The High Court found that a deceased father had failed in his moral duty to make proper provision for his first plaintiff son and ordered the estate to pay a €1.6 million debt to AIB, provide a further €500,000 and allow the son to retain land connected with the borrowing.
Mr Justice Michael White delivered the judgment on 18 December 2015 after an eight-day hearing. The claims were brought under section 117 of the Succession Act 1965. The second plaintiff’s case was conditional on the outcome of the first plaintiff’s proceedings.
The deceased died in 2008, leaving a 1996 will that divided his estate equally among his six children. His wife had died in 2005. The court recorded that the estate was valued at about €29.7 million when letters of administration with the will annexed were issued in 2011, and about €14.8 million by October 2015.
The first plaintiff, who had worked in the family firm from 2000 and was a director of group companies, had borrowed €1.2 million from AIB in 2006 to buy 1.98 acres from F.P. Ltd. The deceased guaranteed the loan. The land was intended for a neighbourhood shopping centre, but its market value fell sharply. The court noted evidence that it was valued at €495,000 in July 2008 and at €160,000 in October 2015 by the first plaintiff’s valuer.
The evidence differed on the transaction’s purpose. The first plaintiff said it was intended to provide liquidity to the company and that the land would be bought back. T.D., an executor and former financial adviser to the deceased, considered it a genuine development project intended to benefit the first plaintiff. The judge found the deceased wanted the first plaintiff eventually to run the business, but would not have transferred its main asset to him without protecting the other children.
The court concluded that the deceased should have foreseen the risk that the first plaintiff could be left with a large debt and reduced inheritance if the development failed. It found the deceased had failed in his moral duty, while also finding he would not have intended seriously to disadvantage the other children.
The court ordered the estate to remain responsible for the AIB debt, which it had paid in the sum of €1.6 million. It also awarded the first plaintiff €500,000 over and above his one-sixth share and permitted him to retain the land outside that share. The judge described the land as belonging to F.P. Ltd., but allowed the first plaintiff to retain it as section 117 provision.
The court rejected the second plaintiff’s claim, finding no failure in the deceased’s moral duty to him. It said the executors should transfer the family home to him as part of his one-sixth share and considered an objection by another beneficiary unreasonable. The judgment does not describe that transfer as an additional section 117 award.
Earlier proceedings had ruled that the first plaintiff’s claims for promissory estoppel and constructive trust were statute-barred. The judgment records that his appeal from that ruling was withdrawn.