James v James & Ors

A counterclaiming defendant may make a claimant’s Part 36 offer where the offer settles the counterclaim and takes the claim into account. An offer does not qualify as a Part 36 offer if its costs terms are inconsistent with Part 36. A stated intention to comply with Part 36 cannot cure a clear inconsistency, although the offer may still inform the court’s general costs discretion.

In a probate claim, costs may be left where they fall where the circumstances reasonably gave the unsuccessful challenger a bona fide basis for investigating the will’s validity. The rule applies even though the challenge ultimately fails.

The judgment concerned costs following a trial of a will-capacity challenge and a proprietary estoppel claim. The claimant failed on both issues, but disputed the defendants’ reliance on a letter dated 24 August 2017 as a Part 36 offer.

The court considered whether the letter was a valid Part 36 offer and, if not, how the ordinary costs rules and the special probate costs principle should apply. The central questions were whether the counterclaiming defendants could make the offer in the form used, whether its costs provision invalidated the offer, and whether the will challenge had been reasonably pursued.

1. Part 36 offer. A counterclaim is treated as a claim for CPR purposes, subject to specified exceptions which do not include Part 36. A counterclaiming defendant could therefore make a claimant’s Part 36 offer which took account of the claim. The offer was capable in principle of settling the counterclaim and the claims (paras [7]–[9]).
2. Costs term. The letter nevertheless included a costs term inconsistent with CPR rule 36.13(1). It required payment of costs to the end of the relevant period, or later acceptance, whereas the rule provided for costs only to the date of acceptance within that period. The expressed intention to comply with Part 36 did not require the court to construe clear wording as meaning the opposite. The letter was therefore not a Part 36 offer. Its terms could still be considered in the exercise of the general costs discretion (paras [10]–[16]).
3. Probate costs principle. The unsuccessful claimant had to show why the general rule that costs follow the event should not apply. The second principle in Spiers v English applied where the circumstances reasonably led to a bona fide investigation of the will. Moral blameworthiness was not required; the relevant question was whether the conduct or circumstances caused the litigation. The principle was not excluded merely because the challenger held a strong belief in an entitlement to inherit (paras [17]–[22]).
4. The claimant had medical and factual evidence raising a genuine question about testamentary capacity. The experts considered the issue close, and the absence of contemporary medical evidence and compliance with the so-called golden rule made the challenge reasonable, although it failed at trial. There was accordingly no order as to the costs of the will challenge.
5. The claimant accepted liability for the defendants’ costs of the proprietary estoppel claim. Those costs were ordered to be paid on the standard basis, subject to assessment if not agreed. The parties were invited to submit an agreed minute of order (paras [23]–[24]).

This was a first-instance judgment on costs following the trial judgment handed down on 19 January 2018. No appellate history is stated in the judgment.