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Who pays the legal costs following a will dispute?
A common misconception is that the legal costs always come from the estate when someone challenges a will. With beneficiaries and third parties, the starting point is actually that the loser will pay the winner’s costs.
However, there are two exceptions which were established in Spiers v English  P 122:
Where the person who made the will, or persons interested in the residue, are the real cause of the litigation, then the costs can come from the estate; and
If the circumstances lead to a reasonable investigation, each party could be responsible for their own costs.
Henderson J (as he then was) in Kostic v Chaplin  EWHC 2909 (Ch) stated that these exceptions are not exhaustive nor rigidly prescriptive. It all depends on the facts of the particular case.
Birkett Long’s contentious probate team recently acted for clients who were able to avoid having to pay the other party’s costs, which exceeded £200,000. Master Teverson found that the first exception applied: the deceased’s conduct was the real cause of the litigation and therefore the costs should come from the estate.
The deceased died in 2007 and his estate was administered under the rules of intestacy. Over ten years later, a will was produced which was purportedly made by the deceased in 1999. Birkett Long’s clients disputed the validity of the will on the grounds that it was a forgery, but Master Teverson found that it was valid.
Master Teverson ruled that the highly unusual and truly exceptional facts of the case meant the usual cost rules should not apply.
The will was produced by Howard Day, who was an unqualified individual who assisted people with legal disputes. Mr Day was later convicted and imprisoned for fraud related offences. When the deceased died, our clients knew Mr Day had been convicted of fraud so had reasonable grounds for doubting the validity of the will produced by him.
Unusually, the will was also signed by Mr Day, purportedly at the deceased’s discretion. Whilst this is permissible, it is unusual when the testator could have signed the will himself. Master Teverson found that Mr Day should have insisted the deceased signed the will himself, or recorded on the will that he signed the will at the deceased’s direction.
Master Teverson ruled that the only fair outcome was for all the parties’ costs to come from the estate.
Luckily the estate in this case was large enough to mean that there will still be assets left after both parties’ costs (which will exceed £400,000) have been paid. However, in small estates, this could be problematic.
However, parties should not assume that the costs will come from the estate as this is the exception. There is a real risk, once court proceedings have started, that the loser may be ordered to pay the winner’s costs, or that each party has to bear their own costs, is something that has to be carefully considered by people who become involved in court proceedings concerning the validity of a will.