Unfortunately, a recent inheritance dispute is a stark demonstration that such tales aren't purely apocryphal.
The case is Rochford -v- Rochford, decided in the Peterborough County Court in March.
The dispute was over the estate of the late Kenneth Rochford.
The Claimant, Lynne Rochford, was his daughter, and was left £25,000 under Ken's Will. He left £25,000 to one of his sisters, £2,000 to Lynne's son, and the rest of his modest estate (£245,000 in total) to Ilva, his other sister.
However, Lynne pursued a claim under the Inheritance (Provision for Family and Dependants) Act 1975 claiming that the Will didn't make reasonable financial provision for her due to her disability and lack of income.
Lynne was willing to attempt to mediate the dispute rather than go to trial, but Ilva argued that financial provision should not be made as Lynne owned a house worth approximately £500,000 and that her relationship with Ken had been difficult.
Ilva (or perhaps more accurately her solicitors) took the view that the claim was weak and lacking evidence and therefore refused mediation.
The matter eventually ended in a two day trial. The judge found that the fact that Lynne owned a valuable house would not disqualify her, as it was not a liquid asset.
The judge therefore awarded Lynne a lump sum payment of £85,000, in addition to the £25,000 provided for under the Will, so £100,000 in total.
However, this was more than the sum of £56,000 for which Lynne had offered to settle by making what's known as a Part 36 offer. Such an offer can be made by either party to try and force a settlement. The sting in the tale is that where a party has refused a Part 36 offer and then fails to get a better result at trial, the costs consequences can be very unpleasant.
In this case, as a result of Ilva’s refusal to mediate and her failure to beat Lynne's Part 36 offer, in addition to the payment of the additional £85,000 the Court ordered that Ilva pay by way of a penalty:
1. An additional 10% of the amount awarded (£8,500);
2. Interest at 5% p.a. on the entire judgment from August last year, when the offer was made;
3. Payment of Lynne’s costs on an indemnity basis, which basically means a much more generous method of assessment; and
4. Interest on Lynne's costs at 5% p.a. for the same period.
Lynne's costs were said to be £130,000, and although the judge said they seemed high he nevertheless ordered an interim payment of £60,000 towards them. They will probably end up at about £110,000.
So out of the £193,000 that she would have received the unfortunate Ilva would have had to pay within 14 days of the judgment £85,000 judgment + £8,500 penalty + £6,500 interest + £60,000 costs = £160,000.
Once the costs were assessed / agreed there would probably be another £50,000 or so, and then she'd have to pay her own lawyers, probably at least another £50,000.
So what was an inheritance of £193,000 will end up as a debt of £67,000
Although Ilva was either very stupid or badly advised it seems an incredibly harsh penalty. Faced with such a claim, and with judges increasingly disposed to interfere with people's Wills, it's increasingly hard to know for lawyers to know what to advise.
One aspect of the case that I find disconcerting is that Lynne was running the case under a Conditional Fee Agreement, which required her to pay a rather extortionate £60,000 by way of a `success fee'. Consequently, the judge had to take this into account when making his order. So although she was awarded an additional £85,000 she would potentially only have received an additional £25,000 (though as it turned out she'll also get the extra £11,000 in penalty and interest).
Nevertheless, it means that her lawyers will probably end up with around £180,000 - 5 times what Lynne will receive.
Legal costs in the UK have become quite out of control, and with legal aid having been effectively destroyed no ordinary person can afford to become involved in serious litigation.
It reminds me of a famous saying by a judge called Sir James Matthew,"In England, justice is open to all - just like the Ritz Hotel".