O. v M
| Jurisdiction | Ireland |
| Judge | Mr. Justice Brian O'Moore |
| Judgment Date | 18 March 2021 |
| Neutral Citation | [2021] IEHC 253 |
| Date | 18 March 2021 |
| Court | High Court |
| Docket Number | [2018/178 SP] |
IN THE MATTER OF THE ESTATE OF E AND IN THE MATTER OF THE SUCCESSION ACT 1965 AND IN THE MATTER OF SECTION 117 OF THE SUCCESSION ACT 1965
IN THE MATTER OF THE ESTATE OF E AND IN THE MATTER OF SECTION 24 OF THE LAND AND CONVEYANCING LAW REFORM ACT, 2009
AND
AND
AND
AND
[2021] IEHC 253
Brian O'Moore
[2018/178 SP]
[2020/315 SP]
THE HIGH COURT
Settlement – Approval – Succession Act 1965 s. 117 – Applicants seeking an order approving an arrangement – Whether the applicants were appropriate persons to make the application
Facts: The last Will and Testament of the deceased (“E”) named the applicants in the 2020 proceedings (“M” and “K”) as her Executors and Trustees. E also made provision in her Will for her only child (“O”). The bequests to O included the income from the residuary estate of E, with the capital and any undistributed income in E’s estate to O’s two children (“R” and “G”) after O died. O initiated proceedings under s. 117 of the Succession Act 1965, alleging that E failed to make proper provision for her and therefore failed in her moral duty to O in accordance with the means of E. Uncertainty about the position of the contingent beneficiaries gave O’Regan J reason to pause when she was asked to approve the settlement of the s. 117 proceedings. The applicants therefore brought the Special Summons seeking: (i) an order pursuant to s. 24(1) of the Land and Conveyancing Law Reform Act 2009 approving (in revocation and substitution of the trust created by clause 2(c)(iii) of the Will) for the benefit of the beneficiaries (or contingent beneficiaries) an arrangement in terms of the draft trust instruments exhibited to the Affidavit of “W”; (ii) if necessary, an order pursuant to s. 23 of the 2009 Act designating the applicants appropriate persons to make this application.
Held by the High Court (O’Moore J) that it agreed with counsel for the applicants that Goulding & Anor. v James & Anor. [1997] 2 All ER 239 was helpful in that it supported the use of actuarial evidence in order to assess the benefit (or lack of benefit) to contingent beneficiaries of a proposed arrangement in substitution of an existing trust. Even without the authority of Goulding, O’Moore J would have been prepared to accept the careful analysis of the actuaries in this case as the only realistic way of judging whether the requirements of s. 24 were met. On the basis of that analysis, he made the order sought at (i) above. He held that it was clear that the applicants were appropriate persons to make this application, within the meaning of s. 23. He made the order sought at (ii) above. He assessed afresh the proposed settlement. He found that the parties to the compromise were all mature adults advised by excellent lawyers, the interests of the residuary beneficiaries were not affected, the compromise was one which he assumed reflected the informed views of the Executors and Trustees and of each of the family on the rights and wrongs of the claim, the settlement would avoid the financial cost and emotional upset that accompany almost every dispute of this sort, and it would free up a considerable amount of court time. He approved the compromise of the s. 117 action.
O’Moore J gave the parties liberty to apply in respect of the precise order to be made but, so that further costs in both cases could be minimised, he suggested that the solicitors for the Executors/Trustees draft the appropriate orders in both actions, have them agreed with the solicitors for the other parties, and present the agreed orders to his Registrar. He added that the hearing of the 2020 Special Summons and the contents of this judgment, were so intertwined that he believed it was appropriate to make an Order under s. 24(3) of the 2009 Act that the hearing be treated as held otherwise than in public, and that this judgment should be treated accordingly. He held that the parties had liberty to apply in respect of this aspect of the Order.
Settlement approved.
E died on the [REDACTED]. Her last Will and Testament named the Applicants in the 2020 proceedings as her Executors and Trustees. Clause 29(c)(iii) of the Will reads:-
“In the event of any of my grandchildren predeceasing my daughter O leaving a child or children him or her surviving then and in that event I GIVE AND BEQUEATH the share of that predeceased grandchild to his or her children, if any, in equal shares, the same to be held on trust by my Trustees until they shall attain the age of 18 years and thereafter to them absolutely.”
E also made provision in her Will for her only child, O. The bequests to O included the income from the residuary estate of E, with the capital and any undistributed income in E's estate to O's two children after O died.
O has initiated proceedings under section 117 of the Succession Act 1965, alleging that E failed to make proper provision for her and therefore failed in her moral duty to O in accordance with the means of E.
It is impossible for me to assess the merits of O's claim, and I am not now asked to do so. I should explain briefly why this is the case. A significant part of O's claim is that the gift to her of the income from E's residuary estate is next to worthless as it attracts a large tax liability. However, the report obtained from tax consultants (which supports this argument) is not one upon which I can place any great reliance. The report is premised on the view that:-
“In general, a provision that gives the income of a fund to a beneficiary for life is treated as a life interest to that person.”
In his evidence in the section 117 proceedings, F (solicitor for the Executors and Trustees of the Will of E) states that the tax advisers have advised “that the Will creates a life estate in favour of [O]”.
It is plain that any unfortunate tax consequences for O will arise only if a life estate in the residuary funds is created in her favour. However, early in their report the tax advisers state:-
“You might note that [the tax advisers] provides taxation rather than legal advice and my advice is based on the facts and assumptions set out in this letter of advice. Any facts, assumptions and comments on legal issues should be reviewed, in order to confirm that the comments are in line with the relevant legal treatment, and the facts and assumptions are correct.”
This is potentially a very broad reservation. On one view, any advice on tax involves comment on a legal issue as ultimately tax liabilities are set by law. It would be better, in framing a report such as this, if assumptions (either of fact or law) were to be clearly set out, followed by the advice which the professional or firm is providing. This comment in no way suggests that the advice provided here by the tax advisors is inaccurate or is advice for which they are not taking responsibility. It is simply not sufficiently plain that the legal proposition set out at paragraph four of this judgment is one which the advisors are standing over.
The effect of all this for the parties in the hearing before me, is that I will decide these two applications without reference to the strength of O's claim; that makes the burden on the parties (and in particular on the Executors and Trustees) more onerous, but this is an inevitable consequence of the quality of the evidence before me. I will explain at paragraph 24 of this judgment the significance of this issue.
The section 117 action taken by O was compromised by the parties, subject to court approval, on terms set out in the Affidavit of W grounding the Special Summons proceedings commenced by the Applicants on the [REDACTED] 2020. These terms are summarised as follows (at paragraph 12):-
“The parties to the [section 117] Proceedings and [the children of O] have compromised them by settlement […] the terms of which provide, inter alia, after payment of the pecuniary legacies contained in the Will (other than those to the parties to the Settlement) for the distribution to [O] of 55% share of the remaining estate and the distribution of the balance thereof to the [children of O].”
Of course, this settlement would do away with the trust created by clause 2(c)(iii). That trust benefits the children, if any, of R and G (the children of O) who may qualify under the terms of the Will. These contingent beneficiaries cannot consent to the proposed settlement, not least because they cannot now be definitively identified. R and G are alive. While G has one child (A), R has none at this point in time. It was this uncertainty about the position of the contingent beneficiaries that gave O'Regan J. reason to pause when she was asked to approve the settlement of the section 117 proceedings. The Applicants have therefore brought the Special Summons seeking:-
(i) An order pursuant to s. 24(1) of the Land and Conveyancing Law Reform Act 2009 approving (in revocation and substitution of the trust created by clause 2(c)(iii) of the Will) for the benefit of the beneficiaries (or contingent beneficiaries) an arrangement in terms of the draft trust instruments exhibited to the Affidavit of W.
(ii) If necessary, an order pursuant to s. 23 of the 2009 Act designating the Applicants appropriate persons to make this application.
I have slightly paraphrased the reliefs sought.
The proposed arrangement is described at paragraphs 13, 16 and 17 of the Applicants’ written submissions in the section 24 proceedings:-
“The provision for the contingent beneficiaries that is incorporated in the settlement […] is in the nature of a commensurate percentage of the residue being placed on trust for the contingent beneficiaries, and, specifically, for one fund to be placed on trust for the children of the second respondent and...
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