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Musa & Ors v Holliday & Ors [2012] EWCA Civ 1268

Appeal of award under the Inheritance (Provision for Family and Dependants) Act 1975 to deceased’ cohabitant and her adult son.

The deceased, Ramadan Houssein Guney died intestate in 2006. Diane Holliday had lived with him for six years prior to his death and had a son by him. She and her adult son, Kevin Holliday brought a claim under the Inheritance (Provision for Family and Dependants) Act 1975, which was determined by Her Honour Judge Kushner QC, sitting as a Deputy High Court Judge on 11 November 2011. [Earlier in the case the judge had to determine that the deceased was domiciled in England and Wales, her decision being reported at [2010] EWCA Civ 335.]

Considerable uncertainty existed about the value of the estate, particularly assets in Northern Cyprus, but also the English aspect of the estate. The approach of the judge had been (1) to ascertain the claimants' reasonable needs for maintenance and (2) to make an award from the English estate to meet those needs (and if those needs were reasonable, then the whole of the estate would go to the Claimants).

The Defendants, who were the five children of the deceased, appealed.

The President concluded that the judge, who was exercising a judicial discretion in difficult circumstances, was not wrong, let alone plainly wrong in making the award which she did and he "valued the judge's rugged and robust approach" [25] to the case. There had been no error of principle and the judge had correctly directed herself under the 1975 Act.

Lloyd LJ provided a separate judgment in which he agreed that the judge's award should stand.  He did, however, vary the order so as to make clear that the net proceeds of 60 Green Lanes should not be subject to the burden of testamentary and administrative expenses, which should be borne by the assets taken by Diane Holliday.

The appeal was therefore dismissed.

Summary by Thomas Dudley,  barrister, 1 Garden Court Family Law Chambers


Neutral Citation Number: [2012] EWCA Civ 1268
Case No: B4/2011/2918

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 15 October 2012

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Defendants Appellants

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Claimants Respondents

Defendants Respondents

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Christopher Wagstaffe Q.C. and Miranda Allardice (instructed by DWFM Beckman)
for the Appellants
Ulick Staunton (instructed by Hunters) for the Claimant Respondents
The Defendant Respondents were not represented

Hearing date: 3 July 2012
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Sir Nicholas Wall, President of the Family Division:
1. This application for permission to appeal is brought by five proposed appellants.  The appellants were defendants to an action brought under the Inheritance (Provision for Family and Dependants) Act 1975 (the Act) by the first Respondent to this appeal, Diane Linda Holliday (Diane) and her adult son by a former marriage, Kevin Holliday (Kevin).  The appellants seek permission to appeal against the decision of Her Honour Judge Kushner QC sitting as a judge of the High Court following a reserved judgment dated 11 November 2011.   

2. The appellants are five of the six adult children of the deceased, Ramadan Houssein Guney, (who died intestate on 2 November 2006) by his wife, Souheyla, who herself died intestate in 1992.  Diane was a dependant of the deceased, and had lived with him for some six years prior to his death.  She also has a son by him, Houssein Guney (Houssein), who was born on 3 June 1999, and who was also joined as a respondent to the claimants' claim.  The sixth of the adult children was a defendant and opposed the Claimants' claim below, but has not taken any part in the appeal.  I will refer to the six adult children together as the family.

3. The order made by the judge followed her previous decision that the deceased was domiciled in England and Wales at the date of his death, a decision which was appealed by the family to this court: see [2010] EWCA Civ 335.  We are not, however, concerned in this appeal with that decision.

4. On 21 January 2012, Thorpe LJ, on the papers, adjourned the application for permission to appeal and for a stay of execution to an oral hearing, with the appeal to follow if permission was granted.  We heard argument on the application for the best part of a day on 3 July 2012, after which we reserved our judgments.  Speaking for myself, I would grant permission to appeal, except as regards the part of the appeal which sought to challenge the judge's award to the second claimant, which was not pursued at the hearing.

5. The order made by the judge is complex, but her thinking about the case is, essentially, straight-forward.  It was, on any view, a very difficult case for the judge to hear.  There was a marked lack of cooperation with the proceedings by the family, to the extent that they refused to take out a grant of administration.  There were also substantial areas of uncertainty over the value of the assets comprising the estate.  It was, however, conceded that the claimants were maintained by the deceased immediately prior to his death, within the meaning of section 1(1)(e) of the Act, and that accordingly each had a claim for financial provision under section 2.  It was, furthermore, accepted that Diane was entitled to a substantial award.

6. The judge set out the legal framework of the Act in some detail, and reminded herself in paragraph 2.8 of the judgment that "reasonable financial provision" in the context of the case meant such "financial provision as it would be reasonable in all the circumstances of the case for the applicant to receive for (his / her) maintenance".  She also reviewed a number of the authorities, including the well known case of In Re Coventry (deceased) [1980] 1 Ch 461.

7. The deceased owned property both in England and Wales, and in Northern Cyprus.  Without apparent irony, the judge referred to "major areas of uncertainty" as to the value of certain assets comprised in the estate, particularly as far as the assets in Northern Cyprus were concerned; but as will be apparent, there was also some doubt as to the value of the English aspect of the net estate.

8. In these circumstances, the judge, in my judgment, had little choice but to adopt the course she did, namely (1) to ascertain the claimants' reasonable needs for maintenance, and (2) to make an award from the English assets to meet those needs.  If, as is likely to be the case, the net estate was insufficient to meet those needs, and those needs were reasonable, then the whole of the net estate would go to the claimants.

9. The appellants say that this approach is wrong in principle.  They point to the fact that the first applicant was not married to the deceased, and is not to be treated as though she was his widow.  On the facts of this case, I do not think that this argument stands up.  It is, of course, easy to envisage facts on which the arguments advanced by Mr. Wagstaffe QC for the family, would be correct.  On the facts of this case, the course adopted by the judge seems to me eminently permissible.

10. The judge was first faced with an application for an adjournment.  This was put by the family on the basis that there was an enquiry being conducted by Her Majesty's Revenue and Customs (HMRC) as to possible under-declarations of tax during the lifetime of the deceased.  It was not known how long the enquiry would take, or the likely ambit of any assessment or penalties that may ensue.  There was also, it appears, litigation in Northern Cyprus over the deceased's properties there.  Once again, there was no indication of when that litigation would be resolved.  It is said, and I accept, that although this was a complicating factor, it was not the basis for the application for the adjournment.

11.  The judge refused the application to adjourn.  She was plainly right to do so.  She pointed to the already protracted nature of the proceedings, which had begun in 2007.  She pointed to the fact that the family had "little foundation" to present a "worst case scenario" of £500,000 plus fines and penalties consequent upon the HMRC investigation.  She pointed to the cursory investigations undertaken by the family in Northern Cyprus and the effectively indeterminate amount of time required before a resolution of litigation in Northern Cyprus could take place.  She concluded on this aspect: -

"4.16 Accordingly, although the evidence is presently far from perfect, and the result will therefore be less easy to calculate on a reliable basis, further delay will not perfect the flaws or gaps in the information unless there is an adjournment for a lengthy and indefinite period.  This is unacceptable.

4.7. Further, as I refer to later in his judgment, I feel that [the family] have been sparse in their disclosure and have filed scant evidence at the very last moment ..."

12. The judge thus proceeded to apply the statutory criteria to the facts of the case.  She looked first at the position of Diane.  At the time of the hearing, she was 50.  She had little formal education and no external earning capacity.  She had worked in the family business (the cemetery to which further reference is made below) and had received a wage for doing so, albeit described by her – and accepted by the judge – as being "pin" money.  She and the deceased had enjoyed "a more than comfortable" life style.  The deceased had "various properties" in London, and also "indulged in occasional trappings of wealth" such as a Rolls Royce motor car.

13. Following the death of the deceased, Diane was effectively "frozen out" of the cemetery, and ultimately dismissed for gross misconduct by the member of the family who had taken over the running of the cemetery.  That, according to the judge, effectively put paid to any prospect of her obtaining gainful employment.

14. The judge then looked at Diane's needs.  The house in which she and Houssein were living was "probably a larger property than is absolutely essential" for their needs, but it was "entirely reasonable" not to expect her to "uproot" herself and Houssein at this stage.  Had the deceased not died it was likely that she would have moved to an even bigger property.  So she needed (1) accommodation and (2) income.

15. The English estate comprised the following: -

i) 62, Victoria Road, Knaphill, Woking, Surrey (62, Victoria Road).  This was the former home of the deceased and the first applicant.  It had been acquired in September 2003, and Diane has continued to live there with Houssein.  It was worth in the order of £450,000 and had an indebtedness of approximately £170,000 secured on it, as well as other debts.  The judge estimated its equity at £260,000 (see paragraph 19 below).

ii) The deceased's shares in the Brookwood cemetery (the cemetery).  This was the major asset.  There was a professional valuation of the cemetery in the sum of £1.2 million;

iii) In addition there two other properties, numbers 58 and 60 Green Lanes.  I will say something about these at paragraph [19] below.

16. The judge then looked at Diane's needs:-

"5.2.35 Given the terms of the original mortgage, Diane needs the funds to be able to repay it now to enable her to remain in the property.

5.2.36  She will also need to pay for the incidental maintenance of the property, including outside help to clean and keep the garden in a decent condition.  Naturally she will need to pay for fuel, telephone bills and the like.

5.2.37  Diane needs a reliable vehicle, reflecting her lifestyle hitherto and also to transport Houssein around for school and leisure activities.  She and Houssein would expect to have annual holidays abroad once a year and be able to have meals out on occasion.  Diane would expect to be able to entertain her friends and also those of her son.  She should expect to be able to dress to a reasonable standard and provide uniform, clothing and for activities for Houssein which reflect his talents and the activities of his peers.  She should expect to be able to fund private health insurance for herself and Houssein, something which was paid for by the cemetery company when Ramadan was alive, but which was withdrawn when she was removed from the business.

5.2.38  Diane also needs to be in a position to fund Houssein's school fees at around the level of those presently paid, namely £12,000 a year and, no doubt, rising, as opposed to the level of over £24,000 argued for.  I have given my reasons for this when dealing with Houssein's needs later in this judgment.  She will also need to pay for his music lessons and the "extras" that usually arise from activities through a private school.

5.2.39  I anticipate that Houssein will progress to university and later perhaps qualify in some profession.  This would mean that he would need to be maintained by his mother and his education paid for until he was at least 21 and perhaps significantly older, namely at least another 9 years.

5.2.40  Although Houssein has his own share of his father's UK estate, this has been used up, by my calculation, as the personal representatives have borrowed against it for the purpose of paying his school fees and general care.  Therefore, although one could argue that he has had to contribute in a substantial way to his own maintenance, the fact remains that henceforth, Diane will be the provider for both of them.

5.2.41  Taking all this into account and bearing in mind the standard of living she had when Ramadan was alive, I would agree with Mr Staunton's calculation that an income of £60,000 a year is the appropriate sum as a starting point for Diane."

17. This passage gives rise to a point of controversy in the case, albeit one that does not seem to me to affect the result.  The judge appears to be saying that £60,000 per annum is the right figure for Diane alone.  But she also does so in the context of Diane having to be the provider for both herself and Houssein.  Certainly, if the notional figure of £60,000 was to be for Diane alone, the judge could have expressed herself more clearly.  I have come to the view, however, that in the overall context of the case, the figure of £60,000 is the judge's best estimate of what Diane requires for herself.  But even if I am wrong about that, it does not follow, in my judgment, either that Diane will have sufficient income after catering for Houssein's needs or that she will be able to "downsize" from her present accommodation to make up the difference.

18. Having then dealt with the position of Kevin, the judge turns to The financial resources and financial needs which any beneficiary of the estate of the deceased has or is likely to have in the foreseeable future; any physical or mental disability of any beneficiary  of the estate of the deceased.  The judge deals with each member of the family in turn.  Nothing in this section of the judgment seems to affect the merits of the judge's ultimate award, although it will be remembered that she had no real idea of the value of the assets in Northern Cyprus, from which the family would benefit in due course (to the exclusion of Houssein, who apparently does not qualify because he was born out of wedlock).  Unsurprisingly, the judge found it very difficult to put a figure on the value of the Northern Cyprus estate, and the proffered figure of £2,516,312 was viewed by the judge with caution, as it amounted to less than the property which actually had a value attached to it.  It was, I think, sufficient for the judge to find that each member of the family would in due course receive a substantial sum from the deceased's Northern Cyprus estate, which could be transferred to England for his or her use.  This was plainly sufficient to negative any "needs" defence which individual members of the family had indicated they were likely to advance. 

19. The judge then turned to the size and nature of the net estate in England of the deceased.  The cemetery was professionally valued at £1.2 million.  Victoria Road was valued at £450,000 and had an equity of £260,000.  A third property owned by the deceased, albeit subject to litigation from a member of the family who claimed the right to live in it (60 Green Lanes, London, N16) (60 Green Lanes), was worth, with vacant possession, some £430,000 to £435,000.  There was also another property (58 Green Lanes) which was in the deceased's wife's name, and which the judge treated as falling into her estate.

The Value of the Assets in the UK
20. The judge then tackled the difficult task of establishing the value of the assets in England and Wales.

"5.5.26 Mr Staunton [counsel for Diane] has attempted to set out and calculate the total value of the UK assets in his opening skeleton.  He calculated that it was worth some £2,345,000.

5.5.27 However, there has to be significant adjustment to reflect the finding that only some £75,000 plus £27,000 extra interest from the proceeds of sale of 58 Green Lanes forms part of Ramadan's estate and also to reflect that the valuation of 60 Green Lanes is possibly much less than the anticipated £435,000 in the event that the property cannot be sold with vacant possession.

5.5.28 Taking that into account the estate will be worth £2,000,000 before taking into account the devaluation if the Claimants fail in their possession action.

5.5.29 I am grateful to Mr Staunton for his breakdown of the Inheritance Tax due now or which will fall due in the fullness of time.

5.5.30 However, this is only of limited assistance given the imponderables of the estate as outlined and the distribution of the assets as a result of this judgment.

5.5.31 All that can be said is that the estate has a liability attributable to tax of in excess of £397,500.  Costs of the administration of the estate were £489,000 as of July 2010, and estimated at £580,000 as at the date of the hearing.  This would mean that the net estate was in the region of £1m rather than Mr Staunton's figure of £1,458,437.

5.5.32 This is somewhat short of Miss Allardice's [counsel for the family] net valuation of the estate.  However, she has placed greater values on 62 Victoria Road and 60 Green Lanes and had taken the costs of the administration of the estate at the later, greater total.

5.5.33 Although counsel for both sides have been of great assistance and assiduous in their calculations of the net value of the UK estate, in fact, in the event, this has been of less significance than they may have been.

5.5.34 First, the only liquid asset is the proceeds of sale of 58 Green Lanes, of which I have decided less than a quarter forms part of the UK estate.

5.5.35 Of the other assets, the value of 60 Green Lanes is not established as it is not yet known whether it comes with vacant possession.

5.5.36 The value of the major asset, namely the cemetery, although subject to an independent valuation by Mr Plumb, is subject to the possible contingent liability of outstanding tax, fines and penalties, the extent of which will not be known for some time."

21. Under the heading Any other matter, including … Conduct the judge was critical of the family, and took into account the behaviour of one member of the family who was charged with, and subsequently cleared of attempt to procure the murder of Diane.  She dealt with the matter in this way-

"5.6.16 However, the real relevance is the impact his actions must have had on Diane and even worse, on Houssein, who only knew that Erkin had approached someone to kill Diane.  I cannot express my disgust at Erkin's actions strongly enough.  As a result, he was incarcerated yet again which had a knock-on effect, no doubt on his immediate family and their finances, not to mention having all the psychological issues to deal with.

5.6.17 Further, I also take into consideration that the actions of the family have in effect stripped Diane of any realistic opportunity to gain employment.  She did not merely have to leave the job she had been doing for several years with her partner at a time when it must have been a struggle for her, but she was dismissed for misconduct, and fraud at that.  Moreover, there were attempts to deprive not only her, but also Houssein, of their home at this very vulnerable time.  This was more despicable conduct in all the circumstances."

22. Finally, the judge came to make her award.  Her first concern was to ensure mortgage free accommodation for Diane and Houssein.

"7.4. I have decided that the imperative of mortgage-free accommodation for Diane and Houssein means that this shortfall will be provided from the proceeds of sale of 60 Green Lanes, when that can be effected.  Of these sums, what would normally be his one seventh share will be given to Houssein the remainder will be awarded to Diane.  Any resulting tax will be borne by each of them pro rata."

23. The judge then came to the view that the only way she could be sure of achieving the reasonable needs of Diane and Houssein was by a transfer to her of the deceased's shares in the cemetery.  Diane could either attempt to run it, and produce income from it – or she could attempt to sell it and invest the proceeds.  The judge went on:-

"7.11 The disadvantage for Diane is that there is the unknown tax liability which is being investigated.  If the "worst case scenario" put forward as a realistic possible by the Defendants is correct, and it is borne by the cemetery business, the net value of the company will not be £1.2 million, but as little as £700,000, less penalties and interest.

7.12 I had considered whether, by giving Diane the most substantial capital asset of the UK estate, together with the income from it, the award would be disproportionately large.  However, in the context of all the assets in Ramadan's estate both here and in Northern Cyprus, I do not think that the transfer of the Brookwood companies to Diane will be excessive.  Moreover, by providing an income for her it will avoid having to transfer more capital assets to ensure the level of income she requires for herself and Houssein.  Finally, of course she has to bear the unquantifiable risk that the cemetery is not worth its present estimate due to any tax liability.

7.13 I make one exception to the transfer of all the companies' assets, namely the off-site interests, loosely valued by Mr Plumb at £75,000.  They will be earmarked as going to Ramadan's seven children to sell and produce more capital for them.  Each will bear any tax resulting from his or her share of the sale.

7.14 The "quid pro quo" for Diane is that Brookwood will bear all the risk of any liability to HMRC.

7.15 The value of the estate in Northern Cyprus and the value of 60 Green Lanes are uncertain.  However, I am sure that there will be significant funds for all the adult children of the deceased from these two sources together with their share in the proceeds of 58 Green Lanes, more than adequate to satisfy their needs.

7.16 In relation to 60 Green Lanes, the property shall be sold.  Of the proceeds, Houssein shall receive his one-seventh share.  Thereafter, the first £123,571.51 of the proceeds shall be transferred to Diane to make up the sum due to repay the mortgage on 62 Victoria Road.  The balance of the net proceeds shall be divided among the First to Sixth Defendants as remaining beneficiaries in the normal way.  All seven of the children will be responsible for any tax that may ensue in relation to their respective shares.  Of course any of the Defendants will be at liberty to raise the sum to pay Diane and buy out the shares of the others and thus avoid a sale.

7.17 So far as Kevin is concerned, I find that he is entitled to a sum or sums from Ramadan's UK estate to pay any tuition fees, enrolment fees and expenses to which I refer above to enable him to qualify as a lawyer.  This should be met by Diane paying one half of those fees; the other half will be met by the adult Defendants within 30 days of any request by Kevin together with an invoice or other proof that the fees or expenses are due."

24. The judge then refused permission to appeal and a stay of execution. She then dealt with the question of costs.

25. I have to say that when I first read the papers, the more sophisticated the arguments for the appellants became, the more I valued the judge's rugged and robust approach.  That perception has remained with me, despite the able argument we heard from Mr. Wagstaffe.

26. The first point taken, as I understood it, was that the transfer of the deceased's shares in the cemetery was wrong in principle.  I do not agree.  If on the facts the judge comes to the conclusion that the transfer of the principal asset in the estate is needed to achieve her statutory objective, then there can be no objection in principle to the transfer of the shares.

27. Equally, if the judge comes to a similar conclusion about a claimant's need for housing, there can be no objection in principle to the order.  This was plainly not the case for a life interest: the case cried out for a clean break.  If there had been any other factor in the case which made it appropriate either for Diane to have a smaller house, or if the facts were quite different, one might say that a mortgage free property was an inappropriate exercise of discretion, but on the facts presented to the judge it seems to me that the outright transfer of the home to Diane was a perfectly proper exercise of discretion.

28. Equally, I can see no basis upon which the judge should have fixed a sum and given the family time to raise it.  If the parties choose to settle on that basis, so be it, but I do not know of any principle on which such an approach should be required of a judge.

29. Equally, it seems to me that Diane's position in relation to the questions of unpaid tax is sufficiently ambiguous to make it all the more necessary that her position should be secured to the maximum amount.

30. The proposition that the court should interfere with the deceased's dispositions as little as possible must, it seems to me, yield to the facts of the individual case.  Here, it is common ground that the deceased did not make reasonable provision for Diane and Houssein.

31. I would therefore dismiss this appeal.  In my judgment, the judge was exercising a judicial discretion in difficult circumstances, and I do not think that her decision can be categorised as wrong, let alone plainly wrong.  If, which I do not accept, the decision is harsh on the family, they have only themselves to blame for the manner in which they chose to conduct the litigation.  No error of law or principle has in my judgment been demonstrated, and it follows that, subject to one point, by way of clarification rather than anything else, the judge's order will stand.

32. That one point concerns the incidence of the administration costs and liabilities, and is explained by Lloyd LJ at paragraphs [58] to [60] of his judgment, which I have had the opportunity to read.  I agree with what he says there, and with the order he proposes at paragraph [62].

33. To my mind the position which he explains there both (a) demonstrates all the more clearly Diane's need to have the bulk of the English net estate; and (b) gravely weakens the argument that, after catering for Houssein, she will have spare capital to invest after any "downsizing". 

34. The attack on the judgment is made, as it has to be made, on the basis that the award was wrong in principle.  If the award was within the discretion of the judge, then it must stand.  Speaking for myself, I see no error of principle.  The judge directed herself correctly under the 1975 Act.  She was fully aware that the sum which she had to award was that which was reasonably required for Diane's maintenance.  A substantial award was conceded.  The "needs" defences of the family, insofar as they remained, are negatived by the judge's finding that each would be adequately provided for from the Northern Cyprus estate.  The judge had no real idea as to the value of that part of the estate.  What she was faced with was an embattled dependant, who plainly needed to be maintained from the English estate.  Some judges might have followed the line argued for by the family, and awarded a lump sum based on the value of the net English assets.  This judge did not do so.  She gave Diane virtually the whole of what she understood to comprise the English net estate.  I cannot say she was wrong to do so.  I detect no error of principle, rather the robust exercise of a judicial discretion, brought about largely by the manner in which the family had conducted itself, but necessary in my judgment, to provide Diane with reasonable maintenance.

35. I would, accordingly, dismiss the appeal and the Respondent's Notice, but as Lloyd LJ says the order should be amended so as to clarify the incidence of the administration costs and liabilities.

Lord Justice Lloyd

36. I agree with the President that permission to appeal should be given as regards the appeal against the provision for Diane Holliday (and refused as regards the rest of the appeal) but that the appeal should be dismissed, subject to one point which I refer to below.  Having regard to some of the issues that arise, and the able arguments addressed to us by all Counsel, I explain my reasons in what follows.

37. The late Mr Guney, whom, like the President, I will call Ramadan, intending no discourtesy, died intestate and left a more than usually complex succession.  He had six children by his late wife, and one (not of full age) by Diane Holliday, and he had two other dependants, Diane herself and her son Kevin.  As the court found, he died domiciled in England and Wales, so the intestate succession to his movable assets, as well as to his real property in England and Wales, is governed by English law.  However, he also had significant connections with Northern Cyprus, and owned land there, the succession to which is governed by the local law of that territory.  Under English law his statutory next-of-kin are his seven children: subject to the applications under the 1975 Act, his English estate is to be divided equally between them.  Under the law applicable in Northern Cyprus, as we understand it, his land there is inherited by his six legitimate children, presumably in equal shares.  Apart from legal entitlement under the relevant succession laws, there were, as I say, two people who were, to a greater or lesser extent, financially dependent on him but not entitled to any share in the estate as of right, namely Diane Holliday and her son Kevin.

38. As for the assets of Ramadan's estate, he left land in Northern Cyprus, about which the judge thought that she knew less than was to be known, and the value of which may be adversely affected by the consequences of the decisions of the European Court of Justice and of this court in Apostolides v Orams, and therefore by consequent claims by any Greek Cypriot former owners.  He also left land in England and the shares in Brookwood Cemetery Ltd and Brookwood Park Ltd, and other assets of only negligible amount.  He owned 1% of Brookwood Cemetery Ltd, but the other 99% was owned by Brookwood Park Ltd, of which he owned 99.9%, the remaining 0.1% being held by the second appellant.

39. I do not suppose that if Ramadan had made a valid will this would have avoided all disputes as to his succession, but he might have been able to reduce some of the complications to which the situation gave rise.  At the very least, it would have avoided the extraordinary situation in which his adult children, entitled between them to six sevenths of the English estate, declined, for what reason I know not, possibly sheer obstructiveness, to take out letters of administration to the estate, so that, in the end, Diane Holliday, not herself entitled as of right to any part of the estate, had to do so in order to be able to make her claim under the 1975 Act.  It is yet another object lesson as to the great desirability of making a will, especially if one of the people who can be regarded as having a legitimate claim on the estate is not one of the statutory next-of-kin, namely someone in the position of Diane Holliday.

40. Given that the entitlement of Diane Holliday and her son Kevin to some award under the 1975 Act was not in dispute, the principal tasks of the court were to ascertain, as best it could, what was the net estate, and its value, and what was the amount reasonably required for the maintenance of each of the applicants.

41. So far as the net estate is concerned, there had been a major dispute as to the value of the shares in the cemetery companies which, on behalf of Diane Holliday, were valued at over £20 million.  In the end it was accepted, by the time of the trial, that they were worth £1.2 million, subject, however, to the possible impact of the investigation by HMRC.  For the family it was said that this might result in liabilities of up to £500,000.  If so, then the value of the companies was that much the less.  It also suggested that, at any rate until the investigation had been concluded, it would be very difficult indeed to sell the shares for anything like their proper value, whatever that might be.

42. The value of the companies also included what were referred to as "off-site interests".  As I understand it, this refers to the benefit of restrictive covenants relating to some 60 private roads in Woking.  The benefit of these covenants enables monetary consideration to be demanded if the owner of land affected by the covenants wishes to build or do some other act which requires the covenant to be varied or released.  If, as I understand it, the benefit of these covenants is vested in the cemetery companies, then they are an aspect of the value of the companies, and they would not normally fall to be considered separately.  The papers suggest an agreed value of £75,000 for this aspect of the value of the company, in addition to the £1.2 million.

43. The other English assets were the house at 62 Victoria Road, Knaphill, Woking, where Ramadan had lived with Diane Holliday and Houssein, and from time to time with both Kevin and (previously) his older sister Pamela, and 60 Green Lanes, London N16.  The adjoining property, 58 Green Lanes, the judge held, belonged not only legally but beneficially to Ramadan's late wife (who died in 1992) and it formed part of her estate where it was divisible between the six children, subject to Ramadan's estate being entitled to the statutory legacy of £75,000 with interest for six years (put at £27,000).

44. As the President has said, 62 Victoria Road was valued at £450,000, subject to a mortgage to secure a loan made on its purchase in 2003 and repayable by 2011.  By the date of the hearing before the judge some £163,000 was required to clear off all the indebtedness secured on that property.  The property at 60 Green Lanes was said to be worth about £430,000 with vacant possession (58 Green Lanes having been sold in 2011 for £465,000).  However, the second appellant, who had lived in a flat in the property for years, was resisting the personal representatives' claim for possession on the basis of a proprietary estoppel claim to be entitled to inherit the flat on his father's death.  That made the value of that property uncertain at the date of the hearing.

45. The judge treated the English estate as worth £2 million before taking into account the possible adverse effect of the second appellant succeeding in his claim to the flat and also, though she did not say so in terms at paragraph 5.5.28, subject to the possible adverse effect of the HMRC investigation into the companies' tax affairs.  From that figure fell to be deducted the inheritance tax payable, which the judge took as being at least £397,500, and the costs of the administration of the estate.  For the personal representatives these were estimated at £580,000 as at the date of the hearing.  The adult children had said they would challenge this figure, in order to have it reduced, but they had not taken any steps to do so. 

46. Thus, as the judge said at paragraphs 5.5.31 to 36, the value of the net estate was more than usually imponderable, with issues as to the value of 60 Green Lanes (depending on the second appellant's claim), as to the value of the shares in Brookwood Cemetery Ltd because of the HMRC investigation, and possible issues as to the amount of the inheritance tax and the administration costs.  The judge took a figure of £1 million.  It seems to me that she cannot be criticised for this.  The doubts and imponderables were likely, if anything, to reduce this figure.  This was not a case in which an asset of the estate had a potential to realise a great deal more than was currently estimated.

47. Having established a figure for the net estate, as best she could, the judge had to decide what was the financial provision that it would be reasonable in all the circumstances of the case for each applicant to receive by way of his or her maintenance.  The judge was well aware that Diane Holliday was only entitled to provision on that basis, not to the more generous measure of provision which a widow would be entitled to claim. 

48. At the hearing of the appeal, whatever may have been the position earlier or below, there was no issue taken as to the provision for Kevin.  He was held to be entitled to a sum or sums from Ramadan's English estate to pay tuition fees, enrolment fees and expenses to enable him to qualify as a lawyer, to be met by his mother as to half and as to the other half by the adult children of Ramadan (paragraph 7.17).  This was put in issue on the grounds of appeal and the original skeleton argument, but in a supplementary skeleton argument, filed after Mr Wagstaffe had been instructed, it was said not to be under challenge, a sensible and realistic approach.  As a matter of form I would refuse permission to appeal on that aspect of the appeal (amended ground of appeal 32).  I can therefore ignore that aspect of the issues below and on the appeal in what follows.

49. The grounds of appeal had been many and various, and additional grounds were added at a late stage by amendment.  Sensibly, Mr Wagstaffe did not address most of them in his oral submissions.  Mr Staunton said that a good many of the points taken had not featured before the judge, and had not been pursued, as they should have been, in evidence, so they were not proper criticisms of her judgment or proper points to take at all.  That would be a powerful objection, if it were needed.  As it is, I choose to deal with the points which featured in the oral argument before us on their merits, such as they are.

50. Mr Wagstaffe focussed much of his oral submissions on the quantification of Diane Holliday's needs, present and foreseeable.  He argued that the judge had, properly, identified that Diane Holliday had a degree of need now, because Houssein is still at school (he is just 13 now), which will continue while he remains at school but which will be reduced as he moves on to tertiary education and then still further once he has completed his education.  That bears, he argued, both on her need for accommodation and her need for income.  He pointed to the judge's paragraph 5.2.41 (quoted by the President at paragraph [16] above) and said that, if £60,000 is the appropriate starting point for Diane Holliday, then (in present value terms) it should be reduced significantly when Houssein gets to 18 and then still further some 3 or 4 years later.  He conducted a skilful but fallacious forensic exercise by taking figures which Diane Holliday had given, in fact as the actual level of expenditure during the life of Ramadan, and presenting them as if it were her statement of need.  From this he identified items which were referable to Houssein's school expenditure, others attributable to expenditure on him at home, yet others which would be of a lesser amount once he was no longer living at home, whether for part of the year or at all, so much as to come to a figure whereby, by the time he is, say, 22 years old, Diane Holliday would need not £60,000 but no more than £24,000 per year.  The inherent implausibility of that calculation resulted from his application of itemised figures which came, overall, to an annual expenditure of more than £100,000, to be deducted in full from a broad brush figure achieved by the judge of £60,000.  The two figures were different in kind, and the process was therefore inappropriate and led to a misleading and, as I say, implausible result.

51. It would be possible to criticise the judge for not making it clear at paragraph 5.2.41 whether she was identifying a sum for Diane Holliday's own needs for herself, or her overall needs including that which she needed to cope with the time when Houssein was undergoing education.  It seems to me that it is at the very least highly probable that the figure of £60,000 is what the judge considered she needed for herself.  I say that not least because she says in paragraph 5.2.41 that she agreed with Mr Staunton's calculation, and he has shown us the source of that in his submissions before the judge, which was clearly a figure which did not, for example, include school fees and other school expenditure.  It cannot, for example, have been taken as including Houssein's school fees, even at £12,000 plus £3,000 for music lessons, not to mention other school extras at some £3,750.  This was in the context that Diane Holliday had put in evidence showing that, under pressure of circumstances, her expenditure had been greatly reduced to £3,109 per month, but contending that this was far too little for her reasonable needs.  If the judge's figure of £60,000 was to cover education expenditure as well, then it only gave her £3,750 per month for other expenditure, a very small increase which no party had contended for before the judge.  The judge did not, however, come back later to identify an additional figure, to come from somewhere, to cover the additional needs during Houssein's period of education.  Moreover, when she came to put all the figures together, at paragraph 7.5, she spoke of Diane Holliday's income needs as being £60,000 from which "she will be almost, if not entirely, responsible for the financial support of Houssein".  If circumstances had been otherwise, it seems to me that Diane Holliday would have had good grounds for an appeal against that assessment of her income needs.  However, in the context of the net estate as it was found to be, there would have been little advantage to be gained by Diane Holliday by way of challenging that finding, and she has not done so.  As the judge went on to point out, on the basis of conventional Duxbury calculations, an income of £60,000 required a capital sum of almost £1.3 million for a woman of Diane Holliday's age (she was born on 1 September 1961).  She went on to make the obvious comment, at paragraph 7.7: "There are insufficient assets in the UK estate to provide even the minimum sum."  For that reason she declined to enter into a discussion as to the proper basis of calculation, since it could only lead to a still higher sum being required.  Equally, although she did not say so, there would have been little or no point in entering into a debate as to whether the sum required by Diane Holliday should have been higher, or even, for that matter, rather lower (at least in the future) than £60,000, since the estate was altogether insufficient to provide her with both the income which the judge held that she required – or anything like it – and with the accommodation which was the other aspect of her reasonable need for maintenance.

52. I turn to that, before returning to the main issue.  The judge recognised that 62 Victoria Road was larger than Diane Holliday and Houssein strictly needed at this stage, but held that it would be unreasonable to expect her to move out at this stage.  Mr Wagstaffe did not challenge this as regards the present.  However, he pointed out that, in future, when Houssein has left home, it would be by no means unreasonable to expect Diane Holliday to sell 62 Victoria Road and move to a smaller property, and indeed she might very well want to do so, in order, for example, to reduce her property-related outgoings of all kinds.  At that stage, therefore, he argued, some capital would be likely to be released on the sale, some or all of which would no longer be required for Diane Holliday's maintenance.  He used that proposition for two purposes: first to emphasise his argument that she did not need £60,000 indefinitely, and secondly to argue that 62 Victoria Road should not be given to Diane Holliday outright, but should be held on trust so that she can live there while she wants to do so, but that then it should be sold, such part as is needed of the net proceeds of sale to be used to buy an alternative property, with suitable provision during her life as to the income (for her benefit) and for the investment or application of the balance of the capital in case it is needed for her maintenance, but so that at her death the property, or the net proceeds representing it, should pass back into the estate, so as to be divisible between the seven children.  Mr Wagstaffe invoked by way of analogy the basis for the provision of accommodation for children under the Children Act 1989, Schedule 1, which he said was almost invariably done by way of a settlement on trust, with the capital reverting once the child's need for which the father is expected to provide has come to an end.

53. I do not doubt that suitable trusts could be devised to cover the various eventualities that might arise, in a reasonable manner.  But it seems to me that such an order would be altogether inappropriate in this case for at least two reasons, either of which may be sufficient, but which together are compelling.  The first is the inadequacy of the net estate to provide for what the judge has assessed as Diane Holliday's reasonable needs in terms of maintenance.  Taking her figure of £60,000 at present values and needs, £1.3 million would be needed to provide this – as well as a house - but it just is not there.  Even if one were to take Diane Holliday's future needs as being rather less (in present money terms) than £60,000, for the net estate to be adequate to provide for them, as well as a house – even one which in future might be smaller and less expensive – the proper maintenance figure would have to be lower than £60,000 by an altogether improbable amount  for there to be anything to spare out of the net estate or, more particularly, out of any cash released on a downsizing sale of 62 Victoria Road.  Secondly, it seems to me that, if ever there were a case for a clean break on an application under the 1975 Act it is this one.  The President has referred to some of the difficulties that have arisen between at any rate some members of Ramadan's first family on the one hand and Diane Holliday on the other.  The judge went into more detail in her judgment.  It seems to me that it would be a recipe for disaster to set up even the best drafted trusts, and even with the most robust and independent of trustees (an exercise which in itself would be expensive to set up and maintain), under which Diane Holliday and the adult family had successive interests in the same property.  I therefore reject Mr Wagstaffe's argument that the judge was wrong to give Diane Holliday 62 Victoria Road free of mortgage.  For all of those reasons, I find it unnecessary to consider the analogy of the provision of accommodation for a child under the Children Act 1989.

54. Mr Wagstaffe made a similar submission about the shares in the Brookwood companies, namely that it was wrong for Diane Holliday to receive the whole of the shares outright.  This argument was based in part on the proposition that the business was regarded as having a potential to produce significantly more income, and that it could generate income for far longer than the remainder of Diane Holliday's life, and therefore, on the one hand, that it might therefore come to be worth a good deal more than it is now, and on the other it would provide income for far longer than Diane Holliday needs.  He argued that the point of it, for Diane Holliday, in the context of the 1975 Act, was to generate income for her maintenance during the rest of her life, and that it might well be able to do so, more effectively and on a larger scale, in future, so that it might come to provide more than she would reasonably need, as well as doing so for long after her death.  Like the President and for the same reason, I would reject that argument.  For the judge's purposes the company should be taken as worth the amount of the valuation which was agreed, of £1.2 million, disregarding the "off-site interests" worth £75,000.  That valuation represents the present value of its actual and its potential profitability.  There is no proper basis for treating it as worth more than the judge's figure simply because it may come to be more profitable in future than it is now.  That possibility is part of what makes it worth £1.2 million now, as is the prospect that it will generate profits for a long time into the future.

55. That being so, I can see no proper basis for challenging the judge's decision that, because the net estate is inadequate (and by some considerable way) to provide for Diane Holliday's reasonable needs, she should be given the most valuable assets of the estate, namely the shares in the Brookwood companies, outright, and should also be given 62 Victoria Road free of mortgage and outright.

56. Mr Wagstaffe submitted that the adult children ought to have been given the opportunity to satisfy Diane Holliday's reasonable entitlement by raising, say, £1.2 million which could then be paid over to her to satisfy her entitlement, leaving the shares in the companies, with whatever future potential for capital growth they may have, in the hands of the adult children.  In other circumstances that might be a reasonable proposition.  In the present circumstances it seems fanciful.  The judge explained at length the evidence she had received as to the position and means of the adult children.  Their positions differ quite considerably as between them.  Only one of them (Gonul Sema Guney, a solicitor, who is not an appellant) appears to have any significant earning capacity, and although, as the judge explained at paragraph 5.3.46 Erkin Guney had an expectation of a substantial asset, it was not suggested that this could or should be used, even in part, to buy out Diane Holliday's entitlement.  As I understand it there was no evidence before the judge suggesting that they would be able to raise this significant sum, either from their own resources or against the security of the shares.  We were shown that Miss Allardice had mentioned such a possibility in the last paragraph of her written closing submissions, but without elaborating on it or, in particular, as to its feasibility.  We were also shown a brief exchange of correspondence in January and February this year in which the appellants' solicitors asserted that they had an "offer of assistance of a sum up to £1.2 million" to secure for the adult children the benefit of the companies without Diane Holliday having any interest in them, so that this would be available if the Court of Appeal were to allow the appeal to the extent of making a monetary award instead of an award of the shares.  The solicitors declined to provide any further details of the potential lender or the solicitors instructed, but said they intended to firm up the precise details with those acting for the lenders, and would communicate those in due course.  Since that was the last word on the subject, it was reasonable for Mr Staunton to submit that this possibility should be ignored as unrealistic.

57. In fact the judge's order did not give Diane Holliday the entire estate, even disregarding the provision made for Kevin, and that which she left in place for Houssein.  She ordered that the sum to which Ramadan's estate was entitled out of the proceeds of sale of 58 Green Lanes should be applied in paying off, in part, the liabilities secured on 62 Victoria Road.  That fell short by just over £123,000 from the amount needed to clear off the secured indebtedness.  She then ordered that this shortfall was to be provided from the eventual net proceeds of sale of 60 Green Lanes.  The incidence of that was a little complicated.  Houssein was first to receive his one seventh share of the net proceeds of sale.  Out of the balance of six sevenths the amount required to pay off the balance of the secured debt was to be so applied, by way of an award under the 1975 Act to Diane Holliday.  Whatever remained after that out of the net proceeds of sale of 60 Green Lanes would be shared between the six adult children equally.  On the figures used before the judge that might come to some £250,000.  They would, of course, also have what was left out of 58 Green Lanes, but that was not part of the estate of Ramadan.  What they would receive from the two Green Lanes properties, and the Northern Cyprus assets, were the main assets available for them, by way of inheritance from their parents. However the judge also decided to award to the seven children the so–called "off-site" interests of the cemetery companies, valued at £75,000.  This is covered by paragraph 2 of the judge's order.  It was mentioned during the appeal hearing but I do not understand that it gives rise to any issue on the appeal as such.

58. Diane Holliday served a Respondent's Notice, in case permission to appeal were granted, by which she sought to raise two separate issues.  I do not need to spend time on one of them, because it would have been a response to the appellants' arguments attacking the £60,000 figure for maintenance, by reference to the use of conventional Duxbury calculations.  The other was aimed at paragraph 1(3) of the judge's order in respect of the proceeds of 60 Green Lanes, insofar as they would go to the adult children, as described above.  The point made was that these net proceeds ought to bear (so far as they can) the liabilities of the estate, including administration costs.  It is said that, properly understood, the basis of the judgment was that the liabilities of the estate should fall first on 60 Green Lanes.  For my part I cannot detect that proposition from the terms of the judgment.  The judge was of course well aware of the large liabilities, both for inheritance tax and for administration costs, let alone litigation costs, as well as contingencies such as the possible liability to HMRC through the investigation into the companies.  In relation to some of these she made express provision, for example that Diane Holliday, taking the shares in the companies, had to bear the risks as regards liability to HMRC.  In general, she dealt in terms with the incidence of inheritance tax: see paragraphs 7.4, 7.5, 7.13 and 7.16.  As regards 60 Green Lanes she was very specific as to what was to happen to the proceeds of sale, and it is clear that she intended a net sum from this to go to the children: see paragraph 7.4 and paragraphs 7.15 and 7.16, the latter quoted at paragraph [23] above.  This is correctly reflected in paragraph 1(3) of the order.  That is inconsistent with the proposition in the Respondent's Notice that this fund is to bear the primary liability for the costs of the administration.  Accordingly I cannot accept the argument that the order should be varied as sought in the Respondent's Notice so as to make the proceeds of 60 Green Lanes primarily liable for the liabilities and costs of administration of the estate, and that only thereafter should any sum be paid either to Diane Holliday or to any beneficiary of the estate.  Since the argument is that this is needed to give effect to the intention of the judge as apparent from the judgment as a whole, and since I disagree with the premise, I would reject this point in the Respondent's Notice.

59. Conversely, the appellants argued that the judge's order was wrong on this point because it would result in the net proceeds of 60 Green Lanes being treated as residuary assets of the estate, and therefore liable in the first instance to bear the liabilities and the administration costs.  We heard little argument about this, but it seems to me that, given the specific terms in which the judge's order deals with the application of the net proceeds for sale of 60 Green Lanes, it could not be appropriate to treat this as part of the residuary estate, and therefore liable to be used first to meet debts, liabilities and expenses.  It is perhaps unfortunate that the judge did not state in terms what she intended in this respect, the point having been raised with her by both Counsel in their comments on the judgment when circulated in draft, but I have stated what appears to me to have been the judge's intention, and accordingly the basis of her order in this respect.  The same point is not said to arise as regards the "off-site interests", presumably because, since those are assets of the companies and the benefit of them for the children is to be secured by a deed operating, I take it, outside the net estate as such, they could not be treated as part of the residuary estate which would be liable to meet liabilities or costs of the estate.

60. The logic of much of what the judge said in her judgment might have led her to require that Diane Holliday and Houssein between them should have the whole of the benefit of the net proceeds of 60 Green Lanes, so as to have an additional asset out of which to bear the liabilities and to contribute to the fund available for their maintenance.  In the exercise of her discretion she chose not to do so, but to leave part of this asset (that is to say, the six sevenths, subject to bearing the sum required to clear off the mortgage on 62 Victoria Road) for the adult children.  That has the effect that Diane Holliday will have to bear the whole of the administration expenses out of what is left to her, in effect from the value of the cemetery companies.  That of itself shows all the more clearly that the judge was fully justified in making for her the provision by way of outright transfer that she decided to order.

61. If there are remaining issues in the administration of the estate, they can be made the subject of an application for directions in the Chancery Division, to which the judge (sensibly) transferred the proceedings. 

62. For the reasons which I have given, I would refuse permission to appeal as regards the appeal against the order in favour of the award to the second claimant, I would grant permission to appeal on the other grounds, but I would dismiss the appeal.  I would also dismiss the Respondent's Notice, but it seems to me that it would be sensible for the position, as I have stated it, that the net proceeds of 60 Green Lanes is not subject to the burden of testamentary and administration expenses which are to be borne in the first instance by the assets taken by Diane Holliday, should be made clear by way of a variation to the order.  Only to that extent, which is by way of clarification, would I vary the judge's order.

Lord Justice Sullivan
63. I agree with both judgments.