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You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Ilott v Mitson Michael Peter Lane (Personal Representatives of Melita Jackson Deceased) the Blue Cross Animal Welfare Charity Royal Society for the Protection of Birds Royal Society for the Prevention of Cruelty To Animals [2015] EWCA Civ 797 (27 July 2015) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2015/797.html Cite as: [2015] EWCA Civ 797, [2015] 2 FCR 547, [2015] Fam Law 1196, [2015] 2 FLR 1409, [2015] WTLR 1399, [2016] 1 All ER 932 |
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ON APPEAL FROM THE HIGH COURT
FAMILY DIVISION
Mrs Justice Parker
FD06F00810
Strand, London, WC2A 2LL |
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B e f o r e :
LORD JUSTICE RYDER
and
SIR COLIN RIMER
____________________
Ilott |
Appellant |
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- and - |
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1st Respondent |
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Michael Peter Lane (personal representatives of Melita Jackson deceased) |
2nd Respondent |
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The Blue Cross Animal Welfare Charity |
3rd Respondent |
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Royal Society for the Protection of Birds |
4th Respondent |
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Royal Society for the Prevention of Cruelty to Animals |
5th Respondent |
____________________
WordWave International Limited
Trading as DTI
165 Fleet Street, London EC4A 2DY
Tel No: 020 7404 1400, Fax No: 020 7831 8838
Official Shorthand Writers to the Court)
Penelope Reed QC (instructed by Wilsons Solicitors) for the Third to Fifth Respondents
The First and Second Respondents did not appear and were not represented
Hearing date: 3 July 2015
____________________
Crown Copyright ©
LADY JUSTICE ARDEN :
OVERVIEW
A. Set out the material provisions of the 1975 Act
B. Explain the history of the appellant's relationship with the deceased
C. Summarise the judgments of DJ Million and Parker J
D. Explain the award sought by the appellant
E. Set out the issues which require to be decided
F. Deal with Issue (1) (the error made by DJ Million) and conclude that the lump sum award of £50,000 must be set aside
G. Deal with Issue (2) (remit to High Court or re-exercise discretion) and conclude that this court should re-exercise the discretion as to quantification
H. Deal with Issue (3) (re-exercise of discretion) and conclude that the appellant should be awarded the cost of acquiring her home and the sum of £20,000
I. Restate my overall conclusion.
A. RELEVANT PROVISIONS OF THE 1975 ACT
such financial provision as it would be reasonable in all the circumstances of the case for the applicant to receive for his maintenance. (emphasis added)
It is now clearly established that claims under the Act by persons other than spouses are limited to maintenance. The applicant has to show that the will fails to make provision for his maintenance: see Re Coventry (deceased) [1979] 2 All ER 408, [1980] Ch 461; affd [1979] 3 All ER 815, [1980] Ch 461. In that case both Oliver J at first instance and Goff LJ in the Court of Appeal disapproved of the decision in Re Christie (deceased) [1979] 1 All ER 546, [1979] Ch 168, in which the judge had treated maintenance as being equivalent to providing for the well-being or benefit of the applicant. The word 'maintenance' is not as wide as that. The court has, up until now, declined to define the exact meaning of the word 'maintenance' and I am certainly not going to depart from that approach. But in my judgment the word 'maintenance' connotes only payments which, directly or indirectly, enable the applicant in the future to discharge the cost of his daily living at whatever standard of living is appropriate to him. The provision that is to be made is to meet recurring expenses, being expenses of living of an income nature. This does not mean that the provision need be by way of income payments. The provision can be by way of a lump sum, for example, to buy a house in which the applicant can be housed, thereby relieving him pro tanto of income expenditure. Nor am I suggesting that there may not be cases in which payment of existing debts may not be appropriate as a maintenance payment; for example, to pay the debts of an applicant in order to enable him to continue to carry on a profit-making business or profession may well be for his maintenance. (emphasis added)
2 (1) Subject to the provisions of this Act, where an application is made for an order under this section, the court may, if it is satisfied that 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 not such as to make reasonable financial provision for the applicant, make any one or more of the following orders -
(a) an order for the making to the applicant out of the net estate of the deceased of such periodical payments and for such term as may be specified in the order;
(b) an order for the payment to the applicant out of that estate of a lump sum of such amount as may be so specified;….
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…
(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.
"the court" means unless the context otherwise requires the High Court, or where the county court has jurisdiction by virtue of section 25 of the County Courts Act 1984 , the county court ;
(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.
B. APPELLANT'S MARRIAGE, CHILDREN AND ESTRANGEMENT FROM HER MOTHER (THE DECEASED)
C. JUDGMENTS OF DJ MILLION AND PARKER J (FIRST APPEAL)
i) He first directed himself that any capitalised sum must be based on an income need.
ii) He rejected the Charities' submission that a capital fund of £3,000-£5,000 was sufficient. He considered that this sum would be too small.
iii) He rejected the claimant's claim which on analysis exceeded the size of the estate. The appellant sought £186,000 to purchase the family home, £53,000 to pay for a single storey extension to the house, a capitalised sum equivalent to an income of £10,000 and a further capital sum to permit refurbishment and re-equipment of the house, which might amount to £40,950. The district judge then rejected the claim for a sum to purchase the house. He held that maintenance had to be income based. That led him to focus on the amount that would be saved by purchasing the house. He held that the maximum amount saved would be £912 per year being the net amount of the rent paid by the family after housing benefit.
iv) He then rejected the claim for a capitalised sum of £10,000 per year for life. He said that there were no figures to show the net effect which took into account the state benefits which the family received. He assumed that the practical consequences of such a large capital payment would be that the family lost most if not all of their benefits. He added "none of these consequences appeared to have been thought through."
v) At this point in his judgment, having rejected the claim, he went on to make his own calculation. He held first that the appellant had some earning capacity but that would not be enough to meet her financial needs. He took her share of the tax credits and held that they could be said to indicate the amount of maintenance which the government accepts as being needed by her to provide her with a reasonable but basic standard of living. DJ Million therefore took the level of state benefit as the ceiling on the amount that he could award for the appellant's maintenance.
vi) He therefore rejected the argument put forward by the Charities which appeared to have been that the appellant's income is in any event already met by state benefits and should not be replaced by provision out of the estate of Mrs Jackson.
vii) Having done that, DJ Million then looked at the "At A Glance" tables for 2007-8 and concluded that the sum of approximately £69,200 would be required to provide the appellant with an income of £4,000 per year. He held that this was the appropriate level of financial provision because of the appellant's earning capacity. He took into account that such work would be poorly paid and that she would be likely to continue to require state subsidies for her basic living expenses.
viii) Having made that calculation he capitalised the maintenance figure at the lower sum of £50,000. He emphasised that this had a significant degree of approximation in it but represented the best that he was able to do in the circumstances of the case.
i) the lack of analysis about the effect of the award on state benefits did not render his decision wrong because he was not given the necessary material to assess that effect.
ii) DJ Million was entitled to take the view that, since the appellant and her husband had managed for many years on their limited resources, their straitened circumstances did not justify any award.
iii) The appellant's contention that she could only benefit from the award if her housing costs were met could not be the right approach because "[o]therwise [DJ Million's] determination that the lack of expectation tempered the award would be rendered meaningless."
D. AWARD SOUGHT BY THE APPELLANT
E. ISSUES TO BE DECIDED ON THIS APPEAL
31. In my judgment, the following issues arise:
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?
F. ISSUE (1): ARE THERE ANY ERRORS IN THE REASONING OF DJ MILLION ON FINANCIAL PROVISION WHICH MEAN THAT HIS AWARD SHOULD HAVE BEEN SET ASIDE?
i) DJ Million wrongly equated reasonable provision with sums paid in respect of state benefits. He then made a provision to replicate the appellant's existing state benefits, or what he deemed to be her share of the benefits, rather than improving her financial circumstances (paragraph 79).
ii) DJ Million failed to analyse what the appellant reasonably required by way of maintenance other than by analogy with state benefits and produced the result which meant in practice that her maximum benefit from the award would only be £16,000 less any savings she had.
iii) DJ Million was wrong to ignore the fact that half the estate was derived from death-in-service compensation paid to the deceased upon and because of the death of her husband and the appellant's father.
iv) DJ Million was wrong to conclude that provision should not be made to enable the purchase of the Property as it would only relieve the appellant of expenditure of £912 per year. It would in fact also relieve the appellant of the liability for £4,793.33 in rent each year.
v) DJ Million was wrong to confine her needs to 50% of the family benefits. Her real needs were higher because it is well known that two people can live more cheaply than one. He ought to have taken her needs as if she were a single person.
vi) DJ Million was wrong not to seek further information to clarify the effect of any award on state benefits.
G. ISSUE (2): SHOULD THIS COURT RE-EXERCISE THE DISCRETION TO MAKE AN AWARD OR REMIT THE MATTER TO THE TRIAL COURT?
H. ISSUE (3): HOW SHOULD THIS COURT RE-EXERCISE THE DISCRETION?
i) No penalty for living within means: Ms Stevens-Hoare submits that when assessing the value of the claim it is wrong to weigh against the appellant the fact that she had been living in straitened financial circumstances. She submits that Neuberger J, as he then was, in Re Watson [1999] 1 FLR 878 at 890 rightly rejected the idea that a claimant has no need for the purposes of the 1975 Act if she has been living within her means:
…just because the person manages to live within his or her income does not mean that that income fulfils all his or her "needs" or "requirements" let alone "reasonable requirements".
Ms Stevens-Hoare submits that this is the correct principle and that Parker J was wrong to distinguish this case as resting on very different circumstances (see judgment of Parker J at para 46). Ms Reed contends that Re Watson is distinguishable for the reason which Parker J gave and does not establish any principle. I agree that the existing means are not conclusive as to the appropriate level at which a claimant is entitled to be maintained.
ii) Father's employer's payment: Ms Stevens-Hoare submits that the fact that the matrimonial home equates to about half the estate and was derived from the appellant's father's efforts rather than her mother's was a factor that should be weighed in the appellant's favour as it must have been partly intended for her. On Ms Reed's submission, the appellant's father's employer's payment can have no impact on the award under the Act. It engages none of the section 3 factors. Ms Reed submits that the fact that the deceased derived part of her estate from the bounty of her husband's employer was irrelevant. The judge correctly distinguished Re Callaghan [1985] Fam 1 where the stepchild had been very close to her stepfather and cared for him dutifully towards the end of his life to the detriment of her own circumstances. In that case the court awarded the daughter the house in which the deceased had lived which had been left to him by the daughter's mother. As Parker J said, at paras 40-41 of her judgment, there was nothing to suggest that the payments made to the deceased were anything other than to her as a widow which would have to support her and her child going forward.
I consider that there is no sufficient evidence that this sum was intended for the appellant. It became part of the general assets of Mrs Jackson and, subject to the 1975 Act, she was entitled to use or dispose of it as she choose. I therefore agree with Parker J on this point.
iii) Lack of expectation of benefit: Ms Stevens-Hoare submits that the appellant should not be penalised for lack of expectation of benefit from her mother's estate. It would be contrary to public policy if claimants had to prove expectation as this might encourage some undesirable conduct by prospective claimants.
For my part, I do not think that this factor has much weight in this case. The only beneficiaries are the Charities, who can have had no expectation either: the deceased had no connection with the Charities. The appellant, on the other hand, was the only child of the deceased, and she was deprived of any expectation primarily because Mrs Jackson had acted in an unreasonable, capricious and harsh way towards her only child.
iv) Mrs Jackson's testamentary wishes: Ms Stevens-Hoare submits that the judge was wrong to pay such high regard to the deceased's testamentary wishes. There was no other beneficiary's needs to which the court had to pay attention. Since the trial judge had found that it was unreasonable to exclude the appellant, there had to be consideration of reasonable provision. Ms Reed submits that DJ Million was correct to have regard to the deceased's testamentary wishes: see per Oliver J in Re Coventry dec'd [1980] Ch 461 ("An Englishman still remains at liberty at his death to dispose of his own property in whatever way he pleases.").
In my judgment Parliament has entrusted the courts with the power to ensure, in the case of even an adult child, that reasonable financial provision is made for maintenance only. In my judgment that limitation strikes the balance with the testamentary wishes of the deceased whose estate is used for the purposes of making an award, at least in this case where there is no other claimant apart from the Charities. They have no demonstrated need or expectation.
v) Estrangement: Ms Stevens-Hoare relies on DJ Million's findings of fact as to responsibility for this. Ms Reed submits that estrangement is relevant and that it is difficult to apportion blame for estrangement, but relies on the fact that DJ Million did not simply find that Mrs Jackson's failure to make provision was unreasonable, capricious and harsh. He also found that the Ilotts contributed to some of the difficulties in effecting a sustained reconciliation. He held that the fault was not all on the side of Mrs Jackson (judgment, paragraph 63). Ms Reed also relies on Mrs Ilott's lifestyle choices, meaning her decision to marry Mr Ilott who would have very limited means and work in the home rather than take paid employment.
Ms Reed helpfully referred us to Gold v Curtis [2005] WTLR 637 (Master Bowman) where a son who was estranged from his deceased mother, who was difficult and combative, until shortly before her death, made a claim opposed by his wealthy sister on the ground that he needed extra resources because he had mental health issues and had a daughter who similarly had mental health issues. The court made an order granting him a measure of financial provision despite the estrangement. His share of the estate remained less than that of his sister. As Ms Stevens-Hoare submits, this case was decided on its facts: it contains no statement of principle that assists in this case.
In my judgment, as Ms Reed accepted, responsibility for estrangement is difficult to quantify. I do not consider that on the facts of this case the estrangement ought to deprive the appellant of an award, or even substantially to diminish it, for three reasons. First, although DJ Million found that she was partially responsible for the failure of the attempts at reconciliation, there is no suggestion that she wanted to be estranged from Mrs Jackson. Second, while she may not have made the choices in life that her mother thought were necessary for her to make a success of her life, she has made a success of her life in other ways through being a mother and homemaker. Third, not only may it be difficult to apportion fault here but there may not have been fault on anyone's part. Estrangement may simply have been the result of Mrs Jackson's inability to make lasting relationships with anyone, of which there is other evidence. There is no finding on that one way or the other.
Ms Stevens-Hoare further submits that the reasonable standard of living or needs for a particular claimant who was a recipient of state benefits is not to be ascertained simply by reference to their income including benefits. She further submits that the court should assess what the appellant needed for her living expenses. The appellant lived within her means and it would penalise her unfairly if the fact that she did so meant that the court found that she did not need an award.
Ms Reed submits that the court would not be justified in providing a home for the appellant because the money saved would be small. The court has to take into account housing benefit and weigh against the small benefit that she would obtain the costs of maintaining the house which she would acquire.
H. OVERALL CONCLUSION
Lord Justice Ryder:
Sir Colin Rimer
ANNEX TO JUDGMENT OF ARDEN LJ: EXTRACT FROM THE JUDGMENT OF DJ MILLION
67. In my judgment all of the above factors has produced an unreasonable result in that no provision at all was made for Mrs Ilott in her mother's will in circumstances where Mrs Ilott is in some financial need. However I also accept that Mrs Ilott has not had any expectancy of any provision for herself. Mr and Mrs Ilott have managed their life over many years without any expectancy that Mrs Ilott would receive anything. That does not mean that the result is a reasonable one in the straightened financial circumstances of the family. But is does mean, in my judgment that any provision now must be limited.
Reasonable Financial Provision
68. What financial provision, if any, should be made? All parties are agreed that any provision should be in the form of a capitalised sum. I remind myself that any capitalised sum must be based on an income need.
69. Mr Harrap submitted that a very modest sum is all that would be justified. He suggested (if any amount were justified) that it should be a small sum to pay for driving lessons and to see her back in work, giving her greater financial independence. He suggested a figure no more than about £3-5,000.
70. Mr Smith for Mrs Ilott put forward a much more ambitious case. Indeed, so ambitious that at times the total sum sought exceeded the size of the estate. At the end of his final submissions, under pressure from me to quantify his claim, Mr Smith descended to some figures. On behalf of Mrs Ilott he sought:
1. £186,000 to permit her to purchase their own home (with a discount under right to buy provisions);
2. £53,000 to pay for a single storey extension to the house, to give more living room for the family (including the 4 children who live at home);
3. A capitalised sum equivalent to an income of £10,000 per year for life. (He put no figure on this but the Duxbury tables in At A Glance indicate a sum of £173,000 for a woman ages 46);
4. Some further capital sum to permit the refurbishment and re-equipment of the house after its purchase. According to a list produced during the final hearing such a sum might amount to £40,950 (£27,450 plus £13,500).
71. The claimant also produced a proposed annual budget for the family which totalled £34, 600. Allowing for Mr Ilott's income from his part time earnings at £5, 304 (that is £4,164, plus £900 plus £240), and the current child benefit of £1,570, this would have required an additional annual income of £27, 776. Capitalised for life for a female aged 46 years would require a sum of about £562,000 (using figures from At A Glance). This exceeds the size of the estate.
72. I regret to say that the claimant's case on these matters was presented in an ill thought out and unhelpful way.
73. I must keep in mind that under s 1(2)(b) of the Act the financial provision is for "maintenance" – that is, income based. Mr Smith's justification for the capital sum sufficient to buy the family home was that it would free up income which would be spent otherwise on rent. But, because of the incidence of housing benefit, the net income released would be about £912 per year (£76 per month). This is the net amount or rent paid by the family after housing benefit.
74. Further, I was presented with two figures which showed the net effect (after benefits and tax credits) of providing an income of £10,000 per year. Also, when advancing the proposal for a capitalised sum I was presented with no figures to show the net effect which took into account the state benefits which the family receive. I assume that the practical consequence of a large capital payment would be that the family would lose most, if not all, of their benefits. None of these consequences appeared to have been thought through.
75. I have therefore been left to deal with this case with a more rough and ready approach.
76. I accept that the continuing obligations and responsibilities of Mrs Ilott to her children make it reasonable for her to wish to remain at home for the time being rather than seek work, or at least full time work. This has been her role since the birth of her eldest son, Adam, 23 years ago. In any event, any work she would be likely to obtain would be limited by her lack of employment skills and the travel difficulties stemming from living in a somewhat isolate village.
77. However I would consider it reasonable for her to attempt to support herself by some paid work during the course of the next few years. As I find, even with such future work Mrs Ilott is likely to remain in some financial need. If one or both of Mr and Mrs Ilott work, they may continue to be entitled to working tax credit. Currently tax credits (including child tax credits) make up about £8,112 of the couple's annual income. If I notionally apportion those credits equally between Mr and Mrs Ilott, her proportion of them would be £4, 056 per year. This could be said to be an indicated amount of maintenance which the government accepts as being needed currently to provide Mrs Ilott with a reasonable, but basic, standard of living.
78. On that basis, I find that Mrs Harrap's submission is too low. The reasonable basic needs of Mrs Ilott are greater, as I find, than provision for driving lessons and a small 'starter' sum of capital. I therefore start from my approximated figure of basic needs derived from the tax credit apportionment.
79. From At A Glance 2007-8 Table 20, a Duxbury figure for lifetime maintenance of £10,000 a year net for a woman aged 46 would be £173,000. As a guideline calculation a maintenance figure of £4,000 per year may require about £69,200 ( that is 4/10ths of £173,000). This is an approximation, not an arithmetically precise calculation. However, as I have found, Mrs Ilott ought to be able to find some modest part time work in a few years to support herself to some limited extent. I accept that such work would be likely to be poorly paid and that she is likely to continue to require state subsidies for her basic living expenses.
80. However, to reflect that potentially reduced financial dependency, I intend to capitalise the maintenance figure at the lower sum of £50,000. I accept, indeed explicitly state, that such figure has a significant degree of approximation in it. But, in the absence of any better method of calculation, it is the best I am able to do in the circumstances of this case.
Summary and outcome
81. I consider that Mrs Jackson's will does not make reasonable financial provision for the claimant, Mrs Ilott. I therefore order that the claimant should receive the sum of £50,000 from the estate.