Jones v Longley [2015] EWHC 3362 (Ch)

Analysis

On 30 July 2015 the court made an order under s50 of the Administration of Justice Act 1985 to remove the claimant (C) as co-executor of the deceased’s estate. The judgment involved no criticism of C. The result was to leave the first defendant (D1) as sole executor of the estate. The master invited written submissions on the issue of costs because all parties wished to apply for costs orders. This was the judgment on the issue of costs orders that should be made in the claim.

C and D1 were appointed as co-executors of the deceased’s will. C was the solicitor who drew the will. D1 was the deceased’s elder son. The second (D2) and third (D3) defendants were D1’s siblings and other beneficiaries under the will.

In the claim, C sought the removal of D1 as executor. D1 filed a counterclaim. D2 and D3 were joined to the proceedings and filed acknowledgments of service indicating their intentions to contest the proceedings.

At a directions hearing on 14 May 2015, the master invited both sides to consider making an application for the removal of either or both of the executors, fixing the hearing on 30 July 2015.

C issued an application for an order removing both executors to be replaced by an independent third party. Each of the defendants issued a separate application notice for an order removing C as executor but leaving D1 in post. The court made the order removing C and leaving D1 in post on the basis of what was in the interests of the beneficiaries of the estate in the circumstances.

In C’s written submissions on the point of costs, C asked for an order that (i) D1 pay C’s costs of the claim on the standard basis, but that C be entitled to recover from the estate on the indemnity basis any costs not recovered from D1, or alternatively (ii) C should at least be entitled to recover his costs from the estate on the indemnity basis.

In written submissions on the point of costs the defendants asked for an order that (i) C pays the defendants’ costs of the claim and the defendants be entitled to recover from the partners of C’s former law firm or its successor any costs not recovered from C, or alternatively (ii) the defendants’ costs be paid by the firm. Both alternatives were sought on the indemnity basis. The defendants opposed any application for costs to be paid from D1 or the estate.

On the issue of costs, C contended that:

1. (a) he acted reasonably in commencing the claim because the administration of the estate was deadlocked and a personal representative is not normally allowed to retire and hence C had to seek the removal of D1;
2. (b) he acted reasonably throughout and he achieved the objective of unblocking the administration of the estate;
3. (c) on the other hand, D1 resisted C’s claim until the last moment, insisting that C remain an executor with D1 and failing to offer any reasonable alternative;
4. (d) D1’s conduct of the litigation was unreasonable, both in seeking to keep both executors as personal representatives and in producing a large amount of wide-ranging and unfocused material.

The defendants contended on this issue of costs that:

1. (a) C’s decision to commence the claim was unreasonable and not in the best interests of the estate, but in his own interests;
2. (b) the claim did not succeed in removing D1 as executor;
3. (c) C conducted the litigation unreasonably whereas the defendants conducted their defence reasonably throughout;
4. (d) the problem in the administration of the estate was not deadlock but C’s refusal to engage in administration of the estate.

C admitted that there was serious delay on his part in 2010-2011 in applying for and obtaining probate. The defendants accepted that later on there was deadlock but asserted that this arose through C’s lack of cooperation. Overall, there were four issues concerning the administration of the estate on which the parties differed, namely:

1. (i) the terms on which the deceased’s house should be assented to D1;
2. (ii) the type of title guarantee that was appropriate to that assent;
3. (iii) the question whether there should be supplied to D1 a notarised copy of the deeds and documents of title; and
4. (iv) whether the executors should pursue a claim against a bank in Hong Kong regarding a deposit in that bank’s predecessor by the deceased.

D1 also sought compensation from C and his firm for the delays in administration.

Held:

1. 1) The relationship between the executors had completely broken down. As a result, the administration of the estate was deadlocked and needed to be unblocked. Since the administrators could not agree on what to do, in order for the administration of the estate to be progressed, either one or both of them had to go.
2. 2) In relation to the four issues in dispute between the parties concerning administration of the estate: the second and third issues had already been decided by a deputy master in C’s favour and D1 had not sought to appeal those decisions therefore they stand. As to the first and fourth issues, it was not possible to find C’s conduct unreasonable.
3. 3) C’s application for removal was not unreasonable. The proper course in case of dispute between the executors was to ask the court to decide.
4. 4) C’s application for removal was in the best interests of the estate. The relationship between the executors had completely broken down by the time the proceedings were issued and the administration was at a standstill. The only way forward was for at least one of the executors to go. It was reasonable for C to bring the application and he did so reasonably.
5. 5) D1 did not act reasonably in the way that he defended the claim. D1’s approach to the litigation had been to characterize any failure or refusal by C to comply with his unreasonable demands during the administration as C’s unreasonable conduct, to state and re-state allegations in repetitive language and to purport to support such allegations by reference to voluminous written materials, most of which were of marginal relevance at best.
6. 6) This is a case where the idea underlying the claim has been vindicated and to launch the claim was the right course to take at the time.

7) D1 should pay C’s costs of the claim on the standard basis if not agreed. To the extent that C’s costs are not recovered from D1, they will be recoverable from the estate on the indemnity basis.

JUDGMENT MASTER MATTHEWS: [1] The claimant and the first defendant were appointed co-executors of the will dated 24 November 1994 of Charles Henry Longley. The claimant was the solicitor who drew the will. The first defendant was the deceased’s elder son. The deceased died on 9 May 2010, and probate was granted to both executors …

Continue reading "Jones v Longley [2015] EWHC 3362 (Ch)"