Contentious Probate Costs – Displacing the general rule of “winner takes all” and Part 36 compliance

Bob Hanlon, Senior Advocate

Our Bob Hanlon, Senior Advocate reports on the case of James v. James, Underwood and James

The original dispute in this matter concerned the Estate of the Claimant’s father. The Claimant alleged that his father’s Will was invalid on the grounds of lack of testamentary capacity and that in any event he was entitled to land left by the Will, and also the greater part of the land left to the First Defendant, by virtue of proprietary estoppel.

The claim was heard over seven days and was subsequently dismissed. The Trial Judge then ruled on costs.

The Defendants had made a Part 36 offer intended to cover the claim and counter claim.

The offer provided that:

 

2.1          “We are, therefore, authorised to make your client the following offer to settle under Part 36 (the “Offer”)”.

2.2 of the letter states:

“The Offer is made pursuant to Part 36 of the Civil Procedure Rules and it is intended to be a Claimant’s Part 36 offer. Accordingly, if your client accepts the offer within 21 days (the “Relevant Period”) your client will be liable for our client’s costs, in accordance with CPR 36.13″.

Paragraph 3 of the letter states as follows:

“The Offer is to settle the whole of the counterclaim and the Claims on the following terms:

[ … ]

Your client is to be liable to pay our client’s costs of the claim and the counterclaim on the standard basis, to be assessed if not agreed, up to the end of the relevant period or, if later, the date of service of notice of acceptance of this Offer”.

The Claimant took two points in relation to the offer:

First, that it was expressed to be a Claimant’s offer and was not therefore a valid offer.   However, it was clear from CPR 20 that a counterclaim is to be treated as a claim. The Judge held that the offer was valid, which expressly stated it took account of the counterclaim.

Second the Claimant maintained that the offer contained a term which was inconsistent with Part 36.13 (1) which provides that:

“where a Part 36 offer is accepted within the relevant period, the Claimant will be entitled to the costs of the proceedings up to the date on which notice of acceptance was served on the offeror”.

The court found that not only was this a term on costs, it was also a term which provided differently, although not by much, from what rule 36.13 provides for. If the offer was to be accepted, the Claimant would pay the Defendant’s costs up to the end of the relevant period, whereas Rule 36.13 provides that the Claimant would pay the Defendant’s costs only up to the date of acceptance within the relevant period. The court found that the offer was inconsistent with the rule and was not an offer within Part 36.

The Judge then considered the general rules on costs and Costs Orders after Judgment.

The general rule in 44.2 (3) that the unsuccessful party pays the cost of the successful party can be displaced in contentious probate proceedings.

CPR 57.7 (5) (a) and (b) permits the Defendant to give notice in his Defence that he does not raise a positive case but insists on the will being proved in solemn form.  If the Defendant give such notice the court will not make an Order for costs against them.

In James, the Defendants relied on the other two exceptions to the general rule set out in Spiers-v -English (1907) P.122.

The first exception is that if the person who makes a will, or persons who are interested in the residue, have been the cause of the proceedings, a case can be made out for costs to come out of the Estate.

The second exception is that if the circumstances lead reasonably to an investigation of the matter, then the costs may be left to be borne by those who have incurred them. Where the first exception applies the unsuccessful party maybe awarded his costs out of the Estate. Where the second exception applies the appropriate order is likely to be to each side will be left to bear its own costs.

The Claimant relied on the second exception and argued that investigation into the circumstances surrounding the execution of the Will was required on the grounds that:

1.            The Testator was suffering from Alzheimer’s at the time he made his Will and there was real doubt about his capacity.

2.            Both the experts called in relation to the issue of capacity said the case was borderline

3.            There was little discussion between the Testator and his solicitor who did not apply the golden rule of seeking a medical opinion of the capacity.

The Defendants resisted the Application and submitted that the Claimant had engaged in adversarial conduct. The Judge considered the Claimant’s conduct was not sufficient to justify an Order for costs against the Claimant. He held each party should bear their own costs for the Will challenge and that the Claimant pay the Defendant’s costs of the proprietary estoppel claim.

Points arising:

  • The exceptions to the “winner takes all” rule in contentious probate survives the CPR
  • The circumstances relating to the conduct of the parties will be carefully considered by the Court
  • Part 36 offers must be carefully drafted and follow the wording in the rules.

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