Sifri v Clough & Anor

JUDGE KAYE QC: The claimant in this action is the only child of a Mr James Leslie Orell, the deceased. In this action the claimant seeks damages for professional damages against the defendant firm in connection with the preparation of two wills on behalf of the deceased, one in 1999 and the other in 2000.

The background to this action is as follows. The deceased was born in 1916 and died on 4th March 2001, aged 84. In 1976 the deceased's first wife and the claimant's mother died. The deceased married again in 1977. In November 1998 the deceased made a will leaving a life interest in the matrimonial home and in one third of his residuary estate to his widow, the claimant's stepmother, for life and thereafter to the claimant. He also left the remaining two-thirds of his residuary estate to the claimant. He appointed the claimant and his widow as executors.

In 1999 and 2000 he apparently made two new wills. These wills were prepared by Mr Alan Maden of the defendant firm (then known by a different name).

Following the death of the deceased and after some lengthy exchange of correspondence and investigation the claimant commenced an action in this court in the Manchester District Registry against her stepmother, Mrs Margaret Orell, seeking to set aside the 1999 and 2000 wills on the grounds of undue influence, lack of testamentary capacity and lack of due execution. This action (which I shall refer to as the 'probate action') was commenced on 9th June 2004.

The probate action came on for trial on 18th April 2005 before His Honour Judge Maddox QC sitting as a judge of the High Court. On the first day a successful application was made to amend the Particulars of Claim to include another cause of action, this time based on want of knowledge and approval, it being said in short that the deceased did not know of the contents of the two wills of 1999 and 2000 and did not approve of them and they were therefore invalid on that additional ground.

On 7th June 2005 the judge declared against the two contested wills, but solely on this late added ground of want of knowledge and approval. The other claims he dismissed. He declared the 1999 and 2000 wills invalid and pronounced in favour of the earlier 1998 will. The lack of due execution he dealt with shortly on the grounds that there was nothing to displace the presumption of due execution. The claims of lack of testamentary capacity and undue influence he also roundly dismissed. The fourth ground, want of knowledge and approval, he upheld on the basis that Mr Maden in essence had failed to ascertain from the deceased what his true intentions were as regards these wills. He held that by taking instructions for the preparation of these wills from Mrs Orell rather than the deceased, and on the basis that there was a lack of communication between the three of them, the deceased, Mrs Orell and Mr Maden, the judge was not satisfied that the deceased knew and approved the contents of the two wills as drawn.

So far as costs were concerned the judge made no order, leaving each side to pay their own. The claimant had asked for all her costs. The defendant had submitted that there should be no order. The judge upheld the latter. His reasons are not entirely clear and I have no transcript of his reasons, but I do have a transcript of the submissions that were made to him and I also have a note of the judgment or decision that he made in respect of costs prepared by counsel on that occasion and I have to say I have been much helped by counsel on both sides as to the correct interpretation of these notes of his reasons.

It appears to be common ground that the judge regarded the claims based on undue influence and lack of testamentary capacity as unreasonable in the sense they ought not to have been brought against Mrs Orell. The judge also does not seem to have regarded it as inevitable that an unsuccessful party should have to pay a successful party's costs where the issue was solely want of knowledge and approval. Clearly what influenced him in that case was the fact that he seems to have taken the view that the full circumstances in which the wills came to be executed were not necessarily have emerged except at a trial or under an enquiry by the court at a trial.

Following that judgment and the decision on costs, on 16th September 2005 the claimant commenced the present action against the defendant firm. She relied essentially on two types of negligence. One flowing from the negligent preparation of the two wills and the other on the alleged failure to advise the claimant and her mother as executors (or putative executors) to protect the estate by getting it in and converting it into cash and investing it appropriately. More specifically it was said he should have advised the appointment of an interim administrator or some other official to protect the estate. These claims were originally stoutly defended.

In March 2007, however, the defendant firm accepted that its stance on this was somewhat inconsistent with the judgment of His Honour Judge Maddox and unequivocally indicated to the claimant that it accepted liability in respect of the first head of claim that is in connection with the preparation of the wills, but not the latter. The matter has proceeded before me on that basis.

In the meantime Macur J in the Family Division has ordered that letters of administration be granted to the claimant and to one other, an independent solicitor, in place of Mrs Orell. However, no grant has yet been obtained, the relevant HM Revenue & Customs inheritance tax forms have not been completed and the administration has not so far proceeded.

Against that background Mr Dumont, who appeared on behalf of the claimant, seeks damages essentially of two types. First, the entire costs of the whole of the probate action which he puts at just below £67,000. The costs of this probate action were never assessed, so he proves his case by proving the cheques and sums paid to solicitors and counsel for their fees and costs and some estimate as to the expenses. Mr Davie on behalf of the defendant does not dispute the amount put forward on that basis. He does, of course, dispute liability as we will see in a moment.

Second, Mr Dumont seeks the loss to the estate attributable to the delay caused, he says, by the negligent preparation of the two wills, i.e. by the admitted negligence. He does not in this context rely on the second type of negligence pleaded in the action that is failure to advise the claimant and her mother as executors to take certain protective measures as regards the estate.

As to the first part, costs, Mr Dumont submits that it was not unreasonable to raise these claims, that they were incurred as a natural consequence of the defendant's firm’s negligence in the preparation of the wills. The fact that the judge thought that the claims, that is undue influence, lack of testamentary capacity in particular and lack of due execution, the fact that the judge thought that they, and in particular the first two of those were unreasonable as between the claimant and Mrs Orell does not mean that they do not flow from the breach and therefore are recoverable from the defendant firm or ought to be regarded as unreasonable as between the claimant in the present action and the defendant firm.

Mr Davie, on behalf of the defendant firm, disputes any responsibility for the costs. His primary submission was that the claimant cannot recover any costs because in launching her wholly unmeritorious and unreasonable claims based on lack of testamentary capacity and undue influence she lost or forfeited or deprived herself to any right to any costs at all. In short, it was not the negligence of the firm that led to her loss of costs, but her own misjudgment. Hence, even if she might not have recovered them from her stepmother had she sued on that ground alone, perhaps on the basis that the full facts might only have emerged at trial, then she might arguably not have lost them. But that, he submits, only points out more so the fact that by indulging in the unreasonable claims she lost them because of those unreasonable claims.

His secondary submission is that if damages are recoverable on this head it is limited to a small amount referable only to the costs of the action so far as it can be fairly attributed to want of knowledge and approval. The action is founded in tort and the implication of the admitted breaches and duty is that the defendant firm did owe a duty of care to the claimant in the preparation of the 1999 and 2000 wills. She undoubtedly incurred costs in challenging these two wills and was the person who in consequence of costs not being met by the defendant in the probate action is the person who has to bear the loss of the amounts she has paid out in the costs of the probate action. That being said the question is: what costs if any are recoverable from the defendant firm? All of them, part of them or none of them?

Both sides agree that the answer to this question and its starting point really depends upon whether the costs in question can be said to be of a type of damage reasonably foreseeable in consequence of the admitted negligence. As to that, in my judgment if a solicitor does fail to take instructions from the proposed testator, does take them from a third party and does not check to see he has understood his instructions properly and moreover, as alleged in this case, does not keep a proper note of his instructions, it is reasonably foreseeable that a challenge to whatever wills are executed as a result will in turn ensue and the costs thereby incurred are also foreseeable. The fact that those costs might or might not for a variety of reasons be recovered from the other side does not in my judgment mean that all the costs of such an action are recoverable.

In my judgment, Mr Davie is right insofar as the claimant cannot recover costs she chose to bear in pursuing a wholly unreasonable claim based on lack of testamentary capacity and undue influence. So far as I can tell from the evidence placed before me these are nothing to do with Mr Maden and it has not been proved to me that they were. On the other hand, the claim based on want of knowledge and approval plainly succeeded because of Mr Maden's breach of duty as a solicitor. But for that breach of duty certainly some costs would not have been incurred.

But I also agree with Mr Dumont that it seems reasonably clear from the transcript of the submissions to and the notes of the judge's reasons on costs in the probate action that he would not necessarily have awarded costs against Mrs Orell had want of knowledge and approval been the only issue. There is also nothing also in such transcript and in the notes to suggest that he set-off one set of costs against the other. The judge clearly was much taken by Mrs Orell's openness, honesty and frankness in the witness box.

In my judgment, therefore, some costs are recoverable as damages. The question for me then is what and how much. Both sides have urged me to do the best I can on the figures. That if I may say so is a wholly sensible approach to be commended and moreover a proportionate one. Both accept that I should not accept necessarily accept the actual outgoings of the claimant on costs but ask myself what the costs of the probate action would have amounted to if they had been assessed on the standard basis. Given that each side were paying their own costs no such actual assessment was carried out.

Given, further, that the amendment to allege want of knowledge and approval was only made at trial, Mr Davie asked me to distinguish pre-trial and post-trial costs, though he accepted that there should be some perhaps small allowance for some pre-trial costs to reflect the issue of the various stages in the proceedings and so on and so forth up to trial. Allowing for all of that, he submits that a fair way to approach the matter would be to award 40 per cent of the trial costs assessed on a standard basis. He points out; drawing on the schedule of cheques and the figures provided by the claimant of the costs that she in fact paid, that the solicitors and counsel's costs for the trial of the probate action amounted to £33,487. He invited me to discount this to 85 per cent as a reflection of assessment of costs on the standard basis. On this basis the assessed costs would be £28,463.95 and the 40 per cent would be £11,385.58.

Mr Dumont on this aspect of the case submits that if I do not award the entire costs, then I should assess the standard basis at some 90 per cent of the total costs allowed and take 75 per cent of those. Alternatively, I should include greater pre-trial costs on the grounds that there had been some correspondence pre-issue – pre-issue of the claim form, that is, in the probate action -- relating to the potential possibility of a claim based on want of knowledge and approval. He suggested on this basis that Mr Davie's figure of £33,487 should be increased to £40,000, even allowing for the fact that there may have been some overlap at the outset because the claimant changed solicitors and counsel on occasion.

Doing the best I can, as I am invited to on the figures and evidence presented to me, I largely accept Mr Dumont's submissions on this latter aspect. It is not unreasonable in my judgment to add some element for some pre-trial work on the issue of want of knowledge and approval and I accept his suggested raise of Mr Davie's figure to £40,000. It does not seem to me at all an unreasonable figure to take as a starting point. Mr Dumont suggested that on the standard basis 90 per cent of that also would not be unreasonable, i.e. £36,000. I agree. Simply testing it against my own judicial experience of figures for cases of that nature and that on issue that does not seem to me to be unreasonable. On the other hand, I consider 75 per cent of the total costs as too high a proportion. I propose to adopt Mr Davie's suggestion of 40 per cent.

Doing the best I can therefore on the costs element, I shall award the claimant £14,400 plus interest at a rate and for a period to be discussed in a moment.

On the second part of the case Mr Dumont sought damages for losses incurred by delay in administration owing to the dispute over the preparation of the wills. He categorised this as the following types of loss: lost use of premium bonds on which prizes are not payable more than one year after death, lost use of money held on deposits by the deceased at nil or low interest rates, and lost use of money represented by uncashed cheques. Pausing there, in fact there was only one such cheque, for £24,093.20 which arrived after March 2003 when Mr Maden ceased to act for Mrs Orell having been alerted to the fact that the claimant intended to make a claim that the 1999 and 2000 wills were invalid. Additionally Mr Dumont claimed interest charged (or to be charged) on late payment of inheritance tax and penalties for such late payment. As to those last two items, I have previously indicated there does not seem to have been much progress with the administration of the estate in recent months. That is not intended in the slightest bit to be critical, the point being that the matter of penalties or interest for inheritance tax has not yet been assessed.

Earlier in the course of the proceedings I had held that there was in effect a case to answer on this second part of the case because I held that there might be a situation where damages might flow from delay caused by the negligent preparation of the wills: see Corbett v Bond Pierce [2006] WTLR 967, Rimer J. I am not, however, satisfied that the loss claimed in this case has been so caused. I accept that it is foreseeable that there might be some delay in administering the estate due to the negligent preparation of the wills. I accept too that some loss might be capable of being caused by such delay, but I do not accept, nor in my judgment has it been proved, that the losses claimed in this case are attributable to the negligence admitted, i.e. to the failure to prepare valid wills or to ascertain the deceased's proper testamentary instructions.

Where a dispute emerges over which will is valid there is much that can be done to protect the estate pending the obviously come of the probate action, including the appointment of an interim receiver or administrator pending action. Thus, I can see that the losses said to arise in this case might result from not taking such protective measures, which in turn might have resulted from failure to advise the contesting parties at the time, but it does not in my judgment necessarily follow that the same losses arise from a failure to take instructions properly in relation to the preparation of a will or failure to ensure the will as drawn is what the testator wants or approves or that such was the situation in this case. In short, I do not see how the defendant's admitted negligence has caused this part of the loss alleged.

I pause to repeat and remind myself that the admitted negligence of Mr Maden and the defendant firm in this case is confined to the preparation of the wills. They have not conceded negligence in relation to advising how the estate should be protected in the interim and Mr Dumont, in my judgment rightly and fairly, did not press that part of his case.

In any event, further, the uncashed cheque arose after Mr Maiden had ceased to advise even Mrs Orell about the estate and as I have already remarked the inheritance tax office has not yet begun to consider whether penalties or interest are payable and no declaration for an indemnity is sought, although it was suggested. It is also said that the monies which were got in were not invested in banks or other institutions which would have given or might have given a higher return. I am not satisfied that higher returns could or should have been obtained on the evidence I have seen, even if the defendant firm is answerable.

Accordingly, I reject this aspect of the case and the result will be judgment for the claimant in the sum of £14,400, plus interest as I have indicated.