Parnall v Hurst: A cautionary tale

How to get procedures horribly wrong…

Barrister Sidney Ross examines the conduct of an inheritance-act claim in reference to the Parnall v Hurst case. While revealing how difficult it is to eliminate a case that has merit because of procedural irregularity, the case demonstrates how legal advisers may nonetheless find themselves in trouble over costs.

In Parnall v Hurst¹ the claimant was the first wife of the deceased. They married in 1961 and were divorced in 1990. Provision was made for her by way of monthly payments of £500 gross, which continued until the death of the deceased, and a capital sum of £32,540.92, which represented the value of a half share in the matrimonial home, together with a half share of his savings. The deceased remarried in March 2001 and made a will in favour of his second wife (whom he appeared to have first met in September 2000) on 21 July 2001. He died on 19 September 2001 and his net estate amounted to some £170,000, of which £150,000 was attributable to the value of the former matrimonial home.

The claimant, who was 67 years of age, owned her house, the value of which was in dispute but was in the range £60-85,000. Her income derived wholly from the state retirement pension of £92 per week, and her only capital (apart from the house) was an ISA, the value of which was £3,288.

The widow was 55. She was disabled but received no benefits in respect of the disability. Her income consisted of the widow’s pension of £1,200 per month net of tax, paid by the deceased’s former employers, and child allowance of £15.50 per week in respect of her grandson. She had no capital of her own.

The history of the litigation

Within a month of the death of the deceased, the claimant instructed solicitors (T & Co) to act on her behalf. The firm wrote to the widow² on 18 October 2001, intimating a claim against the estate. The solicitors (IM) acting for the executors caused the usual notice under s.27 of the Trustee Act to be published and on 20 November 2001 T & Co, having seen the notice, wrote to IM. However, they had already, on 31 October 2001, entered a caveat, and although IM wrote to them once a month for four months requesting it to be withdrawn, it was not until 1 March 2002 that T & Co wrote to the Probate Registry for that purpose. Probate was then granted to the first and second defendants, who were partners in IM, on 8 March 2002. The entry of the caveat by T & Co therefore prevented the commencement of proceedings for some five months.

Having created the delay entailed by the entry of the caveat, T & Co then compounded it, first, by not issuing the proceedings until 5 September 2002, and then not serving them until 22 December 2002. Part of this delay was due to the fact that the disclosure of the claimant’s financial position by T & Co was on a piecemeal basis, though IM were probably not as forthcoming as they might have been. They refused, on the ground that it was not relevant to the claim, to give details of the widow’s pension from the deceased’s employers, though (as was commented on in the judgement), it is a relevant matter, since s.3(1)(c) of the 1975 Act directs the court to have regard to the financial needs and resources of any beneficiary.

However, when the proceedings were at last served, T & Co committed a clear breach of the Civil Procedure Rules by not serving a witness statement or affidavit in support of the claim as required by RSC O.99, r.3, which applied at the time when proceedings were commenced³. What they did, incorrectly, was to serve particulars of claim, which are not appropriate to a Part 8 claim. On 6 January 2003, IM drew that omission to the attention of T & Co, who replied that they considered a witness statement to be superfluous but would oblige IM if they required. On 10 January, IM again drew T & Co’s attention to RSC O.99 r.3, and also to CPR rr.8.5, which requires that a claimant in Part 8 proceedings must serve his evidence with the claim form, and 8.6, which provides that no written evidence may be relied on at the hearing unless it has been served in accordance with r.8.5, or the court gives permission. T & Co’s response, on the same day, was that an inordinate time appeared to have been spent in discussing procedural points, and continued: “Is it not time your clients concede there is a valid claim and one that needs to be settled?” On 21 January, they extended time for service by all defendants until 31 January, but did not, themselves, serve any evidence.

On 29 January, IM wrote to them requesting the claimant’s written evidence, and stating that, if it was not received by 31 January, they would assume that the claimant had no such evidence and did not intend to rely on any evidence in support of her claim; and that they would then have no option but to apply to the court on behalf of the executors to strike out the claim. On 5 February, T& Co wrote to IM, calling for the defence evidence, but did not serve the claimant’s evidence. IM replied on the same day, stating that they could not respond to the claim without seeing the claimant’s evidence, and on 7 February they issued an application to strike out. The claimant’s witness statement, which she had signed on 5 September 2002, was at last served by T & Co on 17 February 2003. They followed this up with an application for directions “to progress the claim of the claimant because the claim has reached the point of a deadlock”, supported by a witness statement from the legal executive who was conducting the proceedings, attempting to justify their conduct of them.

Comment on procedural matters

Every one of the errors referred to in the history of this litigation has occurred in 1975 Act cases of which the author has personal knowledge, so it may be that certain misconceptions about the conduct of such litigation are quite widespread. However, to find them all in a single case is sufficiently unusual to merit some detailed comment.

The caveat

The first error, and one which is by no means uncommon, was the entry of the caveat. As the judgement states⁴, the entry of a caveat by or on behalf of a claimant in a 1975 Act claim is inappropriate. HH Judge Langan QC said: “It is elementary that the only proper object of a caveat is to prevent the issue of a grant in respect of a testamentary paper which, on the caveator’s case, is not the last valid will of the deceased. To enter a caveat where the caveator’s intention is to make a claim under the Inheritance Act is wholly wrong, first, because ex hypothesi the validity of the will is admitted; second, because a delay in the grant of probate entails a corresponding delay in getting the caveator’s claim on foot.”

The correct course of action is not to prevent the issue of a grant, but to ensure that the prospective claimant is made aware of the issue of a grant, which starts the time running within which the claim can be issued without the permission of the court. The necessary knowledge can be obtained by applying for a standing search in accordance with rule 43 of the Non-Contentious Probate Rules 1987⁵.

Failure to supply relevant information

The reluctance on both sides to furnish each other with financial information about their respective clients, while not, technically, a breach of any rule, is (as was pointed out in the judgement) inconsistent with the practice direction protocols⁶. While there is no pre-action protocol, which specifically applies to 1975 Act claims⁷, it is clear from that part of the practice direction that refers to pre-action behaviour that failure, let alone refusal, to exchange relevant information would not be regarded as reasonable; and unreasonable behaviour in the conduct of the litigation may (as it did in this case) have significant adverse costs consequences⁸. Furthermore, it is also quite unrealistic to attempt to negotiate a settlement when each party is in ignorance of the other’s financial circumstances.

There is a decision at first instance in which it was held that a beneficiary is not obliged to disclose his assets or income⁹. However, in the commentary to the former RSC O.99, r.5, the learned editors of the Supreme Court Practice (1999 edition) stated that although there was no rule of court relating to beneficiaries’ evidence, and no obligation to disclose assets or income, the court, in the absence of such evidence, would be likely to draw the inference that his financial resources were amply sufficient for his needs without recourse to the property, which he stood to take under the will or intestacy. There is no reason to suppose that courts will take any different view under the regime instituted by the CPR.

Use of the wrong procedure

Before the CPR came into force, RSC O.99 directed that 1975 Act claims be commenced by originating summons. After some initial doubts as to whether they should be commenced as Part 7 or Part 8 claims¹⁰, rules of court made it clear that the Part 8 procedure was mandatory¹¹. There is no provision in Part 8 corresponding to r.7.4 (particulars of claim). Instead, the claimant must file the written evidence on which he intends to rely when he files the claim form. It must be served on the defendant with the claim form and he may rely on matters set out in the claim form if it is verified by a statement of truth¹².

In Hannigan v Hannigan¹³, solicitors acting for the claimant in a 1975 Act claim issued the proceedings in the County Court, but instead of using the practice form N208 (the Part 8 claim form) as counsel had advised them to do, used the wholly inappropriate County Court form CCR 208. They also made many other procedural errors. On an application by the executors’ solicitors the district judge struck out the claim. The circuit judge refused to grant relief under CPR r.3.9(1), concluding that there was so much wrong with the proceedings that he ought not to exercise his discretion in the claimant’s favour. The Court of Appeal, allowing the claimant’s appeal, expressed the view that it would be wholly disproportionate to strike out the claim without any investigation of its merits because of a number of technical mistakes. The executors and their solicitors could see, from the documents served, the nature of the claim, the fact that it was a Part 8 claim, and the claimant’s evidence.

The overriding objective was not furthered by this technical squabble, which had eaten into the slender resources available to the parties; the interests of justice would have been much better served had the executors’ solicitors pointed out the procedural errors, allowed them to be amended, and claimed the costs of the amendment.

Failure to serve a witness statement with the claim form

Whereas none of the errors discussed above would have been fatal to the claim¹⁴, the failure to serve the witness statement might well have had that effect. CPR r.8.6 provides that no written evidence may be relied on at the hearing of a Part 8 claim unless it has been served with the claim form or the court gives permission. A refusal of permission would be tantamount to striking out the claim, and (as set out below) an application to strike out was made. Although in Parnall permission was given on terms, it remains the fact that T & Co, by their failure to comply with CPR r.8.5 (notwithstanding that the claimant’s signed witness statement was available to them on the day when proceedings were issued), put their client at risk of having her claim struck out without any investigation of its merits.

Judgement

At the hearing on 17 March 2003, there were before the judge: the defendants’ application of 10 February to strike out the claim on account of breaches of the rules and practice directions and/or as being an abuse of process, together with another application dated 11 March for further information , and the claimant’s application of 7 March for directions, together with another application (without written notice) for relief from sanctions.

In relation to the applications (other than the application for further information, which was dealt with separately from the others, and was granted), it was found that:

There was only one breach of the rules, that being the failure to comply with CPR r 8.5, which requires a claimant in Part 8 proceedings to serve his evidence with the claim form;
The claimant was also in breach of paragraph 4 of the practice direction protocols, in that she did not act reasonably in exchanging information before proceedings were commenced; indeed, an offer of settlement was made on her behalf although she had at the time of the offer provided no financial information.

Having made those findings, the judge held that to strike out the claim would be a drastic remedy for the breach which had been established. If the court could deal justly with the case by the imposition of some penalty less than striking out the claim, it should do so¹⁵. Abuse of process was a ground for striking out only if there is found to be:

A manifest intention not to bring the litigation to trial¹⁶;
A wholesale disregard for the rules¹⁷, which would involve multiple breaches committed over a long period and would usually include both breaches of the rules and disobedience to orders of the court.

On consideration of the matters set out in CPR r.3.9(1), relief from sanctions would be granted for the following reasons:

The claim had merit¹⁸;
The court should be reluctant to dispose of a claim such as this at an early stage and without a substantive hearing;
The case was not one of wholesale disregard or repeated breaches of court rules and procedures;
The real fault lay not with the claimant but with her solicitors;
It was possible to deal with the default by an appropriate costs order.

The salient features of the order made were:

Relief from the sanction imposed by CPR r.8.6 (that is, permission for the claimant to rely on her witness statement notwithstanding that it had not been served with the claim form) would be granted on terms that:

None of the costs incurred on her behalf up to the date of publication of the judgement should be recoverable from the defendants;
The defence costs from the date of entry of the caveat to the date of publication of the judgment¹⁹ should be paid by the claimant in any event;

At the conclusion of the litigation, the claimant’s solicitors should show cause why a wasted costs order should not be made, so as to render irrecoverable by them some or all of the claimant’s costs referred to in paragraph 1(a) above, and to make payable by them some or all of the defence costs referred to in paragraph 1(b) above.

Merits of the claim

The judge acknowledged that it was unusual for a court to make provision for a former spouse when the parties had reached a final settlement on divorce; that was shown by the decisions of the Court of Appeal in Re Fullard²⁰ and Barrass v Harding²¹. Applications by former spouses who have not remarried are very rare nowadays, owing to the almost invariable practice of including in the order embodying the financial settlement a term that neither party should be permitted, on the death of the other, to make any application under the 1975 Act for provision to be made for him or her out of the estate of that other. Indeed, as Thorpe LJ said in Cameron v Treasury Solicitor²², “After 12 October 1984²³, any practitioner or judge of any experience in the field of ancillary relief understood that the inclusion of an Inheritance Act bar was an essential part of any clean break settlement or order… an order dismissing all claims under the Matrimonial Causes Act 1973 that did not also bar claims under the Inheritance Act would be so irregular as to suggest fundamental error in drafting”

However, as was argued for the claimant, those settlements were by way of capital payments only, whereas in this case there were ongoing periodical payments of £6,000 per year gross, which had ceased on the deceased’s death. The following passage from paragraph 3532 of Butterworth’s Family Law was relied on in argument: “…practitioners have long taken the view that where an ex-wife has been in receipt of maintenance payments, either under a court order or by way of agreement with her ex-husband, she will be very likely indeed, upon his death, to obtain an award which, in effect, compensates her for the loss of those payments.”

This was what happened in Re Farrow²⁴. Following the divorce, it was ordered on 14 June 1978 that the husband should pay the wife a lump sum of £50,000 and periodical payments of £5,500 per year. He died intestate on 5 May 1979, so the former wife received less than one year’s payments. The 1975 Act claim, which was commenced in January 1980, was not tried until May 1986. It was held that, as the continuing periodical payments order was in effect at the time of the deceased’s death, provision should be made for her further support after his death. She was awarded payments of £5,000 per year together with a lump sum of £15,000 to take account of the fact that she had been without that source of income for the previous seven years. The sum was not intended to cover those payments fully, since there had been some extravagance in the way in which she had spent the lump sum which she had received as part of the divorce settlement.

Balancing those matters, the judge considered that the case was well arguable on both sides. In favour of the claimant were her own difficult financial position, the fact that it had been caused by the deceased’s death, the shortness of the marriage to the widow and the fact that the widow was entitled to a pension. In favour of the widow were the general reluctance of the court to make provision for a former spouse when a final settlement had been reached by the parties, and the fact that the bulk of the estate was represented by the home in which she lived.

In summary, it is true that very few 1975 Act applications are dismissed without consideration of the merits and that, when this occurs, it is almost always because the claimant is found not to be an eligible claimant²⁵. Furthermore, considerations of proportionality may, more often than not, lead the court to hold that the claim should not be disposed of without a hearing on the merits. Albeit that neither in Hannigan (despite the multiplicity of errors in that case) nor Parnall (where, apart from the general conduct of the case, the breach of the rules was a serious one) was the claim struck out, practitioners should not assume that either the claim will survive, or that they will escape unscathed, if they conduct 1975 Act litigation in the manner in which those cases were conducted.

References:

[2003] WTLR 997
She was the third defendant in the proceedings, the executors being the first and second defendants
Claims commenced before 2 December 2002 were regulated by RSC O.99; CPR Part 57 applies to claims issued on and after that date
[2003] WTLR 997, at 1001A-B
The required form for such an application is Form 2 of Schedule 1 to the Non-Contentious Probate Rules 1987; see Tristram & Coote, Probate Practice, 29th edition (2002), at p.954
Set out in Civil Procedure 2003, vol.1, section C1; in particular, see paragraph 4, which deals with pre-action behaviour in cases not covered by any approved protocol; and see also the commentary at C1A-008 in the Winter 2003 supplement to Civil Procedure 2003
A draft pre-action protocol for the resolution of probate and trust disputes (including 1975 Act claims) was published in issue 24 (April 2001) of the ACTAPS newsletter and was there stated to be under consideration by the Lord Chancellor’s Department
See section 3, below, where the terms of the order are set out and, for the relevant rule, CPR r.44.3(5) with its commentary at para.44.3.11
Clark v Clark, [1981] C.L.Y. 2884, per Hollings J.
The author attended a number of seminars in early 1999 at which district judges were divided in their views on this point, with one or two confessing uncertainty. The Part 7 supporters were of the view that there would normally be disputed facts and therefore the Part 7 procedure was appropriate, while the stance of the Part 8 supporters was that claims which had previously been commenced by originating summons should be Part 8 claims under the new regime
Originally, by Practice Direction B-Part 8, Section A, and, since 2 December 2002, by CPR r. 57.16
CPR Part 8, r.8.5(1), (2) and (7)
[2000] 2 FCR 650, C.A
Provided, of course, that the caveat was eventually withdrawn or allowed to expire
Biguzzi v Rank Leisure Centre [1991] 1 WLR 1926
Grovit v Doctor [1997] 1 WLR 640
Arbuthnot Latham Bank v Trafalgar Holdings Ltd [1998] 1 WLR 1426, at 1436
The merits are discussed in section 4, below
That is, from 31 October 2001 to 15 May 2003
[1982] Fam 42, particularly per Ormrod LJ at 49A-F, Purchas J at 52E-G.
[2001] 1 FLR 138
[1996] 2 FLR 716, at 732E-F
When s.15 of the 1975 Act was amended by the Matrimonial and Family Proceedings Act 1984, so as to enable the court to make such an order on the application of either party rather than, as the 1975 Act had formerly provided, with the agreement of both parties.
[1987] 1 FLR 205.
As in Gandhi v Patel [2002] 1 FLR 603, where the claim on the basis that the claimant was a surviving spouse failed because the ceremony undergone by the parties was, in English law, neither a valid marriage nor a void marriage entered into in good faith, but a non-marriage. See also Re Watson [1999] 1 FLR 878, and Churchill v Roach [2003] WTLR 773, in each of which the applicant claimed both as a cohabitant and as a dependant. Each applicant succeeded on one ground and failed on the other. The questions whether the deceased had acquired an English domicile of choice and was domiciled there at his death were considered in Bheekhun v Williams at first instance and answered in the affirmative, so the claim was allowed to proceed. That decision was affirmed; [1999] 2 FLR 229 CA.

Sidney Ross is a barrister at 11 Stone Buildings. He can be contacted at: sidneyr@11StoneBuildings.com