Mr and Mrs Randall divorced in 2006. As part of the financial settlement it was agreed that in the event that Mrs Randall was left more than £100,000 by her mother she would share any excess with Mr Randall. The couple were of modest means when they divorced and while unusual, this agreement was to account for the fact that Mrs Randall was due to inherit a substantial amount from her mother.
Mrs Randall's mother died in 2013. Under her Will ('the Will'), Mrs Randall received £100,000 with the remainder of the estate passing to Mrs Randall's children. Mr Randall did not receive anything and subsequently claimed that the Will was not valid as it had not been signed. Mr Randall submitted that, in accordance with the rules of intestacy, Mrs Randall should receive the entire estate of £250,000.
In bringing his claim in the High Court, Mr Randall argued that he had the standing to do so for two reasons: 1) the Will was a public document and therefore could be challenged by any individual; and 2) he was a creditor of his ex-wife, a beneficiary under the Will, and therefore had sufficient interest in the estate. Both of these arguments were rejected by the High Court and it was held that Mr Randall did not have standing for the purposes of contesting the validity of the Will.
Mr Randall appealed to the Court of Appeal ('the Court') on the basis that he had an interest by virtue of being a creditor to Mrs Randall. This appeal was granted by the Court and the High Court decision was overturned.
In finding that Mr Randall did have standing to challenge the Will, the Court emphasised a distinction between creditors of a beneficiary and creditors of an estate. It was held that these two positions were fundamentally different. A creditor of an estate will receive payment regardless of the terms of a Will and therefore has no interest in a Will itself. By contrast, a creditor of a beneficiary has an interest in whether that beneficiary receives any monies to pay their debt and therefore has a clear interest in the provisions of a Will.
In denying Mr Randall's claim, the High Court highlighted a concern that the floodgates would be opened if the action was allowed. While this seems unlikely, and claims of this type are likely to remain uncommon, solicitors should still be alive to the possibility that their clients may be able to bring a claim as a creditor of a beneficiary, or that they may need to defend one if representing the estate. However what this case ultimately indicates is that the trend by the courts to relax the rules on standing is set to continue and potential claimants may face a lower hurdle in order to establish their interest in an estate in the future.
We regularly advise administrators on the correct procedures for dealing with complex and difficult estates, including claims by creditors of estates.