Smith v Green

Administration of Estates - Financial Provision

Sidney Ross took this case on at short notice when other counsel had had the conduct of it for over a year. Mr Smith, who was 80 years of age, claimed financial provision out of the estate of June Margaret Bell, who had died intestate on 20th September 2004 aged 72. Mrs Green, who was 68 years of age, was her half-sister and the only person entitled to take on her intestacy. Letters of administration were granted to her on 28th September 2006. The net estate consisted of £71,352 in cash and the leasehold flat occupied by the deceased for which local estate agents had recommended asking prices in the range £155,000-£185,000.

Mr Smith's case was that he had enjoyed a relationship with the deceased from 1995 or 1996 until her death and that, for a period in excess of two years immediately before her death, he lived together with her in the same household as husband and wife, thereby satisfying the requirements of sub-Ss.1(1(ba) and 1(1A) of the Inheritance (Provision for Family and Dependants) Act 1975. He claimed to have cared for the deceased during the period following the mastectomy which she underwent in mid-2002 and up to her death, stating that she was living at his address during that time, except when she was in hospital or other care.

He also produced documents evidencing the deceased's intention to make a will in his favour but the will drafted in 1998 was never executed, and a subsequent will questionnaire apparently completed by her was never followed up. The deceased executed an enduring power of attorney in his favour on 6th January 2002 in relation to all her property and affairs, and it was registered with the Court of Protection on 6th April 2002. In that instrument she expressed the wish that her family should not (except as she should specify) inherit her estate but she took no steps to implement that wish. Her bank statements for the period 3rd April 2002-20th August 2004, that is, after the execution of the power of attorney, showed withdrawals from her funds to the extent of £69,291.90, including one sum of £40,358.09 on 11th December 2003, which Mr Smith stated was a gift to him.

In negotiations shortly after the claim was first intimated, Mr Smith offered to settle his claim for £100,000. That offer was rejected. In January 2008, shortly before the trial of the claim was due to commence, he provided a witness statement and an updated financial statement showing his expenditure for the year 2007 as £12,069, but not giving details of his income other than that he was receiving a State retirement pension. He owned his home as tenant in common in equal shares with his daughter and was not paying an occupation rent in respect of his enjoyment of her beneficial share, so no provision needed to be made for his housing costs.

In offering to settle his claim, we assumed that he was currently receiving the amount of £119.05 per week (£6,190 per year) representing the standard minimum guarantee for 2007-08, leaving an annual income shortfall of £5,879, and he did not make any assertion to the contrary. At age 80 last birthday, his actuarial life expectancy according to the then current interim life tables (2003-5) was 7.45 years. We assumed in his favour that that life expectancy was not reduced by the heart condition to which he referred in his witness statement. Using the Ogden Tables (6th edition, May 2007-Table 28, multipliers for pecuniary loss for term certain) and assuming the conventional net rate of return of 3.75%, the appropriate multiplier was 6.51. Applied to a annual shortfall of £5,879, that multiplier gave a sum of £38,272. Sidney Ross's recent article in Family Law Week demonstrates that calculations based on the Ogden tables are just as appropriate as Duxbury calculations for capitalising annual income needs in circumstances such as existed in this claim.

Although it would not, strictly speaking, fall within the description of "maintenance" in Re Dennis, [1981] 2 All ER 140, at 145, that "maintenance connotes only payments which, directly or indirectly, enable the applicant in the future to discharge the cost of his daily living at whatever rate is appropriate to him", we accepted that Mr Smith might from time to time incur expenses such as car repairs and the replacement of household items, and therefore we proposed to provide a modest capital sum for those contingencies, in addition to the calculated amount of £38,272. A figure of £4,228 for that contingency fund was thought adequate, bringing the total provision up to £42,500. That offer, which was made in accordance with CPR Part 36, was accepted, so Mr Smith was also entitled to his costs on the standard basis.