In 2016, I have settled a contentious probate case which involved an unusual set of facts. The circumstances of the case meant that I had to take a number of unusual steps before the claim could be compromised. This case study is a useful reminder of the less common but highly effective steps that can be taken to protect an estate during a dispute.

Summary

Below is the background to the matter, together with full details of the steps taken and when it may be appropriate to take such steps. The matter began with a caveat being lodged to prevent my clients, who were the executors under a will, obtaining probate. After lengthy pre-action correspondence, the caveat was warned off and an appearance entered, following which it became necessary to issue proceedings to prove the will in solemn form. Along the way we had to consider applying for a limited grant ad colligenda bona and later a grant pending determination of a probate claim (in order to try and protect the estate assets as far as possible), apply for a representation order under CPR 19.7 and apply to the court for permission to serve notice of the claim on certain named individuals (such that they would be bound by a later order or judgment of the court) under CPR 19.8A. I set out below further detail in respect of each of these applications and why they may be of use in the area of contentious trusts and probate.

Background

My clients, who I shall fictitiously call Mr and Mrs Brown for the purpose of this note, were a relatively elderly couple. The estate in question was that of the Aunt-in-law of Mrs Brown. The Aunt was married to Mrs Brown’s Uncle by blood and was an eccentric character who suffered from agoraphobia and had a deep dislike of any sort of professional person. In August 2010 the Aunt and the Uncle were both admitted to hospital at the same time and thereafter lived in residential homes, both being elderly and the Uncle suffering from cancer. The Aunt had not made a will, but the Uncle had, leaving his estate to the Aunt. Mrs Brown’s uncle died and it was at that stage that the Aunt decided she wished to make a will, her husband having now pre-deceased her. The Aunt and Uncle had no children of their own and the Aunt asked Mr Brown to help her prepare a will. When Mr Brown suggested instructing a solicitor the Aunt refused saying she did not want to see a solicitor and again asked him to help. Mr Brown therefore helped prepare the will. It was a very simple will in its terms and the sole beneficiary was Mrs Brown, who had been extremely close to her Uncle since she was a child and who had helped both the Aunt and Uncle throughout their lives, but particularly as they became older and more so following their admission to hospital. The will was signed in the first week of December and the Aunt died suddenly on Christmas Day. The executors under the will were Mr and Mrs Brown.

Following the Aunt’s death and prior to her funeral, a caveat was lodged by a first cousin once removed. Subsequent caveats were lodged by other cousins at the expiry of previous ones and in total 10 distant relatives of the Aunt confirmed they contested the will on grounds of lack of testamentary capacity, want of knowledge and approval and undue influence (although this allegation was subsequently dropped). Under an intestacy, which would have been the case had the will been invalid, (based on the position prior to the change in the Intestacy Rules in October 2014), due to a rather prolific relative of the Aunt’s, coupled with the fact she had no children of her own, there would have been between 40 and 50 beneficiaries.

The Browns’ estate solicitors initially attempted to correspond directly with the relatives, but without success and we were instructed in mid 2012. After obtaining all medical and care home records and obtaining witness statements from the attesting witnesses to the will (the Aunt’s neighbours), and after exchanging correspondence (a solicitor now having been instructed to act for the relatives), a warning to the caveat was lodged. After this step, 5 of the relatives stated they no longer wished to contest the will, but an appearance to the warning was entered by the remaining 5 (within the 8 days allowed from service of the warning). It was therefore necessary to issue High Court proceedings to prove the will in solemn form. The claim was issued in March 2014 against the 5 relatives who had maintained the contest to the will, and a counterclaim was also made to disprove the will.

Limited grants

One issue that was becoming more pressing was that one of the main assets of the estate was the Aunt and Uncle’s house. This had been standing empty since they had both been admitted to hospital and whilst the Browns were helping to maintain the garden, the utilities had been shut off and it had begun to fall into disrepair. Given we had no idea how long proceedings would take, we had discussed with the clients applying for a limited grant ad colligenda bona. Those who have had to apply for such limited grants before will know that they enable executors to deal with certain specific assets/steps in order to preserve the value of the estate and that such grants are limited so as to not allow the distribution of the estate.

In the instant case, we were seeking a grant limited for:

“the purpose only of collecting and getting in and receiving the estate and doing such acts as may be necessary for the preservation of the same and until further representation be granted, and in particular for the purpose of selling the property and the contents of that property, paying the reasonable costs of the said sale(s) and receiving the net proceeds of sale [limited until further representation be granted].”

The process for obtaining a limited grant is to file an affidavit setting out the reasons for the request and containing the appropriate oath. There will need to be a satisfactory reason given that justifies why a limited grant should be issued in advance of a full grant. The Probate Registry does not view a limited grant as a “quick-fix”, but needs to be persuaded that the estate is likely to suffer if a limited grant is not issued. Prior to lodging the affidavit at the Registry (with the appropriate fee), it is also necessary to obtain clearance from HMRC to confirm that no inheritance tax is payable on the estate at that time. HMRC will send a letter confirming the position which should be exhibited to the affidavit.

One significant advantage of the option of the limited grant is that the step may be taken even if a caveat is in place. This is because it only enables the estate (or part of it) to be collected in and does not enable the executors to distribute the estate. If you are able to obtain support for the application from the other side (most likely the beneficiaries or, as here, the possible beneficiaries under an intestacy in the event the will was invalid), this can also be stated in the affidavit and should assist the process.

In the event that a claim has already been issued at court, the process is slightly different and the correct application is under Section.117 of the Senior Courts Act 1981 for “administration pending determination of a probate claim”. The process is largely similar to the grant ad colligenda bona in that an affidavit in support must be lodged at court, but here the grant will automatically cease the moment the court determines the claim.

Obtaining a limited grant is therefore a useful way of dealing with any potentially problematic issues concerning assets in an estate (such as the sale of a property) if a caveat is in place thereby precluding a full grant being obtained, or whist a claim proceeds through the courts to prove a will.

Other unusual applications

Reverting back to the case of Mr and Mrs Brown, whilst the value of the estate was around £450,000, settlement was preferable if this could be achieved at an early stage so as to preclude the need to incur the costs of litigating through the courts. However, the main concern for us in acting for Mr and Mrs Brown was, given the potential number of beneficiaries under an intestacy, ensuring how we could protect them from any further claims on the estate in the event the claim was compromised, in particular bearing in mind 5 relatives had initially been willing to contest the will, subsequently dropping out.

The steps taken involved two applications as follows:

• CPR rule 19.8A – The first was an application to the court for permission to serve notice of the claim on certain non-parties under CPR part 19.8A. The named individuals were those 5 who had dropped out of contesting the will pre-issue. The process for this step is an application to the court supported by written evidence, together with notices to the relevant individuals in the wording prescribed by 19.8A and its practice direction. The notice enables the individual(s) 14 days to acknowledge service following which they would become a party to the claim. It goes further to state that if they do not acknowledge service, they will be bound by any judgment given in the proceedings as if they were a party. The intention behind the application was to ensure that those 5 individuals who had expressed a desire to contest the will, but had removed themselves from the equation prior to the issue of proceedings, would be bound by any court order recording settlement terms agreed so as to preclude them from seeking to claim in due course. In the present case, no acknowledgments of service were filed, which meant we could proceed with negotiations knowing those 5 individuals could not seek to claim against the estate ‘through the back door’, in the event they learnt that their relatives who had persisted had reached a settlement.

• CPR rule 19.7 – The other concern that arose for Mr and Mrs Brown, however, was the possibility that any of the other potential 40 or so beneficiaries under an intestacy might seek to claim against the estate at a later date and/or to ensure that a settlement reflected the large number of potential beneficiaries. If a settlement was to be reached in the current claim, it was necessary to protect Mr and Mrs Brown against any future claims. We therefore made a second application under CPR rule 19.7 for a representation order, that the 5 defendants be appointed to represent, for the purposes of this claim and counterclaim, all those who would or might be interested in the estate of the late Aunt, should the will not be admitted to probate. The application was made at the same time as the application under rule 19.8A and is again made by way of application and written evidence. The representation order was made by the court which then enabled us to negotiate terms of settlement with the defendants.

Settlement

Terms were agreed and a settlement agreement prepared. We had initially considered whether a settlement could be achieved under Section 49 of the Administration of Justice Act 1985 (powers of the High Court to compromise a probate action), but under that section it is necessary to be able to say that the consent of every relevant beneficiary is in place. Here this was not possible as those served with notices under 19.8A could not be said to have consented.

It was therefore necessary for the defendants to apply under 19.7(5), which requires the court’s approval of any settlement where a representation order is in place, and 19.7(6) where a court may approve a settlement where it is satisfied it is for the benefit of all represented persons. At the same time as making this application we made an application for the court to hear the matter on paper so that it could consent to the terms of settlement.

The steps were taken and a settlement agreement, which contained an indemnity provision from the defendants to indemnify Mr and Mrs Brown against any claim(s) made against them as executors of the estate from any of the other relatives under the representation order.

Summary

The above case study demonstrates the benefit of the limited grant in situations where it is not possible to obtain a full grant of probate. A limited grant will enable steps to be taken in dealing with certain assets in the estate in order to preserve the value of the estate. It is certainly worthwhile considering this course of action in cases where it looks like a dispute may become protracted, whether a caveat has been lodged, or at a later date after court proceedings have been issued.

Further, if an estate goes down in value over time and you are aware of depreciating assets, obtaining a limited grant could also avoid any later potential allegations of negligence.

In terms of the representation order, the high number of potential beneficiaries under an intestacy in the Browns’ case meant that, in order to achieve a settlement, it was necessary to seek to tie in those individuals by way of the representation order. Where there are many potential beneficiaries, but not all of them are defendants to a claim, this is an effective tool to ensure that all their interests are tied into the claim. Coupled with the inclusion of an indemnity in any settlement agreement, this also enables terms to be agreed which protects the executors against future claims.

The final order referred to, which enables non-parties to be served with notice of a claim, is a useful method to tie in parties to court proceedings who have previously indicated an intention to dispute a will, only to indicate at a later date pre-issue that they do not wish to be proceed with their claim and so are not a party to the proceedings. This gives peace of mind that those individuals will remain bound by any decision the court makes.

Whilst the steps set out above are not commonplace, they are useful tools in the course of litigation if the facts of your case are such that taking such steps may assist you or may bring you a tactical advantage. In the Browns’ case they were able to preserve the estate by an early sale of the property and ensure that an early settlement could be achieved.