The Supreme Court today ordered a solicitor’s insurer to pay the bulk of both parties’ costs over a wills dispute arising when a married couple each signed the wrong draft of a will. 

Judges unanimously agreed that the solicitor’s insurer in Marley v Rawlings should pay the costs of both parties for earlier hearings where they contested a £70,000 inheritance.

The case started after the deaths of Alfred and Maureen Rawlings and the subsequent discovery each had signed the other's will. Both had intended to leave their entire estate to Terry Marley, whom they treated as their son.

When the mistake was found out, the couple’s two sons, Terry and Michael, contested the will, arguing that the mistake meant their father had died intestate, leaving them to inherit. 

Following defeat in the High Court and Court of Appeal, Marley succeeded in the Supreme Court, which concluded that each will was valid, despite the oversight.

On the matter of costs, Marley contended that this was ordinary hostile litigation, and the sons should pay costs incurred in all three courts. The solicitor’s insurers made submissions in support of this case.

The respondents, who instructed their legal advisers in the Supreme Court on a conditional fee agreement, said all parties’ costs should come from the estate – or failing that should be paid for by the insurers.

The Supreme Court agreed the insurers should pay the appellant’s costs, the respondents’ solicitors’ disbursements, and, the respondents’ two counsels’ fees, conditional on the respondents’ counsel disclaiming any entitlement to their success fees under their CFA.

The court found it would be unfair to settles parties’ costs from the estate as this would cause Marley to suffer a loss.

The judgment said: ‘This is not a case where it could possibly be right to ignore the position of the solicitor. The problem in this case arose as a result of the solicitor’s negligence, and the insurers, on behalf of the solicitor, had required Mr Marley to bring proceedings to seek to have the will upheld.’

The court commented that the insurer’s agreement to underwrite the appellant’s costs of the appeal placed them in the position of a third-party funder. Further, the solicitors had no defence to a claim from the appellant for damages.

Commenting on the case, Alex Bagnall, head of commercial litigation costs for Law Lords, said: ‘The key aspect of this case which allowed the order to be made against the solicitors’ insurer is their role in funding the appellant’s costs.

‘The insurers placed themselves in the position of third-party funders by exerting a degree of control over the litigation and by standing to gain from its outcome. Without this agreement, I think it is unlikely that the court could have made such an order.’