Walters & Anor v Smee & Anor

I now have to decide the costs issues arising out of the judgment I delivered in London on 25^th July.

For the reasons I then gave, I found against Annie Latimer’s 2004 Will, and admitted her earlier 1998 Will to probate.

The Claimants (“the Walters”) were the executors, and entitled to the residuary estate, under the earlier Will. The Defendants (“the Smees”) were named as executors and beneficiaries under the later Will.

It is evident from this brief summary that the Walters won. It follows, they argue, that they should have their costs of the proceedings. This is of course the normal rule in proceedings generally, as CPR 44.3(2)(a) recognises, subject to sub-paragraph (2)(b).

The Smees resist this conclusion. They say that the case falls within the exception to the normal rule in probate proceedings (recognised on the authorities, including after the CPR) which requires costs to come out of the estate where the litigation can be said to have been caused by the conduct of the deceased.

Alternatively, they say that I should make no order as to costs, as (in accordance with another exception recognised in probate proceedings) the issue of the validity of the later Will required investigation, and that investigation was only complete when I delivered judgment. Until then, the matter was open, and the Smees cannot (it is said) be criticised for leaving that question to the Court’s decision.

Finally, the Smees say that if any costs order is to be made against them, it should only be an order for the proportion of the total costs, such proportion to be determined having regard to the recognised practice in probate proceedings.

In exercising my discretion, I have had regard to the exceptions to which I have referred, and the general review and elucidation of the authorities set out in the judgment of Henderson J in Kostic v Chaplin & Others [2007] EWHC 2909 (Ch); [2007] All ER (D) 119 (Dec) . What that case highlights is that, even where one or more of the probate exceptions applies, the point may be reached where the litigation becomes ordinary hostile litigation, from which point the normal rule entitling the successful party to an order for costs comes into effect.

I have accordingly considered whether the order I make should, for different parts of the litigation, reflect 2, if not all 3, of the principles (the normal rule and the 2 exceptions) to which I have referred.

At the conclusion of the costs argument, I was undecided as to the proper order to make. I was mindful also that the total costs (subject to assessment) may well be equal to or exceed the value of Mrs Latimer’s estate. Any order that the costs should come out of the estate might therefore leave the Walters empty-handed, despite their victory in the litigation. On the other hand, if the Smees are to be ordered to pay the costs, their liability for defending an apparently valid will which, on my findings in the action, they did nothing to encourage would be very substantial indeed (potentially in the order of £230,000). In those circumstances, I decided to reserve judgment.

I am mindful that my decision should not be based on any sympathy that I may feel for one side or the other, or both. If the correct order, reached having regard to the principles to which I have alluded, is that the costs should come out of the estate, or should be paid by the Smees, or should be somewhere in between, then that is the order I should make.

It was accepted in argument before me that, as the general rule indicates that the Walters should ordinarily have their costs from the Smees, the practical burden was on Mr Child (who appeared for the Smees) to persuade me to make a different order. Hence, Mr Child opened the argument on costs, and Mr Darton (for Mr Walters) responded to Mr Child’s submissions, Mr Child then replying. Mrs Walters, I should add, had no submissions of her own, though I took her to associate herself with Mr Darton’s submissions. Despite Mr Child’s adoption of the practical burden, the ultimate decision I reach is one of discretion, unaffected by any notion of burden.

Mr Child, basing himself on my findings in the July judgment, said the case should properly be characterised as one where the litigation was caused by the words and conduct of the deceased and her probate manager, Crystal Walker.

Mrs Latimer (though not at fault in any sense of moral blameworthiness) brought into being an apparently valid Will which she lacked capacity to make. This lack of capacity was not evident to the Smees, who, acting in good faith, took Mrs Latimer (who I found to be of high moral integrity) at her word, and did no more than act as friends properly concerned for her welfare in making an appointment with Crystal Walker for Mrs Latimer to make a new will. As I recorded in paragraph 114 of the July judgment, they did not put Mrs Latimer up to it in any way.

Mr Child points out that it was fully understandable that the Smees should take Mrs Latimer at her word when she made her representations concerning the behaviour of the Walters. I made a similar point, also in paragraph 114 of my July judgment, saying that I could understand why, on the basis of what he had been told by Mrs Latimer, Mr Smee approached the matter with a great deal of suspicion towards Mr Walters. The same point applies to Mrs Walters.

What Mrs Latimer told the Smees was apparently confirmed by other independent witnesses, and it is evident from Mr Smee’s notes that he spoke to some of these witnesses during Mrs Latimer’s lifetime about Mrs Latimer’s welfare. In addition, Mr Smee’s own experience of an altercation with Mr Walters (as recorded in paragraph 113 of the July judgment) and his monitoring of Mrs Latimer’s finances (as recorded in paragraph 95 of the July judgment) were to his mind corroborative of what Mrs Latimer was telling him. The Smees were also unimpressed by the standard of care that Mrs Latimer was receiving from the Walters, which they observed with their own eyes.

Thus, from the Smees perspective, Mrs Latimer had, based upon what she told them and their own observations, ample reason to change her will, and they had no reason to doubt the truth of what she told them. They were aware also that the Will was prepared by Crystal Walker, who saw to its execution, and had no reason at the time to suppose that Crystal Walker had acted other than competently.

Additionally, there was no expert medical evidence in this case until shortly before the trial, when a joint expert was appointed. That expert (Professor Howard) reviewed the evidence and concluded that Mrs Latimer probably had sufficient capacity, notwithstanding her dementia, in October 2004. This was subject to the qualification set out in paragraph 24 of the July judgment to the effect that, if the facts motivating Mrs Latimer were untrue, that might indicate an abnormality of mind or “delusion” depriving her of capacity. Mr Child says that the only way of testing whether Mrs Latimer in fact had capacity was by a trial, and that his clients were fully entitled to have that issue tested. Until Professor Howard’s Report was received, the claim that Mrs Latimer lacked capacity appeared weak at best. Once the Report was received, it was still weak, as Professor Howard’s view (subject to the qualification I have mentioned) was that she did indeed have capacity. The only way of resolving the issue was by having the matter tested in Court.

Mr Darton on the other hand says that the litigation has been fought as ordinary contested litigation throughout, and that the normal rule should apply. The Smees, if merely concerned to carry out proper investigations, could have approached the litigation very differently, by seeking expert evidence much earlier, based upon the medical records (which were available to the Smees as executors appointed under the 2004 Will) and the attendance notes of Crystal Walker’s firm (which were available to both sides from an early stage). Mr Smee also had his own notes of conversations with Mrs Latimer, and with other witnesses, which could have been put before an expert. Instead, the Smees initially objected to any expert evidence, though that objection was unsurprisingly not persisted with once the application was made in June 2008.

Mrs Latimer’s medical records were inconclusive. On her admission to hospital shortly before her death, Mrs Latimer initially scored highly on a test of her mental faculties, but subsequently (when examined by a more experienced doctor) recorded a low score. The various attendance notes (which I have summarised or set out in the July judgment) were equally inconclusive. There are indications both of mental deterioration and of lucidity. What also emerged from them was the clear record of the promise that had been made to the Walters that they would receive the residuary estate in return for their continued care. That raised the question of why Mrs Latimer changed her mind, and the later attendance notes concerning the 2004 Will barely addressed this issue.

The Smees also unsuccessfully applied at an early stage to strike out these proceedings on technical grounds. Whilst the costs of that application have been dealt with, their approach was, it can fairly be said, that of an ordinary litigant taking every point fairly open to them. Even before any expert evidence was sought, the Smees’ solicitors obtained detailed witness statements designed not simply to demonstrate that Mrs Latimer was of full capacity, but in addition to blacken the Walters’ characters and thereby to reinforce the reasons which they conceived Mrs Latimer had to change her Will. This went beyond a mere objective assessment of the factors affecting Mrs Latimer’s capacity.

Mr Darton also drew my attention to 2 offers that were made in this case. The first was made by the Smees in January 2008, in a letter expressed to be “without prejudice save as to costs”. The Smees offered to settle on terms which would have seen the Walters receive only £30,000 inclusive of costs, conditional on Mrs Latimer’s bungalow selling for at least £150,000. The offer was open for acceptance within 14 days, at a time when there were outstanding disclosure requests which the Smees had not then complied with. The Walters have of course done considerably better than this, assuming the costs do not come out of the estate. The Walters’ offer, in February 2008, was a Part 36 offer to accept £125,000 plus costs. I do not know what their costs were at that date, but they must have been considerably less than they are now. Neither offer was accepted. I do not criticise the Smees either for the offer they made, or for refusing the Walters’ offer. What the process shows, however, is that the litigation was being conducted as ordinary contested litigation, in which the Smees took a stand they were entitled to take, but with the risk of adverse costs consequences. It is unrealistic to treat this case as one where the Smees were reserving their position while making investigations, still less as one where they had no real choice because of the conduct of Mrs Latimer. There are many cases where litigants take a stand, and reasonably fight on. If they succeed, they are vindicated. If they fail, the normal rule is that they pay the costs.

I can understand how the case must have appeared weak to the Smees, but the case on incapacity was never so weak that it could be struck out. The Smees chose to defend the claim, knowing in outline from the pleadings what the case was. I can understand why they did so, but weak cases (as I accept this one appeared to them) do sometimes come good, and the normal costs consequences usually follow. That seems to me to be the correct way of approaching the present case. The Smees took a view and acted upon it. In doing so, they protected (they must have thought) their financial interests as sole beneficiaries under the 2004 Will and should, in my judgment, bear the costs of doing so, including the Walters’ costs.

I have, as I mentioned earlier, considered whether one or other (or both) of the exceptions to which I have referred should apply to different stages of the litigation (for example, before the exchange of witness statements, or the obtaining of the joint expert’s report). Having reviewed the whole course of the litigation, I do not think it is appropriate to approach the case in that way. The litigation has been conducted as ordinary hostile litigation throughout. I have summarised some of the features of the course of the litigation which demonstrates that this was the Smees’ approach. Most importantly, the litigation has involved the Smees in making allegations of stealing and neglect against Mr and Mrs Walters, and physical and mental abuse, as well as the bringing of prostitutes to the property, against Mr Walters. Though Mr Child, at trial, in his skilful closing submissions, said that I need not decide whether the allegations were true, and that it was enough if Mrs Latimer reasonably thought them to be true, the clear thrust of the evidence in support, and of the cross-examination, was that the allegations were indeed true, and this is clearly what the Smees believed and were alleging, both on the pleadings and in their own evidence. It seems wrong to me that the Walters, having disproved these allegations, should not have their costs from those making them. As the key issue at trial, in assessing Mrs Latimer’s capacity, was whether the allegations were true, the Walters have been vindicated on the issues which went to the heart of the case.

I have not overlooked the fact that I did find against Mr Walters on some factual elements of the case (most importantly as recorded in paragraph 87 of the July judgment). These were not of great importance in the overall scheme of things and do not justify a departure from the normal rule.

As mentioned previously, the Smees also rely upon the criticisms I made of Crystal Walker in the July judgment concerning the taking of instructions for, and execution of, the 2004 Will (see paragraphs 106 to 108 of the July judgment). I do not think it is right, however, to attribute any fault of Crystal Walker to Mrs Latimer, so as to bring the case within the exception justifying costs out of the estate where the litigation is caused by the deceased. Nor do I think this was a case where inquiries still needed to be made. The attendance notes were disclosed to both sides at an early stage, and the absence of any recorded questioning of Mrs Latimer was notable. If and to the extent that further inquiries were needed, they should (assuming they were not made) have been made at the outset.

Generally on the issue of inquiries, I do not think that any further inquiries, whether in relation to Crystal Walker or any other aspect of the case, would be likely to have affected the Smees’ approach to this litigation. They were convinced that the allegations against the Walters were true and never regarded the case on incapacity as other than weak.

Mr Child points out that, if costs are ordered to be paid out of the estate, it will be open to the Walters, as executors, to bring proceedings against Crystal Walker’s firm for negligence. I do not see how this factor (assuming without deciding that any such proceedings would succeed) can disentitle the Walters to their costs from the Smees if, as I have concluded, that is otherwise the proper order to make. The possibility of applying for a costs order against Crystal Walker’s firm was also raised before me, but not pursued in advance of this judgment. I say nothing about whether or not such an application would succeed.

In the circumstances, the appropriate order is that the Smees should pay the Walters’ costs of the claim and counterclaim, on the standard basis.

Finally, I have reached my conclusion on costs by reference to the outcome of the probate claim, upon which the Walters were successful. That conclusion is reinforced by my findings on the proprietary estoppel claim (set out in paragraphs 132-139 inclusive of the July judgment). In the estoppel claim, the same alleged misconduct as featured in the probate claim was relied upon (in Mr Child’s closing submissions at the trial) in support of a defence of unclean hands. There was therefore considerable overlap between the 2 claims. On the estoppel claim, I would, had I found it necessary to rule upon it, have found for the Walters. This seems to me an additional reason justifying the costs order I have made.