Karen Lane v Susan Dorothy Lane & Ors

A personal representative’s costs are recoverable from an estate where they were properly incurred in proceedings brought to obtain directions on construction or administration. In such cases, neutrality does not invariably require passivity: the personal representative may need to advance the opposing argument to assist the court. The claim remains within Re Buckton category (1) or (2) where its substance is administration for the benefit of the estate, even though beneficiaries have personal interests.

Different principles apply to removal proceedings. A personal representative removed for conduct who unsuccessfully resists removal will normally bear personally both their own costs and the claimant’s costs, and cannot rely on an indemnity from the estate.

The judgment concerned costs following the court’s earlier decision, [2024] EWHC 275 (Ch), that a testamentary gift had not adeemed and that Susan Lane should be replaced as personal representative.

Karen Lane sought her costs of both claims from Susan personally. Susan argued that all costs should be paid from the estate on the indemnity basis. The court had to classify the construction claim, decide whether Susan’s costs of defending it were properly incurred, and determine the consequences of her unsuccessful resistance to removal.

1. Construction claim. The claim fell within Re Buckton category (2). It was brought by a beneficiary but raised the same kind of issue as an application by the personal representative for directions, and resolution was in the interests of the estate. The existence of a personal interest did not alone convert it into hostile category (3) litigation.
2. Under CPR r.46.3 and para.1.1 of PD 46, the question was whether Susan’s costs were properly incurred. The principles in Re Buckton did not displace the general indemnity available to a personal representative. In a category (1) or (2) claim, neutrality need not mean passivity. Where necessary, the personal representative may put forward the contrary argument, particularly where other beneficiaries will not do so.
3. Susan’s costs of advancing the opposing construction and ademption argument were properly incurred. The issue was untested, required determination in the estate’s interests, and the court would have wished to hear both sides. Her failure to describe herself expressly as neutral, and her failure to respond earlier to the claimant’s detailed analysis, did not cause unnecessary costs or amount to unreasonable conduct within PD 46 para.1.1.
4. An application for directions before arguing one side of a category (1) or (2) claim may be sensible in a high-value or divided-beneficiary case, but is not required routinely. Whether it is appropriate depends on the circumstances, including the value of the estate and whether the beneficiaries agree on the proper role of the personal representative.
5. Removal claim. Susan had been removed because of serious concerns about the administration of the estate and had unsuccessfully maintained until judgment that she was the appropriate administrator. Her defence costs were therefore not properly incurred. A personal representative removed on grounds of conduct who resists the claim until judgment will normally bear personally both their own costs and the claimant’s costs. The use of written evidence does not alter that principle.
6. Karen’s costs of the removal claim were payable by Susan, with any unpaid balance deducted from Susan’s share and, if necessary, treated as an expense of the estate. Susan was not entitled to indemnify herself from the estate. The construction claim costs were payable from the estate on the indemnity basis. All costs were subject to detailed assessment if not agreed, and Susan was ordered to make an interim payment of £25,000 within 28 days.

First-instance costs judgment following the court’s substantive judgment in the same proceedings, reported at [2024] EWHC 275 (Ch).