England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
PROPERTY TRUSTS AND PROBATE LIST (Ch)
IN THE ESTATE OF JAMES MURRAY MCKAY DECEASED

		Royal Courts of Justice, Rolls Building Fetter Lane, London, EC4A 1NL
		15 December 2023

This Judgment was handed down remotely at 10am on Friday 15 December 2023. A copy of the Judgment was sent by email to the legal representatives of the Claimant and the Ninth Defendant and a copy sent to The National Archives

MASTER TEVERSON :

1. On 22 March 2023 I handed down my reserved judgment on the underlying claim with neutral citation number [2023] EWHC 642 (Ch) ("the judgment") following a one day trial on 18 January 2023. On 6 April 2023 it was ordered by consent as between the Claimant and the First to Eighth Defendants that GCWA Solicitors of 47/49 North Road, Lancing, West Sussex BN15 9AS ("GWCA") be joined as Ninth Defendant pursuant to CPR 46.2 for the purposes of costs only. A hearing was held on 14 November 2023 to determine the Claimant's application for a non-party costs order against GWCA. This is my reserved judgment following that hearing. It needs to be read in conjunction with the judgment for the full background and outcome.
2. The Claimant's application for a costs order against GWCA arises out of his claim for rectification of the last will and testament dated 3 August 2016 ("the will") of his late step-father James Murray McKay deceased ("the deceased") or, in the alternative, for a declaration as to the true construction of clause 11 of the will for the purposes of the Claimant's distribution of the deceased's estate in his capacity as executor of the deceased's estate.
3. The will was drafted by BBMW Limited of 4/5 Aldsworth Parade, Goring-by-Sea, Worthing, West Sussex BN12 4UA ("BBMW"). With effect from 7 November 2022 GWCA merged with BBMW. GWCA is the successor practice to BBMW for the purpose of SRA Indemnity Insurance Rules.
4. The will provided in clauses 4.1 to 4.3 for gifts to family members ("the family members"): £50,000 was given to each of the Claimant, Steven Pead, and his wife Sally Pead, the Fourth Defendant, (clause 4.1); £10,000 was given to his step great granddaughter, Leah Grace Jones, the Fifth Defendant, (clause 4.2); £20,000 each to his step grandson, Adam Pead, the Sixth Defendant, to his step-granddaughter, Lisa Jones, whose estate is the Seventh Defendant, and to his step-grandson, Josh Pead, the Eighth Defendant, (clause 4.3).
5. By clauses 4.4 to 4.8 the deceased made gifts to charities who have been represented in these proceedings by Withers LLP ("the charities"); £2,000 to Macmillan Cancer Support for the benefit of Macmillan Nurses at Kingston Hospital, London (clause 4.4); £2,000 to Macmillan Cancer Support for the benefit of Macmillan Nurses at Worthing Hospital, West Sussex (clause 4.5); £6,000 to Macmillan Cancer Support for the benefit of Macmillan Nurses' work generally (clause 4.6); £5,000 to Cancer Research UK (clause 4.7); and £12,000 to Prostate Cancer UK (clause 4.8).
6. By clause 8 the deceased gave his property 26 Sea Lane Gardens, Ferring, Worthing BN12 5EQ ("the Property") as follows; a 25% share each to the Claimant and to the Claimant's late brother, Keith Pead, who survived the deceased, (clauses 8.1 and 8.2); and 50% to accrue and be added to the deceased's residuary estate (clause 8.3).
7. By clause 10.4 the deceased directed his Trustees to deal with the remainder ("my Residuary Estate") as he now directed. By clause 11 the deceased directed:-

"Subject as above my Trustees shall hold my Residuary Estate upon trust for such of the beneficiaries named in Clauses 4.1 to 4.8 inclusive absolutely as shall survive me and in accordance with the provisions relating to each gift."

8. The Claimant's primary claim was for rectification of clause 11 of the will so as to provide that the deceased's residuary estate should be held for the family members referred to in clauses 4.1 to 4.3 in equal or proportionate shares. In the event that his rectification claim was unsuccessful, the Claimant asked for directions as to the construction of clause 11 and the proper distribution of the deceased's estate.
9. The Claimant's rectification failed. In paragraph 70 of the judgment I stated:-

"Looking at the state of the evidence as a whole and all the circumstances I am not satisfied on the balance of probabilities or with a sufficient degree of confidence to order rectification that the deceased intended that his residuary estate be divided only among the family members. Mrs Hill's manuscript annotation on the draft will records that there was to be a division between all those mentioned in Clauses 4.1 to 4.8."

10. In paragraph 71 I stated my conclusion on the construction issue as follows:-

"I am however satisfied on the balance of probabilities that it was not the deceased's intention that his residuary estate should be divided between those mentioned in clauses 4.1 to 4.8 in equal shares."

11. I concluded instead that clause 11 should be construed as providing for the residuary estate to be divided between each beneficiary named in clauses 4.1 to 4.8 pro rata according to the proportion that that beneficiary's legacy bears to the total gifts made under clause 4. It was common ground before me at trial that a clerical error had been made by BBMW in not recording the deceased's intention to increase the legacy under clause 4.7 to Cancer Research UK from £5,000 to £6,000. The effect of my judgment was that the Claimant's rectification claim by which he sought to establish that the charities were not intended by the deceased to have any share of residue failed but the charities' share of residue was reduced from a maximum of 62.5% (if there was to be equal division per sub-clause) to 13.5%.
12. By letter dated 8 November 2023 Withers LLP informed the court that the parties have agreed:-

(i)the charities' costs in relation to construction (subject to assessment if not agreed) will be paid by the will drafting firm, GWCA's insurers;

(ii)the charities' costs in relation to rectification (again subject to assessment if not agreed) will be paid either by the insurers or by Mr Pead and his family (his family having agreed to the same);

(iii)the charities' share of the deceased's estate will be 'ringfenced' such that they will not bear any part of any other parties' costs of either element of the dispute.

13. This agreement relating to the charities' costs means that I do not have to determine what order for costs to make as between the Claimant and the family members on the one hand and the charities on the other. Nor do I need to decide whether the Claimant or the charities was the successful party for the purposes of CPR 44.2. On the construction issue, I would have directed that all parties' costs should be paid out of the estate. Although the charities lost on this issue, it was in my view not unreasonable for them to rely on the reference in Mrs Hill's attendance note of 27 July 2016 to the sentence:-

"The Residue is to be divided between those people mention in clauses 4.1 to 4.8 in equal shares."

14. On the rectification issue, there was agreement between the family members that the Claimant's costs, if not recovered in whole or in part from the solicitors or their insurers, should be borne by their combined share of the estate. I would not have thought it right to burden the charities' share of the estate with the costs of the Claimant's rectification claim.
15. GWCA accepts that it should bear all parties' costs of the construction issue on the basis that it was responsible for the ambiguous drafting of clause 11 as regards the distribution of the residuary estate. It accepts that it was thus responsible for the dispute as regards that element of clause 11 within the logic of the Supreme Court's costs judgment in Marley v Rawlings (No 2) [2014] UKSC 51; [2015] AC 157. The contest before me as between the Claimant and GWCA was therefore primarily addressed to the issue whether GWCA should bear the costs of the whole or any part of the Claimant's unsuccessful rectification claim.
16. The court has under section 51 of the Senior Courts Act 1981 jurisdiction to make an order against a non-party for payment of costs. Section 51(3) provides that:-

"The court shall have full power to determine by whom and to what extent the costs are to be paid."

17. The procedure where the court is considering whether to exercise its power under section 51 to make a costs order in favour of or against a person who is not a party to proceedings is governed by CPR 46.2. CPR 46.2(1) provides that that person must-

(a)be added as a party to the proceedings for the purposes of costs only; and

(b) be given a reasonable opportunity to attend a hearing at which the court will consider the matter further.

18. In the present case, no formal application was made so far as I am aware by the Claimant for an order to join GWCA. Instead an order was filed by consent which was in fact by consent as between the parties to the proceedings but not with the consent of GWCA. I do not however consider that GWCA has been prejudiced by this error in procedure. The order adding GWCA as a party was made on 6 April 2023. There was then extensive correspondence between the parties including GWCA's solicitors, Kennedys, up until the hearing on 14 November 2023. GWCA was represented before me by Diarmuid Laffan of counsel who provided a full and helpful skeleton argument dated 13 November 2023 and made oral submissions at the hearing.
19. The general principles to be applied on an application of this type were not in dispute before me. Paragraph 46.2.2 of the White Book 2023 sets out a number of propositions applicable to applications for non-party costs awards (the second, third and fourth propositions relate to litigation funders and are not relevant in this case):-

"(1)Although costs orders against non-parties are "exceptional", exceptional means only that the case is outside the ordinary run of cases which parties pursue or defend for their own benefit and at their own expense. The ultimate question in any such exceptional case is whether in all the circumstances it is just to make the order. Inevitably this will be fact specific to some extent.

(5)A non-party should not ordinarily be liable for costs which would in any event have been incurred without the non-party's involvement in the proceedings, although the position may be different where a number of non-parties have acted in concert."

The notes in the White Book continue:-

In Deutsche Bank AG v Sebastian Holdings Inc [2016] EWCA Civ 23, the Court of Appeal stressed that the crucial factor was the nature and degree of the non-party's connection with the proceedings, as ultimately that will determine whether it is appropriate to adopt the summary procedure envisaged in the authorities. The procedure should be summary in nature. Generally the court will decide whether to make an order based on the evidence given and the facts found at trial, together with its assessment of the behaviour of those involved in the proceedings. An order should not be made unless it is just and fair that the non-party should be bound by the evidence given at trial and the judge's findings of fact."

20. It follows I must consider carefully whether in this case it is just and fair that GWCA should be bound by the evidence given at trial and my findings of fact. As referred to in paragraphs 38 to 40 of the judgment, witness statements of Mrs Hill and Mrs Sartin dated 7 December 2022 were prepared by GWCA solicitors and served by GWCA on the parties. In the case of Mrs Sartin, her statement was accompanied by a notice under section 2(1) of the Civil Evidence Act 1995 and a medical report confirming that she was not fit to attend the trial. I gave permission to the Claimant to cross-examine Mrs Hill on her statement. It follows that the witness evidence of Mrs Sartin and Mrs Hill was before the court at trial. I do however take into account that GWCA was not represented at the trial and that no submissions were made to me at the trial on its behalf.
21. On behalf of GWCA it was submitted that in order to do justice on this costs application, a distinction must be drawn between the costs of the rectification claim and the costs of the construction claim. It was submitted that the rectification claim was not caused by any failure traceable to BBMW. It was submitted that unlike the construction claim, the rectification claim was not a claim needing to be brought in the interests of the estate as a whole, but rather was a claim brought with a view to the Claimant's benefit and those of his family members. It was submitted that the Claimant should bear the costs of having lost self-interested litigation on the rectification point. If the family members were agreed, those costs should come out of the family members' share of the residuary estate and not be paid for by GWCA or its insurers.
22. It was further submitted on behalf of GWCA that this was not a claim where the same end was sought by construction and rectification in the alternative. The rectification claim focused on the first part of clause 11:-

"upon trust for such of the beneficiaries named in Clauses 4.1 to 4.8 inclusive absolutely as shall survive me"

The construction claim concerned the words at the end of clause 11:-

"and in accordance with the provisions relating to each gift."

It was submitted that the two points had separate goals: one the exclusion of the charities from the residuary estate and the other the identification of how the estate should be distributed if the charities were included. It was submitted that the difference in focus between the two issues in the claim made it eminently suitable for a proportionate or percentage-based costs order.

23. On behalf of the Claimant it was submitted that GWCA should be responsible for all the costs of the claim. It was submitted that the proceedings were the result of the poor drafting of the will by BBMW. It was further submitted that there was general sub-standard conduct on the part of BBMW in relation to the will making process and a clear failure to ensure that the deceased approved of and understood the changes to the will when he attended the offices of BBMW on 3 August 2016 and was seen by Mrs Sartin following his meeting with Mrs Hill on 27 July 2016.
24. In Marley v Rawlings (No 2) the solicitor's mistake had led to each of the Claimant's adoptive parents signing the other's will. The Supreme Court ordered the insurers of the solicitors responsible for the mistake to pay the costs of the Claimant, Mr Marley, and the defendants in relation to the proceedings throughout. As pointed out by Mr Laffan, the estate in that case was modest and the effect of a direction that costs be paid out of the estate would have been to deprive the successful party, in that case Mr Marley, of any benefit from the litigation or the estate. In that case, the solicitor was primarily responsible for the whole problem that gave rise to the proceedings. In addition, in that case, the insurers had required Mr Marley to bring the proceedings by way of mitigation.
25. On behalf of GWCA, Mr Laffan submitted that Marley v Rawlings (No 2) was distinguishable. He submitted that BBMW, unlike the solicitor in Marley v Rawlings, cannot be regarded as the cause of or responsible for the rectification claim.
26. In my view, the acts and in particular the omissions of BBMW did significantly contribute to the circumstances giving rise to the rectification claim. The deceased's initial instructions given to Mrs Sartin on 13 July 2016 left his residuary estate in unequal shares (75/25) between his two step-children. There was no suggestion at that stage that the charities should share in residue. Following the deceased's meeting with Mrs Hill on 27 July 2016 a further draft will was prepared for the deceased by BBMW. Mrs Hill said in paragraph 2 of her affidavit sworn on 29 June 2022 that she drafted the will in manuscript and passed it to her secretary to type. She says that at that point the file was passed to Judith Sartin, the solicitor with conduct of the matter.
27. Mrs Hill says that a copy of the engrossment was retained on her file but that she did not have occasion to look at it until after the death of the deceased. Mrs Sartin sent a letter to the deceased on 29 July 2016 enclosing a further draft of the will and raising points on clauses 8, 8.1, 8.2 and 8.3. Those points related to the shares in the deceased's property 26 Sea Lane to be taken by the Claimant and his brother and not on the division of residue in clause 11.
28. Mrs Sartin's attendance note of 3 August 2016 records that the deceased had not received her letter of 29 July 2016 which enclosed the further draft will. As stated in paragraph 75 of the judgment, it follows that the first and only opportunity the deceased had to review the terms of the will as amended following his meeting with Mrs Hill on 27 July 2016 was in the reception area of BBMW on 3 August 2016 and then with Mrs Sartin.
29. As stated in paragraph 76 of the judgment, Mrs Sartin's attendance note of 3 August 2016 refers to her going through her letter of 27 July 2016 and explaining the basis of her questions. As noted in paragraph 28 of the judgment, Mrs Sartin's attendance note of 3 August 2016 does not record that she went through the will with the deceased. Instead it records that she went through the letter explaining the basis of her questions and that she suggested to the deceased that he sign the "present will as a holding will and that he went through my letter when it arrived with him and would let us know whether he wanted to make the relevant amendments". "The relevant amendments" refers to the points raised by Mrs Sartin in her letter of 27 July 2016 in relation to clauses 8, 8.1, 8.2 and 8.3.
30. In paragraph 9 of her witness statement dated 7 December 2022, Mrs Sartin says:-

"I went through the amended Will with Mr McKay who told me that he had not received my letter of 29 July 2016. I therefore went through that letter with him explaining the basis of my questions. I suggested he may wish to have the will further amended but he advised me that he was happy to execute the Will on that day."

31. In paragraph 71 of the judgment I said:-

"Had clause 11 been discussed and reviewed by Mrs Sartin with the deceased, the omission of any words specifying how residue was to be divided between the beneficiaries named in clauses 4.1 to 4.8 would surely have been picked up."

32. Had such a discussion and review of clause 11 taken place, there would have been an opportunity to confirm that the deceased did indeed wish the charities to share in his residuary estate. A competent solicitor would have appreciated the need to confirm the deceased understood the effect of clause 11 was to include the charities within the distribution of his residuary estate and the need to ascertain what proportion of his residuary estate the deceased intended each of the charities to receive.
33. In my view, a vital opportunity was lost on 3 August 2016 to confirm that the deceased did indeed wish the charities to share in his residuary estate. Although the claim to rectify clause 11 of the will so as to refer only to family members failed, the claim was a reasonable one to bring. Mrs Hill's typed attendance note of 27 July 2016 referred to "those people mention in clauses 4.1 to 4.8 in equal shares". It was certainly reasonably arguable that the deceased would not have intended to increase the gifts to charities if he was intending them to share in his residuary estate.
34. This is not such a clear cut case as in Marley v Rawlings (No 2) where it was clear that the solicitor had no defence whatsoever to a damages claim from Mr Marley. It is a matter now for speculation as to what would have been the outcome had clause 11 being fully discussed and reviewed with the deceased on 3 August 2016 by Mrs Sartin or his attention drawn to the gift of residue in a commentary on the further draft will before then.
35. I have considered whether the right course would be to dismiss the application against GWCA and leave the Claimant and the family members, if so advised, to bring a professional negligence claim against GWCA. I have come to the clear conclusion that this would not be a fair and just outcome. BBMW was put on notice in March 2022 that professional negligence was being alleged against it and it notified its insurers accordingly. The witness statements of Mrs Hill and Mrs Sartin dated 7 December 2022 were served on the parties by GWCA on 8 December 2022. I consider that it is just and fair that GWCA should be bound by my findings of fact at the trial in particular my finding that clause 11 of the will was not discussed and reviewed by Mrs Sartin with the deceased on 3 August 2016.
36. I do not consider that it would be just in all the circumstances to order that GWCA pay all the Claimant's costs of the claim. I do not consider it can fairly be said that BBMW was solely responsible for the whole problem. I think that what can be said is that BBMW lost the opportunity on or before 3 August 2016 to confirm and clarify the deceased's instructions in relation to the distribution of his residuary estate. It can further be said that BBMW's responses to the claim raised evidential questions which may reasonably have encouraged the pursuit of the rectification claim.
37. On behalf of GWCA it is submitted that the costs of the claim should be split 80/20 as between the rectification claim and the construction claim. It was submitted that had the claim been limited to the issue of construction it could have proceeded as a Part 8 claim with the scope of the evidence significantly reduced. On behalf of the Claimant it was submitted that both the rectification and construction claims were concerned with establishing the deceased's testamentary intentions and that the costs between the two claims cannot easily be apportioned. It was submitted that when considering any apportionment or a proportionate costs order the judge has to consider what costs are referable to each issue and what costs are common to several issues. The Claimant estimates that only 5% of his costs were referable wholly and exclusively to the rectification claim.
38. Any apportionment of costs between the two claims inevitably involves what has been described as a broad brush exercise. The best that can be achieved is an estimate that is going to be somewhat crude. I accept that the rectification claim was evidentially the wider claim. On the other hand, as clause 11 of the will was ambiguous, extrinsic evidence, including evidence of the deceased's intentions was admissible under section 21 of the Administration of Justice Act 1982. There was bound to be overlap.
39. I have come to the conclusion that rather than attempt to apportion costs between the two claims, I should determine what proportion of the total costs of the claim, if any, it is fair and just should be paid for by GWCA or its insurers. I take into account:-

(i)it is accepted on the part of GWCA that it is should pay all parties' costs in relation to construction as a result of the ambiguous drafting of clause 11 of the will;

(ii)the rectification claim failed but there were reasonable grounds for bringing the claim and pursuing it to trial;

(iii)BBMW lost the opportunity on 3 August 2016 or at any time after the deceased's meeting with Mrs Hill on 27 July 2016 to confirm and clarify the deceased's intentions and instructions in relation to the disposition of his residuary estate;

(iv)the case is not as clear cut as that in Marley v Rawlings (No 2) and had confirmation of the deceased's instructions been obtained, it is far from certain what they would have been;

(v) in bringing the rectification claim, the Claimant must be taken to have assumed the risk that if the claim failed his costs would not be recoverable from the estate as a whole but either from his own or, with their agreement, his and the family's share of the estate;

(vi)on the other hand, there were serious shortcomings in the way that the deceased's instructions were taken and recorded and confirmed by BBMW which may fairly be said to have given rise to the claims.

(vii) BBMW's response to the claim raised further evidential questions which reasonably encouraged the continuation of the rectification claim.

40. In all the circumstances I have reached the conclusion that it is just to make an order that GWCA or its insurers should pay 60% of all parties costs of the total claim to be assessed if not agreed. This conclusion is based on the matters set out in paragraph 39 and more generally on my view as to the degree to which BBMW may fairly be said to have by its conduct and omissions been responsible for the claim.
41. This judgment will be handed down remotely at 10am on Friday 15 December 2023 without any attendances being required.
42. I would hope that the parties will be able to agree the costs of the application against GWCA. If agreement cannot be reached between the parties by 4pm on Friday 5 January 2024, brief written submissions are to be filed and exchanged by 4pm on Friday 12 January 2024 marked for my attention.
43. I am grateful to both counsel for their written and oral submissions.