Schumacher v Clarke

On an application to remove or replace personal representatives or trustees, the court’s central concern is the best interests of the beneficiaries as a whole. The court need not find wrongdoing. A good arguable case concerning an office-holder’s conduct may justify an exercise of the jurisdiction.

Such applications require pragmatic and expeditious determination. A Part 7 claim does not entitle the parties to oral evidence or cross-examination. The court controls the mode of disposal and the appropriate judicial level by reference to fairness, complexity, importance, expedition and the overriding objective.

The value of an estate, media interest or the fame of the deceased or parties does not by itself require trial by a High Court judge.

The claimant and defendants were the four executors of Dame Zaha Hadid’s estate and prospective trustees of will trusts benefiting the claimant, a large class connected with her businesses, and a charitable foundation. The claimant sought the defendants’ removal under section 50 of the Administration of Justice Act 1975 and the court’s inherent jurisdiction. The defendants counterclaimed for his removal.

At the second directions hearing, the disputed questions were whether the claim should be tried by the Chief Master or a High Court judge and whether the witnesses should be available for cross-examination. The claimant proposed a three-day hearing before the Chief Master without cross-examination. The defendants sought a conventional eight-day trial before a High Court judge, relying in part on alleged bad faith, the estate’s value and public interest in the participants.

1. Directions given for a three-day trial before the Chief Master without cross-examination. A party remained entitled to seek permission for limited cross-examination if the witness statements disclosed a sufficient need for it.

2. The central concern under section 50 of the Administration of Justice Act 1975 and the inherent jurisdiction was the best interests of the beneficiaries as a whole. The jurisdiction did not depend upon proof of wrongdoing or an adverse factual finding. A good arguable case concerning an executor’s or trustee’s conduct could suffice where the court had real concerns for the beneficiaries’ welfare. The essential question was whether an office-holder’s continuation in office was detrimental to those interests.

3. The court should determine removal applications pragmatically and promptly. Mere disagreement or dissatisfaction would rarely suffice, since office-holders should not be held hostage to mischievous allegations. Equally, the court could exercise its powers without resolving disputed facts where the response to a good arguable case left real concerns. The process should not become a forum for personal complaints, and unnecessary findings should be avoided where later devastavit or breach of trust proceedings might arise.

4. A section 50 claim was intended to proceed under Part 8 of the Civil Procedure Rules 1998, having regard to Practice Direction 57. A claim under the inherent jurisdiction to remove a trustee appeared to be one arising in the execution of a trust and therefore within rule 64.3. Nevertheless, converting this Part 7 claim would cause unnecessary expense and delay. Commencement under Part 7 did not create an entitlement to a conventional trial or cross-examination. The court retained control of the mode of disposal under the overriding objective.

5. No compelling need for cross-examination was established. The claimant expressly disavowed dishonesty, fraud and bad faith, and any residual good-faith issue was insufficient to dictate the claim’s future course. The court could exercise its jurisdiction without finding a breach of a duty of good faith.

6. The claim was suitable for determination by the Chief Master. It was neither a category A case nor one reserved to a High Court judge. Chancery Masters regularly exercised the relevant jurisdiction and handled estates of greater value. Celebrity, social standing and media interest did not themselves confer an entitlement to trial by senior judiciary. Because the claim was otherwise suitable for a Master, the ability to try it about six months earlier was a powerful consideration favouring that allocation.

This was a first-instance directions judgment. At an earlier hearing on 11 February 2019, the court considered converting the Part 7 claim to Part 8 but retained the existing procedure to avoid unnecessary delay and expense. At the second directions hearing on 5 April 2019, the court determined the future mode and judicial allocation of the trial.