Ilott v Mitson – Court of Appeal awards disinherited daughter £163,000

The recent Court of Appeal ruling in the case of Ilott v Mitson [2015] EWCA Civ 797 has been widely reported over the last couple of days but what does the ruling really mean for children who have been disinherited under a parent’s will?

Unlike in some other jurisdictions, in England and Wales we enjoy what is referred to as “freedom of testamentary disposition” i.e. provided a person is an adult, of sound mind and free from any undue influence, they can leave their estate to whomever they choose.

Most of the articles regarding the recent Court of Appeal decision in Ilott v Mitson seem to suggest that the ruling could significantly weaken people’s right to leave money to those they want to inherit with the Telegraph’s headline going so far as to state “Your will can be ignored, say judges”.

Max Hastings for the Mail Online closes his article by stating that “it is not the law which has shown itself an ass in the case of Mrs Jackson’s will. It is the judges.”

To my surprise, what has not been reported is the fact that, in the absence of any will, the outcome would have been much less “desirable”, at least for the charities and Melita Jackson, the deceased. In that situation her estate would have passed in its entirety to her daughter, Heather Ilott. As such, to say either that there is no longer any point in making a will, or that the will can be ignored is to misreport the case and the law.

So, what were the facts of the case?

Mrs Melita Jackson died in June 2004 leaving a net estate worth £486,000. Under her will, she left a small legacy to BBC Benevolent Fund and divided the rest of her estate between three animal charities; the Blue Cross, RSPB and the RSPCA. Melita Jackson disinherited her only daughter, Mrs Heather Ilott. It is reported that Mrs Jackson had no connection with the charities during her lifetime. This perhaps brings to mind the age old threat no doubt echoed to many children of their parents “leaving everything to the cat’s home”.

Heather Ilott was the only child of Melita Jackson. Mr Jackson passed away before Heather Ilott was born and she was brought up by Melita Jackson. In 1978, aged 17, Heather Ilott left the family home without Melita Jackson’s knowledge to live with Nicholas Ilott. In the High Court appeal, Mrs Justice Parker noted that:

“The deceased profoundly disagreed with her lifestyle choice and an irreconcilable rift developed between them.”

The couple are still married and have five children together.

Heather Ilott and her mother remained estranged from 1978, despite three failed attempts of reconciliation. It was believed that both sides were responsible for the failure of these attempts.

In 2007, Mrs Ilott bought a claim under the Inheritance (Provision for Family and Dependants) Act 1975 (“the Inheritance Act”) as a child of the deceased, claiming that her mother’s will did not make reasonable financial provision for her.

The Inheritance Act allows the court to use its discretion to vary the distribution of a person’s estate where it considers that “reasonable financial provision” has not been made out for a person.

To be eligible to bring a claim under the Inheritance Act, one must fall into the category of one of the following:

• the spouse/civil partner of the deceased;
• the former spouse/civil partner of the deceased who has not remarried or entered into a further civil partnership;
• a person who was living with the deceased for at least two years prior to their death;
• the deceased’s child (which includes an adult child);
• a person treated as the deceased’s ‘child’ (for example, but not necessarily, adopted, fostered or a step-child); or
• a person who was being “maintained” by the deceased.

For forty years, therefore, Parliament has entrusted the courts with this discretion. The Inheritance Act applies and has always applied in the case of an adult child.

The Inheritance Act defines reasonable financial provision in all cases other than for spouses / civil partners as “such financial provision as it would be reasonable in all circumstances of the case for the applicant to receive for his maintenance” (emphasis added). In the case of a spouse or civil partner they are entitled to a higher standard of provision, being such financial provision as it would be reasonable in all the circumstances of the case to receive whether or not it is necessary for their maintenance.

In using its discretion, the court will need to have regard to the factors set out in section 3 of the Inheritance Act which are:

• the financial resources and financial needs which the applicant has or is likely to have in the foreseeable future;
• the financial resources and financial needs which any other applicant for an order under section 2 of this Act has or is likely to have in the foreseeable future;
• the financial resources and financial needs which any beneficiary of the estate of the deceased has or is likely to have in the foreseeable future;
• any obligations and responsibilities which the deceased had towards any applicant for an order under the said section 2 or towards any beneficiary of the estate of the deceased;
• the size and nature of the net estate of the deceased;
• any physical or mental disability of any applicant for an order under the said section 2 or any beneficiary of the estate of the deceased; and
• 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.

On 7 August 2007, DJ Million awarded Heather Ilott £50,000 in her claim in the county court. Heather Ilott appealed that award but Parker J dismissed her appeal on 3 March 2014.

Mrs Ilott subsequently appealed to the Court of Appeal

The Court of Appeal therefore had to consider whether DJ Million’s order should be set aside by reason of an error and, if so, whether the Court of Appeal judges should re-exercise their discretion in determining the figure, if any, to aware Heather Ilott for her maintenance.

In his ruling in 2007, DJ Million held that maintenance, within the meaning of the Inheritance Act, had to be income based and assumed that the practical consequence of a large capital payment would result in Heather Ilott losing most, if not all, of her state benefits. This essentially led DJ Million to award Heather Ilott an amount to replicate what she received in estate benefits rather than actually improving her financial circumstances. The award of £50,000 was intended to represent annual income of £4,000.

In 2014, Parker J relied on the fact that, even if Heather Ilott lost her benefits, she would have had the opportunity to bring her capital down to £16,000 and still claim benefits.

In the Court of Appeal, Lady Justice Arden held that DJ Million wrongly equated reasonable financial provision with sums paid in respect of state benefit and that the submissions by Parker J would result in an immediate major spending spree for Mrs Ilott rather than meeting her future needs.

The court also discussed a number of factors which were relevant to this case. The factor which has been brought to the forefront of the news by the media is that of the importance of Mrs Jackson’s wishes as expressed in her will.

Heather Ilott’s barrister submitted that DJ Million was wrong to pay such high regard to Melita Jackson’s testamentary wishes whilst, Penelope Reed QC, barrister for the three charities, referred to Oliver J’s comment in the well-established case of Re Coventry dec’d [1980] Ch 461 that “an Englishman still remains at liberty at his death to dispose of his own property in whatever way he pleases.”

Lady Justice Arden advised that the limitation of “maintenance” within the Inheritance Act ensures that judges strike the balance between the overarching importance of freedom of testamentary disposition with the purpose of the Inheritance Act, namely to ensure that reasonable financial provision, determined on a case by case basis, is made out to an eligible party. That may, of course, be anything from zero to the entire estate depending on the factors listed above.

She went on to advise that the court has to balance the claims on the estate fairly. In doing so, the Court of Appeal awarded Heather Ilott with the sum of £143,000, which was the cost of acquiring her family property together with the reasonable expenses of acquiring it. Further, Mrs Ilott had an option to receive a capital sum not exceeding £20,000 out of the estate to provide for a very small additional income to supplement her state benefits.

The uproar of the media and their interpretation of this ruling risks undermining the importance of making a will and questions the well-established law which has been in place for 40 years. What some commentators have failed to recognise is that, in the absence of Mrs Jackson’s will, Heather Ilott would have received the whole estate under the intestacy provisions.

Further, the Law Commission, an independent body established by Parliament to review the law of England and Wales and to recommend reforms has previously consulted on both the Inheritance Act and intestacy, most recently in May 2013 which led to the introduction of the Inheritance and Trustees’ Powers Act 2014.

What this case does demonstrate is the importance of seeking professional advice either when considering making a will or if you consider that reasonable financial provision has not been made for you in an estate.