Laura Lillian Key v Richard Duncan Key

Replacement of personal representatives under section 50 turns on the beneficiaries’ interests as a whole. The court need not find wrongdoing. It must make a pragmatic and balanced assessment of the administration, the testator’s and beneficiaries’ wishes, the effect of conflict on completion, and the cost and proportionality of replacement. Relationship breakdown alone is insufficient, but entrenched conflict leaving no realistic prospect of effective cooperation may justify an independent administrator. Directions on discrete issues will not be proportionate where they cannot cure fundamental distrust and would generate further applications. A beneficiary’s purchase of estate property need not always follow an open-market sale. A properly supported valuation may suffice. Occupation rent requires broad equitable justice, taking account of market rent, estate benefit and proper property expenses.

This first-instance Part 8 claim concerned the estate of Grace Baillie Key. Her adult children, Laura and Richard, were joint executors and the only beneficiaries under the Will.

Laura sought the appointment of an independent administrator because of the parties’ longstanding conflict and mistrust. Richard sought to remain as executor and asked the court to give directions on disputed administration matters. The court was also asked to address the proper sale price of the principal property, occupation rent and any credit for benefits or expenses.

The central issue was whether there was a realistic prospect that the parties could cooperate to complete the administration, or whether replacement was in the beneficiaries’ overall interests.

Disposition. Cripps Trust Corporation Limited was appointed as independent administrator of the estate. The remaining issues did not arise because Laura and Richard were no longer to remain in post, although the court expressed views on them as guidance for the administrator.

1. The discretion to replace personal representatives under section 50 is guided by the beneficiaries’ interests as a whole and is exercised pragmatically. Wrongdoing is unnecessary. The court must consider the effect of any fault, the parties’ wishes, the practical ability to complete the administration and the cost of replacement. The principles summarised in Harris v Earwicker [2015] EWHC 1915 (Ch), the core concern identified in Schumacher v Clarke [2019] EWHC 1031 (Ch), the working test in National Westminster Bank plc v Lucas [2014] EWHC 653 (Ch) and the pragmatic approach in Long v Rodman [2019] EWHC 753 (Ch) were applied.
2. Although there had been some cooperation, the history showed entrenched conflict and mistrust, with fault on both sides. There was no realistic prospect of the parties cooperating to complete the administration. Determining individual issues by directions would not cure the underlying distrust and would likely lead to further court applications. Appointment of an experienced professional administrator was therefore proportionate and in the beneficiaries’ overall interests.
3. Under Civil Procedure Rules 1998, CPR 8.3(2) entitled Richard, without permission, to seek a different remedy arising from matters relied on by Laura. CPR 8.7 was not inconsistent with that conclusion because a counterclaim requires a separate cause of action.
4. Obiter, an open-market sale with vacant possession was not invariably required for a beneficiary’s purchase of estate property. A properly obtained valuation from a qualified valuer instructed on an expert-witness basis could support an off-market sale. The valuation itself should reflect the open-market vacant-possession price. Brown v Brown [2019] EWHC 138 (Ch) did not establish that an executor or beneficiary must pay the upper end of a valuation range.
5. Obiter, occupation rent required broad equitable justice between co-owners. The administrator could consider market rent and the benefit to the estate from occupation, and could deduct a fair amount from the occupying beneficiary’s residuary share without formally charging rent. Proper property expenses were creditable, but expenses referable to personal occupation were not. The court also referred to Ali v Khatib [2022] EWCA Civ 481, [2022] 4 WLR 50.