Leonard -v- Leonard delivers again: three further takeaways from the probate costs judgment

In February 2024, Mrs Justice Joanna Smith handed down judgment in the highly publicised probate dispute Leonard v Leonard [2024] EWHC 321 (Ch), finding for the Claimants and pronouncing in favour of the Will made by Jack Leonard in 2007 and declaring that he lacked testamentary capacity to make, and did not know and approve of, a later will prepared by Irwin Mitchell in 2015.

Earlier this month, the Judge heard arguments from both sides in relation to costs and the costs judgment was handed down this week. Three key takeaways arise from the 21-page judgment and there may be more to come…read to the end to find out more.

First, when is a Part 36 offer a genuine offer? The Claimants were, of course, the successful party and so could, in accordance with the normal rule, expect to receive their costs. In addition, they relied on a Part 36 offer made on 13 September 2021, at a very early stage of the proceedings and, argued that, from 4 October 2021 (i.e. 21 days after the Part 36 Offer was made), the consequences set out in CPR 36.17(4) must apply, namely indemnity costs, an enhanced rate of interest on those costs, and a further amount calculated under CPR 36.17(4)(d)(ii).

In response, the Defendants sought to rely solely on CPR 36.17(5)(e) and to persuade the Judge that it would be unjust to apply the consequences set out in CPR 36.17(4). They contended that the Claimants’ offer was not a genuine offer attempt at settlement.

The Judge agreed with the Claimants. She held that their offer, part of which agreed to give up their claim to repayment of 2 lifetime gifts made by Jack Leonard during his lifetime, was a genuine concession by the Claimants when it was made and that it represented a real attempt to settle the claim, notwithstanding the fact that this part of the claim was later conceded by the Claimants following an alteration in their expert’s opinion.

Takeaway 1: a Part 36 offer must be viewed with an objective approach free from the hindsight afforded by the outcome at trial.

The Judge then went on to consider the application of the long-established common law probate exceptions to the general rule at CPR 44.2 that the unsuccessful party pays the successful party’s costs. These exceptions were summarised in the cases of Kostic v Chaplin [2007] EWHC 2909 (Ch) and Perrins v Holland [2009] EWHC 2556 (Ch) and have survived the introduction of the CPR.

The first exception requires the Court to ask whether the litigation was caused by the testator so as to justify an order that costs be paid from the estate. The second considers whether the circumstances, including the knowledge of the unsuccessful party, warranted an investigation. If so, there may be no order as to costs.

The Judge dismissed the Defendants’ submissions that Mr Leonard had been, in any way, the cause of the litigation, finding that there were no grounds to show that a challenge to the validity of the 2015 Will had been ‘inevitable’ because of Mr Leonard’s conduct and the nature of his dementia.  Furthermore, the Defendants’ proximity to Mr Leonard during the will-making process meant that they were well-placed to assess his condition at the relevant time.

With regard to the second exception, the Judge held that this was engaged for a limited period up to and including a mediation which took place in March 2021 (5 months before the claim was issued).  She was persuaded that, during that initial pre-action period, it had been reasonable for the Defendants to undertake investigations following receipt of the Letter of Claim, particularly as Mr Leonard’s wife, who had by this time lost capacity herself, was unable to give input as to her knowledge of the events which had passed during the will-making process. As such, the parties are to bear their own costs up to and including the mediation.  The Defendants must pay the Claimants’ costs on the standard basis following the mediation and until the expiry of the relevant period of the Claimants’ Part 36 offer.

Takeaway 2: the probate exceptions are just that, exceptions. By no means will they be applied in every case which involves a challenge to the validity of a will on the grounds of testamentary capacity.  The Court will scrutinise, on the facts of each case, whether an investigation into the validity of a will has been reasonable, and if so, for what period.

Finally, and perhaps of most note (and possibly alarm) for practitioners in the fields of both non-contentious and contentious probate alike (and indeed, for their insurers), the Judge agreed, on the Claimants’ raising the point, to make an Order that any party who wishes to do so may apply to join Irwin Mitchell to the proceedings for the purposes of seeking a non-party costs order against them under s.51 SCA 1981 and CPR 46.2. For anyone who has read the judgment in this case, and the extensive comments made about Irwin Mitchell’s conduct in the will-making process, it will come as no surprise that the Judge was asked to make an order in these terms. It reflects the steps taken by Briggs J of his own initiative in the case of Key v Key [2010] EWHC 769 (Ch), where he ordered that the solicitors who had been found wanting in their preparation of the testator’s last will should be joined to the proceedings for the purposes of determining whether they should be liable for the costs (as well as Lord Neuberger’s costs decision in Marley v Rawlings).

Takeaway 3: Failure to adhere to the Golden Rule and other failures in the will-making process may leave a will writer with costly questions to answer in the future.

Watch this space for what is to come….

This article is attributed to Birketts and Constance McDonnell KC and George Vare from Serle Court.