Karen Lane (as Personal Representative of the Estate of David Lane (Deceased)) v Susan Dorothy Lane (as Personal Representative of the Estate of Monica Lane (Deceased))
| Jurisdiction | England & Wales |
| Judge | Jonathan Hilliard |
| Judgment Date | 28 March 2024 |
| Neutral Citation | [2024] EWHC 752 (Ch) |
| Court | Chancery Division |
| Docket Number | Claim No. PT-2023-000102 |
[2024] EWHC 752 (Ch)
Jonathan Hilliard KC sitting as Deputy Judge of the High Court
Claim No. PT-2023-000102
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
PROPERTY, TRUSTS AND PROBATE LIST
Daniel Burton (instructed by Greene & Greene Solicitors) for the Claimant
Mark Blackett-Ord (instructed by Barker Gotelee solicitors) for the First Defendant
Hearing date: 7 March 2024
APPROVED JUDGMENT
Jonathan Hilliard KC sitting as a Deputy Judge of the High Court:
Introduction
This judgment deals with the costs of the claims that I determined in my 9 February 2024 judgment (the “Judgment”), neutral citation number [2024] EWHC 275 (Ch). The Judgment dealt with two questions concerning the effect of a will and the administration of an estate respectively, specifically (1) whether a gift under the will had adeemed and (2) whether the executrix, Susan, should be replaced by an independent solicitor. I decided that, as contended by Karen, the gift had not adeemed and that the executrix should be replaced by an independent solicitor. The former claim turned heavily on the construction of the Will, so I shall continue to refer to it as the Construction Claim. I shall adopt the other defined terms in the Judgment, including that of the Removal Claim to denote the second claim.
Karen's submission is that that (1) the costs of and occasioned by the Removal and Construction Claims should be paid by Susan on the standard basis subject to detailed assessment, with £50,000 on account of costs payable in 28 days, (2) any sums not paid by Susan should be deducted from Susan's share of the estate and if exhausted deducted as a proper expense of the estate, and (3) Susan should bear her own costs and not be entitled to indemnify herself out of the estate in respect of them. Susan's position by the time of the hearing was that all costs should be borne by the estate on an indemnity basis.
For the reasons that follow, in my judgment:
(1) Susan should pay Karen's costs of the Removal Claim, on the standard basis to be subject to detailed assessment if not agreed, and any sums not paid by Susan shall be deducted from Susan's share of the estate and, if exhausted, deducted as a proper expense of the estate. Susan shall bear her own costs of this claim and shall not be entitled to indemnify herself out of the estate in respect of them.
(2) The costs of the Construction Claim should be paid out of the estate on an indemnity basis.
Relevant background
The background to the substantive dispute is covered in my Judgment. There are the following other points relevant for present purposes.
The relief sought by Karen in her claim form included costs from Susan personally. In her accompanying witness statement, Karen explained that she did not want to involve the second and third defendants, Daniel and Georgia, in litigation unnecessarily and was not seeking any relief against them personally. She joined them in case they wished to take part and to ensure they were bound, as the other residuary beneficiaries and beneficiaries of the estate generally. She anticipated that Susan would defend the Construction Claim on her own behalf and on behalf of Daniel and Georgia.
In her acknowledgement of service and witness statement, Susan sought a declaration as to the construction of the provision of the Will relevant to the ademption argument and stated that she remained unconvinced by the arguments put by Karen on the point.
Daniel and Georgia did not file acknowledgments of service. They attended the first day of the hearing and stated that they did not intend to participate but supported Susan remaining as executrix.
Legal principles
The core legal principles were common ground before me.
R.44(2) of the Civil Procedure Rules 1998 ( “CPR”) contains general rules about costs, specifically:
“ (1) The court has discretion as to –
(a) whether costs are payable by one party to another;
(b) the amount of those costs; and
(c) when they are to be paid.
(2) If the court decides to make an order about costs –
(a) the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party; but
(b) the court may make a different order.”
The CPR makes specific provision for the costs of trustees and personal representatives. CPR r.46.3 deals in the following terms with the Court's power to award costs in favour of a trustee or personal representative:
“ (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) rule 44.5 does not apply.
(2) The general rule is that that person is entitled to be paid the costs of those proceedings, insofar as they are not recovered from or paid by any other person, out of the relevant trust fund or estate.
(3) Where that person is entitled to be paid any of those costs out of the fund or estate, those costs will be assessed on the indemnity basis.”
Further guidance is given on this by para.1 of PD 46, which provides that:
“ 1.1 A trustee or personal representative is entitled to an indemnity out of the relevant trust fund or estate for costs properly incurred. Whether costs were properly incurred depends on all the circumstances of the case including whether the trustee or personal representative (‘the trustee’) –
(a) obtained directions from the court before bringing or defending the proceedings;
(b) acted in the interests of the fund or estate or in substance for a benefit other than that of the estate, including the trustee's own; and
(c) acted in some way unreasonably in bringing or defending, or in the conduct of, the proceedings.
1.2 The trustee is not to be taken to have acted for a benefit other than that of the fund by reason only that the trustee has defended a claim in which relief is sought against the trustee personally.”
Helpful guidance on how beneficiary costs of construction claims and certain other claims should be borne is provided by the well-known decision in Re Buckton [1907] 2 Ch. 406 at pp.413–417. As explained in Lewin on Trusts (20 th ed., 2020) at [48-033], the following principles can be collected from Buckton:
(1) Category (1) claims are brought by the trustee to have the guidance of the Court as to the construction of the trust instrument or some other question of law arising in the administration of the trust or in relation to the trusts on which the trust property is held. In such cases, the costs of all parties are, whatever the outcome, usually treated as necessarily incurred for the benefit of the trust fund and ordered to be paid out of it.
(2) Category (2) claims are where the application is made by someone other than the trustee, but raises the same kind of point as in the first category and would have justified an application by the trustee. Such proceedings differ in form but not in substance from the first category and similar considerations apply as to costs.
(3) Category (3) claims are where the application is made by someone other than the trustee, but differ in substance from the second category, and in substance as well as form from the first category, in that they have the character of a hostile claim founded on a point of construction or law raised by someone other than the trustee to a beneficial interest in or entitlement to the trust fund. The distinction, though not easy to draw in practice, between this kind of litigation and litigation within the first two categories, is that the claim is brought not in substance for the benefit of the trust fund, but for the benefit of the claimant, and is resisted for similar reason. In such situations the general principles as to costs of hostile litigation apply between the claimant and the party against whom the claim is directed, and so the general rule is that the unsuccessful party will be ordered to pay the costs of the successful party, subject to the general qualifications which apply in ordinary hostile litigation.
The same principles apply to trusts and estates in this regard.
It is important to appreciate that Buckton was concerned with beneficiaries' costs. Its guidance is of relevance to the costs of trustees or personal representatives in such cases, but one must be careful to appreciate that it does not detract from the general rule in 46.3 or the guidance in para.1.1 of PD 46. Those reflect the right of indemnity of the trustee or personal representative.
Reflecting this, the role of the trustee in Buckton (1) and (2) cases is dealt with separately in a specific subsection in Lewin. I was referred to the first paragraph of that subsection at [48-035], which explains that generally a trustee should remain neutral in such proceedings:
“…generally the proper role of the trustee is a neutral one as between the beneficiaries or persons who claim to be beneficiaries. Provided that a trustee conducts himself in the proceedings in this way, his right of indemnity in accordance with general principles is secure, though a trustee who takes the side of some beneficiaries against others, thereby acting for a benefit other than that of the trust fund, is at risk of being held to have acted unreasonably and so deprived of his right of indemnity and may be ordered to pay costs of the successful beneficiary under Part 44, rule 44.3(2) of the Civil Procedure Rules. Such a trustee should raise the issue of costs in advance of any directions or disposal hearing, so that the court may consider whether, in the absence of an...
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