Deputy master “wrong to deny executors costs indemnity from estate” – High Court

A deputy master was wrong to deny executors indemnity from the estate for the costs of a challenge which led to their removal.

Stephen Jourdan QC, sitting as a High Court judge, said they should not be penalised for the period after they dropped their unreasonable opposition to removal.

Griffin v Higgs and Ors [2018] EWHC 2498 (Ch) concerned an application by one of the beneficiaries of a multi-million-pound will to remove the executors, who were two solicitors at Staffordshire firm Higgs and Sons and an accountant.

She wanted an investigation into a number of transactions carried out before her mother’s death in favour of one of her brothers and argued that the executors were not sufficiently independent because they had been involved in some of them.

The executors had actively opposed their removal, but shortly ahead of the hearing before Deputy Master Linwood, they dropped their opposition to the application and thereafter took a neutral stance.

The deputy master granted the application after a three-day hearing. On costs, he ordered that the brother and his three children, along with the executors, were jointly and severally liable to pay the applicant’s costs up to the point where the executors changed position.

He ordered that the brother and his children were jointly and severally liable to pay both the applicant and executors’ costs thereafter (called the ‘second period’ in the ruling), and that the executors were not entitled to any indemnity from the estate in respect of their own costs either before or after their change of position.

Mr Jourdan QC dismissed all the appeals against the costs orders except over whether the executors’ costs for the second period should be paid out of the estate.

Among the deputy master’s reasons for his order was that it would not be just, in general, for executors to contest removal and then realise their own true position, adopt a neutral stance and expect the estate to pay the costs of same. It did not change the cause of or reason for removal, he said.

Mr Jourdan QC said: “I respectfully disagree with the principle stated by the deputy master. If executors unreasonably resist an application to remove them, but then change their stance and become neutral as to the outcome of the application, any reasonable costs which are reasonably incurred by them thereafter will generally not be due to their previous unreasonable resistance, but to events occurring after that resistance has been abandoned.

“If they do incur costs after that which are attributable to their previous unreasonable defence of the claim, e.g. amending an existing pleading, then they ought to pay those costs. In the present case, it has not been suggested that there are any such costs. But if they incur costs because the claim continues due to a defence mounted by others, rather than because of their own previous defence, I do not see that they should be deprived of their indemnity in respect of those costs simply because, in the past, they unreasonably resisted the claim.”

As to the point that the executors’ change of position did not change the reason for their removal, the judge said the deputy master did not make any finding that the executors had committed any breach of duty either before or after the testator’s death.

“He held that they were closely involved in some of the events that he considered ought to be investigated, and would have a personal interest in the outcome of such an investigation which would preclude them from making an objective enquiry.

“This is not a case where the costs of the claim can be attributed to a prior breach of duty by the executors. Therefore I do not think the deputy master was entitled to deprive them of their indemnity in respect of costs reasonably incurred by them, reasonable in amount, incurred during a period when they acted reasonably.

“I consider the right order in respect of the second period is that the executors are entitled to be paid the costs of those proceedings, insofar as they are not recovered from or paid by [the brother or his children], out of the estate, assessed on the indemnity basis.”

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Costs News
Published date
17 Oct 2018

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