Janet and John had been living together for five years. They had purchased a house together and taken out a life policy to cover the mortgage. Tragically, John was killed in an accident. He had not made a will which meant that under the intestacy rules all of his estate would pass to his parents.
Janet claimed that she thought that when the house was purchased it was bought as joint tenants and so would pass to her by survivorship. She therefore claimed to be surprised to learn that the property was held as tenants in common. The transfer to the parties declared that the property was held in unequal shares but those shares were not quantified. Draft documents were found on John’s computer dealing with that question but no signed copies existed and Janet said that she had never seen these drafts before. The life policy was not written in trust and the insurance company decided to pay the proceeds of the policy to Janet.
Janet issued proceedings claiming that the property should have been transferred to them as joint tenants and that she therefore was entitled to the property by survivorship, and in the alternative that the intestacy provisions did not make adequate provision for her. John’s parents, as the beneficiaries under the intestacy, defended the claim and counterclaimed that the property was held in unequal shares in favour of their son in accordance with either the drafts on his computer or in accordance with the unequal contribution to the purchase price and mortgage payments. They also claimed that the life policy was clearly taken out to redeem the mortgage on first death and that it should therefore be used to redeem the mortgage rather than being paid to Janet. There were also ancillary arguments in relation to various sentimental possessions.
The parents were struggling to finance the litigation whereas Janet, having been paid the life policy proceeds, had a large fund from which she was financing her case.
After a lengthy mediation, settlement was agreed on the basis that Janet was able to remain in the house subject to the mortgage but she had to pay a large lump sum greater than 50% of the property’s value but less than 50% of the property’s value plus the life policy to John’s parents. A schedule of possessions to be returned was agreed.
If the matter had not settled it is quite possible that John’s parents would not have been able to afford to continue defending the claim and prosecuting the counterclaim. If the claim had gone to trial the Court would either have found that the property should have been transferred to Janet and John as joint tenants in which case it would all have gone to Janet, or if the Court had found that it was held as tenants in common the Court would have had to have decided on the shares which each party held. The Court would have been required to rule as to whether the life policy should have gone to Janet or to the parents. Accordingly at one end of the spectrum, Janet could have ended up with everything and at the other end of the spectrum she could have ended up with a small share in the property and would have had to have sold the property and moved out. Her major objective was to be able to afford to be able to remain in the property. For the parents, even if they had succeeded in the claim to the life policy proceeds, if most of those monies had been spent by Janet on legal fees in the litigation then they would have been unable to recover the monies, and a hollow victory would have resulted. The settlement enabled her to remain in the property whilst enabling John’s parents to succeed by recovering a reasonable proportion of all they claimed rather than being forced out of the litigation by economic factors.
