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In the aftermath of losing a loved one, the grieving process is often compounded by the practical need to settle their estate.
The task of administering the estate – ensuring that the deceased’s debts are settled and their assets are distributed in accordance with their wishes – often falls to an appointed executor.
However, what happens when the executor’s role becomes a point of contention, leading to an impasse that halts the entire process?
This article provides analysis of the recent decisions in the case of Lane v Lane [2024] EWHC 275 (Ch).
Lane 1: Removal Applications
In Lane v Lane [2024] EWHC 275 (Ch), Jonathan Hilliard KC provides a careful and considered elucidation on the removal of executors, and the practical application of section 50 of the Administration of Justice Act 1985.
The judgment can be found here.
The decision sheds light on the interpretation of wills, construction of gifts, the nuances of ademption (the failure of gifts) and the operation of partnership law upon death – providing valuable guidance for practitioners.
Relevant Factors
When the administration of the estate grinds to a halt, it can often be due to a breakdown in trust and confidence between the executors and beneficiaries. The fact that the deceased had chosen the executors in question will always be a relevant factor in favour of executor retention. However, the criteria for the removal of executors or representatives are often multifaceted. They include demonstrated misconduct, incapacity, insolvency, conflicts of interest, clashes of personality, friction and hostility, acts or omissions that endanger the estate and evidence want of honesty, or want of reasonable fidelity, all of which can formulate as individual grounds for removal.
The Decision
In this context, Jonathan Hillard KC made clear at [61]:
“[Though the authorities on section 50] helpfully summarise the key criteria to which the Court should have regard, there is – as Chief Master Marsh emphasised in his 2020 annual lecture to the Association of Contentious Trust and Probate Specialists – a danger that lists of criteria obscure the essential simplicity of the test in this area.”
Simply put, the overriding consideration is whether the administration of the estate is being properly carried out or, putting it another way, ‘the welfare of the beneficiaries’: Williams, Mortimer & Sunnucks on Executors, Administrators and Probate (22nd ed, 2023) at [53-20].
Jonathan Hillard KC at [84] referred to this as:
“[…] the prism through which [the Court should] evaluate whether to remove [an administrator] and replace her with a professional administratrix […] that of the interests of the beneficiaries as a whole.”
It was decided that the estate had not been administered as it should have been in a number of respects. The pro tempore Deputy Judge observed at [85] and [95]:
At [85], “I have a number of serious concerns about how the estate administration has proceeded to date in [the executrix]’s hands. There are a number of steps that should have been taken which have not [and] the focus for the purposes of removal must be on [the executor].”
At [95], “The [matters of concern] taken cumulatively give serious concern as to the future administration of the estate in circumstances where I consider the past administration has been lacking in a number of respects. No proposals have been put to deal with any of the remaining matters since [the deceased]’s death […] and none were put in evidence, in skeletons or in submission at the hearing.”
This led Jonathan Hillard KC to conclude that, in the long run, with it being critical that the future administration of the estate does not proceed in the same way, to stick with a setup that is causing problems will likely only continue to do just that – with the incidence of greater cost. If an executor relies on solicitors for estate administration, additional legal fees are inevitable regardless of who sits as executor. If there is friction in the administration between the executrix and the beneficiaries, it is likely to continue and, in the premises, it would be “better to grasp the nettle and bring in someone who will certainly be able to deal efficiently with estate administration, rather than prolong the problems of the estate”.
In short, if beneficiaries would be better served by removal and replacement of the executor – that is the appropriate order to make.
Lane 2: Cost Consequences
In Lane v Lane & Ors [2024] EWHC 752 (Ch), Jonathan Hilliard KC’s second decision on costs serves as a useful reminder of the Buckton principles in construction claims and, in particular, the personal responsibility of executors following successful removal applications.
The second judgment can be found here.
The Decision
The sitting Deputy Judge ordered the former executor to pay the costs of the section 50 Application, on the basis that it was not simply a case where there has been a breakdown in trust and confidence; instead, it was one where – as stated at [46]:
“A trustee or executor who is removed on the grounds of their conduct and unsuccessfully resists the claim until judgment will normally bear personally their own costs and those of the claimant, because they will not have properly incurred their costs or their liability to the claimant.”
Jonathan Hilliard KC further commented at [47] and [48]:
At [47], “Where removal proceedings are intimated against a trustee or someone administering an estate and the beneficial class is split in their view as to the appropriate course of action, it is sensible for the recipient to consider seeking Court directions promptly to resolve the matter if such proceedings have not yet been launched by the beneficiary, or making or agreeing to an offer for appointment of an independent trustee. If instead they resist the claim without qualification, they necessarily run the risk that the Court finds that they have not acted reasonably in defending the claim and cannot rely on their indemnity.”
At [48], “Here [the executrix] has maintained forcefully until Judgment the position that she is the appropriate administrator. I have rejected that and found that I have serious concerns about the administration of the estate for the future in light of how it has been conducted in the past.”
The Court also criticised the executrix’s failure – it being incumbent on a personal representative to administer the estate as expeditiously as possible – to seek directions at an earlier date, or at all, to address the friction causing the administration standstill.
Comment
The case underscores the importance of executors remaining neutral (as distinct from hostile or passive) in removal applications to avoid cost consequences. However, even if the defendant executor remains neutral, a removed executor may ultimately find themselves liable to a percentage of the claimants’ costs as a natural consequence of removal applications (per Perry & Anor v Neupert & Ors [2019] EWHC 2275 (Ch)).
Conclusion
In summary, Lane v Lane [2024] provides valuable insights into the removal of executors and the administration of estates – emphasising the simplicity of the section 50 test and the importance of beneficiary interests. The High Court also makes clear the potential cost implications for executors involved in contentious litigation.
Author: by Joshua Cullen, Counsel at 25 Canada Square Chambers