England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BIRMINGHAM DISTRICT REGISTRY

		Royal Courts of Justice Strand, London, WC2A 2LL
		21/10/2009

The Hon Mr Justice Lewison :

Introduction

1. In my judgment of 31 July 2009 I pronounced in favour of the will of Robert Perrins. As agreed with counsel at the end of the trial I adjourned all further applications and directed that they should be dealt with in writing. This is my ruling on the questions of:

i) Costs and

ii) Permission to appeal.

2. I assume that any reader of this ruling is familiar with my substantive judgment. The sole asset of value in the estate is Robert's leasehold interest in a bungalow. At the time of trial it was worth £195,000, although after deducting the amount secured by a mortgage its net value is of the order of £160,000. David's costs (the Claimant) in October 2007 were of the order of £63,000 and must have increased substantially since then. The executors' costs (the First and Second Defendants) stand at £40,000 and Anne's costs (the Third Defendant) stand at £80,000. As is therefore apparent the aggregate costs exceed the value of the estate.
3. It is common ground that CPR 44.3 applies to an award of costs in contested probate proceedings. Under CPR 44.3 (2) the general rule is that the unsuccessful party should pay the successful party's costs; but the court may make a different order. In the present case David was the unsuccessful party. So the general rule is that he should pay the successful party's costs. In Kostic v Chaplin [2007] 2 Costs LR 271 Henderson J held (§ 6) that, even in a contested probate case, a positive case must be made out for departing from the general rule that costs should follow the event. I respectfully agree.

David's entitlement to and liability for costs

4. Mr Quirke, for David, submits that a positive case has been made out, not merely for exonerating him from having to pay any one else's costs, but for having his own costs paid. In summary they are:

i) The litigation was induced by uncertainty over the testamentary capacity of the testator, and his knowledge and approval of the contents of his will at the date on which it was executed; and that the real cause of these uncertainties was the failure of Mr Ferguson (the legal executive who took instructions for the will and supervised its execution) to follow "the golden rule" (i.e. to have consulted a medical practitioner about the testator's mental capacity);

ii) The uncertainty was compounded by deficiencies in the statement provided by Mr Ferguson in accordance with the practice recommended by the Court of Appeal in Larke v Negus [2000] WTLR 1033;

iii) In one respect Mr Ferguson gave untruthful evidence and in other respects exaggerated;

iv) Anne failed to give truthful or helpful evidence about Robert's mental capacity; and herself contributed to the uncertainty over the validity of the will;

v) In any event David succeeded on the issue whether Robert had testamentary capacity at the date of execution of the will. I held that he did not, and that the will was only saved from invalidity by the application of the principle in Parker v Felgate (1883) 8 PD 171.

5. Mr Quirke submits that the first three points should lead to an order that the executors should pay David's costs. The fourth point should lead (in combination with the first three) that David's costs should be paid out of the estate (effectively by Anne).
6. I begin by considering whether, apart from certain offers upon which the Defendants rely, any or all of these points should displace the general rule. Under CPR 44. 3 (4) the court must have regard to all the circumstances, including the conduct of all the parties and whether a party has succeeded on part of his case, even if he has not been wholly successful. CPR 44.3 (5) provides that the conduct of the parties includes whether it was reasonable to raise, pursue or contest a particular allegation or issue; the manner in which a party has pursued or defended his case or a particular allegation or issue and whether a claimant who has succeeded in his claim has exaggerated his claim.
7. In addition, in contested probate cases there are two recognised exceptions to the general rule that an unsuccessful party should pay the successful party's costs. Sir Gorell Barnes P described them in Spiers v English [1907] P 122, 123 as follows:

"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."

8. In Kostic v Chaplin Henderson J considered in detail the scope of these two principles. The points of significance, for present purposes, are:

i) The first exception is capable of applying in a case where the problem is the testator's testamentary capacity (§ 9);

ii) However, the trend of the more recent cases has been to narrow rather than to expand the circumstances in which the first exception is engaged (§ 21).

9. Neither of these established exceptions goes so far as to entitle an unsuccessful challenger of a will to have his costs paid by the executors personally.
10. Point i). The "golden rule" is a rule of solicitors' good practice; not a rule of law. Even where the "golden rule" has been obeyed, a will may still be successfully challenged on the ground of testamentary incapacity. Moreover, the medical evidence in the present case showed that none of the medical practitioners who actually treated Robert in his lifetime was willing to assess his mental capacity. In addition, Dr Gross (David's expert) was very sceptical of a GP's ability to assess the mental capacity of a person, like Robert, who was suffering from severe multiple sclerosis. So following the "golden rule" would not necessarily have avoided a challenge. Finally, even if Mr Ferguson had followed the "golden rule" the principle in Parker v Felgate would have remained applicable. Thus I do not consider that Mr Ferguson's failure to follow the "golden rule" can be said to have caused the litigation.
11. Point ii). The alleged defect in the Larke v Negus statement is that it did not describe any reading of the will to Robert when it came to be executed. I held, however, that the principle in Parker v Felgate meant that it was not necessary for the will to be read at that time. In addition I am entirely unpersuaded that even if the Larke v Negus statement had described the execution of the will in the terms in which I found that it took place, the litigation would thereby have been avoided.
12. Point iii). Although I did not accept Mr Ferguson's evidence in its entirety, I accepted the thrust of it. The respects in which I did not accept his evidence had no impact on the result. In addition, the mere fact that a witness exaggerates his evidence, or even tells lies, is no ground for depriving a successful party of his costs (let alone ordering costs to be paid to the unsuccessful party) unless the successful party has colluded in the lies: Mehnaz v Sabre Insurance Co Ltd [2007] EWCA Civ 1525 (§§ 10, 11).
13. What, in my judgment, really caused the litigation was David's refusal to understand or acknowledge the character or depth of the relationship between his father and Anne. The family disapproved of Robert's choice of Anne and were suspicious of her motives. Robert was aware of their disapproval, yet stuck to his guns. It was the fact that Robert left his only valuable asset to Anne that was, in my judgment, the trigger for the litigation. The cause was not, therefore, either Robert's mental capacity or Mr Ferguson's conduct.
14. I do not therefore consider that individually or cumulatively these three points entitle David to have his costs paid by the executors. In addition, the First and Second Defendants were sued as executors, not as solicitors. The fact that they happened to be solicitors is coincidental. It would be wrong in principle to confuse their two roles, and in effect to make them vicariously in a claim for negligence which has not been pleaded. Nor do I consider that individually or cumulatively these three points bring the case within the first of the established exceptions, which, if applicable, would have enabled David to have his costs paid out of the estate (but not even then to have them paid by the executors personally).
15. Point iv). Anne's evidence was of peripheral importance in determining Robert's mental capacity. The primary evidence was the medical and other records. I do not consider that Anne can be said to have been the cause of the litigation. Even when added to the first three points, the first of the established exceptions is not engaged.
16. Point v). It is true that time was taken at trial in deciding Robert's testamentary capacity at the date of execution of the will; and it is also true that, contrary to Anne's case, I decided that he did not have such capacity. It is also possible that the trial would have been a little shorter if that had not been in issue, although it would still have been necessary to investigate Robert's mental capacity in order to decide whether the principle in Parker v Felgate applied. But at best this point would only result in a reduction of the costs that David would otherwise have been ordered to pay as the unsuccessful party who nevertheless succeeded on one issue.
17. More cogent, to my mind, is the argument that the second established exception applies. This, it will be recalled, 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 (i.e. there should be no order for costs as between the contending parties). Although Henderson J noted in Kostic v Chaplin that recent cases had narrowed the scope of the first established exception, he made no similar remark in relation to the second. There is, I think, still a public interest that where reasonable suspicions are raised about the validity of wills they should be proved in solemn form. Mr Quirke submits that David had to come to court "if the evidential fog and suspicion surrounding the state of the testator's mind and health and his execution of the will were to be lifted". The evidential fog cannot but recall the opening of Bleak House; just as the exhaustion of the estate in legal costs cannot but recall its ending. Nevertheless, despite its colourful language, there is a real point here. In my judgment the circumstances of Robert's disability coupled with the information given to David did raise a reasonable suspicion about the validity of the will. In my judgment, therefore, there was justification for an investigation of the matter. All other things being equal, this would have led me to order that costs should lie where they fall as between David and the other parties.
18. However, there is still the question of the offers to take into account, as I am required to do by CPR 44.3 (4) (c). On 8 August 2005 Anne offered to settle both the probate action and David's claim under the Inheritance (Family and Dependants) Act 1975. The latter claim was not before me. The offer of settlement was a payment of £10,000 by Anne with no order for costs. The costs incurred by the estate and by Anne at that time stood at £12,000; and the estate's solicitors predicted (rightly as it turned out) that if the dispute went to trial it was likely that the costs of all the parties could exceed the sums available in the estate. Although I cannot of course form a concluded view about David's Inheritance Act claim the fact is that he is a healthy young man who, at least at the trial date, was in employment. Successful claims under the Act in those circumstances are rare. Although I have said that there is, in my judgment, a public interest that where reasonable suspicions about the validity of a will are raised, it should be proved in solemn form, that public interest cannot justify the potential exhaustion of the estate in legal costs. Even in the case of a contested probate action there is also a public interest in encouraging sensible settlements. In my judgment, the making of that offer was a reasonable offer, and one which David ought to have accepted. At that time Anne was not a party to the litigation. She became a party on her own application (opposed by David) on 28 November 2005.
19. The offer was not, however, in a form that complied with CPR Part 36 since it contained its own terms about costs. I do not, therefore, consider that it would be right for an offer in that form to attract the costs consequences that would attach to an offer which did comply with Part 36. However, in the light of that offer, I consider that David should in principle pay Anne's costs on the standard basis from the date of her joinder as a party.
20. David has however been in receipt of funding from the Legal Services Commission. So any costs order made against him is likely to be of academic interest only. But I am not in a position to determine how much it is reasonable for him to pay. That will have to be decided by a costs judge. The only finding of fact that I make which may be relevant to that determination is that in my judgment it was unreasonable for David to have refused the offer made to him on 8 August 2005.

The Executors' costs

21. Anne accepts that the executors should have their costs of defending their claim out of the estate, except to the extent that they were unreasonably incurred. The executors for their part accept that they are not entitled to recover costs that they have unreasonably incurred.
22. The only issue concerns the costs incurred by the executors in attending the date originally fixed for the trial of the action on 15 September 2008. On that day David applied for permission to adduce and rely upon Dr Gross' expert report. Anne was also represented on that day, by a separate legal team who had been recently instructed. The Defendants opposed the application on the ground that they would be unable to deal with it without an adjournment. David accepted that an adjournment would be needed. Counsel for David accepted that in principle David's solicitors would be personally liable for the costs thrown away by the adjournment. HH Judge Purle QC ordered that the report be admitted; and that the trial be adjourned and that David's solicitors should pay the costs thrown away. Thereafter the executors took no active part in the litigation. HH Judge Purle QC observed that it was not apparent to him why both the executors and Anne were separately represented. Accordingly his order read:

"Without prejudice to any future submission by the Claimant that the costs of one or more of the Defendants were not properly incurred, that the solicitors to the Claimant should pay the costs of and occasioned by today's adjournment in any event and that they pay to the solicitors to Mrs Dooney the sum of £5,000 on account of those costs."

23. In their letter of 21 October 2008 the executors' solicitors explained in detail how it came about that both they and Anne were separately represented on 15 September. In essence the point is that Anne had been acting in person until about a week before the original trial date. Because of the holiday period counsel had to be briefed and prepare a skeleton argument. Counsel was briefed on 22 August and prepared a skeleton argument. It was not until after that had been done, on about 8 September 2008, that Anne told the executors that she had instructed her own legal team. Accordingly the only additional costs incurred in actually attending trial were the attendance costs of the solicitor in attendance on counsel (charged at £175 plus VAT per hour). Counsel's attendance was already covered by the brief fee which had been incurred on 22 August (at the latest). On that basis, the executors say that they acted reasonably. None of this is expressly challenged by Mr Quirke in his submissions. In my judgment the executors did act reasonably and consequently HH Judge Purle QC's order that David's solicitors should pay the costs thrown away by the adjournment should stand.
24. It follows from this that, to the extent that the executors are unable to recover their costs thrown away from David's solicitors, they are entitled to recover them out of the estate.

Permission to appeal

25. David applies for permission to appeal. The draft grounds of appeal allege numerous errors both of fact and law in my judgment. The only point of principle is that the decision in Parker v Felgate does not bind the Court of Appeal and should no longer be applied in the light of the Mental Capacity Act 2005 (which was not in force at the time of the events in issue at trial). Although it is true that Parker v Felgate does not technically bind the Court of Appeal, it has stood without challenge for over 100 years; has been approved by the Privy Council; has been applied in recent cases and is cited without criticism in the standard textbooks. It must be for the Court of Appeal themselves to decide whether this is a proper case for a challenge to that long-standing principle to be overturned.
26. So far as the other alleged errors are concerned, I consider that I was applying established principles to findings of fact. In those circumstances it must again be for the Court of Appeal to decide whether it will entertain an appeal (compare Rowlands v Hodson [2009] EWCA Civ 1025 (§ 5)).
27. I invite counsel to agree a form of order to give effect to my judgment and this ruling.