Christie’s Exor v Armstrong, 1996 SLT 948
Citation: Christie’s Exor v Armstrong, 1996 SLT 948
Rule of thumb: Where a person dies with life insurance, can their former get some of the money? Yes, they can get a % share for the period of time they were with the deceased as they theoretically made a contribution to the premiums being paid during this time period.
Judgment:
The Court affirmed in this case the principle of ‘recompense’ – this means that where the Courts perceives a great injustice, with one survivor of the deceased obtaining next to nothing, and another survivor obtaining almost everything, then the Court can intervene to correct this position, particularly if this was based on legal technicalities rather than the clear intention of the deceased. The facts of this case were that the deceased man in this case separated from his wife and children. The deceased moved in with another partner and together they took out a joint mortgage for a house that they lived together. The deceased and his new partner went into fairly big debt for this property investing pretty much all their financial assets into it – there was a survivorship clause in the conveyancing contract meaning that if either passed away the other became full owner of the house. The deceased also took out a life insurance policy. The deceased then of course died, but he died intestate, and the technicalities of the deceased’s legal agreements from his heritable property contract and life insurance contract meant that the proceeds from deceased life insurance policy paid off all of his debts under the heritable property contract. This meant the deceased’s life insurance policy was used not to just to pay off all his own under the mortgage, but all his joint debts, which included his new partner’s debts under the mortgage as well. This meant from the lump sum from the deceased’s insurance policy was all pretty much used to pay off the entire mortgage, meaning that under technicalities the deceased’s new partner got virtually all of the deceased’s lump sum and his wife and children got nothing. The Court held in this circumstance that it was equitable for them to potentially intervene under recompense legal principle to consider what a fair distribution of the deceased’s estate might – they said it seemed to potentially apply given that the deceased had paid off not just all his own debt’s under the mortgage but all of his new partner’s as well. They held that they should intervene to consider what the deceased’s true intention – this case was not a full proof before answer - a proof in this matter was therefore called, although it was never exactly outlined how the matter was resolved ... ‘In our opinion the fact that the policy was assigned to the building society in security for the loan ... enabled the building society to use the proceeds of the policy ... to extinguish not only the deceased’s half share of the debt to the building society but the defender’s half share as well...’ at 954
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