T v V  EWHC 214 (Fam) is a case that will be of interest to contentious probate practitioners since it deals with the question of when the court should exercise its power to award interim payments to a claimant in a claim under the Inheritance (Provision for Family and Dependants) Act 1975.
There is a statutory power to award interim payments under s. 5 of the 1975 Act, which provides as follows:
“Where on an application for an order under section 2 of this Act, it appears to the court – (a) that the applicant is in immediate need of financial assistance, but it is not yet possible to determine what order (if any) should be made under that section; and (b) that property forming part of the net estate of the deceased is or can be made available to meet the need of the applicant; the court may order that, subject to such conditions or restrictions, if any, as the court may impose and to any further order of the court, there shall be paid to the applicant out of the net estate of the deceased such sum or sums and (if more than one) at such intervals as the court thinks reasonable; and the court may order that, subject to the provisions of this Act, such payments are to be made until such date as the court may specify, not being later than the date on which the court either makes an order under the said section 2 or decides not to exercise its powers under that section.” [Emphasis added]
There is very little reported case law on the point. To my knowledge, prior to T v P, there has been only one other reported decision dealing with the approach to applications for interim payments: Smith v Smith and Others  EWHC 2133 (Ch).
The decision in T v L confirms that a claimant has a very high threshold to surmount in respect of such applications.
The claimant in T v L was bringing her claim on the basis that she was a financial dependant of the deceased having been maintained by him, wholly or partly, immediately before his death, and thus eligible to claim under s.1(e) of the 1975 Act. Her case was that she had been in a romantic relationship with the deceased and that they had cohabited for periods (but presumably not for the entirety of the two-years prior to death to enable her to claim as a cohabitant).
For the purposes of s.1(e) a claimant must demonstrate that the deceased was making a substantial contribution in money or money’s worth towards the reasonable needs of the claimant (other than a contribution made for full valuable consideration pursuant to a commercial arrangement). Arguments about the standing of a person to bring a claim as a financial dependant often turn on the nature and frequency of any provision made for the claimant and whether or not such provision continued until death.
The deceased died in June 2016. T had received a sum of £196,000 from a SIPP in the deceased’s name but had given little detail as to how these funds, of which only £64,000 remained at the date of the hearing, had been spent.
T’s standing to bring a claim was disputed by the beneficiary defendants. The accepted that she had been in a relationship with the deceased at times but did not accept that she was eligible to claim as a dependant.
The defendants had produced evidence from a number of witnesses disputing much of the claimant’s case in terms of the nature and duration of her relationship with the deceased and as to the degree of financial support provided by him.
A draft will and attendance note existed from 2014, which set out the deceased’s view of the relationship. However, there were arguments about the weight to be attached to that evidence and in any event it did not shed light on what had happened in the relationship between T and the deceased thereafter.
T sought interim provision for the payment of her legal fees under s. 5 of the 1975 Act, in the sum of £155,000 (having already spent c. £52,000 in respect of legal fees and owing a further £80,000). The judgment does not say what the value of the estate was.
It was accepted by T that she would have little prospect of repaying any interim provision in the event that her claim ultimately failed at trial and she was found not to be entitled to any interim provision paid to her.
Her position was that she would face very significant, if not insuperable, problems in funding her case to trial by any other means. However, there was no evidence that she had attempted to achieve funding by other means.
Mrs Justice Lieven dismissed the application and ordered T to pay the beneficiaries’ costs.
She noted that the nature of an order under s.5 is very draconian, being a mandatory order to pay money which the claimant may ultimately be found not to be entitled to and where there is no possibility of a cross undertaking in damages. In these circumstances Article 1 of Protocol 1 of the European Convention on Human Rights was further engaged:
“given the very nature of such an interim order, considerable caution must be applied. This cautious approach can be analysed under Article 1 Protocol 1 of the European Convention of Human Rights and the requirement for proportionality in a decision to effectively deprive someone of property after an interlocutory hearing, but almost certainly with a permanent effect. I therefore consider that the cautious approach which I should adopt involves ensuring that any order that I make is proportionate under A1P1.”
Two requirements must be met in the present case:
(a) the claimant must be in immediate need of financial assistance; and
(b) there must be consideration of whether or not the claimant’s substantive claim had sufficient merit to justify an interim order, which Mrs Justice Lieven considered required that the claimant could at least demonstrate a strong arguable case.
[I should add that the statute requires consideration as to whether or not there are assets in the net estate that are available or that can be made available to make provision for the claimant but this presumably was not in issue on the facts]
In such cases (referring further to the judgment in Smith), very clear evidence was required of financial need before an application under s. 5 should be acceded to.
Mrs Justice Lieven’s reasons for rejecting the application are worth considering in full, since they shed light on how these sorts of applications should be approached (or should not be approached):
28. I will deal, first – although it is not essential that they are in this order – with the question of whether the claimant has satisfied me that she is in immediate need of financial assistance. It is my view that her evidence is far from sufficiently clear or comprehensive on this matter.
29. The deceased left the claimant 50 per cent of a SIPP, which amounted to some £196,000, which she received in January 2017. Her witness statement of 8 January 2019- that is her fourth witness statement – gives little detail of how a large part of this money has been spent.
30. I note that her evidence on financial need relevant to this application is limited to six paragraphs in that fourth witness statement, paragraphs 13 through 18. She has produced no bank statements and no supporting evidence in respect of how that money has been spent or any breakdown either of the legal fees she has already spent or those to be owed in the future.
31. She says in the witness statement that she has spent £52,000 on legal fees and owes a further £80,000 and that she now has £64,000 only in her bank account. She makes reference in the witness statement to charitable donations and support for individuals in Ghana, but there is neither any detail as to these payments nor anything from any bank accounts, nor is it at all clear to me why that type of expenditure should ultimately be paid by the estate rather than by the claimant if she chooses to do so. And, as I have said, there is no documentary evidence supporting the nature of any of those payments.
32. It is, in my view, clear from the above that the claimant has not come close to satisfying the kind of evidence that Mann J was looking for in the Smith case and this is particularly important given the nature of the claim and the onus on her to justify the making of a section 5 order. I also note that there is no evidence from her solicitors suggesting that they would refuse to act if they were not paid the outstanding sum, nor was there any evidence of attempts to get either legal insurance or enter into any form of conditional fee agreement.
33. It may be that it would not be possible to reach such an arrangement in a case such as this but I would have expected to see evidence on the point. Mr Weale also submits that, if the claimant had genuinely needed financial assistance to pay her legal fees, then it seems reasonable to expect that she would have made the application under section 5 well before 8 January 2019. I agree with this argument.
34. This application has been made very late in the day both in respect of the proceedings overall but also after the indication from Mostyn J at the previous interlocutory hearing that if an application was to be made it should be done so by early December 2018. Ms Allardice says that the claimant has been unwell and that is why the application was delayed but, yet again, I have no supporting evidence for that. I only have Ms Allardice’s submissions. I should make clear, I have no doubt whatsoever that Ms Allerdice does so on instruction but, again, given the strong objections that the defendants were making about the timing of the application, I would have expected to see evidence of ill-health. For these reasons, I do not think that the claimant has satisfied the burden upon her to show immediate financial need within the terms of the statute.
35. In those circumstances, it is not strictly necessary for me to consider whether the claimant would satisfy a merits test under section 5 . However, for completeness, I will briefly deal with the point. Given the impact of a section 5 order, particularly in circumstances where, as I have said, repayment is unlikely, a claimant would have to show that they had, at least, in my view, a strong arguable case.
36. It may often be the case that the principle of entitlement under section 5 is agreed and, therefore, the only issue is quantum. In those circumstances, it may be relatively easy to satisfy a merits test for a section 5 application. But, here, the defendants strenuously resist any eligibility under section 1 of the Act.
37. In respect of the entitlement under section 1 , the defendants have produced a large number of witness statements disputing much of the claimant’s evidence as to the nature and duration of the relationship with the deceased and as to the degree of financial support.
38. Ms Allardice submits that much of this evidence is unimportant or irrelevant because there is a draft will and attendance note from 2014 which sets out the deceased’s view of his relationship with the claimant. It would not be appropriate for me to express any detailed view on that evidence or to prejudge the issues at trial, but it is quite clear from the evidence that has been submitted that the defendants will raise arguments about the weight to be attached to the 2014 evidence. Further, and, in any event, those 2014 documents relate, self-evidently to 2014 and consideration under section 1 will have to be given to events thereafter.
39. All that that material shows is that there are clearly arguable points on both sides and that the defendants have arguable points to be made against the claimant having an entitlement. In those circumstances, I think that it would, in any event, be wrong to make an order under section 5 for such a large sum where there is absolutely no security or even very much likelihood that it would be repaid.
40. In my view, making an interim payment under section 5 would effectively be prejudging a part of the section 1 issue in a manner that would not be right on the facts of the case. For these reasons, I reject the application.
Learning points for practitioners
- The courts will subject applications for interim payments to very careful scrutiny. Given that an application can only be made in circumstances of immediate financial need, it will almost invariably be the case that the claimant will be unable to repay any overpayment of provision that is made and the court will need to feel a degree of confidence that the claimant is ultimately going to be entitled to some provision from the estate.
- Particular care is required in preparing the applicant’s evidence as to their financial needs. Bank statements will need to be produced and expenditure will need to be explained and justified. Financial needs that have come about through unwise expenditure are unlikely to then be laid at the door of the estate.
- If provision is going to be sought for legal costs, the claimant should demonstrate what steps they have taken to find lawyers willing to act on a conditional or deferred fee basis or to obtain legal expense insurance.
- These sorts of applications should only be contemplated in cases where eligibility is conceded or the claimant’s position on that point is particularly strong and an immediate need can be demonstrated – for example claims by minor children where the surviving parent is struggling to support them, spousal claims where for example there is an urgent need to pay mortgage instalments. Such applications are always going to be difficult, and will require very careful consideration, where there is a factual dispute as to the claimant’s standing to bring a claim. Embarking on a chancy application will not only leave the claimant with the burden of a costs order against them but also risks adverse comment being made about the substantive merits of such a claim, which may then weaken the claimant’s hand in negotiations.