A warning with costs in competing Inheritance Act claims

Background

The case comprised of four claimants, relatives of the late Mohammed Amnir Bala (‘Deceased’) – his surviving wife, their two young children, and his adult daughter from a previous marriage – all of whom were bringing a claim against his estate for reasonable financial provision under the Inheritance Act 1975. Mr Bala had sadly died in 2019, and the matter had progressed to full trial in May 2023.

The surviving wife – unemployed since having their children – had been maintained by the Deceased until his death and continued to live in the matrimonial home (itself an asset forming part of the estate). The Deceased’s three surviving children all required continued maintenance; in particular the adult daughter who had significant physical and mental disabilities. With this in mind, the judge was tasked with navigating the appropriate division of the estate, with all claims acknowledged as meritorious in their own right.

Ahead of the trial, the value of the estate had not been determined. It was valued at somewhere between c.£1million and c.£2.5million – a sizeable estate.

However, by the time of the trial, the parties had incurred c.£700,000 in legal costs (and growing). The parties agreed that these should be paid out of the estate first. This however naturally depleted the estate, and meant that what remained was insufficient to make adequate provision in respect of all, or any, of the competing claims.

Warnings to litigating parties

In his judgment, Master Brightwell issued the following warning to litigating parties:

“What follows below may be seen as an exhortation to parties embarking on litigation under the Inheritance Act 1975 to consider in advance the potentially devastating consequences of fighting points of marginal relevance at inordinate cost with the effect of depleting a significant estate so that none of the competing claims on it can be fully met. It may also highlight the difficulties in determining claims before the value of the net estate has been established, and the futility of pursuing through to the end of trial claims of a magnitude which the net estate is on any view not large enough to meet”.

Another important takeaway is that it is not always a safe assumption that the costs of a claim will be met from the estate itself. Every party entering such litigation should be prepared to bear its own costs, especially if pursuing the court route looks like a realistic possibility. Master Brightwell agreed with the parties that the costs should be met from the estate in this instance, however warned:

“It is a persistent myth that the costs of the parties, or possibly the costs of the claimant(s), are invariably paid out of the estate in a 1975 Act claim”.

Conclusion

Issuing proceedings and pursuing a claim to full trial should always be approached with caution and a last resort. We will undertake a regular costs-benefit analysis on all of our matters and always encourage our clients to look to settle a claim at the earliest opportunity to ensure legal costs remain proportionate to the likely outcome, with both the merits of the claim and size of the net estate being crucial considerations.

If you require advice on whether to pursue litigation, on Inheritance Act claims or otherwise, please do get in touch with Contentious Trusts & Estates expert, Thomas Middlehurst, or our wider Litigation team.