To the death?
October 2008
Peter Steer and James Aspden look at the cost/benefit of will disputes to charities...
When the sculptress Mary Spencer Watson died leaving her £2m house, Dunshay Manor, to the Landmark Trust, a building preservation charity, in March 2006, her partner Margot and Margot’s daughter Hetty Baynes each began litigation to try to secure money from the estate. The charity decided to contest these claims to protect the late Ms Spencer Watson’s ‘ardent desire’ to preserve Dunshay intact as a memorial to her family. Earlier this year, both claims were rejected by the High Court[i], thus safeguarding the gift to the Landmark Trust. This was a particularly high-profile case, but typical of the sort of dispute generated after the death of a charitable donor. Relatively few will disputes go to court but those that do are just the tip of an ever-increasing iceberg.
Around £1.6bn comes to charities in legacies each year and some of the larger charities are highly dependent on them. For example, almost two-thirds of RNLI’s annual income of £158m (2007) comes from legacies. However, for many charities a large bequest is the exception rather than the rule. So it is all the more difficult to decide how to react when the joyful news of a large bequest is superseded by a warning that the charity faces a legal challenge to its entitlement.
Wills can give rise to litigation in a variety of ways. A person may claim that a will is not valid, perhaps because it is alleged the deceased was not of sound mind at the time, and that a previous will should therefore take effect. A member of the deceased’s family, or a dependant during the deceased’s lifetime, may claim that the amount they receive under the deceased’s will is unreasonably small. There is an entire statute – the Inheritance (Provision for Family and Dependants) Act 1975 – dealing with the court’s ability to make provision for dependants. Sometimes family members take matters into their own hands by administering the estate in such a way as to reduce the amount that ends up with the charity.
Charities that receive a large part of their income from legacies frequently have to deal with will disputes and are therefore better equipped to know what to do. For other charities, litigation involving wills and estates is a rarity, but when it does happen, the chances are that the amount at stake will be significant.
Unlike commercial disputes, which are more likely to be driven by business considerations, charities may be unwillingly drawn into conflict with individuals who are in a state of turmoil, emotionally bound up in the events surrounding the dispute and feeling let down by the deceased. Those individuals may consider that the charity should be grateful for whatever it gets, and that it has no place becoming involved in matters they regard as private. They may even suggest that the charity ought to act ‘charitably’ by allowing them to have everything they are asking for.
Charities are often understandably nervous of the potentially adverse public response to media coverage generated by disgruntled beneficiaries – contested wills are popular with the press. In the recent courtroom battle[ii] between the Conservative Party and the son of the late millionaire businessman Branislav Kostic, the son brought a High Court case to overturn his father’s last will. He said his father had been suffering from insane delusions when he made it. The will left £8.3m to the Conservative Party Association. The Court ruled in the son’s favour, after days of evidence from witnesses and experts and after having heard that Mr Kostic made his last will shortly after saying that Margaret Thatcher was ‘the greatest leader of the free world in history’ and that she would save the world from the ‘satanic monsters and freaks’. After judgment had been given in his favour, the son said he was ‘disappointed that the Conservative Party made it necessary for my family to come to court and to give evidence on private matters that we found deeply distressing’.
Trustees and legacy officers should approach a will dispute in the same way as any threat to the charity’s income. The starting point is the duty to protect the charity’s entitlement and to take steps to maximise the amount available for the charity’s work. It is important to pinpoint the merits of the claim and consider:
- what the dispute is going to involve;
- the likely cost to the charity (both in terms of the cost of employing lawyers and the delay in receiving its legacy); and
- the risks of the claim and the benefits to be gained from litigation.
The process of disputing a will
A will dispute should be seen as having two distinct stages: a pre-action stage and the litigation itself.
At the pre-action stage, no court proceedings will have begun. Instead, each party explains their case to the others, discloses the evidence they intend to rely on and raises any questions they may have about the other parties’ cases. The aim is to gain an understanding in advance of what would happen if the case were to be litigated. Once the parties have explored the issues and evidence, they can decide whether they still wish to embark on full litigation or negotiate to try to find an alternative solution.
If, at the end of the pre-action stage, the parties have not agreed on what should happen, then one of them may begin litigation. That party’s legal representatives will instruct a barrister to prepare a ‘claim form’ summarising the claim and naming anyone who may be affected, together with an accompanying document (either particulars of claim or a witness statement, depending on the type of claim) setting out the details. They will pay the court a fee, send copies of the claim form and supporting documents to everyone identified in the claim form and the litigation will begin. The party who begins the litigation is known as the ‘claimant’. Each person who receives a copy of the claim form from the claimant is referred to as a ‘defendant’. Each defendant will have the opportunity to respond by serving a defence and, if appropriate, a counterclaim. In some cases, the claimant will then have the opportunity to respond to what the defendants have put forward.
Once all the parties have set out their case, the court will decide (with the parties’ assistance) what steps need to be taken before the case is ready to be decided by a judge. For example, the parties may wish to produce evidence from witnesses, rely on expert evidence or to ask the other parties targeted questions about their case. The court will set out a timetable for the parties to follow, at the end of which comes the trial. At the trial, the judge will consider each party’s case, hear arguments from each party’s barrister, review all of the evidence they have produced and hear the witnesses give their evidence and be cross-examined. The judge will then deliver a judgment.
This process inevitably takes time. In will disputes, it can take well over a year to get a final hearing. The courts are busy and their diaries are full. When you ask for a trial date, the first available ‘trial window’ may be eight or nine months away.
People often mistakenly believe that the law gives a clear-cut answer in every case. In fact it is very difficult to predict how the various witnesses will come across in court, under cross-examination by a skilled barrister. It can also be difficult to predict what any particular judge will consider to be important to the case. The judge may not agree with the barristers’ interpretation of the relevant law. This is why legal advice tends to be couched in terms of the likelihood of success, rather than in terms of one outcome or another being guaranteed.
The parties may therefore prefer the certainty of a negotiated settlement to the uncertainty of the final outcome of a trial. The charity will have power to compromise a genuine legal claim provided it acts reasonably. Fewer than 10 per cent of cases reach trial. The role of the charity’s legal advisers includes assisting in the prompt resolution of the dispute, when appropriate.
The cost of will disputes
Litigation is expensive. Each party will normally engage solicitors and a barrister, who will have to put in a great deal of work as the case proceeds. Each party may need to pay court fees, experts’ fees and witnesses’ expenses. Will disputes are particularly expensive because of the sheer volume of evidence. The task is made more onerous because the dispute concerns the affairs of a person who is no longer available to give evidence.
Different forms of litigation will give rise to different levels of expense. Generally, the most expensive are about the validity of a will (‘probate claims’). The court has a special role in probate claims, which is to give effect to the true last wishes of the deceased. So, for example, even where the parties agree a settlement, the court should only admit a disputed will to probate if it considers the will is legally valid and if all relevant beneficiaries have been given an opportunity to object. The result is extra work, and therefore extra expense. In contrast, claims under the Inheritance (Provision for Family and Dependants) Act 1975 are usually less costly, because they follow a more streamlined court process.
If a claim goes to trial, the general rule is that the court will order the loser to pay the winner’s costs. However, the court has a wide discretion to order one party to pay costs to another. The court can make a different order, if appropriate, and may use liability for costs as a way to punish any party it considers to have acted unreasonably (for example exaggerating a claim or pursuing a hopeless argument). Litigants can make offers of settlement to influence who will have to pay the costs. After judgment has been given, the court will examine the parties’ conduct, including any offers of settlement made, and take this into account when deciding who will have to pay the costs.
In probate claims, if the case goes to trial then the total costs are likely to be a six-figure sum. For example, in the dispute between the Conservative Party and Branislav Kostic’s son, the combined costs of the parties were over £900,000, reflecting the amount at stake and complexity of the issues.
What can the charity do?
Perhaps the most important point for a charity to keep in mind is that the dispute does not necessarily have to be decided in one party’s favour or the other’s. It is perfectly possible, and in many cases advisable, to agree to ‘settle’ the dispute on terms that provide for each party to have something. The advantages are obvious. If the parties construct their own settlement, they can do so without the expense, delay and uncertainty of a trial. They can instead reach a compromise.
It may sound obvious, but the way to achieve a compromise is to negotiate. This can be as simple as one party making an offer of settlement (in writing or even orally) which the others accept. The parties can agree to be bound by the settlement as though it were a contract. The parties may agree to appoint an independent third party to assist them in reaching an agreement. Mediation is the most popular way to do this, and is now regarded as such an effective way to resolve disputes that the court rules actively require parties to litigation to consider this process. An impartial third party is appointed, by agreement, to act as mediator. Mediators use various techniques and skills to open and/or improve dialogue between the parties, aiming to help them reach an agreement. Given the intensity of feelings that run with will disputes, a good mediator can often unlock a resolution which has hitherto been elusive. And the success rate is high: around 75 per cent settle on the day of the mediation or shortly afterwards.
Whichever method the parties choose, the important thing is to talk about the issues and, as far as possible, to understand the opposing positions. Parties to litigation involving a charity need to understand that the charity has a duty to protect its entitlement, and to act in accordance with the legal advice it has received. Equally, settlement is more likely if those litigants who have particularly strong feelings about the outcome, for whatever reason, feel that the other parties have listened to them.
Not every dispute does settle and wills are notoriously difficult to compromise. However, the fact that less than 1 per cent of estates result in legal proceedings does suggest many disputes are being brought to an end without the court’s involvement. For charities, this is no bad thing.
Legacies are likely to remain a significant source of income for the charity sector, but that can only mean that charities will continue to face a wide variety of legal challenges to their entitlement so it is vital to tread carefully, and to take appropriate advice before deciding how to respond. A compromise will often be the most suitable way to resolve matters but, as the Landmark Trust has shown, sometimes the right thing to do is simply to hold fast and fight for a benefactor’s right to choose to leave money to your charity. After all, what could be more important to charities than that?
[i] Henrietta Sarah Louise Baynes v Rosemary Felicity Hedger & 6 Ors [2008] EWHC 1587 (Ch)
[ii] Zoran Kostic v (1) Malcolm Chaplin (2) Martin Saunders (3) HM Attorney General [2007] EWHC 2298 (Ch)
Biography
Peter Steer is a partner at Wilsons in the charities and schools team. He specialises in probate litigation and other contentious work for charities He is a member of the Association for Contentious Trusts and Probate Specialists (ACTAPS) and the Charity Law Association.
James Aspden is an associate at Wilsons in Peter Steer’s team. His work includes will disputes, Inheritance Act claims, undue influence, fraud, proprietary estoppel and claims by or against executors, trustees and solicitors. He is an associate member of ACTAPS.
Author: Peter Steer
Peter Steer is a partner at Wilsons in the charities and schools team. He specialises in probate litigation and other work for charities. He is a member of the Association for Contentious Trusts and Probate Specialists (ACTAPS) and the Charity Law Association
Author: James Aspden
james Aspden is an associate at Wilsons in Peter Steer's team. His work includes will disputes, Inheritance Act claims, undue influence, fraud, proprietary estoppel and claims by or against executors, trustees and solicitors. He is an associate member of ACTAPS
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