Judge warns parties about costs in inheritance act cases

In a recent inheritance act case the Court warned about the risks of litigation when dealing with a low value estate. The case is called Amnir & Ors v Bala & Ors (Rev1) [2023] EWHC 1054 (Ch) (16 May 2023) 

The Chancery judge began his judgment by saying: What follows below may be seen as an exhortation to parties embarking on litigation under the Inheritance (Provision for Family and Dependants) Act 1975 (“the 1975 Act”) 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.

The problem in this case was that the costs outweighed the value of the estate.
The real difficulty in applying this costs regime is that if I make awards without directing that the parties’ costs be paid out of the estate first, either the entire estate will be exhausted in so doing (and especially if the estate turns out to be worth less than I have estimated), or there will be insufficient sums left within the estate to meet the costs of the parties, either to allow an order that costs come from the estate, or that there be an indemnity for such costs if not recovered pursuant to any inter partes costs orders that may be made.

The judge was told that  Shama’s costs stand at some £282,000 and those of AB and CD at £102,000. The judge said that:

The combined litigation costs of the parties are said to be just below £700,000, but will inevitably have increased once this judgment is handed down and matters consequential on it are dealt with. Based on the estimate I have reached above, and if (say) 80% of the costs or £560,000 are agreed or allowed on assessment, this will leave the remaining estate at around £1,050,000 to £1,150,000. These figures are a little higher than, but broadly consistent with those I ventilated with counsel during their closing submissions, without an apparent suggestion that they are unrealistic.