Charlotte John investigates interim payments under the Inheritance (Provision for Family & Dependants) Act
We now have two recent decisions on the subject of interim payments under s. 5 of the Inheritance (Provision for Family and Dependants) Act 1975: the decision of Mrs Justice Lieven in T v V, which I have covered in a recent post here, and now the decision of Mr Justice Francis in Weisz v Weisz and others  EWHC 3101 (Fam).
S. 5 of the 1975 Act confers power upon the court to award interim payments where the applicant is in immediate need of financial assistance and there exists property in the net estate of the deceased which could be made available to meet the applicant’s needs.
In T v V there was a dispute between the parties as to whether or not the claimant, who brought her claim as a cohabitee, was eligible to claim under the 1975 Act. There was evidence on both sides that the court considered to raise arguable points as to the question of the nature of the relationship between the claimant and the deceased and her standing to bring a claim. Conversely, Weisz v Weisz concerns a claim by widow who indisputably has standing to pursue a claim under the 1975 Act. Mr Justice Francis accepted that s.5 orders can be draconian, as Mrs Justice Lieven had put it in T v V and also accepted her analysis of the test to be applied, but noted that the claim before him was a very different one and that it was reasonable to conclude that Mrs Weisz was going to achieve something from her claim. In T v V there was a real possibility that the claimant would achieve nothing and be unable to repay the money she had received.
The size of the estate in Weisz was substantial, if not astronomically so, at c. £4 million. The claimant had been left the deceased’s half share of the matrimonial home (presumably with the result that she would therefore own the matrimonial home outright), which was subject to a mortgage of £200,000 or so.
I note that reports elsewhere state that Mrs Weisz had an interest in the income of the estate under a will trust but that this had been reduced and, following the issue of the claim, stopped altogether. That point is not covered in the judgment, but one can imagine that this would not play well with the judge unless there were some very cogent explanation for the income coming to an end. The claimant had also had the use of a car, which had been leased by the deceased’s company, but this had been removed from her and whilst the judge declined to speculate as to whether this was “spiteful, legitimate, commercial or not”, this again was a matter that excited sympathy from the court.
Mr Justice Francis was also plainly displeased by the level of legal fees that had been incurred in relation to the application. On the application alone, Mrs Weisz had incurred costs of £18,000, the costs of the two defending beneficiaries of the estate were just shy of £39,000 and the executors (one of the beneficiaries and the deceased’s sister) were unable to say what their costs were (a fact that attracted particular criticism) but were presumed by the judge to be about the same as the claimant’s costs, leading to the global costs of the application being something in the region of £74,000. I find myself wondering why it was necessary for the executors to instruct separate counsel from the adult beneficiaries on the application. It may be the case that there are interests of more remote minor and unborn beneficiaries that justify the executors taking a slightly more active role than might be required in a dispute between a claimant and adult beneficiaries alone, however in circumstances where, as Mr Justice Francis noted, the interests of the beneficiaries and the estate were aligned and counsel for the executors adopted almost all the submissions made for the beneficiaries, the separate representation of the executors at the hearing appears somewhat wasteful.
Mrs Weisz sought a lump sum of £75,000, £55,000 of which was sought to cover her costs up to and including an FDR hearing and £20,000 of which was sought in order to repay funds loaned to her by a friend. In addition, she sought income provision of £8,511 per month (£102,131 per annum). The estate offered £4,000 per month.
The judge noted that the exercise under the 1975 Act is not squarely on all fours with the jurisdiction to award maintenance pending suit or interim periodical payments in divorce cases:
I do not accept that the exercise of the discretion is identical. I do not even accept that it is broadly the same, although there are necessarily considerable overlaps. The words “immediate need” seems to me to make it very clear that I have to identify exactly that: an immediate need. Some things which claimants receive in interim periodical payments or maintenance pending suit applications go beyond what might be described as immediate needs. It is not appropriate for me to set out a list of things that might or might not come within that heading. I shall do so only restricted to the specific context of this case.
Mrs Weisz was successful in recovering provision for her legal fees in the full sum sought. The conclusions drawn on the submissions made against that provision are of interest:
- It was argued for the beneficiaries that there was no evidence from the claimant’s solicitors that they would not continue to act if she was not put in funds. Why, the judge asked himself, should a firm of solicitors have to act as a creditor? In circumstances where there was a net estate of c. £4 million, it was unreasonable to expect a firm of solicitors to extend a line of credit to a client.
- The submission that there was no evidence that the claimant could not find a firm of solicitors to act for her on a CFA basis also failed to find favour. She should not be required to “change horses” and spend time looking for lawyers willing to act on a CFA, when she had a legal team that she was happy with. The judge noted that the beneficiaries should be careful what they wish for, since, if they lost the litigation, the estate could be ordered to pay the uplift on the fees; foreshadowing the recent decision in Re H (Deceased)  EWHC 1134 (Fam) in which the court made provision from the estate to meet the uplift notwithstanding the statutory provisions precluding an order for costs being made in respect of a CFA uplifts.
- Although it was not argued for the beneficiaries that Mrs Weisz should be required to borrow from a litigation funder (such firms typically charging substantial interest on borrowed funds), Mr Justice Francis nonetheless stated that his attitude in a divorce situation is to make the paying party cover the interest when the case is over because “it is totally wrong to make, in some cases your spouse, but in this case the claimant, go and borrow money at an expensive rate like that when there is money in the estate or in the matrimonial estate as the case may be, to make provision for that funding“.
- He noted that there could be no complaint about the hourly rates sought because the beneficiaries costs were running at something like twice the rate of the Mrs Weisz’s costs.
On perhaps something of a contradictory basis given his view that Mrs Weisz’s solicitors should not be expected to be act as creditor, the judge declined to make any allowance for the sums that the claimant had borrowed from a friend, noting the absence of any evidence that her friend had an immediate need to recover the sums lent or had threatened to issue proceedings.
In relation to the disputed elements of the claim for recurring payments, the judge took the following approach to Mrs Weisz’s budget:
- Housing: sums claimed for longer term maintenance of the property were knocked off as not fitting into the category of immediate need.
- Maintenance of appliances and central heating: allowed, it was not unusual for an appliance to breakdown at least once per year.
- Housekeeping: £10,000 on an annual basis for food, wine and household goods appeared “a pretty round number plucked out of the air” but was something that could be tested in cross-examination at trial and was not something that the judge was minded to dissect for the purposes of an interim hearing.
- Domestic help: £7,800 claimed was high but it would not be right to reduce it to nothing and to require Mrs Weisz to sack anyone she employed to help her. She may have to make other economies or reduce their hours. 50% of the sum claimed would be allowed.
- Clothes and footwear: a total of £12,380 was sought under this heading as an annual allowance (including sums for accessories, jewellery and evening wear). It was suggested by the judge, perhaps somewhat dryly, that Mrs Weisz probably had enough jewellery and accessories to keep her going for a year and could probably get by without new evening wear for the moment. A sum of £3,000 was allowed.
- Car: Mrs Weisz should not have to make do with a “borrowed old Peugeot 106 with a leaky roof”. The lease payments of £3,600 per year were allowed. The sum of £1,300 for petrol would be allowed, if that was found to be too much then “the parties can pay their lawyers three times as much as they will save to argue over that heading. Good luck to them if they seek to do that, but I hope that common-sense will prevail.”
- Personal expenses: the sum of £2,600 for dental and optician expenses was reduced to £1,000, there being no evidence that any specific dental or eye treatment was required and the judge being of the view that a new pair of glasses could probably be avoided for this phase of the litigation.
- Holidays, entertainment, sport and hobbies: £31,400 was claimed under this heading, including £20,000 for holidays. The judge considered that it was not possible to reconcile £20,000 on holidays with the phrase “immediate need”. £8,000 would be allowed under this heading.
- Charities: The judge derided a “most inelegant scrap” over a claimed £1,000 per year to charities, noting that “of all the items for the estate to query, this is not a meritorious one” and that the amount that Mrs Weisz sought was about one hour plus VAT of the defendants’ solicitor’s time.
The order for recurring payments would be made to run until two months after the date of the FDR, or until settlement, so that there was time for the parties to try and negotiate a renewal of the interim position before an application had to be made.
Learning points for practitioners
- Applications of this nature are highly fact specific, but nonetheless the approach taken to the budget and the points that found sympathy with the judge, or failed to do so, are of interest. Of course, this is an estate that is far removed from the majority of 1975 Act claims. It will no doubt appear shocking to a claimant managing on much less that a claim could even be countenanced for an “immediate need” for a £20,000 holiday budget or for evening wear, but as I often say to clients, there are “needs and needs” and “wives and wives”.
- There are a number of places in the judgment where the judge was plainly very vexed by points that appeared to be ‘nitpicking’. Defendants to these sorts of applications have to tread something of a fine line between taking meritorious points and hair-splitting (especially where the estate is substantial and they are paying very expensive lawyers to engage in this). Connected to this, there were a number of case preparation issues that also irked – forget about the pennies (but note that suspiciously round numbers may also be picked up on) and this judge also did not consider it necessary for the court to be troubled with reams of bills and bank statements (however, I would suggest that this is a point that requires caution since applications of this nature have to be properly evidenced and bills and bank statements should be disclosed even if they are ultimately left out of the hearing bundle).
- An application of this nature is much more likely to be favourably received where the claimant has an obviously meritorious claim for provision. No doubt the fact that this was a spousal claim also weighed with the judge. Applications are unlikely to be successful where, as in T v V, there is a serious dispute over standing to bring a claim. The claimant here, moreover, evidently had some assets of her own (aside from the provision from the estate a half share in the matrimonial home) whereas the claimant in T v V did not appear to have resources from which any recovery could be made. It appears that undertakings were also required from the judge on both sides – on the part of the claimant to repay such sums as the court considered appropriate at the final hearing and on the part of the estate not to make further distributions.
- The judge was plainly dismayed at the inability of the parties to reach terms on the application and strongly exhorted them to engage in dispute resolution such as a private FDR or mediation. The parties were noted to have all got on perfectly well before the death of the deceased, and he remarked that it was “especially tragic that they are now locked into emotional and expensive litigation”.
- It will be interesting to see if the decision in Re H (Deceased)  EWHC 1134 (Fam), in which the court made provision from the estate to meet the uplift notwithstanding the statutory provisions precluding an order for costs being made in respect of a CFA uplifts, lends force to requests for interim provision to meet costs, on the basis that a failure to make such provision will force the claimant to enter into a CFA and may lead to the estate paying more in the long run.
This piece first appeared in Charlotte John‘s blog – Equity’s Darling.