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

I welcome the Minister to the House, yet again. He is developing a relative familiarity with these walls, the ceiling, etc.

Sections 1 to 3, inclusive, agreed to.
SECTION 4

I move amendment No. 1:

In page 4, between lines 9 and 10, to insert the following:

"(2) A court's jurisdiction shall for the purposes of subsection (1) include jurisdiction to make an order in respect of costs that does not follow the event for special cause to be mentioned in its order.".

I will give the House some background to this amendment. In anticipation of Committee Stage, my office contacted the Department to ascertain informally what its position was on this legislation. The Minister, helpfully, by letter dated 29 November 2019, gave a lengthy reply setting out some of the decisions and developments in rules of the superior courts that have happened in the meantime. To make clear what the Minister's letter points out, which deserves to be acknowledged, there have been a number of decisions in the High Court and the Supreme Court, some of which I referred to on Second Stage.

It appears that the practice and procedure of the courts on costs has changed somewhat. In particular, there is a new order 63C, rule 17, which provides:

(1) Unless the List Judge otherwise orders, a party intending to rely upon the oral evidence of a witness as to fact or of an expert at trial shall, not later than 30 days prior to the date of such trial (if not previously done or required to be done), serve upon the other party or parties and file:

(a) in the case of a witness as to fact, a written statement, and

(b) in the case of an expert, a written report (in this rule referred to as an “expert report”),

consisting of a summary of the evidence to be given by that witness containing the essential elements of that evidence signed and dated by the witness or expert, as the case may be.

That particular new rule in the superior courts has the effect of requiring the parties to litigation to warn each other in advance in virtually every case now that their factual evidence will be as set out in a summary statement and that their expert evidence will be as set out in a summary statement. The relevance of that to wills is that Mr. Justice Kearns in a Supreme Court decision in the case of Elliot v. Stamp, which was referred to in the explanatory memorandum to this Bill, evolved what could be described as a probate lodgement. He stated:

I believe the Defendants in this case were entirely correct to set out by means of statements and reports the evidence which they proposed to rely on at trial. I would encourage such an initiative in all testamentary proceedings which lend themselves to such steps. It is beyond doubt that small Estates can be entirely dissipated by legal proceedings brought by disappointed parties whose intention may be to force the Executor into some form of settlement or vindictively to waste the assets in legal proceedings which, even if capable of being seen as properly brought at the onset, can no longer be seen as such once the full picture has been made available by those defending the proceedings. I see this as the equivalent in Probate terms of a lodgement or tender made in personal injuries actions. I believe it is an approach which should be adopted whenever possible. It would represent a valuable protection for the Estates of deceased persons, without in any way diluting the principles enunciated in Bonis Morelli: Vella .v. Morelli [1968] IR11. Thus while it may be reasonable to commence and bring proceedings, and to bring them bona fide, a point may arrive where, as a result of disclosure made by the defence, the future maintenance of the claim can no longer be seen as reasonable.

In such circumstances, it seems to me that a trial judge should not be fettered in the exercise of his discretion as to costs and should be free both to decline costs from the estate to an unsuccessful litigant or even to award costs against such a litigant from the time of disclosure. That was an informal attempt by Mr. Justice Kearns to achieve some analogue to a lodgement whereby a defendant in a will suit could warn the plaintiff of the evidence that he or she had at his or her disposal, say, medical, factual, or whatever else, and the evidence perhaps of a solicitor who executed the will, so that it should be very clear to the plaintiff in those proceedings that the defendant has a good deal of evidence to give against the challenge to the will.

The Minister's letter very helpfully states another amendment, a new rule 1A, which has been inserted in Order 99, intended to encourage the settlement of cases between the parties at an early stage. The new rule is that "the High Court, in considering the awarding of the costs of any action (other than an action in respect of a claim or counterclaim concerning which a lodgment or tender offer in lieu of lodgment may be made in accordance with Order 22) or any application in such an action, may, where it considers it just, have regard to the terms of any offer in writing sent by any party to any other party or parties offering to satisfy the whole or part of that other party's (or those other parties') claim, counterclaim or application". That is an offer in writing that can be taken into account in regard to costs. That deals with an offer to satisfy, in whole or in part, the other party's claim. The Minister's letter points out that this was cited and applied in Cawley v. Lillis. More recently, in McCormack and Anor v. Duff and Rabbitte, the Supreme Court had an opportunity to review the relevant case law. Looking at the circumstances of the case, including the appellants' conduct, Ms Justice Laffoy concluded there could be no justification for imposing the costs of the proceedings on the testator's estate and that the estate should not bear the appellants' costs or any part of them. In July last, in the case of Shannon v. Shannon, Mr. Justice McGrath ruled in the High Court that the court rules I have mentioned, in addition to the case law, are "designed to achieve a just result" and to ensure, "in so far as it is possible, that no injustice is caused". In that case, the court concluded that the fairest and most reasonable result was for each party to bear its own costs.

The Minister has indicated that the Office of the Attorney General is concerned that the amendment this Bill would make to the law might somehow sweep away some of the jurisprudence in existence. I fully understand the points the Minister and the Office of the Attorney General are making. I have, therefore, proposed an amendment to make matters very clear. The amendment, which pertains to section 4, states, "A court's jurisdiction shall for the purposes of subsection (1) include jurisdiction to make an order in respect of costs that does not follow the event for special cause to be mentioned in its order." That amendment reflects the up-to-date qualification of the rule that costs should follow the event. It requires that the court should, if it is not going to rule that the costs should follow the event, state why, state the cause to be a special cause, and mention it in the court order. It would therefore not simply be a vague reason for not making an order as to costs; the court would recite the reason it is not doing so in a manner that follows the event and should incorporate that in the order of the court.

I fully take on board what the Office of the Attorney General said and what the Minister has stated in his very helpful letter. We are, however, still left in questionable circumstances concerning the initiation of proceedings. Under the new rules, it is presumed that, at the point where the defendant states what evidence he or she has in support of holding the will, the plaintiff is expected to fold his or her tent and say he or she now understands the nature of the defence that would be made if the matter went to trial. It does not really deal with the question of whether expenditure incurred in bringing the challenge and preparing the case up to that point on the part of the plaintiff is not to be considered legitimate expenditure that should be borne by the estate. That is what I consider to be a really serious problem.

It seems that the rule in Vella v. Morelli has effectively been superseded by many events. The old chancery courts used to have documents produced at them. Handwriting expertise was negligible when all these rules began to emerge. The use of solicitors in making wills was relatively uncommon at the time. Informal wills were much more common in the 19th and early 20th centuries than they are now. The practice of solicitors in taking instructions to make a will has changed. Under Law Society guidelines, as I understand them, solicitors are now required to ascertain the capacity of the testator. Wills, unless they are forgeries, are now much more likely to be capable of being stood up by the executor or person defending any challenge on the basis that a solicitor taking instructions for a will satisfies himself or herself as to the capacity of the testator and does not take a will from somebody who is delirious or fading in and out of consciousness, for example. Second, the solicitor taking a will now usually takes careful attendance of the circumstances in which a will is made and the stated intention of the testator as to the effect he or she wants in regard to the will and why one potential heir is excluded rather than other. Those are the kinds of points a solicitor will deal with in preparing a proper will.

This legislation is still necessary because the bringing of a challenge, even to the point where witness statements are exchanged 30 days prior to a trial, involves the incurring of costs. Unless it is clear that those costs are definitely on the hazard, such that one cannot bring a case so far, fold one's tent on seeing the strength of the defence and still apply for the costs incurred up to that point or seek to have them made costs payable out of the estate, it is not fair.

The real point we have to bear in mind is that so many disputes concern relatively small estates. It still remains the case, notwithstanding these developments regarding court procedure and costs, that an executor or a will's universal beneficiary faces advice from his or her solicitor, or counsel or both if it gets to that point, such that the claim really has to be compromised because of a very significant danger that, if the case proceeds, the estate itself will be diminished to some extent or to a very significant extent, depending on the facts of the matter.

Even if one wins, it will be a bit of a pyrrhic victory. It is in that spirit that the amendment to section 4 is tendered. The intention is that a court's jurisdiction to make an order of costs shall include jurisdiction to make an order that does not follow the event for special cause, provided that such special cause is mentioned in the order of the court. The purpose of all of this, in effect, is to say that somebody who starts a case against an estate - the measure applies with particular force to medium and small-sized estates - does so at considerable risk to himself or herself. If a person has a licence, effectively, to initiate proceedings and to bring them to whatever extent short of actual trial, the result will be that the estate will be depleted and that the executor will have to be advised by his or her own legal advisers that one really has to compromise these cases because in a sense, one is vulnerable to a costs order of a kind, right up to the point at which the exchange of documents takes place.

There are cases where even notwithstanding that statements of fact and expert evidence such as medical evidence and that reports would be exchanged between the parties, where a plaintiff would be intent on proceeding further on the basis that he or she had different evidence as to fact and medical or other evidence tending in a different direction. Even in those cases where the plaintiff loses, the estate is obliged to carry the costs. The purpose of this legislation is to make it an exception that somebody can launch an action against a will on the basis that some or all of his or her costs are likely to be borne by the estate. That is an injustice, especially to people with a modest estate, for example, a former public authority house now owned by an elderly person with a value of €100,000 in total. Even to allow the preliminary costs of one side, who is eventually unsuccessful, to be taken out of the estate might deplete it by €20,000 with no bother.

I ask the Minister to bear this in mind, if a defendant has to defend a case, that is not going to be done for nothing. That will come out of the estate one way or the other. It is going to be expensive to even bring things to the point where an exchange of documents might act as a deterrent to the further prosecution of a case. A lot of money will have been spent on both sides and even if the costs of a defence are the only costs which an executor has to incur, that is a lot of money in any event. The purpose of this legislation is to deter people from bringing a challenge to an estate by making it clear to them that they are significantly at risk, even initiating such litigation, that it is not a free ride and that they cannot load the legal costs onto small and medium-sized estates, which for many working families renders a very significant injustice.

I listened with great interest to Senator McDowell. The House will recall that when the matter was before us earlier, the Government accepted the merits of the underlying principle of the Bill and agreed not to oppose it on Second Stage. Since then, Senator McDowell and the other promoters of the Bill will be aware of the engagement and consultation with the Office of the Attorney General, advising caution on the basis that some of the provisions of the Bill would disrupt and displace relevant case law of the superior courts, and indeed the rules of court, designed as they are to achieve a just result.

However, the amendment before us is one that I can accept. Between now and any future enactment of the legislation it will be necessary for further consultations with the Office of the Attorney General. It could well be that future refinements may be necessary but if that is the case I undertake to consult with Senator McDowell, who makes something of a reasonable point. I could not help contemplating during the course of his recent speech on this matter that the nub of the issue is the costs, and of course costs are issues that are in the gift of lawyers because they are legal costs for the most part. The basis of the Bill centres on legal costs in the matter of the administration of estates in probate. Some of these costs are quite excessive. I invite Senator McDowell to agree that in many respects-----

-----the costs are most excessive. Recently, I had a look at the new complaints regime, complaints in respect of legal issues now being under the jurisdiction of the Legal Services Regulatory Authority. The complaints are made by members of the public who are exercised and are often not happy with the delivery of service from their legal advisers. I eagerly await the confirmation in the form of the first report that will be given to me by the authority. It seems to me the trends are such that most complaints now are in the area of the administration of estates in probate and the distribution of an estate in accordance with the will and wishes of a deceased person or an administration in the event of there not being a last will and testament. That is a matter of concern. I merely flag it now in the course of this debate. I eagerly await the confirmation in the form of the first report from the Legal Services Regulatory Authority. If the trends are borne out, then I believe it is something that we may wish to turn to, and I will rely on the support of Senator McDowell and others in this House if the level of complaints and dissatisfaction is such that action is required.

Senator McDowell mentioned the trend towards the making of a will in writing, the documentation of a person's will and wishes. He mentioned that in the 18th and 19th centuries, circumstances were often different. I wish to merely mention in passing if you allow me, Acting Chairman, an issue I wish to explore myself and on which I seek the support of learned Senators, namely, the last will and testament of the great Irish patriot, Henry Grattan.

His wishes, in the form of his testament and will, were not complied with. Henry Grattan, who led the charge in the House of Commons against the Act of Union introduced by William Pitt, died of an illness in the summer of 1820 in close proximity to the House of Commons. His friends decided that his passing merited a big funeral and that he should be buried in the grounds of Westminster Abbey. He was buried within the confines of the abbey even though his last will and testament ordained that he be buried in Queen's County, now County Laois, in my own constituency. Even though he was buried in 1820, it is not too late to see how we could best comply-----

Why not, if General Franco can be exhumed?

-----with the wishes of the late Henry Grattan and have his remains removed from Westminster Abbey and reinterred in Moyanna graveyard, which is very close to Grattan's country estate in what is now County Laois, formerly Queen's County.

In fact, any Member of the Seanad, or anybody else, seeking to locate the tomb of Henry Grattan within Westminster Abbey would find it difficult because the plaque which marks the plot is beneath one of the abbey's main heavy carpets. It is not readily identifiable to anybody who would wish to see where the remains of the great Henry Grattan are interred. In the event of the repatriation of the remains at some future stage, it would be appropriate for Grattan's headstone or plaque to be placed in a position of greater notoriety than its current position. The people of County Laois would make sure of it.

In any event, to get back to the Bill before us, in the event of a will of testamentary disposition being challenged, the court normally awards costs from the estate. This is the issue that has given rise to Senator McDowell's Bill. The effect of the proposed amendment would be to confirm that the court will continue to have discretion to make an order in respect of costs. I believe this is important. The court may make an order for costs that does not follow the event for special cause to be mentioned in the order. It would be appropriate for the court to order costs in favour of an unsuccessful party in appropriate cases, to be paid out of the estate or otherwise. It is important. I accept what Senator McDowell has said insofar as the reason behind the Bill is to deal with genuine claims and situations in which there is misconduct or a form of maladministration. In the event of such cases, which do unfortunately arise, claimants should not be discouraged from issuing legal proceedings. Costs should not present an obstacle, barrier or discouragement such that claimants would be prohibited from exercising a genuine claim or seeking the answer to a reasonable question. Legal costs should not prohibit claimants in this way.

I will accept the amendment and I trust that we can move the legislation to its further stages. If we can complete Committee Stage this evening, I would like to engage with Senator McDowell with a view to holding Report Stage before the end of the year. I know the Seanad is very busy but we might be able to move matters on within that busy schedule.

I believe we could facilitate that.

We could then move the Bill on to the Lower House.

I thank the Minister for his contribution. I agree with him in respect of costs. Costs have grown very substantially and considerable disquiet has been expressed, both on a disciplinary basis and by the courts themselves, with regard to the costs practitioners sometimes charge estates. I accept that proposition. As the Minister will fully understand, this is not a lawyer's Bill. It is an ordinary person's Bill. To use the term we have been using in the House, this is a layman's Bill rather than one that is in lawyers' interests. If the Minister wants to have another period of reflection before the Bill leaves the House, that is one thing. Alternatively, the Minister might just say that it can leave the House and go on to the Dáil. At that stage the Attorney General will have to act. There is not much point in reconvening this House on this matter before Christmas unless the Minister is going to tender amendments. I will not be tendering further amendments and I do not see people on any bench here waving documents at me. I suggest that we attempt to deal with all Stages and then hand the Bill over to the Dáil in order that it can have the opportunity to seek the advice of the Attorney General, if that is required. It will not be law just because it has passed in this House. On the other hand, there is little point in having another hour or two of debate on it before Christmas. There are other matters the Minister would like this House to deal with before Christmas and which he thinks are more urgent. I do not want to waste too much time.

Amendment agreed to.
Section 4, as amended, agreed to.
Sections 5 and 6 agreed to.
Title agreed to.
Bill reported with amendment.