Zoom Mediations (www.ihtbar.com)

Zoom Mediations (www.ihtbar.com) – The Government is poised to announce ‘Plan B’ rules including working from home as early as today.
‘It comes after experts warned Covid cases could hit 90,000 a day by Christmas, as hospital admissions begin to increase even before the more transmissible omicron variant takes hold across Britain.
The emergence of the omicron variant of the coronavirus in southern Africa last month is causing concern around the world, not least because it is thought to be highly transmissible and because the 32 mutations of its spike protein suggest it might be able to resist current vaccines.’ Source: The Independent (08.12.2021).

Reviews of my recent book

STEP published an online review of my book the ‘Contentious Trusts Handbook – Practice and Precedents’ today. For all reviews of the book, which was published by the Law Society, please visit the ‘Contentious Trusts Handbook’ page at www.ihtbar.com. For reviews of my previous book, the ‘Contentious Probate Handbook’ please visit the ‘Contentious Probate Handbook ‘ page at www.ihtbar.com.

Using transformative mediation as an estate planning process?

I am currently developing a three hour seminar to present next year by Zoom called, ‘Transformative Mediation’ – How to transform a Contentious Probate, Inheritance Act and Trust Dispute, into an opportunity to expand the pie by applying estate planning principles to develop bespoke and holistic family wealth structuring solutions.

The pie can be expanded by e.g.

(a) using estate/trust funds to pay for professional advice about estate planning and asset-re-structuring, instead of paying for escalating litigation costs;

(b) re-directing testamentary gifts to enhance tax-efficiency (and I am also currently co-writing an article with Stephanie Churchill CTA for Taxation about this); and

(c) re-structuring the holding of estate assets. It recently occurred to me that the application of estate planning principles through a process of transformative mediation can also be used to develop and implement a holistic plan for putting a family’s house in order before a dispute arises.

This might include e.g.

(i) reviewing and re-drafting a family trust deed that is not fit for purpose; and

(ii) altering the share capital structure of a family owned company, and re-drafting the articles and shareholders’ agreement/LLP Members Agreement for succession planning.

Where a business family does not know where to go, and how to start, a facilitated discussion about the joint development of a bespoke plan for:

(i)     business succession; and

(ii)    estate planning/ asset ownership structuring and fiduciary management, then as a process undertaken before a dispute has arisen, Transformative Mediation may be used to create a safe space in which each key family member can:

(a)    voice their individual: needs; concerns; hopes; expectations; and priorities, to a trusted neutral, and disinterested person, who has the soft skills to talk to them, i.e. a mediator; and

(b)    to speak through the mediator, to a multi-disciplinary team of professional advisors acting for the family, to jointly develop a bespoke and holistic plan designed to achieve defined objectives, with the flexibility to adapt to changes in circumstances. 

See also my blog: ‘We are all in this together!’ | Carl’s Wealth Planning Blog

My article new article ‘Electing between equitable remedies’

My new article ‘Electing between equitable remedies’, has been approved for publication by Oxford University Press for Publication in Trusts & Trustees, and is scheduled for publication in Issue 2 of the current volume (28).

Abstract

Carl Islam explains the operation of the principle of election, and concludes that in a breach of fiduciary duty claim, before an election between equitable remedies must be made by the claimant beneficiary, the judge should first consider the duties and powers of the defendant fiduciary. Because that exercise is inseparable from determination of breach, the author further submits that the exercise should be undertaken by the judge at the same time, i.e. at trial, before making a finding about breach. To request a copy of the article following publication, please send an email to carl@ihtbar.com

Trusts & Trustees is the leading international journal on trust law and practice, and the official journal of the International Academy of Estate and Trust Law. The most significant source of information in its field, the journal is essential for all trusts practitioners and lawyers.

Our distinguished editors Toby Graham (Partner, Head of the Contentious Trusts and Estates group, Farrer & Co., UK) and David Russell QC (barrister, and Deputy Chair of STEP Worlwide 2019 – 2020) lead a superb Editorial Board and team of Country Correspondents, including Lord Peter Millett, Richard Pease, and Nicholas Le Poidevin QC, who are well placed to provide unparalleled international coverage.

The journal is ideal for international trust lawyers working in both private practice and in-house in trust companies; trusts practitioners; and those working in trust companies. It will also be an essential source of reference for academics specializing in trusts; members of the judiciary; members of regulatory bodies; and institutional libraries.’

About | Trusts & Trustees | Oxford Academic (oup.com)

About the author

Carl Islam LLM (Exon)(International Business Law), of Lincoln’s Inn and the Middle Temple, Barrister-at-Law (practising), TEP, SCMA accredited mediation advocate, MSoM, Certified Mediator and Panel Member of the Society of Mediators in London. Dual qualified as a Solicitor of the Supreme Court. Registered Public Access Barrister and authorised by the Bar Standards Board to conduct litigation. Chambers of Ian Mayes QC, First Floor, 1 Essex Court, Temple, London (www.1ec.co.uk). Author of the ‘Contentious Probate Handbook – – Practice and Precedents’ (published by the Law Society in October 2016); the ‘Contentious Trusts Handbook – Practice and Precedents’ (published by the Law Society in July 2020); and of ‘Tax-Efficient Wills Simplified’ (Amazon Kindle book). As a practising Barrister and Mediator, Carl specialises in Contentious Probate, Inheritance Act, and Trust Disputes (including Co-Habitation and Ownership of Property). Carl is also a contributor to Taxation (Tolley), and is developing the outline of a six hour course to present by Zoom from May 2022 entitled, ‘Trust Disputes, Litigation & ADR’.. For more information please visit, www.ihtbar.com. I am currently co-writing an article with Stephanie Churchill CTA for publication by Taxation early next year entitled, ‘The use of DOV’s, s.142 appointments with reading-back under s.144, and disclaimers, in settling a contentious probate dispute.’ I am also developing the outline of a six hour course to present by Zoom from May 2022 provisionally entitled, ‘Transformative Mediation’ – How to transform a Contentious Probate, Inheritance Act and Trust Dispute, into an opportunity to expand the pie by applying estate planning principles to develop bespoke and holistic family wealth structuring solutions.

‘We are all in this together!’

Mediation breakthrough tool – Recognition by e.g. executors, trustees, and beneficiaries, that ‘We are all in this together’. Recognition = shared generosity = fairness – which opens the door to principled negotiation, and settlement. The key that opens this door is empathetic listening, which is taught as a voice technique by Patsy Rosenberg to politicians and businessmen.

The ability to nurture this dynamic is a skill that is particularly helpful where participants and their advisors are from different cultures, e.g. when mediating an international family trust dispute.

As we look at our own blocks it is also very creative to empathetically notice others. This generous act can actually free our own blocks. The more we allow others to return to their natural voices the more we are empowered. Listening and focusing on others and giving them their rights can also facilitate our own survival. Recently, I have been employed to train overpowering Western leaders to be attentive and sensitive in their communication with Eastern leaders. The hard facts are that an overpowering Western style of backslapping, jovial communication is losing businesses billions of dollars as this style is obnoxious to the East. I train these very successful leaders to observe and listen to their Eastern clients and drop the habits that don’t work. If they don’t they cannot do business in the new and powerful Eastern markets.. Generosity will create their ability to survive. It seems very obvious, but forceful communication never works. Powerful expression does. What can change the world is dialogue and negotiation. … Dialogue requires generosity and generosity requires respect. If in your mind you can consider anyone you are having a dialogue with as an equal respect has a chance to thrive. Both parties have to remain present with each other and give each other the right to speak and be a generous listener. As passion rises in any dialogue, shouting and vocal pushing is a constant threat. No one can listen to shouting or pushing, you can be heard but not received. The vocal tension disturbs the ear and we switch off. It is counter-productive. Speaking quietly but not fully audibly is also very annoying to the other person. They are having to work harder than necessary. Also counter-productive is rushing, mumbling or sounding flat and boring. The key is to think about what helps to change the other person and how you would like to be spoken to. … Listening attentively is an act of survival as is speaking with your rights. … Dialogue is about joint transformation and the sharing of knowledge.’ The Right to Speak’ by Patsy Rosenberg, 2nd edition (2015), pages 106 and 107.

In mediation a claimant can use their voice and be heard. In litigation, except as a witness, they do not have a voice. Paradoxically, while a claimant may have gone to court or threatened to issue proceedings, because they are being ignored or stonewalled, the voices in the court room are not those of the parties, but of disinterested lawyers and indifferent judges. Consequently, how participants speak to each other in mediation, either directly, or through their legal representatives or the Mediator, is an opportunity to show respect by allowing the other to be heard. That can move the parties along from deadlock about their respective positions to doing a deal in their mutual interests.

The skill of allowing a participant in mediation their voice, i.e. the right to be heard, is linked to both ‘how you talk’, and to ’empathetic listening’, because to switch the dynamic from confrontation to collaboration, you must first show that person that: (i) they have been heard; and (ii) you understand their position and the underlying reasons. That is where a Mediator can add value and open a door to dialogue.

I think that these skills are essential when mediating an international family trust dispute, because the participants and their advisors are not only located in different time zones, but culturally may be from different worlds.

See also my blogs:

Carl Islam – Fully Accredited as a Commercial Mediator 28.10.2021 | Carl’s Wealth Planning Blog

Zoom Mediation of International Trust Disputes | Carl’s Wealth Planning Blog

How to expand the pie when settling a will dispute | Carl’s Wealth Planning Blog

Higgins v Morgan & Ors [2021] – 27.5% reasonable provision award included part of a CFA success fee | Carl’s Wealth Planning Blog

I am also developing the outline of a six hour course to present by Zoom from May 2022 provisionally entitled, ‘Transformative Mediation’ – How to transform a Contentious Probate, Inheritance Act and Trust Dispute, into an opportunity to expand the pie by applying estate planning principles to develop bespoke and holistic family wealth structuring solutions.  For more information please visit the ‘About Carl’ page at www.ihtbar.com

Carl Islam – Fully Accredited as a Commercial Mediator 28.10.2021

The Society of Mediators in London confirmed to me today that I am now a fully qualified and accredited MSoM panel member. For information about my services as a Commercial Mediator please visit the ‘Mediator – Contentious Probate, Inheritance Act, & Trust Disputes’ page at www.ihtbar.com.

See also:Carl Islam: Fully Accredited Commercial Mediator – Advisory Excellence

As a practising Barrister, TEP, MSoM, Certified Mediator and Panel Member of the Society of Mediators in London, I provide a niche service as a Mediator in relation to Contentious Probate, Inheritance Act, & Trust Disputes (including Co-Habitation and Ownership of Property).
I am attending the Zoom Mediations (i.e. controls) course provided by the Society of Mediators in January 2022, and from January 2022 will be conducting all pre-mediation meetings, and mediations by Zoom from my home office in Leicestershire.

To request a copy of my Mediation Agreement and to arrange a free preliminary consultation Zoom call, please either call my Clerk on 0207 936 3030 or send an email to carl@ihtbar.com.

I am also developing the outline of a six hour course to present by Zoom from May 2022 provisionally entitled,

‘Trust Disputes, Litigation & ADR.’

As a practising Barrister and Author, I specialise in Contentious Probate, Inheritance Act, and Trust Disputes, and as a Certified Mediator, can be appointed to act as either a solo or co-mediator in a Zoom mediation about a dispute anywhere in the world, including the following trust law jurisdictions: Australia; Bahamas; Bermuda; BVI; Canada; Cayman;  China (http://www.china.org.cn/china/LegislationsForm2001-2010/2011-02/12/content_21907980.htm); Dubai; Guernsey; Gibraltar; India; Jersey; Malaysia; New Zealand; Northern Ireland; Pakistan; Republic of Cyprus; San Marino (The Court for Trusts and Fiduciary Relations – Corte Trust) (i.e. for trusts holding art, cultural heritage, and luxury assets located in Italy); and the United States.

As a newly qualified and Certified Mediator, I charge a fixed fee (the ‘basic fee’) for a mediation starting at 9.30am and ending at 5.30pm (GMT), and for time incurred after 5.30pm at my fully inclusive hourly rate of £300 (‘additional time’). The basic fee allows for 8 hours pre-reading time (i.e. position papers and one lever arch file of documents), and a pre-mediation meeting with each participant. There is no refund if a mediation ends for any reason before 5.30pm (GMT). The basic fee is payable in advance, and the mediation will only proceed if all participants and any observers have signed my standard Zoom Mediation Agreement. If the basic fee is payable by representatives of the estate, they are also contractually obliged to pay for any additional time incurred after 5.30pm (GMT). If a participant’s internet connection fails for any reason they agree to carry on by telephone, and bear all corresponding telephone charges.

For appointment as a Co-Mediator I will charge one half of the basic fee and at half of my hourly rate for additional time, so the total fees payable by the participants for either solo or co-mediation are the same.

As a Mediator my role is to manage a process that enables the parties to come out of their trenches and in a safe environment to walk side by side in jointly exploring and developing a commercial solution of their own design which takes into account: the facts presented in their position statements and agreed bundle; legal merits; litigation risks (including the judge); the time value of money; and the benefits of ‘doing a deal’ now instead of incurring further legal costs by resuming trench warfare.

The unifying factor in all contentious probate and trust cases is the composition of the estate/ trust asset pool, and its value. It is not uncommon for litigation costs to exceed the value of an estate, therefore participants are more likely to walk away from mediation with a slice of a larger cake (i.e. of the estate/trust fund) if they mediate before proceeding to litigation. Thus, the first item of business when I visit each participant in their camp (i.e. their Zoom break-out room), is to clarify and confirm the composition of the estate/trust asset pool, and values, which may have gone up or down since e.g. an IHT 400 was filed. Each participant should also apply for up to date Office Copies and valuations for any land in dispute in advance of the Mediation Day.

A Mediator must not only be impartial, but must also be seen to be impartial. The focus of a Mediator is therefore on the process and not on the outcome.

Mediation is a confidential process, and I cannot repeat anything said to me by a participant in their private Zoom break-out room to anybody outside that room unless authorized/told to do so.

The ‘without-prejudice’ rule applies to and protects all communications, see: Without prejudice | Practical Law (thomsonreuters.com)

At the end of the mediation the only document I will keep is the Mediation Agreement. All other documents provided to me and electronic files will be destroyed/deleted.

The golden rule in all mediations – which has always been and continues to be my advice to Clients when representing them as a Barrister in mediation, is that because mediation is essentially a form of facilitated negotiation, success (however that is measured by the participants), depends upon movement and momentum, which requires compromise on all sides, i.e. flexibility – otherwise if the parties stay in their trenches the mediation will fail. This requires courage, trust, and realism. My job as a Mediator is to empower the parties to begin and progress a difficult conversation. This requires counter-intuitive thinking and behaviour and can result in a paradigm shift which results in a creative solution that a court cannot impose. It therefore also requires a commercial rather than a forensic legal mind-set, and some imagination.

Prior to entering private practice I worked in-house for Rolls-Royce and Alstom (in Paris) structuring, drafting, and negotiating deals in multiple jurisdictions around the world. As a Mediation Advocate, I approach doing a deal in settlement of a dispute with the benefit of that commercial experience. Now as a Mediator, I can use my antennae to help parties re-frame their dispute as an opportunity. For example, where family wealth is held in a complex international ‘dynastic’ trust structure with underlying asset holding companies, and a dispute arises out of a critical event such as the death or loss of capacity of the wealth creator, if the overarching trust instrument was drafted using a standard form precedent that is no longer fit for purpose (i.e. because it was not carefully drafted as a bespoke document in the first place), or if the Deed has not been reviewed periodically, mediation of the dispute is an opportunity to re-draft the instrument on tax-efficient terms that a court could not direct. In other words, mediation is an opportunity to re-structure the trust as the end product of doing a ‘deal’ in settlement of the dispute, which may turn out to be a  win/win solution for both the beneficiaries and the trustees.

Prior to practising at the Bar I practised as both a commercial and private client solicitor drafting: shareholders agreements; IPR licence agreements; wills; and trusts, and am the author of ‘Tax-Efficient Wills Simplified’:

Tax-Efficient Wills Simplified eBook : Islam, Carl: Amazon.co.uk: Kindle Store.

I am therefore familiar with both the form and terms of most wills, trusts, and corporate governance documents, including LLP members’ agreements. In my practice as a Barrister I have also advised and written about fiduciary duties, see:

Breach of fiduciary duty claims and the quiet fiduciary thesis | Trusts & Trustees | Oxford Academic (oup.com)

Equitable compensation arising out of sale of a property ordered under section 14 TLATA | Trusts & Trustees | Oxford Academic (oup.com)

In the methodologies I have pioneered for mediation advocates, which are set out in my books the ‘Contentious Probate Handbook’ (published by the Law Society in 2016); and the ‘Contentious Trusts Handbook’ (published by the Law Society in 2020), I recommend that participants do not have an opening plenary session.

Instead, ground-rules and a broad and flexible structure (or direction of travel) are agreed during pre-mediation meetings individually with each participant. This is also an opportunity to test the link if the mediation is being conducted by Zoom.

The business of doing a deal can then get under way within the first hour. Participants therefore need to come to the table with the pragmatic resolve to do a deal, and be ready to make offers and counter-offers.

To discover and close the gap somebody has to get out of their trench and walk into the place in between. When the howitzers have stopped pounding and the smoke clears, each side can then see where a settlement zone exists, and gradually move forward in incremental steps toward closing the gap which divides them. This means they need to calculate their BATNA (best alternative to a negotiated settlement) i.e. what they are likely to end up with at the end of a trial.

Litigation is binary, and nobody ever recovers all of their costs. On the standard basis, as rule of thumb a party is unlikely to get more than two thirds of costs actually incurred, and in reality much less following a detailed assessment. If the losing party cannot pay the winner cannot recover, and this can result in bankruptcy for the losing party. That is why lawyers often liken contentious probate and trust litigation to a game of high stakes poker.

In these cases, ‘doing a deal’ is almost always better than going to court, and the Civil Justice Council have recently confirmed that the English court can order parties to litigation to mediate without the consent of all the parties. If a party refuses and wins, this is likely to turn out as a pyrrhic victory, because costs sanctions are likely to be applied for refusing to mediate.

Costs are the elephant in the room, and during the pre-mediation meetings I will ask each participant what costs they have incurred to date (including costs of the Mediation), and what their projection is if the case proceeds to trial, and ask for permission to inform the other participant, because at the end of the day, one of them will be ordered to pay a heavy price if the Mediation fails.

I will also check that the legal representatives have full authority to agree costs in the terms of a settlement agreement.

In contentious probate and trust cases it is not uncommon for costs at the end of a trial to exceed the value of the estate. Costs typically mount in tranches of around £10K for each stage in litigation, and pre-issue base costs and disbursements frequently exceed £25K. If there is a CFA, then part of the success fee can be taken into account as a debt in making an award for maintenance under the Inheritance Act, see: Inheritance Act – 25% CFA cases – Hirachand v Hirachand (CA)(2021) | Carl’s Wealth Planning Blog

See also: CFA Costs Allowed in second 1975 Act Claim | News and Events | Parklane Plowden Chambers

Re-H-in-the-CA-2021.pdf (radcliffechambers.com)

Adding costs incurred to the financial outcome a participant wants defines the outer limits of the potential zone of settlement, i.e. the gap between them at the outset.

As a Mediator I am always working with incomplete information and do not give any legal advice, although I may ask reality-testing questions about the basis and legal merits of a participant’s position and the corresponding real-world litigation risks if a deal is not done – i.e. by playing Devils advocate.

I will also probe for any element of double counting in the calculation of an offer, e.g. in the capitalisation of income needs in an Inheritance Act claim using Duxbury Tables, see:

Family Law Week: Capitalisation of income needs in Inheritance Act claims: Duxbury or Ogden?

It is the participants who will design, agree, and document their deal and not me They must and consequently will own it.

While my Mediation Agreement states that nothing is agreed until a settlement agreement has been executed, it is up to the participants to decide whether and how to document the terms of a settlement agreement, and usually one of the solicitors will have a worked up template/draft ready for mediation. It is not my job to advise any participant about whether they have agreed a good or bad deal, and how can a Mediator possibly know?

However, where for any reason a claimant’s solicitor proposes or requires that a payment be made either to their firm to hold for the benefit of trustees, or directly to trustees (i.e. instead of to their firm to hold for the benefit of their client after subtracting their fees), then that proposal or requirement should be clearly stated before a deal is agreed. Otherwise, it may not be possible for the participants legal representatives to draft and execute a settlement agreement on the day of the mediation where the Settlement Agreement incorporates complex trust provisions that need to be carfefully considered before they can be agreed.

Please note that as a Mediator I do not give any legal or tax advice whatsoever about the drafting and tax-efficiency of settlement agreements. While I take no part in drafting and recording terms of settlement, before ink is put to paper I will read the document, and if it does not appear to clearly state what has been agreed in principle, I will ask the participants to clarify whether or not the settlement agreement as drafted accords with their wishes and understanding. What they do next is up to them.

Likewise, I will only communicate an offer or counter-offer during the mediation if the participant has written it down and either emailed it to me or put it into the chat box for his break-out Zoom so that with his /her permission I can cut and paste it into the chat box for the other participant’s break-out room.

If participants are willing to walk down the road less travelled I am confident that a deal can be done, and the proportion of cases that settle on the day is around 74%, see:

Reviewing the 2018 Eighth CEDR Mediation Audit – by Joseph Mulrooney (mediatelegal.co.uk)

I suspect that in the majority of those cases, Mediation worked because the participants had invested in the process by preparing to do a deal instead of going to war, i.e. by thinking about: the settlement zone; the gap between what each participant wants; their BATNA’s; and how to close the gap and come away with a win-win solution compared to the costs and risks of litigation, which to an extent is always a lottery depending upon who the judge is.

Where parties and their legal and tax representatives are located in different time zones, while some parties will be participating late into the night, or early in the morning, a Zoom mediation may be particularly effective if the distance between participants has the advantage of avoiding face to face venting in a highly acrimonious dispute, as participants are not physically in the same room. In fact, they do not have to meet and can stay in their own Zoom break-out rooms throughout the mediation, which is not uncommon in domestic contentious probate and Inheritance Act mediations. In 2022 I am planning to write an article provisionally entitled, ‘Tools and Strategies for Mediating International Family Trust Disputes’,

I had the great privilege and honour of carrying out my mandatory mediation observations to qualify and obtain full accreditation as a mediator, with one of the top five Contentious Probate, Inheritance Act and Trust Mediators practising in England and Wales today – Mr Mark Keeley of Freeths.

What I learned is that there are in reality three types of offer a participant can make:

(i)   an ‘unacceptable’ offer that will be rejected and may result in the other participant walking out and ending the process;

(ii)  an ‘acceptable’ offer which is so high that the other participant will bite your hand off – which is why an offeror will not want to make such an offer; and

(iii) an ‘interesting offer’ that makes the other party really think, and start to work with that proposal, as a starting point for opening a discussion that results in a final settlement as the gap narrows.

Before a participant can make an ‘interesting offer’  there has to be reciprocal clarity about the elements of the claim and corresponding values – i.e. the mediation maths.

The challenge for a Mediator is to get each participant to identify (in strict confidence) what is actually at stake. The Mediator can then ask questions in order to get each participant to work out their range of best and worst outcome scenarios, which will identify the gap between their positions.

To help the parties to narrow and eventually close the gap, a Mediator can then ask reality testing questions which get each participant thinking about what a judge is likely to decide on the facts in the real world.

There is always an element of risk in civil litigation, and where the law is unsettled the outcome cannot be predicted with any high degree of certainty.  For example, in certain Inheritance Act claims, if the relief sought was argued before ten different judges, it is possible that each could make a different order.

In the Courts of England and Wales, as a general rule, judges at all levels are also required to assess costs summarily at the end of a trial on the fast track or at the conclusion of any other hearing lasting less than one day, i.e. on the spot at the end of the trial/hearing, see: See, ‘Guide to Summary Assessment of Costs’: Guide to Summary Assessment of Costs 2005 edition (publishing.service.gov.uk), therefore the earlier participants enter into mediation (which the court has the power to order without consent at the first CMC), the less risk there is of incurring a costs liability early on in the proceedings that could have been avoided altogether had the participants had the sense to go to mediation sooner rather than later.

From the outset, my compass as a Mediator is to help the parties to appreciate and think hard about: (i) the litigation risks and costs involved in proceeding to trial, and (ii) the mutual benefits of settling by doing a deal on terms that no judge has the power to order (i.e. a creative and practical solution).

In my experience, nearly all contentious probate and trust disputes eventually settle. The wonder is, why the participants did not mediate earlier instead of after significant costs had been incurred and the Frankenstein creature they  created, i.e. their claim, had taken on a life of its own.

See also my blogs:

Financial provision claim by adult child – Miles v. Shearer [2021] | Carl’s Wealth Planning Blog

Mediation in the Court of Protection | Carl’s Wealth Planning Blog

Mediation Strategies | Carl’s Wealth Planning Blog

Mediation of Will, Inheritance, Probate, and Trust disputes | Carl’s Wealth Planning Blog

Zoom Mediation of International Trust Disputes | Carl’s Wealth Planning Blog

and my articles:

The Advocate and the Expert in a Testamentary Capacity Claim | Expert Witness Journal

The Advocate and the Expert in the Court of Protection | Expert Witness Journal

Please note that my Mediation Agreement provides that Mediation continues until a settlement agreement has been executed by the participants, and that if a settlement agreement is not executed by the participants before 8pm (GMT) on the day of the mediation, the participants may either elect to adjourn the mediation until a settlement agreement has been executed, or to end the  mediation without a settlement agreement having been executed. If the participants elect to adjourn the mediation, they each agree to proportionately share the cost of paying my fees charged at my standard hourly rate, in advance of any further meeting to conclude the mediation, i.e. on another full or half day.

Anecdotally, I had the great privilege of meeting with the late Professor Roger Fisher for two hours in his study at Harvard Law School during an academic visit from King’s College London in 2002, and his parting advice was,

‘Appreciate their point of view:

  • understand it – it’s very important to appreciate the way they see it,
  • even if you don’t agree, say that it merits serious consideration, don’t say that they are wrong.

Appreciate their self-esteem.

Acknowledge that the other person has been heard.

Be prepared to argue their case better than they can before you answer it.’

By the end of the Bar Council Mediator Training Course, I understood the wisdom that Professor Fisher (co-author of ‘Getting to Yes’ and a founding Father of principled negotiation) had imparted to me.

The secret or acme of mediation is authenticity, empathy, and active listening (without making matters worse!), which develops trust and enables the Mediator to create a safe space into which the participants feel empowered to enter and start a conversation that can lead to a solution of their own design and making, i.e. to a ‘deal’ that they own. This requires counter-intuitive thinking and behaviour, and is a lot harder to actually do than you might think.

Facilitative Mediation can be used to solve almost any kind of dispute, and does not require any legal, economic, business, social, political, or diplomatic knowledge and subject-matter expertise/experience by the Mediator. What it demands is skill in managing a process.

At the end of our meeting Professor Fisher went up to his bookshelf and handed me a copy of his book ‘Beyond Machiavelli’ which he inscribed, ‘To Carl – Another set of ideas!’

It is one of my greatest treasures.

STEP Journal Book review: Contentious Trusts Handbook, Practice and Precedents

Book review: Contentious Trusts Handbook, Practice and Precedents

Monday, 18 October 2021

Published in the STEP Journal, Issue 5, 2021

Richard Dew TEP reviews Contentious Trusts Handbook, Practice and Precedents

By Carl Islam TEP

Reviewed by Richard Dew TEP

As the foreword to this book states, the unfortunate fact is that the risk of trustees becoming involved in court proceedings is on the increase. This book, described as a handbook, aims to provide the busy practitioner with a practical overview of the key themes and to guide them through each stage of proceedings, from pre‑action to settlement or trial.

The book contains a series of concise chapters covering the core concepts of contested trusts, including the powers of trustees, trustee duties, breach of trust, claims, equitable remedies and defences. Each chapter quotes from, or references, the key authorities in the area such that the reader has no doubt as to the key applicable principles and their effect. Importantly, for a book on contentious trusts, it goes on to describe the process and core concepts for litigation in England and Wales and the key principles relating to costs, and it has a whole chapter devoted to alternative dispute resolution and settlement. There are also three brief notes, written by experts, on art and heritage assets, trust litigation in the Cayman Islands and mediation.

For many – and especially for those new to the area or looking to practise in an area not core to them – the appendix will be invaluable, containing as it does a number of precedents for applications and claims involving trusts, alleging breach of trust, making Part 36 offers (under the Civil Procedure Rules) and so on. Inevitably, not every precedent that could be desired is there, but most will find that those that are there can be adapted to their purposes.

This is not, and does not pretend to be, a Lewin on Trusts. For detailed discussion of difficult areas of the law, the reader will need to look elsewhere. In many ways, though, this is a key advantage of this book, as it is not weighed down by lengthy discussions of disputed areas of law, but instead gives the reader what they need to know when arguing – or defending – a contentious case.

Overall, the book admirably meets the authors aims. It fills a clear need for a simple guide to the principles and conduct of trust litigation and should be a welcome addition to all practitioners’ libraries.

First edition
Price:
 GBP100
Publisher: The Law Society
ISBN: 9781784461249

See also the Book Review by J.J. Meagher published in Trusts & Trustees (Oxford University Press) (08.06.2021) – Review of my book in Trusts & Trustees (Oxford University Press) | Carl’s Wealth Planning Blog

For more information about the book please visit: Contentious Trusts Handbook – Carl Islam

I am also developing the outline of a six hour course to present by Zoom from May 2022 provisionally entitled, ‘Mediation of Probate, Inheritance Act, and Trust Disputes – A Toolkit for Mediators and Participants’. For more information please visit the ‘About Carl’ page at www.ihtbar.com

Higgins v Morgan & Ors [2021] – 27.5% reasonable provision award included part of a CFA success fee

The moral of Higgins v Morgan [2021] and of Hirachand v Hirachand (CA)(2021) is to mediate early in order to contain the risk of a judge making an award of financial provision that includes an element of a CFA success fee that is impossible to calculate with any precision because as HHJ Cawson QC concluded in Higgins,

‘ 133. I do not agree with Mr Willetts that awarding some part of the CFA success fee would necessarily be contrary to s. 1(2)(b), because it involves providing for something other than maintenance. To the contrary, I consider it relevant for the purposes of s. 3(1)(a) of the 1975 Act to the question of the financial resources and financial needs which Mr Higgins has or is likely to have in the foreseeable future. This is because if I do make an award in his favour so as to trigger “success” and a requirement to pay the success fee, which cannot as a result of s. 58A(6) of CALSA be recovered from the Defendants as costs, then his liability to pay the success fee will be bound to affect his ability to maintain himself to the extent sought to be achieved by the award. I consider that Cohen J was thus correct at [55] in Re H to consider it appropriate to consider the liability for the CFA success fee as part of the claimant’s needs.

134. However, there is plainly a tension, in my judgment, between giving effect to s. 3(1)(a) of the 1975 Act in taking into consideration the success fee on the basis that it would affect the claimant’s ability to maintain himself on the one hand, and the policy considerations behind s. 58A(6) of CALSA on the other hand in not requiring the opposing party to litigation to meet the payment of success fees, a factor taken into account by Deputy Master Linwood in In re Clarke, but not seemingly by Cohen J in Re H.

135. On the other hand, the actual effect of s. 58A(6) is simply to prevent a “costs order” being made so as to permit the recovery of the success fee. It is not in terms outlawing the making of an order under the 1975 Act that includes an element of successf fee within the quantum of the award because that has been taken into account as a consideration in respect of the claimant’s needs. I take Mr Willetts’ point in respect of CPR 36.17(4) that circumstances might arise in which an element of the success fee is brought into account in calculating the punitive sums provided for thereby. However, even if this can properly be construed as a “costs order”, the difficulty occasioned by any unlawfulness could be dealt with by the exercise of the Court’s power under CPR 36.17(4) to depart from the operation thereof, given that the relevant provisions only apply “unless [the Court] consider it unjust to do so”. This exception could be used to avoid any difficulties of the kind that Mr Willetts raises.

136. The overall conclusion that I come to is that I am required to take into account the success fee in considering Mr Higgins’ financial resources and financial needs for the purposes 29 of s. 3(1)(a), but that the policy considerations behind s. 58A(6) CALSA fall within the category of “any other matter” which the Court is entitled to, and in my view should take into account for the purposes of determining the manner in which it should exercise its powers under s.2 of the 1975 Act. 137. I am not persuaded that it is appropriate to take into consideration the respective merits of the case in deciding how much of the success fee ought to be recoverable as part of an award under the 1975 Act, even on the basis of submissions made post judgment. Apart from the difficulties that is likely to create so far as questions of privilege are concerned, I consider it to be an inherently unreliable exercise. I consider that I am entitled to take a rather broader view of the position and have regard to the size of the estate, the amount of the likely success fee compared with the award actually made, and the fact that in many cases, particularly where significantly less is recovered than claimed, some agreement for payment of a significantly smaller success fee might well be negotiated, even if the same is technically payable under the relevant CFA. 138. Taking these broad considerations into account, and having regard to the policy considerations behind s. 58(6)(A), I consider that the appropriate course is to increase the award to £55,000 to include an element of success fee provided that evidence can be produced, in an appropriate way, to prove that the success fee has become payable. Overall conclusion

139. On the basis of my above findings, I propose to make an award of a lump sum payment of £55,000 out of the Deceased’s estate pursuant to s. 2(1)(a) of the 1975 Act, subject to the matters referred to in paragraph 138 above.

140. Following the circulation of the draft of this Judgment, Mr Gomer quite properly pointed out that it did not explain how the interim award referred to above ought to be taken into account for the purposes of a final award, bearing in mind that a lump sum of £4,000 was paid pursuant to the interim award, and that some 8 monthly payments of £1000 have been paid to date pursuant thereto, giving a total of £12,000. My intention had been that the award provided for in this judgment should be in addition to the sums already paid and received pursuant to the interim award bearing in mind that the £4,000 element thereof related to a specific debt in respect of arrears of rent, and the figure for maintenance referred to in paragraph 131(c) above was intended to cover the position going forward rather than dealing with the position retrospectively. Whilst the 8 monthly payments of £1000 per month exceed the monthly deficiency identified in Mr Higgins’ Statement of Means as at April 2021, I consider it necessary to bear in mind that Mr Higgins evidence in his first witness statement as to the then monthly deficiency, and that COVID-19 began to have a serious effect from as long ago as March 2019. It is in the light of these considerations that I proceed on the basis that the interim award stands insofar as it has taken effect to date, and that insofar as may be necessary, the figure of £12,000 paid be treated as additional in the final award to the figure of £40,800 referred to in paragraph 132 above, and thus to the figure of £55,000 referred to in paragraph 139 above. However, for the avoidance of doubt, so far as any further monthly payment or 30 payments of £1,000 since the date of the trial are concerned, including the payment due in October 2021, these are to be included within the figure of £40,800, and thus within the figure of £55,000.

141. There is one further postscript to add following the circulation of my draft judgment. On 15 October 2021, and following the circulation of my judgment, the Court of Appeal handed down judgment in an appeal from the decision of Cohen J in Re H (supra) – see Hirachand v Hirachand [2021] EWCA Civ 1498. The decision of Cohen J was affirmed, and Mr Gomer and Mr Willetts have each confirmed that they do not seek to content otherwise than that the decision of the Court of Appeal was consistent with my own reasoning on the issue as to whether, and if so how, the CFA success fee should be taken into account. In these circumstances, I have not considered it necessary to rewrite the relevant parts of the judgment dealing with this issue in order to take into account the decision of the Court of Appeal.’

See also my recent blog – Inheritance Act – 25% CFA cases – Hirachand v. Hirachand (CA) (2021): Inheritance Act – 25% CFA cases – Hirachand v Hirachand (CA)(2021) | Carl’s Wealth Planning Blog

I am also developing the outline of a six hour course to present by Zoom from May 2022 provisionally entitled, ‘Mediation of Probate, Inheritance Act, and Trust Disputes – A Toolkit for Mediators and Participants’. For more information please visit the ‘About Carl’ page at www.ihtbar.com

Courts can presume foreign law is ‘materially similar to English law’ to establish jurisdiction

FS Cairo (Nile Plaza) LLC (Appellant) v Lady Brownlie (as Dependant and Executrix of Professor Sir Ian Brownlie CBE QC) (Respondent) (bailii.org)

C:\Users\joeur\Documents\AutoIt_code\getter\processing\out\2021\45.image1.html (bailii.org)

FS Cairo (Nile Plaza) LLC (Appellant) v Lady Brownlie (as Dependant and Executrix of Professor Sir Ian Brownlie CBE QC) (Respondent) (bailii.org)

Supreme Court rules in favour of Lady Brownlie in Four Seasons Cairo case | Law News | Kingsley Napley

How to expand the pie when settling a will dispute

When reviewing a will in a probate dispute, I am sometimes left wondering why a solicitor has advised a testator to gift his or her beneficial interest in the family home into a discretionary trust.

It also recently occurred to me that some Solicitors and Barristers (including practitioners who specialise in drafting wills and trusts), may be completely unaware of the potential to expand the pie when negotiating the settlement of a probate dispute, by re-structuring a testamentary gift of the family home made on professional advice into a discretionary trust, as a more tax-efficient IPDI, i.e. to increase the IHT tax shelter for the benefit of the estate.

This is a technical tax solution, and I set out below extracts from my article co-written with Stephanie Churchill CTA for Taxation about how the relief works: Tax_2017_Vol180_Issue4619_RNRB-final.pdf (carlislam.co.uk)

For DOV’s, see section 10.9 of Chapter 10 of my book, the ‘Contentious Probate Handbook’Wildy & Sons Ltd — The World’s Legal Bookshop Search Results for isbn: ‘9781784460600’; and for planning using an IPDI, see pages 174-177 and 298 – 300 of by book ‘Tax-Efficient Wills Simplified’: Tax-Efficient Wills Simplified eBook : Islam, Carl: Amazon.co.uk: Kindle Store

The amount of the transferable RNRB is capped at an additional 100% of a surviving spouse’s available RNRB. However, more than one pre-deceased spouse’s RNRB can be transferred. As with the NRB, it is the unused percentage of the RNRB that is transferred, not the unused amount.

Be wary of the many pitfalls when trusts are used to own residential property (either during lifetime or on death). …

If a property is left into a discretionary trust … the RNRB will not be available even if all beneficiaries are lineal descendants. This is because the beneficiaries are not treated as the beneficial owners of the property. Therefore, it is important that lifetime trusts and wills are reviewed to ensure that any potential issues are identified. To avoid the trust being created, it might be possible to put in place a deed of variation within two years of death. On a practical note, there can be problems if the beneficiaries include future children and grandchildren because it is necessary for all parties to agree to a variation. Many discretionary trusts cater for unborn generations and it might be necessary to apply to the court to vary this type of arrangement. Another option is for the trustees to make an appointment of the residential property to lineal descendants under the provisions of s. 144 within two years of death. In this case, the appointment is read back to the date of death which should enable the RNRB to be claimed. However, if no action is taken, no RNRB will be available to the estate. …

Generally, an immediate post-death interest (IPDI) will be effective in providing access to the RNRB because the beneficiary is deemed to own the asset. However, sometimes an IPDI can be set up as a discretionary trust in the first instance. It may therefore be necessary to review its terms to ensure that the RNRB is available. To use the RNRB it will be necessary to transfer part or all of the residence to the life tenant.

As mentioned above, if the RNRB is not available because, for example, the residence is a discretionary trust asset, … the trustees can restore it by making an RNRB gift post-death under s 144 (which is read back to the time of death and so qualifies for the relief). As long as the trust is unwound within two years of death (in other words by the trustees appointing the trust assets to S absolutely) this will be treated for inheritance tax purposes as if the assets had simply been left by T to S outright. Alternatively, the trustees can confer an interest in possession on S within two years of T’s death, which will be treated for inheritance tax purposes as if the will had conferred an IPDI on S.’

For non-tax planning reasons re-structuring may not be appropriate. Before proposing and drafting a DOV, current tax advice should be taken from a CTA in addition to legal advice from a specialist trust law practitioner, as there are elephant traps for the unwary. So plan carefully!

I am co-writing an article with Stephanie Churchill CTA for publication by Taxation early next year entitled, ‘The use of trusts, DOV’s, and s.142 appointments in the tax-efficient settlement of a contentious probate dispute.’

See also my recent blogs:

Inheritance Act – 25% CFA cases – Hirachand v Hirachand (CA)(2021) | Carl’s Wealth Planning Blog

Zoom Mediation of International Trust Disputes | Carl’s Wealth Planning Blog

Testamentary Capacity claims | Carl’s Wealth Planning Blog

Recent advocacy testimonial | Carl’s Wealth Planning Blog

Liability for costs in a Contentious Probate case | Carl’s Wealth Planning Blog

Beddoe Applications | Carl’s Wealth Planning BlogArt of persuasion in court | Carl’s Wealth Planning Blog

I am also developing the outline of a six hour course to present by Zoom from May 2022 provisionally entitled, ‘Mediation of Probate, Inheritance Act, and Trust Disputes – A Toolkit for Mediators and Participants’. For more information please visit the ‘About Carl’ page at www.ihtbar.com