Chancery Division

Published January 11, 2008

Kostic v Chaplin and Others

Before Mr Justice Henderson

Judgment December 17, 2007

When deciding costs in a contentious probate action, the two long-established exceptions to the normal rule that costs followed the event that survived the introduction of the Civil Procedure Rules were: (i) where a testator had been the cause of the litigation, costs should come out of the estate; and (ii) where the circumstances led reasonably to an investigation of the matter, costs should be borne by both sides.

Mr Justice Henderson so held in the Chancery Division when ordering that a proportion of the costs incurred in contentious probate proceedings in which judgment was awarded to the claimant, Mr Zoran Kostic, against the defendants, Sir Malcolm Chaplin and Mr Martin Saunders, chairman and secretary of the Conservative Party Association), and the Attorney-General, were to be paid out of the estate of the testator, the claimant’s late father, other costs were to be borne by both sides, and a further proportion was to follow the event.

In his last will, the testator left his estate worth £8 million to the Conservative Party Association. In the substantive proceedings, the judge decided that Mr Kostic’s challenge to the validity of the will was successful on the ground of lack of testamentary capacity. Accordingly, under the normal costs rule, the defendants would bear the costs of both sides.

Miss Clare Montgomery, QC and Mr William Henderson for Mr Kostic; Mr Andrew Simmonds, QC and Miss Tracey Angus for the Conservative Party Association; the Attorney-General did not appear and was not represented.

MR JUSTICE HENDERSON said that a positive case had to be made out before departing from the general rule that costs followed the event and the two recognised exceptions, as identified in Spiers v English ([1907] P 122) were guidelines not straitjackets.

A number of propositions as to the meaning of the exceptions could be derived from authorities decided before Spiers.

First, in order for the first exception to apply, the touchstone was whether it was the testator’s own conduct which had led to his will being surrounded with confusion or uncertainty in law or fact: see Mitchell v Gard ((1863) 3 Sw & Tr 275, 277).

If that causal test was satisfied it should not matter whether the problem related to the state in which the deceased left his testamentary papers, for example, where a will could not be found), or to the capacity of the deceased to make a will.

Second, moral blameworthiness was not the criterion for the application of the first exception: see Davies v Gregory ((1873) LR 3 P & D 28, 31).

Third, there was no correlation between eccentricity and testamentary incapacity: Boughton v Knight ((1873) LR 3 P & D 64, 78).

Fourth, the second exception applied, and each party would bear their own costs, where neither the testator nor the persons interested in the residue had been to blame, but where the opponents of the will had been led reasonably to the bona fide belief that there were good grounds for impeaching the will. The trend of more recent authorities was to encourage a very careful scrutiny of any case in which the first exception was said to apply and to narrow, rather than extend, the circumstances in which it would be held to be engaged.

In the instant case, the testator had suffered from delusions which were so far-reaching that a challenge to his testamentary capacity after his death was all but inevitable.

However, it could be a very difficult question to determine the precise point at which eccentricity shaded into incapacity.

That was particularly so where the testator had not sought treatment for his mental illness with the result that there was no medical evidence based upon an examination of him as a patient.

However, the Conservative Party Association was fully justified in investigating the issue of testamentary capacity once Mr Kostic’s claim to challenge the will was advanced on a formal basis, so that their costs for such investigation should come out the estate down to the stage where a realistic assessment of the merits of the claim could be made.

Further, each side should bear its own costs in an intermediate period of the proceedings up to the date on which expert reports were exchanged, whereafter costs should follow the event.

Solicitors: Allen & Overy LLP; Penningtons LLP.

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