Karen Lane v Susan Dorothy Lane & Ors

A specific testamentary gift does not adeem merely because a partnership has been dissolved. Where the gifted subject matter is a partner’s “share and interest”, that expression may include the economic rights realised through winding up. Those rights continue until the partner has been paid out, unless the will shows a different intention. A change in form at dissolution is insufficient where the substance of the economic rights remains the same.

Under Administration of Justice Act 1985, s.50, the central question in replacing a personal representative is the interests of the beneficiaries as a whole. Misconduct is unnecessary, although friction alone is insufficient. The court may remove an executor where the relationship difficulties materially impede, or are likely to impede, proper and prompt administration.

The claimant, as personal representative of David Lane’s estate, disputed the administration of Monica Lane’s estate by Susan Lane, Monica’s surviving daughter and executrix. Monica’s will gave David her share and interest in a farming partnership with him. The partnership agreement provided for dissolution on permanent incapacity.

The claimant sought a declaration that the gift had not adeemed, even assuming Monica became permanently incapacitated before death. She also sought Susan’s replacement as executrix by an independent solicitor under s.50 of the Administration of Justice Act 1985. The removal claim proceeded on written evidence, with disputed facts generally left unresolved. The issues were whether dissolution had caused ademption and whether the interests of the beneficiaries as a whole required replacement of the executrix.

1. Construction and ademption. The construction of a will follows the same general principles as contractual interpretation. The court first identifies the subject matter of the gift and then asks whether that subject matter ceased to exist as the testator’s property or fundamentally changed in nature.
2. A partner’s “share and interest” describes a bundle of rights, including the economic right to receive the surplus produced by realisation of partnership assets and payment of liabilities. Dissolution does not extinguish that right. It crystallises it and initiates winding up. Under ss.38 and 43 of the Partnership Act 1890, the continuing partners conduct the winding up and the amount due becomes a debt, but the departing partner retains rights to an account and to proper completion of the process.
3. The will was construed as giving David the value of Monica’s economic rights in the partnership, including what would be received on winding up. Monica had not been paid out when she died. The gift therefore remained effective. Any change caused by dissolution was not substantial or fundamental, since the core right to receive the winding-up proceeds remained. The fallback argument concerning a replacement partnership did not require determination.
4. Removal. The touchstone under s.50 of the Administration of Justice Act 1985 is the interests of the beneficiaries as a whole. Misconduct endangering estate property need not be established. Hostility or friction alone is insufficient, but the court must assess its effect on administration. Removal will usually follow where administration has become impossible or difficult for the existing representative.
5. The administration had been unsatisfactory. Important directions had not been sought, correspondence and relief issues had not been adequately addressed, no current estate account had been provided, and further disputes were foreseeable. Cumulatively, the past deficiencies, continuing friction and need for neutral professional decision-making justified replacement. Susan was removed and an independent professional administrator was to be appointed, with ancillary matters to be addressed by agreement.

The judgment was a first-instance decision on a Part 8 removal claim and a related construction claim. The proceedings had initially been listed before Deputy Master Arkush, who directed a two-day hearing before a High Court Judge. There was no appeal from an earlier judgment identified in the supplied text.