17 March 2017

Ilott v The Blue Cross and others in the Supreme Court

The Supreme Court's judgment in Ilott v The Blue Cross and others which was handed down on 15 March 2017 marks the end of a dispute that has been both protracted and well-publicised. The judgment is hugely significant for those making their wills, their prospective beneficiaries, and those advising them.

The history of the proceedings

The case began life as Ilott v Mitson and is the first claim brought under the Inheritance (Provision for Family and Dependants) Act 1975 ("the 1975 Act") to have reached the Supreme Court (previously the House of Lords).  Acting as a check on complete testamentary freedom, the 1975 Act allows certain family members, together with others who were being maintained by the deceased person at the time of death, to argue that insufficient provision has been made for them.

In 2007 Heather Ilott applied to the County Court under the 1975 Act for reasonable financial provision to be made for her from her mother's estate.  As has been widely reported in the press, Mrs Ilott had been completely cut out of her mother's will, the two women having been estranged since Mrs Ilott eloped with her boyfriend (now husband) when she was a teenager.  Instead, the deceased (Mrs Melita Jackson) had left her entire estate (worth just under £500,000) to three animal charities (The Blue Cross, the RSPB and the RSPCA).  The charities opposed the claim.

District Judge Million awarded Mrs Ilott £50,000.  He found that, although Mrs Ilott was an adult who was living independently from - and had no real relationship with - her mother, Mrs Jackson had acted in an unreasonable, capricious and harsh way towards her daughter such that an award was justified.  

For Mrs Ilott, £50,000 was not enough: she appealed to the High Court for an increased award.  The charities cross-appealed on the ground that the District Judge had failed properly to apply the law and that, had he done so, he would have concluded that reasonable provision for her daughter on the part of Mrs Jackson was no provision.  In 2009 the High Court Judge allowed the charities' cross-appeal but did not consider Mrs Ilott's appeal as to the amount of the award. She appealed again, this time to the Court of Appeal, which in 2011 allowed the appeal and remitted the case to the Family Division of the High Court for a re-hearing.

In 2013 the second High Court Judge dismissed Mrs Ilott's appeal as to the amount of the award.

On her second appeal to the Court of Appeal, however, Mrs Ilott was successful: it held that the District Judge had got it wrong by, among other things, failing to ascertain the effect that the award of £50,000 would have on her entitlement to state benefits. In 2015 the Court of Appeal increased the award to £143,000 to allow Mrs Ilott to purchase her housing association home and also gave her an option to take an additional maximum capital sum of £20,000, from which further income needs could be met, all structured in a way that would allow state benefits to continue. 

The final hearing

On an appeal by the charities, the case was heard by the Supreme Court on 12 December 2016.

The Supreme Court considered whether:

  1. the Court of Appeal was wrong to set aside the award made at first instance;
  2. in making an award under the 1975 Act, the Court of Appeal should have taken into account the factual position at the date of the original hearing rather than at the date of the appeal;
  3. the Court of Appeal had erred in its approach to the "maintenance" standard under the 1975 Act;
  4. the Court of Appeal was wrong to structure an award in a way which allowed Mrs Ilott to preserve her entitlement to state benefits; and
  5. the balancing exercise required under the 1975 Act had been properly carried out.

These questions went to the heart of the 1975 Act – why it exists and how it should operate.  In particular, the Supreme Court was asked to address questions of what responsibilities parents have towards their children once they are adults and how the needs of those children should be weighed against the interests of those whom the deceased has chosen to benefit. 

Allowing the appeal, the Supreme Court rejected the Court of Appeal's criticisms of the initial judgment and restored the award of £50,000.

Key points arising from the judgment

  1. The wishes of the deceased are important

Mrs Jackson had clearly intended to benefit the charities by naming them in her will and her wishes were part of the circumstances of the case.  They did not cease to matter just because Mrs Ilott could demonstrate financial need.  Nor did the charities need to justify their own needs (even though charities depend heavily on testamentary bequests): what counted was that Mrs Jackson had chosen to benefit them. 

  1. Conduct also counts - but should not be determinative

The reasonableness of Mrs Jackson's decision not to benefit her daughter in the light of their 26 year estrangement was a factor which could be considered, and their respective responsibility for the continuation of the estrangement was "not irrelevant".  However, the Supreme Court cautioned against making awards as "rewards for good behaviour on the part of the claimant or penalties for bad on the part of the deceased".  Unreasonable behaviour does not necessarily mean that a will has failed to make reasonable financial provision.

  1. Maintenance should mean maintenance

The Supreme Court took the opportunity to affirm existing case law finding that, although the concept of maintenance is broad, it should be based on provision for everyday expenses. The award of £50,000 was meant to enable Mrs Ilott to purchase household items, and perhaps a holiday.  As such, the Court of Appeal had erred in its approach by making an outright award of sum sufficient to enable Mrs Ilott to purchase her house.  Maintenance was "by definition the provision of income rather than capital".

  1. The unsatisfactory state of the current law in relation to claims by adult children

In a supplementary judgment, Lady Hale pointed to the lack of guidance in the 1975 Act "as to the factors to be taken into account in deciding whether an adult child is deserving or undeserving of reasonable maintenance".  She was critical of the Law Commission for not having "considered the fundamental principles underlying such claims" when they considered the 1975 Act in 2011.

Conclusion

The Supreme Court has confirmed that testamentary freedom remains a key principle of English law. Despite the acknowledged lack of clear guidance in relation to claims by adult children who feel they have been unfairly treated, the judgment does serve to reinforce the position as it had been understood prior to Ilott v Mitson: adult children who are living independently of their parents will have an uphill struggle to persuade the Court that a wish on the part of their parents to disinherit them in favour of others (even charities) should be overridden.

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