An appeal was needed in the recent and much publicised case of Williams v Martin, which was subsequently heard in the High Court as Martin v Williams  EWHC 491 (Ch), in order to clarify the rights of a cohabitee whose long term partner had left his estate to his estranged wife under the Inheritance (Provision for Family & Dependants) Act 1975.
The facts of the case were as follows.
Mrs Martin was the wife of the deceased, Norman Frederick Martin. Mr Martin died leaving a will dated 29 April 1986 under which his entire estate passed to Mrs Martin, who was also his executrix. Mrs Martin extracted a Grant of Probate on 1 September 2014.
So far so good, but the matter was complicated by the fact that whilst they remained married, Mr and Mrs Martin had separated a number of years previously and lived apart although they maintained as Mr Justice Marcus Smith commented “an unusually high level of connection”.
Mr Martin in fact lived with his partner, Mrs Williams and had done so since June 2009 in a property at 20 Coburg Road, Dorchester. Mr Martin and Mrs Williams owned the property jointly as tenants in common with a 50% share each. The property was mortgaged but it was accepted that the mortgage liability was Mr Martin’s only. On Mr Martin’s death the property passed to Mrs Martin under the terms of his will leaving the rather unsatisfactory situation that Mrs Williams ended up living in a property that she owned jointly with her deceased partner’s wife.
Mrs Williams received nothing on the death of Mr Martin and pursued a claim under the 1975 Act on the ground that reasonable financial provision had not been made for her. She claimed under section 1 (1)(ba) (as a cohabitee) and under section 1(1)(e) (as a dependant).
The trial took place on 8-11 February 2016 before His Honour Judge Gerald who held that:
- Mrs Williams was a person falling within section 1(1)(ba) of the 1975 Act and was therefore an eligible claimant. He did not make any specific finding in relation to section 1(1)(e) but it is clear from the judgment that he would have found that Mrs Williams was eligible under this section if he had not done so under section 1(1) (ba).
- Reasonable financial provision was not made for Mrs Williams under the terms of Mr Martin’s will;
- Reasonable financial provision in this case involved the transfer of Mrs Martin’s beneficial interest in the property to Mrs Williams.
Mrs Martin appealed. The amended grounds of appeal were as follows:
- That HH Judge Gerald’s finding that Mr Martin “maintained” Mrs Williams within section 1(1)(e) was unsustainable on the evidence;
- That HH Judge Gerald’s conclusions as to the extent of Mrs Williams’ financial needs were unsupported by any proper or admissible evidence;
- That the relief granted by HH Judge Gerald was substantially in excess of what was necessary to meet those needs and was a perverse decision;
- That HH Judge Gerald wrongly disregarded Mrs Williams’ interest in another property at 60 Slade Road, Bristol, as an asset available to her;
- That HH Judge Gerald wrongly dismissed the evidence of Mrs Martin as to her financial needs.
The appeal was heard on 2 March 2017 before Mr Justice Marcus Smith.
In hearing the appeal, Mr Justice Marcus Smith was very clear to set out that the appropriate standard of review was that applying to the exercise of a discretion (a principle clarified by Arden LJ in the Court of Appeal decision of Ilott v Mitson) saying:
“I cannot allow the appeal and set aside HH Judge Gerald’s order simply because I disagree with the matter in which the judge disposed of the case on the merits. Rather, before the appeal can be allowed I must be satisfied that there has been a wrong exercise of the judge’s discretion.”
Turning to the issues in the appeal itself, Mrs Martin’s counsel argued that HH Judge Gerald went wrong in that he (i) accepted the evidence of Mrs Williams’ expenditure provided in a letter dated 21 March 2013, then proceeded to increase that without any proper evidence; (ii) he then concluded that Mr Martin maintained Mrs Williams within the meaning of section 1(1)(e) and (iii) he failed to take into account Mrs Williams’ interest in 60 Slade Road.
Mr Justice Marcus Smith considered the first two grounds of appeal together. During submissions he was shown schedules of expenditure provided by both parties. He found that on appeal it was even harder than at first instance to make findings about the relative contributions of Mrs Williams and Mr Martin to the household from these schedules. However, he took the view that during Mr Martin’s lifetime he had drawn on accounts that he shared with Mrs Martin which they maintained and both drew from despite their separation, and that after Mr Martin’s death these had vested solely in Mrs Martin. To that extent, Mrs Williams was the poorer on Mr Martin’s death and the judge at first instance was entitled to infer a contribution by Mr Martin to his household with Mrs Williams.
Mr Justice Marcus Smith held that HH Judge Gerald was entitled to find that Mr Martin had maintained Mrs Williams prior to his death (and as such he rejected Ground (2)), and following on from that there were grounds to conclude that Mrs Williams’ financial needs were greater than set out in the 21 March 2013 letter (thereby rejecting Ground (1A)).
Turning to Ground (4), this related to Mrs Williams’ interest in a property at 60 Slade Road which had not been disclosed in the 21 March 2013 letter. This was a three bedroomed property which Mrs Williams jointly owned with her sister, having inherited it from their father. Each had a 50% share valued at £135,000. Mrs Williams’ evidence at the trial was that her sister lived there, she was of very limited means and could not afford to pay any rent. Furthermore she would be reluctant to evict her so that she could sell the property. There was no evidence, as a matter of strict law, why Mrs Williams could not exercise a power of sale over 60 Slade Road.
On appeal, Mr Justice Marcus Smith commented that the reason that HH Judge Gerald left 60 Slade Road out of account was the human cost of Mrs Williams enforcing any strict legal right against her sister to evict her from the property. That, he said, gave rise to two questions:
- Firstly, as a matter of law under the 1975 Act, is a court entitled to disregard an asset on such grounds?
- Secondly on the basis that it was (as a matter of law) open to the judge to take this course, were there sufficient grounds to entitle him to do so?
The emphasis of submissions by counsel for Mrs Martin was the second of these, contending that “the reasons given by the judge for disregarding 60 Slade Road were perverse and there was otherwise no proper basis for doing so”. He was not able to identify any law that required a court to treat 60 Slade Road as a financial resource available to Mrs Williams, whatever the circumstances, and Mr Justice Marcus Smith found that there was therefore an element of discretion in that regard.
However, turning then to the exercise of that discretion, Mr Justice Marcus Smith found that there was no sufficient ground for HH Judge Gerald to leave 60 Slade Road out of account. He said that “extremely cogent reasons” would be required. Mrs Williams had agreed on cross examination that her sister could downsize if she wanted to. Mr Justice Marcus Smith therefore found that if necessary Mrs Williams could have sold the property and furthermore no consideration was ever given to whether she could have used 60 Slade Road to finance her needs without requiring her sister to move.
He therefore held that the decision by HH Judge Gerald to leave 60 Slade Road out of account was a perverse conclusion and therefore Ground (4) succeeded.
Mr Justice Marcus Smith then turned to Ground (5) of Mrs Martin’s appeal, namely that HH Judge Gerald had wrongly dismissed her evidence as regards her financial needs in circumstances where her evidence was not challenged in cross-examination. Mrs Martin gave evidence that since her husband’s death the share of his pension provision she had been entitled to had diminished. She gave evidence as regards her income, expenditure and capital assets and she was not cross examined on that (presumably as Mr Justice Marcus Smith commented because counsel for Mrs Williams took a “mature assessment” that she was telling the truth. However, the reason for why there was no cross examination was irrelevant.
Mr Justice Marcus Smith found that the absence of cross examination made the judge’s criticism of Mrs Martin’s evidence and the inferences that he made in relation to that evidence impossible to justify. HH Judge Gerald had commented that “it is quite possible that there are additional means not revealed to the court” and “there has been an absence of frankness as to her actual resources and income given the shortcomings in disclosure” leading him to conclude “one should take into account what she says with a pinch of salt so far as the 1975 Act is concerned”. Mr Justice Marcus Smith found this approach, particularly as Mrs Martin’s evidence had not been challenged, “unprincipled and wrong”.
HH Judge Gerald had also taken the view that an open offer of a life interest in 20 Coburg Road by Mrs Martin to Mrs Williams substantially undermined her evidence as to her needs. That offer was made by Mrs Martin’s solicitors in an attempt to bring the proceedings to a close. Mr Justice Marcus Smith felt that HH Judge Gerald had placed far too much emphasis on this offer saying “it is extremely dangerous to draw inferences from the fact that such an offer has been made, given how the making of such an offer is coloured by a litigant’s desire to bring proceedings to an end and to avoid further costs”.
Accordingly Ground (5) succeeded.
Finally, Mr Justice Marcus Smith considered the third ground of Mrs Martin’s appeal namely that the relief granted was in excess of what was necessary. He considered that it was difficult to separate this ground from the other grounds already considered.
Mr Justice Marcus Smith held that HH Judge Gerald failed to follow the approach laid down in the 1975 Act and for that reason Ground (3) also succeeded. He made a number of comments:
Firstly, HH Judge Gerald failed to consider the appropriate test for determining “reasonable financial provision“ for Mrs Williams. He should have had in mind that the 1975 Act does not seek to abrogate the concept of freedom of testamentary disposition (a point emphasised in the Supreme Court’s judgment in Ilott v Mitson). The 1975 Act only permits a court to interfere when there is a failure to make reasonable financial provision for certain categories of people as defined by section 1(1) of the Act.
Secondly he applied the wrong test in relation to Mrs Martin. She was not an applicant and it is difficult to see how she could have been given that she was the sole beneficiary of the estate. However, given that the estate was a small one which would not have been sufficient to meet the needs of two applicants, the judge should have had regard to the effect of making “reasonable financial provision” for Mrs Williams on Mrs Martin.
Interestingly, had Mrs Martin been an applicant then the test of “reasonable financial provision” is what “would be reasonable in all the circumstances of the case, whether or not that provision is required for her maintenance”. It would not have been limited to what she required for her maintenance as it was for Mrs Williams, despite the fact that Mr and Mrs Martin had separated and Mrs Williams had been living with Mr Martin for many years.
Thirdly, Mr Justice Marcus Smith found that HH Judge Gerald should have considered whether both Mrs Martin’s and Mrs Williams’ interests could be satisfied given the limited estate. What he had appeared to have done was to assume that Mrs Martin had had enough and that Mrs William’s needs overrode those of Mrs Martin.
In conclusion, Mr Justice Marcus Smith upheld the first instance decision that Mrs Williams had standing to bring a claim under the 1975 Act and that reasonable financial provision had not been made for her. However, he held that the judge’s exercise of his discretion in respect of what provision should have been made was “fatally undermined” by the success of Mrs Martin’s appeal in respect of Grounds (4), (5) and (3). He therefore revisited that issue.
In terms of Mrs Williams’ position he accepted all of HH Judge Gerald’s findings save for his disregard of Mrs Williams’ interest in 60 Slade Road. In terms of Mrs Martin’s position, he found that Mrs Martin had discharged Mr Martin’s mortgage on 20 Coburg Road from his estate and had therefore deprived herself of that sum. With both those points in mind, Mr Justice Marcus Smith held that reasonable financial provision for Mrs Williams amounted to her being awarded a life interest in Mr Martin’s 50% share of 20 Coburg Road. He considered that she needed a roof over her head and it was reasonable for her to continue to reside, rent free, at the property where she had lived with Mr Martin as opposed to using her equity in that property and 60 Slade Road to purchase alternative accommodation, but that an award of Mr Martin’s 50% share to her absolutely was “excessive”.
He did consider the risk that a life interest would be unworkable given the animosity between the parties but he rejected that, commenting that he hoped that once the matter was finally resolved the parties would be able to work together.
The case is interesting as it emphasises the discretion that must be exercised by a judge in considering claims under the 1975 Act. Whilst one judge may exercise his or her discretion in a different way from that of another judge (making such claims inherently risky), it is the factors which a judge takes into consideration and how he/she considers those which is key.
The case also emphasises the weight the court will place on testamentary disposition, a point which was emphasised by the Supreme Court in Ilott v Mitson and perhaps an issue which, although not a section 3 factor in terms of what the court needs to take into consideration during claims under the 1975 Act, is one which has become overlooked.
Finally, whilst the circumstances of this case are unusual, with Mr and Mrs Martin remaining married despite Mr Martin living with Mrs Williams, it does raise the interesting issue of a spouse’s claim for financial provision from an estate not being limited to what he or she requires for maintenance (even when the relationship is over) whereas for a cohabitee, the claim is limited to maintenance, even where the parties have been living together as husband and wife for many years. This again highlights the disparity between the legal positions of spouses and cohabitees.
This article was published in Trusts and Estates Law & Tax Journal in August 2017.