State of play

Dellal v Dellal

This case concerned an application for strike out and/or summary judgment, against a widow's claim under the Inheritance (Provision for Family and Dependants) Act 1975.

Jack Dellal died in 2012 age 89, effectively leaving his entire estate to his second wife, Ruanne Dellal, under his will. One of Britain's most successful property tycoons, Mr Dellal's worth was estimated at £445m in the 2012 Sunday Times rich list. On death, however, his disclosed assets amounted to only £15.4m.

Mrs Dellal described this as an 'absurd presentation of the true scale of his personal wealth at the date of his death'. She argued that, for his estate to have shrunk so significantly, he must have secretly given most of it away (in trusts, bank accounts and gifts, to his children from other relationships) with the intention of defeating a claim under the Act.

Mrs Dellal therefore launched a claim for reasonable provision against Mr Dellal's deemed net estate, under sections 2, 10 and 13 of the Act. Under sections 8 and 9, the 'deemed estate' includes not just the actual death estate, but also any other assets given away within six years of the death, to frustrate a claim under the Act.

If Mrs Dellal's claim is successful, those who received these gifts (or their trustees) could be ordered to pay back an equivalent sum to the estate.

Mr Dellal's sister and six of his children from previous relationships applied for strike out, and summary judgment on the grounds that Mrs Dellal's claim has no prospect of success. They argued that she had not identified any dispositions to them within the relevant time limit before death, nor had she established any 'bad motive' as required by the Act.

The court agreed that the claim was evidentially poor, but refused to strike it out.

Mostyn J was sceptical about Mrs Dellal's estimates of her husband's true wealth, noting that rich lists are notoriously unreliable. The evidence of outright dispositions to the defendants during the relevant period was described as 'thin indeed', and almost entirely inferential.

However it would be unfair to deprive Mrs Dellal of the opportunity to scrutinise the financial evidence of the defendants. Mostyn J concluded that Mrs Dellal had 'put up a strong prima facie case that at his death, Jack had access to very considerable resources... it is a reasonable inference that most were held in trusts'. Accordingly the application for strike out did not meet the standards required by the CPR.

The issue to be determined would be whether these trusts really exist and if they were established within the six-year time limit. Mostyn J ordered the defendants to disclose all relevant documents and adjourned the application for summary judgment until the disclosures had been made. The application to dismiss Mrs Dellal's case will then be reconsidered.

See Ruanne Dellal v Guy Dellal & ors [2015] EWHC 907 (Fam)

 

Hopkins v Hopkins

Hopkins v Hopkins concerns a post-nuptial agreement (PNA) and provides a useful illustration of the courts’ approach to such agreements, since the landmark decision in Radmacher v Granatino [2010] UKSC 42.

In Hopkins, the wife argued that the PNA was signed under duress, undue pressure or exploitation by her husband due to his dominant position. Further, she argued that the PNA was unfair as it would leave her in a position of real need. The High Court rejected her claim and upheld the PNA.

The parties’ relationship of 40 years had been complex, with periods of separation and cohabitation. The marriage itself lasted only two years, during which time the couple fluctuated between divorce and reconciliation. 

In 2011 (16 months into the marriage) the wife signed a PNA, despite repeated and clear advice that the agreement would provide her with significantly less than a court would order in financial proceedings. 

The paper trail demonstrated that she had clearly instructed her solicitors to act against their own advice by executing the PNA. Counsel had advised:

‘The lengths to which those instructing me have gone in their attempt to inform W only strengthen the agreement in the eyes of the court, despite its unfairness. In short, this advice undermines any future attempt to challenge the agreement.’ 

On challenging the PNA, the wife argued that significant parts of correspondence between her and her solicitor had been dictated by her husband and that she had been bullied, intimidated and was once assaulted.

In delivering judgment, the court cited Lord Phillips in Radmacher at length. Per Lord Phillips, it was held that for a nuptial agreement to be valid, it must be entered into of the parties own free will, with no duress, fraud or misrepresentation. 

Legal advice and disclosure are desirable, but more importantly parties must be fully aware of the implications 

of the agreement. 

On the facts, the High Court found no evidence of undue influence, duress or improper pressure; rather the parties had both entered the agreement freely with a full appreciation of its implications. The court placed particular weight on the ‘copious amounts of specialist matrimonial advice’ the wife had received over the years. 

More importantly the court believed (despite her assertions to the contrary) that she had understood this advice, highlighting sections of emails to her solicitor that demonstrated this understanding. 

While the wife’s emotional state was relevant and the husband himself had referred to his own ‘bullying’ in letters to her, looking at all the evidence in context, this was insufficient to overturn her agreement. Further, the court held that on balance, the wife’s ‘real needs’ were met by the agreement.

It seems that, where a pre or post nuptial agreement has been entered into following extensive independent legal advice, and the evidence points to the parties understanding that advice and the implications of the agreement, it will prove difficult to challenge its provisions, provided it does not leave either party in a position of real need. 

See Hopkins v Hopkins [2015] EWHC 812 (Fam)

Alan v David

Alan v David is a case in which there was a dispute as to who should act as a deputy. The patient was 95-years-old woman with advanced dementia and had two children; a deceased daughter and an estranged son. The patient’s son-in-law, David, provided assistance to her for some years.

One of David’s sons, Alan, and his wife, Donna, applied to be appointed as the patient’s personal welfare and property and affairs deputies. In the application, Donna stated that David had removed £4,000 of the patient’s savings and they had subsequently advised the care home, safeguarding and the police. Donna advised that the care home still contacted David to discuss funding.

David filed an application notice (supported by two of his other children) for Croydon County Council to be appointed as the deputy on the basis of fairness and transparency. 

The court asked the Public Guardian to prepare a section 49 report, which concluded that both the council and the police confirmed that there was no substance to the allegations of financial abuse. 

It was agreed that the patient would be unable to decide who she would like to manage her finances and, although the care home staff believed David had acted in the patient’s best interests, the council should be appointed as deputy due to the current situation. 

The council agreed to this, and it was held there was no need for a health and welfare deputyship.

Alan and Donna filed an application notice citing their objections to the council being appointed as the Deputy.

A witness statement by a senior social worker stated that the patient’s best interests were served by having as much independent scrutiny as possible. It also highlighted that the patient’s previous wishes were to have her daughter and David involved in her care and finances. 

The council was concerned as to the motives of Alan and Donna, who focused on financial control rather than working with the wider family and care home.

The court held that it would not be in the patient’s best interest to appoint Alan and Donna on account of the hostilities that existed between them, 

the rest of the patient’s family, and the care home staff. 

The court was also suspicious of Donna’s motives, due to the inflammatory and hysterical nature of the submitted documents, accompanied by a high frequency of phone calls to the court. The council were to be appointed as the deputy for property and affairs. 

The court dismissed the application for a personal welfare deputyship on the basis that the application was neither necessary nor well-founded. A health and welfare decision was a collaborative one, between those with an interest in the welfare of the patient. 

Working together is the best policy to ensure that incapacitated adults receive the highest quality of care. In this case, Alan and Donna had shown they had no intention of collaborating with family members, the care staff or social services. 

This case also reiterated the principle that, when considering an application for the appointment of a deputy to make decisions on behalf of someone else, the decision of the court is to be preferred to the appointment of a deputy. 

This is usually difficult to apply in a property and affairs setting, but will be applied in most personal welfare cases where the court does not need to appoint a deputy.

See Alan & Another v David & Others [2015] EWCOP23

Re ID

This case concerned an application by the Public Guardian for the revocation of a lasting power of attorney, which had been made by a donor who now lacked capacity to revoke the document herself.

The donor, ID, had appointed her two sons, BW and MD, to act as her attorneys under a property and affairs lasting power of attorney (LPA). She had appointed them to act jointly, as opposed to jointly and severally.

Around a year after ID had moved from her own self-contained flat into a residential care home, the Public Guardian applied for an order freezing ID’s bank accounts and revoking the LPA, so that a panel deputy could be appointed to act for ID.

A witness statement by the Public Guardian’s caseworker stated that a significant amount of care fees were outstanding; ID was not receiving her personal allowance and the attorneys had not provided accounts when requested. 

Her house had been converted into two flats, with MD living in one of them and supposedly paying rent, and there were significant unaccounted payments from ID’s accounts.

A Court of Protection visitor confirmed that ID lacked capacity to revoke her LPA, and Senior Judge Lush accepted this evidence. 

SJ Lush made reference to the number of cases coming before him which featured the serious irregularities of non-payment of care fees, and failure to provide a personal allowance. 

This case also featured serious irregularities, including MD’s claim that he had spent £80,000 of his own money on ID’s property. MD had co-mingled his own funds with those which had been paid to ID by the insurance company, following flood damage to 

the property. 

ID’s state pension and the rental income from one of the flats were paid into this account, but the rent (if any) from the flat which MD was occupying was not. There were also significant unaccounted payments from ID’s accounts.

The judge was satisfied that the attorneys had behaved in a way that contravened their authority, and revoked the LPA. He appointed a panel deputy to act solely on ID’s behalf rather than appointing BW as a joint deputy. 

The reason for this decision was that BW and MD had been appointed to act jointly as attorneys, but BW had allowed MD to have a free rein in the management of their mother’s property and financial affairs. 

The judge held BW jointly liable for any loss to ID’s estate and he went on to comment that, if MD turned out to be a ‘man of straw’, BW could find himself wholly liable for the loss to ID’s estate.

The case demonstrates SJ Lush’s frustration at the number of cases coming before him, where attorneys are failing to ensure that care home fees are paid on behalf of the donor. 

It also provides a salutary warning to attorneys who are appointed jointly, that they will not escape liability for loss to the donor’s estate if they stand by and allow their co-attorney to mismanage the donor’s funds.

See ID (Revocation of LPA) [2015] EWCOP 19

 

Jennifer Ridgway is an associate in the private client team at Michelmores

Karen Bayley is a solicitor at Barlow Robbins

Jennifer and Karen write regular case updates for Private Client Adviser

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