In this landmark case the Supreme Court has highlighted the well-established principle of testamentary freedom and has given important guidance to practitioners assessing claims under the Inheritance (Provision for Family and Dependants) Act 1975 (the “1975 Act”).
At first instance, Mrs Heather Ilot (the “Claimant”) brought a claim under the 1975 Act against the estate of her mother, Mrs Melita Jackson (the “Defendant”), who died in 2004. In her Will, the Defendant provided for the majority of her estate (valued at £486,000) to go to three charities (the “Charities”). The Will made no provision for the Claimant. The Court heard that the Claimant and the Defendant had been estranged for many years and their attempts at reconciliation had failed. The Claimant relied heavily on state benefits, lived in a rented 3-bedroom house and her primary occupation was the care of her 5 children.
In 2007, the District Judge found that the Defendant had failed to make reasonable financial provision for the Claimant, and awarded the Claimant £50,000. The Claimant appealed against this award on the basis that it was too low and deprived her of means-tested benefits. In 2015, the Court of Appeal awarded the Claimant (1) £143,000 to enable the Claimant to purchase her rented house and (2) an option to receive a further sum up to a maximum of £20,000 structured in a way that would allow the Claimant to preserve her state benefits. The Charities appealed this decision and the Supreme Court allowed the Charities’ appeal and reinstated the award of £50,000 made by the District Judge.
In its judgment, the Supreme Court criticised the Court of Appeal on a number of counts.
First, it was held that the definition of “maintenance” employed by the Court of Appeal was too broad. The matters to which the court must have regard in exercising its power to award reasonable financial provision are listed under s.3 of the 1975 Act. For an applicant other than a spouse or partner, reasonable financial provision is limited to what it would be reasonable for him or her to receive for maintenance only. This is an objective standard, to be determined by the court. Furthermore maintenance by definition would ordinarily mean the provision of income rather than capital and therefore in this case the Supreme Court held that it would have been more appropriate for the Court of Appeal to have awarded the Claimant a life interest in her rented house rather than giving her a lump sum. The provision of capital could be appropriate in certain circumstances (such as the provision of a car to allow the claimant to get to work) but this, it was stated, was an exception to the rule.
Secondly, the limitation to maintenance provision represents a deliberate legislative choice and demonstrates the significance attached by English law to testamentary freedom. The Supreme Court criticised the Court of Appeal for failing to give sufficient weight to the Defendant’s very clear wishes. It was abundantly clear from the Defendant’s Will that the Charities were the Defendant’s chosen beneficiary and any award under the 1975 Act, the Supreme Court warned, would be at the expense of those whom the testator intended to benefit.
Thirdly, the Court of Appeal had not given sufficient weight to the very long estrangement between the Claimant and the Defendant. Although the judgment said that matters of conduct such as this should not be ignored, it warned that the 1975 Act should not be used in future cases as a means of rewarding the good behaviour of the Claimant and penalising the bad behaviour of the deceased.
Finally, the Supreme Court addressed the issue of state benefits, which the Court held should be treated as a resource of the Claimant. Practitioners should therefore be ready to demonstrate to the Court how an award under the 1975 Act might impact on a claimant’s receipt of state benefits.