Wharton v Bancroft & Ors

This is my judgment about costs. I will first deal with the position as between Maureen and the Daughters.

I address first the period up to and including the 7^th May 2010. The starting point for a consideration of the relevant pre action and action costs during this period is CPR 44.3 (2) (a). An application of the general rule would give Maureen her costs as against the Daughters for this period; but, having regard to all the circumstances, a different order might be appropriate. In Probate cases this requires the Court to consider two particular sets of circumstances which experience over the years has shown may require a disapplication of the general rule in order to achieve justice; it also requires a consideration of the same factors as ought to be considered in any other litigation.

First, whilst remembering that costs are always in the discretion of the court, it is recognised that if the cause of the litigation has its origin in the fault of the testator or of those interested in residue, then the costs may properly be paid out of the estate. In the instant case, as in many others, the reality of such an order would be that Maureen (who has succeeding in proving the 2008 Will) would pay to the Daughters their costs of unsuccessfully challenging it.

Was Mr Wharton the cause of the litigation over his will because his own conduct lead to the 2008 Will being surrounded with confusion or uncertainty in law or fact? What Mr Wharton did was to make a Will whilst he was in an enfeebled state and effectively on his death bed. He did so by giving oral instructions to a solicitor who immediately transcribed them into an effective Will, the terms of which were commented upon by the solicitor as he undertook the drafting. At one point in the process (after the key dispositive provision had been transcribed and commented upon) Mr Wharton lost concentration. Mr Wharton then listened whilst the terms of the Will were read over to him clearly and distinctly by someone who had not been involved in its preparation and he expressed his clear assent to it. He then signed his Will in a formally correct way before two reliable witnesses. Many would think that Mr Wharton had done his best to ensure that his affairs were not left in a state of confusion.

Before he made the 2008 Will Mr Wharton had made a number of inconsistent statements to various acquaintances about the provision he had already made by Will (or possibly, the provision he intended to make). Immediately after making the Will Mr Wharton had given an indication to one of the Daughters that she and her child would be provided for (though he did not say that he had made provision by Will for them). In Re Cutcliffe’s Estate [1959] P.6 at 19 Hodson LJ said

The other matter to which Mr Cousins QC drew attention was that Mr Wharton had left a Spanish Will which incorrectly declared that he and Maureen were married and that he had two daughters. This did not leave his affairs in any state of confusion. The 2008 Will revoked the Spanish Will. Looked at objectively (and not through the eyes of someone looking for straws at which the clutch – a remark not directed at Mr Cousins QC) the Spanish Will simply showed that Mr Wharton treated Maureen as his wife (as did the 2008 Will) and that there were times at when he would not recognise one of his daughters (as did the 2008 Will).

In my judgment there is no ground to say that this Probate action was caused by Mr Wharton.

Was the action caused by the Claimant? Mr Cousins QC submits that the Claimant behaved with the lack of candour in the following respects;-

she did not disclose that, at the time when Mr Wharton made the 2006 Will she too had made a mirror will:

in the proceedings she did not disclose that will herself (and it is alleged that she did so because she was attempting to conceal any involvement in the will making process):

She dealt with money in Spanish bank accounts without telling the authorities that Mr Wharton was dead:

She was inaccurate in the information she provided about the Spanish bank accounts:

She ignored, resisted and delayed the provision of information, for example about dealings by White Horse with its assets:

She cut the Daughters out of her life and from any involvement or connection with Mr Wharton and his former home or possessions.

Mr Cousins QC posed the question: suppose Maureen had disclosed that she had made a Will in 2006 and had perhaps persuaded Mr Wharton to make a “holding” Will at the same time, how different would things have been as regards this action? If I am invited to speculate in that way I would unhestitatingly answer in the sense that the Daughters would have continued vigorously to contest the 2008 Will, and would have regarded any involvement by Maureen in the making of the 2006 Will as supporting their allegations of undue influence in 2008 (as they pleaded).

This part of the Daughters’ argument on costs referred to matters about which I have in the action itself found it unnecessary to make findings of fact to reach a conclusion. It is not necessary to make extensive findings of fact for costs purposes. In fairness to the Daughters I should record that I do not consider that Maureen was wholly frank about one of the Spanish bank accounts: and as to the behaviour and conduct in and following the funeral the Daughters’ account is probably more accurate than Maureen’s account. In fairness to Maureen it should be recorded that the fault was not all on one side, and the questions raised by the Daughters as to the circumstances of Mr Wharton’s death must have been extremely distressing. But in my judgment none of this has anything to do with the origin of the Probate action. If in the perception of the Daughters it does then that is only because they persisted in making enquiries about matters that were simply irrelevant to the question whether the September 2008 will making process had resulted in a valid Will. Looking at the action and its conduct as a whole the Daughters were in no sense “led” into commencing the probate proceedings.

There is no ground on which I can properly conclude that Maureen was the cause of the Probate action. In my judgment the cause of the Probate action was the refusal of the Daughters to accept the truth of Mr Bancroft’s statement (in his letter to their then solicitors of the 10^th November 2008) that Maureen was not present when instructions were taken for the 2008 Will or when that Will was made or executed; or the truth and accuracy of Mr Bancroft’s detailed attendance note (with which they were provided on 2 December 2008). The terms of the letters written by the various solicitors on their behalf and the terms of their original Defence and Counterclaim demonstrate, to my mind, that irrespective of the material available to them the Daughters were determined to upset the 2008 Will.

When examined, the cause of the litigation does not warrant a departure from the general rule as to costs and its replacement by an order that the costs should come out of the estate. (I should note that by “the costs” I am of course referring only to those costs for which the Daughters are liable having regard to the terms of their CFA. Had I been minded to consider awarding costs out of the estate I would have wanted to see the terms of the CFA to ascertain whether such an order would itself have amounted to “success” which would have exposed the Daughters to increased liability for costs).

The second set of circumstances that may cause a disapplication of the general rule is that if there is a sufficient and reasonable ground (looking at the knowledge and means of knowledge of the parties opposing the will) to question the validity of the will then it might be proper to make no order as to costs. There are two brief comments to add about those circumstances. First, a party who simply says that there is a reasonable cause for inquiry and invites the Court to undertake that inquiry can obtain costs protection under CPR 57.7(5); so the second principle in Spiers v English is directed at those who have chosen to run an active case but failed in it. Second, one must not confuse the concept of “reasonable cause for enquiry” with “an assertion of undue influence which cannot be struck out as having no real prospect of success” or even “an arguable case of undue influence”. The circumstances have to be such as to have lead the Daughters reasonably to the bona fide belief that there were good grounds for impeaching the Will for want of knowledge and approval or for undue influence. In my judgment if one looks at the circumstances in which the 2008 Will was produced from a balanced stand point it does not reasonably lead to a genuine belief that the process was invalid. If one looks with a deeply suspicious eye at those circumstances and approaches those circumstances by putting the worst possible construction on the characters and events in question then you can get a case together: as I think the terms of the original Defence and Counterclaim demonstrate. Such an approach, has of course, to yield to reality: and the Daughters realistically did not pursue their original challenge to capacity and withdrew their pleaded allegation that the 2006 Will was forged. They also modified their original allegation that Maureen instructed Mr Bancroft as to the content of the 2008 Will, and significantly revised their allegations as to what Mr Wharton’s testamentary intentions were. At trial there is no attempt to maintain very significant parts of the pleaded case of want and knowledge and approval or undue influence (for example the allegation that Maureen presented the 2006 Will to Mr Wharton and to Mr Bancroft and Joanna Bancroft when they attended Mr Wharton on the basis that it represented Mr Wharton’s established testamentary wishes). The impression I have is that this is not a case in which the available material reasonably lead the daughters to the genuine belief that the Will was invalid, but rather that the Daughters genuinely and passionately believed that the 2008 Will must be invalid whatever the circumstances reasonably showed and would use whatever material was available in order to sustain that a priori position. They and those advising them took a commercial decision about the strength of that case: and it has turned out to be wrong.

Accordingly, I hold that there is no proper ground upon which to displace the general rule as to costs with an order that there be no order as to costs.

I therefore turn to a consideration of the general factors outlined in CPR 44.3. I have considered each of the matters to which my attention is directed, and I have stood back and looked at the facts in the round: having done so I see no proper ground upon which to deprive Maureen of any part of the costs that she would otherwise receive under the general rule. I would specifically record that I have considered the Daughter’s complaints about Maureen’s conduct before and in the course of this case, that I have weighed against that the defendants’ own conduct, in particular the nature of the allegations which they made against Maureen, the modification of allegations (rather than their abandonment) in the face of emerging material and the nature of the case advanced at trial (including in particular the deliberate amendment to include a yet further allegation of undue influence against Maureen in relation to the 2006 Will). I find myself in agreement with a view expressed by Hodson LJ in Re Cutcliffe’s Estate (supra) at page 21: -

The next question to be determined is as to the basis upon which Maureen’s costs down to and including the 7^th May 2010 should be assessed. Ms McDonnell makes a considered submission that the costs should be assessed on the indemnity basis because of

the nature of the case advanced;

the manner in which the case was advanced;

the extent to which the Daughters’ solicitors engaged in irrelevant enquiry (e.g. as to the terms of Spanish conveyancing documents, as to the capital gains tax payable on the sale of Mr Wharton’s boat, and as to the circumstances in which Maureen obtained a Spanish identity number);

the way that the existence of the daughters CFA and ATE arrangements were deployed in correspondence against Maureen when she was herself personally funding the litigation.

I have reminded myself of the approach outlined in Reid Minty v Taylor [2001] EWCA Civ 1723 and National Westminster Bank Plc v Rabobank Nederland (No. 2) [2007] EWHC 1742 (Comm) ; and like Morgan J in Digicel [2010] EWHC 888 (Ch) have found it helpful to ask whether it is just to make in Maureen’s favour an order

Which gives her the benefit of the doubt on any disputed question as to whether an item of costs was reasonably incurred or reasonably in amount? and

relieves her of the obligation of demonstrating proportionality.

I have decided that an order that the Daughters pay Maureen’s costs of the action and counterclaim on the indemnity basis is warranted for the following reasons:-

The costs incurred by the Claimant were largely responsive to the case made against her by the Daughters. Her positive case (that the Will was duly executed by a competent testator) was not in fact in issue. She was responding to the case of want and knowledge of approval and undue influence made by the Daughters and it is not unfair to put upon them (particularly having regard to the way they conducted that case) the task of demonstrating that a response to their aggressively pursued case was in some measure unreasonable.

This is not a case in which issues of proportionality could figure large. This was an “all or nothing” decision about a four million pound estate.

The case of want and knowledge and approval was legally and factually weak to such a degree that the case lies outside the norm. If Mr Bancroft’s detailed attendance note was accurate (and there was no suggestion that it was dishonestly concocted) then a man of unchallenged capacity announced what the intention was, proceeded to give direct oral instructions to his solicitor, listened as the solicitor provided some sort of commentary on his drafting, listened whilst the finished product was read back to him, affirmed that he understood what the will said and then signed it. The suggestion that he did not know and approve that he had left everything to his wife and that he did not know and approve that he had left nothing to his daughters was extraordinary.

A case based on undue influence is one founded upon a very serious charge which ought not to be pleaded or pursued unless there is a proper factual foundation from which the necessary inference can be drawn. The cases are clear as to what those inferences are and as to the limited circumstances in which they may be properly drawn. The case pleaded and argued was in my judgment weak and outside the norm.

The case was conducted in manner which was outside the norm with excessive enquiry into irrelevances which generated significant costs, which costs were then used as a means of emphasising to Maureen the great risk in costs to which she herself was exposed unless she settled with the Daughters by giving them most of the estate.

I now turn to the question of costs from and after 7 May 2010. On 16 April 2010 Maureen made a Part 36 offer (a) to execute a Deed of Variation under which each of the Daughters would receive a legacy of £5000 and (b) would be entitled to payment of their costs (assessed on the standard basis) out of the estate which would otherwise pass to Maureen. Implicit in the offer was that Maureen would also bear the executors’ costs of the litigation. The beginning of the letter explained that Maureen was “confident that [the Daughters] case has no merit whatever” and that the offer was made to avoid lengthy and expensive litigation. The offer was rejected.

It is common ground that this was a technically correct Part 36 offer. CPR 36.14(1)(b) applies because the judgment which Maureen has obtained as against the Daughters is better than her Part 36 offer. CPR 36.14 (3) says that in such circumstances “the Court will unless it considers unjust to do so order that the Claimant is entitled to [her costs] on the indemnity basis from the date on which [the Part 36 offer] expired”.

Mr Cousins QC submits that it would be “unjust” to make that order because this was not a real Part 36 offer. In Huck v Robson [2002] EWCA Civ 398 Jonathan Parker LJ suggested (at paragraph [63]) that a Part 36 offer must present a genuine and realistic attempt by the offeror to resolve the dispute by agreement (as opposed to making a offer which created no real opportunity for settlement but was merely a tactical step designed to secure the benefit of the incentives provided by Part 36). The other members of the court did not agree with that formulation though Tuckey LJ said (at [71])

The concept is not an easy one to apply. All Part 36 offers are tactical in the sense that they are designed to take advantage of the incentives provided by Part 36. A low offer in a case where the offeror considers that the offeree’s position has no merit cannot be written of as self evidently “merely a tactical step”. But the principle has no application here. The sum to be received by each of the Daughters was small. But the offer was not derisory. On the available figures (and having regard to the fact that the Daughters were conducting the litigation on a CFA with a 100% uplift and with the benefit of ATE Insurance, the premium on which was an undisclosed percentage of their costs) the real effect of the offer (although calculated as a nuisance value offer) was of the order of £200,000 (ignoring the fact that Maureen would be bearing her own costs and those of the executors). I see no reason on that ground (or taking into account the matters to which my attention is directed in CPR 36.14(4)) why it would be unjust to order costs on the indemnity basis.

In my judgment there are no other grounds which would make it unjust in this case to allow the general rule in CPR 36.14 to have effect. After all I am awarding costs for the preceding period on the indemnity basis. Indeed the aggressive conduct of the action by the Daughters’ solicitors (both as regards the probate action and the administration of the estate) reinforces the essential justice of such an order.

The next question to be addressed is whether a separate order should be made about the costs of Mr Bancroft and his co-executor. If I make no order the reality is that the executors will seek to cover the costs incurred in proving the Will against the estate to the direct detriment of Maureen. Ms McDonnell and Mr Bancroft accordingly submit that I should order the Daughters to pay Mr Bancroft’s costs (his co-executor appears to have incurred low or only minimal costs, so for convenience I will refer to the executors costs as “Mr Bancroft's costs”) and on the indemnity basis.

Mr Cousins QC submits that that would be not be an appropriate order and that there is no justification for the court allowing more than one set of costs. In Bagshaw v Pimm [1900] PD 148 executors and legatees appeared at the trial by separate Counsel and the question arose whether the unsuccessful party had to pay the costs of both the executors and the legatees. The Master of the Rolls said

In Twist v Tye [1902] PD 92 those entitled on intestacy were cited and attended the trial being separately represented. The Judge declined to make a separate order that the unsuccessful Plaintiff pay their costs because he could

Mr Bancroft was a party against whom relief was sought (including an order that he pay the Daughters’ costs). A substantial part of the case advanced at trial (only foreshadowed in the skeleton argument) was that Mr Bancroft had behaved improperly, in particular by failing to recognise a conflict of interest in receiving instructions from Mr Wharton for a will and in failing to arrange for the attendance of a doctor in compliance with “the golden rule”. He was the subject of criticism for having failed completely and consistently to recount the circumstances in which the 2008 Will was produced. His words were said to be the ground for an argument that the testator had only truly intended to give a life interest to Maureen. In my judgment he acted reasonably in preparing for and in attending the trial, and was moderate in not seeking his own representation by Counsel. There is no reason in justice why his costs of attending to hear and to respond to the personal criticisms of him and to address the court as to the circumstances in which the 2008 Will was produced (i.e. his attendance at trial) should be borne by Maureen. I will order the Daughters to pay Mr Bancroft's costs of the action and counterclaim to be the subject of detailed assessment on the indemnity basis (in default of agreement).

I must now determine whether any part of Mr Bancroft's costs of obtaining and acting upon an interim grant should form part of the assessment of costs in these proceedings. Such an application was necessary in July 2010 because the Daughters’ solicitors declined to agree the issue of a limited grant to an administrator. I direct that the costs judge is to include in his assessment of the cost payable by the Daughters to the executors the additional costs thrown on the estate by the appointment of the administrator with a limited grant: that is so much of the costs, expenditure and remuneration of Mr Bancroft as administrator as does not relate to work which would anyway have had to be done in the administration of the estate if probate had already issued to the First and Second Defendants. This was the course taken in Re Howlett [1950] P 177 at 181-182 and approved in Re Kostic [2007] EWHC 2909 at para. 43 and meets the justice of this case.

I must now determine the rate of interest payable on costs from and after 7 May 2010. CPR 36.14(2) says that the court will, unless it considers it unjust to do so, order interest at a rate not exceeding 10% above base rate on costs “from the date on which the relevant period expired” i.e. incurred after 7 May 2010. Maureen asks for interest at 10.5%. Nothing in the terms of the offer, the time at which the offer was made, the information available to the Daughters at the time when the offer was made or any matter of conduct or other circumstance leads me to view that it would be unjust to award interest on these costs. The rate of interest must be such as comfortably ensures that Maureen is not out of pocket for her expenditure on costs from and after the period when the litigation ought to have been brought to an end by the acceptance of the Part 36 offer: so it must replace any investment income (or growth) she has lost through using savings to pay costs and reimburse her for any borrowing costs she has incurred. My understanding is that Maureen funded her costs from savings and from her income, and when these were exhausted she negotiated a CFA. I will award interest at the rate of 8% from the date after 7 May 2010 when such costs were paid against a delivered bill or were drawn from client account in respect of costs or disbursements. (This award of interest relates only to Maureen’s costs. The interest is awarded under CPR 36.14(3)(c) and this provision (by its reference back to the costs dealt with in CPR36.14(3)(b)) relates only to her costs. I am not awarding interest at 8% on the costs which I have ordered the Daughters to pay to the First and Second Defendants under CPR 36 because the Executor’s costs are not Maureen’s costs. Although a suggested order as to such interest was included in the draft Minute produced at the costs hearing I was not in that connection addressed by Ms McDonnell upon any provision other than CPR 36: so Mr Cousins QC did not reply on CPR 44.3(6)(g). I regard the argument as now closed).

I must now address the question whether there should be a payment on account of Maureen's costs (and if so in what sum). Her costs will be assessed on the indemnity basis. Maureen has an immediate liability to pay £209,880 in respect of her costs of obtaining insurance cover (which Mr Cousins QC fairly said he could not challenge). Her legal costs to date amount to some £438,073. She sought an interim payment of £500,000. I will order an interim payment of £455,000 payable 8 February 2012.

I must finally address the question whether there should be a payment on account of the executors’ costs (and if so in what sum). Their costs will also be assessed on the indemnity basis. Their total costs amount to some £99,000 in respect of the action and an estimated £4000 in respect of the administration costs and disbursements (though Mr Bancroft indicated that if one was looking only at the additional costs incurred by reason of the interim grant that figure should be halved). Mr Cousins QC submitted that the executors’ cost estimate simply amounted to a list of invoices without any attempt to produce a proper costs statement, and that I lacked any material properly to found an interim costs order. I have, however, seen the correspondence file; and the course of the trial has given me a sufficient insight into the way the action was conducted (both by Mr Bancroft and by the Daughters’ solicitors). At the hourly rate charged the hours spent (implicit in the invoices raised) do not strike me on their face as entirely unreasonable. The invoices are a sufficient guide for the limited purpose of an interim costs order. I will order an interim payment of £60,000 also payable 8 February 2012.