Analysis
The appellant solicitor applied under s50 Administration of Justice Act 1985 to remove his co-executor, the deceased’s widow. At a hearing before Bacon J the parties agreed by consent that both executors should be removed and replaced with an independent administrator, but could not agree on costs. The judge gave directions for written submissions to be exchanged, after which a decision was made on the papers without a hearing. The appellant was ordered to pay personally the respondent’s costs on the standard basis (with the balance paid out of the estate) and was deprived of his indemnity out of the estate for his own costs.
The judge’s reasons were:
- (i) the proceedings were commenced without pre-action correspondence or the protection of a Beddoe order;
- (ii) the action was unsuccessful, in that the applicant sought to remove his co-executor and continue administering the estate alone;
- (iii) the outcome achieved by consent had been proposed by the respondent soon after proceedings were issued; and
- (iv) the application had been based upon a perceived conflict of interest between the respondent’s role as executrix and her intimated claim for reasonable provision out of the estate pursuant to the Inheritance (Provision for Family and Dependants) Act 1975.
The applicant’s conduct was therefore not ‘a reasonable and proper exercise of his powers as personal representative’.
The appellant appealed to the Court of Appeal. The issues to be determined were:
- (1) In what circumstances may a personal representative be deprived of his right to reimbursement from the estate for expenses incurred?
- (2) Is there any principle of law which prevents a claimant in family provision proceedings under the 1975 Act from acting as a personal representative of the deceased’s estate?
- (3) What approach should the court adopt when an action is settled apart from the question of costs?
Held:
- (1) The principles applicable to reimbursement are well established. Section 31 Trustee Act 2000 provides that a trustee (which includes a personal representative) is entitled to be reimbursed for expenses properly incurred by them. This is reflected in CPR r46.3 and para 1.1 of Practice Direction 46. ‘Properly incurred’ means ‘not improperly incurred’ – Price v Saundry [2019].
- (2) There is no principle of law which automatically requires a person bringing or intending to bring a claim under the 1975 Act to cease acting as personal representative. An applicant under the 1975 Act and the beneficiaries of the estate share a common interest in the proper administration of the estate and the maximisation of its assets. See Civil Procedure (2023) at 57.16.1 and Ross on Inheritance Act Claims (4th ed.) at §1-032 and Francis on Inheritance Act Claims: Law, Practice and Procedure chapter 3 at 35.
- (3) Where an action is settled by the parties but they have been unable to agree on costs, the court may in all but the most straightforward cases decline to decide the issue or alternatively the court may be willing to do its best to resolve the question in an effort to avoid the expense of time, money and court resources which a full trial would entail. The latter course necessarily involves a ‘broad brush’ approach, and an appellate court will only interfere with the judge’s decision if the appellant makes out a case of manifest injustice: BCT Software Solutions Ltd v C Brewer & Sons Ltd [2004].
- (4) The judge’s decision was not manifestly unjust on the facts and fell within the scope of her discretion. The appellant’s conduct had been unreasonable for the reasons identified by the judge. The proceedings had been begun with inappropriate haste, without any pre-action correspondence. In cases involving modest estates, recourse to hostile litigation should be a last resort. The view that the respondent’s claim under the 1975 Act put her in a position of conflict was wrong. The decision not to seek Beddoe relief should have brought home to the appellant that he was proceeding at his own risk on costs and would need to show his conduct had been reasonable in order to retain his indemnity.
Appeal dismissed.
JUDGMENT SIR LAUNCELOT HENDERSON: Introduction [1] This is an appeal against a costs order made by Bacon J (‘the Judge’) on 24 November 2022 (‘the Costs Order’), pursuant to directions which she had given on 3 November 2022 when making a consent order removing the two original executors of the will (‘the Will’) of the …Continue reading "Bowser v Smith & anr [2023] WTLR 1207"