Challenges to wills

Monday, 01 July 2013
Tracy Harris discusses Lillyman v Lillyman and claims by dependants in England and Wales.

The law in relation to claims under the Inheritance (Provision for Family and Dependants) Act 1975 (1975 Act) is constantly developing. One case of particular interest is Lilleyman v Lilleyman [2012] EWHC 821 (Ch), in which a successful claim was made by the second wife of the deceased, Roy Lilleyman. The defendants to the claim were Nigel and Christopher Lilleyman, the deceased’s two sons by an earlier marriage, who were both the executors and principal beneficiaries under the deceased’s last will, dated 20 May 2008.

Facts of the case

The deceased died in January 2010 and had been married to Mrs Lilleyman for a little over two years at the date of his death, although their relationship had begun in 2004. By then, the deceased was a successful businessman and owned two companies. He subsequently formed a third business with the defendants, both of whom worked in the family business by the time of the deceased’s death. When they met, the deceased and Mrs Lilleyman each owned their prior matrimonial homes. During their marriage, they bought a property known as Water Meadows, which became their marital home. They also bought a property, Lea Court, which was occupied by one of Mrs Lilleyman’s sons, who had been living with her when she met the deceased. The deceased also purchased a holiday home, Dunhome, in his sole name. Although the deceased initially funded the purchase of Water Meadows and Lea Court from his own money, both properties were owned jointly by the parties at the date of his death. During their marriage, Mrs Lilleyman had paid the deceased GBP175,000, following the sale of her former matrimonial home.

This was partly to repay the deceased for her half-share of Water Meadows and partly to refund the deceased for his contribution to the purchase of Lea Court. Mrs Lilleyman subsequently made further payments to the deceased in respect of her outstanding liability to him.

The deceased’s will gave Mrs Lilleyman limited rights of occupation in both Water Meadows and Dunhome. She was also given chattels worth in the region of GBP17,000 and a limited income of GBP378 per month. Other than legacies of GBP25,000 left to each of his grandchildren, and a gift of his first wife’s jewellery to his granddaughter, the deceased left the rest of his estate to the defendants.

Arguments

Right up to the closing submissions at the trial, the defendants maintained that the deceased’s will made reasonable financial provision for Mrs Lilleyman – a position the judge found to be entirely unrealistic. The judge noted various factors when considering Mrs Lilleyman’s claim under the 1975 Act, including her financial resources and needs (both at the time of the trial and in the future), the obligations and responsibilities of the deceased towards both her and his sons, and the size and nature of the deceased’s estate. The judge also considered what Mrs Lilleyman may have been awarded had the parties divorced; known as the ‘divorce cross-check’ – this being a big money, short marriage case. A key issue between the parties was how much of the business assets should be taken into account as marital property for the purposes of carrying out this cross- check. The judge concluded that only GBP250,000 of the business assets – which totalled a little over GBP5 million – should be taken into account because the deceased had built up the companies before his marriage to Mrs Lilleyman.

The GBP250,000 represented the increase in the value of the businesses, which was attributed to the deceased’s activities during his marriage to Mrs Lilleyman, rather than passive growth.

At the time of the trial, Mrs Lilleyman was 66 years old and it was not suggested that she had any significant earning capacity. She had, in fact, given up two part-time jobs at the deceased’s request during his lifetime. The defendants accepted that the requirement was for her to have a roof over her head and financial security for the rest of her life.

In her own right, she owned 50 per cent of Water Meadows – her share being worth roughly GBP165,000. She also owned 50 per cent of a property occupied by her mother, worth approximately GBP77,500. She had cash and other assets of around GBP27,000, as well as the chattels left to her in the deceased’s will. The judge found that the shortfall in Mrs Lilleyman’s income on an annual basis (including her future capital requirements as well as her income requirements) was GBP20,533 per year.

The defendants also contended that the estate was entitled to a 50 per cent share of Lea Court, but the judge found that Mr and Mrs Lilleyman had agreed before his death that Mrs Lilleyman did not owe the deceased anything further. He therefore decided that Mrs Lilleyman was entitled to the whole of Lea Court, subject to her son’s right to occupy the property and his option to purchase it for GBP125,000 in 2014.

The judge decided that, especially  in light of the antagonism that had developed between the parties, there ought to be a clean break, as he did not think it was realistic for Mrs Lilleyman to have a life interest in assets belonging to the estate. He therefore ordered that she should have the estate’s share of Water Meadows and, at her option, either the whole of Dunhome or the equivalent of its value, which was GBP330,000. The total awarded to Mrs Lilleyman was GBP500,000. This represented approximately 8 per cent of the overall value of the estate, but over 33 per cent of the value of the marital property, from which most of the business assets were excluded.

Costs

The story did not, however, end there, as the judge subsequently had to determine who should pay the legal costs of Mrs Lilleyman’s claim. The usual order is that a successful claimant in a 1975 Act claim will be awarded their costs out of the funds in the estate. However, in this case, the defendants had made an offer, which Mrs Lilleyman did not accept and which was more generous than the amount she was awarded by the judge at the trial. When considering costs, the judge acknowledged that any award against Mrs Lilleyman would reduce the amount she received by way of provision from the estate. However, the judge concluded that it would not be unreasonable for Mrs Lilleyman to be ordered to pay the defendants’ costs after the effective date of the offer, although he ordered that Mrs Lilleyman pay only 80 per cent of the costs incurred by the defendants because of their conduct of the claim. In particular, he considered that the defendants’ failure to acknowledge that the will did not make reasonable financial provision for Mrs Lilleyman had led to a ‘no holds barred’ approach to the litigation.

When giving his judgment on costs, the judge estimated that Mrs Lilleyman would have to bear costs of just over GBP150,000 – a significant proportion of the amount she was awarded at the trial. So, even though Mrs Lilleyman’s claim was successful, she ultimately received far less than she was awarded by the Court because she had refused a reasonable offer by the defendants. This illustrates the need for the parties to any litigation to carefully consider any offers that are made, and demonstrates the pitfalls of failing to accept a reasonable offer in the hope of being awarded more at a trial. Indeed, many disputes of this kind are now resolved through mediation, which can reduce the emotional, as well as the financial, impact of these claims. 

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Tracy Harris

Tracy Harris is a Litigation Lawyer at Taylor Walton LLP in Luton.

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