Last week saw the final instalment of the Ilott v Mitson saga being played out in the Supreme Court.
As with all sagas, it has finished on a cliff hanger, and we must await the decision of the justices next year as to what (if anything) Heather Ilott should receive from her mother’s estate.
Until that decision is handed down, it is not possible to draw any definitive conclusions from the case; nevertheless, it is a timely opportunity for third sector organisations to reflect on how best to deal with contentious situations when they appear on the horizon.
Many claimants to disputes over wills are driven by a strong sense of principle and moral entitlement.
The same is true for charities, although slightly different principles apply. Where a charity is a beneficiary of an estate that is under attack, difficult questions can arise on how best to respond.
The Charity Commission advises that trustees have a duty to act in the best interests of their charity. But what constitutes those best interests?
A difficult balance needs to be struck between issues such as protecting the charity’s reputation, deploying the charity’s financial resources responsibly, and receiving what the testator wanted them to have.
In particular, reputational issues can be difficult to manage, given the need to reconcile a duty to recover that to which the charity is entitled, with very firmly held views by some as to what a testator ‘should’ do, regardless of testamentary freedom.
Get the balance wrong, and a charity can suffer damage on several fronts: being ordered to pay costs by the court; loss of existing and potential donors; and, in some cases, being on the wrong end of an investigation by the Charity Commission.
The majority of legacy disputes settle by agreement. In the case of claims for reasonable financial provision (as opposed to challenges to the will itself) this is even more common, as the courts have a very wide discretion on how to determine claims – as can be seen by the divergence of judicial opinion in Ilott, which has now been in front of the courts on no less than six occasions.
Costs are another important consideration. It is not uncommon for costs in a matter which proceeds to a trial to exceed £100,000 – sometimes considerably more. Even if a successful charity obtains an order for costs, this may not be realistically enforceable (Ilott, for example, lives in a housing association property with very limited means).
Consideration should be given to settlement at all stages, and in very complex cases, consideration might be given to seeking confirmation from the Charity Commission that a compromise is within the charity’s powers.
Given the many potential negatives for charities in pursuing claims, it is understandable that many will be reluctant to become involved. However, while settlement should always be the aim where possible, charities should not be deterred from pursuing the right case.
Gareth Ledsham is a partner in the trusts and estate disputes team at Russell-Cooke solicitors