Reports of a landmark ruling under the Inheritance (Provision for Family and Dependants) Act 1975 are greatly exaggerated……

Simon Lane considers the impact of the decision in Ilot v Mitson [2015] EWCA Civ 797 and how its significance was misreported in the media yesterday.

By Simon C. Lane
Barrister and Mediator

It is a rare thing for decisions relating to claims brought under the Inheritance (Provision for Family and Dependants) Act 1975 to be given widespread coverage in the media, but that is what happened yesterday in relation to the case of Ilott v Mitson [2015] EWCA Civ 797. It is an even rarer thing for these to be reported accurately (which is largely what didn’t happen today in the mainstream media including the BBC).

What was reported was that the law (which the commentator said was considered to be very harsh) appeared to have been extended by this “ruling” in the Court of Appeal, to allow more claims by people who have been cut out of their inheritances (whatever that might mean).

It is true that the case is significant but not for the reasons generally given in the media.

For most people the detail of these kind of cases is simply too dull to report accurately, including it would seem, the BBC’s own legal correspondent. For some reason commentators thought that the significance of the case extended the right of those who were not previously “maintained” by the deceased to bring a claim. Not so, for example the legitimate child of a deceased has to prove no such thing to demonstrate they are eligible to bring a claim.

What was not reported is that the trial Court back in August 2007 (DJ Million as he then was) had already found that Mrs Jackson’s failure to provide for her daughter Mrs Ilott was unreasonable when he awarded her a lump sum of £50,000.00. The main issue for the Court on appeal related to the assessment of reasonable financial provision for the Claimant or “quantum” to baffle non-lawyers and media commentators alike.

So what is significant about the decision itself as opposed what was reported?

Lady Justice Arden identified 2 fundamental errors with the District Judge’s approach when she assessed the correct financial provision:

  1. The award was limited because of the finding that the Mrs Ilott had a lack of expectation in life and was able to live within her means;
  2. Certain assumptions were made about the impact of any award on the Claimant’s benefits and that the incidence of these should not displaced by an award out of the estate.

 

The Court of Appeal concluded that it should exercise its discretion to assess the correct award itself with the material it had available rather than simply remit it to the High Court to assess.

The significance of the case may be found in the application of the factors under section 3(1) of the 1975 Act by the Court of Appeal itself in deciding what award if any it should make. That is to say the balancing exercise, or as Lady Justice Arden had herself described when the same case was last before her back in 2011 as the “value judgments within the four corners of the statutory framework”.  The factors under s3(1) allow the court to assess whether to (and the manner in which it should) make an order under s2(1 of the 1975 Act for reasonable financial provision.

So nothing new here.

What is significant is the time the Court spent dealing with the factors under s3(1)(g) namely  “any other matter, including the conduct of the applicant or any other person, which in the circumstances of the case the court may consider relevant”.

Practitioners will know that this sub-section often generates more heat than light in any dispute between the parties not least because the word “conduct” is specifically referred to in s3(1)(g). However, clients are often (though perhaps not often enough), rightly told that the Courts are seldom interested in this. In this case a number of issues were raised. Some where the Court had already determined the Court of first instance had got it wrong, namely in relation to penalising the claimant because she had a low life expectation and on the issue of benefits.

The Court also balanced the question of “estrangement” and the testamentary wishes of the deceased. It was accepted that, on the facts of this case, responsibility for estrangement was difficult to quantify. This perhaps leaves open the door for every other party in every other case to argue about the rights and wrongs of an estrangement in their “special” case. However, it is submitted that it will only be in the clearest cases (short of forfeiture) that the Court will properly be able to attribute sufficient blame on a Claimant to justify not making an award, especially bearing in mind that in order to consider this the Court will also have had to have already decide that the failure to make provision was not reasonable under s2 of the Act.

On the question of importance that should be attached to testamentary wishes, the Court reminded the parties in this case (an adult child with some residual earning capacity) that as the Claimant was not a spouse of the deceased, parliament had specifically limited a claim to “maintenance”.

In my judgment Parliament has entrusted the courts with the power to ensure, in the case of even an adult child, that reasonable financial provision is made for maintenance only. In my judgment that limitation strikes the balance with the testamentary wishes of the deceased whose estate is used for the purposes of making an award, at least in this case where there is no other claimant apart from the Charities. They have no demonstrated need or expectation.

Arden LJ [para 51 iv)]

It is difficult to see how the BBC could have got its reporting of this so very wrong.

Once these issues had been disposed of the Court got down to the nitty gritty of assessing Mrs Ilott’s needs. The case demonstrates the flexible way in which it approaches an assessment, which will of course be those at the date of the hearing, in this instance was on appeal.

As such Lady Justice Arden provided as part of the order, in addition to housing provision of £142,000.00 to enable Mrs Ilott to buy her housing association house, an option exercisable on more than one occasion allowing her to draw down from a sum the total of which was not to exceed £20,000.00 so that her entitlement to benefits would not be affected by each sum she decided to draw down.

The Court left open the question of what amounted to “maintenance” for the purposes of calculating an award with Ryder LJ almost inviting the appropriate case to be heard by the Court of Appeal (paragraph 68).

So why is this case significant?

Any decision of the Court of Appeal which applies the factors under s3(1) is considered significant because of the authority of the Court’s approach. However, treating such an utterances to be veritable tablets of stone which must be followed in every case is entirely wrong.

What is significant from the decision is that the Court made clear that an award should not be limited by reference to the applicant’s means or their existing benefits. These are simply considerations along with the many others that will fall to be considered under the s3(1) where a Court has already decided that the deceased has failed to make reasonable financial provision.

In reality the significance of the decision is that the publicity that this area of the law will receive and the significant number of enquiries that solicitors will also receive as a result of it having been reported in the media, albeit entirely incorrectly.

The truth is that Inheritance Act claims are complex and advice should only be sought from those who have significant experience of this specialist area.

Simon is a barrister and mediator in our specialist Private Client team with a number of years of experience in advising clients in this area and representing them at trials, other hearing and at mediations throughout the country.

Please contact Simon’s clerks if you would like to get in touch.

clerks@magdalenchambers.co.uk