Ilott appeal likely to give each side something but to leave them both dissatisfied
Early next year, the Supreme Court will hand down its judgment in the case of Ilott v The Blue Cross. There have of course been a number of wayward predictions this year, so let me chance my arm here. I predict that the Court will alter the decision made by the Court of Appeal and both sides will be able to claim a victory of sorts.
The case concerns the power of the Court to make an award of reasonable financial provision from a deceased’s estate to a claimant under the Inheritance (Provision for Family and Dependants) Act 1975. Ranged against each other are the impecunious Mrs Ilott (the deceased's adult daughter) and 3 charities, being the RSPB, the RSPCA and the Blue Cross. The charities have a combined annual turnover of over £250 million.
The story begins in 1960 when Heather Jackson (now Heather Ilott) was born. Her father was already dead, and her widowed mother brought her up. When she was 17, Heather went off with her boyfriend Nick Ilott. The mother disapproved, and that brought about an estrangement which was never patched up.
In 2004, Mrs Jackson died at the age of 70. She had an unremarkable estate, valued at £486,000. She left almost all of it to the charities. She left nothing at all to her daughter.
Mrs Ilott went to see a solicitor and made a claim under the Inheritance (Provision for Family and Dependants) Act 1975. She said that the dispositions under her mother's Will did not make reasonable financial provision for her. She pointed out that although her mother had been very angry that she had gone off with a man when she was so young, she was now in her 50s, she and the man were (still) married and they now had 5 children. She also stressed that they as a family were living in financially straightened circumstances.
The charities resisted the claim. There were, no doubt, attempts to resolve it by negotiation, but those attempts failed.
As long ago as 2007, District Judge Million heard the case and made an award for Mrs Ilott of £50,000, deciding that that was a reasonable amount for her to receive from her mother's estate. The figure was a little over 10% of the estate.
Mrs Ilott believed that that was too low, and she appealed. The charities also appealed, asserting that she should not have been awarded anything at all. There was a hearing before a High Court Judge and then a further appeal leading to a first hearing by the Court of Appeal in 2011.
In 2015, the Court of Appeal heard the case for a second time and allowed Mrs Ilott’s appeal. It set aside the original award and substituted its own award. It gave her enough money to buy her housing association home plus the reasonable costs of purchase. It also awarded her up to £20,000 which was to be structured in a way which would preserve her entitlement to means-tested state benefits.
The charities have now appealed to the Supreme Court. Amid all the excitement of the Brexit appeal, the Court heard the case on 12th December and its decision is awaited next year.
The possible outcomes
There are various lines which the Supreme Court may decide to take.
If it goes away the charities hope, it will reduce the award to Mrs Ilott either to something close to the original award made in 2007 or possibly to nothing at all. The case’s earlier appeals have attracted a good deal of publicity, and the charities would very much like the Court to stop the hare which the previous decisions have set running and to make it clear that individual beneficiaries such as members of the family should not regard charities as fair game and think that opposing bequests which are made to charities is a legitimate and sensible thing to do.
Alternatively, the Court could uphold the second decision of the Court of Appeal. Certainly, during the hearing this month, the Court was asking far more questions of the charities’ advocate than of Mrs Ilott’s, which may indicate that the Court was happy with what she had to say but less content with what the charities were suggesting.
Making a rash prediction, I believe that it is likely that the Court will be unhappy with the way the Court of Appeal approached its last decision. The Supreme Court may think that the Court of Appeal in effect awarded capital to Mrs Ilott, ordering that she receive a figure so that she could buy her home. Under the Act, a child claimant is entitled only to a reasonable figure for their maintenance, and they are not entitled to claim capital. The court can though award something which helps with maintenance by reducing the expenditure a person faces and that can involve one-off items, which seems to be what the Court of Appeal had in mind. The Supreme Court may think that the lower court went too far.
The second problem with the Order was that the Court of Appeal tried to work out an outcome which resolved the relationships between 3 parties rather than 2, i.e. not just Mrs Ilott and the charities, but also the branch of government which hands out means-tested benefits. It specifically tried to tailor the award so as to preserve Mrs Ilott’s benefits as if trying to reconcile and adjust the relationship between her position and the state.
A further difficulty, and one which the court by convention ignores, is what impact the payment of legal costs will have. The estate was only £486,000, and given that the litigation has been going on for well over a decade with several appeals, and bearing in mind the fact that both parties will have made offers to settle which may have an impact on who pays whose costs, it is likely to be entirely artificial to award Mrs Ilott a figure to enable her to purchase her home if in fact after payment of costs (hers and perhaps the charities’) she cannot do so.
It is likely therefore that the Supreme Court will alter the award but still give Mrs Ilott something significant. If that happens, both sides will be able to say that they got something out of the appeal. The charities will try to say that they were successful in overturning the wrong-headed Court of Appeal decision, but Mrs Ilott will be able to announce that she still received something substantial.
We will have to see how the Supreme Court decides. I may well be wrong, and the shock results may continue into 2017.