'Dogs, Daughters and "Disinheritance" in the Supreme Court': Brian Sloan (audio)

Should a person be entirely free to dispose of her property as she wishes on her death, or should she be forced to leave it to certain family members or others? This is one of the most fundamental questions in succession law, and indeed in any legal system. It excites much passion among the public and across the political spectrum.

In some jurisdictions, particularly in continental Europe, the question is resolved by allocating compulsory portions of a person's estate to certain family members, irrespective of the contents of the person's will. In England and Wales, however, along with many other common law jurisdictions, the preferred approach is to have a default principle of testamentary freedom and to allow certain family members and dependants to claim discretionary provision out of the estate in limited circumstances via a piece of legislation called the Inheritance (Provision for Family and Dependants) Act 1975.

Today I want to talk about the Supreme Court's recent decision in Ilott v The Blue Cross, which produced the first ever judgment on the 1975 Act issued by the highest court in the land. As we'll see, the Supreme Court struck something of a blow in favour of testamentary freedom and against compulsory provision for family members.

Melita Jackson died in 2004, leaving an estate worth £486,000. In 2002, she'd made a will dividing most of her estate between the Blue Cross, the Royal Society for the Protection of Birds, and the Royal Society for the Prevention of Cruelty to Animals (I'll call them "the Charities"). Mrs Jackson had also written a letter of wishes in which she explained her decision to exclude her only daughter, Heather, from her will. Heather had left home in 1978 at the age of 17, without her mother's knowledge or agreement, to live with Mr Ilott, whom Heather later married. Mrs Jackson clearly disapproved of her daughter's choice of lifestyle. Heather and her husband had five children and lived in straitened financial circumstances, Heather having chosen to remain at home since the birth of her first child. For example, Heather never went on holiday, found it difficult to afford clothes for the children and a range of food, and had many items that were old or second-hand. Despite attempts at reconciliation, mother and daughter were estranged for some 26 years, and Heather was fully aware before Mrs Jackson's death that she was due to be excluded from the will.

Heather initiated proceedings under the 1975 Act, claiming that her mother's will failed to make 'reasonable financial provision' for her maintenance, which is what section 1 requires a claimant who was not a spouse or civil partner of the deceased person to prove. The litigation had a very long history, and Lord Hughes eventually observed that 'the whole process has taken an unconscionable time'. In 2007, District Judge Million agreed that the will failed to make reasonable financial provision for Heather. That's the first stage of a claim by an eligible applicant under the 1975 Act, and at the second stage the court must then decide what provision the claimant should actually receive out of the estate. At both stages, the court must consider various factors set out in section 3 of the Act. Judge Million exercised his discretion to hold that Heather should receive £50,000 out of her mother's estate.

The Court of Appeal ultimately upheld his conclusion that the will failed to make 'reasonable financial provision' for her in 2011. But Heather then went back to the Court of Appeal, seeking a greater share of the estate at the second stage, and her appeal was allowed in 2015. The Court of Appeal made two criticisms of Judge Million's approach. The first was the fact that he stated that the award should be 'limited' because of Heather's lack of expectation of provision and her ability to live within her current means but wrongly omitted to explain 'what the award might otherwise have been and to what extent it was limited by the matters in question'. The second criticism was the judge's failure to verify what effect his award would have on Heather's entitlement to state benefits.

In light of those errors, the Court of Appeal proceeded to exercise the discretion itself. In doing so, Arden LJ asserted that the Charities did not have any relevant expectation, resources or needs and that anything they received from the estate was a windfall. Heather's resources, meanwhile, were 'at such a basic level that they outweigh[ed] the importance that would normally be attached to the fact that [she] is an adult child who had been living independently for so many years'. Arden LJ refused to hold that the estrangement should eliminate or substantially diminish an appropriate award, agreeing that 'Mrs Jackson had acted in an unreasonable, capricious and harsh way towards her only child'.

The Court of Appeal ultimately concluded that Heather should receive £143,000 to enable her to purchase the housing association property in which she and her family were living, in addition to the reasonable costs of the purchase. Heather was also given an option to claim up to £20,000 as a capital sum from the estate, in order to provide 'a very small additional income to supplement her state benefits'. The Charities appealed that 2015 decision on the second stage. It's important to note that they'd been refused permission to appeal the first stage decision to the Supreme Court back in 2011, so that Heather was effectively guaranteed to receive something from the estate whatever the Supreme Court said in March 2017.

The Supreme Court allowed the charities' appeal, reinstating Judge Million's award of £50,000 and holding that it had been right all along. The main judgment was given by Lord Hughes, with which all six other justices agreed. The Supreme Court held that Judge Million had not made either of the errors alleged by the Court of Appeal.

Lord Hughes discussed maintenance at some length. The Act's limitation to maintenance for non-spouse/civil partner applicants was described as a 'deliberate legislative decision' that was 'important'. Maintenance could not 'extend to any or every thing which it would be desirable for the claimant to have', but was not limited to 'subsistence' either. A need for maintenance was seen as a necessary but not sufficient condition. In other words, the mere fact that Heather was Mrs Jackson's daughter and that she had a need for maintenance would not necessarily be enough. Nor would needs necessarily be the measure of what is provided by the court if (as in this case) it has been concluded that reasonable financial provision has not been made by the will: the claims of others, and significantly the relationship between people such as Heather and Mrs Jackson, could justifiably limit the size of the award.

The Supreme Court held that the Act required 'a single assessment by the judge of what reasonable financial provision should be made in all the circumstances of the case'. It did not require the judge (as the Court of Appeal appeared to suggest) 'to fix some hypothetical standard of reasonable provision and then either add to it, or discount from it…for variable factors'. Judge Million was said to be perfectly entitled to take into account the relationship between Mrs Jackson and Heather as he had. The two dominant factors in the case were the estrangement and Heather's strained circumstances, and Lord Hughes even suggested that it would have been legitimate for the judge to have concluded that it was entirely reasonable for no provision to be made at all in the will because of the estrangement (not, of course, a matter under appeal). So he was definitely able to say that 'what reasonable provision would be was coloured by the nature of the relationship between mother and daughter'. The Court of Appeal's order, by contrast, had given 'little if any weight' to the length of the estrangement between the protagonists.

The Supreme Court was also concerned that again 'little if any weight' had been given by the Court of Appeal's order to Mrs Jackson's very clear wishes. It was incorrect to say that the charities' lack of any expectation of benefit because Mrs Jackson hadn't been involved with them during her life was on a par with Heather's lack of any similar expectation. They were the beneficiaries under Mrs Jackson's will, and simply didn't need to justify their claim to the estate with reference to needs in the same way that Heather did. The Court of Appeal had erred in suggesting that they were not prejudiced by a higher award to Heather because they couldn't plead human needs: clearly the benefit to an estate beneficiary is inherently reduced by an order under the 1975 Act. The Supreme Court was clearly sympathetic to the position of charities in general in this context, emphasising that they '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'. That was perhaps an amusing choice of words in a case largely involving animal charities!

It was also held to be erroneous to suggest that the court didn't need to give specific consideration to Mrs Jackson's wishes because Parliament had limited claims under the 1975 Act to particular circumstances. Those wishes were relevant factors and fell to be considered alongside the others.

On the second suggested error, the allegation that the judge had been unaware of the effect of his order on Heather's entitlement to benefits, the Supreme Court held that Judge Million had in fact addressed the impact on benefits. Lord Hughes regarded the essence of the Court of Appeal's criticism to be that the judge's order would have little or no value to Heather because of the impact on her benefits. But he held that if Heather spent the £50,000 in a particular way that impact would be minimised. In fact, Lord Hughes suggested that the Court of Appeal had somewhat ironically given insufficient attention to the impact of its own order on Heather's benefits position.

That was enough to dispose of the case: the £50,000 award met many of Heather's needs for maintenance, allowing her to 'buy much needed household goods and have a family holiday' as Lady Hale put it, and should be restored. But even if housing provision had been appropriate, Lord Hughes held that a life interest would have been preferable to capital.

Lady Hale then gave a striking supplementary judgment, with which Lords Wilson and Kerr agreed. She observed that Ilott raised 'some profound questions about the nature of family obligations, the relationship between family obligations and the state, and the relationship between the freedom of property owners to dispose of their property as they see fit and their duty to fulfil their family obligations'. She then claimed that 'none [of those questions are] answered by the legislation which [the Supreme Court] had to apply'. It may be true that the questions are not conclusively resolved on the face of the 1975 Act, but the Supreme Court did of course manage to resolve the case. In any event, Lady Hale criticised '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', particularly in light of the range of public views on the point. She took the unusual step of expressing 'regret that the Law Commission did not reconsider the fundamental principles underlying such claims when last they dealt with this topic in 2011'.

The end result will be a relief for the charities concerned, who took a big financial and reputational risk in fighting the case all the way to the Supreme Court, which gave judgment well over 12 years after Mrs Jackson's death. The charities did so largely on principle because of the possible wide impact of the Court of Appeal's approach. The decision will also be welcomed by private client practitioners, who will generally want to assure their clients that the wills that they have been paid to advise on and draft will actually reflect what happens on the client's death, as well as by those who support the idea that property rights extend to control on death and that able-bodied adult children should not be able to disrupt testamentary intentions.

Some of the clearly contestable elements of the Court of Appeal's judgment, such as the suggestion that the charities were not prejudiced by a higher award to Heather, have been satisfactorily resolved. But the Supreme Court's decision may itself be challengeable in some respects. There would arguably be little point in the 1975 Act's application to non-spouse/civil partnership cases if it were not able to raise a claimant's standard of living reasonably significantly beyond what is available from state benefits. On that basis, Heather had a need for maintenance by the standards of many people, and since the courts are often reluctant to consider the conduct regarding the relationships of the protagonists in intra-family disputes, as Lord Hughes recognised, it could be seen as surprising for the Supreme Court to accept that her claim should be quite so limited with reference to the relationship between mother and daughter. That said, in my research on care and property law I've argued that consideration should to be given to positive contributions and conduct, a general idea that Lord Hughes appeared to approve, even if he was anxious that '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'. It's difficult for me to criticise his reasoning on the converse case where parent and child have not been close at all. My previous work also leads me to agree with Lady Hale about the need for reconsideration of the principles underlying claims by adult children.

The debate over the proper balance between testamentary freedom and provision for family members will inevitably continue. For now, it seems as though the 'testamentary freedom' camp are in a stronger position than they were before the Supreme Court's decision. But it should be remembered that Heather Ilott still went away with something despite being left out of her mother's will (even if some similar future claimants may not be so lucky), and it will be interesting to see whether Lady Hale's plea for reform of the 1975 Act is heeded.