Choosing Not to Mediate a Probate Dispute: The Risks of Standing on Stoney Ground

Court judgements relating to mediation are a bit like buses. You don’t see one for ages and then two come along at once.

The case Stoney-Andersen -v- Abbas and Others involved a contentious probate dispute.

The Deceased left a Will appointing his wife and the first defendant (who was married to his wife’s niece) as executors.  The deceased’s wife having died before the deceased, probate was granted to the first defendant in relation to an estate valued at just under £500,000 or in the words of the judge, “ not a very large estate”.

The deceased had made five handwritten manuscript amendments to his Will which the first defendant as the executor regarded as valid, even though the judge ended up taking the opposite view there being no evidence as to when, how and by whom the amendments had been made.  Relying on the amendments, the first defendant had made what turned out to be an unlawful payment to the second defendant (who coincidentally happened to be his own daughter).

The first defendant, who was also the executor of the deceased’s sister-in-law’s estate, had as part of the administration of that estate accused the claimant of having stolen funds from the sister-in-law’s bank account which the claimant denied. The claimant was the great niece of the deceased.

The claimant issued proceedings for : –

• An order replacing the first defendant with an independent professional executor
• An order that the first defendant repay the sums wrongly paid to the second defendant
• A declaration as to the proper division of the deceased’s residuary estate.

All of the defendants initially opposed the claimant’s claim in its entirety, save that the first defendant was neutral on the question of the amendments to the will.

The first to third defendants indicated an intention to defend the claim but the fourth defendant did not.

The claimant alleged in particular that she was entitled to considerably more from the Deceased’s estate than she had received.  In her letter of claim she stated that she was prepared to engage in Alternative Dispute Resolution (ADR) including mediation but only following full and proper disclosure.

In a letter of response denying the factual allegations, the first defendant’s solicitors rejected the proposal of mediation.  In response, the claimant’s solicitors then withdrew the offer of mediation on the basis that as they said the first defendant’s liability was clear, “it would not appear appropriate at this stage to be arranging a mediation”.

The first and second defendant’s solicitors then made subsequent proposals for mediation to which it appears the claimant’s solicitors did not respond.

Further settlement proposals ensued such that by the time of the hearing before His Honour Judge Matthews, most of the substantive issues between the parties had been resolved, the first defendant’s solicitors having about a week before the hearing said that their client no longer intended to contest the application to remove him as an executor.

The claim in relation to a declaration remained live until the very last minute when at court all of the parties and their lawyers had the opportunity to examine the original Will and in particular the handwritten amendments to it.

The judge, relying upon the presumption that manuscript amendments to an executed Will were made after its execution, decided that as there was nothing in this case to rebut that presumption, then all of the amendments should be ignored.

In light of the above, the hearing essentially proceeded as a costs hearing.  Having recited the general principle that costs are in the discretion of the court and the usual rule is that “the loser should pay the winner’s costs” the judge said that in terms of the exercise of that discretion, the court should take into account the conduct of all parties.

In the normal course of events, an executor/trustee is entitled to be reimbursed from the trust/estate funds for expenses (including legal costs) properly incurred by them when acting on behalf of the estate/trust.  However, the judge decided that in this case the executor should be deprived of that indemnity because he had fought the application to remove him as an executor almost to the end giving up “when it was really far too late”.

Of more interest, however, was the decision relating to the claimant’s “hokey-cokey” approach to mediation.  Initially she had offered it but then changed her mind when she thought that there was no defence to her claim.

Having said that he thought that the first and second defendants were right to pursue the possibility of mediation and that the claimant was wrong in terms of not going along with it, the judge decided that whilst it would not be right to deprive her of all of her costs he would award her only 50% of her costs and on the standard rather than the more generous indemnity basis.

In light of the recent Court of Appeal decision that it is within the powers of the court to order parties to mediate this is a salutary reminder to parties and their advisers that mediation should be considered at an early stage.  As the judge said, “it is commonplace that both sides are told by their lawyers that they will win. But they cannot both be right.  Indeed, sometimes both sides are wrong.  The combination of litigation risk and irrecoverable costs almost always makes it worthwhile considering mediation and other ADR”.

The reduction of the order for costs in favour of the claimant was, “to mark the court’s disapproval of the claimant’s failure to take up the suggestions of mediation/ADR”.

By the way, did I mention that I am an accredited mediator specialising in contentious Wills, trust and probate disputes.

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