(Judgment of the Supreme Court, 15th March 2017)
On 15th March 2017, the Supreme Court handed down judgment in the landmark case of Ilott v The Blue Cross and others (formerly known as Ilott v Mitson). The decision is being hailed as a victory for the Charity Sector.
The facts of the case are well known. Mrs Ilott had been long estranged from her mother, Mrs Jackson, who died in 2004 leaving the entirety of her estate to three charities (the Charities). Mrs Ilott subsequently brought a claim against her mother’s estate under the Inheritance (Provision for Family and Dependants) Act 1975 (the 1975 Act). Mrs Ilott was awarded £50,000 at first instance and the Court of Appeal increased this to a lump sum of £143,000 (which would have enabled her to purchase her house at the time under the right-to-buy scheme) and an option to also receive a further £20,000 in one or more instalments; so structured to avoid the loss of her means-tested benefits..
The Charities appealed against the Court of Appeal decision. In allowing the appeal, the Supreme Court restored the initial £50,000 award to Mrs Ilott made in the first instance. The outcome of this decision is good news for charities, many of which depend heavily on testamentary gifts for their funding.
The crux of the Supreme Court decision was that the Court of Appeal had no proper basis for interfering with the first instance decision. The judgment provides a helpful clarification of the position in relation to claims for reasonable financial provision made by adult children of the deceased under the 1975 Act. Specifically it upheld the fundamental principle of testamentary freedom; and it confirmed that such awards should be limited to maintenance rather than providing legacies.
The well-known decision of Re Coventry  was cited in the judgement and Lord Hughes commented that whilst the concept of maintenance is “no doubt broad” it does not extend to everything the claimant needs and an assessment of needs will not always be an appropriate measure for an award. It is important to note that there is no set formula for calculating awards as this will be based on an individual assessment of the circumstances of the case.
Another criticism made of the Court of Appeal’s decision was that the wishes of the deceased Mrs Jackson had not been given sufficient weight. The fact that Mrs Jackson was estranged from her daughter and had clearly expressed her wish not to benefit her and to leave her entire estate to the Charities was an important consideration, regardless of whether she had been closely connected to the Charities during her lifetime or not. The judgment also highlights the fact that any award granted under the 1975 Act is effectively made at the expense of the testator’s intended beneficiary.
The Supreme Court judgment in this case provides a useful clarification of the principles of awards under the 1975 Act. There was also a particularly helpful indication from the court that where the claimant has a housing need it will usually be appropriate to address this by way of a life interest rather than an outright transfer of property or lump sum payment.
To summarise, the court found:
- testamentary freedom should not be lightly disregarded;
- ‘maintenance’ should be limited to the ordinary cost of living;
- maintenance can be paid as a lump sum;
- if maintenance extends to the provision of real property, then a life interest is more appropriate than an outright gift;
- behaviour of the parties and estrangement are legitimate considerations;
- gifts to charities should be respected.