Probate claims are all about costs, says Lloyd Junor, but do your clients really understand who pays them?
"It's about nothing but costs now. We are always appearing, and disappearing, and swearing and interrogating, and filing, and cross-filing and arguing, and sealing, and motioning, and referring, and reporting, and revolving about the lord chancellor and/or his satellites, and equitably waltzing ourselves off to a dusty death about costs. That's the great question. All the rest, by some extraordinary means, has melted away."
Charles Dickens, Bleak House
Dickens had a point. Whatever may be said about the merits ?of a claim against a will's validity, the rights or wrongs, or the heartfelt views of the family, it all boils down to cost.
Unfortunately, there is still misunderstanding about how costs fall in a probate dispute and who pays. Briefly, there are some key points to remember:
The costs of a probate claim are not payable out of the estate. As Scrutton LJ in Re Plant deceased said: "The lure of 'costs out of the estate' is responsible for much unnecessary litigation." Generally, the loser pays the winner's costs, known as the 'costs follow the event' principle.
That costs follow the event is, however, only the start. While, fundamentally, the core concept of 'loser pays' remains the guiding principle, it is subject to rules of conduct. This is namely how reasonable a party, including the winner, is in managing the litigation, i.e. compliance with protocols and with pre-action behaviour generally, the manner in which the parties acted and whether the action or steps taken in the litigation were proportionate to the case.
Back to the 'loser pays' principle, this is subject to two well-known exceptions that survive the Civil Procedure Rules. The two exceptions, first stated in ?Spiers v English , are:
That the claimant's and defendant's costs may be paid out of the estate where it was deemed reasonable to oppose the will and run the case because the dispute had been triggered as a result of the testator's fault or had been caused by the residuary beneficiaries' fault. The deceased's conduct must be causative of the claim, which may arise, for example, where the testator left their affairs in a disordered state or was incapable when the will was made.
That the claimant's and defendant's should each bear their own costs if the dispute has been triggered through no fault of the testator or those interested in the residue and where the circumstances reasonably lead to an investigation. This may be so even if a case is discontinued after evidence establishes there is no case.? This exception is mostly applied in knowledge and approval claims, where the facts surrounding the execution of the will reasonably require investigation. It is likely that an unsuccessful party will have to bear their own costs, but not those of any other party.
Personal representatives (PRs) form a special category. They must remain neutral and adhere to the parties' or court's directions. If they are biased, they risk an order for costs being made against them personally. ? It has been said that while an executor has a duty to propound a will (and in so doing has the protection of an indemnity), that duty does not apply where there is some reason why the will could not be admitted to probate.
Probate claims are never fixed in terms of costs and it should be remembered that the risk can shift with the evidence at particular points in the proceedings. This, in turn, may well affect tactics and strategy for each opponent.
Lloyd Junor is an associate at Thomas Eggar
He writes the regular in-practice article on wealth structuring for Private Client Adviser