State of play: case summaries

Kaur v Dhaliwal and Anr

Judge Barling’s judgment in this case is noteworthy because he defined the test to determine when a couple are living in the
same household.

Under section 1(1A) of the Inheritance (Provision for Family and Dependants) Act 1975, a person living in the same household as the deceased as man and wife for two years immediately prior to the date of death is entitled to make a claim for financial provision from the deceased’s estate. The central issue in this case was the definition of ‘living in the same household’ for the requisite two-year period.

The claimant and the deceased had formed a relationship soon after the deceased’s wife’s death (she had taken her own life and the deceased was acquitted of her manslaughter). They became engaged and began living together in the same house for three months. It was not in dispute that this period satisfied the conditions for cohabitation in the Act.

During this period the claimant gave up her job to work seven days a week with the deceased in his cafe. There was then a period of eight to nine months in which the claimant and the deceased did not live together in the same house, while the deceased focused on rebuilding his relationship with his sons and wider family in India following
his acquittal.

The couple resumed living together for a continuous period of one year and 49 weeks before the deceased’s death, three weeks short of the requisite two-year period. The claimant was not mentioned in the deceased’s will and the deceased’s sons opposed her claim.

At first instance, Judge Powles QC held that the disputed three-month period was relevant to the length of the couple’s relationship, and therefore that the claimant was entitled to financial support under section 1(1A). The defendants appealed, contending that the judge had erred in his ruling. Judge Barling upheld the trial judge’s decision, and while doing so, he defined the test to determine when couples were living in the same household.

Adopting the principle of a non-literal approach established in In Re Dix (deceased) [2004] EWCA Civ 139 by the Court of Appeal, Judge Barling distinguished between the notion of living in the same household and living in the same house. Whether the couple shared a household relies on the nature of the relationship between them and whether this ‘subsists’, despite the couple living in different places. This is because a household is considered a public and private acknowledgement of their mutual “society... protection and support”. Thus, the household will be shared if the relationship is maintained and a short period during which the couple live apart will not be a barrier.

Judge Barling held that, on the facts, it was evident that the claimant and the deceased did share a household in this wider sense. The judge drew particular attention to the fact the couple worked together daily in the deceased’s cafe and that the brief separate living arrangements were caused by separate and unrelated family reasons.

A lack of actual cohabitation for three weeks was therefore not sufficient to defeat the claimant’s claim that she was entitled to apply for financial provision from the deceased’s estate.

Blue Tropic and Coppella Ventures v Ivane Chkhartishvili

This case concerned the application of article 22 of Council Regulation (EC) No 44/2001 (the Brussels 1 regulation) and the court’s jurisdiction to decide a claim brought by two companies incorporated in the British Virgin Islands.

The case concerned the beneficial ownership of the shareholdings in Blue Tropic Ltd and Coppella Ventures Ltd. The claimants argued that the shares were held in trust for a third party. The defendant argued that he was the beneficial owner of the shares and therefore resolutions by the claimant companies to bring proceedings against him should be set aside.

The defendant, a Georgian national, argued that the party (who accepted he was domiciled in the UK for the purposes of these proceedings) also issued proceedings against the claimants in the BVI and Georgia. He argued that the court had no jurisdiction to hear this case under article 22 because the proceedings should properly be heard in the BVI, or alternatively that the court should grant a stay until those BVI proceedings were concluded.

Mr Justice Newey held that the starting point when considering jurisdiction is article 22: a person domiciled in a member state of the European Union must be sued in that state, subject to the application of article 22.

Article 22(2) and (3) set out that in relation to proceedings that have as their object the validity of company resolutions or entries in public registers, the court of the member state where the company has its seat or where the register is kept has exclusive jurisdiction, regardless of the defendant’s domicile. 

Mr Justice Newey commented that article 22 can be applied reflexively; the courts of an EU member state can decline to exercise jurisdiction where article 22 would apply (as held in Ferrexpo AG v Gilson Investments Ltd [2012] EWCH 721 (Comm)). 

Therefore, was the object of the proceedings the validity of the company resolutions or the entries in the share registers? It was held that article 22 did not apply as the object of the proceedings, meaning the “principal subject matter” of the proceedings was, in fact, the beneficial ownership of the shares in the companies, not the validity of the decisions made by those companies nor entries in their share registers. 

The fact that the issue of beneficial ownership might affect the validity of the resolutions, or that ownership may be crucial as to whether the entries in registers should be rectified, did not make these issues the principal subject matter of the proceedings.

Mr Justice Newey also rejected the argument that a stay should be granted under the court’s case management powers. It was not open to an English court to decline jurisdiction on the grounds of “forum non conveniens” where article 2 applied, and to grant a stay would have been to “achieve by the back door a result against which the ECJ has locked the front door”.

Re BM

This case clarifies the importance of an incapacitous person’s established relationships when assessing who is best appointed as a property and affairs deputy.  

BM had lived with his parents all his life, until the death of the survivor of them in 2009. His two main interests in life were religion and supporting Millwall football club.

In April 2013, he suffered a severe intracerebral haemorrhage and was left with permanent brain damage. Following the stroke, he lacked the capacity to make decisions regarding is property and financial affairs. 

Six months later, JB made an application to the court to be appointed as BM’s deputy. JB was a Pentecostal preacher who lived near BM and, in her application, she claimed that he had no other close friends and that he had become part of her family. 

An objection to the application was lodged by AG, who was the daughter of BM’s mother’s half-sister. Prior to her retirement, AG had managed substantial sums of money and large budgets. AG claimed that JB was not a fit and proper person to act as BM’s deputy. 

Counsel for AG ran through a list of strengths and weaknesses of both JB and AG to produce a balance sheet of the various relevant factors, including both applicants’ qualifications, whether there were any conflicts of interest between the applicant and BM, and also BM’s own wishes and feelings as far as they could be determined. 

Counsel for JB took the increasingly familiar approach of looking for “the factor of magnetic importance”, and claimed, on JB’s behalf, that this was BM’s strong faith which indicated that JB should be appointed. 

AG claimed that JB had deliberately prevented BM’s friends and neighbours from seeing BM, both in his own house and in hospital, and that she had allowed her own daughter to occupy his house while he was in hospital. 

SJ Lush considered the various options available to the court, namely whether to appoint JB or AG, both of them or neither. He ruled out the last option on the basis that there were applicants who were willing to act, and ruled out the penultimate option on the basis that JB and AG would not be able to work together, given the level of friction between them. 

He was of the view that the various strengths and weaknesses of both candidates were pretty evenly matched. However, he went on to determine that the factor of magnetic importance was not in fact BM’s faith, but the fact that there was already a network of friends and neighbours who had supported BM prior to the appearance of JB, and that AG was part of this network. The network included a friend who BM had appointed as executor of his will, which he had made in October 2008. Significantly, BM had not altered his will to appoint JB as his executor instead. 

Further, SJ Lush found that JB had indeed tried to isolate JB from this pre-existing network of friends, and that, in letting her daughter live rent-free in the property, there was a conflict between her interests and those of BM. Accordingly, AG would be appointed as deputy. SJ Lush had some words of comfort for JB when he suggested that her spiritual gifts could be of great use to BM if she continued to offer prayers and intercessions on BM’s behalf.

His decision clarifies the importance of the incapacitous person’s established relationships (including the identity of an executor appointed in a will) when assessing who is best appointed as a deputy.

Re GM

This hearing is the sequel to the infamous ‘handbags and season tickets’ case in which Janet Miller and Margaret Johnson, who had been appointed as deputies for Gladys Meeks, had used Meeks’ money to make gifts to charities, buy cars, jewellery, designer handbags and football season tickets for themselves. SJ Lush had found that they were personally liable to repay money back to Meeks’ estate and revoked their appointment as deputies, replacing them with a panel deputy. The new deputy then made this application for a statutory will for Meeks, and for an order that the former deputies’ security bond be called in.

Meeks never made a will and was therefore intestate. A statutory will application must be decided in accordance with the incapacitous person’s best interests and, in considering that question, HHJ Hodge QC reiterated the usefulness of applying a balance sheet approach.   

Her husband had died many years previously and their only child, Barbara, had died in 2010. 

The people who would benefit under Meeks’ intestacy were a niece and a great-nephew, who were the descendants of her pre-deceased brother. 

The judge discounted the great-nephew’s claim on the basis that he had no contact with Meeks. He discounted the niece’s claim on the basis that Meeks had fallen out with her and on the evidence, once Meeks had fallen out with someone, it was likely to stay that way.   

The former deputies claimed to be entitled to take half the estate on the basis that they were the only two people who had shown any interest in Meeks’ welfare in recent years. However, the judge found that, even though Meeks “loved them to bits”, she herself had lived a relatively frugal life and would have been horrified by their spending and conduct. 

Meeks had kept in contact with an old university friend, and Barbara had been particularly close to the friend. On the basis that Meeks had inherited Barbara’s estate, the judge found that 25 per cent of her estate should go this friend. The balance of the estate would go to charities with which Meeks would have sympathised.

With regards the application to call in the security bond, in HHJ Hodge QC’s view, the decision would be made in accordance with the “best interests” principle. He noted that a replacement deputy would have the option of suing the defaulting deputies to recover the loss suffered but that calling in the security bond would short-circuit that process and save the costs associated with the litigation. 

He also felt that the present financial means of the deputies should carry very little weight when taking the decision to call in the bond. He said that the whole purpose of the security bond was to provide a speedy method of remedying default by a deputy, and the enforcement of the security bond in such circumstances should be viewed almost as a matter of course.

Given the lack of case law on security bonds, this decision provides useful guidance on when the bond should be called in. It is also a useful illustration of how the court will approach the issue of whether defaulting deputies should be included in a statutory will.

  

Heather Viljoen is a solicitor at Michelmores

She writes regular case updates for Private Client Adviser

 

Karen Bayley is a solicitor at Barlow Robbins

She writes regular case updates for Private Client Adviser