Wharton v Bancroft & Ors

In probate litigation, the general costs rule should be displaced only where the testator or another party caused the litigation, or where the circumstances gave the unsuccessful challenger reasonable and bona fide grounds to question the will’s validity. Suspicion or an arguable pleading is insufficient. Serious allegations of undue influence or fraud, pursued unsuccessfully and without a proper factual foundation, may justify indemnity costs. A technically valid Part 36 offer may attract the rule’s costs consequences even if it is tactical, provided it is not derisory or merely artificial. Separate costs may be awarded to an executor who reasonably attends and responds to allegations made against him.

The claimant had successfully proved the deceased’s 2008 will in probate proceedings brought by the defendants who challenged its validity. The judgment determined the consequential costs issues between the claimant, the challenging daughters and the executors.

The court considered whether the general rule should be displaced because the litigation was allegedly caused by the testator or claimant, whether the defendants had reasonable grounds for challenging the will, the appropriate basis of assessment, the effect of a Part 36 offer, the executors’ separate costs, interest and payments on account.

1. General probate costs rule. The general rule under CPR 44.3(2)(a) entitled the claimant to her costs. The court found that neither the deceased nor the claimant caused the probate action. The litigation resulted from the daughters’ refusal to accept evidence concerning the making and execution of the 2008 will. Their conduct did not justify payment of costs from the estate or an order that there be no order as to costs.
2. A reasonable cause for inquiry is distinct from an allegation which merely has some prospect of surviving an application to strike out, or from an arguable undue-influence case. The circumstances must reasonably have led the challengers to a genuine and bona fide belief that there were good grounds to impeach the will. That threshold was not met.
3. Indemnity costs. The claimant’s costs were ordered on the indemnity basis. The undue-influence and want-of-knowledge-and-approval allegations were legally and factually weak, involved serious charges pursued without a proper factual foundation, and were conducted outside the norm through excessive investigation of irrelevant matters. The court applied the approach in Reid Minty v Taylor [2001] EWCA Civ 1723, National Westminster Bank Plc v Rabobank Nederland (No. 2) [2007] EWHC 1742 (Comm) and Digicel [2010] EWHC 888 (Ch).
4. The claimant’s Part 36 offer was technically valid and produced a better result than the judgment. It was not derisory. The tactical nature of a Part 36 offer did not itself make it unjust to apply CPR 36.14. Indemnity costs therefore followed from expiry of the relevant period, with interest at 8% on the claimant’s post-offer costs.
5. The executors were also entitled to their reasonable costs on the indemnity basis. The first defendant had reasonably attended trial and responded to personal criticisms. The assessment was to include additional costs caused by the interim limited grant, following Re Howlett [1950] P 177 and Re Kostic [2007] EWHC 2909. Interim payments of £455,000 to the claimant and £60,000 to the executors were ordered.