Think of the Children! – Minors and reasonable financial provision

On 27 July 2018, the High Court handed down judgment in the case of Ubbi v Ubbi [2018] EWHC 1396 (Ch). The judgment explored reasonable financial provision under the Inheritance (Provision for Family and Dependants) Act 1975 in the context of minor children and serves as a necessary reminder to all to update your will.

Background

The claim was brought by Mattia Ubbi and Gabriele Ubbi, by their litigation friend and mother Bianca Corrado (‘Bianca’) for reasonable financial provision from their late father’s estate, Malkiat Singh Ubbi (‘the Deceased’). The claim was brought against the Deceased’s wife, Susan Elizabeth Ubbi (‘Susan’), the personal representative and beneficiary pursuant to the Deceased’s will.

The Claimants were the infant children of the Deceased as a result of an extra marital relationship with Bianca. Both children were born after the Deceased executed his will on 6 August 2010 and therefore no provision was made for them. The Deceased’s will appointed Susan as executrix and devised all of his real and personal property to her which was estimated to be worth in the region of £3.3 million.

The Deceased died unexpectedly on 8 February 2015 and at the time of his death, he had been living with Bianca for around 13 months and the two children were 2 years old and 6 months old respectively. A decree nisi was pronounced on 28 January 2015 but a decree absolute was not obtained prior to the Deceased’s death.

It was accepted by Susan that reasonable financial provision should have been made for the children in the will, however, there remained three areas of dispute as to the value of the provision, namely:

1. Housing needs;
2. Childcare; and
3. Private schooling.

The parties adopted a multiplier multiplicand methodology using Ogden Table 28 to assess the costs in raising both children with the sum of £848,105.78 sought from the estate by the Claimants. Susan contended that nothing was due as Bianca’s proposed contribution, of 65% of her income over an 18-year period, would surpass the reasonable needs of the children.

The judgment

The parties were largely agreed on the law following the decision Ilott v The Blue Cross [2017] UKSC 17. However, Master Shuman rejected a submission that the needs of an infant child should normally outrank the needs of other beneficiaries stating, at paragraph [18], that the 1975 Act does not elevate the needs of minor children to ‘a first or paramount consideration’ as in s25 Matrimonial Causes Act 1973 or s1 Children Act 1989 and that the needs of the children ‘must be considered in the round’ although ‘the fact that a claim is brought by an infant child is a vital part of the factual matrix.’ The Master accepted a submission that the mere fact that a child is born outside of marriage is an irrelevant consideration but how they were treated by the Deceased may be of relevance.

Master Shuman was also invited to draw parallels between the court’s approach to a claim for reasonable financial provision and its jurisdiction under Schedule 1 of the Children Act 1989. However, the Master held that although guidance may be taken from approached in Schedule 1 applications when considering any other matter which the court may consider relevant at s3(g) of the 1975 Act, it was by no means determinative of any claim.

The Master also rejected any suggestion that research relating to the average costs of raising a child would be of any assistance to the court, emphasising that the court’s consideration is on the particular claimants and what it is reasonable for those individuals to receive in all the circumstances of their case.

In relation to quantification of the claim, Master Shuman made the following findings as to the areas in dispute:

1. Housing Needs – the master agreed that the Claimants could not continue to live in their current property which had been held by the Deceased and Susan as joint tenants and that there should be a ‘clean break’ in respect of any award. As such, the master assessed the needs of the children by reference to the rental value of suitable accommodation which produced a capitalised need of £701,950
2. Childcare – Master Shuman accepted the mother’s claim that she would need to return to work sooner as a result of the Deceased’s death and that to do so she would require a professional nanny rather than an ad hoc au pair. As a result, a capital sum of £234,234 was justified.
3. Education – It was alleged that the Deceased’s firm intention was that the children be privately educated. This was rejected by Master Shuman who held that the income and assets of the parties would not have been sufficient to fund private education to university level without significant reduction in living standards and the provision of private education was not a reasonable financial provision.

This came to a total sum of £1,287,929, which included other sums dealt with in schedules not appended to the judgment. However as, in open correspondence, Bianca had made an apparent concession that she would contribute 65% of her income towards the needs of the children, Master Shuman capitalised this concession over an 18-year period in the sum of £901,639. As a result, this produced a contribution from the Deceased’s estate of £386,290.60, significantly less than the £848,105.78 initially sought.

The Addendum

Master Shuman’s main judgment was then followed by an addendum judgment as Counsel for the Claimants sought to reopen the methodology used to quantify the claim as a result of an award being ordered that was lower than the one sought.

The Claimants sought to distance themselves from the concession made by Bianca that she would contribute 65% of her income over an 18-year period which amounted to £901,639. They argued that the 65% concession was based on the total maintenance needs calculated at £1,749,744 and that it would not be open to the court to rely on this figure in circumstances where a significant amount of that calculated figure had been disallowed.

However, Master Shuman rejected this argument and held that, had the concession been conditional then this should have been clearly set out in correspondence and, if it was the case that Bianca proposed to contribute a fixed percentage of the children’s maintenance needs rather than a fixed sum calculated from her income then this should have been clearly set out in the correspondence. As a result, the Claimants were not permitted to re-open matters following judgment and the concession stood.

Comment

Master Shuman’s judgment provides useful analysis for assessing claims brought by minor children and a handy reminder that claims involving minor children do not merit a ‘first or paramount consideration’ as they may in other jurisdictions, although the very fact that they are minor children will be an important fact for the court to consider.

Secondly, as with so many claims under the 1975 Act, this case reinforces the importance of ensuring that wills are kept up to date. This is especially important in circumstances where there has been a major life event such as a new, significant relationship or the birth of a child. So much of the difficulty in this case could have been avoided had the Deceased revisited his will following the birth of the Claimants.

Finally, this decision also offers a stark reminder of the care that should be taken when making open offers and concessions. As the addendum judgment demonstrates, if an open offer or concession is intended to be conditional, the correspondence containing that offer should make that fact abundantly clear. Moreover, if a party wishes to argue that an open offer or concession was intended to be conditional despite this not being set out in correspondence, then they must make this clear at the outset of trial and not attempt to re-open matters after judgment has been given.