Welcome to the summer edition of our Legacy Loop coverage
Clitheroe v Bond (2021) EWHC 1102 (Ch)
This recent decision is significant in reiterating that the correct test when determining mental capacity to make a will is still that set out in Banks v Goodfellow (1870) and not the Mental Capacity Act 2005.
The 19th century case of Banks v Goodfellow provides the well-established common law test for determining mental capacity to make a will and is almost always referred to by legal advisors in cases where a lack of capacity is asserted.
Background to the case
In summary, the Banks v Goodfellow test sets out that a testator must:
- Understand the nature of making a will and its effects.
- Understand the extent of the property of which they are disposing.
- Be able to comprehend and appreciate the claims to which they ought to give effect.
- Have no disorder of the mind that perverts their sense of right or prevents the exercise of their natural faculties in disposing of their property by will.
The level of understanding required varies with the complexity of the will itself, the assets and any claims on the testator.
In the case of Clitheroe v Bond however, the court had the opportunity to re-consider arguments that the Mental Capacity Act 2005 should replace the Banks v Goodfellow test for determining capacity, as well as examining the current test for delusions (limb 4 of the Banks v Goodfellow test).
The case concerned a dispute between a brother and sister over the validity of two wills made by their late mother. The court was asked to decide whether the mother died intestate (effectively without a will) – meaning daughter, Susan Bond, and son, John Clitheroe, would receive an equal share of the £400,000 estate – or whether her wills were valid, meaning almost all of the residuary estate would go to the son.
In the original trial, it was held that both wills were invalid due to the mother not having sufficient mental capacity to make the wills. It was found that, at the times the wills were made, their mother was suffering with complex grief reaction, 'insane delusions' and persisting depression following the death of her eldest child from cancer.
What was the outcome?
However on appeal, it was argued that the judge had applied the test in Banks v Goodfellow incorrectly when determining the mother's capacity. It was concluded that the correct test for determining capacity continues to be the Banks v Goodfellow test. It was also concluded that to establish delusional thoughts, the relevant false belief must be "irrational and fixed in nature". The parties have been given a further three months to reconsider their positions in light of these decisions.
This case has provided contentious probate lawyers with welcome clarity on the ongoing effectiveness and use of the Banks v Goodfellow test.
A full copy of the judgment can be found here.
Miles & Shearer v Shearer (2021) EWHC 1000 (Ch)
A recent unsuccessful claim brought by two adult children under the Inheritance (Provision for Family and Dependants) Act 1975
Background to the case
This recent high-profile claim was brought by two adult daughters (Juliet and Lauretta) of a deceased father's estate. Neither the daughters nor their children benefitted under their father's will and Juliet and Lauretta therefore brought a claim under the Inheritance (Provision for Family and Dependants) Act 1975 for financial provision from the estate. The claim was defended by the deceased's second wife, Pamela, who was the principal beneficiary of the estate.
What was the outcome?
The court dismissed the claim. It was held that the pair were able to meet their maintenance needs from other resources and their father had no obligation or responsibility towards them. They had also been well provided for during the parent's lifetime and the court therefore made no award for further provision from the estate.
What does this mean for charities?
Adult child claims are generally considered difficult to succeed in, particularly where the individuals bring the claim are financially stable. This case provides a further reminder the court is unlikely to make an award to an adult child in those circumstances, even where the estate is of considerable value. If charity beneficiaries are faced with a claim brought against the estate by an adult child claimant, it is important to seek legal advice early to establish the true merits of that claim and the strength of the position to take in defending the claim.
A full copy of the judgment can be found here.
Rittson-Thomas v Oxfordshire County Council, 2019 EWCA Civ 200
An interesting case where the court considered a donor's intentions regarding a gift made for a specific purpose and how a change in circumstances reversed the gift back to the estate
This case concerned the redevelopment of a primary school in Nettlebed, Oxfordshire. The land upon which Nettlebed primary school originally stood had been gifted to the local authority for its use as a school by the estate of Robert Flemming in the early 20th century.
Anna Morris recently considered the outcome of this case in further detail in an article for Today's Wills and Probate, a link to Anna's article can be found here and a copy of the judgment in full can be found here.
Recent Government response to 2017 Law Commission report – guidance on ex gratia payments
You may be aware that earlier in the year, the Government made a number of recommendations in response to the 2017 Law Commission report on Technical Issues in Charity Law.
From a legacy perspective, the Law Commission recommendation on 'ex gratia' payments out of charity funds is of particular interest.
'Ex gratia' payments are payments out of charity funds that trustees feel morally obliged to make, but which they have no legal power to make. This may be the case where someone leaves their estate to a charity and later instructs lawyers to include a family member as a beneficiary but dies before the change to their will is made. Charity trustees may feel morally obliged to make an ex gratia payment to the family member in question. The current law requires charity trustees to seek Charity Commission permission for all ex gratia payments, which can be disproportionately time-consuming and cause delays.
The Law Commission's recommendation would allow charities to make relatively small ex gratia payments without seeking Charity Commission permission, and to delegate the power to make those payments to an appropriate person within the charity. This is a sensible adjustment that reflects the reality of delivering a charity's work.
The Government accepts all recommendations in this chapter of the report and recommends the introduction of a new statutory power allowing charities to make small ex-gratia payments (the levels of which depend on the proportionality of the payment to the charity's gross annual income).
The full Government response can be found here.
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.
