Court of Appeal Allows Creditor of Beneficiary of an Estate to Bring Probate Claim

August 31, 2016

Dispute Resolution, Wills and Probate

Court of Appeal Allows Creditor of Beneficiary of an Estate to Bring Probate Claim

In Randall v Randall [2016] EWCA Civ 494 (Randall) the Court of Appeal overturned a 2014 High Court decision and ruled that a creditor of a beneficiary had an interest in the estate that gave him sufficient standing to challenge the validity of a will.

Part 57 of the Civil Procedure Rules deals with contentious probate claims, which are defined at CPR 57.1.2 as contentious claims relating to one of the following:

  • Grant of representation to an estate of a deceased person.
  • Revocation of a grant of representation.
  • Decree pronouncing for or against the validity of a will.

It is a common law requirement for claimants to show they have an interest in the deceased’s estate that gives them legal standing to bring the probate claim. CPR 57.1.1 states that the claimant must state the nature of their interest in the deceased’s estate in the claim form.

In Randall the former husband (the claimant) of the defendant (and main beneficiary) of the deceased’s estate sought to dispute the validity of his former mother-in law’s will

As part of the financial settlement following their divorce, the claimant and his ex-wife agreed that, if the claimant’s mother-in-law left the ex-wife more than £100,000 in her will, the ex-wife would keep the first £100,000 and share any excess sums with her former husband. This agreement was formalised by a consent order.

On her death, the mother-in law left the ex-wife £100,000 and passed the remainder of her estate (£150,000) to her grandchildren.

The claimant challenged the validity of the will in the High Court, arguing that it had not been properly executed in accordance with the provisions of section 9 of the Wills Act 1837. If the will was set aside, the claimant would be entitled to around £75,000 (his share of the mother-in-law’s estate over £100,000) as the dispositions to the grandchildren would no longer take effect. The defendant contended that the claimant had no standing to bring such a claim.

The judge at first instance held on the facts that ‘it does not appear that the deceased intended by her signature to give effect to the alleged will’.

The preliminary position to be determined was whether the claimant had satisfied the requirement in CPR 57 to show that he had an interest in the deceased’s estate so that he had legal standing to bring a claim.

The High Court Judge held that the claimant had no proprietary interest in the deceased’s estate. His right to enforce the agreement (endorsed by the consent order) represented a debt or potential debt owed by the defendant and such a debt could only be determined once the deceased died. After all, the deceased could have decided not to benefit her daughter, either in her lifetime or in her will, in which case there would have been no benefit to be passed on to the claimant.

The judge also held that, in accordance with the common law principle in Menzies v Pulbrook and Kerr (1841) 2 Curt 846, neither a creditor of a beneficiary of the deceased’s estate nor a direct creditor of the estate would have an interest in the estate for the purposes of CPR 57. The claimant was unsuccessful and appealed.

In 2016 the Court of Appeal overturned the High Court decision, holding that the claimant does have an interest in the estate for the purposes of contesting the will. The Court of Appeal preferred a broad construction of the meaning of ‘interest’ in CPR 57; that justice required the court to extend the meaning of interest to persons such as the husband who ‘is not a mere busybody….[but] has a real interest in challenging the validity of the will’ and who had no other method available for challenging the will.

Both a creditor of an estate and a creditor of a beneficiary are ‘interested’ in the estate but whereas the creditor of a beneficiary has an ‘interest’ by virtue of his relation to a beneficiary the creditor of the estate has no ‘interest’ in the estate because his interest is outside the will or intestacy.

The Court of Appeal was, in effect only confirming established authority; such as The Goods of Timothy White (1893) LR Ir 31, Dixon and Dickenson v Allinson (1864) Tr. & Sw. 572 and Kipping and Barlow v Ash (1845) 1 Rob 270.

The Court of Appeal made it clear that, had the claimant’s dispute fallen in its general (i.e. commercial) jurisdiction, rather than its probate jurisdiction, it would have been obvious that the husband had sufficient interest in the subject matter to bring a claim.

The judgment in Randall makes it clear that the courts will adopt a very broad approach in assessing whether a claimant has an interest under CPR 57, particularly where such a claimant may have no other form of recourse to explore.

If you are a creditor of a beneficiary, as an executor, or you are subject to a challenge from a creditor of a beneficiary, please contact our Private Client department who will be delighted to assist.

posted by Kate Garrow | August 31 2016