486,000. But for a small legacy, Mrs Jackson’s will directed the residue of the estate to be split between the Blue Cross, the RSPB and the RSPCA to the exclusion of her only child, Mrs Ilott.
At first instance, District Judge Million awarded Mrs Ilott £50,000. She appealed and the charities cross-appealed. Mrs Justice Eleanor King held in the charities’ favour and dismissed Mrs Ilott’s appeal.
Mrs Ilott then appealed Mrs Justice Eleanor King’s award, and the case was remitted back to the High Court where Mr Justice Parker reinstated DJ Million’s first instance award.
This latest appeal by Mrs Ilott was brought on the grounds that District Judge Million had erred in his judgment in awarding just £50,000, and that Mrs Ilott should be awarded sufficient financial provision for her maintenance without it affecting her state benefits.
Lady Justice Arden, handing down judgment, held as follows:
1. District Judge Million had erred in his judgment on two fundamental points:
a. he ‘limited’ Mrs Ilott’s award on the basis that she was able to live within her means and that she did not expect to receive anything from her mother’s estate, without stating what the award might otherwise have been; and
b. he was required to calculate an award for Mrs Ilott’s ‘maintenance’, but did not consider properly the effect that an award of £50,000 would have on Mrs Ilott’s state benefits.
2. Having held that District Judge Million had erred in his judgment, Lady Justice Arden then turned her mind to whether or not the court should re-exercise its discretion and, if so, how. Ultimately, the court did decide to re-exercise its discretion and awarded Mrs Ilott £163,000, based on a sufficient sum (£143,000) to enable her to purchase her council home, plus an option to claim up to £20,000 from the estate to supplement her state benefits.
The rationale for the £20,000 optional award was to keep Mrs Ilott within the means-tested benefits cap and provide her with an additional £331 net income each year based on the latest Duxbury tables. This sum was limited, given: (i) Mrs Ilott was an adult child living independently, (ii) Mrs Jackson’s testamentary wishes, and (iii) the estrangement between the two.
Awards under the 1975 act are notoriously difficult on appeal to overturn because of the wide discretion afforded to the courts. However, what this case demonstrates is that if a court makes an award without providing a reasonable explanation for how it arrived at that award, then it may be open to challenge.
It remains to be seen whether or not the charities will seek to appeal the decision.
King v The Chiltern Dog Rescue and others  EWCA Civ 581
Summary: Court of Appeal overturns previous ruling of donatio mortis causa.
This was an appeal of a first instance decision in the High Court brought by the charity beneficiaries of Ms Fairbrother’s last will.
Mr King claimed that his aunt, Ms Fairbrother, had promised him that her house would be his after her death, and accordingly handed the title deeds to the property to him, stating ‘this will be yours when I go’. This, Mr King claimed, constituted a donatio mortis causa (DMC) – a gift in contemplation of death.
Ms Fairbrother, a known animal lover who kept cats and dogs, had worked for animal charities during her lifetime. In 1998, she executed a will leaving the vast majority of her estate, including her property worth c. £350,000, to seven animal charities.
Mr King, who had previously been imprisoned for acting as a company director when disqualified from doing so after having run a series of failed businesses, and been made bankrupt twice, moved in with Ms Fairbrother in 2007.
The purported DMC, Mr King claimed, was made approximately five months before Ms Fairbrother’s death.
Mr King also produced as evidence a note written by Ms Fairbrother confirming that, in exchange for his care for her and, after her death, her animals, he should receive the property. That note was only witnessed by one person.
Some three months later, Ms Fairbrother purported to execute a will that Mr King had downloaded from the internet that left the property to him. That document was not witnessed.
At first instance, the court, relying on Vallée v Birchwood  EWHC 1449 (Ch), held that Ms Fairbrother’s statement when handing the deeds over, along with the further evidence, was sufficient to constitute a DMC.
The Court of Appeal disagreed, holding that the doctrine of DMC and cases of such nature that come before the courts should be treated with ‘considerable caution’, and that any evidence of a DMC should be subjected to a high degree of scrutiny.
Lord Justice Jackson was especially critical of Mr King, noting that, contrary to Ms Fairbrother’s wishes, he had not continued to look after Ms Fairbrother’s dogs and had ’sent them off to the dog’s home’.
As such, the Court of Appeal allowed the charities’ appeal, dismissed Mr King’s claim and also indicated that Birchwood had been incorrectly decided. It was contrasted with Sen v Headley  Ch 425, Re Craven’s Estate (No 1)  Ch 42 and Birch v Treasury Solicitor  Ch 298, in which the deceased had died within a week of the purported gift.
Mr King also issued a separate claim for reasonable financial provision under the Inheritance (Provision for Family and Dependants) Act 1975, in which he was ultimately awarded £75k from the estate.
Lothian v Dixon (2014)
Summary: High Court exercises its discretion to award claimants entire estate worth over £1m for two years’ care under doctrine of proprietary estoppel.
In 1983, Mrs MacArthur executed a will dividing her residuary estate, valued at over £1m, between her two cousins, Mrs Lothian and Mrs Webb, themselves sisters.
The main asset in Mrs MacArthur’s estate was a majority shareholding in MacArthur Hotels Ltd valued at nearly £600k, which itself owned Mount Hotel in Scarborough along with other assets totalling just over £450k.
In 2010, shortly after Mrs MacArthur was diagnosed with inoperable terminal cancer, Mr and Mrs Lothian claimed that she made a number of promises and reassurances to them. In short, these promises were that, if they stayed at the hotel with her, cared for her and ran the hotel, Mrs Lothian in turn would leave them her entire estate on death.
As such, over the course of the following two years until Mrs MacArthur’s death, Mr and Mrs Lothian cared for Mrs MacArthur and ran her hotel. However, despite instructing a solicitor shortly before her death, Mrs MacArthur failed to execute a will reflecting those promises.
Thus, Mr and Mrs Lothian advanced a claim for proprietary estoppel or, in the alternative, a common intention constructive trust, on the basis of Mrs MacArthur’s failure to give effect to those promises.
Accordingly, following much witness evidence and the fact that Mrs MacArthur had, without the parties’ knowledge, given instructions for a will very shortly before her death that she had failed to execute, Mrs Webb accepted that promises had been made on which Mr and Mrs Lothian had relied.
However, she was not willing to accept that the claimants had suffered any detriment, as they had received free board and lodging whilst caring for Mrs MacArthur. If any detriment had been suffered, it was argued that it could be satisfied by an award of £40,000 each plus expenses, based on the average annual salary of a trainee manager of between £18,000 and £20,000.
The High Court disagreed with the narrower view, stating that ‘detriment is not a narrow or technical concept but must be judged in the round’ and that it ‘need not be expenditure of money or other quantifiable financial detriment but it must be substantial’, citing Gillett v Holt  Ch 210.
The High Court held that Mr and Mrs Lothian had suffered significant detriment as they had ‘substantially altered their entire life style in order to help care and support the deceased in her last two years’, echoing the court’s sentiments in Suggitt v Suggitt  EWCA Civ 1140. The court awarded Mr and Mrs Lothian the entire estate.