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Nicola Phillipson TEP
Please note that this article assumes that the reader is familiar with the various decisions in the Ilott case, including the Supreme Court decision handed down on 15/3/17. A summary of these cases can be found in a previous article: Ilott v Mitson: The Final Chapter – Back to where we started (15/3/17) available via www.zenithchambers.co.uk
Let’s start with what this case is not. It’s not a case which changes the law. It’s not a case which tells us what seven Supreme Court Judges think Mrs Ilott should have received under the Inheritance (Provision for Family and Dependants) Act 1975 (“the Act”). It’s not a case which provides guidance as to what a court should award under the Act.
3. The present case concerns one kind of claimant, namely an adult child who has lived quite independently of her parent, the deceased testator, for many years, but who is in straitened financial circumstances. That is only one of the types of case which may raise difficult individual questions under the 1975 Act, which have to be resolved on a case-by-case basis.
Some of the factors inevitably dealt with in this judgment may apply also to types of case other than those of adult children living separately from the deceased, but there
is no occasion for this court to attempt to meet every difficulty to which claims for family provision may give rise.
The point is emphasised throughout the judgment, just as it was in the 2011 Court of Appeal decision; there is no blue print which can be applied. Cases under the Act are fact sensitive, are decided on a case by case basis, and different judges can legitimately reach different conclusions on the same facts.
In granting Mrs Ilott’s appeal in 2011, the Court of Appeal said that the decision reached by King J, that it was reasonable in all of the circumstances that Mrs Ilott should receive nothing, was also a decision which was “meticulously reasoned and well within the ambit of decisions that were open to her and would not be vulnerable to the attentions of this court”. This was an explicit acknowledgment that two judges, faced with identical facts, can legitimately reach entirely opposing decisions.
This Supreme Court decision makes the same point. The charities’ appeal was allowed because the decision of District Judge Million, that Mrs Ilott should be awarded £50,000, wasn't wrong. It wasn’t said that the court expressly agreed with the decision he reached, or that he reached the only possible right answer. But he wasn’t wrong. He didn't stray outside the very wide ambit of his value judgment. Therefore his judgment was reinstated.
In a previous article, I concluded that the many cases of Ilott had been a bit of a storm in a teacup. The same could be said for this decision. However, there are some parts of the judgments, particularly with reference to life interests in property, and the wishes of the testator, which merit closer scrutiny.
  EWCA Civ 346
 Paragraph 79
 Ilott v Mitson: A storm in a Teacup? (October 2016)
Maintenance and Life Interest
At paragraph 13 of the judgment, it is noted that
This limitation [for applicants other than spouses] to maintenance provision represents a deliberate legislative choice and is important.
14 - The concept of maintenance is no doubt broad, but the distinction made by the differing paragraphs of section 1(2) shows that it cannot extend to any or every thing which it would be desirable for the claimant to have. It must import provision to meet the everyday expenses of living.
At paragraph 15 it is said,
…it is necessary to remember that the statutory power is to provide for maintenance, not to confer capital on the claimant. Munby J (as he then was) rightly made this point clear in In re Myers  EWHC 1944 (Fam);  WTLR 851 at paras 89-90 and 99-101. He ordered, from a very large estate, provision which included housing, but he did so by way not of an outright capital sum but of a life interest in a trust fund together with power of advancement designed to cater for the possibility of care expenses in advanced old age. If housing is provided by way of maintenance, it is likely more often to be provided by such a life interest rather than by a capital sum.
The court came back to this point at paragraph 44 when discussing the Court of Appeal decision under review;
44 - There were in any event a number of potential difficulties about the Court of Appeal's proposed order. Plainly some judges might legitimately have concluded that this was a case in which reasonable financial provision for the claimant should be made by way of housing, even though the actual benefit of doing so would be much reduced by loss of housing benefit. In the absence of error of principle by the District Judge the occasion for the Court of Appeal to say what its own order might have been did not of course arise. But even if it had arisen, the right order would be likely to have been a life interest in the necessary sum, rather than an outright payment of it.
Even Lady Hale remarked that if the court had made an award which included housing Mrs Ilott, the appropriate order should have been a life interest.
65 - … It is difficult to reconcile the grant of an absolute interest in real property with the concept of reasonable provision for maintenance: buying the house and settling it upon her for life with reversion to the estate would be more compatible with that. But the court envisaged her being able to use the capital to provide herself with an income to meet her living costs in future.
The issue of whether an applicant should be awarded a life interest in property as opposed to an absolute interest is an issue which regularly troubles practitioners, particularly where a surviving long term partner has only been granted a right to reside in the former home, and this partner wants to move away and have a clean break. The tension between the former partner wanting to live a life free from any perceived interference by the Deceased’s children, and the desire of the children of the Deceased not to provide the partner with capital which will subsequently be inherited by children not related to the Deceased is a common stumbling block in settlement discussions and mediations. The repeated references to a life interest satisfying the maintenance test under the Act is likely to be seized upon by Respondents, and Claimants may now have to provide compelling arguments as to why an outright order should be made.
Limited nature of Maintenance and Testator’s wishes
The limiting of maintenance is also considered in this judgment. It is often argued that once a Claimant has successfully navigated the first stage of the test and it is established (or conceded) that the will fails to make reasonable financial provision, the focus is then upon the Claimant’s needs, and if the Claimant’s needs can only be satisfied by the whole of the estate, then so be it. This approach is not endorsed by the Supreme Court.
22 - 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. It is obvious that the competing claims of others may inhibit the practicability of wholly meeting the needs of the claimant, however reasonable. It may be less obvious, but is also true, that the circumstances of the relationship between the deceased and the claimant may affect what is the just order to make. Sometimes the relationship will have been such that the only reasonable provision is the maximum which the estate can afford; in other situations, the provision which it is reasonable to make will, because of the distance of the relationship, or perhaps because of the conduct of one or other of the parties, be to meet only part of the needs of the claimant.
46 - More critically, the order under appeal would give little if any weight to the quarter of a century of estrangement or to the testator's very clear wishes. The Court of Appeal indeed offered the view (at para 51) that these factors counted for little, and that Mrs Ilott's lack of expectation of any benefit from the estate was likewise of little weight, in part because the charities had no expectation of benefit either. Those observations should be treated with caution. The claim of the charities was not on a par with that of Mrs Ilott. True, it was not based on personal need, but charities depend heavily on testamentary bequests for their work, which is by definition of public benefit and in many cases will be for demonstrably humanitarian purposes. More fundamentally, these charities were the chosen beneficiaries of the deceased. They did not have to justify a claim on the basis of need under the 1975 Act, as Mrs Ilott necessarily had to do. The observation, at para 61 of the Court of Appeal judgment, cited above, that, because the charities had no needs to plead, they were not prejudiced by an increased award to Mrs Ilott is, with great respect, also erroneous; their benefit was reduced by any such award. That may be the right outcome in a particular case, but it cannot be ignored that an award under the Act is at the expense of those whom the testator intended to benefit.
47 - It was not correct to say of the wishes of the deceased that because Parliament has provided for claims by those qualified under section 1 it follows that that by itself strikes the balance between testamentary wishes and such claims (para 51(iv)). It is not the case that once there is a qualified claimant and a demonstrated need for maintenance, the testator's wishes cease to be of any weight. They may of course be overridden, but they are part of the circumstances of the case and fall to be assessed in the round together with all other relevant factors. Lastly, for the reasons adverted to above, it was not correct that so long and complete an estrangement was of little weight.
These paragraphs also appear to go further than simply saying that the court must consider all of the s.3 factors. The judgment clearly states that weight should be attached to the testator’s wishes – “they are part of the circumstances of the case and fall to be assessed in the round together with all other relevant factors”. However it should be remembered that the testator’s wishes, clear or otherwise, are not specifically listed within the s.3 factors. (John Collins, who as well as being Mrs Ilott’s pro bono counsel for the last 7 years has an encyclopaedic knowledge of old acts, tells me that these wishes were a relevant factor under the 1938 Inheritance (Family Provision) Act, but that the omission from the 1975 Act was deliberate).
The court has, of course, always been able to take the testator’s wishes into account under s.3(1)(g), “any other matter … which in the circumstances of the case the court may consider relevant”, but this judgment does seem to be adding the wishes of the testator, and the nature of the relationship between the Deceased and the parties as specific matters to be considered alongside the s.3 factors.
My experience of contested cases is that the wishes of the testator do have a tendency to be overlooked in the face of an impecunious Claimant and Defendants who are not mounting a needs based defence. I anticipate that these wishes will be given more prominence in the future.
Defendant friendly Judgment?
On the whole, it is my opinion that when the judgment is looked at in detail, it feels more Defendant friendly. However, I urge a word of caution. As set out above, and emphasised by Lady Hale in her judgment, different judges can, and will, reach different conclusions on similar facts.
58 - The point of mentioning all this is to demonstrate the wide range of public opinion about the circumstances in which adult descendants ought or ought not to be able to make a claim on an estate which would otherwise go elsewhere. That range of opinion may very well be shared by members of the judiciary who have to decide these claims. The problem with the present law is that it gives us virtually no help in deciding how to evaluate these or balance them with other claims on the estate.
61 - As Black LJ wisely observed when this case first came before the Court of Appeal:  EWCA Civ 346;  2 FCR 1, para 88:
"A dispassionate study of each of the matters set out in section 3(1) will not provide the answer to the question whether the will makes reasonable financial provision for the applicant, no matter how thorough and careful it is. … [S]ection 3 provides no guidance about the relative importance to be attached to each of the relevant criteria. So between the dispassionate study and the answer to the first question lies the value judgment to which the authorities have referred. It seems to me that the jurisprudence reveals a struggle to articulate, for the benefit of the parties in the particular case and of practitioners, how that value judgment has been, or should be, made on a given set of facts."
64 - For these reasons, I have every sympathy for the difficult position in which District Judge Million found himself. He was faced with the complete disinheritance of an adult child in favour of charities in which the deceased had shown little or no interest while alive. The adult child was in straitened circumstances, living in rented accommodation which was almost entirely financed by the public purse, through housing and council tax benefit. These benefits were means-tested by reference to income and to capital and would be lost if there were capital of more than £16,000. The family lived within its modest means, but these too were largely derived from the public purse, the husband's meagre earnings being supplemented by tax credit, child tax credit and child benefit. Apart from child benefit, these were means-tested, but by reference only to income and not capital. The household goods were old and dilapidated - the family could do with another car, some furniture and carpets and white goods, and had never had a holiday, so it might be regarded as reasonable to spend money on these and thus quite quickly reduce a capital sum to below £16,000 without incurring penalties. On the other hand, mother and daughter had been estranged since the daughter left home to live with and then marry her husband, of whom the mother disapproved, three attempts at reconciliation having failed. The mother had left a letter explaining why she had disinherited her daughter, which the district judge did not find wholly "founded on truth."
65 - So what was he to do? A respectable case could be made for at least three very different solutions:
(1) He might have declined to make any order at all. The applicant was self-sufficient, albeit largely dependent on public funds, and had been so for many years. She had no expectation of inheriting anything from her mother. She had not looked after her mother. She had not contributed to the acquisition of her mother's wealth. Rather than giving her mother pleasure, she had been a sad disappointment to her. …. Thus it is not surprising that Eleanor King J regarded this as the reasonable result …
(2) He might have decided to make an order which would have the dual benefits of giving the applicant what she most needed and saving the public purse the most money. That is in effect what the Court of Appeal did, by ordering the estate to pay enough money to enable her to buy the rented home which the housing association was willing to sell to her and a further lump sum to draw down as she saw fit. …
(3) He might have done what in fact he did for the reasons he did. …
66 - Some might think that the best choice was between options (1) and (2). Option (1) was not, however, open to the Court of Appeal this time round and is not open to this Court now. … I agree with Lord Hughes that it was entirely open to him to make the order that he did, and just as it should not have been disturbed first time round it should not have been disturbed this time either. 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. I regret that the Law Commission did not reconsider the fundamental principles underlying such claims when last they dealt with this topic in 2011.
When considering claims under the Act, the wide scope of the “value judgment” must be borne in mind. Despite the comments made by the Supreme Court and set out above, each case is fact specific. The life interest preferred by the court in this case won't be suitable in all cases. And there will still be circumstances where the only reasonable option is for the testator’s wishes to be overridden and for the claimant to take the whole of the estate.
Nicola Phillipson TEP
21st March 2017
Prof. Suzanne Rab
Zenith'sProf. Suzanne Rab writes:The Competition and Markets Authority (CMA) has announced that it will refer the proposed acqu...
Prof. Suzanne Rab
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