The High Court ruled that litigation costs must be kept separate from any Inheritance (Provision for Family and Dependants) Act 1975 awards. 

Background:

The claim concerns the estate of Fiaz Ali Shah who had four children. He entered a relationship with Srendarjit Kaur Jassal in 2000 and later cohabited with her. In August 2006, Fiaz made a will under which he left her everything and described Srendarjit as his ‘wife’. In December 2006, he made a new will in which he left just 50% to Srendarijt, who was described as a ‘close friend’, with the residue of the estate passing to Sajad or Shabana. 

The relationship ended in 2012 but it was only in 2018 that Fiaz made yet another will which made Sajad sole beneficiary. In 2020, Fiaz died, leaving an estate valued at £1.4 million.

In January 2021, Srendarjit issued a claim for reasonable provision under the Inheritance Act 1975 (The 1975 Act), claiming that she and the deceased had resumed their relationship two years prior to his death and that they were cohabiting as if they were married. The children, Sajad and Shabana, resisted the claim, arguing that they were not living together but that she was living in another property belonging to Fiaz. 

In 2021, Deputy Master Marsh found in favour of Srendarjit’s evidence and declared that she qualified for an award under Section 2 of the 1975 Act. She was granted a half share of the Salt Hill Mansions property, along with a £385,000 lump sum for her maintenance, which included her litigation costs. Sajad and Shabana appealed the decision, arguing that the Deputy Master erred in law by including Srendarjit's litigation costs as part of the substantive relief.

Decision: 

The appeal was allowed. Judge James Pickering examined precedents set in the previous cases of Lilleyman v Lilleyman and Hirachand v Hirachand, both of which were under the 1975 Act. He concluded that the Court Procedure Rules approach should be applied and that – unlike the Family Procedure Rules – litigation costs should be dealt with separately. The Judge noted that “as things stand, proceedings under the 1975 Act are squarely governed by the CPR.” He continued by noting “It was simply not permissible for Srendarjit's litigation costs to be considered as part of the substantive award.” Instead, Deputy Master Marsh should have “considered the appropriate substantive relief, ignoring those litigation costs (however unrealistic that may have been) and should then, subsequently and separately, have gone on to consider the matter of costs.”

The original order was varied to reduce the lump sum to exclude any litigation costs. The executors were ordered to pay Srendarjit's costs for the original proceedings, though not the appeal. 

Implications:

This decision makes it clear that costs should be dealt with separately from the substantive award. It sets a significant precedent for how litigation costs should be treated in inheritance disputes under the 1975 Act. 

It is now clear that the Court will have to determine the substantive claim first and then proceed with a decision on whether to make an order with regard to litigation costs.