Clare Alison Laird (as executor and trustee of the estate of Robert John Simcock) v Catherine Anne Lowder Simcock (as executor, trustee and beneficiary of the estate of Robert John Simcock) & Ors.

In trust and estate litigation, a trustee’s statutory and procedural entitlement to reimbursement depends on whether the expenses were properly incurred when acting on behalf of the trust. Carelessness, negligence or unreasonable conduct may justify curtailing or denying that indemnity, even without dishonesty or a finding warranting removal as trustee.

Where an unopposed claim is necessary because of the trustee’s conduct, the court may assess the relevant facts when making the costs order. The costs jurisdiction remains confined to costs of and incidental to the proceedings. It may include relevant pre-action correspondence, but not non-contentious costs of preparing and executing the defective instrument itself.

The judgment concerned liability for the costs of an unsuccessful, unopposed claim to rectify a deed of appointment relating to an estate trust. The claimant, an executor and trustee, sought an order that there be no order as to costs and that her costs be reimbursed from the estate. The defendants sought their costs from the claimant and opposed her indemnity.

The court had to determine whether the claimant’s conduct in executing and subsequently maintaining the effect of the deed justified depriving her of an indemnity, whether she should pay the defendants’ costs, and which pre-action costs fell within the costs of the claim.

1. Costs liability. The court’s discretion under Senior Courts Act 1981, section 51, and CPR rules 44.2 and 46.3 was subject to the special principles governing trustee and estate litigation. The statutory source of the trustee’s indemnity was section 31(1) of the Trustee Act 2000; the CPR provisions were complementary.

2. The applicable questions were whether the expenses were properly incurred and whether they were incurred when the trustee was acting on behalf of the trust. Those questions depended on all the circumstances. Properly incurred meant not improperly incurred. Misconduct was construed broadly and could include neglect, negligence, carelessness or unreasonable conduct. Dishonesty was unnecessary.

3. The claimant’s lack of knowledge when signing the deed, her subsequent failure for nearly 17 months to acknowledge the drafting problem, the deficiencies in the initial evidence and the inconsistent evidence justified depriving her of her indemnity. The fact that the claim was unopposed did not prevent the court from relying on factual findings made in determining the rectification claim. A separate trial of alleged misconduct was unnecessary.

4. The claimant was ordered to pay the defendants’ costs. The court rejected the submission that the deed was within the trustees’ powers and therefore could not evidence culpable conduct. The claimant had no relevant subjective intention, and the deed itself was not equivalent to a positive finding that its terms represented the trustees’ intention.

5. The costs jurisdiction was confined to costs of and incidental to the claim. Costs of preparing and executing the deed were non-contentious and were not costs of the rectification proceedings, although they might be recoverable in a separate damages claim. Relevant pre-action correspondence concerning the deed could fall within the recoverable costs, subject to assessment; correspondence concerning wider estate disputes and trustee-removal applications did not.