Green v Astor & Ors

Costs in an application by a personal representative are governed by the CPR and the established principles concerning trustee and estate litigation. The usual indemnity from the estate is not automatic. The court must examine the nature of each issue and the conduct which generated the costs.

Where a beneficiary’s unreasonable conduct causes substantial costs on an application for directions or approval, the court may order that beneficiary to pay those costs rather than burden the estate. A retrospective application seeking to protect the personal representative from possible liability is not necessarily for the benefit of the estate. Costs may be apportioned broadly between issues, and adverse costs orders ordinarily attract the standard, proportionate basis.

The claimant, administrator of the Maitland Estate, applied under CPR Part 64.2(a) for approval or authority concerning three matters: a settlement with a third party, a proposed partition agreement concerning a Swiss estate, and potential claims against other third parties. Most substantive issues were resolved by agreement or case-management directions.

The court authorised entry into the partition agreement, refused retrospective approval of the earlier settlement, and treated the third-party issue as spent after an assignment. The remaining dispute concerned whether the resulting costs should be paid from the estate, by the opposing beneficiary personally, or by the administrator.

1. Applicable principles. The court’s costs discretion was governed by CPR rule 44.2(2)(a), CPR rule 46.3 and paragraph 1.1 of Practice Direction 46. A trustee or personal representative is generally entitled to an indemnity from the relevant fund for costs properly incurred, but that entitlement depends on all the circumstances, including whether the proceedings were brought for the benefit of the estate and whether the representative acted unreasonably.
2. The categories identified in Re Buckton [1907] 2 Ch 406 remain useful guidelines, but are not exhaustive. The court must apply the statutory discretion to achieve fairness and justice. An application which formally resembles an application for directions may in substance be hostile litigation between beneficiaries.
3. The costs of the retrospective Tomlin Order application were not payable by the estate. The court had refused that relief. The application was unsuitable for determining an allegation of fraud and was principally intended to protect the administrator from possible personal liability, rather than to benefit the estate. The administrator was therefore liable for her own costs on that issue and for the opposing beneficiary’s corresponding costs.
4. The costs of the partition-agreement application were payable by the opposing beneficiary. Although a beneficiary has no duty to consent to an administrator’s proposed course and need not be polite, unreasonable conduct which generates substantial costs may justify a personal costs order. The beneficiary’s sustained demands, opposition and litigation conduct had caused the application and materially escalated its costs.
5. The negligible costs concerning potential third-party claims were also payable by that beneficiary, since he accepted an assignment only after proceedings had been issued.
6. Because the orders were adverse costs orders, the costs were to be assessed on the standard rather than indemnity basis, including the requirement of proportionality. Taking a broad-brush approach, 15% of the administrator’s costs was attributed to the unsuccessful Tomlin Order issue. That proportion was disallowed, the beneficiary was ordered to pay 85% of the administrator’s costs, and the parties’ liabilities were set off. Detailed assessment was directed if costs were not agreed.