Analysis
Mr Rawlings (the deceased) and his wife Mrs Rawlings made mirror wills in 1999. Mrs Rawlings died in 2003 and her estate passed to her husband. However, upon the death of Mr Rawlings in 2006, it became apparent that the solicitor involved in the preparation of the wills had accidentally presented Mr and Mrs Rawlings with, and each had signed, the will intended for the other. The validity of the will was subsequently challenged by the deceased’s two sons, who were not entitled under the will but stood to inherit his £70,000 estate under the rules of intestacy. The Supreme Court held that the will could be properly rectified under s20 Administration of Justice Act 1982 and was therefore valid and effective. This decision concerned the allocation of the costs of proceedings. Mr Marley contended that the respondents should pay his costs in accordance with the general rule. The respondents contended that Mr Marley’s costs should be paid out of the estate, or in the alternative, by the solicitor, who was responsible for the error. The insurers, who made submissions on costs, contended that the respondents should pay Mr Marley’s costs.
Held:
- 1) If there had been no question of negligence on the part of the solicitor, it would have been difficult to decide what order to make as between Mr Marley and the respondents. On the one hand, there was force in Mr Marley’s argument that this was hostile litigation between two parties fighting over money, and the normal rule of ‘loser pays’ should apply. On the other hand, the authorities revealed that where a challenge to a will was a reasonable one and is based on an error which occurred in the drafting or execution of a will, the court often orders that parties’ costs should come out of the estate.
- 2) A pragmatic approach might well have suggested that, if the estate had been very substantial, the correct order would be to direct that costs be paid out of the estate, but one should hesitate long and hard before making such an order in a case where the estate is modest as it would deprive the successful party of any benefit from the litigation or the estate.
- 3) This was not a case where it was right to ignore the position of the solicitor. There was considerable attraction in the notion that the solicitor should bear all the costs, in the sense that he was the person whose unfortunate error was responsible for the litigation. While the court should always be wary before making a costs order against a third party, it was the error of the solicitor which caused the problem.
- 4) It was by no means unusual to make an order for costs against a party who was funding the litigation or who was responsible for the litigation. Given that the respondents’ decision to fight the litigation was not unreasonable, it would be harsh if they had to pay any substantial costs. It was foreseeable to the solicitor and to the insurers that the respondents would contest the claim, and it was scarcely unreasonable of them to do so ‘all the way’ as demonstrated by the fact that they won in the High Court and the Court of Appeal.
- 5) An order that the parties be paid out of the estate would result in Mr Marley being able to reconstitute the estate through a claim for damages, and so the position was equivalent to one where the estate is substantial. It was justified in pragmatic terms on the basis that those costs would be covered by Mr Marley from the solicitor and the solicitor from the insurers in any event. Such an order would be appropriate in relation to the costs up to and including those incurred in the Court of Appeal.
- 6) The position in the Supreme Court was different, as their solicitors and counsel were acting under CFAs. On the wording of the solicitors’ CFA, the respondents were worse off as so far as the substantive issue was concerned, and had not obtained any ‘benefit’ from the appeal. However, the CFA provided that the solicitors might require the respondents to pay their disbursements which would include counsels’ CFAs. Counsels’ CFAs stated that solicitors would be liable to pay counsels’ fees if the ‘opposing party (including the estate) agreed to pay or the court ordered that they pay their costs’. That condition was satisfied, as the court had ordered that the respondents be paid out of the insurers which was the short-circuiting of an order that the estate paid the costs.
- 7) It was inappropriate if any costs order resulted in the unsuccessful respondents’ counsel receiving a success fee, or to put it another way, if any costs order resulted in any party, whether the respondents’ solicitors, the respondents or the insurers, having to pay a success fee to the unsuccessful respondents’ counsel. As such, the court was prepared to include counsels’ base fees in the scope of an order against the insurers, but not any uplift for counsel.
- 8) In all the circumstances, the right order to make was that (i) the insurers of the solicitor pay the costs of the proceedings (a) of Mr Marley up to and including the Supreme Court and (b) of the respondents up to and including the appeal to the Court of Appeal, and that (ii) the insurers of the solicitor pay (a) the respondents’ solicitors’ disbursements and (b) provided that both counsel for the respondents disclaim for all purposes the right to recover any uplift to which either of them would otherwise be entitled under their respective CFAs, counsels’ base fees, in relation to the further appeal to the Supreme Court.
- 9) If counsel were not prepared to provide such a disclaimer, the order was that the insurers pay the costs of the proceedings (a) of Mr Marley up to and including the Supreme Court, and (b) of the respondents up to and including the appeal of the Court of Appeal, and that there be no order for costs in the Supreme Court, save that the insurers pay the solicitors’ disbursements.
Continue reading "Marley v Rawlings & anr [2014] WTLR 1511"
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