For a full discussion of costs in Contentious Probate cases, see Chapter 9 of my book the ‘Contentious Probate Handbook – Practice and Precedents’ published in 2016 by the Law Society: Wildy & Sons Ltd — The World’s Legal Bookshop Search Results for isbn: ‘9781784460600’
Recently, in Goodwin v Avison & Ors  EWHC 2356 (Ch) (23 August 2021) HHJ David-White QC (sitting a judge of the High Court) stated the following principles in relation to liability for costs in contentious probate cases:
- The starting point is, and has for some considerable time been, that the court has a discretion as to whether costs are payable by one party to another or from the testator’s estate (see CPR r44.2(1); Mitchell and Mitchell-v-Gard and Kingwell (1863) 3 Sw & Tr 275).
- That discretion is not unfettered but to be exercised in accordance with principles laid down by the court.
- As such Sir J. P. Wilde put it in the High Court of Admiralty in the Mitchell case, after pointing out that absolute rules in this area are not possible: ‘But, where it is not possible, something may yet be done. By acknowledged method and general classification, the suitor may in some measure be enabled to estimate the prospect before him, and foresee the penalties under which he launches into litigation. To this extent it is the duty of the Court, so far as may be, to assist him’.
- The principles are, as it has been said in other cases as regards guidelines, guidelines rather than tram lines or strait jackets. Put another way, they are to apply to a wide range of different factual situations and are open-textured in the sense that their application in any case depends upon an evaluative judgment taking into account, in most cases, a number of relevant circumstances some of which may point one way and some another. As Sir J. P. Wilde (the later Lord Penzance) put it in the Mitchell case: ‘It is hardly in the nature of discretion that its exercise should be adjusted by exact rule. No positive regulation could be established that would bear the strain put upon it by the justice or hardship of particular instances.’ Indeed, more recently Jackson LJ has pointed out that the need to consider all the relevant circumstances, now set out expressly in the CPR results in a position where ‘the individual provisions of [what is now, CPR 44.2(4)] tend to pull in different directions.’
- The starting principle, now set out in CPR 44.2(2)(a), is that the unsuccessful party will be ordered to pay the costs of the successful party, or, in other words, that costs follow the event. However, the court may make a different order. This applies to the costs of a contentious probate claim, like those of any other claim. However, the notion that the costs of an unsuccessful party will generally be ordered to be paid out of the estate in a probate claim is wrong (Kostic v Chaplin  EWHC 2909 (Ch) at para ); Theobald on Wills 10th Edn 2021 para 15-001).
- The starting principle, of costs following the event, but also that, as a generality, such starting point may readily be departed from is at least in part to reflect the point that if applied too robustly, ‘the application of the “follow the event principle” can encourage litigants to increase the costs of litigation, since it discourages litigants from being selective as to the points that they take’ (per Lord Woolf MR in AEI Rediffusion Music Limited v Phonographic Performance Ltd  1 WLR 1507).
- In exercising the discretion to make (or not) any order about costs the Court is required to have regard to all relevant circumstances (CPR 44.2(4) and (5)) including: ‘(a) the conduct of all the parties; (b) whether a party has succeeded on part of its case, even if that party has not been wholly successful; and (c) any admissible offer to settle made by a party which is drawn to the court’s attention, and which is not an offer to which costs consequences under Part 36 apply.’
- For these purposes, the conduct of the parties includes (CPR 44.2(5)): ‘(a) conduct before, as well as during, the proceedings and in particular the extent to which the parties followed the Practice Direction – Pre-Action Conduct or any relevant pre-action protocol; (b) whether it was reasonable for a party to raise, pursue or contest a particular allegation or issue; (c) the manner in which a party has pursued or defended its case or a particular allegation or issue; and (d) whether a claimant who has succeeded in the claim, in whole or in part, exaggerated its claim.’
- Cases which allege fraud and which are lost or withdrawn will usually result not just in an adverse order for costs but an order for costs on the indemnity basis: ‘….. The general provision in relation to cases in which allegations of fraud are made is that, if they proceed to trial and if the case fails, then in the ordinary course of events the claimants will be ordered to pay costs on an indemnity basis. Of course the court retains a complete discretion in the matter and there may well be factors which indicate that notwithstanding the failure of the claim in fraud indemnity costs are not appropriate, but the general approach of the court is to adopt the course that I have indicated.  The underlying rationale of that approach is that the seriousness of allegations of fraud are such that where they fail they should be marked with an order for indemnity costs because, in effect, the defendant has no choice but to come to court to defend his position.  In circumstances where, instead of the matter proceeding to trial and failing, the claimant serves a notice of discontinuance, thereby abandoning the case in fraud, it is in my judgment appropriate for the court to approach the question of costs in the same way.’ (per David Richards J in Clutterbuck v HSBC plc  EWHC 3233 (Ch)).
- Indeed, where the withdrawal of fraud allegations deprives the defendant of an opportunity to vindicate his reputation, an order for indemnity costs is likely to be the just result: ‘ …I consider that the approach in Clutterbuck is sound. Where a claimant makes serious allegations of fraud, conspiracy and dishonesty and then abandons those allegations, thereby depriving the defendant of any opportunity to vindicate his reputation, an order for indemnity costs is likely to be the just result, unless some explanation can be given as to why the claimant has decided that the allegations are bound to fail.’ (per Rose J in PJSC Aeroflot v Leeds  EWHC 1735 (Ch)).
- In the case of contentious probate claims regarding the validity of a will, the testator whose will is in issue is not a party and is unable to give evidence. Potential beneficiaries to his estate may have very limited knowledge of the circumstances in which a will is said to have been made. Justice has therefore resulted in the formulation of two principles that can apply in that context and which may lead to a departure from the starting point that costs follow the event. These principles, which can result in a different costs order to one based on costs following the event, are of long pedigree and the considerations of policy and fairness which underlie them remain as valid today as they were before the introduction of the CPR (Kostic v Chaplin  EWHC 2909 (Ch)).
- As with other costs principles, these two principles are guidelines not strait jackets (Kostic paragraph ).
- The underlying policy basis of these relevant costs principles (the ‘probate costs principles’) is the striking of a balance between two principles of ‘high public importance” namely that “parties should not be tempted into a fruitless litigation by the knowledge that their costs will be defrayed by others” on the one hand and that ‘doubtful wills should not pass easily into proof by reason of the cost of opposing them’ (Mitchell at pg. 279).
- The application of the first probate costs principle points to, and will result in, an order that costs are awarded to the unsuccessful party out of the estate. The first probate costs principle is that if a person who makes a will or persons who are interested in the residue have been really the cause of the litigation, a case is made for costs to come out of the estate (Spiers v English  P.122 at 123).
- The rationale underlying the first probate costs principle was stated by Sir J. P Wilde in the Mitchell case as follows: ‘The basis of all rule on this subject should rest upon the degree of blame to be imputed to the respective parties; and the question, who shall bear the costs? will be answered with this other question, whose fault was it that they were incurred? If the fault lies at the door of the testator, his testamentary papers being surrounded with confusion or uncertainty in law or fact, it is just that the costs of ascertaining his will should be defrayed by his estate. If the party supporting the will has such an interest under it that the costs, if thrown upon the estate, will fall upon him, and he by his improper conduct has induced a litigation which the Court considers reasonable, it is not unjust that the estate should bear the costs of the litigation which his conduct has caused.’
- In looking at the ‘cause’ of the litigation, it is not necessary to identify moral fault or culpability, at least so far as conduct of the testator is concerned which has the relevant causal effect.
- If it is the testator’s own conduct which has led to the will ‘being surrounded with confusion or uncertainty in law of fact’ it should not matter whether the problem relates to ‘the state in which the testator left his testamentary papers (for example where a will cannot be found, or where there is a question whether a will has been revoked) or whether the problem relates to the capacity of the deceased to make a will’ (Kostic at ) or to execution of the will (re Cutcliffe’s Estate  P. 6 at pg.20).
- The first probate costs principle is capable of applying to a situation in which undue influence or fraud are alleged but fail. Thus, in the Mitchell case costs were paid out of the estate where a challenge to a will failed but where the person to whom the bulk of the residuary estate had been bequeathed had drawn the will and: ‘been guilty of improper conduct in the transaction, and particularly so, in knowingly omitting from the will legacies which he knew the testatrix had ordered and still desired but which escaped her memory at the time the will was executed. This conduct, and the suspicions which flowed from it, gave the next of kin [who unsuccessfully challenged the will] a fair and reasonable ground for litigation.’
- In Re Cutcliffe’s Estate Hodson LJ envisaged that an unsuccessful case of undue influence might fall within the first costs probate principle but on the facts of that case: ‘Unless there is some case of undue influence made out against [the residuary legatee], or some reasonable ground for making out such a case, there is nothing in the Judge’s findings as to her conduct which would make it right to say that this litigation was the fault of the residuary legatee.’
- A strong case has to be made out: ‘I should be reluctant to do anything to create the idea that unsuccessful litigants might get their costs out of the estate, without making a very strong case on
facts. The lure of “costs out of the estate” is responsible for much unnecessary litigation’ (per Scrutton LJ n Re Plant (deceased)  P 139. 32. Indeed: ‘…the trend of more recent authorities has been to encourage a very careful scrutiny of the case in which the first exception is said to apply, and to narrow rather than extend the circumstances in which it will be held to be engaged. There are at least two factors which in my judgment contributed to this change of emphasis. First, less importance is attached today than it was in Victorian times to the independent duty of the court to investigate the circumstances in which a will was executed and to satisfy itself as to its validity. Secondly, the courts are increasingly alert to the dangers of encouraging litigation, and discouraging settlement of doubtful claims at an early stage, if costs are allowed out of the estate to the unsuccessful party’ (Kostic at paragraph ).
- The first probate costs principle is limited in extent. That limitation was expressed in Re Cutcliffe’s Estate as follows: ‘While it would not be possible to limit the circumstances in which a testator is said to have promoted litigation by leaving his own affairs in confusion, I cannot think it should extend to case where a testator by his words, either written or spoken, has misled other people, and perhaps inspired false hopes in their bosoms that they may benefit after his death. It does not seem to me that the judges who, in the past, have laid down the practice that costs should be allowed out of the estate where the fault of the testator has led to the litigation, had in mind such a situation as that.’
- This statement of principle was in relation to the following facts in the case. In that case, on his return from hospital, the testator had called for his solicitor on 19 January 1954. The solicitor had made an attendance note of the meeting. At that stage the testator had fallen out with his step-daughter. He had made a will in favour of the daughter of tenants who lived in an upstairs first-floor flat and who had been looking after him. He told the solicitor that, while he, the testator, had been in hospital, his relations, ‘a lot of blasted scoundrels’, had been pestering him both in hospital and since he had been at home, and that he was determined that they would get nothing from him. He was re-assured when the solicitor explained that the will that he had made left everything to the daughter of the upstairs occupants, Mr and Mrs Veness. He smiled and nodded and asked if he could rely upon it because it was what he wanted and he was worried about what his relatives had been doing. He also expressed concern that they might set aside the will. On January 31 at about 7:30pm the testator saw his stepdaughter and two other ladies known to them both. They brought a typewritten will, revoking his earlier wills and appointed the stepdaughter executrix and sole beneficiary. The new will was signed and attested in the testator’s bedroom. The Judge rejected the evidence of Mrs Veness that while standing outside the bedroom door she had heard a crescendo of the words ‘Sign, sign, sign’. Two hours after the execution of the will, the testator signed in his own handwriting a dated and timed document certifying that he had not signed any document on that date which he wished to be valid and in accordance with his wishes.
- The Judge pronounced for the will in favour of the stepdaughter. He found that the case of undue influence was not made out. In particular, the ‘sign, sign, sign’ incident had not occurred and not been heard. He found the testator knew and approved of the terms of the will in favour of the stepdaughter.
- It was submitted that ‘because the testator gave a statement to the solicitor on January 19 and left behind him this rather remarkable document of January 31, he was himself responsible for inviting litigation about his estate.’ This was rejected by Hodson LJ in the passage cited in paragraph 33 above. Morris LJ seems to have decided the case on a slightly different point, which I explain further below. Ormerod LJ agreed with both judges.
- The approach of Hodson LJ regarding the first probate costs principle was followed by Norris J in Wharton v Bancroft  EWHC 91 (Ch). 38.
- The second probate costs principle points to there being no order for costs, but the parties bearing their own costs. The principle was stated in the Spiers v English case as follows: ‘if the circumstances lead reasonably to an investigation of the matter, then the costs may be left to be borne by those who have incurred them.’
- In the second probate costs principle as stated above, it is the ‘reasonably’ that has to be stressed. Thus, Sir James Hannen in the earlier case of Davies v Gregory (1873) LR 3 P&D 28 said ‘Where the facts show that neither the testator nor the persons interested in the residue have been to blame, but where the opponents of the will have been led reasonably to the bona fide belief that there was good ground for impeaching the will, there will be no order as to costs. Of course the opponents must have taken all proper steps to inform themselves as to the facts of the case, but if, having done so, they bona fide believe in the existence of a state of things which, if it did exist, would justify litigation, then, although no blame should attach to the testator or to the executors and persons interested in the residue, each party must bear his own costs.’
- On the face of it, claims which are brought alleging undue influence or fraud, such as would, if made out, involve pronouncement against the will procured in such manner, are capable of falling not only within the first probate costs principle but also the second probate costs principle (see Mitchell).
- However, cases of undue influence or fraud ‘differ largely in the degree of probability or suspicion to be demanded for their justification’ (see Mitchell). This is because, in general, fraud and/or undue influence is unlikely. This of course has to be read subject to the light that has been cast on this area by cases such as Re B (Children)  AC 11 esp at - and at - and Bank St Petersburg PJSC & Anor v Arkhangelsky  EWCA Civ 408. Thus, first, the burden of proof in fraud cases remains the civil standard. Secondly, the likelihood of fraud in a particular case will depend upon the relevant surroundings facts and circumstances (see the discussion about the animal outside the lions’ cage in Regent’s Park zoo).
- Further, if a failed case of fraud/undue influence is found not to fall within either of the two probate costs principles that I am considering, that does not automatically mean that a failed case challenging knowledge and approval by the testator of the will cannot fall within either of those principles. In Re Cutcliffe’s Estate, Hodson LJ noted that the Judge had considered that the undue influence claim had not been brought on reasonable grounds but on unfounded evidence. The party failing in that claim had to pay the costs of the propounder of the will. However, the Judge had recognised that the case was one where the suspicion of the court was aroused and that knowledge and approval had to be established. Hodson LJ considered that ‘the document of January 31 and the conversation on January 19 are not in themselves evidence of undue influence against the stepdaughter; but, in my judgment, they are relevant in considering whether the testator knew and approved of the contents of his will dated January 31. They would come under the heading of circumstances which are likely to arouse suspicion in ascertaining facts relating to the execution of the will.’
- Where suspicion of the court is properly raised such that knowledge and approval of the testator to the will becomes a live issue, but an undue influence/fraud claim fails and is held not to have been reasonably brought it is possible for the court to make separate costs orders regarding the two issues (see e.g. Carapeto v Good  EWHC 640 (Ch)). However, the usual order is likely to be that the person propounding the failed fraud/undue influence case will end up having to pay the costs on both issues. Hodson LJ (with whom Ormerod LJ agreed) put the point as follows in the re Cutcliffes Estate case: ‘It seems to me a strong thing, which I should be slow to listen to, to maintain that people who give evidence which the judge finds to have been wholly false, who have lost their case, and who have had the costs given against them, should be heard to say that an order for costs should be made either wholly or in part in their favour on the ground that the court in exercising its discretion in these cases is in the habit of exercising it along certain lines and in accordance with certain principles. The discretion of the court is always there, and the rules on which that discretion is exercised are there for the assistance of those who have to advise litigants before they embark on litigation, so that they may have some idea of the risks they run as to costs. It must surely be obvious to anyone who has studied the history of litigation in the Probate Division, notwithstanding the exceptions which are to be found in the books, that where pleas of undue influence and pleas of fraud are made, the probability, at any rate, if they are unsuccessfully made, is that the people who make such charges and fail will be condemned in the costs not only of that charge but of the whole action. The evidence in this case was the evidence of the Venesses, and it was directed not only to the question of want of knowledge and approval but also to that of undue influence. A great deal of evidence was directed to both those matters. It was not one of those cases where the defendants merely put the plaintiff to proof that the deceased knew and approved of the contents of the will. They took on themselves the task of proving, if they could, that not only was that onus not discharged but that the will itself was brought into existence by the undue influence of the plaintiff. That they wholly failed to prove. Having failed, and having failed because they were disbelieved, it seems to me inevitable that an order for costs would be made against them. I think that the order was rightly made and that this appeal should he dismissed.’
- Morris LJ, with whom Ormerod LJ also agreed, also decided the case on the basis that substantially the case was fought on the undue influence case that had failed and therefore the Judge was not wrong to order the defendants to pay all the costs: ‘The judge said that there was a lot to be said for the proposition that it was the testator who was responsible. But he did not proceed to decide that matter for this reason: It was put to the judge that the case laid been fought substantially on the evidence of the Venesses, and that their evidence went very considerably to the issue of undue influence. That issue failed completely and it failed because the judge rejected their evidence and, indeed, called it unfounded evidence. Therefore, the judge took the view that, substantially, the case was fought on the evidence of those witnesses and on the issue of undue influence, and that the evidence of the Venesses had on many vital matters been positively rejected. I think that the judge, having that in mind and not forgetting the other considerations that had been put to him, came to the conclusion that the right order in the exercise of his discretion was that the costs should be paid by the defendants. I do not feel that I can say that the judge erred in coming to that conclusion.’
- I should also note that the test of ‘reasonableness’ in bringing the claim (or opposing a will) is not automatically met where the relevant claim or defence survives the strike out test.
- In addition to the two probate costs principles that I have identified, there is a specific provision for costs in probate proceedings in CPR r57.7(5) which provides: ‘57.7(5) (a) A defendant may give notice in his defence that he does not raise any positive case, but insists on the will being proved in solemn form and for that purpose, will cross-examine the witnesses who attested the will. (b) If a defendant gives such a notice, the court will no make an order for costs against him unless it considers that there was no reasonable ground for opposing the will’.
- In this case the 2nd defendant seeks to rely upon this rule. In Wharton v Bancroft  EWHC 91 (Ch), Norris J suggested that CPR r57.7(5) covers the situation where the defendant does not run a positive case whereas the second costs principle applies in circumstances where the defendant does run a positive case. It may be that both situations boil down to the same question (but with the incidence of the burden of proof being different), that is that where the court finds there was a reasonable ground for opposing the will there will be no costs order against the defendant whereas if the court finds that there was no reasonable ground for opposing the will then the no order as to costs rule/principle will not apply.
- Finally I should mention that the normal consequences of withdrawing or discontinuing a claim is that there will be a costs order against the person withdrawing (CPR r.38.6). Because of the special nature of probate proceedings, the court controls the question of whether discontinuance is permitted and on what terms, including what, if any, costs order should follow (see CPR r57.11). Nevertheless, subject to the probate costs principles that I have considered, it seems to me that the starting point will usually be that the party seeking to discontinue should pay the costs. In this case, the defendants did not withdraw their defence and, where made, counterclaim. Nevertheless, in submitting to a consent order in favour of the claimant’s case that the 2017 will is valid and that therefore the 2005 will is not valid, their position was very close to a discontinuance.
The judge was convinced neither that the testator’s conduct had led to the litigation, nor that the defendants had reasonable grounds for challenging the will, and held that the unsuccessful defendants had to pay both their own costs and the claimant’s costs, see: https://www.bailii.org/ew/cases/EWHC/Ch/2021/2356.html