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Solicitor's insurers in Marley v Rawlings must pay heavy costs

Monday, 22 September, 2014

The insurers of a negligent solicitor have been ordered to pay almost all the costs of both parties in the Marley v Rawlings contentious probate case.

The case concerned the will of an elderly couple resident in Kent, Alfred and Maureen Rawlings, who had two natural sons and one adopted son. In 1999 they instructed their solicitor to prepare a pair of identical mirror wills, in which they both left their entire estate to the other spouse if alive, and otherwise to their adopted son, Terry Marley. The solicitor duly drafted two very short and simple wills and had the couple execute them. However, the two testators accidentally signed the other's will without anyone noticing. The solicitor has admitted negligence for this oversight, which was not discovered until much later.

This case led to lengthy litigation between Terry Marley and the Rawlings' two natural sons, with the former applying for the wills to be rectified and the latter insisting that the estate should be distributed to them by intestacy. The Rawlings sons won in the England and Wales High Court and the Court of Appeal, but in January this year Marley finally prevailed in the UK Supreme Court.

The legal costs far outweighed the size of the relatively modest estate, and the question of how they were to be paid was an important one. Terry Marley – supported by the negligent solicitor's insurers, which had underwritten his litigation costs – contended that this was ordinary hostile litigation. Thus the losers – the Rawlings sons – should pay his costs in all three courts.

However, the Rawlings sons contended that all parties' costs should come out of the estate, as is often done in contentious probate cases; or alternatively be paid by the negligent solicitor. Their legal advisors had acted on a traditional basis in the High Court and the Court of Appeal, but counsel in the Supreme Court were instructed on conditional fee agreements (CFA). These agreements allowed the two barristers to claim their full fee in the event that the estate was ordered to pay the Rawlings' costs.

The Supreme Court has now declared how costs are to be paid. Its ruling is an unusual one. It unanimously decided that the solicitor's insurers should pay the costs of both parties in the High Court and Court of Appeal. Regarding the costs in the Supreme Court itself, the insurers should pay Marley's costs, the Rawlings' solicitors' disbursements, and, the fees of the Rawlings' two counsels – conditional on the latter disclaiming their entitlement to success fees under the CFA.

The reason given for this is the role played by the negligent solicitor, against whom Marley had a clear claim in tort, said the Supreme Court. If it ordered costs to be paid out of the estate, the solicitor, or rather his insurer, would have had to reimburse the estate anyway. However, the Supreme Court said that would also have led to the unfair result that the Rawlings' counsel would have been able to claim their success fees under the CFA.

'In the light of the fact that the respondents lost, the court considers that it would be quite wrong if their counsel recovered any success fee from the insurers', said Lord Neuberger. 'But if the order simply recorded that only counsels' base fees were to be paid by the insurers, their 100 per cent success fees may be recoverable from the respondents or else from the solicitors. Accordingly, the insurers will only be liable to pay the respondents' counsels' fees in the Supreme Court if both counsel disclaim their entitlement to a success fee.'

The two barristers did indeed drop their claim to success fees, and will thus receive only their base costs.

Sources