Fitzhugh Gates (a firm) v Claudia Louise Elaine Borden Sherman

A wasted costs order requires improper, unreasonable or negligent conduct by a legal representative, causation of unnecessary costs, and a conclusion that compensation is just. The representative’s duty is ordinarily owed to the client, not the opposing litigant. A commendable practice of assisting litigants in person does not itself create a legal or professional duty capable of supporting such an order. An executor with common-form probate and no reason to doubt the will may reasonably seek directions and need not commence proof in solemn form merely for convenience. Costs of resolving entitlement to an estate asset may properly be paid from that asset. The applicant’s own unreasonable conduct and the absence of causally wasted costs may make an order unjust.

Emma and Len Woolnough had lived together in a house which was their principal asset. After Emma’s death, Len made a will excluding the family and leaving his estate to charities. Mrs Perkins obtained common-form probate and sold the house.

Claudia Sherman disputed whether the earlier joint tenancy had been severed and whether Len’s later will was invalid for want of testamentary capacity or undue influence. Mrs Perkins, advised by Fitzhugh Gates, issued an Originating Summons seeking an inquiry into Claudia’s entitlement. The Master determined the severance issue and ordered costs from the sale proceeds, but held that the capacity issue required a probate action. On a substantially delayed appeal, the deputy judge imposed a wasted costs order against Fitzhugh Gates. The central issues were jurisdiction, the form and conduct of the proceedings, notice to Claudia, alleged conflicts of interest, and the proper allocation of costs.

1. Appeal allowed. Carnwath LJ, with whom Sir Christopher Staughton agreed, set aside the deputy judge’s wasted costs order and restored the Master’s order. The appeal procedure had been highly unusual: permission was sought substantially out of time and used to mount a wide-ranging challenge to the solicitors’ conduct. Such applications should ordinarily be dealt with promptly by the trial judge, although this was guidance rather than a jurisdictional rule.
2. The statutory test under Supreme Court Act 1981, section 51, as explained in Ridehalgh v Horsefield [1994] Ch 205, required improper, unreasonable or negligent conduct, causation of unnecessary costs, and justice in ordering compensation. Conduct outside issuing and conducting the litigation was irrelevant. The alleged failure to tell Claudia of the Master’s preliminary view did not satisfy the test. Lawyers’ practice of assisting litigants in person was commendable, but, absent a legal duty or court direction, Fitzhugh Gates owed its duty to its client, not Claudia. Connolly-Martin v Davis [1999] Lloyd’s Rep PN 790 supported that conclusion.
3. The Originating Summons could not determine the validity of Len’s will; a probate action was required. Claudia had been advised of that requirement and could not shift the resulting costs after repeatedly threatening but delaying such proceedings. Mrs Perkins nevertheless faced a genuine dilemma and acted reasonably in seeking the court’s assistance. An executor with a common-form grant and no reason to doubt the will was not obliged to commence proof in solemn form merely for convenience. Fitzhugh Gates were also entitled to rely on specialist procedural advice from counsel, subject to their continuing responsibility.
4. The potential conflict between Fitzhugh Gates’ roles did not cause the wasted costs. The severance issue would have required determination in any event, and another solicitor would have incurred comparable costs. The Master was entitled to order costs relating to the house out of its proceeds. The fact that Emma’s estate indirectly bore part of the burden reflected its beneficial interest. There was no obligation to obtain a Beddoe order before proceedings; the relevant question remained whether the executrix had acted reasonably.
5. The final orders included repayment of interim costs payments of £850 and £15,000, costs against Claudia for the appeals, no order for costs before Judge Rich, and refusal of leave to appeal to the House of Lords.

• Court of Appeal (Civil Division): Appeal allowed. The wasted costs order was set aside and the Master’s costs order restored.
• Chancery Division: The deputy judge allowed the appeal from the Master’s costs order and ordered Fitzhugh Gates to bear the proceedings’ costs, less £1,750, on the indemnity basis.
• Master Moncaster: On 14 July 1999, the Master determined the severance issue and ordered the costs of the proceedings to be paid from the proceeds of sale before division.