Analysis
Mr Wharton (D) died in 2008 and was survived by his second wife, Maureen (M), and by his three adult daughters, Victoria, Gina and Amanda. D and M had been living together for 32 years but only married three days before D’s death. He had been discharged from hospital earlier that day so that he could spend his last few days at home. During this time his solicitor (B) visited him at home and took instructions from him for a will. This left his entire £4m estate to M, in contemplation of their marriage that took place the same evening. Essentially, D made a ‘deathbed will’ and then married M. Following D’s death, his daughters challenged the validity of his will for which B’s firm was executor. They argued that it was invalid because either D did not have the necessary knowledge and approval at the time he gave instructions and signed the will or, alternatively, because the will had been made as a result of undue influence by M. The judge rejected these arguments and pronounced in favour of the will. A further judgment was required in respect of costs.
Held
The daughters should pay costs on an indemnity basis to both M and B together with interest and interim payments were awarded.
If the cause of the litigation was the fault of the deceased, or of those interested in the residue, the court could properly order that the costs be paid out of the estate.
The daughters argued that here D had created the difficulties by making the will when he was in an enfeebled state and that he had made a number of inconsistent statements to various acquaintances about the provision he had made, or intended to make, by will. They also criticised how M had gone about the administration of the estate.
However, there was no basis to argue that D had caused the probate action. There was authority stating that, while it would not be possible to limit the circumstances in which a testator was said to have promoted litigation by leaving his own affairs in confusion, it could not be thought that ‘it should extent to cases where a testator by his words… had misled other people and perhaps inspired false hopes in their bosoms that they may benefit after his death’. It did not seem that the judges who, in the past, had laid down the practice that costs should be allowed out of the estate where the fault of the testator has led to the litigation, had in mind such a situation as that [8]. Nor was there any basis upon which it could properly be concluded that M was the cause of the probate dispute [11].
The second set of circumstances that could cause a disapplication of the ‘general rule’ was if there were a sufficient and reasonable ground (looking at the knowledge and means of knowledge of the parties opposing the will) to question the validity of the will, for example for lack of capacity. In that situation, it might be appropriate for each party to pay their own legal costs so that the loser was not penalised. It was perfectly legitimate for a person who thought there was a reasonable cause for inquiry to invite the court to undertake an enquiry without fear of being punished in costs and CPR 57 contained a specific provision for this. However, the concept of ‘reasonable cause for inquiry’ must not be confused with an assertion of undue influence. It was necessary for the person mounting the challenge to have a bona fide belief that there were good grounds for impeaching the will for want of knowledge and approval or for undue influence. The daughters had such good grounds. This was not a case in which the available material reasonably led the daughters to the genuine belief that the will was invalid, but rather that the daughters genuinely and passionately believed that the 2008 will must be invalid whatever the circumstances reasonably showed and would use whatever material was available in order to sustain that a priori position. They, and those advising them, took a commercial decision about the strength of that case, and it turned out to be wrong. There was no reason to replace the general rule that costs follow the event with no order as to costs [14].
If somebody unsuccessfully made a challenge based on undue influence, and that challenge failed, they would be condemned in costs. A case based on undue influence was one founded upon a very serious charge, which ought not to be pleaded or pursued unless there was a proper factual foundation from which the necessary inference of undue influence could be drawn. M’s costs up until 7 May 2010, when she made a part 36 offer of £5000, and costs to be assessed on the standard basis to each of the daughters should be paid on an indemnity basis as her costs were largely responsive to the case made against her; proportionality was not an issue; the case was an all or nothing case involving a £4m estate; the case of want of knowledge and approval was very, very weak, as was that of incapacity; and the case was conducted in a manner that was outside the norm, with excessive enquiry into irrelevances that generated significant costs that were then used as a means of emphasising to M the great risk in costs to which she herself was exposed unless she settled by giving the daughters most of the estate [18].
The part 36 offer made by M on 7 May 2010 amounted to around £200,000 (ignoring the fact that M would be bearing her own costs and those of the executors). There was no reason why it would be unjust to order indemnity costs as set out under part 36. The offer was small but not derisory and the aggressive conduct of the action by the daughters’ solicitors (both as regards the probate action and the administration of the estate) reinforced the essential justice of such an order [23].
B was a defendant who was conscious of the need to control costs. He first indicated an intention to be a ‘passive defendant’. He then indicated that once proceedings were issued he would review his position since he had ‘an extremely strong belief [D] had full testamentary capacity’ (which was the challenge then made by the daughters). When the proceedings were issued he indicated that he would not dispute the claim. The executors accordingly did not serve a defence. In the course of the case B provided extensive disclosure at the request of the daughters’ solicitors, and two witness statements. He did not appear by counsel at the trial. He did not attend every day of the trial. B was a party against whom relief was sought (including an order that he pay the daughters’ costs). A substantial part of the case advanced at trial (only foreshadowed in the skeleton argument) was that he had behaved improperly, in particular by failing to recognise a conflict of interest in receiving instructions from D for a will and in failing to arrange for the attendance of a doctor in compliance with ‘the golden rule’. He had acted reasonably in preparing for and in attending the trial, and was moderate in not seeking his own representation by counsel. There was no reason in justice why his costs of attending to hear and to respond to the personal criticisms of him and to address the court as to the circumstances in which the 2008 will was produced (ie his attendance at trial) should be borne by M. The daughters must pay B’s costs of the action and counterclaim to be the subject of detailed assessment on the indemnity basis (in default of agreement) [27].
An application for an interim grant was necessary in July 2010 because the daughters’ solicitors declined to agree the issue of a limited grant to an administrator. The additional costs thrown on the estate by the appointment of the administrator with a limited grant were to be added to the costs paid by the daughters to B [28].
JUDGMENT MR JUSTICE NORRIS: [1] This is my judgment about costs. I will first deal with the position as between Maureen and the daughters. [2] I address first the period up to and including the 7th May 2010. The starting point for a consideration of the relevant pre action and action costs during this period …Continue reading "Wharton v Bancroft & ors (costs) [2012] EWHC 91 (Ch)"