Murphy (a child) v Holland & Ors

Whether rights under a joint life policy are joint or several is determined by construing the policy, not by assuming that persons named together as policyholders hold a joint right or by relying on subjective intentions. A temporary fixed-term policy with no surrender value or endowment element, providing a lump sum on the first death, ordinarily indicates that the death benefit is for the survivor’s exclusive benefit. The contingent death rights are therefore several unless the policy shows otherwise. A jointly held terminal-illness benefit does not require the death benefit to be jointly held, since different qualifying events may serve different purposes. A reference to executors or administrators in the payment machinery does not itself give the deceased policyholder an interest. Section 9 of the Inheritance (Provision for Family and Dependants) Act 1975 cannot apply where the deceased held no joint tenancy of the relevant benefit.

The claimant, a child of Mr Anthony Murphy, sought reasonable financial provision under section 2 of the Inheritance (Provision for Family and Dependants) Act 1975. The only asset identified was a 25-year temporary life policy taken out jointly by Mr Murphy and his former wife, Lisa Murphy. It paid a fixed sum on the first death or on acceptance of a terminal-illness claim. After Mr Murphy’s death, the benefit was paid to Mrs Murphy.

On a preliminary issue, HH Judge Moseley QC held that the policy benefit was jointly held and fell within section 9. The Court of Appeal considered whether, immediately before Mr Murphy’s death, he was beneficially entitled to a joint tenancy of the right to the death benefit, or instead held a separate contingent right.

1. Majority disposition. Thomas LJ, with whom Pill LJ agreed, allowed the appeal. The preliminary issue was reformulated to ask whether Mr Murphy was beneficially entitled to a joint tenancy of the right to benefit from his death before Mrs Murphy. The answer was no.
2. The question whether the rights were joint or several depended on the objective construction of the policy document. The court was not to rely on the policyholders’ subjective intentions. The policy’s objective purpose and the nature of its benefits were relevant to construction.
3. The policy was a standard-form temporary assurance policy for a fixed sum, with no surrender value and no endowment element. The ordinary inference was that the death benefit was intended for the survivor’s exclusive benefit. Each policyholder therefore had a separate right to the death benefit. The possibility of severance was inconsistent with that construction.
4. The court could distinguish between the consequences of different qualifying events. A terminal-illness benefit could be jointly held because it might meet the needs of both policyholders, while a first-death benefit was intended to assist only the survivor. The distinction was supported by the separate provisions concerning qualifying events and claims. The reference to executors, administrators or assignees accommodated the possibility that both policyholders had died; it did not give the estate of the first deceased an interest. Thomas LJ also explained the distinction between a joint and composite policy by reference to General Accident Fire and Life Assurance Corporation v Midland Bank [1940] 2 KB 388.
5. Because Mr Murphy held no joint tenancy of the death benefit immediately before his death, section 9 of the Inheritance (Provision for Family and Dependants) Act 1975 could not treat that benefit as part of his net estate.
6. Dissent. Chadwick LJ would have dismissed the appeal. He considered that the policy rights were joint during the policyholders’ joint lives because the terminal-illness benefit would then be payable to them jointly. The rights could not depend on the qualifying event which ultimately triggered payment, and payment to the survivor could be explained by survivorship.

• Court of Appeal (Civil Division) [2003] EWCA Civ 1862: allowed the appeal and answered the reformulated preliminary issue in the negative.
• High Court of Justice, Chancery Division, Cardiff District Registry: HH Judge Moseley QC held that the policy benefit was jointly held and answered the preliminary issue in favour of the claimant.