UK: Donatio Mortis Causa?

Last Updated: 17 July 2014
Article by Scott Taylor and Katelyn Silver

On 1 July 2014 the High Court gave judgment on a case involving a donatio mortis causa ("DMC"). A DMC is a gift made during the lifetime of the donor in the contemplation of his or her impending death.

Charles Hollander QC's judgment in King v Dubrey & Others 2014 EWHC 2083 (Ch) relates to a claim by Kenneth King, the deceased's nephew. Mr King claimed that the deceased, June Fairbrother, made a DMC of her property to him, removing the most valuable asset from her residuary estate which was gifted to the animal welfare charities nominated as residuary beneficiaries in her will dated 20 March 1998.

In the event that the court rejected this claim, Mr King made a further claim under the Inheritance (Provision for Family and Dependants) Act 1975 (the '1975 Act') as Ms Fairbrother's dependant for financial provision from her estate.

Background

It was widely known amongst Ms Fairbrother's family and friends that she adored animals and was leaving her property in Harpenden, Hertfordshire (valued in the region of £350,000) to animal charities in her will. Indeed, Ms Fairbrother's will dated 20 March 1998 was drafted in those terms and provided for legacies of £19,000 to her friends and family and for her residuary estate (consisting primarily of her property) to a selection of animal charities.

In 2007 Mr King moved into the property with Ms Fairbrother to look after her. She was becoming increasingly frail and did not want to move into a care home. Mr King cared for Ms Fairbrother until her death on 10 April 2011. Before moving in with Ms Fairbrother, Mr King rented a bedroom and lounge from his business partner for £600 per month which was paid directly from his business takings. From 2007 Mr King gradually wound up this business and increasingly spent his time with Ms Fairbrother, who provided Mr King with board and lodging and made payments towards his living expenses.

During this period, the court heard that Ms Fairbrother had never discussed the contents of her will with Mr King. However, on a number of occasions Ms Fairbrother told Mr King that her property would be his and on 19 November 2010 and 4 February 2011 she wrote and signed documents, the second witnessed by a neighbour confirming her intentions. In addition, on 24 March 2011 Ms Fairbrother signed but did not have witnessed a will leaving the property to Mr King in the hope that he would look after her 2 cats and 3 dogs. None of these documents constituted valid wills and therefore her will dated 20 March 1998 remained valid at the date of her death.

Mr King's evidence was that in addition to the above, Ms Fairbrother presented him with the deeds to the property (which was unregistered) four to six months before her death and said "this will be yours when I go" in a serious tone of voice. Mr King asserted that Ms Fairbrother had been out for the day with a neighbour to collect the documents from her solicitor or bank. Once Mr King received the deeds, he placed them in his wardrobe at the property. These actions were suggested to meet the requirements of a DMC by Mr King.

The Law

The existence of the legal principle surrounding DMC was confirmed in 1991 in Sen v Headley [1991] CH 425 and was recently considered in Vallee v Birchwood [2013] EWHC 1449 (Ch). However, to be valid, the gift must be conditional until the donor's death, the donor must believe that he or she is going to die, and must part with the gift or deliver it to the recipient absolutely. If the gift is revoked at any stage before the donor's death, it will not be valid. In light of the nature of these gifts, the court must be satisfied that the gift constitutes a genuine DMC.

The charities, argued that Mr King's evidence was unreliable and could not be accepted - Mr King had been made bankrupt in 1990 and again in 2000 and was disqualified from acting as a director for eight years in 1996. Later in 2005 he was convicted of acting as a company director whilst disqualified and was sentenced to 12 months in prison.

In addition, the charities argued that the requirements of a DMC had not been met as:

  • the court could not be satisfied as to Ms Fairbrother's capacity;
  • the words used did not suggest that the gift was conditional on her death;
  • Ms Fairbrother did not contemplate her impending death;
  • there was no parting with possession; and
  • the gift was revoked by her later attempt to leave it to Mr King in her failed will of 2011.

The court considered these points in turn, rejecting each as there was an absence of medical evidence regarding Ms Fairbrother's capacity (or lack of), the words used by Ms Fairbrother were considered sufficient to suggest a conditional gift on her death and the significant passage of time and absence of serious illness did not prevent Ms Fairbrother's contemplation of her death. Further, the court found that Ms Fairbrother handing the deeds for the property to Mr King was sufficient for her to part with possession, despite the deeds remaining at the property owned by her thereafter. In relation to the charities' last argument, the court found that there was no inconsistency between the DMC and Ms Fairbrother's effort to perfect the gift by her attempt to create a will.

As suggested above, the court found in Mr King's favour, thus reducing the value of Ms Fairbrother's residuary estate significantly. The court placed considerable weight on the various failed wills expressing Ms Fairbrother's wishes.

The court also considered Mr King's claim under the 1975 Act for completeness. Mr King asserted that he had been dependent on Ms Fairbrother and that the provision made for him in Ms Fairbrother's 1998 will was not sufficient. In assessing Mr King's dependence on Ms Fairbrother, the court looked at whether a balance had been struck between Mr King's services as a carer and the payments, board and lodging from Ms Fairbrother. It was held that in light of the failed wills, and Ms Fairbrother's actions, she had accepted and assumed responsibility for Mr King's maintenance.

In the months after Ms Fairbrother's death, Mr King continued to live in the property, without working and unable to maintain himself. The court heard that he had survived on small loans and payments from friends. In assessing what if any, further provision should be made from the estate for Mr King, Charles Hollander QC commented that if the DMC claim had failed, he would have awarded Mr King the sum of £75,000 given his needs. It was considered that a greater sum would have overstated his dependency and constituted a windfall.

Comment

Charities often face a difficult decision when confronted with a claim which challenges a legacy set down in a valid will. A claim based on a DMC is particularly difficult to assess as DMC cases are rare and evidence-based. Considerations such as costs, the potential for negative PR and the risks of litigation should be weighed up at the outset. Whilst every case will have its own facts, this case serves as a stark reminder as to the unpredictability and risk associated with litigation.

When facing a trust or estate dispute, it is essential to seek specialist expert advice sooner rather than later. Charles Russell's Contentious Trusts and Estates team has the strength and expertise to deal with the entire range of trust and estate disputes, from contested wills, to trust disputes in the UK and overseas and disagreements over the administration of estates - our team of specialist lawyers offers a responsive service to both charities and individuals. We also understand that these issues are often of a private nature and require sensitive handling.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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