Costs and conduct in contentious probate cases

We review the general rules and look at a recent decision where conduct was the overriding feature the court took into account when making a costs award. This is relevant to insurers of law firms as such cases often feature in the professional indemnity arena.

Background

The starting position for costs awards in probate and trust claims is exactly the same as for other litigation – costs are in the discretion of the court; generally the “loser” can expect to pay, but the court can make a different order. Over the years, the courts have come up with a number of special circumstances in probate and trust claims which are likely to lead to a different outcome to “loser pays”. These have mainly been in order to protect the “innocent” in probate disputes, such as executors or beneficiaries who reasonably take some steps to involve the court in connection with a disputed will, but ultimately are unsuccessful.

Examples of these “special circumstances” include:

• where a party issues a claim seeking the court’s formal approval to a grant of probate (known as proving a will in solemn form), the defendants have the choice between a specific challenge to the will, or the passive approach of simply stating they require it to be proved in solemn form. If the former, they are at risk on costs; if the latter, they will not usually have costs ordered against them unless there was no reasonable basis for the court to investigate the will
• where the testator or the residuary beneficiaries were the cause of the litigation, costs will usually be paid out of the estate. This reflects the fact that the estate comprises the testator’s assets which would be available to meet a costs award against him if he were alive; and that it is proper for those residuary beneficiaries who are responsible for an unsuccessful challenge to have their share of the residue reduced.

In extreme cases, costs can be ordered directly against third parties, such as the person responsible for drafting a will which contained an error or even their insurers. The highest recent example of this is the Supreme Court decision in Marley v Rawlings (2014). This was the case where husband and wife executed each other’s wills by mistake. The Supreme Court eventually solved the problem by wholescale rectification, but the costs of getting to that stage were considerable compared to the size of the estate. The court ordered the insurers of the solicitor who had overseen execution of the wills to pay both sides’ costs.

Conduct and costs: a recent case

As can be seen from the above, “conduct” in its broadest sense is a factor in some of the principles behind costs awards in probate claims. What about the situation where the actual conduct of one or more parties to probate litigation does not meet the court’s approval? The High Court looked at this in Burgess v Penny (2019).

This was a claim between a brother and two sisters, whose mother made a will leaving her estate equally between her three children. The brother applied to prove this will in solemn form; the sisters challenged it on the basis that there were doubts about the validity of the will because of the way it had been executed. Acrimonious litigation followed, which ended in a trial at which the sisters actively pursued three issues. The brother failed to show that the will was valid (the first issue) and so the mother’s estate passed via the intestacy rules to the three children equally. However, the sisters lost on the second and third issues which had also taken significant court time. The court was asked to rule on costs in those circumstances.

On a “half-win” basis, the court considered that the proper starting position was that the brother and sisters should each pay half of the others’ costs. Against this was the recognition that the circumstances in which the will was executed reasonably called for investigation, which suggested that the sisters were in the stronger position. However, the court also identified two further important factors:

• all the parties had said from an early stage that they were willing to accept an equal division of the estate. Not only was this the actual outcome after trial, but also the most likely one either because of the will being admitted to probate, or the application of the intestacy rules. Despite this, the sisters had run to trial an aggressive claim challenging the will; and
• the sisters refused to mediate.

The court viewed these as the overriding factors which justified a different approach on costs. It particularly disapproved of the sisters’ refusal to mediate, noting that their wish that their brother admit he had done wrong was not a sufficient reason to refuse mediation. As a result, even though the sisters were reasonable in commencing investigations into the will, their conduct of the litigation and refusal to mediate worked against them, and each party was ordered to pay its own costs.

Conclusion

The broad theme from Burgess ties probate disputes in with the courts’ current approach to conduct in general litigation: reasonableness of approach and good reason for litigation are necessary ingredients for a party hoping either to be awarded costs, or to avoid an adverse order. Refusal to mediate is a particularly strong factor which is likely to alter the normal outcome on costs. In a memorable phrase from Catherine Newman QC (sitting as a Deputy High Court Judge in Burgess), mediation is “about attempting to reach a solution which both parties can live with as a better alternative to litigation”. Insurers of lawyers regularly have to deal with claims involving probate disputes in which one or more party behaves unreasonably: Burgess provides further ammunition to use in response.