IPFDA Claims – Ilott v Blue Cross

Many people will be aware of some long-running litigation that has recently reached its final conclusion with a ruling by the Supreme Court.  The case started life (as Ilott v Mitson) after the death of the testator, Mrs Jackson, in 2004 and has generated quite a few headlines over the 12 years it has been before the courts.

Let’s start with the facts. Mrs Melita Jackson married her husband in 1956 but he was tragically killed in an accident at work only four years later.  The widowed Mrs Jackson was expecting a baby at the time. The baby was subsequently born, named Heather, and brought up by Mrs Jackson on her own. Relationships between mother and daughter became difficult, however, and broke down when Heather left home at the age of 17 to marry, without her mother’s knowledge, her boyfriend, Nicholas Ilott. There were three attempts at a reconciliation, but none of them lasted long and, in effect, mother and daughter were completely estranged for over 25 years. Mrs Jackson was not too badly off, as the compensation paid when her husband died and her pension as his spouse enabled her to carry on living in her own home mortgage-free, and to make some savings over time. Heather and Nicholas did not fare so well. They had five children, so Heather understandably never took up full time employment. Nicholas seems to have borne out Mrs Jackson’s view that he was a waste of space, at least as far as financial support for Heather was concerned, as he is described as working “intermittently” as a “supporting actor” whose earnings  at the time Mrs Jackson died, in 2004 were less than £5,000 a year. Heather and Nicholas had therefore lived mostly on state benefits, but lived within their budget, “getting by” by taking no holidays and spending only the very modest amounts they could afford on household goods, food and clothes.

When Heather learned that her mother had left an estate valued for probate at £486,000 divided entirely between three charities, she took advice and made a claim under the Inheritance (Family and Dependants) Act 1975 (the “Act”). This provides that, as has long been the case under English law, Testators may make a Will in favour of anyone they choose, or if they have not made a Will, their estate will be divided on a set formula set out by statute, but that people in certain categories may, if “reasonable provision” has not been made for them, apply to the Court. The Court then has a discretion to order the Personal Representatives to make provision, or better provision, for the applicants out of the Estate. Heather claimed that the Executors should pay her enough to buy the Ilotts’ former Council House under their “Right to Buy”, and further sums to extend the property and improve their living conditions. She was conscious, no doubt, that if she simply received large sums of capital, she would no longer be entitled to some of the means-tested benefits she was receiving. The charities, naturally, objected.

The difficult question for the judge, therefore, was whether to make no award at all or to make a large one. Arguably, the “reasonable”level of provision for someone who has been managing without support for 25 years and has no expectation of getting any, is nil. If, on the other hand he wished to make an award that would be of any real benefit to Heather, it had to be of an amount that was large enough to offset the loss of benefits for a substantial period of time, or to buy her house (which is disregarded for purposes of the the means test if it is the home of the person in receipt of benefit).

The judge decided, applying the statute as well as he could in the circumstances, that “reasonable provision” had not been made for Heather, partly because of Mrs Jackson’s conduct and “harsh” treatment of her daughter, and that the estate should pay her a lump sum of £50,000 which would be sufficient for her to to improve her circumstances at home and to have some additional income, at least for a time, until the capital  sum was depleted by drawings to make up for the lost benefits. Understandably, this pleased no-one.

Heather appealed against the amount of the award, and the charities appealed against the “reasonable provision” finding, concerned about other cases where money left to them would be clawed back, or tied up in litigation, as a result of similar claims. Initially, the charities were successful and, it having been decided that it had been “reasonable” to make no provision for Heather, the discussion on the amount became irrelevant. There was a further appeal against this decision to the Court of Appeal, however, who overturned that decision and sent the case back to the High Court. The High Court decided that the lump sum originally awarded was correct. Heather appealed again to the Court of Appeal, however, and this time succeeded on the amount claim, with the Court of Appeal substituting an award of £143,000 (sufficient to buy the Ilotts’ house) and a further £20,000 to meet maintenance needs. The case received a lot of publicity and adverse comment. The charities appealed again, and the case wound up in the Supreme Court.

The judgement of the Supreme Court has just been handed down, and it is an interesting, as well as important one. A strong court of seven judges unanimously agreed that the original decision of the first instance judge should be upheld and the Court of Appeal’s decision should be overturned. The Court of Appeal had criticised the original decision because (a) the trial judge had said the £50,000 award was “limited as result o the long estrangement and limited expectations” Heather would have had, but had not quantified the effect of this limitation by saying what a full award would be and (b) the trial judge had not correctly considered and analysed the effect of loss of state benefits when calculating the award. The Supreme Court rightly held that it is a nonsense to expect trial judges to quantify all of the factors that are supposed to be involved in coming up with a final award when they are exercising their discretion and that the trial judge had specifically referred to the loss of benefit problem, and done his best on the limited information that had been presented to him at the trial.

What is interesting, though, is that the Supreme Court specifically commented on the correct application of the legislation and a minority group of three judges, led by Lady Hale, then went on to point out how difficult the law is to apply in its current form in cases like this.

The main points made were:

  • The starting point is that, under English law, there is testamentary freedom and no one is forced to give any fixed share of their estate to anyone else;
  • Except in the case of claims made by spouses, claims under the Act are for “maintenance” only. This does not mean “bare subsistence” but is limited to the payments required to maintain the everyday standard of living “appropriate to the circumstances” of the claimant and, whether the award is made in the form of a lump sum or a stream of income, or the right to live in a property (the court cited with approval cases where life interest trusts of houses had been awarded) it is emphatically not a division of the capital in the estate along whatever lines might have been “fairer” than the testator original decision.
  • The conduct of the claimant and other people, including the testator, is a relevant consideration but this is not the determinant of what provision is “reasonable” and the Act does not require the Court to “provide legacies or awards for meritorious conduct”. The only test is whether the actual provision which resulted from the original disposition is, looked at objectively, “reasonable” in all the circumstances, not whether the deceased themselves acted reasonably or unreasonably.
  • Just being a person who is in the category of people who are entitled to apply under the Act, and someone who has had nothing from the estate, is not sufficient to entitle you to an award: you must also establish some moral claim or other circumstances that would have made it “reasonable” to make greater provision for you and also that making payments to you out of the estate is not unfair on other beneficiaries. Clearly, if there is not enough money to go round, “reasonable” provision cannot be made for everybody.
  • (from the minority group of judges only) A review of other legal systems and academic studies canvassing the views of samples of people on what the law on provisions for families and dependants should be after a death shows that there are many different approaches. Some are based on bloodlines, some on affinity, some on what is “reasonable” behaviour on a testator’s part and what is not: the trouble is that the Act does not clearly follow any of these approaches and the guidance it gives on “reasonable” provision is logically unclear on which of these approaches is preferred. The current state of the law is “unsatisfactory”.

Perhaps the clearest conclusion to be drawn, however, is from the fact of the Supreme Court’s willingness to overturn the Court of Appeal’s decision and some obiter comments that, if no award had been made by the judge, his original decision would probably have been allowed to stand. Judges will be emboldened to avoid the complexities of this kind of claim in the future by saying that whatever provision was made, or not made, for someone applying under the Act, it was in fact “reasonable” and the testator’s wishes should be respected. More claims will fail as a result of this decision. Given the rising tide of litigation in this area, perhaps that is a good thing.

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