The Thomas and Agnes Carvel Foundation v Carvel & Anor

A beneficiary under the doctrine of mutual wills does not claim under the surviving testator’s will and therefore lacks standing under section 50 of the Administration of Justice Act 1985. The beneficiary may nevertheless apply under section 1 of the Judicial Trustees Act 1896, because the survivor and the survivor’s executor are trustees and the person entitled to enforce the equitable obligation is a beneficiary.

The principal consideration when removing a trustee or personal representative is the proper administration of the trust and the welfare of its beneficiaries. Misconduct need not be proved where continuance in office would prevent proper administration. A non-party whose beneficial interest is directly diminished by an order may apply under CPR Part 40.9 to have it set aside.

The claimant foundation claimed the residuary estate of Agnes Carvel under a reciprocal wills agreement previously upheld by the New York Surrogate’s Court. It sought the replacement of Pamela Carvel as sole personal representative under section 50 of the Administration of Justice Act 1985 or section 1 of the Judicial Trustees Act 1896.

After the New York decision, Pamela had brought English proceedings seeking more than £8 million from the estate. An order for payment was obtained by consent without notice to the claimant. The foundation therefore also applied under CPR Part 40.9 to set that order aside.

The principal issues were whether a beneficiary under mutual wills had standing to seek replacement of the personal representative, whether the foreign decision established the foundation’s beneficial entitlement, whether Pamela should remain in office, and whether the payment order should be set aside.

1. Both applications were granted. Pamela Carvel was removed as personal representative and Mr Guy Greenhous was appointed in her place. The order requiring payment of more than £8 million from the estate was set aside.

2. A person claiming under mutual wills is not beneficially interested under the surviving testator’s will for section 50 of the Administration of Justice Act 1985. The later will remains valid. The equitable trust instead arises from the agreement between the testators when the first testator dies without revoking the agreed will. The foundation therefore lacked standing under section 50.

3. The jurisdiction under section 1 of the Judicial Trustees Act 1896 was not co-extensive with section 50. The survivor and the survivor’s executor were trustees in the ordinary sense, while a person entitled to enforce the mutual-wills trust was a beneficiary. The foundation accordingly had standing under the 1896 Act. Alternatively, the statutory treatment of estate administration as a trust produced the same conclusion.

4. The New York decision created an issue estoppel. It was final, conclusive, on the merits and made by a competent court. It necessarily determined that the foundation was beneficially entitled to the residuary estate. The New York ancillary administrator and Pamela represented the same estate and had sufficient identity of interest. Carvel-Florida, which claimed through Agnes and was closely connected with Pamela, was also a privy.

5. The guiding principle governing removal was the proper execution of the trust and the welfare of the beneficiaries, applying Letterstedt v Broers (1884) 9 App Cas 371. Proof of dishonesty was unnecessary. Pamela had pursued substantial personal claims against the estate without notifying the principal beneficiary, despite an obvious conflict of interest. Her continued insistence that this course was proper demonstrated a failure to understand her responsibilities. Her hostility, partisanship and attempts to enforce the order despite restraining orders made her continuation in office detrimental to proper administration.

6. The foundation was directly affected by the payment order within CPR Part 40.9 because the order diminished the residuary estate. It had received no notice, the claim had not been determined on its merits, and the consent was not demonstrably independent. The discretion was therefore exercised to set the order aside.

This was a first-instance application, but the judgment described earlier proceedings relevant to the relief sought.

• New York appellate proceedings: the Appellate Division of the Supreme Court of New York affirmed the Surrogate’s decree upholding the reciprocal wills agreement and recognising the claimant’s entitlement to the residuary estate.
• Westchester Surrogate’s Court: the court held that the reciprocal wills agreement was valid and enforceable, that the later will breached it, and that the claimant was entitled to receive the residuary estate.
• Chancery Division: earlier orders required more than £8 million to be paid from the estate to Pamela Carvel. The present court set the operative payment order aside.