Can An Award Made Pursuant To The Inheritance Act Be Set Off By An Applicant’s Debts Owing To The Estate?

Johnston v Wackett

Case background

This case saw the Claimant (Colin Johnston) receive an award of £125,000 plus costs from his late father’s estate, Sidney Johnston. After those proceedings, the executor (and Defendant), Natalie Wackett, sought to limit his award to only £8,900 by setting off a debt of £116,055.75 assumed to be owed by Colin to Sidney’s estate. Colin was then forced to bring further proceedings to seek a declaration as to whether this set-off was allowed.

This debt was briefly referred to in the Inheritance Act proceedings whereby Natalie mentioned it in her witness statement. She did not however specify an amount or provide any evidence as to the sums recoverable. It was only after the Inheritance Act claim was determined was it raised and only with a view to limiting what Colin would actually receive from the £125,000 award. It was accepted evidence of the debt largely came to light after the award had been made.

The debt related to a previous dispute starting in 1992 and ending in 1998 between Colin and Sidney, which left Colin liable for Sidney’s costs. Colin was also owed costs in respect of Sidney’s discontinued counterclaim. It was argued that the cost proceedings were never followed as no final cost certificate could be located. This challenged the sums due but did suggest Colin was at least in debt to Sidney at one point for an undetermined amount. This raised the question of whether that debt could also be owing to the estate.

The Court’s decision

In deciding whether an amount could be set off against Colin’s award the Judge considered the contents of the Inheritance Act claim. During those proceedings, the Court was aware of the potential costs order against Colin. In making an award they referred to the Duxbury Tables but made no mention of that debt. The same follows when assessing the estate value which does not include a sum to be owed by Colin. The Court concluded that the award made under the Inheritance Act must be treated as an award due to the Claimant from the estate after taking into account all debts owed to or from the estate. There can therefore be no claim to set off against an award made pursuant to the Inheritance Act.