Litigation costs must be kept separate from 1975 Act award, says EWHC

The case concerned the estate of the late Fiaz Ali Shah (the deceased), a single man who had four children when he began a relationship with Srendarjit Kaur Jassal (Jassal) in 2000, and subsequently cohabited with her. In 2006, he made a will under which he left everything to Jassal, whom he described as 'my wife'. Later in the same year, though, he made a new will under which he left Jassal (now described as his 'close friend') only half the proceeds of a certain property he owned. The residue of his estate was to pass to two of his children, Sajad and Shabana Shah.

The couple's relationship and cohabitation ended in 2012. Six years later, the deceased made another will, making Sajad his sole beneficiary. He died in 2020, leaving an estate of GBP1.4 million. Jassal, who had been left nothing, launched a claim for reasonable provision under the 1975 Act, alleging that she and the deceased had resumed their relationship before his death. Her claim was resisted by his executors, Sajad and Shabana Shah, who argued that at no time had Jassal resumed cohabitation with the deceased, and had in fact been living as his tenant in another of his properties, Salt Hill Mansions.

The case was heard by Deputy Master Marsh at first instance in November 2021. He preferred Jassal's evidence that she and the deceased had been living together in the same household as if they were a married couple, for the two years before his death, so she qualified for an award under s.2 of the 1975 Act. He granted her a half share of the Salt Hill Mansions property, together with a lump sum of GBP385,000 for her maintenance needs. He made no further order in respect of costs, as the award expressly stated that costs had already been dealt with as part of the GBP385,000 lump sum.

The executors appealed on the grounds that Deputy Master Marsh had made an error of law by awarding Jassal her GBP140,000 + VAT litigation costs as part of the substantive award; that is, as part of the calculation for her maintenance needs. They argued the costs should have been kept separate from, and subsequently to, the award in accordance with the usual practice under the Court Procedure Rules (the Rules), which state that the court will invariably first determine the substantive claim and then go on to decide whether to make an order in relation the litigation costs. As claims under the 1975 Act are governed by the Rules, this procedure should have been followed, they said.

As against that, when considering how to determine the substantive claim under the 1975 Act, the court must have regard to the claimant's financial needs, which include an obligation to pay litigation costs. Thus, a court may wish to consider the claimant's litigation costs as part of the substantive determination of the claim.

The appeal went to the EWHC under Deputy High Court Judge James Pickering. He examined precedents set in the 2012 case of Lilleyman v Lilleyman and the 2021 case of Hirachand v Hirachand, both under the 1975 Act. The 2021 case, Azarmi-Movafagh v Barriri-Dezfouli, was also relevant although it was a dispute over financial remedy on divorce. Pickering's decision was determined by the fact that 'proceedings under the 1975 Act are squarely governed by the CPR', he said.

'The approach taken by Briggs J in Lilleyman was … the correct and indeed the only approach which was properly open to him ... the subsequent decision in Hirachand, albeit not directly on point, only seems to confirm this.' It was not permissible for Jassal's litigation costs to be considered as part of the substantive award, said Pickering. Instead, Marsh should have considered the appropriate substantive relief ignoring those litigation costs, 'however unrealistic that may have been' and should then have gone on to consider the matter of costs, subsequently and separately.

The executors' appeal was duly allowed (Jassal v Shah, 2024 EWHC 2214 Ch). Marsh's original order will be varied such that the lump sum will be reduced to a sum which excludes the litigation costs and VAT. Pickering also ordered the executors to pay Jassal her costs for the original proceedings (excluding the appeal), as she was the clear winner of that part of the dispute.

Sources

• BAILII