It is a commonly held misconception that adverse costs arising out of a probate dispute will be paid by the deceased’s estate. Whereas this is true in some circumstances, the costs position in the vast majority of litigation will be determined by the conduct of the parties in much the same way as any other dispute governed by the Civil Procedure Rules (CPR). As such, it is both dangerous and naive to get sucked into the blithe (and generally incorrect) rhetoric that the estate will indemnify a losing party’s costs regardless of the outcome.
Estate disputes, by their very nature (whether asserted as a claim by a disappointed beneficiary under the 1975 Act or framed as a challenge to the Will’s validity based a lack of due execution, capacity, undue influence or knowledge and approval), can be emotional and highly charged affairs. As such, would-be Claimants often lose sight of the wood for the trees to the extent where they are willing to “bet the farm” on the outcome, even where there is a risk that they might lose. This is an exceptionally risky strategy to take and, often, the unsuccessful Claimant will be unable to fall back on the argument that their (ultimately unsuccessful) ground or grounds of challenge were considered, by them, to be “reasonable”.
Brennan v Prior & Ors
A pertinent example of the above can be seen in the case of Brennan v Prior & Ors where Mark Herbert QC, sitting as a Deputy Judge of the Chancery Division, explained that:
“Often in probate cases an unsuccessful opponent to a will can have an order that the costs should be paid out of the estate, but those are cases in which there is no real antagonistic litigation. In the present case Mrs. Brennan’s case has been to attack the Will on four grounds: lack of due execution; lack of testamentary capacity; lack of knowledge and approval; and undue influence.
In the end none of those attacks was successful and, in my judgment, only the third (knowledge and approval) had any chance of success. The litigation has been conducted aggressively on her side, partly in the form of correspondence, emails and such like from her husband. Of the emails I have seen, one of them I commented on in the judgment, another one I was shown today, which contains extremely aggressive, offensive and damaging attacks, and Mrs. Brennan, although she is a different person from her husband, she has not, until today, as I gather, withdrawn those damaging and unpleasant attacks.
This is a case where I feel that at least some of the costs should be ordered to be borne by Mrs. Brennan and there are two sets of costs in question, because the first two defendants are nominated as the executors and they have in fact taken a very neutral role in the action, but they were obliged … to appear as parties … and put themselves at risk as to costs. They have in turn explained their position … to Mrs. Brennan that if she insists on making allegations essentially of dishonesty against those two parties, they will be seeking to make her liable in costs…”
Comment
The above judicial sentiments could quite easily be applied to many other inheritance disputes and, as such, it is incumbent on practitioners involved in such disputes to advise their clients, in no uncertain terms, that the estate may not provide a sufficient (or indeed “any”) costs indemnity where their client’s position is unreasonable.
Given the fact that inheritance claims are inherently expensive (and on the rise), the cost-consequences of compromising any action need to be at the forefront of the parties’ minds when they are involved in settlement negotiations. This is where some lawyers (and particularly those who are not specialists in the field) fall down, since they place too much reliance on the estate shouldering the costs “come what may”. This can cause problems for both the Claimant and the estate, since:
- As far as the Claimant is concerned, they may not appreciate the very real costs risk they face if they continue, particularly if their claim lacks merit and/or is asserted too aggressively; or
- As far as the estate is concerned, they may not be aware that the risk of adverse costs being made against the Claimant personally could be used as a useful tool to encourage settlement.
Of course, the solvency (or not) of the Claimant will also pervade through the whole of the action and, even where practitioners are aware of the costs rules, the determined Claimant might consider that he/she has “nothing to lose” if they have no money and assets to satisfy an adverse costs award. This, again, needs to be taken into account when…
- Analysing the merits of a claim;
- Having conduct of that claim; and
- Trying to reach a pragmatic settlement.
How can Nelsons help?
At Nelsons, we are specialists in estate disputes and therefore consider the costs consequences of any proposed litigation from the outset. Our highly trained team will be able to identify the costs risk from the outset to ensure the best possible outcome for your claim.
For more information, please call our Inheritance Disputes team on 0800 024 1976 or contact us via our online form.