Costs order aims to discourage ‘no holds barred’ practice in 1975 Act disputes

14 May 2012

The England & Wales High Court (EWHC) has made an unusual costs order in the estate dispute case of Lilleyman v Lilleyman, to discourage litigants in 1975 Act cases from following a ‘no holds barred’ strategy.

The case was brought by the widow of the late Roy Lilleyman, a Sheffield businessman. He left her only an annuity, a few chattels and limited occupation rights in their two jointly owned houses. The rest of his GBP6 million estate went to his two sons from his first marriage. Barbara Lilleyman applied to the court for reasonable provision under the Inheritance (Provision for Family and Dependants) Act 1975, and her stepsons energetically contested the claim. But last month the EWHC granted her full title to both properties, while rejecting her application for a substantial share of the estate's cash.

During the litigation, the defendants had offered their stepmother various out-of-court Part 36 settlements. The first offer proposed giving her the two properties plus GBP450,000 in cash. A later proposal offered to settle for GBP550,000 in cash, including a GBP66,000 contribution to Mrs Lilleyman's costs. She rejected both offers, holding out for the two properties plus GBP500,000 (there were some other, minor terms in the negotiations, which are neglected here).

Since the EWHC ultimately awarded Mrs Lilleyman less than she could have had by accepting the stepsons' Part 36 offer, she would normally have been liable for all legal costs incurred by both sides after that offer was made. However, at the costs hearing on 26 April, Mr. Justice Briggs decided not to follow that principle. Instead, he disallowed one-fifth of the defendants' costs from the order (Lilleyman v Lilleyman, 2012 EWHC 1056 Ch).

His reasoning, in part, was that the Part 36 rules do not produce their intended result when applied in 1975 Act disputes, though they are adequate for other civil disputes. ‘Even in a big money [1975 Act] case, the costs are likely to form an ever-increasing part of the subject matter of the dispute until, as appears largely to have occurred in the present case, it is the costs burden alone which prevents settlement’, he said. ‘The potential for undisclosed negotiations to undermine a judge's attempt under the Inheritance Act to make appropriate provision for a surviving spouse is a possible disadvantage of the civil litigation costs regime currently applied to such claims, by comparison with the regime applicable to financial provision on divorce.’

Also, he said, he wanted to allocate some of the costs to the stepsons to show his disapproval of the ‘no holds barred’ approach they had adopted in the litigation. They had refused to concede until the last moment that the will had not made reasonable provision, and had challenged the claimant's evidence that she had substantially repaid Mr Lilleyman for a loan. There were also, he said ‘irrelevant accusations about the parties' conduct’ which added to the unpleasantness.

Briggs concluded that those advising the parties in a 1975 Act claim should provide their clients with detailed advice on the costs consequences of rejecting a Part 36 offer from the other party.

 

Sources

 

Family Law Week (Costs judgement)

BAILII (Ruling on quantum)

 


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