Category: General

The government ignored opposition and is going ahead with the proposed probate fee increase. For estates worth over £2 million the fee could now be £20,000.

WHAT IS PROBATE?

Probate describes the legal and financial processes involved in dealing with the property, money and other assets of the deceased. This normally involves the appointment of an executor who will deal with the deceased’s estate.

The government is to increase probate fees and thereby seeks to generate roughly £300m. The Joint Committee on Statutory Instruments raised concerns about the hike, in particular whether the proposed fees were proportionate. It questioned whether charging a fee for the administration of probate in excess of the cost of this service can really be termed a ‘fee’. (See the report here.)

More importantly, the fee increase can be seen as a further death tax by stealth, the introduction for which the Lord Chancellor has no powers. This is recognised in the report which sets out that “it is an important constitutional principle that there is no taxation without the consent of parliament, which must be embodied in statute and expressed in clear terms”

• £300 for estates worth more than £50,000 and up to £300,000
• £1,000 for estates worth more than £300,000 and up to £500,000
• £4,000 for estates worth more than £500,000 and up to £1 million
• £8,000 for estates worth more than £1m and up to £1.6 million
• £12,000 for estates worth more than £1.6m and up to £2 million
• £20,000 for estates worth more than £2 million

The current fees stand at £215 for individual applications, and £155 for those applying for probate through a solicitor. The rise will therefore amount to an increase between 40 per cent and 9,202 per cent. There is widespread disagreement with the fee increases. This is reflected in the results of the consultation, which received 853 responses of which 810 disagreed with the proposed fees. (See the Government’s response to the consultation here.)

The Ministry of Justice’s response was that ‘over half of estates [will] pay nothing and over 90 per cent pay less than £1,000’. The increase will take effect next month, though the precise date is yet to be announced.

The Court of Appeal held in a unanimous decision on 10 April 2017 in the case of LL v The Lord Chancellor [2017] EWCA Civ 237 (available here) that a claim can be brought against the Lord Chancellor following a High Court judge’s ‘gross and obvious irregularity’.

Jackson LJ, with whom King and Longmore LJJ agreed, stressed that this decision did not traverse the long-established principle of judicial immunity from suit and should not be considered ‘the thin end of the wedge’ for claims against judges as this case was ‘unusual’ and ‘exceptional’.

The appeal focussed on a series of orders given by Ms. Justice Russell in April 2014, in respect of the custody of the claimant’s son, referred to as M. These orders were all breached by LL leading to Russell J finding LL to be in contempt of court and sentencing him to 18-months imprisonment. When this conviction was appealed, a differently constituted division of the Court of Appeal upheld the appeal and ordered the immediate release of LL.

In April 2015, LL commenced a claim in the High Court against the Lord Chancellor seeking damages pursuant to sections 6, 7(1) and 9(3) of the HRA following his unlawful imprisonment. Foskett J dismissed this appeal on the basis that Russell J’s conduct did not amount to a ‘gross and obvious irregularity’.

When LL appealed this decision to the Court of Appeal in the instant case, the parties agreed Russell J had made a series of failings, the dispute was whether they passed what was described as the ‘very high threshold’ of being a gross and obvious irregularity.

In the Court of Appeal’s decision, Ms Justice Russell made a series of 6 errors, the cumulative effect of which amount to a gross and obvious irregularity:

1. She included in a recital to an order the court’s ‘expectation’ that LL secure the return of M from Singapore by instigating proceedings there if necessary.
2. She failed to recuse herself on grounds of apparent pre-determination or bias.
3. She required the defendant in what had become criminal proceedings to give evidence, rather than warning him the proceedings had moved from the family to the criminal jurisdiction and he did not need to give evidence.
4. When having made such a requirement to give evidence, she failed to permit the defendant to put his case first, instead he was subjected to an immediate cross-examination.
5. She conflated LL’s non-compliance with court orders (some of which were impossible to meet and were only proved to the balance of probabilities) with a deliberate breach of the court orders.
6. The defendant was not afforded the opportunity to make any submissions in mitigation following being found guilty and the judge passing sentence.

Russell J’s finding of guilt following LL’s breach of an order which could not be complied with amounted to a gross irregularity which would be obvious to anyone familiar with the court process.

This case is based on its own unique facts and any subsequent cases would be equally subjective. Indeed, Jackson LJ held that in reaching the decision the court was not assisted by comparing the significance of the breach with previously decided cases. It is unlikely that this case will be the catalyst of a breed of new claims against the judiciary.

In the recent case of Global Asset Capital Inc and another v Aabar Block S.A.R.L and others [2017] EWCA Civ 37, the Court of Appeal held that the High Court was wrong to find that following a ‘subject to contract’ offer letter, a contract was concluded during a telephone call which was inconsistent with subsequent communications.

BACKGROUND:

For the purposes of the appeal the following version of events was accepted. On 23 April 2015, the claimants sent a letter marked ‘without prejudice – subject to contract’ wherein they proposed to pay €250 million for certain rights. On 5 May 2015, the second claimant was informed by the second defendant’s CEO that a board meeting was due on 6 May 2015 where the letter would be considered. On 6 May 2015, the CEO of the second defendant telephoned the second claimant. The claimants case was, that during the call a contract had been agreed subject to two conditions. First, that the second claimant resend the offer letter in an open and binding form and second, he provides satisfactory evidence of his ability to fund the transaction. Later that day the second claimant sent an email attaching the letter ‘as discussed’. On 7 May 2015, the second claimant texted the CEO of the second defendant that fully committed terms were to follow. On 9 May 2015, the second claimant emailed the CEO of the second defendant repeating the key commercial terms of the original offer but included various additional and different terms. On 10 May 2015, the CEO of the second defendant responded that the claimants’ offer was not accepted.

The claimants sought a declaration that there was a valid contract and applied for specific performance. The defendants requested summary judgment but this was refused by Walker J. The defendants appealed.

THE RULING:

The Court of Appeal held that Walker J erred in not considering the parties’ conduct after 6 May 2015 telephone conversation. Hamblen LJ delivering the judgment, with whom MacFarlane LJ agreed, emphasised that this was not a question of the interpretation of the terms of the contract, but was a determination whether a contract had been concluded. The court relied on the well-established principle set out in Hussey v Horne-Payne (1878) 4 App Cas 311, that in establishing whether a contract had been made the court will look at the whole of the negotiations. Hamblen LJ relying on Pagnan SPA v Feed Products Ltd [1987] 2 Lloyd’s Rep 601, noted that the rule also applied to situations where both oral and written communications form part of the negotiations.

The court further held that even ignoring the parties’ subsequent communications, the claimants had no real prospect of success as the offer letter prior to the telephone call on 6 May 2015 was marked ‘subject to contract’. This meant that it was not open to the defendants simply to accept the offer. The claimants’ alternative case that the defendants made the offer also failed on two bases. First, this was not the claimants’ pleaded case and second, the defendants’ request that the claimant re-send the offer was inconsistent with this contention in any event.

During pupillage all our barristers to be are taught to take great care over settling cases and to read Foskett on Compromise. For frequently in a rush to close a file errors are made leading to claims now being made against the lawyer who erred. Undertaking drafting terminology is key.

So what effect does “subject to contract” actually have when inserted in an offer to settle? It shows that the parties are still negotiating and do not intend to be bound until a formal contract is exchanged. With subject to contract, it is only reasonable to expect the parties to enter into a proper and comprehensive sale and purchase agreement documenting all the terms agreed upon between the parties before a valid and binding contract is in existence between the parties. In conclusion, an agreement will only come into force if it is intended to bound the parties at the time the agreement was made. An agreement “subject to contract” will only bind the parties upon the conclusion and creation of a binding and valid contract, after all the terms are agreed.

SUMMARY:

1. An offer must be accepted clearly and unequivocally.
2. The court is entitled to consider all communications between the parties when deciding whether a contract has been concluded.
3. An offer marked subject to contract cannot be accepted so as to form a contract.