Civil Law (Costs in Probate Matters) Bill 2017: Second Stage

I move: "That the Bill be now read a Second Time."

I will outline to Senators what is intended by the Bill. Under ordinary rule of practice in the civil courts, there is a judge-made rule in respect of costs that dates back in the medium term to 1968 and a case called Vella v. Morelli. Prior to that, it dates back to the early 19th century. The Irish courts, where a challenge is brought to a will, generally follow the rule that, if the challenge is brought in good faith and is reasonable, the challenger is entitled to have the costs of the challenge - this is in addition to the costs of defending it - paid out of the estate even if he or she fails.

My reasons for believing this rule is unfair are as follows. The Constitution guarantees the general right to devise, bequeath and inherit property, subject to the provisions of the Succession Act, which afforded extensive protections to parties so as to ensure that they were dealt with properly. We have a new statutory rule under which children and persons in the position of children are entitled to challenge a will that fails to make adequate provision for them, except where all of the estate is given to that child's parents by the child's father or mother.

Those kinds of case are fine, but this Bill addresses a growing problem. Recently, the President of the High Court said that one would need to be either a millionaire, billionaire or pauper to go to law voluntarily these days. I will not dwell too long on how legal fees have grown, but they have increased. I know that from my own experience. As a consequence, any kind of case in the Circuit Court or High Court can be very expensive and outside the grasp of ordinary people to conduct. Such cases can be dealing with limited estates, for example, the value of a small house in Dublin, which is €300,000. If that gets involved in a tangle between the executor, one of the children and another of the children and everyone starts looking for costs, the estate often gets gobbled up or seriously dented rapidly.

The purpose of the Bill is to change the situation so that the ordinary rules of handling costs in litigation should apply in challenges to a will. The costs follow the event subject to a discretion of the judge not to do so. This Bill would effectively reverse the line of case law that is referred to in Vella v. Morelli to make it in future the ordinary rule that, if someone brings an unsuccessful challenge to a will, such challenge will normally be at the challenger's own expense and he or she will be liable to pay the costs of the executor in defending the will if the challenge is not merited.

I do not wish to discuss cases in which I have been involved, but I know as a matter of general experience that, where a challenge is mooted or brought, the reaction of the executor and the people who are likely to gain from the defence of the will is frequently to say that, although they do not believe there is any merit in the challenge, they will need to buy off the challenge in light of the rule in Vella v. Morelli. Consequently, people who are not entitled to a share in the estate or are entitled to a lesser share are suddenly put in the position of effectively having, I do not want to use the term pejoratively, a blackmail value to their challenge, which means that the people who are entitled to succeed to an estate in a will must effectively buy them off.

The rule increasingly acts unjustly. It is easy for someone to imagine that he or she has a good case against a brother or sister for using undue influence to procure a will in the sibling's favour. It is an easy charge to make. To put, for example, the woman who stayed at home to look after her elderly mother in a position of having to defend herself against a charge that she somehow got her mother to leave the house to her when the brother, who is well-to-do and so on, is able to challenge her behaviour, lose the case by a long distance and still say that he had reasonable grounds to challenge the will, creates a significant injustice.

When Mr. Justice Kearns was in the Supreme Court, he stated that the rule in Vella v. Morelli was not an absolute one and that, if someone instituted proceedings and it subsequently became clear that he or she had no case, he or she would not be liable to the costs involved if he or she proceeded with the matter. My view is that it would be far better if there were fewer challenges to wills and if people who wanted to challenge one faced the ordinary rule that they could not get the costs of making an unsuccessful challenge paid out of the estate, except in extraordinary circumstances that justified such a call.

As I understand it, the rule was followed by the Courts of Chancery in Ireland in the 19th century on the basis that there was a public interest in there being scrutiny of wills and documents that were produced as wills.

Now the great majority of wills are drawn up with the assistance of a solicitor. The old idea is somewhat outdated that people take out a small piece of paper from under the bed or something else and say it is a genuine will. It is now much more difficult, as a matter of practicality, for somebody to produce a false or bogus will than it was in the 19th century when there was not such a facility.

Some Members have said they would favour the creation of a registry of wills or some system for registering wills such that, although the fact that there is a will would not be known to members of the public, after the death of somebody, the fact that a will had been brought into existence could be established. It would be instead of having advertisements placed in the Law Society Gazette looking for a will in a case of intestacy. That is a good idea, but it is different from the point I am making in this short Bill. I am strongly of the view that the time has come to change the rule established in Vella v. Morelli and save small estates, in particular, from the added burden that they can be challenged at the expense of the estate by somebody who will lose the case but suffer no penalty. It is in those circumstances that I bring forward the Bill. The explanatory memorandum sets out the background circumstances. I hope the House will give it a favourable hearing.

I second the Bill. If ever there was a truism, it is that where there is a will, there are relations. We have all heard horror stories. I recall one story from the Minister of State's neck of the woods of a man who owned a farm and had two daughters but no son. Living some distance from him was another family with the same family name but unrelated to him. He called to them and asked the woman of the house what was the name of her young fellow. She told him and asked why he was asking. He said he would leave the farm to him. The woman pointed out that the man had two daughters, but he said neither of his daughters had his surname. There is that type of mentality in parts of Ireland. We have all heard stories of people standing around a bed when someone was drawing his or her last breaths, pleading with him or her to sign over land or property.

Senator Michael McDowell in his Bill is setting out to take out the uncertainty of a situation where those who seek to profit almost blackmail the beneficiary of a will into buying them off in order to avoid litigation. If the Bill did nothing else, it would provide that level of certainty. It would stop people rushing to the law in the belief they were entitled to something to which they were not entitled and hoping to profit from it without having to appear in court. In many cases, that is what happens. It is high time we provided that level of certainty.

We also need to be more honest with each other. I recall speaking to a relation who had done very well in a bequest from another relative whom he had been advising. He was both the executor and the recipient. However, the advice he had given from a tax point of view was nonsense and he finished up paying half to the tax man, when it could have distributed among his brothers and sisters. These things happen. We need to be more open with one another about what we will do with our estates. We need to talk about it. Families need to sit down and talk about it. I have a rule when I meet my family that we never say "remember when". My memory of "when " and theirs very often differ.

I support Senator Michael McDowell. It is high time these provisions were brought forward in the House. I hope both it and the Minister of State will support the Bill and it being brought into law. Families deserve and need this certainty in the context of what is a very high cost alternative. I am glad that Senator Michael McDowell is the man who has brought the issue into focus.

I welcome the Minister of State, Deputy David Stanton. This is a very good proposal from Senator Michael McDowell and the Government will not be opposing it on Second Stage. There will always be an opportunity to enhance and improve it on Committee Stage. I encourage Members who have a viewpoint that will enhance what has been proposed to engage in the process. It makes absolute sense. Senator Michael McDowell has significant experience and knowledge which are of huge benefit to the Houses of the Oireachtas. Every day we see examples which prove the benefit of Seanad Éireann and this Bill is one such example. In the last Seanad I proposed a motion which called on the Government to embrace the principle of e-conveyancing, which is different from what is being proposed. When somebody purchases a house, the conveyancing process can take a number of weeks to complete. If it was electronic, it would cut the time involved by 80% to 90%. When the Minister of State was Chairman of the Joint Committee on Justice and Equality, this was an issue we examined. Similarly, in the case of wills taking out probate takes far too long. The process is cumbersome and time consuming, which leads to significant extra costs. The principle of limiting costs as outlined by Senator Michael McDowell is of great importance. If passed, the Bill will certainly deal with that issue. We also need to look at streamlining to ensure the taking out of probate will happen in a timely manner. When nothing is being contested and everything is kosher and agreed to, the time gap is still completely unacceptable.

The registering of wills proposed by others in the House is something with which I absolutely agree. It is ridiculous that one has to advertise to establish whether there is a will. I would say 90%, if not 95%, of wills are now drawn up through a solicitor. Establishing such a register with 95% accuracy is possible. I suggest to the Minister of State that we need to look at the issue of probate and bring the process into the 21st century. We need to embrace e-conveyancing and provide the necessary funding in collaboration with the Law Society of Ireland which is a big proponent of the idea. We need to reduce dramatically the length of time it takes to take out probate, especially when a will is uncontested. We certainly need to implement what is proposed in the Bill in the case of contested wills.

I commend the Bill and look forward to hearing the Minister of State's response.

I commend Senators Michael McDowell, James Lawless, Victor Boyhan and Brian Ó Domhnaill for bringing forward the Bill.

Fianna Fáil is happy to support the Bill. I wish to briefly refer to the points made by Senator McDowell about the buy-off many defendants in these matters undertake. As he outlined, that significantly eats into the estate, and also if a case continues the costs are borne by the estate, which is not satisfactory either. However, I am concerned that if the rule is taken away plaintiffs will be put off from taking cases of merit. That is a very fine balancing act. Senator McDowell also made reference to the comments today in relation to being either a millionaire or a pauper in terms of bringing legal action. I am fearful that this would come into play in probate cases.

Senator Craughwell made reference to a surprising attitude towards women in some parts of Ireland. As a woman, I am not totally surprised by that and I do not think any woman would be surprised at outdated and backward attitudes towards women, but sin scéal eile.

Senator Martin Conway referred to the cumbersome process and long delays in the Probate Office. The Government should consider providing more funding for the Probate Office. Parliamentary replies and research undertaken by Fianna Fáil have shown that the probate waiting times in Dublin are 17 weeks if one is doing it through a solicitor or 48 weeks if it is done by a layperson. That is not satisfactory given that one has families that are grieving and paying out funeral costs and other related costs and trying to cope with the situation. It is unsatisfactory that people must wait up to 16 weeks before the estate is distributed. That is unsatisfactory.

Given that 30,000 people pass away every year in Ireland and nearly 90% of them own a home, if the process takes up to 16 weeks there are thousands of homes lying idle across the country and that is unsatisfactory in the context of the current housing crisis as well. I am pleased to see cross-party support for the Registration of Wills Bill proposed by my colleague, Senator Terry Leyden. I will pass on the good wishes and support on that to him.

In an era of people moving around the country, less association with family solicitors and frequent movement between solicitors it is only right and proper that we would implement the Bill without further delay.

I welcome the Minister of State, Deputy Stanton, to the House. I thank the Senators for bringing forward the Bill. There is always a lot of work involved when anyone introduces a Private Members' Bill. I compliment the Senators on the Bill.

I agree with what my colleague, Senator Clifford-Lee, said about delays in probate. Likewise in Cork, if I lodge an application for probate at the moment it is four months before I will get a query back, if there is an issue to be raised. If there is a query, when one replies, it might take a number of weeks before one can get the probate, so there is quite a long delay. Before one lodges the documents in probate one has to ascertain the valuation of properties and one now has to get balances from the banks on what were in accounts at the date of death. We now find that we have to fill up a huge volume of documentation for the bank before we are even given the information we seek. Before lodging the documents with the probate office it takes, on average, between eight to 12 weeks and then another four months before one gets a reply back if there is a query to be raised. Nine times out of ten there is a query to be raised and then one finds one has to reply to that, so in a lot of cases it is between eight and 12 months before one gets a grant of probate out.

That is fine if one has money in the bank and one is not concerned about the management of property but if one has property to be managed in the meantime then security issues arise. People know when a person has died and that a property is vacant so additional costs are incurred, which is of concern. When someone acts as an executor, he or she acts in the interests of the estate but there are many obligations imposed on them as well and that is of concern. I agree with my colleagues that we must consider whether there is a need for additional staff or how we can expedite the process.

I have concerns about the Bill. The courts have a fair amount of discretion. When an application is made to suggest the will was not properly done or the person did not have legal capacity at the time and the person who is challenging the will loses, in many cases the court tends to grant the costs to the unsuccessful party in order to prevent an appeal being lodged. That is one of the issues arising. In other situations I have come across cases where judges have said the parties are entitled to their costs but if an appeal is filed that will not follow, and the provision is put into the order. We must be careful in doing something like this given the effect on the discretion of a judge. In fairness, judges take into account the mood of the parties as they go through the legal process. If discretion is withdrawn from a Circuit Court judge one may end up with a lot more appeals going on to the High Court. That is something to take into account.

I was interested in what Senator McDowell said about wills. My first experience of dealing with a complicated will was one made by a parish priest in west Cork. It was a homemade will which had a number of changes, so I had to track down the witnesses. I travelled around west Cork and it took me an entire day to find the witnesses who were a father and his daughter. The only time they were in the priest's house was when they went to make arrangements for her wedding. They understood that the document they were signing related to her wedding when in fact they were witnessing his will. All they would do for me was to sign an affidavit to confirm that it was their signature but they would not swear that they witnessed his will. It just goes to show how things were done long ago.

Cork is a queer place.

I wonder if there was much money involved.

It just goes to show the complications that can arise and what we as solicitors can encounter.

In another case a person died who had property in England and a farm in Ireland. Farms are always a very emotional issue. We could not find a will but we eventually found a carbon copy of the will in a handbag in a wardrobe in the person's house in England. If there was no will different parties would benefit in a particular way and other parties would benefit in a certain way if there was a will. We applied to the High Court for the carbon copy to be admitted into probate. As people know, a carbon copy does not have evidence of signature. The High Court did allow the carbon copy to be admitted into probate. There was no challenge from anyone who was unhappy with the contents of the will, even though people could have challenged it. The only thing we could get from the solicitor, who was in his 80s when he got to sign the affidavit, was that he did remember drafting the document but he would not swear that he witnessed it ever being signed, but it was admitted to probate. That goes to show that families do agree at times even when it is difficult to work out what the person wanted, but in this case they were satisfied that this was the intention of the person who had died and there was no contest of the carbon copy will. It is one of those cases which worked out very well. It is a problem that is arising more and more in that challenges are more frequent. I agree with the Senators proposing the Bill that people make the challenges because they are advised that they do not have to worry about costs. Some system must be put in place to make sure that where there is a challenge it can only be brought in a very genuine case. There are cases where the challenges are not genuine but people know it is worth it and that they might end up securing something out of the will.

Another one I dealt with was the successful issuing of what we call a Calderbank letter, putting certain things on the table and saying if they are not beaten in court, the other party will definitely get caught for costs. It forced a settlement on the matter. This goes to show the process is complicated and not every case is the same. Each estate is different and it is important to work out the intention of the person making the will and what way he or she wanted the estate to be distributed. It is about ensuring the estate is distributed in accordance with such people's wishes.

I thank the Senators for bringing forward the Bill. It is certainly something we must look at as there is a problem. In the past five years I have found there have been more challenges to wills than there were in the previous 20 years in which I practised. It is a problem.

I probably will not use the eight minutes as much of what I would reflect upon has already been said. There is no need to engage in unwarranted repetition but I will make some points at this early Stage of the Bill, and in doing so I begin by thanking the proposers who have brought what is, no doubt, a very sincere piece of legislation before us today. We will support passage to the next Stage but we have some reservations about the application of this proposed legislation. I have no doubt we will try to address that in co-operation with colleagues in the time ahead and as we get to additional Stages of the Bill. It has been said there is a raft of deeply personal and emotive matters, and they have been outlined extensively. That is correct because of the severity of how this affects people's lives. It is a very sincere effort by the proposers in bringing the Bill before us today.

I do not need to rehearse everything at this stage. It is an important matter that must be addressed and the proposers are seeking to do that. Collaboratively we can get to a stage where we can get this right. Currently, for all the reasons outlined thus far, people are being failed or let down; they are experiencing added stress at a time of great emotional burden and trauma for themselves. If there is anything we can do to assist practically and tangibly in the process, we have the responsibility to do that. I look forward to working with the Minister and colleagues, not least the proposers of the Bill, as we move ahead.

I will be brief and to the point. I was very happy to sign my name to this legislation as there is much merit in the Bill. It is not the intention of any of the proposers of the Bill to in any way dull or limit the potential of any citizen to litigate with respect to a will. It is a right that people have clearly set out in the Succession Act in the administration of probate. People have the right to litigate, which is very important. If people are unsuccessful in their challenge to an estate, somebody must pay for it. We are speaking in particular about small estates and I have seen and heard about such small estates where the money has dwindled away between the lawyers and litigation, leaving poor folks with nothing. That is unacceptable. I am mindful of a case in County Cork of an illegitimate child - I do not wish to keep getting back to Cork - but that person suffered an ordeal trying to chase a small 15 acre holding in Dunmanway, that lovely little part of the world. That person went through all the litigation to try to get some sort of inheritance from his mother, who always wanted to make contact with her boy who was stuck in Dublin. In the end, it was all lost through litigation. It was sad but things have moved on since.

It is important that we note that the Bill aims to reform the law with respect to the liability of unsuccessful parties to pay the costs of certain civil actions connected with them and in challenging the validity of a will. It is the kernel of this legislation. It is simple, appropriate and important. I welcome the Minister and I look forward to hearing what he has to say. The real kernel of this is we do not want to in any way dull people's ability to make a challenge through the courts and the legal process, if necessary. If they are unsuccessful, they should have to pay some, if not all, of the costs. We cannot allow estates to dwindle because of litigation, much of which is vexatious or arises from other motives. It is an important piece of legislation and I hope we will get support across the House.

I am pleased to be here on behalf of the Minister for Justice and Equality, Deputy Flanagan, who asked me to convey his apologies. He was here earlier for quite a while on Second Stage of the Criminal Justice (Corruption Offences) Bill.

The Government considered this Bill at its meeting this morning and agreed to the Minister's recommendation not to oppose the Bill but to accept the merits of its underlying principles and to agree that the Government should engage with the Bill's sponsors to address some problems that have been identified in the Bill as drafted. The Minister's understanding is that the purpose of the Bill is to ensure that persons who unsuccessfully challenge entitlements under a will or on intestacy, or who unsuccessfully challenge the administration of an estate, should not be able to do so at the expense of the estate and hence of the persons who would share in a distribution of the estate. We have heard some examples from Senators this evening of where things go wrong.

The explanatory memorandum accompanying this Bill states that, in practice, challenges that are unlikely to succeed are settled to avoid a costly court hearing and this legislation aims to bring an end to that practice. The Government acknowledges that there is merit in the policy objective of this Bill. Many of us may be aware of cases where the assets of an estate are eaten by legal battles, some of which are unjustified, and which have the effect of alienating family members and depleting the estate. We heard examples of that this evening. The Minister welcomes the Senators' proposal for legislation to address some of the unsatisfactory aspects of succession law in practice but I wish to highlight some issues with the Bill as drafted, which we believe require further work.

The approach taken in the Bill is to provide that in specified probate proceedings, an unsuccessful party shall not be entitled to an order that his or her costs be paid out of the estate of the deceased person. This would represent a fundamental change to the determination of costs in such cases. As Senators may be aware, there is a long-established practice in the courts that a court, when considering the matter of costs in civil proceedings relating to probate matters, will consider the facts of the case and, in particular, will consider two questions. These questions are whether the unsuccessful party had reasonable grounds for litigation and whether the proceedings were taken in good faith. Where the court considers that both these questions can be answered in the affirmative it is the usual practice of the court to order the general costs of the action be paid out of the personal estate of the deceased. This rule of practice was affirmed by the Supreme Court in the 1968 Morelli case, as has been referenced already. In the course of his judgment on the case, Budd J stated:

It would seem right and proper to me that persons, having real and genuine grounds for believing, or even having genuine suspicions, that a purported will is not valid, should be able to have the circumstances surrounding the execution of that will investigated by the court without being completely deterred from taking that course by reason of a fear that, however genuine their case may be, they will have to bear the burden of what may be heavy costs. It would seem to me that the old Irish practice was a very fair and reasonable one and was such that, if adhered to, would allay the reasonable fears of persons faced with making a decision upon whether a will should be litigated or not.

The Minister is of the view that the Bill as drafted, while attempting to end what might be considered unintended consequences arising from the Morelli judgment, may give rise to unintended consequences of its own. That is, while reducing the number of unjustified claims, this legislation may also run the risk of preventing those who have genuine concerns regarding a will or the administration of an estate, from seeking to exercise their right to access to justice. To ensure that this is not the case, the Government wishes to engage with the Bill’s sponsors to amend the Bill as necessary.

The Minister also draws the attention of the House to section 168(1)(b) of the Legal Services Regulation Act 2015, which provides that a court, in proceedings concerning the estate of a deceased individual, or the property of a trust, may order that the costs of or incidental to the proceedings of one or more parties to the proceedings be paid out of the property of the estate or trust.

The Minister points out that there appears to be a difficulty of interpretation in the Bill as published. Section 3, which provides that an unsuccessful party shall not be entitled to an order that his or her costs be paid out of the estate of the deceased person, is subject to section 4. Section 4 preserves the jurisdiction of the court in terms of the determination of costs in accordance with the rules of court or procedure. Perhaps it is intended that the rules of court could effectively override the provisions contained in section 3. The Minister would welcome some clarification as to what is intended here.

Reference has been made to probate. A working group has been examining an operational probate system and the work is nearly completed. I am also interested in the reference that has been made to a registered wills Bill. That is something that should be examined further.

As I indicated, the Government acknowledges the merit in the Bill's underlying proposals insofar as they seek to deter frivolous or vexatious claims against an estate which may be settled before reaching court. For the reasons that I have set out, however, the Minister considers that the provisions will require careful scrutiny and, in all likelihood, amendments to ensure coherence with existing practice in probate matter and to ensure that the right to access justice is not restricted unfairly. To that end, the Minister will consult the Attorney General to ascertain whether the objectives of the Bill can be achieved in an alternative manner and would be happy to engage with the Bill's sponsors in this regard.

This area is quite interesting and challenging. We all have examples and heard anecdotes of what happens, especially in some parts of Ireland. The cases are not all from Cork and I am sure instances happen in other parts of the country as well. I thank the Senators for bringing forward the legislation and for the interesting debate on same. We look forward to engaging further.

I welcome the Minister of State to the House and thank him for the fair and reasonable way in which he has approached the Second Stage debate. I thank the members of the Government for the decision they made today in respect of same.

As Senator Boyhan has pointed out, the purpose of this Bill is not to take out a meat cleaver and say that in no circumstance could anybody get their costs out of the estate. The purpose is to say that the ordinary discretions granted to a court to do justice, and the ordinary procedures, including lodgement and things like that, would be far more just if they were applied to probate actions than the rule in Vella v. Morelli. Section 4 of the Bill explicitly states:

A court shall have jurisdiction to exercise its discretion or to apply and operate the ordinary rules of court or procedure for the time being applying generally to costs in civil proceedings, including interlocutory proceedings, in respect of actions or proceedings to which this Act applies.

The idea was to give judges discretion but tell them that in future one does not, as a matter of presumption, go to the estate as the first port of call in determining where the money is to come from to pay for lawyers and cases. That is as far as the Bill goes.

I am very grateful to the Minister for pointing out to me section 168(1)(b) of the Legal Services Regulation Act 2015 because I had not seen that getting in under the radar. I thought that it was all to do with barristers, solicitors and the like and I had not seen the particular provision. It is relevant to how this issue should be dealt with and I am grateful to the Minister for drawing it to my attention.

Of course, I have no doubt that all of the sponsors would be agreeable to looking at how, on a collaborative basis, this issue can be best approached, and this is what the Minister is saying. Quite obviously this is a single purpose Bill. If there was a civil law (miscellaneous provisions) Bill travelling through the Department at greater speed than this legislation, we will not be selfish and we will not be dogs in the manger. If the issue can be dealt with in a way that is agreeable to everybody, I am quite happy to let that happen. The idea that the costs of an unsuccessful challenge to a will come out of the estate as a matter of course is an unfair idea. It could be fair in some circumstances but the presumptive rule in Vella v. Morelli is that it operates that way.

In these litigious days, and I was interested in what Senator Colm Burke said about the growth of litigation in this area, it is strange that as we are getting wealthier, we are becoming more litigious. I think the rule in Vella v. Morelli has something to do with that growth and that it is why it should be changed. In those circumstances I am very grateful to all of those, including Senator Ó Donnghaile and Fine Gael colleagues, for allowing this Bill to go to the Third Stage.

Question put and agreed to.

When is it proposed to take Committee Stage?

Next Tuesday, with the agreement of the Whips.

Committee Stage ordered for Tuesday, 15 May 2018.