Adult children and the 1975 inheritance act

01/11/2011

Ilott v Mitson & ors [2011] EWCA Civ 346 will greatly assist in advising adult children on their prospects of making a successful application under The Inheritance (Provision for Family and Dependants) Act 1975. The Court of Appeal has emphatically clarified the correct approach for the court to take to such a claim – and it is good news for needy adult children.

This brief article is divided into four parts [all emphases added]:-

(1) The legal background – case law

(2) The decision in Ilott

(3) Practice points

(4)(a) The statutory factors: an aide-memoire

(4)(b)  Procedure

(1)  The legal background – case law

Following the decision of the Court of Appeal in Re Coventry (deceased) [1984] 1 Ch. 461 there was a tendency among practitioners and the courts e.g. the Court of Appeal in Re Jennings (deceased) [1994] Ch. 286, to look for (per Nourse LJ in Jennings at 295E) “some special circumstance, typically a moral obligation of the deceased towards [the applicant]” in order to found a successful application by an “adult child who is able to earn, and does earn, his own living”.

In Espinosa v Bourke [1999] 1 FLR 74, CA, Butler-Sloss LJ reviewed the 1975 Act and the relevant authorities. She ruled (at 755A) that:

There may have been some confusion in the minds of trial judges that the appellate court was placing a gloss upon the words of the section and putting some special emphasis upon the requirements of s3(1)(d) so as to elevate moral obligation or special circumstance to some threshold requirement. From the judgments of this court in Re Coventry to the present day, it should be clear that no gloss has been put upon subs (1)(d).

An adult child is, consequently, in no different position from any other applicant who has to prove his case. The court has to have regard to s3(1)(a)-(g) and assess the relevance and the weight to be given to each factor in the list. The court has to have regard to s3(1)(a)-(g) and assess the relevance and the weight to be given to each factor in the list. If the applicant is of working age, with a job or capable of obtaining a job which would be available, the factors in favour of his claim ... may not be of much weight in the scales. As Oliver J pointed out in Re Coventrynecessitous circumstances cannot be in themselves the reason to alter the testator’s dispositions.

(2)   The decision in Ilott

In Ilott the deceased mother (a widower) died in 2004 aged 70, leaving a net estate of £486,000. After some pecuniary legacies, she left the entire residuary estate to three charities. There was no evidence that in her lifetime she had any connection with the charities or with their areas of activity.

The applicant, in her early 40s at the time of the death and 50 at the time of the Court of Appeal hearing, was the deceased’s only child, albeit estranged from her mother. The estrangement began when the daughter was 17 and, in 1978, left home to be with a man of whom the deceased strongly disapproved. This led to a lifelong separation between mother and daughter.

The daughter married the man in 1983 and had 5 children between 1984 and 1996. The couple agreed that she would be a full-time mother. Three attempted reconciliations with the deceased failed to last. The husband worked part-time and 75% of the family’s income derived from state benefits. The district judge found that the mother’s will did not make reasonable provision for the daughter, and awarded the daughter £50,000 from the estate.

The daughter appealed against the quantum of the district judge’s order, and the charities cross-appealed. On this appeal, Eleanor King J considered the authorities and set out eight principles, of which three directly relevant ones (all of which may be derived from Espinosa) were:

(v)   there is no threshold requirement that an adult child claimant has to establish some form of moral obligation or special circumstance;

(vi)  necessitous circumstances cannot, in themselves, be a reason to alter the testator’s dispositions;

(vii) the ability of the claimant to earn a living is a significant factor.

Allowing the charities’ cross-appeal and dismissing the daughter’s claim, she ruled (at [67]) that:

Despite looking at each s 3 factor separately, the judge failed thereafter to stand back and assess the impact of them when taken together. Had he done so he would, in my judgment, have concluded that, far from any of the s3 factors tipping the balance in favour of the daughter’s claim, the court was left with a filial relationship and necessitous circumstances with nothing more of sufficient cogency to drive a court to conclude that, in all the circumstances of the case, no provision for the daughter was unreasonable provision.

The daughter appealed against that order. The Court of Appeal allowed her appeal by a 3 – 0 margin, with each Lord / Lady Justice giving a reasoned decision. The Supreme Court has refused permission to appeal.

Wall LJ ruled at paragraphs [50] – [54]:

[50]   It is the Act and the Act alone which identifies the criteria for the exercise of the court’s powers. There was no extra burden on the applicant.

[52]    ... the district judge was not under an obligation to “balance” the section 3 factors or to explain why the combination of factors under section 3 led him to the conclusion that no provision was unreasonable. That was ... a value judgment which the district judge was entitled to make, and ... that exercise should not be interfered with by an appellate court unless it is “plainly wrong”.

[53]   ... however, [he] had to exercise a discretion in deciding what, if any, relief to award. That he did, and in doing so he explained fully and carefully precisely what relief he was minded to award and why. This was the area in which his discretion fell to be exercised. ... The criticism ... that he had not conducted the necessary “balancing exercise” is misplaced.

[54]   What matters is that the decision, taken as a whole, explains why the judge or district judge has reached the conclusion he or she has.

Arden LJ ruled that:

[67]  “reasonable financial provision” ... has a constant meaning, but its application in any individual case must take account of the circumstances of the case and current social conditions.

[69]   ... the conclusion of the District Judge was not on analysis based solely on filial relationship and financial need. In any event, however, the additional factor which the judge found necessary is not required by the authorities. The court is required to look at allthe factors listed in section 3.

She referred to three “notable value judgments” by the district judge: first, the daughter was entitled to make her life with a partner of her choice and have a family of her own; second, it was reasonable for her to wish to remain at home and not work outside the home; third, families such as hers were not to be blamed for their lack of income. These were, Arden LJ said, value judgments for the district judge to make in the circumstances of the case, which could not be said to be plainly wrong.

Black LJ ruled that the dictum of Butler-Sloss LJ from Espinosa that “necessitous circumstances cannot be in themselves the reason to alter the testator’s dispositions” can be misleading, if taken out of context. Necessitous circumstances will never actually be the sole factor from amongst the section 3(1) list to feature in a case.

For example: the size and nature of the estate (s3(1)(e)) will always be material; consideration will always have to be given to the situation of any other beneficiary of the estate (s3(1)(c));

section 3(1)(g), drafted in very broad terms, may well drag in other factors on the facts of the individual case, amongst them potentially the views of the deceased.

She went on to say:

[98]   Each case depends upon its own facts and upon how the judge strikes the balance between the s 3(1) factors in first answering the question whether reasonable financial provision has been  made for the applicant and then determining what order to make.

[99]   The value judgment which the trial judge makes at the first stage is not lightly to be interfered with.

Their Lords Justice agreed that it had not been demonstrated that the first stage decision of the district judge was plainly wrong. Therefore, the daughter’s appeal against Eleanor King J’s decision was allowed. The matter was remitted to a judge of the Family Division on the issue of quantum (since the daughter had a live appeal against the district judge’s award of £50,000).

The clarity regarding the factors to be applied across this nature of case is welcome. It is perhaps a shame that the Court of Appeal was not seised of the daughter’s appeal against the quantum of the district judge’s award - so that practitioners are deprived of what would doubtless have been further helpful and authoritative guidance.

(3)   Practice points

  • It cannot be overemphasised that, in all claims under the 1975 Act, the statutory provisions must be closely considered, without preconceived, extraneous notions about particular categories of applicant.
  • The decided cases remain important – although they will not straitjacket the value judgments required of the court.
  • An adult child of the deceased is in no different position from any other applicant who has to prove his case – there are no threshold ‘special circumstances’. The court has to have regard to s3(1)(a)-(g) and assess the relevance and weight to be given to each factor in the list.
  • Early and careful consideration of all the circumstances of the case will be required in order to advise comprehensively.
  • The weight to be accorded to each section 3 factor will vary from case to case. Note, for example, how widely drawn s3(1)(g) is.
  • Supplementary criteria are applied by section 3 to various classes of applicant as follows:-

3(2) – the spouse, civil partner, former spouse or former civil partner of the

deceased;

3(2A) – cohabitant of the deceased;

3(3) –    child of the deceased or person treated by the deceased as a child of the

family in relation to a marriage or civil partnership to which the deceased was at

any time a party;

3(4) –  dependant of the deceased.

Luke Barnes

(4)(a)   The statutory factors: an aide-memoire

 

3   Matters to which the court is to have regard in exercising powers under s.2

(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 way 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 and mental disability of the 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.

[Spouse, civil partner, former spouse or former civil partner]

(2)   This subsection applies, without prejudice to the generality of paragraph (g) of subsection (1) above, where an application for an order under section 2 of this Act is made by virtue of section 1(1)(a) or (b) of this Act. The court shall, in addition to the matters specifically mentioned in paragraphs (a) to (f) of that subsection, have regard to -

(a)  the age of the applicant and the duration of the marriage or civil partnership;

(b)  the contribution made by the applicant to the welfare of the family of the deceased, including any contribution made by looking after the home or caring for the family.

In the case of an application by the wife or husband of the deceased, the court shall also, unless at the date of death a decree of judicial separation was in force and the separation was continuing, have regard to the provision which the applicant might reasonably have expected to receive if on the day on which the deceased died the marriage, instead of being terminated by death, had been terminated by a decree of divorce.

In the case of an application by the civil partner of the deceased, the court shall also, unless at the date of the death a separation order under Chapter 2 of Part 2 of the Civil Partnership Act 2004 was in force and the separation was continuing, have regard to the provision which the applicant might reasonably have expected to receive if on the day on which the deceased died the civil partnership, instead of being terminated by death, had been terminated by a dissolution order.

[Cohabitant]

2(A) Without prejudice to the generality of paragraph (g) of subsection (1) above, where an application for an order under section 2 of this Act is made by virtue of section 1(1)(ba) of this Act, the court shall, in addition to the matters specifically mentioned in paragraphs (a) to (f) of that subsection, have regard to –

(a) the age of the applicant and the length of the period during which the applicant lived as the husband or wife or civil partner of the deceased and in the same household as the deceased;

(b)  the contribution made by the applicant to the welfare of the family of the deceased, including any contribution made by looking after the home or caring for the family.

[Child or child of the family]

(3) Without prejudice to the generality of paragraph (g) of subsection (1) above, where an application for an order under section 2 of this Act is made by virtue of section 1(1)(c) or 1(1)(d) of this Act, the court shall, in addition to the matters specifically mentioned in paragraphs (a) to (f) of that subsection, have regard to the manner in which the applicant was being or in which he might expect to be educated or trained, and where the application is made by virtue of section 1(1)(d) the court shall also have regard –

(a)   to whether the deceased had assumed any responsibility for the applicant’s maintenance and, if so, to the extent to which and the basis upon which the deceased assumed that responsibility and to the length of time for which the deceased discharged that responsibility;

(b)   to whether in assuming and discharging that responsibility the deceased did so knowing that the applicant was not his own child;

(c)   to the liability of any other person to maintain the applicant.

[Dependant]

(4) Without prejudice to the generality of paragraph (g) of subsection (1) above, where an application for an order under section 2 of this Act is made by virtue of section 1(1)(e) of this Act, the court shall, in addition to the matters specifically mentioned in paragraphs (a) to (f) of that subsection, have regard to the extent to which and the basis upon which the deceased assumed responsibility for the maintenance of the applicant, and to the length of time for which the deceased discharged that responsibility.

[General]

(5) In considering the matters to which the court is required to have regard under this section, the court shall take into account the facts as known to the court at the date of the hearing.

(6) In considering the financial resources of any person for the purposes of this section the court shall take into account his earning capacity and in considering the financial needs of any person for the purposes of this section the court shall take into account his financial obligations and responsibilities.

(4)(b)   Procedure

Section 4 of the 1975 Act requires that an application for an order (for reasonable provision) under section 2 of the Act shall not, without permission of the court, be made more than 6 months after the date of the grant of representation i.e. probate or letters of administration.

Procedure is governed by CPR rules 57.14 – 57.16 and the detailed Practice Direction to part 57. By r. 57.16 the CPR Part 8 procedure is mandatory, as modified by rr.57.16(2) – (5).

Proceedings in the High Court shall be issued in either the Family and Chancery Division (r.57.15(1)). The CPR will apply to such claims in either division. Masters in the Chancery Division and District Judges in the Principal Registry of the Family Division have the jurisdiction to try 1975 Act claims.  In addition, the County Court has unlimited jurisdiction to hear and determine them.

In small estates the County Court may well be the natural venue, while claims involving large or complex estates are likelier to be suited to the High Court, which will include the District Registries of the Chancery and Family Divisions.

Where the claim potentially involves difficult issues of trusts, real property or tax, the Chancery Division is the appropriate choice. Where the claim is brought by a spouse, the Family Division fits the bill, as judges will be experienced in cases decided under Part II of the Matrimonial Causes Act 1973.

The Part 8 Claim form is to be served with the Claimant’s written evidence, to include (r.57.16(3)) an official copy of the grant or probate or letters of administration and every testamentary document in respect of which representation was granted.

The claim form should:

(a) identify the deceased and specify the date of death

(b) specify the date a grant of probate or letters of administration was taken out (identifying a will or intestacy)

(c)  state that the disposition of the deceased’s estate effected by the will or intestacy fails to make reasonable financial provision for the claimant and state that the claimant seeks provision under section 2 of the Act

(d)  identify the defendants and state whether they are personal representatives and / or beneficiaries of the estate, as well as whether they are defendants in respect of an application under sections 8, 9, 10 or 11 of the Act

(e) make other applications under the Act e.g.:

(i)  section 4, for permission to bring the section 2 claim out of time

(ii) section 8, for an order that nominated property or property subject to a donatio mortis causa be treated as part of the net estate for the purposes of the section 2 claim

(iii) section 9, for an order that the deceased’s severable share of property held on a joint tenancy immediately before death should be treated as part of the net estate

(iv)  section 10 and 11, for an order that property subject to a transaction intended to defeat an application for financial provision be treated as part of the net estate

(v)   section 14, for a former spouse’s section 2 claim to be treated like that of a spouse, where death was within 12 months of the decree absolute / judicial separation and ancillary relief proceedings had not been issued, or had been issued but not determined.

 

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