The Supreme Court has handed down its judgment in the case of Ilott v The Blue Cross & Ors [2017] UKSC 17. This decision is the first given by the Supreme Court on claims made under the Inheritance (Provision for Family and Dependants) Act 1975 and gives a clear summary of the law relating to such claims, particularly in respect of adult claims.
Under the Inheritance Act certain categories of family and dependants can apply for reasonable financial provision. These are the deceased’s spouse, civil partner, former spouses or civil partners, cohabitees, dependants and children. In all claims other than claims by spouses and civil partners the provision that can be claimed is limited to reasonable financial provision for their maintenance.
Ilott v The Blue Cross & Ors
Case background
As previously reported by Nelsons, the case concerned the long estranged daughter of the deceased with very limited finances. The daughter was left out of her mother’s will entirely and brought a claim under the Act as her daughter for ‘reasonable financial provision for her maintenance’ from her mother’s estate, which was valued at around £486,000.
The Court of first instance made an award for the daughter of £50,000. This was overruled on appeal first refusing to make any award, and then by the Court of Appeal awarding £163,000. A further appeal was made and the case considered by the Supreme Court in December 2016.
The Supreme Court has allowed the appeal and restored the first instance order of £50,000. The court gave the following useful guidance on claims under the Act but was keen to refer to the wide discretion available to the Judge hearing the case and that it will be very difficult to interfere with the decision of the Judge on an appeal. In the absence of any detailed guidance the law allows each Judge to have their own opinion as to the extent to which the wishes of the deceased are to be affected by the provisions of the Act. The Supreme Court refer to this lack of guidance as being unsatisfactory.
As such it remains difficult for lawyers to predict the outcome of such claims with any degree of accuracy and as such the levels of risk in bringing or defending such claims will be high. Given the lack of certainty it is a must for lawyers to advise their clients of the risks and for parties to seriously consider reaching compromises with their opponents to avoid the high costs and risks of proceeding to trial. This can often prove difficult in such claims where emotions are running high following the death of a loved one, and significant amounts of money and property.
A Press Summary of the case can be found here.
Summary of the Supreme Court’s guidance
Lord Hughes:
- “The concept of maintenance is no doubt broad,…it cannot extend to any or everything which it would be desirable for the claimant to have. It must import provision to meet the everyday expenses of living.
- The level at which maintenance may be provided for is clearly flexible and falls to be assessed on the facts of each case. It is not limited to subsistence level.
- The condition for making an order under the 1975 Act is that the will, or the intestacy regime, as the case may be, does not “make reasonable financial provision” for the claimant… either for maintenance or without that limitation [if the claimant was the deceased’s spouse or civil partner].
- The Act does not say that the court may make an order when it judges that the deceased acted unreasonably.
- The reasonableness of the deceased’s decisions are undoubtedly capable of being a factor for consideration.
- …there can be a failure to make reasonable financial provision when the deceased’s conduct cannot be said to be unreasonable. The converse situation is still clearer. The deceased may have acted unreasonably, indeed spitefully, towards a claimant, but it may not follow that his dispositions fail to make reasonable financial provision for that claimant, especially (but not only) if the latter is one whose potential claim is limited to maintenance.
- …all cases which are limited to maintenance, and many others also, will turn largely upon the asserted needs of the claimant.
- For current spouses and civil partners … need is not the measure of reasonable provision, but if it exists will clearly be very relevant. For all other claimants, need (for maintenance rather than for anything else, and judged not by subsistence levels but by the standard appropriate to the circumstances) is a necessary but not a sufficient condition for an order.
- …cases of long estrangement may, according to the judge’s assessment of the particular facts, be an example of the proposition that needs are not always enough to justify a claim under the Act.
- It is obvious that the competing claims of others may inhibit the practicability of wholly meeting the needs of the claimant, however reasonable.
- 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.
- It has become conventional to treat the consideration of a claim under the 1975 Act as a two-stage process, viz (1) has there been a failure to make reasonable financial provision and if so (2) what order ought to be made?
- The Act plainly requires a broad brush approach from the judge to very variable personal and family circumstances. There can be nothing wrong, in such cases, with the judge simply setting out the facts as he finds them and then addressing both questions.
- …both stages of the process are highly individual in every case. The order made by the judge ought to be upset only if he has erred in principle or in law. An appellate court will be very slow to interfere and should never do so simply on the grounds that its judge(s) would have been inclined, if sitting at first instance, to have reached a different conclusion.
- Where a court has to assess whether reasonable financial provision has been made, and/or what it should be, the relevant date is the date of hearing.
- …the estrangement was one of the two dominant factors in this case; the other was Mrs Ilott’s very straitened financial position. Some judges might legitimately have concluded that the very long and deep estrangement had meant that the deceased had no remaining obligation to make any provision for her independent adult daughter.
- As it was, the judge was perfectly entitled to reach the conclusion which he did, namely that there was a failure of reasonable financial provision, but that what reasonable provision would be was coloured by the nature of the relationship between mother and daughter.
- …care must be taken to avoid making awards under the 1975 Act primarily rewards for good behaviour on the part of the claimant or penalties for bad on the part of the deceased”.
Lady Hale:
- [There is a] “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.
- 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.”
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