Background

This case related to the estate of Lord Sidney Albert Johnston (“the Deceased”), who was the late father of the Claimant, Colin Johnston. The Defendant in this matter was Natalie Elsie Wackett, who was the Deceased’s granddaughter. Under the Deceased’s Will, Natalie was also his personal representative and the sole beneficiary of his estate.

The Deceased died on 27 March 2017 and Colin subsequently brought a claim under the Inheritance (Provision for Family and Dependants) Act 1975 (“the 1975 Act”) against the Deceased’s estate seeking reasonable financial provision. The proceedings concluded in 2019 with a sum of £125,000 being awarded to Colin from the estate.

Following this award, evidence came to light that Colin owed a debt to the Deceased of £115,432.75. The debt related to a past dispute in respect of the breakdown of a car business. Colin had commenced proceedings in 1992 (“the 1992 Proceedings”), which were later dismissed for want of prosecution in 1998. In 2002, a detailed assessment of the costs payable by Colin arising out of the 1992 Proceedings took place, which resulted in him being ordered to pay the Deceased’s costs. Colin was informed of the result of the assessment, but he failed to ever satisfy the costs order. 

Consequently, Natalie contested the value of Colin’s award and stated that it should be limited to approximately £8,700, having offset the £115,432.75 debt which he owed to the Deceased. She sought to rely on the rule established in Cherry v Boultbee: where a person is both a beneficiary and a debtor of an estate, the beneficiary may not receive the legacy from the estate without first paying off their debt (unless the legacy is a specific legacy not represented by cash). An award made in respect of a claim under the 1975 Act is treated as a legacy made in the deceased person’s Will.

In light of Natalie challenging the value of his award, Colin brought a Part 8 claim to determine whether the costs order could be set-off against the legacy. In his evidence, Colin denied having ever received a final costs certificate following a costs assessment and, therefore, in the absence of such certificate he had no liability to the Deceased’s estate. Although Natalie was unable to locate a final costs certificate herself, her position was that such a certificate was obtained in the 1992 Proceedings, thus creating an enforceable liability against Colin.

The Issue

Whether Natalie could, in her capacity as the Deceased’s personal representative in the administration of his estate, deduct from the legacy that Colin was awarded under his 1975 Act claim the amount of an unsatisfied costs order under the rule in Cherry v Boultbee.

The Judgment

Deputy Master Brightwell (“the Judge”) explained that in determining Colin’s claim under the 1975 Act, the court will have assessed the total value of the Deceased’s estate. In doing so, the Deputy Judge would have been well aware of the costs assessment that took place following the 1992 Proceedings, the subsequent costs order and how the Deceased never took steps to enforce this against Colin. Considering these factors and on the basis that the costs order would not be enforced in the future, the Deputy Judge reached the award of £125,000.

As a result, the Judge concluded that it was implicit in the 2012 Proceedings judgment that Colin would not be obligated to contribute to the estate before receiving his £125,000 award. Consequently, the rule in Cherry v Boultbee did not apply to Colin’s award under the 1975 Act and the Judge declared that it be paid to him without any deduction.

The Judge also referred to equity in his judgment, given that the basis of the rule in Cherry v Boultbee was the maxim that “he who comes to equity must do equity”. The Judge could not see any reason why equity would require a successful claimant under a 1975 Act claim to pay back to the estate the money the court had determined they reasonably required for their maintenance. Furthermore, a successful claimant receiving an award under a 1975 Act claim is not coming to equity, but rather is recovering what the court deems as reasonable financial provision owed to them. 

Summary

This case demonstrates that where an individual owes a debt to a deceased person and they are subsequently awarded a sum from the estate under a 1975 Act claim, the court may not be willing to set off that debt against the award they are due to receive.

If you are in any doubt over your rights in the estate of someone who has passed away or find yourself considering a claim for reasonable provision from their estate, please contact our team of specialists on 0345 872 6666 or by completing the form found on this page.