Costs in Contentious & Non-contentious Probate & IPFD Act 1975 – Part 2

 In Probate

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COSTS IN CONTENTIOUS Probate

Following on from Part 1 (published in December 2009), Part 2 lists more precedents and principles to help recover the maximum amount of costs.

  1. The Family Proceedings Costs Rules do not apply.
  2. CPR 38 does not apply to probate claims [CPR 57.11(1)]. Therefore CPR 44.12(1)(d) “Where a right to costs arises under rule 38.6 (defendant’s right to costs where claimant discontinues) a costs order will be deemed to have been made on the standard basis” was disapplied in a contentious probate matter [Smith & Anor v Springford & Ors [2008] EWHC 3446 (Ch)]. Here the executors applied to discontinue after receiving an expert handwriting report which stated that the signature on the later Will was probably not genuine. Mr Justice Norris held that there was no question of compelling executors personally to risk further estate assets in pursuit of this action and when probate proceedings were discontinued, the discretion under CPR to make an award of costs had to be exercised on the basis of uncontentious fact and/or sound conclusions based on the available material. The later Will appeared on its face to be valid and was witnessed by two people of standing and apparent probity. In the absence of a finding that the executors had conspired to propound a Will they knew was forged, the executors had been entitled to seek to propound the later Will, and the initial pursuit of the action fell within the principle that the costs in probate cases should lie where they fell if circumstances reasonably led to an investigation of the matter (the second exception at paragraph 4 above was therefore applied). However, the executors had delayed in obtaining an expert report, which they should have done as soon as they were in receipt of the defence which set out the concerns regarding the later Will and they too were liable for costs from the date the report should have been received since, by then, they would have known both the issues in the action and the costs of resolving them [Kostic v. Sir Malcolm Chaplin and Mr. Martin Saunders (chairman and secretary of the Conservative Party Association) & HM Attorney-General [2007] EWHC 2909 (Ch) considered].
  3. In Ghafoor & Ors v Cliff & Ors [2006] EWHC 825 (Ch) Mr Justice David Richards restated the need to ascertain who would, in real terms, pay the costs if there was an order for them to be paid out of the estate; in the present case this would principally be to the cost of the brothers which would have been wholly unfair in the circumstances. Moreover, this case highlights the level of “misconduct” required to obtain an order for indemnity costs in probate proceedings. Here despite bad faith not being established it was clear on the facts that there was intermeddling, attempts to misappropriate the assets without lawful authority, the seeking of the grant to intervene in petitions in Pakistan and secure tactical advantages, material misrepresentations being made within an affidavit (by amongst others a solicitor) and a lack of independence and impartiality by the administrators [see further CPR 44.4(1)(b) and the commentary thereunder].
  4. Therefore a person named as executor in a Will which is pronounced against may still be awarded his costs from the estate if it was reasonable for him to propound the Will [Boughton v Knight ((1873) LR 3 P & D 64, 79].
  5. An exception to the general rules set out above in contentious probate may arise where a defendent gives notice in his defence that he does not raise any positive case but insists in the Will being proven in solemn form and, for that purpose, will cross-examine the witnesses who attested the Will. Here the court will not make an order for costs against this defendant provided the court does not find that there was no reasonable ground for opposing the Will [CPR 57.7(5)].
  6. Personal representatives who act in the same capacity and who take a neutral role will invariably be entitled to his/her costs regardless of the outcome, either from the estate or from the unsuccessful party [CPR 48.4(2)]. If these costs are to be borne by the estate they are paid on an indemnity basis [CPR 48.4(3); Alsop Wilkinson (a firm) v Neary [1996] 1 WLR 1220]. Depending on the size of the estate the personal representative may be better off without an order to have his costs assessed out of it [Re Cole’s Estate, Barclays Bank Ltd v Cole (1962) 106 Sol Jo 837]. It is further clear that if a personal representative has acted unreasonably e.g. by opposing the claim on baseless grounds or by making prejudicial pre-hearing distributions then the personal representative may be left bearing his own costs, and rarely even paying the other parties [CPR 44.5; section 50A.2 Costs Practice Direction under CPR 48]. If however the personal representative also acted as a beneficiary of the estate his/her costs of so doing will not be recoverable from the estate on this basis alone.
  7. For non-contentious proceedings where there has been a contested hearing or application which was issued on or after 24 February 2003 CPR 43 to 48 apply, save that CPR 44.9 to 44.12 are specifically disapplied and in any event are wholly irrelevant [rule 60 Non-contentious Probate Rules 1987 as substituted by SI 2003/185]. For the rare occasion where proceedings were issued prior to 23 February 2003 and still continuing reference should be made to RSC Ord 62.
  8. Costs of non-contentious proceedings in which there is no contest, or no order for costs made, will normally be charged by the applicant’s solicitors under the rules applicable [Solicitors’ (Non-contentious Business) Remuneration Order 1994 SI 1994/2616]. With any assessment (taxation) of those costs occurring under section 70 of the Solicitors Act 1974.
  9. It has been held appropriate for solicitors to make a separate charge based on value for the administration of an estate, in addition to fees for time spent, provided that the remuneration overall remained fair and reasonable as required by the aforesaid Order. Further the applicable bands in cases such as the present should be: 1.5 per cent for up to £750,000; 0.5 per cent for £750,000 to £3 million; one-sixth of a percent for £3 million to £6 million; one-twelfth of a percent for over £6 million [Jemma Trust Co Ltd v Liptrott [2003] EWCA Civ 1476].
  10. There must be a detailed assessment where a party who receives money is a child or patient and where that party has to pay any costs to his solicitor [CPR 48.5 unless section 51 of the Costs Practice Direction under CPR 48 applies] or where a party is publicly funded [Community Legal Services (Costs Protection) Regulations 2000 (as amended); section 11 Access to Justice Act 1999].
  11. In a contested I(PFD)A 75 application costs follow the event however the court may order otherwise [here CPR 44.3(2)(b) is being applied] as in Espinosa v Bourke [1999] 1 FLR 747, CA where the costs of the unsuccessful respondent to the appeal were paid out of the estate.
  12. It is a myth that in I(PFD)A 75 claims that all parties costs will come out of the estate whatever the result which was stated as long ago as 1982, but it is still misunderstood [Re Fullard, Fullard v King [1982] Fam 42, CA]. Where at 46 Lord Justice Ormrod asked judges to look “very closely indeed at the merits of each application before ordering that the estate pays the applicant’s costs if the applicant is unsuccessful.”
  13. It is common practice, unobjectionable, and results in a saving of cost, for the same firm to act for the executors and residuary beneficiaries in I(PFD)A 75 claims. This means that there will have to be a separation of the costs attributable to the personal representatives’ role in the claim, and that of the beneficiaries. This may want to be established at the beginning as undertaking this task during an assessment of costs will be both time-consuming and inaccurate.
  14. Interest on costs runs from the date of judgment [CPR 40]. Payments on account and settlement of costs without recourse to assessment hearings can prevent or reduce the interest that will be payable by the estate or other party liable to pay costs. If the estate or party concerned has the liquidity to make a payment on account it is a wise move so to do.
  15. Furthermore, CPR 36 and Calderbank offers, pre-emptive costs orders [Re Biddencare Ltd [1994] 2 BCLC 160], protective costs orders [The Queen on the Application of the Corner House Research v DTI [20005] EWCA Civ 192], whether costs should be made against a non-party under CPR 48.2, litigant in person costs pursuant to CPR 48.6 and wasted costs order pursuant to CPR 48.7 [and see section 53 of Costs Practice Direction under CPR 48] are all in the author’s view capable of being applied to probate and I(PFD)A 75 proceedings.
  16. Most importantly in I(PFD)A 75 Act applications and appeals in particular, but this same argument can be equally applied to non-contentious and contentious probate matters, is the courts discouragement and acts of penalising those who litigate in small estates by way of costs [Re Vrint, Vrint v Swain [1940] Ch 920; Re E, E v E [1966] 1 WLR 709; Re Fullard, Fullard v King [1982] Fam 42, CA; Brill v Proud [1984] Fam Law 59, CA]. The message from the Court of Appeal is clear; such cases should be compromised not litigated. The approach taken is akin to that taken when the Practice Direction on Pre-Action Conduct is not followed. Pump Court Chambers mediation service can be utilised in this area.

The importance of costs in modern litigation cannot be overemphasised. Early advice to clients about how the rules on costs work and the potential for liability and all that flows from these liabilities should be spelt out at the beginning.

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Costs are becoming taxing and expertise in this area is a must. The client’s money and/or that in the estate are not just at risk, or in issue. The reality is we are all charging a fee for advice and representation in this area, which can only be justified if one is conversant with the rules, the law and the precedents on costs. The truth is that a lot of ‘lawyer’s money’ is at stake.

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