Perotti v Watson & Ors

An appellate court should generally refuse a new point not taken at trial where evidence could have been adduced which might have defeated it. Fresh evidence is admissible only if the conditions in Ladd v Marshall are satisfied. On an application to remove an administrator under section 50(1) of the Administration of Justice Act 1985, the court must consider the interests of the estate and its beneficiaries, including the costs and practical difficulty of replacement. A decision to retain an administrator despite criticism is discretionary and will be disturbed only for an error of principle or if plainly wrong. A personal representative is ordinarily entitled to an indemnity from the estate for properly incurred costs.

The applicant appealed from a 125-page judgment of Mr Justice Rimer in the Chancery Division concerning the administration of the estate of Lorenzo Perotti. The judge rejected claims concerning alleged misappropriation, declined to remove Kenneth Corbett Watson as administrator under section 50(1) of the Administration of Justice Act 1985, and made various costs orders.

The appeal was heard with numerous applications arising from the main action and a second action. The applicant sought to raise a new investment claim, advance a new case concerning an Italian loan, adduce fresh evidence of Italian law, challenge the administrator’s costs and indemnity, and obtain permission to appeal interlocutory and costs orders. The central issues were whether the appellate court could entertain the new matters, whether the judge had properly exercised his discretion, and whether the applications disclosed any appealable error.

Sir Martin Nourse delivered the judgment, with which Lord Justices Kay and Waller agreed.

1. Disposition. The appeal in the main action and all listed and unlisted applications were dismissed. Leave to appeal was refused, with costs summarily assessed at £100,000. The payment into court was to be kept by the respondent.
2. New points and fresh evidence. An appellate court will generally refuse an amendment raising a point not taken at trial where evidence could have been adduced which might have prevented the point succeeding. The proposed investment claim based on Nestle v National Westminster Bank Plc could have required factual and expert evidence at trial, so it could not be introduced on appeal. The proposed case that the Italian loan devolved under the 1976 Italian will was both new and inconsistent with the case advanced at trial. Fresh evidence of Italian law also failed the conditions in Ladd v Marshall, particularly because it could have been obtained with reasonable diligence for use at trial.
3. Removal of administrator. The direction under section 50(1) of the Administration of Justice Act 1985 was legally impeccable. The discretion required consideration of the estate and its beneficiaries as a whole, including beneficiary views, the additional cost of replacement and the difficulty of finding a suitable successor. Criticism of Mr Watson’s administration did not make refusal to remove him plainly wrong. No error of principle was shown.
4. Executor and costs. Sir Martin Nourse expressed the view that an executor who has not proved the will has nothing from which to be removed, although the point was unnecessary because the judge had independently found no justification for removal. The costs award was upheld because the judge had taken the criticisms of the administration into account and his assessment was not plainly wrong. The indemnity from the estate was also upheld: a trustee or personal representative is entitled to indemnification for properly incurred expenses, and denial after a costs order in contested litigation is exceptional.
5. Other matters. The Court of Appeal could not decide questions not determined below, including the effect of a letter, the validity of an alternative distribution and the allocation of capital transfer tax. A late amendment against an absent and unrepresented party was properly disallowed. The tax settlement, the date fixed for remittance of the Italian loan, the freezing order, costs reviews and Grepe v Loam order disclosed no basis for appellate interference.

• Court of Appeal (Civil Division) [2001] EWCA Civ 116: dismissed the main appeal and all listed and unlisted applications arising from the main and second actions. Leave to appeal was refused and costs were summarily assessed at £100,000.
• High Court, Chancery Division: Mr Justice Rimer rejected the substantive claims, declined to remove the administrator under section 50(1) of the Administration of Justice Act 1985, and made the relevant costs and interlocutory orders. The Court of Appeal affirmed the decisions challenged before it.