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Ilott -v- The Blue Cross and Others [2017] UKSC 17

Tue 16th May 2017

Supreme Court guidance on the  Inheritance (Provision for Family and Dependants) Act 1975

Facts

The claimant, Mrs Ilott, was the only daughter of the testator, Mrs Jackson. In 1978, when Mrs Ilott was 17, she left home secretly to live with her boyfriend whom she later married. Mrs and Mr Ilott remain together and have had five children.

Mrs Jackson disapproved of her daughter’s relationship. This caused a lifelong estrangement between mother and daughter which lasted 26 years until Mrs Jackson’s death in 2004. There were three attempted reconciliations, all of which failed. Thus, Mr and Mrs Ilott lived their lives independently (financially and otherwise) of any connection with Mrs Jackson.

In 2002 Mrs Jackson made a will in which she left almost all her estate of £486,000 to several charities with which she had no particular attachment. In the will and a side letter Mrs Jackson confirmed she was not making any provision for Mrs Ilott and that she felt no moral or financial obligation to her. She left instructions to her executors to resist any subsequent claim by Mrs Ilott.

Mr and Mrs Ilott’s financial circumstances were modest: they lived in a house owned by a housing association and much of their income derived from state benefits.

Claim and Original Decision

In 2004 Mrs Ilott applied for financial provision under ss. 1 and 2 of the Inheritance (Provision for Family and Dependants) Act 1975 (“the 1975 Act”). The district judge exercised his powers under s. 2 after considering the factors in s. 3. He found that Mrs Jackson’s will did not make reasonable provision for Mrs Ilott, and awarded her £50,000. He considered this was appropriate in view of the facts, the long estrangement, and lack of expectation of any benefit.

Appeals

Mrs Ilott appealed the quantum of the award. The charities cross-appealed against the conclusion that there had been any failure of reasonable financial provision.

The Court of Appeal held that the district judge had fallen into two errors of principle in arriving at his award of £50,000, namely (i) in failing to identify what the award would have been without the factors which justified its limitation, and (ii) in making the award of £50,000 without knowing what the effect would be on the benefits Mrs Ilott (and her family) received. The Court of Appeal then made its own evaluation of the claim and awarded Mrs Ilott (1) £143,000 to buy the house she lived in and (2) an option to receive a further £20,000 in one or more instalments. The charities appealed to the Supreme Court.

Supreme Court

The decision of the Court of Appeal was reversed. The Supreme Court held:

  • English law recognises the freedom of individuals to dispose of their assets by will after death however they wish. To this general rule, the 1975 Act gives the court power in defined circumstances to modify a will if satisfied it does not make reasonable financial provision for a limited class of persons [1].
  • There are four key features of the 1975 Act. (1) There is no automatic provision; the will applies unless successful application is made to the court. (2) Only a limited class of persons may make such an application. (3) All claimants, save for spouses and civil partners, can only claim what is needed for their maintenance. This is an important deliberate legislative choice. (4)The test of reasonable financial provision is objective, but it is not a test of whether the deceased acted reasonably or not in leaving the will he did [2].
  • The concept of “maintenance” is broad but does not extend to any or every thing which a claimant wants. It must import provision to meet the everyday expenses of living [14].
  • The level at which maintenance may be provided for is flexible and will be assessed on the facts of each case. It is not limited to subsistence level [15].
  • Maintenance is the provision of income rather than capital, but it might be paid as a capital sum rather than periodical payments [15].
  • The condition for making an order under the 1975 Act is that the will does not “make reasonable financial provision” for the claimant: s 1(1). By s. 1(2), reasonable financial provision is what it is “reasonable for [the claimant] to receive”. This is an objective standard to be determined by the court. The Act does not say that the court may make an order when it judges that the deceased acted unreasonably [16].
  • To enable the court to interfere with the dispositions it must be shown not that the deceased acted unreasonably, but that, looked at objectively, his disposition or lack of disposition produces an unreasonable result because it does not make any or any greater provision for the applicant [18].
  • All cases which are limited to maintenance, and many others also, will turn largely upon the asserted needs of the claimant. For current spouses and civil partners (s 1(2)(a)(aa)), need is not the measure of reasonable provision, but if it exists will be very relevant. For all other claimants, need is a necessary but not a sufficient condition for an order [19].
  • The conventional approach is a two-stage assessment: (1) has there been a failure to make reasonable financial provision and if so (2) what order ought to be made? In most cases this may involve a very large degree of overlap. The factors to be considered, set out in s. 3(1) of the Act, are applicable equally to both stages. Thus the two questions will usually become: (1) did the will/intestacy make reasonable financial provision for the claimant and (2) if not, what reasonable financial provision ought now to be made for him? [23]
  • The Act requires a broad brush approach to the particular circumstances of the case [24].
  • Where a court has to assess whether reasonable financial provision has been made, and/or what it should be, the relevant date is the date of hearing [25].
  • The appeal was allowed: the district judge did not make either of the two errors identified by the Court of Appeal [42]. The 1975 Act did not require the judge to identify what the award would have been without the factors which justified its limitation [34]. The s. 3 factors are all to be considered so far as they are relevant, and the court must make an assessment of reasonable financial provision in light of them. The district judge made his assessment having worked through each of the relevant factors [34-35]. Further, the district judge had addressed the impact of his award on the relevant benefits. The assessment made by the Court of Appeal gave little weight if any either to the 25-year estrangement or to the deceased’s clear wishes [46]. Accordingly, its order would be set aside and that of the district judge restored.

ALEX MODGILL

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