The draft pre-action protocol for the resolution of probate and trust disputes

Constance Mahoney looks at the proposed reforms to probate and trust litigation
(taken from Issue No 18  –  January 2002)

At the present time, although there are long-standing rules for the conduct of non-contentious probate business, there are no officially approved guidelines for solicitors, executors, administrators and trustees to follow before the commencement of proceedings in a probate or trust dispute other than that they should act reasonably and within the spirit of the Civil Procedure Rules 1998. However, this is set to change with the introduction of a new protocol which is currently under consideration by the Lord Chancellor’s Department. The final document will outline the steps parties should take to seek information from and provide information to each other about a prospective legal claim. It will therefore become crucial for those who become involved in a trust or probate dispute to be familiar with its content. The full text of the most recent draft of the protocol can be found at http://www.actaps.com/.

Production of the draft protocol
A draft protocol for the resolution of trust disputes was drafted by Henry Frydenson, chairman of the Association of Contentious Trust and Probate Specialists, with the assistance of Christopher McCall QC, after several meetings of a working party of the Trust Law Committee in 2000. At the request of the Lord Chancellor’s Department, this was then amalgamated with the protocol for probate disputes, albeit with the retention of a provision relating to the representation of unborn and minor beneficiaries which had not been included in the probate protocol.

Application of the protocol

The protocol will apply only to cases in which the proceedings are issued after the date of its coming into force. However, it has already been the case that solicitors have chosen to apply the current draft to ongoing disputes. The introduction to the protocol sets out the expectations of the draftsmen as to which kinds of disputes it will be most likely to apply. These include challenges to the validity of a will, claims under the Inheritance (Provision for Family and Dependants) Act 1975, actions for the removal of an administrator, executor or trustee or the appointment of a judicial trustee, actions for the rectification of a will, disputes over the construction of a provision in a will or trust, administration actions and allegations of breach of trust, as well as some disputes where the provisions of a trust or the devolution of an estate are of the essence. However, the protocol will not apply to each and every case which involves a trust or probate dispute. Examples of cases for which it may be unsuitable are set out in the protocol, including where a dispute is manufactured to fulfil some non-contentious purpose, such as the court being asked to approve constructive proposals by way of compromise.

Where more than one protocol applies
It may well be the case that those involved in trust and probate disputes find, or already have found themselves, subject to existing protocols. For example, the Defamation protocol may apply where there are defamatory statements made in the context of a dispute over the legitimacy of an heir, or a trust dispute may involve allegations of professional negligence, thus invoking the Professional Negligence protocol. The draft protocol makes it clear that it is not intended automatically to displace other protocols. It will have to be decided in each individual case where more than one protocol may be relevant which is the more appropriate, although with regard to requirements such as letters of claim and response there may be little or no difference in the requirements of the different protocols.

Effect of protocol
The effect of the protocol, once in force, is set out in the Protocol practice direction which applies to all approved pre-action protocols. This states that in cases not covered by any approved protocol, the court will expect the parties to act reasonably in exchanging information and documents relevant to the claim and generally in trying to avoid
he necessity for the start of proceedings, in accordance with the overriding objective of the Civil Procedure Rules 1998. However, where an approved protocol applies, the court will expect all parties to have complied in substance with its terms. The draft protocol further states that where its express terms are not appropriate, parties are nonetheless expected to follow the spirit of the protocol and seek to achieve its aims so far as practicable. The consequence of non-compliance may well have an impact on costs orders to be made by the court or directions made for case management. If the court considers that non-compliance with a protocol has resulted in the unnecessary commencement of proceedings or that costs have been incurred unnecessarily, it may order any of the following: that the defaulting party pay all or part of the costs of other parties; that those costs be paid on an indemnity basis; that a defaulting claimant be deprived of interest on his damages, or be awarded a lower rate of interest; or that a defaulting defendant pay a higher rate of interest than would otherwise have been awarded, not to exceed 10% above base rate. The object of these penalties is to place the innocent party in no worse a position than he would have been in had the protocol been complied with.

Aims of protocol
The professed aims of the draft are twofold. Firstly to encourage dispute resolution without hostile litigation. Secondly, where litigation proves necessary, to ensure that every effort is made to simplify it by maximising the scope for the exchange of relevant information before the commencement of proceedings. It is interesting that the draft protocol seeks to simplify litigation, while one of the aims of the practice direction and existing protocols is for proceedings to be managed efficiently and/or expeditiously. While the simplification of issues and directions may automatically result in a more efficient process, it may be that the use of this term in the expressed aims of the new draft protocol is a reaction to a history of tortuously complex trust and probate disputes which have been placed before the courts. If this term is retained in the final approved draft, it will be interesting to see the emphasis and construction placed on it by the courts.

Purpose of protocol
Other than the aims of the protocol set out above, it also has the distinct and expressed primary purpose of protecting the interests of beneficiaries who may not be able to speak for themselves, such as those not yet born, unascertainable or those who are members of a large class of beneficiaries. The draft protocol expressly seeks to carry out this purpose by setting out in Annex A situations in which the court may appoint a representative for certain types of beneficiary, including those who are minor, disabled or unborn. Annex A also makes provision for an expedited process whereby the court may approve a compromise if satisfied that it is for the benefit of interested persons who cannot be consulted directly due to their absence.

Letters of claim
One of the mainstays of this and other pre-action protocols is the requirement for the intended claimant to draft and send a letter of claim to each of the deceased’s personal representatives, or to the trustees, and (unless impractical) to each beneficiary or potential beneficiary. This shall be done as soon as sufficient information is available to substantiate a realistic claim, and the intended claimant shall enclose with the letter copies of documents in his possession on which he relies or upon which any other party is likely to wish to rely. The recommended form of the letter of claim is set out at Annex B to the protocol and examples of documents likely to be relevant are set out at Annex C. If the ultimate pleaded case of a party once proceedings are commenced differs from that set out in the letter of claim, a defendant may only complain about the difference if there is evidence that the claimant intended to mislead him.

Letter of response
Within 21 days of receiving the letter of claim, each recipient should respond stating whether he admits or denies the claim, setting out the facts on which he relies and responding to the facts set out by the intended claimant. If the recipient has a claim of his own in answer, the letter of response should include the information and documents required for a letter of claim. The recipient should also enclose with the letter of response copies of documents in his possession on which he wishes to rely or upon which any other person is likely to wish to rely. Again, examples of these are to be found at Annex C. Trustees or personal representatives should provide copies of documents listed at Annex C (if available), or request a third party to provide copies, within 14 days of the date of a letter of request, or within such other reasonable time as the parties agree. The protocol further provides that the absence of pending proceedings shall not inhibit personal representatives or trustees from making full disclosure since the purpose of these letters and disclosure is to help in clarifying or resolving issues in dispute and should not be used as a ‘fishing expedition’.

Documents or information in control of third parties
The protocol envisages that particularly in the context of probate disputes it may be crucial to acquire medical notes and that therefore in the absence of special reasons these should be disclosed at the outset. A procedure is set out whereby at any party’s request, all parties shall, unless there is a good reason why the documents sought should be withheld, make a joint application for the provision to all parties of copies of medical notes, social workers’ reports or a statement by a solicitor who prepared the deceased’s will setting out the circumstances of its preparation and execution. Annexes D and E contain suggested forms for such joint applications. Where the mental capacity of a deceased at the date of execution of an testamentary instrument is disputed, the party seeking to uphold the instrument should send a letter of request in a form similar to that in Annex F to the deceased’s GP for a report as to the deceased’s mental capacity. The report should then be sent to all other parties within 7 days of receipt.

Experts
The provisions of the draft protocol as to the selection of experts are broadly similar to those set out in the Personal Injury pre-action protocol. The draft protocol encourages the use of jointly instructed experts. Therefore the parties should follow the procedure set out in the protocol whereby a list of proposed experts is sent by one party (not necessarily the intended claimant) for the approval of the other(s). Within 14 days the other party or parties may object to one or more of the proposed experts and suggest alternatives. The proposing party may then instruct one of the acceptable experts, or if none of the experts is acceptable, each of the parties may then instruct their own expert. However, the reasonableness of each party’s conduct over the selection of experts may be subject to the scrutiny of the court if litigation commences.

Negotiation and mediation
One of the most fundamental ways in which the draft protocol aims to achieve the resolution of disputes without litigation is by firmly encouraging parties to enter into discussions and/or negotiations before proceedings are commenced. However, it is also stated in the protocol that mediation may typically be considered after service of the parties’ statements of case or at any critical stage of litigation such as after disclosure of experts’ reports and in the lead up to trial. It is recommended that 42 days from the appointment of a mediator should be the maximum time allocated to mediation. Nothing disclosed during an attempt at mediation can be used in evidence in subsequent proceedings unless the party who made the disclosure consents. Any settlement reached must be in writing and signed by the parties at the conclusion of the mediation. If required, it shall be expressed to be subject to the court’s approval or conditional upon the Inland Revenue’s position being indicated.

Role of the protocol
Once it has been approved, this protocol will become integrated into the parties’ conduct, correspondence and negotiations in most trust and probate disputes. The effectiveness of pre-action protocols has already been shown by those already in existence. The current draft of the probate and trust protocol bears many similarities with those already approved, and especially with the Personal Injury protocol. Due to the nature of disputes to be covered by the draft protocol, it has more suggested forms of correspondence attached to it than, for example, the Defamation and Professional Negligence protocols. However, as set out in the practice direction which applies to all protocols, all have the same purpose of encouraging parties to act sensibly and efficiently in a dispute, with the lure of a quicker resolution and the threat of adverse costs orders and onerous directions.

 

Constance Mahoney
9 Stone Buildings
Lincoln’s Inn