The Supreme Court has overturned the widely reported decision of the Court of Appeal in Ilott -v- Mitson, a claim under the Inheritance (Provision for Family and Dependants) Act 1975. The Court of Appeal had used its discretion to increase significantly the award made to the claimant but its approach was rejected unanimously by seven Supreme Court judges, who restored the decision made by the district judge who had originally heard the case in 2007.
The Inheritance (Provision for Family and Dependants) Act 1975 (“the Act”)
The Act provides a comprehensive framework for claims by what are often called “disappointed beneficiaries”, that is individuals who fall into the following categories who claim that the deceased’s will (or, if there is no will, the rules on intestacy) fails to make adequate provision for them. The Act applies whether or not the claimant is named in the will or would otherwise be entitled to receive sums on intestacy.
The spouse or civil partner of the deceased
A former spouse or civil partner of the deceased who has not formed a subsequent marriage or civil partnership
Any person who was, for a period of two years or more leading up to the death of the deceased, living in the same household as the deceased as their husband, wife or civil partner (that is without having entered into a legal relationship of that nature)
A child of the deceased
Any person who was treated by the deceased as a child of the family in relation to their marriage or civil partnership
Any person not within the above categories who, immediately before the death of the deceased, was being maintained, either wholly or partly, by the deceased.
In broad terms, the Inheritance Act provides for spouses and civil partners in the first two categories to be entitled to seek such financial provision as it would be reasonable for them to receive – whether or not that sum is required for their maintenance. The measure for all other claimants is such financial provision as it would be reasonable for them to receive for their maintenance only.
The court has very broad powers as to the sort of order it can make, in effect giving it liberty to review the assets available and to determine what arrangement best suits the circumstances of the case. In doing so, it takes account of a broad range of factors, not just the value of the estate but also the financial circumstances of everyone who might be affected by an order, not just the claimant but also any beneficiary whose interest would be affected by a successful claim. The court also has regard to any special needs of the claimant and is specifically required to take account of any broader circumstances (including the claimant’s conduct) which it considers relevant.
Ilott v Mitson
In Ilott -v- Mitson, the claimant, Mrs Ilott, was the adult daughter of the deceased, Mrs Jackson, who had, in her will, left her entire estate (worth about £486,000) to three charities with which she had had no particular connection during her lifetime. Mrs Ilott had left home at 17 and had been estranged from her mother for most of the period from then until her mother’s death 26 years later. Mrs Jackson had made clear her reasons for not benefitting her daughter, who had also been aware that this was her mother’s intention.
Nevertheless, Mrs Ilott brought a claim under the Act. Her circumstances were that she was married (still to the man for whom she had left home at 17) with five children and living in a rented property on low income. She and her husband had the right to buy the property but not the means to do so. She claimed that the will did not make reasonable provision for her and at the trial, the judge accepted that claim and awarded her £50,000.
That trial took place in 2007 (Mrs Jackson having died in 2004) and the claim has since been subject to a series of appeals and hearings, leading to a decision by the Court of Appeal in 2015 which increased the award to Mrs Ilott to £143,000 (and other smaller sums). This was a decision with which many people felt uncomfortable, given the particular circumstances of the case, not least the charities, who appealed to the Supreme Court.
The Supreme Court decision
In its decision, the Supreme Court reviewed in detail the approach to be adopted by judges in considering claims under the Act, in particular those by adult children. It was recognised that judges have abroad discretion to weigh up the factors to which the Act requires them to have regard when deciding whether to make awards – and if so, at what level.
Much of the heat generated by this case arose from its unique circumstances, not least the fact that any award made to the claimant would reduce the sums to be paid to charities. The exercise carried out by the Supreme Court was to determine whether the decision of the original judge was one which fell within the parameters laid down by the Act and then, whether the Court of Appeal had acted appropriately in substituting its own discretion for that of the judge. In reaching its decision, the Supreme Court made clear how little guidance is given by the Act as to how judges should evaluate claims and balance them against other claims on the estate (including the rights of named beneficiaries).
The role of solicitors
For clients pursuing or defending claims, it is essential that they are given as clear an understanding as possible as to how claims under the Act operate, not just through the difficult procedural steps which might take a case to trial but also (and this occurs in the vast majority of cases) through the process which leads to a negotiated outcome, often through mediation between the affected parties.
Stephen Morris has extensive experience of advising on claims under the Act, representing claimants and defendants, and has negotiated settlements of claims aimed at achieving the balance encouraged by the Act while at the same time seeking to minimise the costs incurred by clients – and the risk inherent in the trial of such claims by the court, so clearly reflected in the history of Ilott -v- Mitson.
For more information, please contact Stephen Morris on 01932 590588.