The Validity Of A ‘No Contest Clause’ Explored In Sim V Pimlott And Others (2023)
Whilst English law largely seeks to uphold testamentary freedom to allow a testator to leave their estate to whomever and in whatever way they want, a beneficiary of a will can seek to adjust their entitlement in a number of ways:
- Challenging the Will (although this depends on whether there are more beneficial provisions under a prior Will or the rules of intestacy if there is no prior will)
- Bringing a claim under the Inheritance Act (Provision for Family and Dependents) Act 1975 (“the 1975 Act”)
The 1975 Act
The 1975 Act allows certain classes of people to make a claim for ‘reasonable financial’ provision against the estate of a loved one where no/inadequate provision has been made for them under a will or the rules of intestacy.
This can include former spouses so in divorce proceedings it may be common as part of any settlement agreed that the parties respectively agree to forgo any claim under the 1975 Act
In assessing whether reasonable financial provision should be made under the 1975 Act, a court will have regard to the following matters:
a) the financial resources and financial needs which the applicant, any applicant, or any beneficiary has or is likely to have in the foreseeable future;
b) any obligations and responsibilities which the deceased had towards any applicant or any beneficiary;
c) the size and nature of the net estate of the deceased;
d) any physical or mental disability of any applicant or beneficiary;
e) any other matter, including the conduct of the applicant or any other person, which in the circumstances of the case the court may consider relevant.
No Contest Clauses
A testator is normally advised about potential beneficiaries who could bring a claim under the 1975 Act and cautioned about cutting them completely out of the will – rather to make some provision for them in the will instead.
In addition they could increase the deterrence by including a ‘no contest clause’. This is a penalty clause whereby a beneficiary will lose any entitlement under a will if they challenge the will or seek to bring a 1975 Act claim.
The validity of such clauses was considered in the recent case of Sim v Pimlott and others (2023)
Sim v Pimlott and others (2023) – the Facts
This concerned the estate of Dr Sim who was survived by 5 children from 3 marriages and one extra marital relationship, as well as 5 adult grandchildren and 4 minor grandchildren.
Dr Sim died on 16 January 2018 (aged 79) having made a will on 19 December 2017. His estate was worth about £1,200,000. Probate was obtained on 19 March 2019.
His current wife was Valerie, with whom he had been in a relationship for 35 years and marriage for over 19 years.
The will was drafted by Bramhall Solicitors.
Valerie, would receive £250,000 if she executed a deed
- relinquishing any rights to make a claim under the 1975 Act
- relinquishing any rights to assets owned by Dr Sim including his interest in Dubai
- vacating the family home
She would also receive a further £125,000 if she gave up her interest in the Dubai property which was jointly owned with Dr Sim
At the time of death Dr Sim and Valerie were enthralled in divorce proceedings. The relationship was extremely acrimonious with Valerie seeking non-molestation and occupation orders against Dr Sim for domestic abuse.
The Proceedings
Valerie issued proceedings under the 1975 Act on 19 September 2019 but this was not served until 14 January 2020.
By the time of trial there was no less than 14 Defendants.
Valerie was not represented and appeared in person at the 3 day trial which took place in Manchester Civil Justice Centre on 2 May 2023. Oral judgment was given by His Honour Judge Hodge KC on 5 May 2023 at the end of the trial.
The judge heard from a number of witnesses and experts
The Decision
The first question the court had to decide was whether reasonable financial provision had been made for Valerie as the surviving spouse.
In deciding this, the judge took into account
- the burden of proof in this case rests with her
- the court does not have carte blanche to reform Dr Sim’s testamentary dispositions
- the fact that the other beneficiaries have no specific competing needs is not a factor that weighs in
her favour. A beneficiary does not have to justify their case on the basis of need. Rather, they are the chosen beneficiaries of the deceased
The judge was rather critical and stated
The conduct of Mrs Sim towards her husband in his dying months was simply unwarranted, and wholly unacceptable; and I am entirely satisfied that he had good reason for making the changes to his will that he did. I am entirely satisfied that it was not objectively unreasonable for him to draft the will in the terms that he did, seeking, in so far as possible, to ensure that his wife received no more than the reasonable financial provision that would have been awarded to her on any claim under the 1975 Act.
He found against Valerie:
On the particular facts, and in the unusual circumstances, of the present case, I consider that: (1) a pecuniary legacy of £250,000; (2) the opportunity to accept a fixed £125,000 in return for the release of her interest in the Dubai apartment, slightly in excess of its market value; and (3) the life interest in the residue of the estate after payment of the pecuniary legacies of £180,000 to the grandchildren, and amounting to something in the order of £600,000, did indeed constitute reasonable financial provision for the claimant.
The second question which the judge had to decide was whether it was reasonable to include the no contest clause in the will
The judge again decided against Valerie and held that
It was also reasonable to include a provision intended to discourage the relevant beneficiary from embarking upon what is, ex hypothesi, an unwarranted claim under the 1975 Act, with all the consequent delay to the administration of the estate, and accompanying delay in the distribution of assets to beneficiaries, and, in addition, with all the costs associated with defending such a claim.
In my judgment, it would be wrong in principle for a claimant to pursue a 1975 Act claim in the knowledge that in doing so, they will forego a certain benefit; and then to say that, because they have foregone that benefit, the will fails to make reasonable financial provision for that beneficiary. In my judgment, there is good reason for the court to uphold the validity of such a condition.
Final Words
Whilst this case had unusual facts, it does illustrate the pitfalls for a beneficiary in bringing a claim knowing that there is a risk that they would forfeit any entitlement under a will and they will need to make an informed decision having taken appropriate legal advice to decide if it would be worthwhile.
It is not clear why Mrs Sims did not have legal representation in a claim worth a significant sum and whether the outcome would have been different if she had.
This case examines the enforceability of ‘no contest clauses’ in wills, balancing a testator’s right to distribute their estate with a beneficiary’s ability to challenge under the Inheritance (Provision for Family and Dependents) Act 1975. It highlights the importance of informed legal advice in estate planning and inheritance disputes.
For guidance on wills, estate planning, or inheritance claims, contact our legal experts on 0330 822 3451 or request a callback.