Supreme Court decides Ilott appeal in favour of charities, but only on a technicality
(Peter Livingstone reports on further information regarding the case)
In the case of Ilott v The Blue Cross, the Supreme Court handed down its judgment on 15 March 2017, 3 months after the hearing.
In its decision, the Court allowed the charities’ appeal and restored the lower court’s original award. It did so on the basis of 2 technical arguments, which will have little impact on other cases. It also made some useful comments though which will be quoted often.
Background to the appeal
In 2002, Mrs Jackson made a Will giving her estate to The Blue Cross and a number of other charities. She gave nothing to her daughter Mrs Ilott. They had fallen out many years before when the daughter went off at the age of 17 with Mr Ilott and had a baby. By the time Mrs Jackson died in 2004, the 2 women had been estranged for 26 years. Mrs Ilott was married to Mr Ilott and they had 5 children. They lived in very meagre circumstances.
Mrs Ilott brought a claim under the Inheritance (Provision for Family and Dependants) Act 1975, asking the Court to award her a reasonable figure for maintenance on the basis that her mother's Will had failed to do so.
At the first hearing, the District Judge found that Mrs Jackson's Will did not make reasonable financial provision for Mrs Ilott. He awarded her £50,000. There have been several appeals. In the end, the charities could not challenge the fact that the Will did not make reasonable financial provision for Mrs Ilott, but they argued about the level of the award she should receive.
At one appeal, the Court of Appeal set aside the District Judge's original award of £50,000 and instead it awarded her £143,000 to buy the home she lived in plus an option to receive a further £20,000 in one or more instalments. It was that decision which the Supreme Court reviewed.
The Supreme Court's decision
The Supreme Court found in favour of the charities and has restored the District Judge's original award of £50,000. The Supreme Court did this for 2 reasons.
First, it disagreed with the Court of Appeal's decision that the District Judge had made an error in that he had held that the award should be limited in light of the long estrangement between the 2 women and a lack of expectation of benefit by the daughter; and it disagreed with the Court of Appeal’s finding that the District Judge had not identified what the award would have been without these factors and that he had not said what the reduction attributable to those factors should be.
The Supreme Court decided that the Court of Appeal was wrong, since the 1975 Act does not require the judge to fix some hypothetical standard of reasonable provision and then to adjust it up or down by reference to other factors. Instead, all of the factors set out in section 3 of the 1975 Act must be considered and then a single assessment of reasonable financial provision should be made on the strength of them.
Secondly, the Supreme Court disagreed with the Court of Appeal's finding that the original District Judge had made his award without knowing what its effect would be on the means-tested benefits which Mrs Ilott and her family received. The Supreme Court found that the District Judge had considered that impact carefully.
The 2 grounds of the Supreme Court's decision are particular to Mrs Ilott’s case. They are unlikely to have any bearing on other cases. Helpfully, the Supreme Court also made a number of general comments which will certainly be of help in other claims.
General comments by the Supreme Court
The Supreme Court made a number of observations as to how the 1975 Act should be used, and it did so in order to clarify what are perhaps common misunderstandings. The Court said this:
- The level at which maintenance may be provided for is clearly flexible and falls to be assessed on the facts of each case.
- It is not limited to subsistence level.
- Nor, although maintenance is by definition the provision of income rather than capital, need it necessarily be provided for by way of periodical payments, for example under a trust. It will very often be more appropriate, as well as cheaper and more convenient for other beneficiaries and for executors, if income is provided by way of a lump sum from which both income and capital can be drawn over the years.
- There can be a failure to make reasonable financial provision when the deceased's conduct cannot be said to be unreasonable. The converse situation is still clearer. The deceased may have acted unreasonably, indeed spitefully, towards a claimant, but it may not follow that his dispositions fail to make reasonable financial provision for the claimant.
- (Citing In re Coventry) Subject to the court's powers under the Act and to fiscal demands, an Englishman still remains at liberty at his death to dispose of his own property in whatever way he pleases or, if he chooses to do so, to leave that disposition to be regulated by the laws of intestate succession. In order to enable the court to interfere with and reform those dispositions it must, in my judgment, be shown, not that the deceased acted unreasonably, but that, looked at objectively, his disposition or lack of disposition produces an unreasonable result...It clearly cannot be enough to say that the circumstances are such that if the deceased had made a particular provision for the applicant, that would not have been an unreasonable thing for him to do and therefore it now ought to be done. The court has no carte blanche to reform the deceased's dispositions or those which statute makes of his estate to accord with what the court itself might have thought would be sensible if it had been in the deceased's position.
- For current spouses and civil partners...need is not the measure of reasonable provision, but if it exists will clearly be very relevant. For all other claimants, need (for maintenance rather than for anything else, and judged not by subsistence levels but by the standard appropriate to the circumstances) is a necessary but not a sufficient condition for an order.
- There is no requirement for a moral claim as a sine qua non for all applications.
- Nor, if the conclusion is that reasonable financial provision has not been made, are needs necessarily the measure of the order which ought to be made.
- The Act plainly requires a broad brush approach from the judge to very variable personal and family circumstances.
- Whether best described as a value judgment or as a discretion (and the former is preferable), both stages of the process are highly individual in every case. The order made by the judge ought to be upset only if he has erred in principle or in law.
- It is to "kill the parties with kindness" to permit marginal appeals in cases which are essentially individual value judgments such as those under the 1975 Act should be.
- I have written this judgment only to demonstrate what, in my view, is the unsatisfactory state of the present law, giving as it does no guidance as to the factors to be taken into account in deciding whether an adult child is deserving or undeserving of reasonable maintenance.
What do we take from the Supreme Court’s decision?
The Blue Cross and the other charities involved in the case will no doubt hail this decision, resulting as it did in the award going back down to £50,000, as a victory for organisations like them. The reality is, however, that they won on 2 technical grounds which are unlikely to be of any wider impact than the Ilott case itself.
The Court’s other observations, which did not in the end determine the outcome of this case, are considerably more helpful.
The Supreme Court stressed that decisions made by courts in response to applications under the 1975 Act involve a value judgement and the exercise of a discretion.
The Supreme Court also lamented the lack of clear guidance in the statute as to how the lower courts should exercise that discretion.
The Supreme Court was, however, at pains to say that appeals against decisions at first instance should be discouraged. It is doing the parties few favours to allow them to pursue appeals in marginal cases, and the court no doubt had in mind the large number of appeals in the Ilott case and the fact that the litigation has been going on at vast expense since not long after Mrs Jackson died all the way back in 2004.
It may well be that the Law Commission is prompted to clarify the law and the way in which courts should approach challenges to Wills and to the application of the intestacy rules.
Until then, however, cases coming before the courts will continue to be ones where the parties need to approach the trial with the greatest of care and only after thorough preparation. The parties are likely to have only one bite of the cherry. They also need to be under no doubt that the outcome of the Court’s consideration of the case can never be certain. Only the brave should decline to settle on reasonable terms. Only the bold should insist instead on a judge coming in as a stranger to the case and deciding the outcome.
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