Carruthers Law

Ilott v Mitson & Ors [2015]

July 28, 2015

In Ilott v Mitson & Ors [2015] EWCA Civ 797 (27 July 2015) the appeal concerned the quantification of an award for maintenance under the Inheritance (Provision for Family and Dependants) Act 1975 (the 1975 Act).The first proceedings began in 2007. The Claimant brought an action against the personal representatives of the deceased, who was the Claimant’s mother and three charities, the beneficiaries under her will. District Judge Million believed that the deceased had unreasonably excluded the Claimant from the Will particularly in light of the Claimant’s difficult financial situation. He awarded the Claimant £50,000.

The Claimant appealed on quantum with a cross appeal from the Respondents on the Judge’s ruling and on quantum. The appeal before Judge Eleanor King allowed the Respondents appeal which meant that the Claimant’s appeal failed. The Court of Appeal then allowed the Claimant’s appeal before another High Court Judge.

In the Appeal a letter from 1998 had been referred to which revealed that on the Claimant’s father’s death her mother had received a large sum of money which she used to decrease her mortgage. Counsel for the Claimant referred to this when he said the Judge had made an error in the assumption that the deceased had experienced hardship when left to bring up the Claimant.

Mrs Justice Parker stated that the Judge’s award to the Claimant was to help her improve her financial means and to spend as she wanted to. On looking at the aspects of the case she could not say that the Judge was wrong in any way particularly in respect of the Claimant’s “straightened circumstances” within which they have lived for years and which did not justify an amount which improved their finances. The Claimant’s argument was there had been no benefit to her if her housing need was not achieved by the increase of the award to her. Mrs Justice Parker’s overall view was that the Judge could not be said to be wrong and therefore did not allow the Appeal.

Lady Justice Arden in the latest hearing in the Court of Appeal gave the leading judgment with which Lord Ryder agreed, making additional comments and which Sir Colin Rimer also agreed with.

Lady Justice Arden believed the original judgment by DJ Million to be erroneous and that the only reasonable financial provision to be made was to award the Claimant an amount which allowed her to purchase her home and in order that her state benefits would not be affected, a sum to meet her income needs.

She summarised her approach as follows:

With regard to the 1975 Act, s.1 gives the right to a child of a deceased person to apply for an order under s.2 of the Act if the Will does not make reasonable provision, the definition of “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”.

Lady Arden observed that maintenance is not defined in the Act

“but the parties did not seek to disagree with the DJ Million’s ruling that any award had to meet income need and be “income-based”. She considered that when making a decision as to whether the Will is making reasonable financial provision for the Claimant the Court must look at s.3 of the Act:

“3 (1) Where an application is made for an order under section 2 of this Act, the court shall, in determining whether the disposition of the deceased’s estate effected by his will or the law relating to intestacy, or the combination of his will and that law, is such as to make reasonable financial provision for the applicant and, if the court considers that reasonable financial provision has not been made, in determining whether and in what manner it shall exercise its powers under that section, have regard to the following matters, that is to say—

• (a) the financial resources and financial needs which the applicant has or is likely to have in the foreseeable future;
• (b) 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;
• (c) 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;
• (d) 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;
• (e) the size and nature of the net estate of the deceased;
• (f) 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;
• (g) 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…”

Lady Arden noted the estrangement between mother and daughter and the failed attempts at reconciliation. She further noted when the Claimant’s mother died there was no provision made for the Claimant and the deceased did not have any connection with the Charities during her lifetime. The value of the estate at the date of trial was £486,000. which valuation had not really changed since DJ Million’s judgment in 2007.

Lady Arden then summarised the judgments of DJ Million and Parker J, the first Appeal and the award sought by the Claimant which was that she wanted enough money to buy her property and help with her basic needs.

Lady Arden had to consider the following issues:

• “Issue (1): Are there any errors in the reasoning of DJ Million on financial provision which mean that this court should set his judgment aside?
• Issue (2): If so, should this court re-exercise the discretion of DJ Million or remit the matter once more to the trial court?
• Issue (3): If this court is to re-exercise the discretion, how should it do so?”

She considered there to be two fundamental errors in his judgment. He had stated that

• “the award should be “limited” and further he did not say “how he has limited the award to reflect those matters. Parker J simply assumed that those were the reasons why DJ Million had rejected the appellant’s claim for a lump sum that would enable her to buy her home. Those matters might justify a less generous award than would otherwise be made, but, even if that was so, it was wrong in law to state that the award had been limited for those reasons without explaining what the award might otherwise have been and to what extent it was limited by the matters in question.“
• The second fundamental error she noted was that he should have calculated financial provision in respect of the Claimant’s maintenance and he did not consider what effect £50,000 would have on her state benefits, he had just assumed that a “large capital payment” (which would include an award such as he ultimately made) would disentitle the family to most if not all of their state benefits. Failure to verify this assumption undermined the logic of the award”.

She concluded by setting aside the award by DJ Million.

Lady Arden after noting all the aspects of the matter considered that “In my judgment, what the court has to do is to balance the claims on the estate fairly”. She continued by saying “The provision of housing would enable her both to receive a capitalised sum and to keep her tax credits. If those benefits are not preserved then the result is that achieved by DJ Million’s order in this case: there is little or no financial provision for maintenance at all”.

She observed that the award made by DJ Million in 2007 was impaired because of legal errors. She considered the correct judgment would be to award an amount of £143,000 to buy the property the Claimant was living in plus the reasonable costs needed to buy the property. She continued that she would award a further amount of money to supplement the Claimant’s state benefits not exceeding £20,000. She further suggested a provision for a lesser sum in the event that the Claimant’s benefits were affected.