Ilott’s legacy: Two Recent Cases on Reasonable Provision Post Ilott

On the heels of the Supreme Court judgment in Ilott v Mitson, we have two recent cases of interest concerning claims under the Inheritance (Provision for Family and Dependants) Act 1975 that follow and apply the dicta of the Supreme Court in IlottBall v Ball [2017] EWHC 1750 (Ch), a decision of Judge Paul Matthews sitting as a High Court Judge and Nahajec v Fowle (reported at [2017] Lexis Citation 270), a decision of HHJ Saffman sitting in the Leeds County Court.

Ball v Ball

Many cases involving disputed Wills concern fractured families. Indeed, unhappy family relations are the norm in these cases. Nonetheless, the rift in Ball v Ball was particularly profound and sad, concerning the claims of three adult children who had been excluded from provision from their mother’s estate, valued at the date of trial at £157,000, following allegations of sexual abuse against their father.

Their father was prosecuted and in fact pleaded guilty in relation to some of the complaints concerning the second and third claimant, although there were other unpleasant allegations that were seemingly not pursued by the CPS.

Two of the children had made contemporaneous reports of the abuse at the time that it occurred in the ’60s and ’70s and the second claimant had been taken into care, although no police action was taken at the time. The judge found that Mrs Ball had been concerned to ask and did ask all her children whether they had allegations of a similar nature to make against their father and, thereafter considered the matter over.

The precipitating event that triggered the report to the police, was a family argument (seemingly about a wholly unrelated matter) in the aftermath of which a rift developed between the three claimants and the rest of the family and the claimants decided to report their father to the police.

The judge found that, by the time Mrs Ball made her last Will in 1992, she was aware that there was some truth in the allegations. However, she considered them exaggerated and was annoyed with the claimants for making them public when she thought the matter settled. She and Mr Ball settled their Wills at the same time and jointly signed an accompanying explanatory letter which read as follows:

“I have been advising Mr Ball and his wife concerning allegations of incest made against him by their daughters Barbara and Debra. The son Nigel also laid allegations of buggery and indecency against Mr Ball but the Crown Prosecution decided not to proceed with these.

In 1988 Debra Ball was involved with false allegations of robbery and rape concerning her husband. When this matter was investigated by the Police various allegations of incest against Barbara and Debra came out. At the time all members of the family agreed that the allegations of incest against Barbara and Debrah would not be pressed and the Police would not be involved in laying charges.

In 1991 there was a family argument at the home in about June or July involving Nigel. As a result of this argument Barbara, Debra and Nigel split from the remainder of the family and pressed very public and damaging charges against Mr Ball. It would appear that at least some of those charges were totally unfounded. For this reason Mr and Mrs Ball have decided not to leave any of their Estate to Barbara, Debra or Nigel.”

The claimants sought to challenge the Will on the grounds of lack of testamentary capacity or undue influence and in the alternative advanced claims under the 1975 Act.

It was accepted that Mrs Ball was not suffering from any physical or mental illness, which might have caused her to lack testamentary capacity. Instead it was argued that she had been suffering from a serious mistake (namely mistaken belief in her husband’s innocence) such as to remove her testamentary capacity. This argument was rejected. A mere mistaken belief, by itself, did not operate so as to invalidate a Will unless it provided evidence that the testator was suffering from an insane delusion or lacked sufficiently sound memory for the purposes of making a Will; which was not the case here.

Alternatively, it was alleged that Mr Ball had unduly influenced his wife to cut the claimants out of her Will. However, there was no direct evidence of undue influence, which can not be presumed in Will cases. Indeed, the evidence was that Mrs Ball was the dominant force in the marriage.

The 1975 Act claim floundered for two principal reasons:

Firstly, in the judge’s view there were no special circumstances, such as a moral claim, justifying provision for the three claimants, who were all emancipated adults. Sexual abuse by a testator, could be the ‘something else’ that justified provision. However, sexual abuse by someone other than the deceased does not have the same impact (although it could be taken into account if thought relevant). Of interest, it was noted that the assets that Mrs Ball left did not derive from her husband – whilst the judge did not say as much, had the contrary been the case and had Mrs Ball’s estate derived primarily from her husband, that, in my view, might have provided stronger grounds for finding special circumstances justifying provision or a moral claim.

Estrangement and the cause of it could also be a relevant factor. However, the judge was not at all satisfied that the cause of the estrangement lay with Mrs Ball. She thought that the claimants had exaggerated the abuse and reported it to the police after it had been dealt with within the family; it would be wrong to stigmatise this as bad behaviour at the time that it happened or to judge Mrs Ball by the standards of today. There was no moral obligation on her to provide for the claimants. She did not authorise or instigate or encourage such abuse. “The 1975 Act jurisdiction is not some kind of statutory court of appeal from the judgments of parents in bringing up their children.”

Secondly, whilst the claimants were not well off, they were getting by and were not below the breadline. The low value of the estate meant that provision from the estate would make very limited difference to their lives. Split 9 ways, the defendant beneficiaries stood to receive about £17,444 each. Split 12 ways, the claimants and the defendant beneficiaries would receive only about £13,083 each.

Comment

This is, I think, quite a tough decision in some ways. One cannot help but have some sympathy for the claimants here. It underscores the difficulties presented by the search for ‘something more’ in the case of an emancipated adult child.

It is tempting to suggest that the fact that each of the defendant beneficiaries stood to receive only £4,361 less if provision was made for their disinherited siblings should be a factor that weighs in favour of provision; however, it is clear that this would be to look at matters from the wrong end of the lens in the light of the comments in Ilott that there is no requirement on defendant beneficiaries to justify their claim on the estate (although of course competing financial needs will be highly relevant) and that it is not the function of the 1975 Act to make legacies for disappointed or deserving beneficiaries but to provide for the established maintenance needs of the claimant.

Previously, most sensible lawyers have sought to dissuade clients from airing the sorts of family disagreements that, whilst they may vex lay clients greatly and feature prominently in their thinking about the justness of their cause, have generally proved to be unattractive to judges and rarely of any material relevance in the outcome of cases. The judge was at pains to emphasise that “the court’s role is solely to adjudicate on the legal rights of the parties, that is, according to the rules of law. It is not to settle scores between warring members of the same family, or to decide who (if anyone) has the moral high ground.”. However, I fear that the case demonstrates that the weight placed in Ilott on the relevance of any estrangement between the deceased and the claimant, and upon the search for something more than financial need and the qualifying relationship to justify an award, invites a greater focus on conduct and the rights and wrongs of family grievances than has previously been the case.  Whilst in many cases, these sorts of grievances will continue to be immaterial and best avoided, I predict that we will see more cases post-Ilott that do air these sorts of issues.

 

Nahajec v Fowle

Nahajec is by comparison a more straightforward case. The deceased had fallen out with all three of his children and had left his entire estate, worth £265,000, to a friend, who himself was in somewhat difficult financial circumstances. The claimant, although employed, had limited financial means and wanted to improve her circumstances by training to be a veterinary nurse.

The ‘something more’ than the qualifying relationship and financial need in this case was the fact that the claimant had consistently tried to rekindle her relationship with her ‘stubborn and intransigent’ father and was not responsible for the estrangement. She also had a genuine and not fanciful aspiration to qualify as a veterinary nurse and could evidence commitment to this career change.

She sought £59,000 from the estate to assist her in achieving this aim, but was awarded a very modest £30,000. Primarily the reason for the reduction appears to have been the need, in the judge’s view, to reflect the contingency that she would not be complete her studies.

Comment

We do not get many reported claims under the 1975 Act in which the reasoning of the judge in relation to quantum is worked through and even fewer outside of the ‘big money’ cases. The judge’s analysis of the Section 3(1) criteria and his approach to quantum may therefore be of interest and is set out in full below. The cross-check against the award in Ilott as a percentage of the estate, whilst interesting, is (as, in fairness, the judge appears to recognise) not terribly meaningful given how fact sensitive these sorts of cases are. What is more interesting, in my view, is the judge’s decision to discount the sum he considered that the claimant should be awarded to reflect the contingency that she might not be successful in obtaining the necessary GCSEs to allow her to obtain her proposed veterinary nursing qualification.

From the claimant’s side of things, this also strikes me as a sensibly and attractively pitched case in that provision was sought for specific expenditure to enable the claimant to improve her own circumstances through education; an objective that the judge clearly considered to be laudable.

The case perhaps further indicates that we can expect awards under the 1975 Act to be more modest in future, particularly in cases of financially independent adults. That being so, defendants may be well advised to think about putting forward a Part 36 offer. I should be interested to know whether or not that happened here, as a modestly pitched Part 36 offer in this case could have had profound consequences for the claimant and led to the award being substantially eroded or extinguished by a costs order in the defendant’s favour.

 

“Did the will make reasonable financial provision for the claimant?

85.     The obligation is upon the claimant to establish that the will does not make reasonable financial provision for her. Having taken into account all the factors to which section 3(1) directs that regard must be had I am satisfied that it did not do so. I fully accept that each case is fact sensitive and so I do not reach that decision on the basis that the district judge in Ilott reached that decision essentially on similar facts3. The value judgement which must be applied has to be applied on the facts of the case before the court and in accordance with the factors specified in section 3 in so far as they specifically relate to the case in question.

86.     The fact is that in this case, albeit that the claimant is an adult and is independent nevertheless I am satisfied that this claim is based on something more than simply the qualifying relationship to which Lord Hughes refers in paragraph 20 of Ilott. There was no relationship between father and claimant but I am satisfied that that was not for want of trying on the part of the claimant. She appeared to have had a father who was stubborn and intransigent. That was not her fault.

87.     Add to that the fact that the claimant was, and is, far from well off yet there is no evidence that she is significantly profligate. Nor, in my view, was there any evidence that she was not exploiting her earning capacity notwithstanding her qualifications in other fields.

88.     Add further the fact that she has, in my view, a genuine and not fanciful aspiration to improve herself by becoming a veterinary nurse. In my judgment, it is not a fanciful aspiration because she has shown commitment by working a considerable number of hours in a veterinary surgery per week unpaid. In addition, there is no reason to believe that the she is not academically able to achieve her goal. She was after all academically able enough to acquire diplomas in counselling, and a level 3 qualification in bar management and health, safety and food hygiene.

89.     In addition, the size of the estate is such as to justify provision for her, even when the claims of other parties such as the defendant and Mark Nahajec are taken into account.

90.     On the other side of the scales there are first the resources of the defendant. And his needs and obligations. I am prepared to accept that he too has money problems but even so, and even if, as he alleges, some of those may have been caused by the fact that he neglected his work to look after his friend and/or because he suffers from sciatica, then in my judgment these factors can only reasonably militate in favour of a significant bequest for the defendant. They do not render reasonable a will which provides nothing for the claimant to improve her life, especially when she has done nothing significant to alienate herself from her father other than to go out with somebody of whom he disapproves. In that regard, it may be thought that a daughter who has been cut off by her father for 10 years or so while she is growing up and who has only come back into her life at her initiative is not acting unreasonably in taking the view that her choice with regard to her boyfriend is a matter for her rather than him.

91.     I also remark that any criticism that can be laid at the door of the claimant in respect of her spending habits can be levelled with considerably greater force against the defendant. The purchase of two watches for over £18,000 (after he was aware of this claim) is evidence of that.

92.     Of course, the wishes of the deceased as set out in his note are factors that weigh in favour of the defendant. I have however already commented on this note in paragraphs 65 and 66 above. In any event, the fact that a deceased explained his reasons for leaving his estate as set out in his will does not mean that the resultant provisions in the will are necessarily reasonable – especially where, as here, the reasons include a probable misunderstanding of the claimant’s financial position.

What financial provision ought to be made?

93.     The section 3 criteria also play fundamentally into a consideration of what does constitute reasonable provision and the manner in which such provision is made. I have to bear in mind that the award is either one of maintenance or a sum to reflect capitalised maintenance. It is not limited to subsistence level but it cannot extend to any or everything which it would be desirable for the claimant to have.

94.     The trial bundle contains a schedule setting out what the claimant seeks by way of capitalised lump sum. It is £70,227. and is made up as follows;
(a)     £13,619 in relation to course fees for both her GCSE courses and her veterinary nursing course and equipment that she will need in connection with those. Included in this figure is £11,356 fees for the veterinary nursing course. Mr Menon appeared to accept during his final submissions that that may be covered by a student loan.
(b)     £15,867 in relation to transport costs to include the purchase of a car, driving lessons, insurance servicing and fuel. This claim is based upon some guidance given by the College of animal welfare to the effect that some courses consist of a considerable amount of travel, not only to college but to work placements and that entry on the course is dependent upon a candidate having the means to attend college and work placements.
(c)     £2300 to discharge existing loans. In fact, her existing loans amount to £6600.
(d)     £38,439 for monthly maintenance or living expenses. This appears to consist of a claim for £30,751.92 for 24 months maintenance on the basis that her monthly outgoings amount to £1281.33 and a further 6 months monthly outgoings amounting to £7687.98. It seems to be a claim therefore for 30 months maintenance. It gives no credit for current earnings because it is assumed that there will be no scope for earnings by the claimant while studying for her veterinary qualifications.

95.     The result of Mr Menon’s concession that £11,356 may be covered by a student loan caused him to revise his proposal to one of £59,000 or approximately 22% of the estate. However, it is still the case that a student loan must be repaid by instalments once the relevant earnings threshold has been reached and interest accrues on the balance outstanding at a figure equating to the rate of inflation.

96.     It is also important to remember that a great deal of the claimant’s claim is premised on the basis that she intends to undergo the training to become a veterinary nurse. That applies not just to the costs of the course but also her claim to cover her transport costs and maintenance costs. The latter on the basis that she will not be able to work when studying.

97.     I have accepted that the claimant has a genuine aspiration to become a veterinary nurse and that this aspiration is not fanciful, nevertheless, as Mr Menon conceded, it is appropriate to recognise that there is a significant contingency aspect to it such as to justify some discounting.

98.     One factor which both parties are agreed is not relevant here is the fact that the claimant is in receipt of tax credits. The fact that the claimant in Ilott was in receipt of benefits was an important consideration. It is agreed that a capitalised award in this case will not adversely affect the claimant’s entitlement to tax credit.

99.     Miss Lloyd argued that since the claimant has indicated that but for her debts she would be able to manage, the maximum award should be an amount equal to her outstanding indebtedness of £6600. Her position is that the claimant has made it clear that she can live within her means if relieved of the burden of meeting debt repayments.

100.     Having regard to the section 3(1) factors I am of the view that an award that simply enables the claimant to clear her debts would be too low. I accept that she would then be able to live within her means but it would be a fairly frugal existence and would not provide her with any scope to meet any expenses that would be necessary for her to improve her position. In any event, it is right to observe that in Ilott the claimant could meet her outgoings from her own resources but nevertheless it was considered that that did not disqualify her from an award.

101.     Equally, the amount sought by the claimant, even discounted to £59,000 is too high. It has to be said that at first blush an award that represents only 22% of the estate is not unreasonable even taking into account that that is 22% of the estate before the provision to Mark Mahajec. That however seems to me to apply the wrong test. It might well inform as to what is reasonable provision in a claim by a spouse where the court is not confined to an award to reflect only maintenance needs but in this case the award must be specifically confined to maintenance needs — even though the definition of maintenance is fairly broad and, on the authority of In re Dennis to which I refer in paragraph 18 above, can, in my view, include monies that would enable the claimant to undergo her retraining.

102.     What of the provisions of s3(3) of the Act which specifically import an obligation to have regard to the cost of education and training? In fact I do not accept that section 3(3) assists the claimant in this case. The subsection requires the court to have regard to the manner in which the applicant was being or in which he might expect (my emphasis) to be educated or trained. At the time of the deceased’s death the applicant was not being trained and there is no cogent evidence that she might have expected her father to meet the cost of education and training at any future date. It seems to me that the way in which this particular subsection is drafted requires the court to have regard to the manner in which the claimant herself might have expected to be educated or trained. It is not a question of whether it would have been reasonable for a deceased person to contribute towards a claimant’s education or training, the question appears to be whether the claimant expected it from the deceased person. This analysis however does not mean however that this claimant’s aspiration to become a veterinary nurse is irrelevant, it is clearly still a factor to which regard must be had pursuant to section 3(1)(g), as indeed the opening words of subsection (3) make clear.

103.     In my view, taking all the section 3 matters into account the financial provision that would be reasonable in all the circumstances of the case for the applicant to receive for her maintenance duly capitalised is £30,000.

104.     I reach that figure bearing in mind that I am confined to awarding a figure based upon capitalisation of maintenance. £30,000 is my best estimate of the capitalised cost of maintenance for a reasonable time going forward to take into account the possibility, albeit contingent, of the claimant undertaking a course which ultimately results in her becoming a veterinary nurse and which enables her to look after herself financially if such a course is undertaken. In so doing it is intended to take account of the fact that it appears to be conceded that if this course is undertaken some of it may be financed by a student loan but it also recognises that such loans are not grants and that they leave the student with a debt liability. It is not unreasonable in my view for the award to be sufficient to seek to ameliorate that to some extent, if not wholly. It also takes account of the fact that there will be transport costs while also recognising that whilst it may be convenient, there is no necessity for the acquisition of a motor vehicle in order to undertake this course. I suspect that there are many potential veterinary nurses who manage to qualify without having their own car.

105.     In reaching the figure I have had regard to the fact that the claimant may never go on this course albeit that her aspiration to do so is genuine and I have discounted figures appropriately including amounts for her maintenance on the basis that if the course is not undertaken then she remains free to earn her own living, as she is clearly capable of so doing (subject to what I say below in paragraph 106).

106.     The award takes account of the fact that she is now currently indebted and that servicing those debts prevents her from currently living within her means. It also has regard to the value of the estate as one of the section 3 factors to which consideration must be given. In my view that is relevant in the assessment of maintenance bearing in mind that maintenance is not limited to subsistence level and the greater the value of the estate, then, subject to other calls upon it, the greater the level of maintenance that it is reasonable for an applicant to reasonably expect. It is also intended to recognise the possibility, albeit fortunately remote, that, although the claimant does not currently suffer any disability that affects her current ability to work, she may not be able to work for periods at some future date for reasons unconnected to training for a veterinary post. I remind myself of her recent cancer scare and the fact that it is not guaranteed that she is permanently out of the woods in respect of that, albeit that is clearly and thankfully the expectation of those treating her.

107.     I recognise that some judges may have awarded more while others may have awarded less. For what it is worth I note that in terms of the percentage of the value of the net estate, it is 11.3%. Mrs Ilott’s award as a percentage of her mother’s net estate was within approximately 1% of that. Had my hands not been tied to a capitalisation of maintenance the award would have been greater but my hands are so tied.

108.     Finally, I should make it clear that I have not overlooked that the defendant argues that he does not have the money. He is having to borrow to meet the award to Mark Nahajec. Of course, the relevant date for the consideration of resources is the date of the hearing but against that has to be considered the fact that, by section 19(1) of the Act, the order speaks from the death of the testator, not the date of the order. Furthermore, as Mr Menon has identified in paragraph 4(4)(c) of his skeleton argument, in his second witness statement the defendant sets out what he has spent of the monies received from the estate and that totals £222,051. On that basis, it appears that there is approximately £44,000 unaccounted for in any event. Even if that were not so however, the order would be the same. In so far as the defendant suffers a shortfall in meeting the award from his cash resources that is because of unjustified spending of this estate and in this case much of that spending occurred when he was aware of the claim.”

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