Dealing with costs in trusts and probate proceedings – Part 2: exceptions to the general rule in probate claims

26 September 2018

The principles applicable to costs in the context of probate litigation are different from the costs of other litigation. In particular, there are two long established exceptions to the general litigation rule that costs follow the event. These two exceptions were set out in the case of Spiers v English [1907], and were more recently summarised in the cases of Kostic v Chaplin [2008] and Perrins v Holland [2009]:
1, the court may order the unsuccessful party’s costs to be paid out of the estate if the litigation has been caused by the testator;  

2, if the circumstances lead reasonably to an investigation of the matter, then the court may make no order as to costs.
There are policy considerations for these exceptions. The underlying principle is that where claimants who bring about a judicial enquiry into the making of a will have not succeeded but were not wholly in the wrong; they should not be condemned in costs for having failed in a claim which was justified by good and sufficient grounds for doubt and suspicion about the validity of the disputed will.
The application of the second exception in Spiers was considered very recently by the High Court in James v James [2018]. The claim raised two substantive issues: (i) whether the testator had capacity to make his will; and (ii) whether a proprietary estoppel had been raised in favour of the claimant. At trial, the claimant failed on both issues. Notwithstanding this, so far as the probate claim was concerned, the court made no order as to costs.
Nevertheless, any claimant contemplating bringing or presently engaged in probate litigation, ought to take very little comfort from this line of authority. It might sound applicable theory - especially where dubious witnesses might need to be cross examined at trial - but in practice it will rarely be appropriate for either of these exceptions to be engaged by a court, or to displace the normal rule that litigation costs follow the event. Accordingly, a litigating party in a probate claim really ought always to proceed on the basis that the losing party will be liable for the winning party’s costs pursuant to the criteria in CPR 44.2, unless the circumstances are pretty exceptional.
The most viable route away from the normal rule will be if the loser has made a valid Part 36 Offer which the winning party has not beaten at trial. This is a particularly important weapon in probate claims because quite often either party can be a claimant for Part 36 purposes as the defendant will often bring a counterclaim to propound/set aside a will, i.e. the reverse of the relief sought in the claim. That was illustrated in the case of Wharton v Bancroft [2012]. 
In considering whether it would be unjust to give effect to a Part 36 offer, the court is obliged by CPR 36.17(5) to take into account all the circumstances of the case including: (a) the terms of any Part 36 offer; (b) the stage in the proceedings at which the offer was made; (c) the information available to the parties at the time the offer was made; (d) the conduct of the parties with regards to the offer; and (e) whether the offer represented a genuine attempt to settle the proceedings. 
It is fair to say that there is an argument that can sometimes be run in probate claims that the consequences of a Part 36 offer should not be applied because of the nature of probate litigation. In the judgment in the case of Re Ritchie [2011] the judge described will validity claims as “all or nothing” litigation and held that “the question of whether it is unjust not to follow Part 36 depends on the reasonableness of the offer which in turn depends on an assessment of the offer in relation to the value of the estate and the prospects of success of the claim”. He went on to decide that it would be unjust for him to make an order for costs set out in Part 36 in that case. 
However, parties in probate litigation should tread carefully before disregarding or rejecting Part 36 offers on the basis that the trial judge may not apply the consequences of Part 36 merely because it is arguably unjust. The reality is that valid Part 36 offers which are not beaten at trial will be effective in most probate claims and, as highlighted above, may be a particularly potent weapon for a party bringing a counterclaim.   

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