Time is money – limitation periods in the context of provision applications

In general, when someone dies their Will (assuming it is valid) is the final arbiter of where that person's money and other property go.  However, statutes in both England and Hong Kong (and other similar jurisdictions) introduced an important exception to this general rule: those being immediately maintained before the death of the testator could apply for "reasonable provision".  However, the time period within which to make an application is generally short: only six months from the date of the grant of probate or letters of administration.  Although all is not necessarily lost if an application is not made within that period.  The court can allow an application made out of time.  Whether it is willing to do so is the problem an English Court grappled with in the recent case of Berger v Berger, [2013] EWCA Civ 1305. In that case, the Court had to decide whether it would be willing to allow an application made after six years.

The facts  

The appellant in this case was the wife of the deceased. The two had been married for 36 years by the time of his death in 2005, and had lived together for several years prior to marriage. Each had children from previous marriages. The sons of the deceased served as the executors of the deceased's estate, which was made up of several properties and the majority shareholding in a property company, together totaling over £7.5 million.

In his will, the deceased husband specifically allocated a significant portion of his estate to be held on trust "to pay the income to [the appellant] during her lifetime" and thereafter on trusts for the deceased's two sons. Much of the evidence showed the husband's intent for providing substantially for his wife, although the trust did not provide that the appellant receive a specified sum. She was bequeathed an interest in several properties as well as the former matrimonial home to live in with the option of selling it.

Following the death of their father, the stepsons used considerable funds from the estate to renovate various estate properties on a gradual basis. The effect of this was to reduce the assets being held on trust and thus in turn reduce the amount of money available for the appellant.  Six years after the death of her husband and after having received a decreasing income from the estate, the wife applied under the relevant statute for more reasonable provision. She explained that she delayed her application because she did not have proper legal advice and she wanted to avoid litigation with her stepsons, who like their deceased father, happened to be solicitors.

Court's decision

At first instance, the court refused to grant the wife's application for more reasonable provisions citing not only her delay but also that the Will did not specifically allow her more income than was needed for her survival. At the time, the wife was in her 80s and in poor health. She had already received the former matrimonial home to live in with the option of selling it, plus a monetary income, albeit diminishing. What else could she need?

In contrast with the trial judge, the Court of Appeal, Black LJ, held that the wife did have a substantive case with regard to receiving more reasonable provisions from the estate. Citing the case of White v. White [2001] 1 AC 596, the court determined that a divorce court would have effected an equal division of the parties' assets, and thus it was arguable that she deserved more provision at the outset. The trial court had incorrectly focused on the fact that the provisions were "enough" to sustain her for "the rest of her life" as opposed to what she would have been due in a divorce scenario.

Even still, the Court of Appeal upheld the trial court's refusal of the wife's application due to her delay in bringing proceedings. The burden was on the wife to convince the court that it was proper to allow her to make her claim out of time and she did not discharge this burden. The wife's supposed lack of sound legal advice and hesitation to commence litigation against her stepsons was no excuse. The court held that in all the circumstances, it would be unfair to allow the applicant to apply for provision six years after the limitation period had expired.

Comment

Berger v Berger shows that the six month statutory time limit can operate to bar untimely applications even where the applicant has a strong substantive case. Here, the financial provision due under case law was greater than that allocated to the wife and the executors of the will appeared to have undermined the intent of the deceased. Even so, procedural requirements determined this case despite its substantive strength.

If you wish to discuss, please contact Gareth Thomas or Richard Norridge of our Private Wealth and Trusts team.