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Costs order aims to discourage ‘no holds barred’ practice

The High Court has issued a costs order in the estate dispute case of Lilleyman v Lilleyman to discourage litigants from pursuing a ‘no holds barred’ strategy.

12 May 2012

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Giving his ruling on 26 April, Mr Justice Briggs said: “While it may be that a ‘no holds barred’ approach to certain types of litigation is entirely appropriate, it is not in my judgment at all appropriate in the context of claims under the Inheritance Act, where, even in a big money case, the costs are likely to form an ever-increasing part of the subject matter of the dispute until, as appears largely to have occurred in the present case, it is the costs burden alone which prevents settlement.”

The case involved Mrs Barbara Lilleyman’s claim for reasonable financial provision from the net estate of her late husband. In his will, Roy Lilleyman had left her an annuity, various chattels and limited occupation rights in their two jointly owned houses.

Mr Lilleyman, a successful businessman, had left the rest of his £6m estate to his two sons from his first marriage.

The claimant’s case was that ‘reasonable provision’ meant a substantial share in the matrimonial property not limited to her reasonable needs. The defendants pleaded that reasonable provision should be determined solely in relation to her reasonable needs.

During the litigation, the defendants offered their stepmother several out-of-court settlements: the first, title to the two properties and £450,000 in cash; the second, £550,000 in cash, including a £66,000 contribution to Barbara Lilleyman’s costs.

The claimant rejected both offers, holding out for the two properties and £500,000 cash.

The England and Wales High Court eventually granted the claimant full title to both properties, but rejected her claim for a substantial share of the estate’s cash.

As Barbara Lilleyman had refused the defendants’ offer, which was more advantageous than the final award ordered, usually she would have been liable for all legal costs incurred by both sides after the point at which the offer had been made.

However, Mr Justice Briggs instead disallowed one-fifth of the defendants’ costs from the order.

His reasoning was that the part 36 rules do not produce their intended result when applied in 1975 Act disputes, though they are adequate for other civil disputes.

He also said that he wanted to allocate some of the costs to the stepsons to show his disapproval of the ‘no holds barred’ approach they had adopted in the litigation.

Briggs concluded that those advising the parties in a 1975 Act claim should provide their clients with detailed advice on the costs consequences of rejecting a Part 36 offer from the other party.

For the case report see http://www.bailii.org/ew/cases/EWHC/Ch/2012/1056.html

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Wills, Trusts & Probate