England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand London WC2A 2LL
		26 April 2006

1. THE DEPUTY JUDGE: It now falls to me to deal with the costs of this probate action, in which I gave judgment yesterday, admitting the last will of Mr Cross to probate in solemn form.
2. The claimants, who have been successful in this action, ask for their costs to be paid by the defendants. The defendants, on the other hand, ask for their costs out of the estate on the basis that there was a case which merited investigation.
3. The general principle in probate actions, as in other actions, is that costs follow the event. There is a useful extract from Williams Mortimer and Sunnucks which has been put before me, the 2000 edition, which states that at paragraph 40-01, and it is of course provided in the CPR in rule 44.3(2)(a), which applies to probate actions as well as to other actions. On the other hand, 44.3(2)(b) provides that the court may make a different order and 44.3(4) provides that:

"In deciding what order (if any) to make about costs, the court must have regard to all the circumstances, including --

"(a) the conduct of all the parties."

4. It was well established before the introduction of the CPR that there were a number of circumstances in probate actions in particular in which the court would depart from the general rule, but it remains the case that the question is always whether there is sufficient reason for departing from the general rule. One reason is provided for by the rules themselves, that is in CPR 57.7(5), but I need not consider that further as that only applies where a notice is given with the Defence, which did not take place in this case.
5. Otherwise Mr Sartin appearing for the defendants submits, and I accept, that two general principles can be derived from the pre-CPR authorities, which are conveniently summarised in the judgment of the President in Spiers v English [1907] P 122 at 123 where he said this:

"In deciding questions of costs one has to go back to the principles which govern cases of this kind. One of those principles is that if a person who makes a will or persons who are interested in the residue have been really the cause of the litigation a case is made out for costs to come out of the estate. Another principle 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."

6. In a case called Carapeto v Good [2002] EWHC 640 reported at [2002] WTLR 1305, counsel conceded before Rimer J that these principles still applied in the post-CPR world and Rimer J did not disagree with that, apparently taking the view that such principles could be taken account of when looking at the conduct of the parties for the purpose of CPR 44.3.
7. I will consider first whether the defendants have made out a case for costs out of the estate. I was referred by Mr Sartin to the decision of the Court of Appeal in Larke v Nugus, decided as long ago as 1979 but only apparently reported in [2000] WTLR 1033, as an example of a case where the costs of a defendant who had unsuccessfully put in issue the question of knowledge and approval by the testator of a will were nevertheless left to come out of the estate or, to be more accurate, would have been left to come out of the estate were it not for the fact that there was also an unsuccessful plea of undue influence and the trial judge, Browne-Wilkinson J as he then was, in fact made no order for costs.
8. I go back to the principles enunciated by the President in which costs can properly be ordered to come out of the estate: "if a person who makes a will or persons who are interested in the residue have been really the cause of the litigation a case is made out." It is not suggested here that the testator himself was in any sense the cause of the litigation. In order to make out a case for costs to come out of the estate it is in the circumstances of this case necessary to show that the claimants, being those who are interested under the will which they propound, were really responsible for the litigation. I will say straight away that I do not think that this is made out. Before the litigation started the claimants, through their solicitors, had provided the defendants, through their solicitors, with a copy of the will in Dutch and an English translation and a statement by Mr Koch, the notary, whose statement, which I will have to consider in more detail below, said that it was made on instructions and that the testator understood it and signed it.
9. I do not think the claimants in the circumstances in any sense were responsible for causing the litigation. The facts are very far removed from those of Larke v Nugus which was an exceptional case. Not only was the signature of the testatrix, an elderly woman, distinctly wobbly, the will contained a gift, as it was put by the trial judge, "in favour of persons on whom the testatrix is dependent", and the executor, who was a solicitor who had been responsible for drawing up the will, had taken the bizarre view that the defendants were not entitled to a copy of it or to any explanation of the circumstances in which it had been drawn up.
10. I am conscious of the fact that to order the costs to come out of the estate in this case would in practice be to order the claimants to pay not only for their own costs of the litigation but also the defendants' costs of the litigation in circumstances in which they have been entirely successful. I do not think this would be fair or appropriate or in accordance with the principles. The estate is not a particularly large one. I am told, although there is no formal statements of costs before me, that the costs of both parties together would amount to about half the net estate.
11. It seems to me the more difficult question is whether this is a case for costs to be left to lie where they fall. There are two preliminary points that I can get out of the way quite quickly. Firstly, I accept that the defendants' plea in paragraph 1 of their Defence that the will propounded by the claimants was not the true last will of the deceased, was not intended to be, and should not have been read as, a positive plea that there was some later will, a contention which should properly have been pleaded by alleging that the will had been revoked by a later will. I accept that all it was intended to do was to put in issue the validity of the will propounded by the claimants and not to advance any positive case. Secondly, I accept that the pleas which were maintained in the Defence, which were lack of due execution and want of knowledge and approval, did not amount to the running of positive cases. What they did and what they were intended to do was to put the claimants to strict proof both of knowledge and approval and due execution.
12. Nevertheless, it seems to me that the question that I have to decide is whether the circumstances at the time at which the litigation was brought were such as to make it reasonable for the defendants to require those two matters, due execution and want of knowledge and approval, to be proved formally by the claimants with all the inevitable expense that that entailed.
13. Mr Sartin relied in his submissions, written and oral, before me on a number of matters which he said raised sufficient suspicion entitling the defendants to continue to pursue the opposition to the will. Chief among those, and the only one in fact pleaded in the Defence, was that the testator did not speak or understand Dutch, albeit that the will was drawn in the Dutch language and there was no written English translation, despite the fact that there had been a suggestion in correspondence before the litigation started that there had been such a translation. He also relied on the fact that it was curious that the practical effect of the will was that if Mr Cross pre-deceased his wife his natural children, the defendants, would apparently take something under the will, whereas on his surviving his wife, as he did, they were to get nothing and the entire estate would pass to the claimants and stepchildren.
14. I bear in mind that, as is usual in cases of this type, the defendants themselves had no personal knowledge of the circumstances in which the will had been drawn up and were therefore entirely dependent upon what they were told. I accept that when they first came into the picture these factors, in particular their understanding (which as it turned out was correct) that their father did not have sufficient understanding of Dutch to have executed a Dutch will (ie to have read it and understood it in Dutch) reasonably entitled the defendants to press for an explanation as to how the claimants said that the testator really did give instructions for the will in this form and understand what he was doing.
15. So at the time of the letter before action, which the defendants' solicitors wrote on 3 December 2004, it seems to me they were perfectly entitled to make the point which they did, that:

"The burden of proving that the alleged will is formally valid and that Mr Cross knew and approved of its contents will fall on your clients [the claimants]... As far as we are aware, there is no evidence that Mr Cross was shown an English transaction (sic) of the alleged will or that it was explained to him in English.

"If the alleged will is invalid, Mr Cross will have died intestate."

16. Nevertheless, the response to that on 13 December 2004 was that the claimants had spoken to the notary who dealt with taking instructions on and executing the late Mr Cross' will and that he was currently preparing an affidavit which would be forwarded in due course. That did not in the event come until 7 February 2005 and when it came it was in a fairly short form of a statement from Mr Koch signed on 31 January 2005. Since much of the argument turned on this document I should recite its provisions. He said that he was a civil law notary residing at the Hague. He stated that:

"The instructions for the will of Mr Arthur Frederick Cross were given to me by Mr AF Cross in person. The exact date of instructions is not known to me;

"The instructions for the will were given in English by Mr AF Cross;

"There was no official translation accompanying the will of Mr AF Cross;

"A copy of the signed will of Mr AF Cross is attached to this statement [as I have said, the defendants had already had a copy of the will and a translation of it];

"The instructions were clearly given to me by Mr AF Cross, he understood the contents of the will and he signed the will of his own free will;

"The will was signed by Mr AF Cross and executed in accordance with Dutch law;

"The Dutch will was explained to Mr AF Cross word for word in English."

17. That statement was provided to the defendants, as I have said, before proceedings were issued, the claim form being issued more than two months later on 21 April 2005. The real question, it seems to me, is whether, in the light of that evidence provided by Mr Koch, that should have been enough to satisfy the defendants or whether it was reasonable for them to continue on the question of want of knowledge and approval until they had received a more detailed statement, which did not come until shortly before trial, Mr Koch making a much more detailed statement on 9 March 2006, which was received by the defendants on 28 March 2006.
18. Mr Sartin said that it still left a number of matters unanswered. It did not explain precisely what instructions were given. It did not explain whether there were any notes available and the like. He also complains that, despite the defendants' solicitors inviting them to do so, the claimants' solicitors declined to co-operate in sending a joint detailed letter to Mr Koch asking many more detailed questions and if that had been done and answers had been given the matter might have been cleared up a great deal earlier.
19. In my judgment, Mr Koch's statement did contain a clear and unequivocal statement that the testator did know and approve the contents of the will. It was a statement given by a professional notary and I accept Mr D'Cruz's submission that this is an aspect of the matter which in the circumstances does carry significant weight. The whole purpose of formal documents, such as wills, being drawn up and notarised by a notary is to ensure that transactions are carried out properly and are, so far as may be, unimpeachable. For the defendants to continue to maintain a plea of want of knowledge and approval in the light of Mr Koch's statement, short though it is, was, in my judgment, in effect to suggest that there were grounds on which his evidence could properly be rejected and that it was necessary to investigate the matter further before that could be regarded as something that was cleared up.
20. I, however, can see no reasonable ground for thinking that there would be any basis for launching a credible attack on what Mr Koch said in unequivocal terms. Unless that could be done, the plea was bound to fail. As I have said, the only pleaded basis for maintaining the plea of want of knowledge and approval in the Defence when it was served was the deceased's inability to speak Dutch. That was pleaded as particulars to the plea of want of knowledge and approval in paragraph 3 of the Defence in these terms:

"The alleged will was drawn up in Dutch. The Deceased did not read, speak or understand Dutch. The suspicion of the court will accordingly be aroused. The Claimants have failed to provide any or any satisfactory evidence that the Deceased knew and approved of the contents of the alleged will."

21. I find the statement that the claimants had failed to provide any evidence that the deceased knew and approved of the contents of the alleged will impossible to reconcile with the terms of Mr Koch's statement that not only were instructions given in English in person and clearly, but that he understood the contents of the will and the will was explained to him in English. In effect, therefore, I agree with Mr D'Cruz that for the defendants to maintain that plea after receipt of Mr Koch's statement was something that, although they were of course entitled to do, they did at their own risk as to costs.
22. The other pleaded Defence, as I have said, was lack of due execution. The claimants' initial stance was that the will was executed in accordance with Dutch law. There was some technical evidence about that which I did not in the event have to resolve, but by the time of the reply the claimants had plainly said that they were relying on due execution in accordance with English law in the alternative.
23. How did the matter stand at the outset of the proceedings? Mr Koch's statement confirmed on its face that Mr Cross signed the will and intended to give effect to it. The will itself indicates that it was signed in the presence of at least two witnesses, in fact, if one counts Mr Koch himself, three witnesses, who each then signed it. Mr Sartin suggested that there was still a question mark over due execution in English law because the will did not make it clear on its face that the two witnesses signed the will in the presence of the testator, as required by section 9(d) of the Wills Act 1837, but the will (in its English translation) contains an endorsement in this form:

"After the sum and substance of this deed had been stated to the person appearing/testator, this deed was signed, immediately after it had been read out in its entirety, by the person appearing/testator, by the witnesses and by me, civil law notary."

24. I read that as a clear statement that it was signed immediately by all four parties at the same time and that there was no reasonable ground for thinking that there was any technical deficiency so far as execution in accordance with English law is concerned. In effect, therefore, on this aspect of the case the question again comes down to whether there was any reason to disbelieve what was plainly stated on the face of the will. I do not think there was. It is of course the case that a defendant in this situation can insist on a will being proved in solemn form and the onus of proof of due execution lies throughout on the person propounding the will. But unless there is some reason to think that what the will says on its face is open to real doubt, I think this is something that the defendants choose to do at their own risk as to costs.
25. In my judgment, therefore, this is not a case where after service of Mr Koch's statement there remained such suspicions over the validity of the will as to enable the defendants to say that they were reasonably entitled to oppose the will and put those propounding the will, in this case the claimants, to the expense of doing so formally. I do not accept, as was suggested at one stage by Mr D'Cruz, that their stance of waiting until they had seen Mr Koch's more detailed statement and the witness statement of the attesting witness Mrs Wissen-Schmitz was in some sense a sham or a smokescreen. I accept that the defendants genuinely wished to wait until they had seen that evidence and, as I have said, they were perfectly entitled to insist on that. But I do not accept that they had reasonable grounds for doubting that the will had been duly executed such as to avoid their prima facie liability for the costs of an action in which they have failed.
26. On the other hand, I think there is some validity in the criticisms made by Mr Sartin that the claimants on occasion were in some respects not as co-operative as they might have been and took a fairly firm stance that they had done enough and did not need to do any more to dispel the suspicions that the defendants had. I cite three examples: firstly, the claimants' solicitors declined, as I have already mentioned, to send the joint letter to Mr Koch, which the defendants' solicitors invited them to, preferring instead to rely on the very short statement from him which I have referred to. I have not understood why they adopted this frankly adversarial position. Had that joint letter been sent as Mishcon de Reya asked, it is quite possible, and even probable, that a much fuller account would have been forthcoming from Mr Koch at an earlier stage and some of the subsequent costs might well have been saved.
27. Secondly, the claimants were reluctant, despite being asked on more than one occasion, to confirm in plain terms that Mr Cross' grasp of Dutch was not good enough to have read and understood the will in Dutch. This was again unnecessarily obstructive, given that Mr Koch in the event confirmed that that was the position and had already confirmed in his statement of January 2005 that the will had been explained to Mr Cross in English.
28. Finally, despite due execution being plainly pleaded in the Defence, the claimants did not regard it as incumbent upon them to make any attempt to trace the attesting witnesses and see what they had to say until very shortly before the trial. I accept that it had not been specifically raised in correspondence until March of this year, but it had been clearly pleaded.
29. In Larke v Nugus at page 1044 in the judgment of Brandon LJ, he says this in dealing with a particular recommendation of the Law Society:

"Nevertheless, it is necessary to consider, not only the recommendation itself, but the principle upon which the recommendation is based, and the duty of a solicitor when faced with matters of this kind. The recommendation is no doubt of importance, but even if it had not been made certain principles would apply to the matter, and in my judgement the principle which applied is that, when there is litigation about a will, every effort should be made by the executors to avoid costly litigation if that can be avoided and, when there are circumstances of suspicion attending the execution and making a will, one of the measures which can be taken is to give full and frank information to those who might have an interest in attacking the will as to how the will came to be made."

30. The claimants, of course, in this case were not in the formal position of executors, there being no appointment of executors under Dutch law, but the claimants were the ones who were propounding the will and it would, in my judgment, have been better if they had adopted a more co-operative attitude to the litigation from the outset and had co-operated with the defendants in obtaining a much fuller statement from Mr Koch earlier if they had co-operated by offering to trace the attesting witnesses. I accept that the major cause of the costs which have been run up is the free choice of the defendants to put the claimants to proof, but I think in the circumstances that the claimants bear some responsibility for the costs that have been incurred.
31. This is, as I have said, not a large estate. Litigation, although not conducted on a lavish scale, is necessarily costly and it is a matter of regret that the costs on both sides amount, as I have said, to about half the value of the estate. I also bear in mind the point made by Mr Sartin about the defendants' offer to mediate, an offer which was somewhat brusquely rejected by the claimants on the grounds that their clients were in Holland and that the defendants had not made a serious offer. Of course it is the case that a successful party is not to be penalised necessarily for failing to mediate, but in a case of this type I think it would have been better if their invitation had been explored a bit further.
32. In all the circumstances of the case I will make an order that the defendants pay 75 per cent of the claimants' costs of the action. I will exempt from that the costs of applying for an administrator pendente lite, which was for the benefit of all parties, and the costs that are strictly limited to that application should, in my judgment, come out of the estate.
33. That then leads to the next aspect of the matter, which is that on 7 February 2006 the claimants made an offer expressly pursuant to CPR Part 36. That offer was in terms that if the defendants agreed to withdraw the matter at this stage the claimants would not pursue the defendants for costs and each party would be responsible for their costs. The effect of the decision I have already made is that rule 36.21 of the CPR is engaged, which states:

"This rule applies where at trial --

"(b) the judgment against a defendant is more advantageous to the claimant, than the proposals contained in a claimant's part 36 offer."

34. Since I have decided that the claimants should receive 75 per cent of their costs of the action, it seems to me that the judgment against the defendant is more advantageous to the claimants and rule 36.21 applies.
35. Under rule 36.21(3):

"The court may also order that the claimant is entitled to --

"(a) his costs on the basis from the latest date when the defendant could have accepted the offer without needing the permission of the court [that date in this case being 21 days from the date it is received, and I think agreed to be, 28 February 2006], and.

"(b) interest on those costs at a rate not exceeding 10 per cent above base rate."

36. Then rule 36.21(4) provides in fairly prescriptive fashion:

"Where this rule applies, the court will make the orders referred to in paragraphs (2) and (3) unless it considers it unjust to do so."

37. Rule 36.21(5) then requires the court to:

"Take into account all the circumstances of the case including --

"(c) the information available to the parties at the time when the Part 36 offer ... was made; and

"(d) the conduct of the parties with regard to the giving or refusing to give information for the purposes of enabling the offer or payment into court to be made or evaluated."

38. As I understood it, it was really accepted by Mr Sartin that if it was unreasonable for the defendants to continue their opposition to the will in the light of Mr Koch's statement of 31 January 2005, then there is no real answer to the claim for indemnity costs after the receipt of the Part 36 offer, which is a short but no doubt financially quite significant period. He did say that matters were different in relation to a probate action and to some extent I accept that. What is different about a probate action is that if there are circumstances where the court should really investigate it, that can be a reason for requiring the matter to go forward to trial to have the case tried out, as it is put in Larke v Nugus. But that point really stands or falls with the view I have already expressed, that although the defendants were perfectly entitled to put the claimants to proof, as they did, it was something that they did after the receipt of Mr Koch's statement at their own risk as to costs where there were no substantial grounds for continuing to suspect that the will had not been properly approved and had not been properly executed.
39. I also bear in mind that all parties, the claimants and defendants, are adults and, although this is in form and in fact a probate action, ultimately this is simply a dispute as to who is entitled to a sum of money. It was always open to the defendants, even in a probate action, to settle the claim and the CPR, through the mechanism of Part 36 among other mechanisms, forms a very strong encouragement to litigants to form a realistic view of their prospects at every stage of an action.
40. I will therefore, pursuant to rule 36.21(3), order that the defendants pay the claimants' costs on an indemnity basis from 28 February 2006, that being 100 per cent of the costs, and interest on those costs at 10 per cent above base rate. I recognise that is quite a significant financial disincentive but it is intended by the rules to be.
41. There remains one outstanding point which is in relation to the separate costs of instructing a Dutch law expert. I do not think it is necessary to make any special order in relation to Dutch law. It is true that the claimants repeatedly asked the defendants to confirm that Dutch law was irrelevant, but this was really on the basis that there could be no dispute that the will was formally valid under English law. The defendants were at that stage reserving their position on due execution under English law. The claimants never said in black and white terms that they were prepared to drop the question of Dutch validity and rely solely on English validity and have the matter tried on that basis, even if the defendants did not accept that the will was formally valid under English law. Rather, the claimants' position was that if English law validity was not disputed Dutch law became irrelevant, which is a slightly different point.
42. It only remains to me to thank both counsel for their comprehensive and lucid submissions in a case which I have not found entirely easy. Thank you both very much.