Viva! Campaigns Ltd & Anor v Scott

VIVA! CAMPAIGNS LIMITED

THE VEGETARIAN SOCIETY OF THE UNITED KINGDOM LIMITED

These proceedings were commenced on 24.2.10 by the Claimants (Cs) as residuary legatees of the last will of John McKeen (JM) executed on 10.8.06 (the Will). In the course of his life, JM had made four earlier wills (in 1994, 1996, 1998 and 2003). JM died on 23.11.07. Mrs Scott (D) is JM’s younger sister and his heir on intestacy. Cs brought these proceedings because D had entered a caveat against JM’s will on 14.12.07. In response, Cs entered a warning on 19.2.09 and, on 4.3.09, D entered an appearance to the warning. Initially, D asserted rights in relation to JM’s estate based on proprietary estoppel, but as matters developed the issues centred on a challenge to JM’s testamentary capacity and an assertion of want of knowledge and approval of JM’s wills (initially of the 2003 will and the Will). At trial, the issue was JM’s testamentary capacity in relation to all five wills.

D’s positive case got off to an unsuccessful start and, on 11.7.11, succumbed to a strike out application. In August 2011, D changed solicitors, who instructed Mr Blackett-Ord, and her case was reformulated by 31.8.11. D has also changed expert witnesses. Inevitably, adverse costs orders have been made against D. The final version of D’s case (set out in a reamended defence and counterclaim) was served on 12.10.12.

In the particular circumstances of this case, expert evidence as to JM’s mental condition was required and important. The relevant field was psychiatry and, within that, testamentary capacity. The expert witnesses were Professor Jacoby for Cs and, from about August 2012 (or possibly earlier), Dr Cutting for D. By the time of their joint report, which is dated 8.2.13, they were agreed that at all material times JM was schizophrenic and suffered from severe thought disorder. At trial, the difference between these experts was whether JM was capable of gathering or controlling his thoughts sufficiently to be capable of undertaking specific tasks, including those requiring a high degree of understanding such as making a will (Professor Jacoby’s view) or whether at all material times, and in particular in July/August 2006, JM was or should be deemed to have been incapable of making a valid will (Dr Cutting’s view). For reasons given in my judgment, which I delivered orally on 7.11.13, (the Judgment) I preferred and accepted the opinion of Professor Jacoby.

That still left for decision the question of whether in fact when JM made the Will - or if relevant, and taken in reverse order, his earlier wills - JM actually had capacity. For the reasons also given in the Judgment, I found that JM did have capacity when making the Will and held that the Will is valid.

In so doing, I accepted as reliable the evidence of Cs’ witnesses who had had professional dealings with JM in relation to property transactions and the execution of four of his five wills that, throughout their dealings with JM, they had had no doubts about his capacity or his ability to comprehend and give clear and rational instructions in relation to his affairs and property, in short that he knew what he was about.

In relation to the other witnesses of fact, I rejected as unreliable the evidence of a potentially important factual witness called by Cs, Sally Conlin-Jones (SJC), but accepted the evidence of another important factual witness, Amanda Smith. I accepted much, but not all, of the evidence of Allan Shepperd, an important factual witness called by D, and found his photographic record of the state and contents of JM’s home shortly after his death helpful. I rejected significant aspects of the evidence given by D and her husband, Ronald Scott. I also read and considered the other evidence, including the unchallenged written evidence and the written evidence adduced on behalf of D pursuant to Civil Evidence Act notices.

On analysis of the factual evidence, as I said at the conclusion of the Judgment, I had no hesitation in finding on the facts for Cs and holding that the Will is valid.

The parties wished to proceed to submissions as to costs following on from the Judgment. The available time was 2 hours (3.30pm – 5.30pm). With a view to assisting the focus of counsel’s submissions, I indicated my provisional view based on the material referred to at trial and the trial itself, and, of course, in ignorance of any offers that might have been made and any other matters that might be relied on as relevant, including procedural conduct. My provisional approach was that there were three main features to be taken into account as reinforcing or adjusting the starting point under the CPR that Cs, as the successful party, should be entitled to recover their costs from D :

up to 31.8.11, and in so far as not already ordered, D should pay Cs’ costs. Put shortly, the reinforcing and additional reasons were that up to that point D’s case was still under development and was materially flawed, and that D had instructed an expert witness (Dr Reveley) and had served her report but later abandoned that expert’s evidence when Dr Cutting was instructed;

as from 1.9.11, as an adjusting reason, the experts’ costs in relation to Professor Jacoby and Dr Cutting, but not Dr Reveley or Dr Foster (another expert instructed by D but not called at trial), and possibly the general costs should be paid out of the estate or by each party because JM’s mental condition and aspects of his conduct raised genuine doubt as to his testamentary capacity; but,

there had been some conduct on the part of Cs (SJC as a witness) and significantly more conduct on the part of D (material aspects of D’s and her husband’s involvement and evidence) which warranted at least disallowance, if not a positive adverse order, and the net balance was unquestionably against D.

Of course, this provisional indication was open to modification or abandonment in the light of the parties’ correspondence and their submissions as to costs.

Miss McDonnell, Cs’ counsel, submitted that as Cs had won they should have their costs paid by D. She further submitted that Cs had made a number of offers over the course of the proceedings which were all on better terms than those now facing D, and that D had made a counter offer which Cs had beaten. In particular, Miss McDonnell relied on a letter dated 6.8.13 containing an offer pursuant to CPR Part 36 as a basis for submitting that as from 28.8.13 Cs should have their costs on the indemnity basis together with interest on those costs at 10.5%.

In relation to the proposal that certain of the expert’s costs or any other costs might be ordered to be borne by JM’s estate, which Miss McDonnell submitted meant borne by Cs, or even by each of the parties in respect of their own costs, Miss McDonnell submitted that (1) earlier without prejudice save as to costs offers, and (2) facts and information known by and available to D would render such an order unjust.

As to earlier offers, Miss McDonnell referred to :

Cs’ offer on 17.2.12 in effect to pay £100k to D with each party bearing their own costs, which Miss McDonnell submitted Cs had beaten;

Cs’ offer on 14.1.13 of £155k tax free out of the net estate subject to D paying £55k in respect of outstanding costs and C’s costs to date. Cs asserted that this was an offer equivalent to £210k, which implies that Cs were accepting a costs reduction of £55k; however, D understood the offer as a repetition of the offer made on 17.2.12. Either way, Miss McDonnell submitted that Cs had beaten this offer;

D’s counter offer of 3.7.13, which took issue with the level of cover under Cs’ ATE policy and proposed that D should receive 55% of JM’s net estate with the costs of all parties, excluding those the subject of costs orders, being borne by JM’s estate, which Miss McDonnell submitted was in effect a proposal that JM’s estate bear the costs and which Miss McDonnell further submitted had been beaten by Cs.

As to information known to D, Miss McDonnell submitted that :

as at 17.2.12, D would have known the family dynamics, Cs’ pleaded case, D’s own case as her current legal team had been instructed some 6 months earlier, and Professor Jacoby’s initial view which had led to a second report from Dr Reveley and a report from Dr Foster (neither of which were relied upon by D at trial);

as at 14.1.13, the pleadings had been finalised in reamended form. By 11.2.13, the date of D’s reply rejecting Cs’ offer made on 14.1.13, Dr Cutting and Professor Jacoby had met and produced their joint report; disclosure had taken place (so that even if D did not know from her own approach to Mr Ellis of Francis & Co to be a witness for her, she should have known from the Francis & Co file as disclosed that on three occasions Mr Ellis had considered JM capable of making a will) and D will have known that JM gave instructions to solicitors on other matters; and, statements of factual witnesses had been exchanged; and,

as at 3.7.13, Cs had provided an estimate of their base costs to the conclusion of the trial and given notice of the fact that their legal representatives had entered into CFAs; D had disclosed her likely costs of the action as being in the order of £240k; and, D had also been notified that Cs had obtained ATE insurance and that the level of cover was up to £2million, which was the lowest upper limit of cover available.

In relation to conduct, Miss McDonnell submitted that D’s conduct was marked by delay, aggressive attitude, and internal inconsistency and that many of the criticisms she had made at trial of D and her witnesses, particularly D’s husband, and of D’s case had been borne out by specific or broad acceptance in the Judgment.

As to the points raised by me that (1) expert evidence was inevitable in the circumstances of this case, (2) the parties had failed to co-operate in relation to experts with the result that different instructions and material had been provided to the experts, and (3) as late as the eve of the trial, several months after the experts’ joint report, the parties agreed that the experts should submit further reports, Miss McDonnell submitted that in this area of law the parties always produce their own instructions to experts and that there was nothing wrong with the instructions given to Professor Jacoby.

In summary, Miss McDonnell submitted that (1) having regard to the offers that had been made in and from February 2012 and to the information available to D, it would be unjust for Cs to be deprived of any part of their entitlement under the Will by an order that even some part of the costs of these proceedings should be borne by JM’s estate and thereby fall upon them; (2) the court should abstain from ordering that even the reports of Professor Jacoby should fall upon the estate, which would be an order requiring Cs to bear that part of their own costs; (3) ditto the general costs of the action, whatever they might be, between 1.9.11 and 17.2.12; and, (4) having regard to the outcome of the trial and to all relevant circumstances, including in particular Cs’ offers and D’s conduct and counter offer, the just order for costs was that sought by her for Cs, namely that, insofar as not already the subject of court orders, D should pay all Cs’ costs, the standard basis being applicable to costs incurred before 28.8.13 and the indemnity basis with interest at 10.5% being applicable to costs incurred as from that date.

Mr Blackett-Ord immediately acknowledged that D could not resist an order for costs (in so far as not already the subject of costs orders) up to and including 31.8.11.

Mr Blackett-Ord submitted that as from 1.9.11, in the circumstances of this case, an exception should be made to the general CPR rule that costs follow the event and the costs should fall on JM’s estate. For a short statement of the relevant principle, Mr Balckett-Ord referred to Williams, Mortimer and Sunnucks on Executors, Administrators and Probate, 20^th edition, at paragraph 39-04, as support for the proposition that JM’s “habits and mode of life … have brought about the litigation” and that JM’s mental condition and his “own conduct led to the will ‘being surrounded with confusion or uncertainty in law or fact’. As a result, a residuary legatee who succeeds in proving the existence of a will may under this exception end up paying the unsuccessful side’s costs”.

Mr Blackett-Ord submitted that the idea that D knew or ought to have known about JM’s instructions to and correspondence with Francis & Co and other professionals about his property transactions and wills was fanciful, at any rate until after disclosure in May 2012.

Mr Blackett-Ord submitted that, accordingly, there should be a period, starting on 1.9.11, for which costs should come out of JM’s estate.

As to the end date, Mr Balckett-Ord submitted that there was more than a real issue to be tried and that it was reasonable for D to run the case that she did up to the date of the experts’ joint report (8.2.13).

Mr Blackett-Ord submitted that, going forward from February 2013, two specific matters weigh so heavily against Cs’ contentions that all references to offers and other conduct fall away. These points were identified as (1) Cs’ ATE insurance cover and (2) Cs’ refusal to mediate.

Mr Blackett-Ord submitted, correctly, that Cs’ ATE policy, obtained and notified in March 2013, was notified on the basis that the level of cover was £2million not ‘up to’ £2million.

Mr Blackett-Ord submitted that this had the effect of rendering the proceedings incapable of settlement once D looked into the cost of a policy as notified. Mr Blackett-Ord referred to the fact that no warning or indication of intention to obtain ATE cover was notified. Evidently, D made her own enquiries of the likely cost of ATE cover at £2million and was told that the premium would be £1million. Mr Blackett-Ord disputed Miss McDonnell’s assertion as to the lowest available cover, and submitted that ATE policies for cost cover limited to £250k were available. I interject here that neither party had come to court with any evidence to substantiate their counsel’s respective assertions. Mr Blackett-Ord submitted that D had found Cs’ conduct difficult to comprehend and, reasonably, had written to Cs stating her assumption that cover had been taken out in relation to a number of ongoing actions with differing prospects of success; in response, Cs provided an assurance that the policy related only to these proceedings. Mr Blackett-Ord referred to D’s protests that the policy and the likely cost bore no relation to D’s litigation costs and to Cs’ response that any information about costs insurance is privileged.

Mr Blackett-Ord acknowledged that eventually, on about 18.9.13, Cs informed D that the sum of £2million was a “long stop” or upper limit of a policy covering the aggregate of adverse costs and expenses. D responded immediately contending that the premium would be reduced to reflect the true risk being insured. Mr Blackett-Ord submitted that it was not until the costs hearing that his clients became aware that the premium was £163k and not a much, much greater sum.

As to further mediation, this appears to have been proposed by an open letter from D’s solicitors dated 17.5.13. Mr Blackett-Ord referred to Cs’ solicitors responses : questioning the purpose of a mediation in the light of the failed mediation in February 2012, asking D to state a basis on which a further mediation would produce a settlement, and seeking both a payment of £25k on account and in respect of existing costs orders adverse to D and a contribution to Cs’ mediation costs as pre-conditions for a further mediation.

D had urged Cs to mediate in the light of Professor Jacoby’s “volte face” moving from describing JM as an “eccentric man” to one who “suffered from schizophrenia and formal thought disorder and showed evidence of severe mental disorder”.

As to the earlier failed mediation, Mr Blackett-Ord submitted that this was undertaken at an early stage before disclosure and exchange of factual witness evidence, and before Dr Cutting had been engaged by D. Mr Blackett-Ord submitted that a mediation in or after May 2013 was a very different prospect and that Cs’ pre-conditions were unreasonable.

In relation to the various offers to settle Mr Blackett-Ord submitted that :

the 17.2.12 offer was tantamount to an offer to have D’s costs paid out of JM’s estate, i.e. broadly the order contended for on behalf of D;

the same applied to the 14.1.13 offer all the more so because D had incurred further costs;

D’s counter offer of 3.7.13 was not beaten by D, an inevitable concession by Mr Blackett-Ord; and,

Cs’ CPR part 36 offer could not be accepted in the light of exposure to a premium believed to be in the order of £1million and Cs had refused to explain how such a policy could be justified; thus, having regard to CPR part 36.14(4)(c) and (d), on the information available to the parties at the time and having regard to Cs’ failure or refusal to explain the working and calculation of the ATE premium rejection of the offer was appropriate.

Rounding off his submissions, Mr Blackett-Ord contended that (1) until the production of the experts’ joint report, the issue of JM’s testamentary capacity really lay in the balance and JM himself could fairly be said to have brought about the litigation; and, (2) thereafter, Cs’ refusal to mediate and conduct in relation to the ATE policy obliterated Cs’ reliance on their CPR Part 36 offer.

In reply, Miss McDonnell drew attention to the fact that D had been notified of the existence and outline cover of the ATE policy in March 2013 and had made no or no adequate enquiries as to the likely premium; moreover, on 18.9.13 Cs had sent D a copy of a letter from their insurer explaining that the policy was limited to the risk covered, that the premium was unconnected to the maximum (“longstop”) amount, and that the premium was directly proportionate to the costs incurred by D. Miss McDonnell also drew attention to D’s response (Footnote: ¹ ) and to the fact that the CPR Part 36 offer remained open for acceptance and could then have been accepted.

The starting point is the general rule under the CPR that costs follow the event. In general terms, such an order is to be viewed as the just reflection in costs of what has been decided substantively. Nevertheless, (1) where a testator has brought about the litigation, the court may order that the losing party’s costs are paid out of the estate, and (2) where the circumstances are such that investigation of a propounded will was reasonable, the court may order the parties to bear their own costs. In a case such as the present, just determination of the costs may require a hybrid order drawing on these further well recognised principles.

It is common ground that D should be ordered to pay the costs of the litigation up to and including 31.8.11, insofar as not already the subject of a court order, and that the standard basis is appropriate.

As at and going forward from 1.9.11, was it reasonable for D to pursue her challenge to or call for an investigation of JM’s testamentary capacity?

On my findings, D was not close to JM but she had first hand experience of his unusual habits and mode of life (albeit that she and her husband exaggerated them in their evidence). In 2000, D understood that JM had made a will or wills leaving some 40% of his estate to her sons. Following JM’s death, D learnt that he had made later wills removing and then replacing a substantial bequest with only a token bequest to her sons, and the Geography Book (GB) was passed to her. D instructed Dr Reveley in August 2008 and received Dr Reveley’s first report on 30.12.08, shortly after D had entered a caveat.

Cs on the other hand did not instruct Professor Jacoby until the latter part of 2011, i.e. until after D had engaged her present legal team and D’s case had been reformulated. Professor Jacoby produced his first report on 5.12.11, also before disclosure and exchange of written factual evidence. Professor Jacoby’s first report did not close the door on testamentary incapacity.

In my view, it was reasonable to question whether JM’s exclusion of his family went beyond the perversity permitted by law and was the irrational product of an abnormal mental condition, and it was reasonable for D to place weight on the GB in this regard. Whether it is right to conclude that JM brought about this litigation is another matter.

As at 17.2.12, D had not received Cs’ disclosure (although of course she knew that JM had made a number of wills), Dr Cutting had not been instructed, and written factual witness statements had not been exchanged. D knew that the value of JM’s net estate far exceeded the terms of the offer then made to her.

On the other hand, there is a public interest in encouraging settlement of litigation.

Viewed in context, I do not regard D’s rejection of Cs’ 17.2.12 offer as conduct sufficient to undermine the reasonableness of continuing to investigate or, if otherwise justified, to challenge JM’s testamentary capacity.

Going forward from 17.2.12, (1) disclosure, including documents made available by professional witnesses engaged in property and will drafting by JM, occurred in May 2012; (2) D abandoned expert evidence she had obtained from Dr Reveley and Dr Foster; (3) D instructed Dr Cutting before August 2012 and he issued his first report on 1.9.12. Dr Cutting has particular expertise in relation to thought disorder, which he considered to be severe in JM, and he agreed with Professor Jacoby’s view that JM had a predisposition to schizophrenia; (4) the written evidence of the factual witnesses was exchanged on 29.11.12; and, (5) Professor Jacoby and Dr Cutting produced their joint report on 8.2.13.

The seriousness of JM’s condition was confirmed by the experts’ (Footnote: ² ) agreed diagnosis of schizophrenia and severe thought disorder. Mr Blackett-Ord contended that the joint report marked a volte face on the part of Professor Jacoby; that is not my view. Although I did find that Professor Jacoby modified his views to some extent, in part because he had regard to Dr Cutting’s expertise in thought disorder, the main reason was that Professor Jacoby was asked to consider different questions as the case developed. The underlying reason for this was that the experts were being asked to opine before all the factual evidence was available and to address different questions (which, I pause to observe, has in my view led to unnecessary costs being incurred on both sides in this case). As I see it, Professor Jacoby refined and became more confident in his opinion as more material became available; whereas Dr Cutting was hindered by his reliance on his original instructions and in particular on a lengthy statement or report prepared by D.

This carries the time line through to 11.2.13, that is three days after Professor Jacoby and Dr Cutting produced their joint report and when D rejected Cs’ 14.1.13 offer. By this time D had had a reasonable opportunity to evaluate Cs’ case and evidence. At this point, D had not revived the question of mediation and the ATE insurance policy had not been taken out. Thus, these two points have no impact upon my determination of whether the costs of the period 1.9.11 to 11.2.13 should be borne by JM’s estate, or whether the parties should bear their own costs, or whether D should pay Cs’ costs.

I consider that the instruction of experts in the field of psychiatry was inevitable.

But for certain aspects of D’s instructions to Dr Cutting and of Dr Cutting’s evidence, I would order that the costs of and relating to the expert evidence of Professor Jacoby and Dr Cutting from 1.9.11 to 11.2.13 should be borne by JM’s estate. The circumstances which incline me against such an order are the content of the instructions to Dr Cutting and the impact of such instructions on Dr Cutting’s evidence. The findings in the Judgment include that (1) Dr Cutting was heavily influenced by the lengthy and partial document prepared by D and included as part of his instructions; (2) he was not asked to, or did not, consider important material which had become available upon disclosure and exchange of witness statements before the joint report; (3) under cross-examination he was not able to explain parts of his report; and, (4) he had allowed his view as to the import of the GB to affect his consideration of time and task specific matters.

Accordingly, D should bear her own costs of and related to her expert evidence given by Dr Cutting. If, which is not the case, I thought this a borderline case for ordering payment of the expert evidence out of JM’s estate, D’s attempt to involve Dr Cutting in keeping information which D thought potentially relevant about other mental illness in her family confidential between the two experts would drive me to the conclusion I have already reached.

Should Cs recover their costs of and relating to their expert evidence over the period 1.9.11 to 11.2.13 from D? Put shortly, insofar as the costs relate to consideration of Dr Reveley’s or Dr Foster’s reports they should because that evidence was not relied on at trial; but, as from the instruction by D of Dr Cutting they should not because the incursion of such costs was inevitable in the circumstances of this case irrespective of the attitude of D. The fact that D approached JM’s testamentary capacity as a matter to be hotly contested rather than a matter for investigation does not detract from the fact that it was a matter for investigation or from the assistance that evidence afforded to the court.

There is one minor respect in which an order relating to Professor Jacoby’s evidence is to be made against Cs. At the outset of the trial, Cs agreed to pay £1.5k inclusive of VAT towards D’s costs of Cs’ application to adduce a third supplemental report of Professor Jacoby.

As to the general costs of the litigation during the period 1.9.11 to 11.2.13, such costs include both disclosure and the preparation of the factual evidence. If D had approached this litigation as an inquiry into the testamentary capacity of her brother and had acknowledged that she and her family were not close to JM, there might well have been some scope for an order as sought by Mr Blackett-Ord. However, D’s case was driven by her firm view that JM’s estate comprised family money which should stay within the family, and D’s approach to the litigation and the tone and content of her and her husband’s evidence was plainly combative. Subject to one minor exception, there is no good reason why D should not pay Cs’ costs of their factual case through to 11.2.13; the exception is that Cs should bear the costs of obtaining and preparing SJC’s witness statement.

As from 11.2.13, D had considered and rejected an offer which would have produced a better result for her than that which Cs have obtained. However, very shortly thereafter Cs notified D that they had obtained ATE insurance cover for D’s costs at a level of £2million and, in May 2013, D sought to revive the prospect of resolution by mediation.

As to the ATE policy, on 5.3.13, that is a fortnight before Cs obtained ATE insurance for their exposure to D’s costs, D provided an up to date estimate of their costs totalling £240k through to the conclusion of a trial. This was consistent with Cs’ own base costs estimate at 23.1.13 (£154k to 23.1.13 and a further £98k to the conclusion of the trial).

As to Miss McDonnell’s submission that Cs obtained a policy for the lowest level of cover available, I observe that it is not easy to accept that ATE insurance is not available to cover exposure to adverse costs limited a sum below £2million, whether it be £250k or some other sum. The true position is that it was not until 18.9.13 that Cs provided information from which D could deduce that (1) the ATE policy was not for a fixed costs exposure of £2million but was to provide an indemnity in respect of adverse costs whatever they might turn out to be up to a maximum sum of £2million, and (2) the premium was not based on an insured sum of £2million but would vary according to D’s actual costs.

That D found Cs’ notice extraordinary is unsurprising. In correspondence, D disclosed that advice had been sought from other ATE insurers and contended that should Cs succeed the court would be likely to confine the amount of the premium recoverable in costs to that properly payable on a policy relating to D’s actual costs. However, D did not ascertain and put to Cs the likely cost of a policy for adverse costs cover limited to £250k. Even if they had, it is far from clear what Cs’ response would have been.

When I asked Mr Blackett-Ord whether D would have expected the premium for ATE cover in respect of the opposing party’s costs to be in the order of £160k he candidly answered that D did not know but that D was right to call for mediation.

It seems to me that the answer to D’s objection to an adverse costs order based on Cs’ ATE cover is that D could have made a counter offer carving out an accepted level of exposure to an ATE premium based on a policy for adverse costs risk limited to £250k, but she did not. In my view, the ATE point was not a stumbling block to settlement of this case; nor was it an obstacle to acceptance of Cs’ CPR Part 36 offer. The real obstacle to settlement was D’s belief or position that JM’s estate was comprised entirely of family assets which should remain within the family.

As to Cs’ response to D’s proposal to mediate, I do not regard Cs’ pre-conditions as unreasonable barriers to mediation. I agree with Mr Blackett-Ord that a mediation in May 2013 would have been very different from the mediation that had taken place in February 2012. For one thing, disclosure and the written evidence of the professionals and HSBC employee who took instructions for JM’s wills and who acted in his property affairs would have been on the table; and, for another, the mediator would have been likely to have disabused D of any notion that Professor Jacoby had reversed his opinion.

In my judgment, neither the ATE policy nor Cs’ pre-conditions and reserved attitude to participation in a further mediation, even when combined, justify a departure from the general rule as to costs.

As Mr Blackett-Ord conceded, D did not achieve a result equivalent to her offer of 3.7.13.

As to Cs’ CPR Part 36 offer, this should have the effect as from 28.8.13 contended for by Miss McDonnell.

In summary, my decision on liability to costs is that :

in so far as not already the subject of costs orders or agreement and subject to certain exceptions, D is to pay Cs’ costs on the standard basis up to and including 27.8.13 and on the indemnity basis together with interest at 10.5% as from 28.8.13;

the earlier court orders are a matter of record;

there is one relevant agreement, namely that Cs are to pay £1.5k inclusive of VAT towards D’s costs of Cs’ application for permission to adduce the third supplemental report of Professor Jacoby; and,

the exceptions are that (a) Cs are to bear the costs of obtaining and preparing the witness evidence of Sally Conlin-Jones, (b) Cs are to bear the costs of Professor Jacoby’s reports and communications with Dr Cutting from the date on which Dr Cutting was instructed by D to 8.2.13, and (c) to be consistent with the agreement to contribute towards D’s costs of the application concerning Professor Jacoby’s third supplemental witness statement, Cs’ own costs relating to the application (but not of the report itself) should be disallowed.

Dealing first with the principles for a payment on account, CPR Part 44.3(8) confers a discretionary power to order a payment on account before assessment of costs. Where it is clear that there is a receiving party and a paying party, it will generally be appropriate to make such an order if sought by the receiving party. The underlying principle is that a receiving party should not be kept out of monies due, or capable of being estimated as very probably due, and this is all the more so after a trial.

When considering an application for a payment on account, the court will take into account all relevant circumstances including whether the unsuccessful party wishes to appeal, the respective financial circumstances of the parties, the criteria underlying the overriding objective (including avoidance of delay), the conduct of the parties insofar as relevant to assessment of costs, the subject matter of the matter, the importance to the parties and complexity of the matter, the degree of expertise required or appropriate, and any other relevant circumstances.

The aim is not to impose a requirement which would be likely to stifle of significantly inhibit an appeal or to estimate an irreducible minimum which the receiving party is bound to recover on an assessment on the relevant basis but (1) to make a realistic, albeit rough and ready and cautious, pre-estimate of the probable outcome on assessment (a) on the material and information available and then known to the court and (b) with a view to avoiding the likelihood of a repayment by the receiving party, and (2) to take into account any other relevant matters, such as the parties’ respective financial circumstances.

At the costs hearing, Cs produced an outline of their costs to the conclusion of the trial totalling £700k as follows :

From this summary it is appropriate to eliminate : (1) a sum reflecting the costs already the subject of costs orders and in respect of which payments have been ordered and made, and (2) at least half the sum claimed for VAT because one of Cs is registered for and able to recover VAT. As to (1), Miss McDonnell submitted that Cs’ costs already the subject of costs orders totalled some £80k; in addition, some adjustment will be required for costs disallowed by me in principle. As to (2), I propose to leave VAT out of account altogether at this stage and I make a further reduction of £89k. Cs’ total costs to the conclusion of the trial in respect of which a payment on account was sought after adjusting out £80k and the full provision for VAT was £531k. Cs sought a payment on account of 60%, in round terms £320k.

A further point for me to bear in mind is that as from 28.8.13 assessment of Cs’ costs is to be on the indemnity basis. The only source of information I have for identification of those costs condescending to any detail is Cs’ costs estimate of 23.1.13 in which attendance at trial and the cost of the trial bundle as well as the trial fee are stated as £19k attributable to solicitors’ base costs, £30k as attributable to counsel’s base fee, £4k attributable to expert evidence and £1k attributable to court fees; these amounts total £54k before uplift and VAT. The uplift would total £34k. Other costs may well have been incurred between 28.8.13 and the commencement of the trial but I do not have the necessary information for the purposes a payment on account.

I do not include the ATE premium of £163k in this period for the following reasons (1) the policy was notified to D on 22.3.13, i.e. before the CPR Part 36 offer; and, (2) although Cs’ insurer, in a letter dated 17.9.13, has said that the cover provided is exactly proportionate to the cover needed and might be described as infinitely staged, and that, by reference to D’s costs estimate of 5.3.13 and Mr Blackett-Ord’s fee note, it would be possible to estimate an apportionment of the premium attributable to costs as from 28.8.13, I consider that to be a step too far for this type of costs decision. Accordingly, I shall consider what, if any, amount of the premium to take into account when considering Cs’ pre-28.8.13 costs (which are to be assessed on the standard basis).

Thus, for the purposes of a payment on account of Cs’ costs, I treat £88k as attributable to the period as from 28.8.13 and, by deduction, £443k as attributable to the earlier period.

Cs’ solicitors have also included an estimate of post trial costs through to judgment and argument on costs, i.e. from 16.10.13 to 7.11.13. The total sought in respect of solicitors, including 100% uplift and VAT at 20%, is in excess of £34k and in respect of counsel for attendance at the hearing, including 50% uplift and VAT at 20% is £4k, producing an additional total in excess of £38k.

The narrative relating to the additional £34k is that the work done includes liaising with Cs following the trial, liaising with the court in relation to the judgment hearing, preparing for the judgment hearing, preparing submissions as to costs, attending the hearing on 7.11.13, and liaising with the court, counsel and Cs on the day of the hearing.

Cs’ application for a payment on account was addressed only very summarily because of the lateness of the hour.

In very brief submissions, Miss McDonnell acknowledged that adjustment should be made to deduct the amount included in respect of costs already the subject of orders for payment (£80K) and might also be made in respect of VAT, and sought a payment on account of 60% of the balance, namely £320k in round terms. No specific application was made for a payment on account of the post trial costs.

In even briefer submissions, Mr Blackett-Ord candidly accepted that a payment on account would require his client to pay a six figure sum and asked for time or instalment payments to allow D a realistic opportunity to sell a property in central London; that is a stage (2) matter and, of course, other considerations are relevant at that stage, such as whether D might use the property as security to raise a loan while it is being marketed for an orderly sale.

Given the shortness of hearing time, I permitted D to file brief written information as to (1) enquiries made by D prior to the trial about Cs’ ATE policy insofar as not already before the court and about the cost of ATE cover in respect of D’s estimated costs, and (2) evidence of D’s assets and income so that I could consider instalment payments. Although I have received a considerable amount of other material from D and Cs, that was the only further information I sought and have taken into account. The only information sought and not already before the court was a note as to D’s assets and means. In the end, my clerk had to send an e-mail asking the parties to desist from sending further e-mails to the court. I have disregarded all other material and Cs’ costs in relation thereto are to fall outside the costs order I have made.

As to the amount of D’s payment on account, I shall deal first with the period as from 28.8.13, which are to be assessed on the indemnity basis; that is costs totalling £88k. In the context of this case, the following matters are relevant. First, although the matter was substantial and important to the parties, it was not a case in which it was reasonable for counsel to be attended at trial by more than one solicitor, and although attendance by the partner was appropriate for part of the trial, it is questionable whether it was reasonable for a charge to be made for a partner’s attendance throughout the trial. Secondly, the CFA uplift is more appropriately considered at a detailed assessment; however the Judgment acknowledges the existence of a real issue as to testamentary capacity and, therefore, risk; I consider it unrealistic to expect a costs judge to assess the appropriate uplift at less than 50%. Thirdly, the costs estimate on which the £88k starting point was based will not have included a sum relating to the application to adduce Professor Jacoby’s third supplemental report, and no further adjustment is required. Making the necessary adjustments, the payment on account relating to the period from 28.8.13 to the conclusion of the trial should be £65k. Miss McDonnell’s brief fee will have been incurred at least in part some weeks before the trial and a month has already passed since the conclusion of the trial; given the impact of Cs’ successful CPR part 36 offer, a further £1k should be added for interest.

Cs’ pre-28.8.13 costs, excluding costs already the subject of other orders, are to be assessed on the standard basis. Cs’ solicitors’ costs were estimated by Cs at £120k before uplift and, having regard to Cs’ and D’s estimates, I would expect Cs to have no real difficulty justifying as reasonable and proportionate after also adjusting for disallowable items a recoverable sum of not less than £70k. As to counsel’s fees, having regard to both Cs’ estimate and Mr Blackett-Ord’s fee note (and here bearing in mind that Mr Blackett-Ord was not instructed until mid-2011), it is equally likely that Cs will be able to justify a sum of not less than £30k. The fact of CFA uplifts was referred to in Cs’ costs estimate of 23.1.13, but I was not referred to material showing an earlier notification. By 23.1.13, disclosure and exchange of factual witness statements and service of experts’ reports had occurred. Between 23.1.13 and 27.8.13, the experts met, ATE insurance was obtained, a further mediation was discussed, and trial preparation will have been begun (including at least some work on the trial bundle). It is highly improbable that Cs will be unable to justify an uplift of at least £10k in respect of the costs incurred in the period 23.1.13 to 27.8.13.

Cs’ disbursements during this period include issue fees, the expert witness pre-trial costs and, for the reasons stated above, the ATE premium attributable to the policy notified to D on 22.3.13. In the light of Mr Blackett-Ord’s submissions, I anticipate that there will be challenges to some, if not all, of the ATE and further related costs and the premium. The costs of Professor Jacoby’s expert reports are to be borne by Cs as from the instruction of Dr Cutting to 8.2.13. On the information available, I think it highly likely that a sum of at least £3k will be recovered on a standard basis assessment in respect of disbursements other than the ATE policy and professor Jacoby’s expert reports.

As to the ATE premium of £163k, the short point is that there was very little information or time for argument available on 7.11.13, and for that reason I do not consider it appropriate to take the premium into account at all at this stage. I am not in a position to assess whether or not it is realistically open to D to argue that liability for the premium should not fall on D or, if it should, whether or not Cs’ costs of obtaining the ATE policy should be limited to those incurred after the true nature of the policy (‘up to’ rather than fixed at £2million) was notified and what those costs were.

Thus, I consider that the payment of account of Cs’ costs for the period up to 28.8.13 should be £113k.

Finally, I come to Cs’ post-trial costs. I cannot help but observe that even before the 100% uplift Cs’ solicitors’ costs are staggeringly high for the low level of activity reasonably to be undertaken in this period.

As to liaising with the court in relation to the judgment hearing, anything more than merely nominal time of an assistant solicitor cries out for justification as to reasonableness. From my perspective, a considerable amount of court time was taken up by repeated attempts to persuade me that judgment should not be given in the weeks commencing 4.11.13 and 11.11.13 because Cs’ counsel was briefed to prepare for a later trial of other proceedings; needless to say this was as unnecessary as it was unsuccessful and was unquestionably unreasonable.

As to preparation for the judgment hearing, preparation of a relevant correspondence bundle will have been reasonable, and indeed necessary, and some attendance on counsel if Miss McDonnell had not been involved in settling or advising on offers. At the judgment hearing, I was told that Cs had prepared a two volume correspondence bundle running to 721 pages. Only Volume 2, pages 361 - 721, was lodged during the hearing. Of that, reference was made to perhaps two dozen pages.

At the beginning of the costs hearing, Miss McDonnell handed up a 15 page draft submission on costs; a short 3 - 4 page bullet point format note would have been more useful, whether for this or for a longer costs hearing. Time and resources would also have been more usefully spent by Cs’ solicitors preparing a more useful costs summary.

Overall, I simply do not understand how anything approaching £14k, before uplift and VAT, could reasonably have been incurred or be thought reasonable in amount in relation to the post trial period in this case.

I understand from my clerk that the parties have continued to submit e-mails since 7.11.13. I have not had regard to any material submitted but not the subject of permission given during the hearing on 7.11.13 and, with the exception of the reasonable costs of a draft order submitted by Cs on 14.11.13, on assessment no such costs incurred after 7.11.13 are to be taken into account as recoverable from an opposing party in this action.

Having said all of that, Cs are entitled to their post trial costs on the indemnity basis and, in principle, there is no reason to refuse a payment on account. On the information available and having regard to the indemnity basis criteria, an appropriate sum to order at this stage for costs incurred post trial up to and including the judgment and costs hearing is £7.5k, including uplift at 50% but before VAT. Any additional sum will have to be agreed by Cs with D or determined by a costs judge on a detailed assessment. Although covered by Cs’ CPR Part 36 offer and therefore eligible for interest at 10.5% p.a., these costs were too recently incurred and are too small in amount to attract interest as part of a payment on account.

At the conclusion of stage (1), in my judgment, the total of the payment on account of Cs’ costs to be made by D is £186.5k. This is materially less than the sum sought by Miss McDonnell. The difference is explained broadly by my decision not to order any payment on account of the ATE premium whereas Miss McDonnell had sought a payment on account at 60% of the premium (£98k) and my allowance at the payment on account stage of a 50% uplift in respect of solicitors costs rather than the 100% uplift sought.

Turning to stage (2), the following questions arise : Is there any reason for not ordering a payment on account? If not, when and on what basis (lump sum or instalments) should this sum be paid? Mr Blackett-Ord did not intimate that D intended to seek permission to appeal. I am not aware of any other reason why an order for a payment on account should not be made. Following the hearing on 7.11.13, D did file information as to her means. In addition to her main residence, she and her husband jointly own two investment properties in London which are unencumbered and have an estimated aggregate market value of £1.25m. These properties are tenanted and produce gross annual rents totalling more than £40k. D’s beneficial interest is joint with Mr Scott and a sale will trigger CGT liabilities. However, there does not appear to be any reason why the sum of £186.5k may not be raised on the security of either of these properties for repayment out of the proceeds of sale. Such an arrangement would permit an orderly rather than a hurried sale. No other relevant circumstances were drawn to my attention.

As to time to raise a secured loan or make other arrangements, allowing for the Christmas and New Year period, I consider that 9 weeks from 7.11.13, that is to 10.1.14 is a reasonable period to allow for payment by D to Cs of £186.5k on account of Cs’ costs.