Marley v Rawlings (No 2)
| Jurisdiction | England & Wales |
| Judge | Lord Sumption,Lord Hodge,Lord Carnwath,Sumption,Carnwath,Lord Clarke,Hodge,Lords Clarke,Lord Neuberger |
| Judgment Date | 18 September 2014 |
| Neutral Citation | [2014] UKSC 51 |
| Date | 18 September 2014 |
| Court | Supreme Court |
[2014] UKSC 51
Lord Neuberger
Lord Clarke
Lord Sumption
Lord Carnwath
Lord Hodge
Appellant
Robert Ham QC Teresa Rosen Peacocke (Instructed by Hugh Cartwright & Amin)
Respondents
Nicholas Le Poidevin QC Alexander Learmonth (Instructed by Gillan & Co)
Heard on 3 December 2013
Lord Neuberger ( WITH WHOM Lords Clarke, Sumption, Carnwath AND Hodge AGREED):
On 22 January 2014, we gave judgment in Marley v Rawlings [2014] UKSC 2, [2014] 2 WLR 213, in which we allowed Mr Marley's appeal against the Court of Appeal's dismissal of his appeal against the decision of Proudman J. She had refused to admit to probate a document as the validly executed will of Alfred Rawlings ("the will"). On its face, this document appeared to be the will of his late wife (who had predeceased him), but it had been signed by Mr Rawlings. This was because, when the solicitor who had drafted the wills ("the Solicitor") had visited the couple for the purpose of executing their wills, Mr and Mrs Rawlings had accidently been presented with, and each had signed, the will intended for the other. Mr Marley was the residuary beneficiary under the will, if it was valid, whereas the two sons of Mr and Mrs Rawlings ("the respondents") would have inherited on an intestacy.
The issue which arises now is how the costs of the proceedings should be allocated. Mr Marley's primary contention is that the respondents should pay his costs of the proceedings, including the two appeals, in addition, of course, to having to pay their own costs. The respondents, on the other hand, contend that the costs of Mr Marley and the respondents should be paid out of the late Mr Rawlings's estate, or, in the alternative, that those costs should be ordered to be paid by the Solicitor, as he was responsible for the unfortunate error. The Solicitor is, of course, insured against such liabilities. Those insurers have also made submissions on costs, and they contend that the respondents should pay Mr Marley's costs.
These submissions all have to be seen in the light of the fact that the value of Mr Rawlings' estate ("the estate") is in the region of £70,000.
The position is complicated by the fact that, in the Supreme Court, the respondents' solicitors and two counsel were each acting under a conditional fee agreement (a "CFA"), although they were acting on the traditional basis in the Court of Appeal and at first instance. I will first address the position on the assumption that the respondents' solicitors and two counsel were acting on a traditional basis throughout (which will dispose of the costs below), and will then turn to the costs in the Supreme Court in the light of the CFAs.
On the face of things at any rate, it is possible to justify more than one different order for costs in this unfortunate case. I describe the case as unfortunate, because it has involved a hearing in the High Court, a hearing in the Court of Appeal, and a hearing in the Supreme Court, with each side represented by experienced counsel and solicitors, in order to reach a final decision as to how an estate of £70,000 is to be distributed. Even if the costs have been kept at a modest level at all stages, there is unlikely to be much, if anything, left in the estate if the only order in respect of costs which this court makes is that primarily sought by the respondents, namely all parties' costs being paid out of the estate.
If there had been no question of negligence on the part of the Solicitor, it would have very difficult to decide what order to make as between Mr Marley and the respondents. On the one hand, there is considerable force in Mr Marley's argument that, although this litigation relates to the validity of a will, and it is a case where both parties can say that they had a reasonable argument, it was ultimately hostile litigation between two parties fighting over money, and that, in those circumstances, the normal rule of "loser pays" applies, so that Mr Marley should receive his costs from the respondents. There is some support for this in the authorities. On the other hand, the authorities also reveal that, where there is an unsuccessful challenge to the validity of a will, and the challenge is a reasonable one and is based on an error which occurred in the drafting or execution of the will, the court often orders that all parties' costs come out of the estate.
In the present instance, therefore, and still ignoring the possible liability of the Solicitor, there is a case for saying that Mr Marley should recover his costs from the respondents because they took their chance in hostile litigation and lost, but there is equally a case for saying that the correct order is that the costs of all parties should be paid out of the estate, not least because the cause of the error was in the execution of the will, and the stance adopted by the respondents was far from unreasonable, as is evidenced by the fact that they succeeded both at first instance and in the Court of Appeal. A pragmatic approach might well suggest that, if the estate had been very substantial, the correct order would be to direct that costs be paid out of the estate, but one should hesitate long and hard before making such an order in a case such as the present, where the estate is modest: it would deprive the successful party, in this case Mr Marley, of any benefit from the litigation or from the estate.
However, this is not a case where it could possibly be right to ignore the position of the Solicitor. Indeed, there is, at least in terms of broad common sense, considerable attraction in the notion that the Solicitor should bear all the costs, in the sense that he was the person whose unfortunate error was responsible for the litigation. On the other hand, as the insurers point out, (1) a court should always be wary before making an order for costs against a third party, (2) it would, at any rate on the face of it, be odd to require the Solicitor to pay the respondents' costs, given that he owed no duty to the respondents, and (3) it was not the Solicitor's fault that the respondents chose to fight the case.
Although those three arguments have some force, at least on the face of it, I do not find them particularly persuasive. It was the error of the Solicitor which caused the problem that gave rise to the proceedings, as is reflected by the fact that the insurers accepted liability to Mr Marley for his costs in the Court of Appeal and the Supreme Court. Further, when Mr Marley intimated that he had a claim against the Solicitor, the insurers required him to bring proceedings to seek to have the will upheld as valid.
I turn to the three specific points raised by the insurers on behalf of the Solicitor. As to point (1), it is by no means unusual to make an order for costs against a party who was funding the litigation or who was responsible for the litigation. As mentioned, the insurers are funding the litigation to the extent of underwriting Mr Marley's costs of the two appeals; further, not only was the Solicitor primarily responsible for the whole problem that gave rise to these proceedings, but the insurers required Mr Marley to bring these proceedings by way of mitigation. Further, the Solicitor has no defence whatsoever to a damages claim from Mr Marley, and therefore this is a particularly strong case for holding a third party liable for costs. As to point (2), given that the respondents' decision to fight this litigation was not unreasonable, it would be harsh if they had to pay any substantial costs, as explained above. Consequently, there is considerable force in the notion that they should obtain their costs out of the estate. However, if that happened, those costs would be ultimately borne by Mr Marley, because he is entitled to the estate, and he would suffer to the extent that it is diminished by the respondents' costs, and therefore could recover that diminution from the Solicitor. As to point (3), it was both foreseeable to the Solicitor and to the insurers that the respondents would contest the claim, and it was scarcely unreasonable of them to do so "all the way", as is demonstrated by the fact that they won in the High Court and the Court of Appeal.
Because an order that all parties be paid out of the estate would result in Mr Marley being able, in effect, to reconstitute the estate through a claim for damages against the Solicitor, it appears to me that the position is equivalent to one where the estate is very substantial in nature. Accordingly, an order that the parties recover all their costs out of the estate also seems justified in pragmatic terms, on the basis that all those costs would, in practice, be recovered by Mr Marley from the Solicitor, and by the Solicitor from the insurers.
In those circumstances, rather than ordering that the parties receive all their costs out of the estate, and leaving it to Mr Marley to recover the costs from the Solicitor, and leaving it to the Solicitor to be indemnified by the insurers, it seems to me that, assuming that the respondents had funded the litigation traditionally, it would be appropriate to order that the insurers pay all the costs of Mr Marley and the respondents in relation to these proceedings throughout. I take some comfort from the fact that this was the order which was agreed on behalf of the negligent solicitor in not dissimilar circumstances in In re Bimson [2010] EWHC 3679 (Ch), an agreement which, at para 23, Henderson J referred to as "very proper", and that in Gerling v Gerling [2010] EWHC 3661 (Ch), para 50 HH Judge Hodge QC said in a similar case that he "assume[d] that there will be no order as to costs because the costs are...
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Table of Cases
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Case Note
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