Heinie Elizabeth Stoney-Andersen v Ghani Abdul Muttalib Abbas & Ors

In estate litigation, the claimant who obtains the substantive relief is ordinarily the successful party, but the court may make a different costs order after considering all the circumstances, including conduct and admissible settlement offers. A party’s failure to respond constructively to a suitable invitation to mediate may justify reducing otherwise recoverable costs, even where that party succeeds.

An executor’s indemnity covers costs properly incurred in administering the estate and may extend to liabilities ordered against the executor. It is lost where the executor’s conduct amounts to misconduct, in the technical sense, even without bad faith. An exoneration clause may protect against personal liability for breach of trust, but does not prevent removal from office or otherwise make the conduct proper.

The claimant brought a Part 8 claim concerning the estate of Vincent William Cashinella. She sought, among other relief, removal of the first defendant as personal representative, orders concerning administration, repayment of money paid to the second defendant, and a declaration as to the division of residue.

The parties largely resolved the substantive issues before the disposal hearing. The claimant obtained a declaration that she was entitled to 66.66% of the residue, with the third and fourth defendants each entitled to 16.67%. The remaining dispute concerned costs, including the effect of the parties’ conduct, repeated offers of mediation and the first defendant’s claimed executor’s indemnity.

1. Disposition. The claimant was the successful party. The second and third defendants were ordered jointly and severally to pay 50% of the claimant’s costs, and the first defendant 35%, jointly and severally with them, all on the standard basis.
2. Under Senior Courts Act 1981, section 51(1), and CPR rule 44.2, the court has a broad discretion. The general rule is that the unsuccessful party pays the successful party’s costs, but the court may make a different order having regard to all the circumstances, including conduct and admissible offers to settle.
3. The repeated invitations to mediate made by the first and second defendants were appropriate. The claimant’s failure to engage with them was unreasonable. Applying PGF II SA v OMFS Company 1 Ltd [2014] 1 WLR 1386 and Thakkar v Patel [2017] EWCA Civ 117, that conduct justified a substantial reduction, but not the complete denial, of the claimant’s costs.
4. Under section 31(1) of the Trustee Act 2000, as applied to personal representatives by section 35(1), and CPR rule 46.3 and PD 46 paragraph 1, an executor is ordinarily indemnified from the estate for costs properly incurred. The indemnity includes liabilities ordered against the executor which are not recovered from another person: Re Raybould [1900] 1 Ch 199 and Bonham v Blake Lapthorne Linnell [2006] EWHC 2513 (Ch).
5. The first defendant lost that indemnity for the removal issue. Continuing to oppose removal until shortly before the hearing was not in the interests of the beneficiaries as a whole and amounted to misconduct for this purpose. Bad faith was unnecessary. His position on the probate issue was neutral, so only nominal costs of that issue were indemnifiable.
6. The will’s exoneration clause did not assist. Such a clause may prevent personal liability for specified breaches, but it does not prevent conduct from supporting removal or otherwise amounting to a wrong for another purpose.