Zenith CC&P Current Awareness

Ilott v Mitson : The Final Chapter – Back to where we Started [2017] UKSC 17

15 March 2017

Nicola Phillipson TEP

The Decision

The Supreme Court unanimously held that the appeal of the charities should be allowed.  District Judge Million had not erred in assessing Mrs Ilott’s award in the sum of £50,000, and therefore the order of the Court of Appeal should be set aside, and the order at First Instance restored.


Background

The facts of Ilott are well known – Mrs Ilott was the only child of Mrs Jackson, from whom she had been estranged for 26 years, having left home at the age of 17.  Mrs Jackson died in 2004, bequeathing her net estate of around £486,000 to various animal charities.  Mrs Ilott was married with five children, was housed by a housing association, and dependent upon state benefits.  She brought a claim for financial provision under the Act.


The Various Decisions so Far

(i) First Instance[1] - DJ Million (May 2007) – held that the will did not make reasonable financial provision.  Mrs Ilott’s award was assessed at £50,000.

(ii) High Court[2] – Mrs Justice King (December 2009) – Mrs Ilott appealed on the quantum of the award and the charities cross appealed on the grounds that DJ Million was wrong to have made an award at all.  The charities’ appeal succeeded and therefore Mrs Ilott’s appeal was not heard.

(iii) Court of Appeal[3] (March 2011) – Mrs Ilott brought a second appeal, against the decision of King J.  Mrs Ilott succeeded, the decision of DJ Million to make an award was reinstated, and the case was remitted to the HC for Mrs Ilott’s outstanding quantum appeal.

(iv) High Court[4]: Mrs Justice Parker (March 2014) – Mrs Ilott’s appeal on quantum dismissed.

(v) Court of Appeal[5] (July 2015) – A second appeal on quantum.  DJ Million’s quantum assessment was overturned and substituted with an order that Mrs Ilott was to receive the purchase price of her home (£143,000) plus reasonable expenses of purchase, and an option to receive a capital sum of up to £20,000 (expressed in this way to preserve Mrs Ilott’s state benefits).

(vi) Supreme Court (December 2017) - The charities’ appeal from the CA quantum award was successful and the award of £50,000 made by District Judge Million was reinstated.

[1] Unreported, but an extract appears at the end of the 2015 Court of Appeal Judgment

[2] [2009] EWHC 3114 (Fam)

[3] [2011] EWCA Civ 346

[4] [2014] EWHC 542 (Fam)

[5] [2015] EWCA Civ 797


The Supreme Court Judgments

The main judgment was given by Lord Hughes, and covers a number of issues.

Maintenance

It is noted that the limitation of applicants, save for spouses, to the maintenance standard represents a deliberate, important, legislative choice, which demonstrates the significance attached to testamentary freedom.  It is accepted that the concept of maintenance is broad, but it is said that this cannot extend to any or everything which it would be desirable for the Claimant to have.  The summary of Browne-Wilkinson in Re Dennis[6] is cited:

“.. in my judgment the word ‘maintenance’ connotes only payments which, directly or indirectly, enable the applicant in the future to discharge the cost of his daily living at whatever standard of living is appropriate to him.  The provision that is to be made is to meet recurring expenses, being expenses of living of an income nature.  This does not mean that the provision need be by way of income payments.  The provision can be by way of a lump sum, for example, to buy a house in which the applicant can be housed, thereby relieving him pro tanto of income expenditure.  Nor am I suggesting that there may not be cases in which payment of existing debts may not be appropriate as a maintenance payment; for example, to pay the debts of an applicant in order to enable him to continue to carry on a profit-making business or profession may well be for his maintenance”

The level at which maintenance is to be provided is said to be flexible, falling to assessed on a case by case basis.  However, it is expressly stated that it is necessary to remember that the statutory power is to provide for maintenance, not to confer capital on the Claimant.  The case of Myers[7] is mentioned, where the award, which included housing, was by way of a life interest in a trust fund with power of advancement to cater for the possibility of care expenses in old age, rather than an outright capital sum.  It is then noted that 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.

Reasonable Financial Provision

It is emphasised that the test to be applied by the court is whether the financial provision is unreasonable; not whether the Deceased acted unreasonably, and the test set out by Oliver J in Re Coventry[8] is cited with approval. 

“… 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 is noted that maintenance cases will turn largely on the asserted needs of the Claimant, but it is stated that “need” is not necessarily the measure of the order which should be made.  The competing claims of others may inhibit the practicability of wholly meeting the needs of the Claimant, however reasonable those needs may be, and it is noted that the relationship between the Claimant and the Deceased may also affect the order made, such that an order may be made which meets only part of the needs of the Claimant.

[6] [1981] 2 ALL ER 140 at 145-146

[7] [2004] EWHC 1944

[8] [1980] Ch 461 at 474-475


Value Judgment

In the first Court of Appeal judgment (which upheld District Judge Million’s decision to make an award under the Act), the “value judgment” nature of the decision being made by the court was emphasised.  This is also a prominent feature of this judgment, with the court noting that both stages of the process are highly individual, involve a value judgment, and accepting that different judges could legitimately reach different decisions on the same case.

This aspect of the main judgment was the subject of a separate judgment given by Hale J in which, at paragraph 58, she notes that there is a wide range of public opinion about the circumstances in which adult children ought or ought not to be able to make a claim on an estate, and that this range of opinion may very well be shared by the judges who hear these cases.  She notes that “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”, and ends her judgment by stating that it was only written 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”.

Was District Judge Million wrong?

It is said that the act requires a single assessment by the court of what reasonable financial provision should be made in all the circumstances of the case.  It does not require a judge to fix a hypothetical standard of reasonable provision and then add to it or discount from it, for variable factors.  In Mrs Ilott’s case, it was noted that in reaching his quantum decision, District Judge Million had dutifully worked his way through each of the s.3 factors, and the nature of the relationship between Mrs Ilott and her mother was a relevant factor which, correctly, coloured the decision as to what reasonable provision should be. 

The court disagreed with the Court of Appeal’s finding that, due to the loss of her means tested benefits, the award of £50,000 conferred little or no benefit.  It was noted that the District Judge had been faced with a case which, in the words of District Judge Million “was presented in an ill thought out and unhelpful way”, where the effect of any award upon states benefits, and vice versa, appeared not to have been considered.  Nonetheless, the District Judge did consider the likely consequence of an award upon Mrs Ilott’s benefits, and the conclusions he reached did not disadvantage the Claimant.

In relation to the award itself, it was said that the list produced at first instance by Mrs Ilott of domestic items which needed replacement and of elementary refurbishment required (all of which sit within the definition of maintenance), would necessitate spending a substantial part of the £50,000, so that the impact upon the family’s benefits would be minimised.  Therefore, the award was of benefit to Mrs Ilott, and met many of her needs for maintenance.  In conclusion, it was said that there was nothing about the decision which was outside the generous ambit of judgment available to the District Judge, and therefore his order should be restored.

In an interesting comment at paragraph 44 of the judgment, the court noted that some judges could have legitimately reached the conclusion that the Court of Appeal did, namely that reasonable financial provision should be by way of housing.  However, it is said that in these circumstances, “the right order would be likely to have been a life interest in the necessary sum, rather than an outright payment of it”. 

I anticipate that paragraph 44 will be seized upon by Defendants, as will paragraph 46, where it is noted that the Court of Appeal’s award gave little, if any, weight to the lengthy estrangement, or the testator’s very clear wishes.  It is said that the Court of Appeal’s observations that Mrs Ilott’s lack of expectation of any benefit from the estate was of little weight because the charities also had no expectation of benefit, “should be treated with caution”.  It is noted that charities depend heavily on testamentary bequests, and, more fundamentally, the charities were the Deceased’s chosen beneficiaries.  They did not have to justify a claim on the basis of need under the Act as Mrs Ilott had to do.  It is said that “the observation, at para 61 of the Court of Appeal judgment .. 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”.

Comments

Due to the limited time available to write this article, it is of necessity confined to the substance of the judgments, and does not seek to consider the issues raised in any detail.  However, John Collins of Zenith Chambers, has acted on Mrs Ilott’s behalf, on an entirely pro bono basis, since the first High Court appeal in 2009, and on the afternoon of Tuesday 21st March, John and I will be giving a seminar in Leeds when the case will be discussed further and questions can be asked.  For details on this seminar and to book places, please e-mail laila@zenithchambers.co.uk

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Nicola Phillipson TEP

Zenith Chambers

15th March 2017

Current Awareness

By the CC&P team