Analysis
The claims concerned the estate of Monica Lane (the deceased), who died on 8 May 2019. The deceased’s final will was dated 23 February 2013 (the will). By the will the deceased left her son David her ‘share and interest’ in the partnership (the gift), among other assets. The deceased’s daughter Susan (the first defendant) and David were named as executors.
The first defendant had contended that the deceased became permanently incapacitated shortly before her death, causing the dissolution of the partnership. The argument that the gift failed by ademption and fell into residue had been rejected by the court in a claim brought by David’s widow Karen (the claimant).
The claimant had in addition sought the removal of the first defendant as executrix. That claim had succeeded.
The court considered the appropriate orders in respect of costs.
Held:
Given the multitude of different factual situations that can arise in Buckton (1) and (2) cases, it was important not to reduce the role of a trustee or personal representative to passive neutrality in all circumstances in such cases. A trustee may be able to assist the court to resolve the dispute in the interests of the trust by taking steps that go beyond passive neutrality and where necessary the trustee should put forward the other side of the argument to assist in the resolution of the issue. Further, the fact that a trustee was also a beneficiary did not of itself stop a claim falling within Buckton categories (1) or (2).
Given the different views on the ademption question, it was an issue which arose in relation to the administration of the estate which needed to be resolved in the interests of the estate. The fact that the claim was brought along with the removal claim did not alter this. The case was also significantly different from the example in Buckton category (3) where an action was brought where the trust fund had been distributed to one beneficiary and the claim was for recovery from the recipient or breach of trust by the trustee. That was different from debating a point of construction before any distribution had been made on it.
In a Buckton (1) or (2) case there would be situations where it would be sensible for a trustee to seek the directions of the court before arguing one side of the claim. Such applications were not required as a matter of course in all cases, for example in the case of a small-value trust or estate where it is accepted by the beneficiaries that the trustee should take the other side of the argument and the trustee is comfortable with doing so.
In the present case, it might have been sensible for the first defendant to have raised the point with the claimant, and if not accepted an application for a direction could have been made. However, it was accepted on behalf of the claimant that the first defendant taking the other side of the argument would not have been opposed in that situation. Given the limited liquid assets in the estate, the first defendant could not be faulted for choosing the other side of the argument without a court direction.
Further, the first defendant could not be said to have acted otherwise than for the benefit of the estate within the meaning of PD 46 para 1(1)(b) or to have acted unreasonably within para 1(1)(c). The issue needed to be resolved in the interests of the estate given the difference of view. It was reasonable and indeed necessary for the first defendant to take the other side of the argument.
In a typical case there would be no question of someone being deprived of their costs under Buckton (1) or (2) because of the impact on another of the parties of the effect of the order due to the allocation of costs against the estate. The position was no different here. The costs of the construction claim would be paid from the estate.
The first defendant was to pay the claimant’s costs of the removal claim on the standard basis to be assessed if not agreed. A trustee or executor who is removed on the grounds of their conduct and unsuccessfully resists the claim until judgment will normally bear personally those costs and those of the claimant. The first defendant had maintained forcefully until judgment the position that she was the appropriate administrator. That had been rejected and the court had found serious concerns as to the administration of the estate. Any sums not paid would be deducted from the first defendant’s share of the estate and, if exhausted, be deducted as proper expenses of the estate. The first defendant was to bear her own costs of that claim and was not entitled to be indemnified in respect of them.
JUDGMENT JONATHAN HILLIARD KC: Introduction [1] This judgment deals with the costs of the claims that I determined in my 9 February 2024 judgment (the Judgment), neutral citation number [2024] EWHC 275 (Ch). The Judgment dealt with two questions concerning the effect of a will and the administration of an estate respectively, specifically (1) whether …Continue reading "Lane v Lane & ors (costs) [2024] WTLR 639"