That's justice

This is the first of two articles covering recent cases that give comfort to executors, who often find themselves in the firing line when something goes wrong during the administration of an estate.

Jones v Longley [2015] EWHC3362 (CH) gives comfort to executors who act reasonably and in the best interests of the estate, but have not achieved the sought outcome in a court application. The court declined to follow the usual costs rule that the loser pays the winner's costs and instead ordered the 'winner' to pay the executor's costs.

Background

The claimant, a solicitor and the first defendant were appointed co-executors under the will. The claimant applied for the removal of the first defendant as co-executor because the administration of the estate was deadlocked. As a personal representative is not normally allowed to retire, the claimant had no other option but to seek the removal of the first defendant to remedy the deadlock.

However, the first defendant resisted the claimant's claim until the last moment in the court action, insisting that the claimant remain as executor with the first defendant and failing to offer any alternative. The court removed the claimant as executor, leaving the first defendant to administer the estate alone.

Various accusations had been made by the first defendant in a counterclaim against the claimant and his firm, which were denied, save that the claimant accepted that there had been a serious delay on his part in applying for probate. The court set aside the counterclaim to be heard on another day and this court hearing simply focused on the costs issues of the application for the removal of the executor.

The judgment

The court found it was clear that:

1. The relationship between the executors had completely broken down;

2. The administration of the estate was deadlocked and needed to be unblocked; and

3. As the executors couldn't agree what to do in order for the administration of the estate to be progressed, either one or both of them had to go.

The court noted that the reasons for removing the claimant rather than the first defendant (or both) were exceptional. It was largely because all of the beneficiaries were adults and wished the first defendant, not the claimant, to continue to act and were willing to accept any risk in entrusting the administration to the first defendant.

Although on the face of it, the claimant's application had been unsuccessful and the first defendant had 'won', the court resisted the application for an order that the claimant pay the costs of the first defendant and bear his own costs personally. The court found that the claimant had acted reasonably and so the first defendant was ordered to pay the claimant's costs.

The first defendant was found to have made 'meticulous, pedantic and…unreasonable demands during the administration' and had re-stated his allegations '…by reference to voluminous written materials, most of which were of marginal relevance'. He had not acted reasonably in the way that he defended the claim and against the best interests of the estate. In contrast, the court considered that the claimant had done the right thing in bringing the court proceedings, and had acted in the best interests of the estate and its beneficiaries.

The judge found: 'In my judgment, whether or not the claimant has in substance been successful in bringing this claim, and whether or not he has committed any breaches of duty in the administration, he can be regarded as having done the right thing in the interests of the estate and its beneficiaries in bringing these proceedings. That is conduct to be encouraged. The behaviour of the first defendant, on the other hand, in conducting the litigation in such an unreasonable way is not.'

Moving forward

This is a real comfort for executors caught in a deadlock situation who may previously have worried about the costs risks for themselves of bringing a contested court application, either for removal of a co-executor or for directions as to how to proceed. Provided that they are acting reasonably and in the best interests of the estate, they can now be more confident of recovering their costs and not being subject to an adverse costs order. However, as practitioners know, litigation should always be a last resort.

Margaret Windram is an associate at Thomas Eggar

She writes the regular in-practice article on wealth structuring for Private Client Adviser

Copyright & permissions