The Supreme Court today handed down its long anticipated judgement in relation to the case of Ilott v Blue Cross, concerning the Inheritance Act 1975.
The case concerned a mother, Melita Jackson, who chose to leave the bulk of her estate to three charities – and her estranged daughter Heather Ilott who appealed this decision. The daughter was completely excluded from her mother’s will and her mother went so far as to write a letter of wishes, stating explicitly that her daughter should not inherit.
When the case was originally heard in 2007 by DJ Million, he ruled that it was unreasonable for Mrs Jackson’s Will to make no provision for her daughter. The daughter was awarded £50,000 out of the £486,000 estate. However, the daughter was not satisfied as this was not sufficient to purchase her home and would affect her right to means tested benefits.
The case was heard again by Eleanor King J in 2009 on the first appeal. The Judge overturned the previous ruling so that the daughter stood to receive nothing.
The case was then heard again in 2011 by the Court of Appeal who reinstated the £50,000 award, but the daughter was not satisfied.
The case was revisited by the Court of Appeal in June 2015 (Ilott v Mitson  EWCA Civ 797). At this stage, the Court awarded the daughter £163,000 comprising of money to purchase her home (£143,000) and a cash sum (£20,000) which she could optionally draw down on that would not affect her eligibility for benefits. Heather Ilott had five children and very little money – and she had tried to reunite with her mother, without success. The Court described the mother’s decision as ‘unreasonable, capricious and harsh’.
The Court’s decision in 2015 was based on the Inheritance (Provision for Family and Dependents) Act 1975 which allows Wills to be challenged where an individual believes they have been unjustly excluded. Usually, someone would need to be financially dependent on the deceased to make a claim under the Act. However, the Court recognised that Heather Ilott had a very low annual income that overrode the dependency requirement.
Following the decision in 2015, the three charities who originally stood to benefit from the bulk of Mrs Jackson’s estate were given permission to take their course to the UK Supreme Court and this hearing took place on December 12th 2016.
Delivering its judgement this morning, the Supreme Court said that the Court of Appeal had erred when calculating reasonable financial provision and allowed the charities’ appeal against that decision. The ruling which was unanimous and was delivered with a supplementary judgment from Lady Hale, restores an original order handed down by District Judge Clive Million.
The reason stated for this judgement was that the District Judge did not make either of the two errors on which the Court of Appeal relied to revisit his award, and so the Court of Appeal’s order must be set aside and the District Judge’s order restored.
Per the press summary:
The matters to which the court must have regard in exercising its power to award reasonable financial provision are listed under Section of the 1975 Act. Where the applicant is someone other than a spouse or partner, reasonable financial provision is limited to what it would be reasonable for her to receive for maintenance only. This is an objective standard, to be determined by the Court.
The limitation to maintenance provision represents a deliberate legislative choice and demonstrates the significance attached by English law to testamentary freedom (i.e. the freedom of people to leave their property to who they choose in their Will). Maintenance cannot extend to any or everything which it would be desirable for the claimant to have, although it is not limited to subsistence level either. The level at which maintenance may be provided is clearly flexible and is for the Court to decide based on the facts of each case, as at the date of hearing. Although maintenance is by definition the provision of income rather than capital, it may be provided by way of a lump sum. [See judgement para 12-25]
As to the first suggested error, the process suggested by the Court of Appeal is not warranted by the Act. The Act does not require the judge to fix some hypothetical standard of reasonable provision and then increase or discount it with reference to variable factors. All of the factors at Section 3 of the Act, so far as they are relevant, must be considered, and in light of them a single assessment of reasonable financial provision should be made.
The District Judge worked through each of the Section 3 factors, and was entitled to take into account the nature of the relationship between Mrs Jackson and Mrs Ilott in reaching his conclusion.
As to the second suggested error, the District Judge specifically addressed the impact on benefits twice. The Court of Appeal’s criticism that his award was of little or no value to Mrs Ilott was unjustified. A substantial part of the award could be spent on replacing old and worn out household equipment which the family had previously been unable to afford. This fell within the provision of maintenance of daily living, and would avoid Mrs Ilott retaining capital for long above the £16,000 threshold. [See judgement para 29-41]
Reasonable financial provision can in principle include the provision of housing, but ordinarily by creating a life interest rather than a capital and inheritable sum, which possibility appeared not to have been considered by the Court of Appeal. To the extent that the benefits means test was relevant, it was likely to apply also to the additional sum of £20,000 apparently awarded with a view to avoiding that test.
The statement in the Court of Appeal that a claimant in receipt of benefits should be treated in the same way as a disabled claimant was problematic; what must have been meant was that receipt of means tested benefits is likely to be a relevant indication of a claimant’s financial position.
Finally, the Court of Appeal’s order gave little weight to Mrs Jackson’s very clear wishes and the long period of estrangement. The Court of Appeal’s justification for this approach was that the charities had little expectation of benefit either. This approach should be treated with caution, given the importance of testamentary bequests for charities, and because the testator’s chosen beneficiaries, whether relatives, charities or otherwise, do not need to justify their claim either by need or by expectation. [See judgement para 44-47]
Lady Hale in her supplementary judgment reviews the history of the Act and preceding legislation. She comments on the unsatisfactory state of the law, giving as it does no guidance as to the weight of the factors to be taken into account in deciding whether an adult child is deserving or undeserving of reasonable maintenance. The approach under the 1975 Inheritance Act invariably involves a value judgment, which may be problematic as there is a wide range of opinion among the public and the judiciary about the circumstances in which adult descendants ought or ought not to be able to make a claim on an estate which would otherwise go elsewhere. [See judgement para 49-66]
The judgement does not prevent adult children from applying for reasonable provision under the 1975 Act. An adult child who has been left out of a Will by their parent, or will not inherit under the rules of intestacy if the parent failed to make a Will, can still bring a claim under the Act. However, the judgement today shows that the wishes of the testator are still relevant and will be respected. In this case, Heather Ilott’s mother chose to leave her daughter out of her Will entirely for her own personal reasons. The Court of Appeal’s approach previously had given little weight to her wishes or to the 25-year estrangement.
Additionally Ms Jackson chose to donate the majority of her estate to three charities with which she had no connection during her lifetime. The Court acknowledged that this was her right regardless of the fact she had no previous involvement with those causes. Although the charities’ claim was not on a par with that of Mrs Ilott, charities depend heavily on gifts such as that left by Melita Jackson for their work, which is both for the public benefit and often for important humanitarian purposes.