The claimant did not consider that the executors of her mother’s estate would be sufficiently independent regarding the necessary investigations into transactions and documents entered into by her mother as they had been involved in some of them personally. She brought a claim for the executors to be replaced by an independent administrator. The beneficiaries under the will applied to be, and were, joined as defendants to the claim. Up until the date of the hearing of the claim, the executors actively opposed their removal but shortly before the hearing date they dropped their opposition and took a neutral stance. The claim was successful and the deputy master gave a judgment on costs. The costs order divided liability into two periods; the period up to the date of the hearing (“the first period”) and the costs incurred after that date (“the second period”). The deputy master ordered, inter alia, that the executors were not entitled to any indemnity from the estate in respect of their own costs either before or after the hearing date. He also ordered that the executors pay the claimant’s costs for the first period. The executors appealed on the basis that the deputy master had misdirected himself in relation to the correct approach to costs in a number of respects. They claimed that they were entitled to an indemnity from the estate in respect of their costs unless they had acted unreasonably in resisting the claim and that they should only be ordered to pay the costs of the successful claimant if a higher threshold of unreasonable behaviour had been crossed, namely, if their conduct had been wholly indefensible. The executors also claimed that they should have received an indemnity from the estate for their costs of the second period, when their position was that they were neutral as to the outcome of the claim.
On the executors’ appeal—
Held, appeal allowed in part. It was right to say that, if there was a conflict of interest and duty which justified the trustee’s removal, and the trustee unsuccessfully resisted removal, the court might normally be expected to deprive the trustee of his indemnity and order him to pay the costs. The phrase “might normally” was clear that it would, in every case, be a question of whether the trustee had acted unreasonably in resisting his removal. The phrase did not mean more than that. In respect of the costs of the second period, the master erred. If executors unreasonably resisted an application to remove them, but then changed their stance and became neutral as to the outcome of the application, any reasonable costs which were reasonably incurred by them thereafter would generally not be due to their previous unreasonable resistance, but to events occurring after that resistance had been abandoned. If they incurred costs because the claim continued due to a defence mounted by others, rather than because of their own previous defence, they should not be deprived of their indemnity in respect of those costs simply because, in the past, they unreasonably resisted the claim. Accordingly, the executors’ appeal in respect of the costs of the second period was allowed, but otherwise their appeal was dismissed (paras 129, 152, 155).
Elspeth Talbot Rice QC instructed by (Withers llp) for the beneficaries.
Angus Burden (instructed by Higgs & Sons, Brierley Hill) for the executors.
Alexander Learmonth instructed by (Bircham Dyson Bell llp) for the claimant.