Costs in inheritance litigation

Several interesting costs cases have been reported so far in 2020.

Claims Under the Inheritance (Provision for Family & Dependants) Act 1975

The case of Re H (Deceased) [2020] EWHC 1134 (Fam) set a debate running in the contentious probate legal community as a result of the decision on the claimant’s CFA (Conditional Fee Agreement) uplift.

“Should a 1975 Act claimant be entitled to recover CFA success fee uplift as part of the claim?”

In this case, the claimant (an adult child of the deceased with psychotherapy medical needs) was successful in her claim for reasonable financial provision. The defendant beneficiary (the wife of the deceased and mother of the claimant) had not engaged fully in the case/court proceedings and the matter was determined at a trial. The costs liability incurred by the claimant was £85,000 base costs plus the CFA success fee claimed at 72% equating to £48,175.

The claimant sought, as part of her reasonable financial provision damages, an award for her success fee liability, in other words, her costs. HHJ Cohen awarded a sum considered a reasonable CFA mark up of £16,750. (paras 48-60 and 66 (vi))

Prior to the Re H (deceased) [2020]case, the Jackson Reforms and Sections 44 and 46 of LAPSO left  the responsibility for success fees under CFA funding arrangements with the party who entered the CFA.  In a previous High Court decision Clarke V Allen [2019] EWHC 1193 (Ch) Deputy Master Linwood supported this on the following grounds.

• calculation of damages is a matter of procedure carried out before costs are concerned and has never included an element for costs
• the deliberate policy of the legislature that a losing party should not be responsible for the success fee
• it otherwise amounts to an increase of damages by way of costs
• it may put a CFA funded litigant in a better position in terms of negotiations due to the risk of a substantial costs burden. Likewise, absent negotiations, it could lead to grossly disproportionate costs if a contested claim went to trial and the defending party lost
• there is no reason why a claimant seeking reasonable financial provision under the Act should be in a better position than one seeking, for example, damages for personal injury (PI claimants are not permitted to recover from defendants a success fee as part of costs claim, or otherwise as characterised as part of a damages claim)

HHJ Cohen however followed a contrasting recent decision from the case of Bullock v Denton [2020], an unreported decision of HHJ Gosnell in the Leeds County Court (a judgment given just 9 days before the Re H hearing). The judge in that case allowed a figure of £25,000 in total in respect of the CFA by way of contribution that was added to the claimant’s award.     

HHJ Cohen made the award for the claimant in re H (deceased) reasoning:

“55…. If I do not make such an allowance one or more of C’s primary needs will not be met. The liability cannot be recovered as part of any costs award from the other parties. The liability is that of C alone. She had no other means of funding the litigation.”

Recognising the difficulty of the situation and divergence of previous case law on the point HHJ Cohen also stated.

“58…. I cannot see how I can avoid some potential (and it is only potential) injustice to either C or the estate. All I can do is mitigate the potential by taking a cautious approach towards this liability.”

This will not be the final say on the matter. Watch this space as Re H is going to the Court of Appeal and practitioners will hopefully receive clear guidance on the approach the court will adopt for future cases. We may see the Court of Appeal quash the success fee recoverability decision or even possibly a review of the legislation by Parliament in view of the sole litigation costs regime (which differs significantly from , for example, family law divorce costs regime).

I had some limited involvement in the re H (deceased) case – assisting the neutral executor second defendant. A point I will be interested to hear the Appeal Court take on is the ‘no other means of funding’ because interestingly the estate had been ordered at directions hearing stage (dealt with by a different judge) to release funds towards the litigant’s costs and disbursements (including medical expert reports on the claimant).

Divergence of Judicial Opinion

Prohibit success fee uplift recovery                                                           permit success fee uplift recovery

Jackson Reforms                                                                                                               Bullock v Denton

Ss 44 and 46 of LASPO                                                    v                                              RE H

Clarke v Allen

Costs contentious probate – forgery allegation

A second costs decision of interest to inheritance litigation specialists is in the case of  Wrangle v Brunt [2020] EWHC 1784 (Ch). was made recently on 10 August 2020. The  costs judgment can be found here.

The total costs of the two sides amounted to over £400,000 following a High Court trial concerning revocation of a 2008 grant of letters of administration on intestacy in favour of a 1999 Will discovered after 2008. The dispute involved alleged forgery of the Will.

As all good inheritance litigators will know, the court views extremely seriously allegations that an opponent has engaged in fraud and in very many cases, where there has been an unsuccessful allegation of fraud, costs will follow the event.

Unusually, in this case the defendants, after unsuccessfully alleging forgery and losing their argument seeking to reject the 1999 Will and retain the intestacy grant, were still able to avoid a personal costs liability order.

This may come as a surprise to many practitioners as there are many examples of unsuccessful fraud allegations resulting in indemnity costs award against the accusing party. The case I have previously written about of Brenan v Prior [2013] EWHC 2867 (Ch.) is one example. 

Drilling deeper into the Wrangle v Brunt case Master Teverson ruled that the highly unusual and truly exceptional facts of the case meant the usual cost rules should not apply.

However, there are two exceptions in English law which were established in Spiers v English [1907] P 122:

1. Where the person who made the will, or persons interested in the residue, are the real cause of the litigation, then the costs can come from the estate; and
2. If the circumstances lead to a reasonable investigation, each party could be responsible for their own costs.

In the Wrangle case, Master Teverson applied the first exception and ruled that the highly unusual and truly exceptional facts of the case meant the usual cost rules should not apply. The deceased, Dale Brunt, had caused the dispute himself by employing a dishonest and unqualified person to prepare his Will. The Will was prepared by Howard Day, an unqualified individual (not a solicitor but on occasions was willing to let others think he was) who assisted people with legal disputes.  Mr Day was convicted of fraud and received a prison sentence in 2003 (for his involvement in a matter unconnected to the Will).

The costs order was that all the parties’ costs come from the estate. In this case there was a large estate sufficient to cover the costs.

If you have an inheritance dispute and please do not hesitate to contact Susan Glenholme.