The Supreme Court has handed down judgment in Ilott v Blue Cross & Ors, appeal in which three national charities contested an award that had the effect of reducing the bequests in their favour made by the testator, Mrs Melita Jackson. It reversed the Court of Appeal’s increased award.

The law

Section 1 of the Inheritance (Provision for Family and Dependants) Act 1975 confers the right on, among others, a child of a deceased person in England and Wales to apply for an order under section 2 of the Act if the will of the deceased or the intestacy rules do not make reasonable provision for him or her, while section 1(2)(b) provides that, in the case of a child, “reasonable financial provision” means
 ”such financial provision as it would be reasonable in all the circumstances of the case for the applicant to receive for his maintenance” [emphasis added]. The provision is therefore limited to awards of maintenance – which is not the case for awards under the 1975 Act for spouses or civil partners. Section 2(1) of the Act empowers the court, if satisfied that the disposition of the deceased’s estate does not make reasonable financial provision for the applicant, to make an order for periodical payments to the applicant out of the net estate and/or payment of a lump sum. (It should be noted that the Scots law of succession is very different from that in England and Wales.)

The facts

In Ilott v Mitson & Ors [2015] EWCA Civ 797 the appellant, Mrs Ilott, was the 46-year-old daughter of Mrs Jackson; they became estranged when Mrs Ilott left home to marry, without telling her mother: the couple lived their entire married lives independent of any financial connection whatever with Mrs Jackson, and for much the greatest part of that time in complete isolation from her [4]. Mrs Jackson died in 2004 and, apart from £5,000 for the BBC Benevolent Fund, left her entire estate of some £486,000 to be divided between The Blue Cross, the RSPB and the RSPCA. Mrs Ilott knew that her mother intended to cut her off without the proverbial penny: however, she challenged the will and in 2007 DJ Million made an award of £50,000 in her favour. Mrs Ilott thought that the award was insufficient; and in March 2014 Parker J dismissed her appeal from DJ Million’s order. However, the Court of Appeal (Arden and Ryder LJJ and Sir Colin Rimer) set aside DJ Million’s award and awarded her £143,000 to buy a property, the reasonable costs of the purchase, and payments up to a maximum of £20,000 structured in a way that would allow her to preserve her state benefits. The three charities appealed.

Ilott in the Supreme Court

In Ilott v Blue Cross & Ors [2017] UKSC 17, the Supreme Court reversed the judgment of the Court of Appeal and restored DJ Million’s original award of £50,000. The issues before the Supreme Court were as follows:

1. Whether the Court of Appeal had been wrong to set aside the award made at first instance on Mrs Ilott’s claim under the 1975 Act.
2. Whether, in deciding to re-exercise the court’s discretion to make an award under the 1975 Act, the Court of Appeal had erred in taking account of the factual position as at the date of the appeal rather than the date of the original hearing.
3. Whether the Court of Appeal had erred in its approach to the “maintenance” standard under the 1975 Act.
4. Whether the Court of Appeal had been wrong to structure an award under the 1975 Act in a way which allowed Mrs Ilott to preserve her entitlement to state benefits.
5. Whether the Court of Appeal had erred in its application of the balancing exercise required under the 1975 Act.

The Supreme Court concluded that the District Judge had not made either of the two errors on which the Court of Appeal relied to revisit his award [42].

“There were in any event a number of potential difficulties about the Court of Appeal’s proposed order … In the absence of error of principle by the District Judge the occasion for the Court of Appeal to say what its own order might have been did not of course arise. But even if it had arisen, the right order would be likely to have been a life interest in the necessary sum, rather than an outright payment of it” [44].

“More critically, the order under appeal would give little if any weight to the quarter of a century of estrangement or to the testator’s very clear wishes. The Court of Appeal indeed offered the view (at para 51) that these factors counted for little, and that Mrs Ilott’s lack of expectation of any benefit from the estate was likewise of little weight, in part because the charities had no expectation of benefit either. Those observations should be treated with caution. The claim of the charities was not on a par with that of Mrs Ilott. True, it was not based on personal need, but charities depend heavily on testamentary bequests for their work, which is by definition of public benefit and in many cases will be for demonstrably humanitarian purposes. More fundamentally, these charities were the chosen beneficiaries of the deceased. They did not have to justify a claim on the basis of need under the 1975 Act, as Mrs Ilott necessarily had to do. The observation, at para 61 of the Court of Appeal judgment, cited above, 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” [46].

Comment

Quite apart from the issue of testamentary freedom, the case illustrates a difficult problem for charity trustees: how far should they go in defending a challenge to a will under which their charity is a beneficiary? Trustees have an overriding duty to act in the best interests of the charity; and it is often a very fine judgment as to whether those interests are best served by maintaining a challenge all the way to the Supreme Court or by conceding so as to avoid incurring further legal costs. There is no simple answer: but the amount at stake in the Ilott case was quite large and the trustees of the three charities probably thought that there was an important principle at stake that needed to be clarified at the highest level.

Other considerations aside, the three charities will no doubt have derived considerable satisfaction from the Court’s confirmation that “They did not have to justify a claim on the basis of need under the 1975 Act” – after all, as the Court pointed out, they were Mrs Jackson’s chosen beneficiaries.

Finally, Lady Hale DPSC ended her concurring judgment with what looked very much like a call for reform: