Analysis
The Claimants brought a claim as executors of the late Louis Patience, who died in April 1997. They produced accounts setting out the proposed distribution of the deceased’s estate. These accounts were opposed by the Defendants (in their capacity as beneficiaries of the estate).
At trial, HHJ Matthews found that the Defendants’ objections were misconceived, though the Claimants did fail on part of their claim. At the subsequent costs hearing, it was held that the Defendants should pay the Claimants’ costs, though as a result of the Claimants failing on one of the issues, the costs payable by the Defendants would be reduced to 80% of the total amount awarded.
The parties disagreed on how the remaining 20% of the Claimants’ costs should be dealt with.
The Claimants asserted that they should be entitled to be reimbursed from the estate on an indemnity basis, per CPR rule 46.3, and/or a charging clause in the will, and/or s(31) of the Trustee Act 2000.
The Defendants, relying upon the decision of Lightman J in Alsop Wilkinson v Neary [1996] 1 WLR 1220, argued that this was a ‘beneficiaries dispute’, or alternatively a hostile form of ‘trust dispute’, and therefore the executors should not be entitled to any indemnity from the estate in respect of the remaining 20% of their costs.
Held
1) The Claimants were entitled to recover the 20% of costs not borne by the Defendants from the estate itself, on the indemnity basis.
2) This was a trust dispute, not a beneficiaries dispute. It involved the executors putting forward their view as to the entitlement of the beneficiaries – they had done nothing that could form the basis of a claim for breach of trust or devastavit.
3) This was a ‘friendly’ trust dispute, not a ‘hostile’ one. Animosity between parties does not make a dispute ‘hostile’ for these purposes. The court must look at the underlying matters it is being asked to resolve, not the manner in which the parties conduct themselves; here the underlying question concerned the administration of the estate
4) Executors are not automatically entitled to an indemnity in respect of any costs not recovered from the other side in litigation. Their entitlement to an indemnity will depend on whether their costs were reasonably and properly incurred.
5) Executors should not be deprived of their indemnity out of the estate for costs or other expenses and liabilities which they have incurred for the estate unless they have incurred them improperly.
JUDGMENT HHJ PAUL MATTHEWS: Introduction [1] This is my written ruling on an issue that has arisen between the parties in attempting to agree a minute of order following a hearing before me on 29 April 2019 concerning the costs of earlier proceedings. Those proceedings were dealt with by me as proceedings for an account …Continue reading "Mussell & anr v Patience & anr [2019] WTLR 973"