Kostic v Chaplin and Others
| Jurisdiction | England & Wales |
| Judge | THE HONOURABLE MR JUSTICE HENDERSON,The Honourable Mr Justice Henderson |
| Judgment Date | 17 December 2007 |
| Neutral Citation | [2007] EWHC 2909 (Ch) |
| Docket Number | Case No: HC06C02343 |
| Court | Chancery Division |
| Date | 17 December 2007 |
[2007] EWHC 2909 (Ch)
The Honourable Mr Justice Henderson
Case No: HC06C02343
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Miss Clare Montgomery QC and Mr William Henderson (instructed by Allen & Overy) for the Claimant
Mr Andrew Simmonds QC and Miss Tracey Angus (instructed by Penningtons) for the First and Second Defendants
Hearing date: 2 November 2007
Approved Judgment on Costs
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
On 2 November 2007 I heard argument on the questions of costs which arise following the judgment which I handed down on 15 October. The positions of the two main parties are diametrically opposed, and the amounts at stake are very considerable (the total costs incurred to date on both sides are of the order of £900,000). I therefore decided to reserve my judgment.
The difference of approach between Zoran, who has of course succeeded in the action, on the one hand, and the CPA, which has unsuccessfully sought to uphold the 1988 or 1989 Wills, on the other hand, could hardly be more stark. The primary submission advanced on behalf of Zoran by Miss Montgomery QC is that the first and second defendants should pay his costs from 29 May 2007, including all the costs of the trial before me in July, on the indemnity basis together with interest at 10% above base rate, and that they should pay all his costs down to that date on the standard basis. By contrast, the primary submission of Mr Simmonds QC for the CPA is that the first and second defendants should be awarded all their costs of opposing Zoran's claim, including the costs of the trial, out of Bane's estate on the standard basis. Since Zoran is, in the event, the sole beneficiary of his father's estate, the effect of making an order in these terms would be to cast upon him the burden of all the costs incurred by the CPA in opposing his successful claim, subject only to detailed assessment if the amount of those costs could not be agreed.
I shall begin by attempting to identify the relevant principles which should guide me.
The costs of a contentious probate action, like those of any other civil claim, are within the discretion of the court, and CPR Parts 43 and 44 will apply. The general rule, enshrined in CPR 44.3(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, sub-paragraph (2)(b) provides that the court may make a different order, and it was common ground before me that in contentious probate claims there are two long-established exceptions to the general rule which have survived the introduction of the CPR and are still valid. Miss Montogomery did, however, reserve the right to argue in a higher court that the exceptions have now been replaced by the provisions of the CPR. For what it is worth, my own view is that the position is indeed now governed by the CPR, but the considerations of policy and fairness which underlie the two exceptions remain as valid today as they were before the introduction of the CPR, and they should therefore continue to guide the court in deciding whether it is appropriate to depart from the general rule and to make a “different order” pursuant to sub-paragraph (2)(b).
The two exceptions were stated as follows by Sir Gorell Barnes P in Spiers v English [1907] P 122 at 123:
“In deciding questions of costs one has to go back to the principles which govern cases of this kind. One of those principles 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 out for costs to come out of the estate. Another principle is that, 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. If it were not for the application of those principles, which, if not exhaustive, are the two great principles upon which the Court acts, costs would now, according to the rule, follow the event as a matter of course. Those principles allow good cause to be shewn why costs should not follow the event. Therefore, in each case where an application is made, the Court has to consider whether the facts warrant either of those principles being brought into operation.”
This statement of principle makes it clear, in my judgment, that a positive case has to be made out before departing from the general rule that costs should follow the event, and also that “the two great principles upon which the court acts” are neither exhaustive nor rigidly prescriptive. They are guidelines, not straitjackets, and their application will depend on the facts of the particular case. The important distinction between the two exceptions to the general rule is, of course, that where the first exception applies the unsuccessful party may be awarded his costs out of the estate, whereas if the case is merely one where “the circumstances lead reasonably to an investigation of the matter”, the appropriate order is likely to be that each side will be left to bear its own costs.
What is meant, for the purposes of the first exception, by saying that the testator has been “really the cause of the litigation”? And what is meant, for the purposes of the second exception, by saying that “the circumstances lead reasonably to an investigation of the matter”? There are at least four earlier cases which throw some light on these questions, and I will now consider them in turn.
In Mitchell v Gard (1863) 3 Sw.&Tr. 275 the relevant principles were stated for the first time by Sir James Wilde (the future Lord Penzance) hearing an application by the next of kin of the deceased, who had unsuccessfully opposed the will in a testamentary suit tried before Byles J and a jury, for their costs to be paid out of the estate. Sir James Wilde said this at 277–8:
“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.
…
But if the testator be not in fault, and those benefited by the will not to blame, to whom is the litigation to be attributed? In the litigation entertained by other Courts, this question is in general easily solved by the presumption that the losing party must needs be in the wrong, and, if in the wrong, the cause of a needless contest. But other considerations arise in this Court. It is the function of this Court to investigate the execution of a will and the capacity of the maker, and having done so, to ascertain and declare what is the will of the testator. If fair circumstances of doubt or suspicion arise to obscure this question, a judicial enquiry is in a manner forced upon it. Those who are instrumental in bringing about and subserving this enquiry are not wholly in the wrong, even if they do not succeed. And so it comes that this Court has been in the practice on such occasions of deviating from the common rule in other Courts, and of relieving the losing party from costs, if chargeable with no other blame than that of having failed in a suit which was justified by good and sufficient grounds for doubt.
…
From these considerations, the court deduces the two following rules for its future guidance: first, if the cause of litigation takes its origin in the fault of the testator or those interested in the residue, the costs may properly be paid out of the estate; secondly, if there be sufficient and reasonable ground, looking to the knowledge and means of knowledge of the opposing party, to question whether the execution of the will or the capacity of the testator, or to put forward a charge of undue influence or fraud, the losing party may properly be relieved from the costs of his successful opponent.”
Although Sir James Wilde framed his first rule in terms of blame and fault, it is in my view reasonably clear that he did not necessarily mean moral fault or culpability, but rather that the touchstone should be whether it was the testator's own conduct which had led to his will “being surrounded with confusion or uncertainty in law or fact”. If that causal test is satisfied, it should not in my judgment matter for the purposes of the first rule whether the problem is one relating to the state in which the deceased has 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. I do not, therefore, read Sir James Wilde's formulation of the second rule as implying that an unsuccessful challenge to (or defence of) a will on grounds of want of knowledge and approval, lack of due execution or mental incapacity can never come within the scope of the first rule, but rather as being intended to provide guidance in cases where, on the facts, the first rule is not engaged.
I would also point out that at 279 the judge noted the difficulty of extracting any general rule from the earlier case law, and said that his two rules were designed to strike a balance between two principles of high public importance, the first being that “parties should not be tempted into a fruitless...
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