John Osborne & Anor v Michael Osborne

Removal of a personal representative under section 50 of the Administration of Justice Act 1985 does not require proof of wrongdoing or breach of duty. The question is whether the estate is being administered properly and whether removal is in the interests of the beneficiaries as a whole.

A conflict of interest does not automatically justify removal, particularly where the testator created or accepted the conflict. Removal may nevertheless be appropriate where the conflict is pervasive, substantial claims against the personal representative have reasonable prospects of success, pursuing them is proportionate, and the conflict prevents proper administration or makes completion of the estate impossible.

The claimants and defendant were co-executors and residuary beneficiaries of their father’s estate. The estate had remained largely unadministered for more than ten years. The claimants sought disclosure and removal of the defendant under section 50 of the Administration of Justice Act 1985.

The dispute concerned the defendant’s dealings with the deceased’s partnership interest, shares in Brander Rimmer Investments Ltd, and property in France. The court considered whether those dealings gave rise to conflicts of interest and duty, whether the estate had realistically arguable and proportionate claims against the defendant, and whether the estate could be completed without his removal.

1. Disposition. The defendant was removed as an executor without conditions. Consequential matters were reserved.
2. Under section 50 of the Administration of Justice Act 1985, the court applies principles similar to those governing removal of trustees. Proof of wrongdoing or fault is unnecessary. The overriding question is whether the estate is being administered properly and whether removal is in the best interests of the beneficiaries as a whole.
3. The court adopted the approach in Harris v Earwicker [2015] EWHC 1915 (Ch) and Re Folkes [2017] EWHC 2559 (Ch). In assessing potential claims, the court asks whether the evidence, or evidence likely to be obtained at proportionate cost, provides a basis for claims with reasonable prospects of success, subject to possible defences, and whether pursuing the claims would enhance the estate relative to the costs. Borderline claims may cumulatively justify investigation.
4. The dispute over the Letter of Wishes created an actual conflict between the defendant’s personal interests and his duties as executor. The estate had realistic and potentially substantial claims concerning the partnership interest, the French property and the company shares. The unresolved evidence did not prevent removal because the defendant could preserve and advance any defences in later proceedings, including arguments based on Strong v Bird (1874) LR 18 Eq 315 or estoppel.
5. The defendant’s attempted acquisition of the French property and his failure to market it gave rise to conflicts and potential claims. His transfer of the company shares engaged the strict self-dealing rule. The transfer was potentially voidable, alternatively the estate could adopt it and require an account of profits.
6. The deceased’s death dissolved the partnership, subject to contrary agreement. The estate was entitled to seek a dissolution account and payment of any sum due. The defendant’s failure to wind up the partnership, together with unexplained adjustments to the accounts and his conflicting position as surviving partner, made the claim proportionate and materially strengthened the case for removal.
7. Delay alone and a breakdown in relations would not have justified removal. In combination with the pervasive conflicts, failure to take legal or independent accounting advice, prolonged inactivity and the resulting inability to complete the administration, they justified the order.