Lines v Wilcox & Ors

A Beddoe order should not ordinarily be made where litigation is, in substance, a hostile trust dispute between adult beneficiaries who are able to decide whether to pursue or resist the claim. The personal representative should normally remain neutral and allow the rival beneficiaries to litigate at their own costs. This applies where an estate claim seeks to recover an asset from one or more beneficiaries for the benefit of all. The possibility of a derivative claim by a beneficiary, with the personal representative joined as a nominal party, may provide an alternative route. Positive advice on the merits does not necessarily outweigh the unfairness of exposing the estate, and successful beneficiary defendants, to the costs of litigation. The proportionality of costs is a separate question governed by the ordinary costs and budgeting rules.

The claimant, administrator of the estate of the deceased, sought a Beddoe order authorising and protecting proposed proceedings to set aside a transfer of the deceased’s house to the first and second defendants, who were beneficiaries or connected with beneficiaries of the estate. The proposed claim was based on undue influence; a capacity claim was no longer pursued.

The other beneficiaries were adult and sui juris. The court raised whether the dispute was properly a hostile trust dispute between rival beneficiaries, rather than litigation which the administrator should conduct at the estate’s risk. Written submissions were then filed on that threshold issue. The central question was whether the circumstances justified granting Beddoe relief.

1. Beddoe jurisdiction. A trustee or personal representative will ordinarily be indemnified from the trust or estate for properly incurred costs, but a prospective Beddoe order is made only where the court is satisfied that the indemnity will apply and that the costs will not result from misconduct or unreasonable conduct. The jurisdiction arises under CPR rule 46.3, Practice Direction 46.1 and the relevant authorities.
2. Characterisation of the dispute. Although the proposed claim was formally by the estate against transferees, its substance was a dispute over which beneficiaries should own the house. It was therefore a hostile trust dispute involving rival claimants. The administrator’s proper stance was normally neutrality, allowing the beneficiaries to fight the dispute between themselves at their own risk as to costs.
3. Adult beneficiaries. Following the principle in Re Evans deceased [1986] 1 WLR 101, where all beneficiaries are adult and sui juris and can decide whether the claim should be resisted or pursued, countervailing considerations of substantial weight are required before estate funds should be exposed to the litigation. No such circumstances existed here. The proposed positive merits advice did not outweigh the potential injustice identified by the court.
4. Derivative claim. If the administrator declined to sue, an interested beneficiary could in principle bring a derivative claim on behalf of the estate in special circumstances, joining the administrator as a nominal defendant so that the estate was bound. The administrator would be entitled to an indemnity for proper costs incurred in that neutral capacity.
5. Costs. The court would not refuse relief merely because a proposed costs budget appeared disproportionate if relief were otherwise appropriate. Proportionality and reasonableness were separate issues governed by the costs rules, including CPR Part 3, Section II.

The Beddoe application was refused.