The deceased had separated from his wife and was cohabiting with Miss Osbourne. The deceased and Miss Osbourne purchased a property as joint tenants, with the assistance of a mortgage. The purchase price had been andpound;91,000 and the mortgage was andpound;85,000. The mortgage had been supported by an endowment policy, which would pay out after 15 years, or upon the earlier death of either party. The payment upon an earlier death was guaranteed to be at least andpound;85,000. As at the date of death, there was no sale or surrender value attaching to the policy. The deceased died, and Mrs Powell brought proceedings under the Act. Aside from any interest which the deceased had in the payment made under the policy and/or in the Tottenham property, his estate was valueless. Mrs Powell, the wife, argued that immediately before his death, the deceased could have severed the joint tenancy in respect of the property, which would have meant that he was entitled to a half-share of the property, but with the benefit of the half-share of the benefit of the policy monies.
Held: It could not be correct to regard, as the recorder in the court below had done, the policy as having only a negligible value, as to do that would be to evaluate it immediately before the deceased’s death, but without any reference to his imminent death.
As to section 9 of the 1975 Act, Dillon LJ said that its: ‘object is to bring in what could have been severed immediately before the date of death. If the deceased had in fact severed the beneficial joint tenancy immediately before his death, he would have thereupon become entitled to a half-share in the property subject to the mortgage but with the benefit of the half-share in the policy monies and, accordingly, on his death, his net estate would have been left with a clear half-share of the property, half the policy monies having gone to discharge his half-share of the mortgage.
I find it slightly startling therefore, and anomalous, that the effect of section 9 should be said to be that, if the court is merely ordering that the deceased’s share of the joint property at the value thereof immediately before his death is to be treated as part of his net estate, the result is that the half-share of the policy monies is to be treated as of no value at all or at best merely a token value. One is looking at the moment immediately before the deceased’s death, which is the last moment for severing the beneficial joint tenancy, and to give effect to that it is necessary, to my mind, to keep in mind that the deceased is indeed about to die the very next moment or very soon, almost immediately, thereafter. Therefore it cannot be right to value immediately before his death without regard to his assumed imminent death. On the actual facts, he died in hospital (where he had been admitted not long before) and the cause of death was cerebral haemorrhage and hypertension. That again seems to indicate that immediately before his death his actual prospects of surviving would have been virtually negligible.
Taking that into account, I conclude that the order should reflect that, though the property is subject to the mortgage, the half-share of the policy monies is also to form part of the net estate.’
Simon Brown LJ agreed, adding that the deceased was immediately before his death beneficially entitled to a joint tenancy of a property which included an endowment policy. The crucial issue raised in the proceedings was therefore this: what was the value of the deceased’s severable share of that policy immediately before his death? Given that immediately before death the fact of imminent death was by definition inevitable, that issue could in turn be restated thus: in determining the value of a severable share immediately before death, does the court have regard to, or does it ignore, the imminence of death? If it has regard to it, then to all intents and purposes the value of a life policy is the same as at death. If, however, the court is to ignore the deceased’s imminent death and logically therefore ignore even his generally adverse medical condition, then the value is very considerably less. He continued: ‘I have concluded that the reason, and indeed the sole reason, why the value is to be determined immediately before death is because that is the last moment at which severance is possible and it is the severable share that is to be valued. No such consideration arises under section 8 and that is why by section 8(2) the value is to be taken there as at the date of death. The result is that when the value of the property in question depends upon death, and that will only be the case when, as here, the property is a life policy, the value immediately before death will be effectively the same as the value upon death. So be it. That seems to me both fair and to accord with the literal language of section 9.’
Judges:
Dillon LJ, Simon Brown LJ
Citations:
[1993] 1 FCR 797, [1993] 1 FLR 1001
Statutes:
Inheritance (Provision for Family and Dependants) Act 1975 9
Jurisdiction:
England and Wales
Cited by:
Cited – Lim and Others v Walia ChD 26-Sep-2012
The court was asked: ‘where the proceeds of a fixed term joint life policy are paid over as the result of the death of the first of the joint lives insured, but in circumstances where it is to be assumed that the payment of the sum insured might . .
Cited – Lim (An Infant) v Walia CA 29-Jul-2014
The parties disputed a claim under the 1975 Act. Immediately before her death, the deceased had, because of her medical condition, a vested right to bring forward an insurance benefit, but that right had ceased upon her death. The court had found . .
Lists of cited by and citing cases may be incomplete.
Wills and Probate, Family
Updated: 08 May 2022; Ref: scu.510161