SEEKING AN EXTENSION OF TIME – WHEN YOU ARE 9 1/2 YEARS LATE: THE IMPORTANCE OF A SOLICITOR KEEPING A RECORD

Section 4 of the Inheritance (Provision for Family and Dependants) Act 1975 provides that a claim under the Act should normally be brought within six months of the date on which representation is taken out.  An action brought at a later date requires permission of the court.  In the judgment today in Sargeant v Sargeant & Anor [2018] EWHC 8 (Ch) HHJ David Cooke considered an application brought 10 years after the date of representation.  The case also shows the importance of a solicitor taking (and preserving) notes of advice given. One assertion made by the claimant was that she was never told to take independent advice. That assertion, made in a witness statement, was withdrawn in a second statement, when the solicitor’s documentation clearly demonstrated that she had been told to seek separate advice.

“She has withdrawn an allegation in her first witness statement that she was not told to seek separate advice on her own position, having seen Mr Thomson’s records which make it plain she was so advised on more than one occasion.”

THE CASE

The action was brought by the deceased’s wife.  They were brought over 10 years after the grant of probate.  The claimant’s complaint was that the deceased’s will had left her short of cash. The issue of the court granting permission was ordered to be heard as a preliminary hearing.

THE JUDGMENT

Relevant Legal principles

1. 1. There was no significant difference between counsel as to the law to be applied. Mary of course as spouse of the deceased is eligible to make an application under section 1(1)(a) of the 1975 Act. Section 2 of that Act provides that if the court is satisfied that the will of the deceased does not make “reasonable financial provision” for an eligible applicant, it has a discretionary power to make a wide range of orders for her provision out of the assets of the estate, which may be extended to include property jointly held before death. By section 1(2)(a) in the case of a claim by a wife who was living with the deceased at the date of his death “reasonable financial provision” means “such financial provision as it would be reasonable in all the circumstances of the case for a … wife to receive, whether or not that provision is required for … her maintenance.” Section 3 sets out a non-exclusive list of matters to which the court is to have regard in determining whether or not the will makes reasonable financial provision for the applicant and, if it does not, whether and in what respect the court should exercise its powers. Section 3(2) provides that in the case of a claim by such a wife the court shall also have regard to the age of the applicant, the duration of the marriage and the contribution she made to the welfare of the family, and to the provision that she might reasonably have expected to receive if on the date of death of the deceased the marriage had been terminated not by that death but by a decree of divorce. The court is not bound to approach the matter on the basis of a hypothetical divorce; apart from the general discretion section 3(2) as amended in 2014 makes expressly clear that it does not set either an upper or lower limit to the provision that may be made.

   2. Almost all cases dealing with the exercise of the discretion to permit a claim to proceed outside the six month time limit start with reference to the six non-exhaustive considerations identified by Megarry VC in Re Salmon [1981] Ch 167, which Mr Mitchell summarised as follows:

i) the discretion is unfettered, and is to be exercised judicially and in accordance with what is just and proper

ii) the onus is on the claimant to establish a substantial case for the claim to proceed despite the normal rule, which Megarry VC said was “no triviality”, noting that the rule was a substantive provision and not a mere procedural time limit imposed by rules of court which might be treated with indulgence

iii) it is material to consider how promptly and in what circumstances the claim has been brought outside the time limit

iv) it is material to consider whether negotiations were commenced within the time limit, or whether any delay after the expiry of the limit may be accounted for by negotiations

v) it is relevant to consider whether the estate has been distributed before a claim under the Act has been made or notified

vi) it is relevant to consider whether the claimant has any other redress, for example against advisers, if permission is refused.

1. 1. The court should also consider whether the claimant has an arguable claim, which is to be approached on the basis of considering whether it would be sufficient to survive an application for summary judgment; see Re Dennis [1981] 2 All ER 140. Mr Burton concedes that Mary’s claim passes this hurdle. Mr Mitchell urged that I should go further and approach the matter on the basis that Mary would have a very strong claim to provision equal to half the matrimonial assets, on the basis that she was the wife of a multimillionaire with a 45 year marriage and provision on divorce would have started from consideration of equal division, from which he said there were no strong reasons to depart.

   2. I acknowledge that there would be an arguable case, if the claim proceeded, for provision on that basis, but I do not think it is right for me to speculate, still less to express any conclusion, on the strength of that argument or the result that might be arrived at if I were to grant permission. Mr Burton makes the point that a divorce court could have regard to the fact that a substantial part of the assets consists of inherited family wealth. Further, it is clear that hypothetical provision on the basis of a divorce is not determinative; the fact that the will made provision for Mary as the beneficiary of a discretionary trust with guidance given by letters of wishes would be relevant for the court dealing with a claim under the 1975 Act in considering not only whether the will made “reasonable provision” but also whether it was fair and just to depart from the wishes of the deceased by making different provision. It is not necessary for me to decide whether Mary’s claim would be a strong one, and I decline to do so.

Submissions and discussion

1. 1. Mr Mitchell acknowledges that the claim is brought a very long time after expiry of the six month time period; longer than in any reported case in which permission has been granted. That however he submits is not fatal; what is important is the context and the reasons for the delay. In that respect he submits that Mary did not understand her position as a discretionary beneficiary, or the financial implications for her, until Jeff began to assist her in 2014. She says in her witness statements that she always believed she was the owner of half of all the matrimonial assets (and one of the additional claims she seeks to bring if permission is not given is that she is so entitled, by virtue of her understanding prior to her husband’s death). No estate accounts had been produced which might have shown that all the assets were contained the estate. Although she had been involved in meetings before the will was entered into, she had not understood what was discussed about the discretionary trust arrangements. She had not had to be concerned whilst her husband was alive with family finances or how to finance her lifestyle and was not prepared for the costs that would be incurred in doing so after his death. She had deferred to Jane’s wishes or placed Jane’s interests above her own, which he said Jane had abused. As a result her income position and savings had eroded over time to the point where she was compelled to take advice from Jeff and then realised her position. In her witness statement, Mary said that she had been assured by her husband that after his death she would be a wealthy woman, and Mr Mitchell submitted that she had relied on that assurance.

   2. Mr Mitchell further submitted that at no point until receiving his own advice in 2016 had she been advised that she would be entitled to make a claim under the 1975 Act. Up until Jeff’s involvement she had relied on the professionals who had given legal and financial advice to her husband or the family in general, none of whom had alerted her to the possibility of such a claim. She was loyal to them as having been advisers to the family and did not question what they said, but none of them in their advice had been considering her separate position. It was understandable, he said that she had not sought any separate advice on her own position.

   3. I should record that although her witness statements may have hinted at an allegation, Mr Mitchell made it expressly clear on instructions that Mary does not contend that Mr Thomson was guilty of any breach of duty owed to her as a solicitor. She has withdrawn an allegation in her first witness statement that she was not told to seek separate advice on her own position, having seen Mr Thomson’s records which make it plain she was so advised on more than one occasion.

   4. Mr Mitchell relied on Stock v Brown [1994] 1 FLR 840 in which Thorpe J dismissed an appeal against a district judge’s order granting permission for a claim brought by a widow some six years after the grant of probate. The deceased’s will had given her a life interest in the estate, the effect of which was that she was entitled to an income from investments which for the first five years after death amounted to about £9000, which was sufficient for her needs. Thorpe J held that the case was exceptional because in 1992 there had been a dramatic fall in interest rates as a result of which her income fell to about £4000 per annum. He said that the claimant would never have considered a claim if this had not happened and that “the real trigger [for the claim] lies in extraneous circumstances and its activation is either fortuitous or dependent upon national and international factors far removed from the applicant’s control.” The circumstances here, Mr Mitchell said, were similar in that Mary had not received any advice about the possibility of making a claim, and her income had fallen.

   5. Mr Mitchell submitted that there was no difficulty in making provision for Mary even after this long time because the assets of the estate had not been distributed. There was no formal recognition of the conclusion of the administration of the estate and passing over of assets to the executors as trustees of the will trusts, and even if that was found to have happened, the trustees retained sufficient assets to make any provision necessary. It would be easier and cheaper to resolve her claim by allowing the Inheritance Act claim to proceed than by forcing her to bring her additional claims including claims to existing beneficial ownership of assets and to set aside previous transactions in favour of Jane.

   6. Mr Burton submitted that Mary’s evidence as to her subjective lack of understanding was incredible. Her first witness statement setting out her case in this respect had been made before she had seen Mr Thomson’s witness statement and the documents that he produced, and in many critical respects was so in conflict with his evidence and those documents that the only reasonable inference must be that she had not told the truth….

Conclusion

1. Drawing all these matters together, in my judgment the claimant has not made out a sufficient case that is right and just to permit the claim to proceed. I take full account of the fact that she has at least an arguable claim, and that if it were to succeed at anything like the basis that Mr Mitchell put forward it might result in a transfer of assets to her of substantial value. I assume in her favour that if such an award was made it could be limited, or otherwise structured, so that it could be provided for out of the assets that remain in the trustees’ hands. I recognise also the financial difficulties that Mary has been in for some years now, and the distress that it must have caused her that these have led to disagreements between her and Jane. Mr Burton is right however that it is not necessarily the case that any such transfer would result in an immediately increased availability of cash. Such cash as there is in the estate is generated by Jane’s business, and I am not in a position at this hearing to conclude that she has been unreasonable in the amount of that cash that she has allowed, through one route or another, to be paid to Mary. I suspect it is unlikely that if more land were transferred to Mary she would take a different view about selling it than she has to date, so the prospect of it producing cash would depend upon either borrowing against it pending sale or realising development land at an appropriate time. Both of those are things that the trustees can do just as well as Mary could if she were the sole owner.

2. This is not a case in which any material facts have been concealed from Mary at any stage, or where she has been misled by Jane or the trustees. I reject any suggestion that he was misled by, or out of vulnerability or misunderstanding deferred to, the advice of professionals, or that the professionals prioritised Jane’s interest over her own. On the contrary, Mr Thomson in particular made it abundantly clear that he supported her wish to have additional income and he did everything he could to explore the options of generating it with Mary and Jane, including an application to court if Jane would not agree, but Mary evidently did not want to pursue that. Nor is it a case in which the claim is been made necessary by any supervening event outside Mary’s control, either an unexpected external event or some act or conduct for which Jane or the trustees are responsible.

3. I reject also any suggestion that the delay in bringing the claim has been occasioned by Mary placing reliance on generalised statements that she says her husband made to her before his death along the lines of “you will be a wealthy woman after I die”. If he said that, it was true in the sense that she would have an interest in the very substantial assets of his estate. Even as she expresses it, it was not an assurance that she would have any particular level of income, and it is perfectly clear in my judgment that she knew the nature of the assets that Joe would be leaving and that the availability of income and cash from them would depend upon the management of those assets. It is, as I said above, very likely indeed that she knew exactly the implications of the discretionary trust, in the sense that it meant that control of the assets and the income they produced was in the hands of the trustees rather than herself, at the time the will was drafted. Even if she did not fully appreciate these implications at that stage, she certainly did by 2011 at the very latest so her delay from then on cannot be explained by reliance on anything Joe said before his death.

4. The reality is that Mary took her own decision to continue to work within the arrangements provided for by the will rather than to explore whether she had any option available to vary them, in the full knowledge of the financial difficulties she was under, and maintained that decision over a very long period. Is true that she was not explicitly advised that she might consider a claim under the 1975 Act, but she accepts that Mr Thomson was not under any duty himself to give her that advice, and he did on several occasions advise her that if she wished to have advice about her own position she should seek it separately. She was fully capable of acting on that if she wished to do so, and if she needed any support (which I doubt) she had support from Jeff available to her. He is an experienced and wealthy businessman and would have been able to assist her at any time in obtaining any advice she might have needed. Even if it is the case (which seems unlikely) that she made no mention of her difficulties to Jeff until 2014, he was plainly actively involved from at least early in that year and yet Mary did not seek any external advice for a further period of about two years.

5. In all this time the trustees, and Jane in particular, have continued to manage the assets, and Jane and her family have had the legitimate expectation that they would eventually inherit them in accordance with the will and Joe’s wishes. Given the very extensive delay, the operative cause of which was Mary’s own failure to take any steps to explore whether she could disturb those arrangements, it would not be right to give her permission to do so now.

6. I recognise that this may have the effect that she will seek to pursue the additional claims that have been floated in these proceedings, and I say nothing about them. If she does so, their merits will be explored at a future stage.

THE SOLICITOR’S RECORDS

This is a case that shows the importance of the solicitor’s documentation.  An allegation that the claimant had not been told to seek separate representation was withdrawn when documents were disclosed that clearly demonstrated she had been.  This need not (and indeed probably was not) a case of a claimant being dishonest, but a genuine failure to remember advice given a decade earlier.