Landmark Inheritance Case Will Impact Claims On Estates
The Supreme Court has today handed down judgment in the case of Ilott -v- Mitson, the first time that the highest court in the land has considered claims under the Inheritance (Provision for Family and Dependants) Act 1975. The court has overturned the Court of Appeal’s decision in the case, making some important points on how the courts should apply the 1975 Act.
The decision (judgment here) brings to an end many years of litigation, with the trial having taken place in August 2007, but to the disappointment of some lawyers it has not shaken up the law in this area to any great extent.
The case centred on the relationship between Mrs Ilott and her mother Mrs Jackson. When Mrs Jackson died in 2004 she had been estranged from her daughter for 25 years, and despite several unsuccessful attempts at reconciliation there had been no contact for some years. In her will, Mrs Jackson left her entire estate to charities with which she had no particular connection, making no provision at all for Mrs Ilott. Although Mrs Ilott had had no expectation that she would receive anything from the estate, she made an application to the court under the 1975 Act for provision to be made for her from the estate.
The 1975 Act provides that if reasonable financial provision is not made in a will, a spouse, former spouse or child of the deceased, or someone who was being maintained by the deceased before the death, can apply to the court for provision to be made from the estate. The Act provides a list of matters that the court must take into account in deciding whether reasonable financial provision has been made, and if not what provision should be made, but does not say how the court is to make the decision.
In this case, the judge at the trial made an order that Mrs Ilott should be given a payment of £50,000, which was a small proportion of the £486,000 estate. The Court of Appeal disagreed, overturning the order and instead providing for a payment of £143,000 to allow Mrs Ilott to buy a home, and a further £20,000. The payments were deliberately structured so that Mrs Ilott would not lose any of her means tested state benefits.
There was a considerable amount of comment in the press following the decision in the Court of Appeal. The general feeling was that in a case where Mrs Jackson and Mrs Ilott had been estranged for 25 years, Mrs Ilott should not have had any claim on the estate. There was much suggestion that the case broke new legal ground, but the principles behind the case had been law since the 1930s and in much the same form as they are now since the 1975 Act became law. The decisions in the appeal courts have been about how those principles should be applied.
The Supreme Court has overruled the decision of the Court of Appeal and reinstated the award made at trial that Mrs Ilott should receive £50,000. The court found that the Court of Appeal’s criticisms of the trial judge were wrong, and therefore the Court of Appeal had no reason to interfere with the judge’s findings.
In brief, the Supreme Court’s decision was:
- In the case of children (and other claimants other than spouses) the Act only provides for the maintenance of the claimant. That does not mean everything which the claimant wants to have, but neither is it limited to subsistence. The amount required for maintenance is flexible and is to be assessed on the facts of each case. Maintenance is by definition the provision of income rather than capital, but it can be provided by way of a lump sum that has the effect of providing for income.
- The decision is to be made on the facts at the date of the hearing of the case.
- In assessing what reasonable financial provision should be made, the trial judge must make a single assessment in light of all the circumstances of the case. He does not have to come up with a hypothetical standard of reasonable provision and then add to it or discount from it according to individual facts in the case (as the Court of Appeal thought).
- It is relevant to the decision what state benefits are being received by the claimant, and the court should take into account whether they will continue to be received if an award is made under the Act.
- The estrangement of (in this case) Mrs Ilott and Mrs Jackson was relevant to the decision, as was Mrs Jackson’s decision as to what should happen to her estate. The testator’s wishes may be overridden but they are a factor to be taken into account when deciding the case, together with all the other relevant factors.
- The fact that the charities received a windfall and did not have any ‘need’ for the money was not relevant. In the case of charities, their need for the money is derived from the public benefit they give, but the court went further than that. The fact that Mrs Jackson had chosen them as beneficiaries was relevant, and they did not have to justify a claim for the money that had been left to them. The suggestion in the Court of Appeal that the charities were therefore not prejudiced by an award to Mrs Ilott was wrong.
- Awards under the 1975 Act are not rewards for good behaviour of the claimant or penalties for bad behaviour of the deceased. Matters of conduct are relevant, but only as part of the whole circumstances of the claim.
The trial judge had undertaken an assessment in line with these principles, and so was correct in his assessment of the case, and the Court of Appeal had no right to interfere with his judgment.
The decision does not change the law to any great extent. The 1975 Act remains a source of redress for family members who have been left out of wills (or receive insufficient provision on intestacy). This decision has brought some clarity to the process the court will use to arrive at future judgments, but there will be little change to day to day practice. The process of judges plucking figures from the air is far from gone.
But what lies on the horizon? In her judgment, Lady Hale sets out that the present law is unsatisfactory precisely because the Act provides no guidance on the factors to be taken into account in deciding whether an adult child is deserving of some payment. She regrets that the Law Commission did not reconsider this when it looked at the topic in 2011, and it is fair to say that that will be noted by the Commission for future reference. This is plainly an area where the judiciary feel that the law needs some amendment by parliament, and it only remains to be seen how much the views expressed in the press after the Court of Appeal’s judgment will be reflected in whatever changes are made.
For further information on the topic discussed please contact Ben Parr-Ferris on 020 7822 4105 or email email@example.com.