Dorothy House & Anor v Anne Elizabeth Helme & Anor

Under section 50 of the Administration of Justice Act 1985, removal of personal representatives depends principally on the welfare and interests of the beneficiaries and the proper administration of the estate. Proof of wrongdoing or loss is unnecessary. Conflicts of interest, serious delay, unreasonable conduct and the practical difficulty of completing the administration may justify replacement. A testator’s choice of executor is relevant but not determinative.

Costs of removal proceedings are ordinarily a hostile beneficiaries’ dispute. A personal representative is not entitled to an indemnity from the estate for costs incurred defending such proceedings on their own behalf. The indemnity may also be lost where costs were improperly incurred through serious unreasonableness, breach of duty or other misconduct. Indemnity costs require conduct or circumstances taking the case out of the norm.

The claimants, two charities, were residuary beneficiaries under the will of Mary Organ. The defendants were her appointed executors and trustees. The claimants sought their removal and replacement by Stone King Trust Corporation, together with costs and an injunction preserving the estate.

An interim injunction was granted by consent. By the disposal hearing, the defendants no longer opposed replacement. The remaining issues concerned the reasons for removal, the basis of the claimants’ costs, and whether the defendants were entitled to an indemnity from the estate for their own costs and the costs payable to the claimants.

1. Removal. The court ordered the defendants’ removal and their replacement by Stone King Trust Corporation. The governing consideration under section 50 of the Administration of Justice Act 1985 was whether replacement was in the beneficiaries’ best interests and necessary for proper administration. No finding of breach, wrongdoing or loss was required.
2. The court found substantial problems in the administration, including prolonged delay, failure to remarket the Farm when the proposed purchasers lacked funds, unauthorised self-dealing in farm machinery, improper charging by the first defendant for non-legal work, and a conflict or potential conflict arising from the same firm acting for the executors and purchasers. The defendants’ conduct created a serious risk that the estate’s interests would not be adequately protected.
3. The testator’s appointment of the defendants and her instruction that the second defendant should make decisions were relevant factors, but did not exempt them from ordinary fiduciary duties or determine the application. Executors must avoid placing themselves in a position where their duties conflict with another interest.
4. The court declined to decide whether the defendants had a general legal duty to notify legatees of their interests. It followed the binding reasoning in Re Lewis that no such duty arose on the facts, while expressing difficulty with the rationale in Cancer Research Campaign v Ernest Brown & Co and noting the contrasting position concerning trustees and beneficiaries.
5. Costs. The claimants were successful and were awarded their costs on the indemnity basis. The defendants’ acceleration of the sale after notice of the injunction application, incomplete and unauthorised evidence, and refusal of earlier offers to retire made their conduct of the proceedings out of the norm.
6. The defendants had no indemnity from the estate for the litigation costs. The proceedings were hostile litigation conducted on their own behalf, rather than on behalf of the estate. Alternatively, their serious delays, breaches of duty and unreasonable conduct amounted to misconduct, so the costs were not properly incurred and any indemnity was lost.