Brian Richard Bowser v Julie Ann Smith
| Jurisdiction | England & Wales |
| Judge | Sir Launcelot Henderson,Lady Justice Falk,Lord Justice Males |
| Judgment Date | 01 August 2023 |
| Neutral Citation | [2023] EWCA Civ 923 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: CA-2022-002385 |
In the matter of The Estate of Ian John Smith (deceased)
[2023] EWCA Civ 923
Lord Justice Males
Lady Justice Falk
and
Sir Launcelot Henderson
Case No: CA-2022-002385
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
PROPERTY, TRUSTS AND PROBATE LIST (ChD)
Mrs Justice Bacon
Claim No: PT-2022-000662
Royal Courts of Justice
Strand, London, WC2A 2LL
Araba Taylor (instructed by Bowser Ollard & Bentley Ltd) for the Appellant
Edward Hicks (instructed by Ashtons Legal) for the Respondent
Michael Green appeared in person as a solicitor advocate
Hearing date: 13 July 2023
Approved Judgment
This judgment was handed down remotely at 10.30am on 1 August 2023 by circulation to the parties or their representatives by e-mail and by release to the National Archives.
Introduction
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 late Ian John Smith (“the Testator”), who died on 29 May 2022, and replacing them with an independent administrator.
As I shall explain, the dispute came before the Judge on the hearing of an application for interim relief in proceedings brought by one of the original executors of the Will (who was a solicitor in the firm which had acted for the Testator when he made the Will), seeking the removal of the other executor (who was the Testator's estranged wife, and later widow, and the mother of their ten children). With some encouragement from the Judge, an agreement was quickly reached at the hearing that both the existing executors should be replaced, and a suitable candidate for that role was identified, but the question of costs remained outstanding and in dispute. After the parties, through their counsel, had briefly indicated their respective positions on costs, the Judge gave unopposed directions for determination of this question by the court on paper, after an exchange of written submissions and replies thereto within a short period. This procedure was duly followed, and the Judge made the Costs Order on 24 November without any further hearing.
The claimant in the proceedings (and the appellant in this court) is Brian Bowser (“Mr Bowser”), a director of Bowser Ollard & Bentley Limited which carries on business as solicitors under the trading name of Bowsers at offices in March and Wisbech in Cambridgeshire. The Testator executed the Will on 30 August 2019, a few months after he and his wife had separated in March of that year, and she had gone to live with the nine younger children of the marriage in rented accommodation. The Will was prepared for the Testator by Bowsers, and his signature to it was witnessed by two employees of the firm. The executors and trustees appointed by the Testator in clause 2(a) of the Will were (a) his wife Julie Ann Smith (to whom I will refer, for convenience and with her permission, as “Julie”), and (b) one of the directors at the date of his death of Bowsers. Mr Bowser was nominated to act in that capacity within a few days of the Testator's unexpected and untimely death in a road accident on 29 May 2022.
Julie was the sole defendant in the proceedings brought by Mr Bowser for her removal as an executor, and she is the respondent to the appeal.
The replacement administrator was added as a party to the appeal by an order made by Males LJ on 5 July 2023. He is Michael Anthony Green, a partner of Howes Percival LLP (“Mr Green”). He was appointed by the Judge's order of 3 November 2022 to act as substitute personal representative pursuant to section 50(1)(a) and (2) (b) of the Administration of Justice Act 1985 and to take out a grant, conditionally upon his filing a signed consent to act and a witness statement of fitness in accordance with CPR PD 57 para 13.2. Those conditions were fulfilled by 17 November 2022. Mr Green appeared before us in person, exercising his right of audience as a solicitor advocate. He provided a helpful Note with up-to-date details of the composition and value of the estate. His position on the merits of the appeal was, very properly, one of neutrality. I record the gratitude of the court to Mr Green for his assistance.
The Costs Order was adverse to Mr Bowser. Indeed, it was described by his counsel, Ms Araba Taylor, in her written submissions as “to all intents and purposes, punitive”, although I would not accept this description. Not only was Mr Bowser ordered to pay Julie's costs of the claim on the standard basis, but he was also deprived of any indemnity in respect of his own costs of the claim from the estate. Furthermore, Julie was awarded her costs of the claim to be raised and paid out of the estate on the indemnity basis, if and to the extent that her costs were not otherwise paid by Mr Bowser, although there is no reason to think that he will be unable to pay them. He was also ordered to make an interim payment to Julie of £12,500 within 14 days.
The Judge did not deliver a separate costs judgment, but stated her reasons as part of the Costs Order itself. In other words, it was a “reasoned order”. Presumably for that reason, it lacks a neutral citation reference. I will need to examine some aspects of the Judge's reasoning in more detail later in this judgment, but in summary she reasoned as follows:
(1) Mr Bowser began the proceedings without proper pre-action correspondence and without the protection of a Beddoe order. There was no urgency which justified this.
(2) His action was unsuccessful. The order he sought was one restraining Julie from taking any steps in the administration of the estate, and providing for the estate to be administered by himself alone. Instead, the order agreed during the hearing was an order removing both parties as executors and trustees, and substituting an independent personal representative.
(3) An order in those terms was precisely what Julie had proposed not long after the proceedings were issued: see her witness statement of 8 September 2022, and a repetition of the proposal in a letter from her solicitors (Ashtons Legal, “Ashtons”) on 25 October 2022. Ashtons had also repeatedly urged Mr Bowser to resolve the matter without contested litigation, but he failed to do so and did not accept Julie's proposal until the hearing.
(4) Mr Bowser's position had been based on his perception of a conflict of interest between Julie's role as an executor and her intention to make a claim against her late husband's estate under the Inheritance (Provision for Family and Dependants) Act 1975 (“the 1975 Act”). Mr Bowser belatedly accepted at the hearing “that no such conflict arises as a matter of law”, but he instead raised for the first time in his written costs submissions what the Judge considered to be a different conflict argument, “namely that it would not be possible for the minor beneficiaries to be represented by Julie in any 1975 Act proceedings”, although Julie had never suggested that she would represent them.
The Judge then concluded her analysis as follows:
“5. The Claimant's conduct in bringing and pursuing the proceedings has not, therefore, been a reasonable and proper exercise of his powers as personal representative. In the circumstances, the Claimant should pay the Defendant's costs and should not be indemnified for those costs or his own costs from the estate.
6. To the extent that the Defendant does not recover her costs from the Claimant, she should recover them from the estate. Her position from the outset of the proceedings was a reasonable one, and indeed was the position ultimately ordered by consent at the hearing”.
Mr Bowser now appeals to this court, with permission granted by Nugee LJ. At the end of the hearing on 13 July 2023, we announced that the appeal would be dismissed for reasons to be given later in writing. In this judgment, I give my reasons for joining in that conclusion.
Relevant Principles of Law
The basic principles of law which shape the outcome of the appeal are not in dispute.
(1) In what circumstances may a personal representative be deprived of his right to reimbursement from the estate for expenses he has incurred?
Section 31 of the Trustee Act 2000, which is headed “Trustees' expenses”, lays down the basic rule in subsection (1) that:
“A trustee –
(a) is entitled to be reimbursed from the trust funds, or
(b) may pay out of the trust funds,
expenses properly incurred by him when acting on behalf of the trust.”
This principle is then applied, with appropriate modifications, to personal representatives by section 35, which provides:
“(1) Subject to the following provisions of this section, this Act applies in relation to a personal representative administering an estate according to the law as it applies to a trustee carrying out a trust for beneficiaries.
(2) For this purpose this Act is to be read with the appropriate modifications and in particular–
(a) references to the trust instrument are to be read as references to the will,
(b) references to a beneficiary or to beneficiaries…are to be read as references to a person or the persons interested in the due administration of the estate…”
Where a personal representative has been a party to legal proceedings in his capacity as such, the above principles are reflected in CPR rule 46.3, which states that:
“(1) This rule applies where –
(a) a person is or has been a party to any proceedings in the capacity of trustee or personal representative; and
(b)...
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