After validity challenges and 1975 Act claims, disputes concerning the conduct of executors are perhaps the most commonplace of probate disputes. From cases of difficult, slow, uncooperative or hostile executors through to the downright dishonest, the issue frequently arise as to whether the current personal representatives should continue to administer the estate or, alternatively, should be removed and replaced.
In many instances, removal may not be the best course of action. For example, it may be that the estate has been substantially administered and that the costs of appointing an alternative, usually professional personal representative, are likely to be high or, alternatively, it may be the case that an impasse in the administration of the estate can be resolved by some lesser action, such as making an application to the court for directions.
Removal is therefore reserved for the more serious cases.
Once a grant of probate has been obtained, the court has jurisdiction to remove an executor, pursuant to section 50(1) Administration of Justice Act 1985 (“the AJA”), which provides:
“Where an application relating to the estate of a deceased person is made to the High Court under this subsection by or on behalf of a personal representative of the deceased or a beneficiary of the estate, the court may in its discretion— .
- appoint a person (in this section called a substituted personal representative) to act as personal representative of the deceased in place of the existing personal representative or representatives of the deceased or any of them; or
- if there are two or more existing personal representatives of the deceased, terminate the appointment of one or more, but not all, of those persons.”
The statute itself provides no guidance as to the test to be applied by the court when exercising its discretion. There is a considerable body of case law on the issue. Nonetheless, given the very fact specific nature of these sorts of disputes, the outcome of an application can be difficult to predict in all but the most clear cut of cases involving dishonest conduct on the part of executors.
We have had two very helpful decisions this year, both from Chief Master Marsh, which provide detailed guidance both as to the test to be applied on removal applications and also as to the procedure to be followed: Long v Rodman and others  EWHC 753 (Ch) and Schumacher v Clarke  EWHC 1031 (Ch).
Long v Rodman and others  EWHC 753 (Ch)
This was an application by the daughters of the deceased, Mr Norman Rodman, for the removal of the administrator of their father’s estate. The administrator, Mr Long, had obtained the grant in his capacity as the Court of Protection appointed deputy appointed to manage the property and financial affairs of Mrs Rodman.
In this case it was common ground that most of the steps that needed to be taken in the administration of the estate had been completed, or a way forward had been agreed in relation to the matters outstanding. However, it was also the case that there had been a complete breakdown in the relationship between Mr Long and the daughters. Rather than taking a neutral stance, perhaps welcoming the opportunity to be replaced, Mr Long had firmly resisted the application and, in particular, placed focus on his case that the sisters were not suitable appointees to administer the estate in his place. The allegations against Mr Long focused on his handling of taxation matters, and a connected claim for devastavit, and in respect of the administration fees that he sought to charge (amounting to well over £6 million).
Chief Master Marsh held that he should be removed from office, noting:
It is not the role of the court on hearing an application under section 50 necessarily to make findings of wrongdoing. It is clear however, that where the beneficiaries are able to make out complaints that warrant further investigation, the continued tenure of the administrator becomes untenable unless the complaints are trivial. It seems to me that the issues in the letter from Macfarlanes meet that threshold requirement. They are certainly not trivial complaints and they place Mr Long in a position in which he has conflicts of interest that make it inappropriate for him to remain in office.
He did not, however, consider that the sisters themselves were suitable appointees. Amongst other matters, there was evidence that one of them had made misrepresentations in relation to the deceased’s place of residence and the valuation of his estate, in attempting to obtain a grant in Switzerland, and Chief Master Marsh considered that they had not been frank with Mr Long or the court. Accordingly, an independent professional executor was appointed.
The following principles of general application can be distilled from the judgment:
- The discretion under section 50 is to be exercised in a pragmatic way. The court should consider whether or not the circumstances are such that the discretion is engaged, whether or not an order should be made and if so what order is appropriate. It should only rarely be necessary for there to be a trial as it is not normally necessary to make findings in relation to disputed issues of fact.
- It is unnecessary for the court to find wrongdoing or fault on the part of the personal representatives. The guiding principle is whether the administration of the estate is being carried out properly. Put another way, when looking at the welfare of the beneficiaries, is it in their best interests to replace one or more of the personal representatives?
- If there is wrongdoing or fault and it is material such as to endanger the estate, the court is very likely to exercise its powers under section 50. If, however, there may be some proper criticism of the personal representatives, but it is minor and will not affect the administration of the estate or its assets, it may well not be necessary to exercise the power.
- The wishes of the testator, as reflected in the will, concerning the identity of the personal representatives is a factor to take into account.
- The wishes of the beneficiaries may also be relevant.
- The court needs to consider whether, in the absence of significant wrongdoing or fault, it has become impossible or difficult for the personal representatives to complete the administration of the estate or administer the will trusts. The court must review what has been done to administer the estate and what remains to be done. A breakdown of the relationship between some or all of the beneficiaries and the personal representatives will not without more justify their replacement. If, however, the breakdown of relations makes the task of the personal representatives difficult or impossible, replacement may be the only option.
- The additional cost of replacing some or all of the personal representatives, particularly where it is proposed to appoint professional persons, is a material consideration. The size of estate and the scope and cost of the work which will be needed will have to be considered.
- Where the personal representative is, or may be, in a position of conflict because of intimated claims against him, which need to be investigated, this is a material consideration in the exercise of the Court’s discretion. Conflict does not have to be established to merit removal; an outward appearance of or potential for conflict can result in removal.
- The approach put forward by Deputy Master Linwood in In re Folkes  EWHC 2559 (Ch) at  for dealing with allegations made against the personal representative was approved:
“It seems to me that the appropriate test to be applied to each allegation is whether there appears to be on the evidence before the court, or with such evidence that appears likely to be obtained at proportionate cost, the basis for a claim which has reasonable prospects of success, subject to consideration of potential defences. Such a claim must enhance the value of the estate relative to the costs of pursuing it. Evidence for a claim or a defence before the court is unlikely to be determinative but must not be speculative or dependent upon matters which may or may not happen. Further, the whole may be more than the sum of the parts in that individual claims may be borderline but together they may persuade the court that investigation is necessary. Then the question of the replacement of the Executors must be considered in the context of their position as far as knowledge and possible conflicts of interest are concerned.”
- The core guide to the exercise of the court’s discretion derives from the judgment of Lord Blackburn in Letterstedt v Broers (1884) 9 App Cas 371, as applied to applications under section 50 by Lewison J in Thomas and Agnes Carvel Foundation v Carvel  Ch 395. It is the welfare of the beneficiaries.
The costs decision is also available and is worth considering: Long v Rodman & Ors  EWHC 2451 (Ch). No order for costs was made between the parties in respect of the s.50 application, neither party having been wholly successful and there being grounds for criticising conduct on all sides. Mr Long was further deprived of his entitlement to an indemnity from the estate.
Schumacher v Clarke  EWHC 1031 (Ch)
Very unusually, this is a judgment arising from a directions hearing in a s.50 application concerning the estate of Dame Zaha Hadid. I confess that I had not previously heard of her, but she was an architect of very considerable repute and someone with a public profile. This was relevant to the issues as it was suggested that Dame Zaha’s celebrity was a matter that warranted trial by a High Court judge rather than trial by a master. I am sure that submission was tactfully handled, but I cannot help but wince slightly at the prospect of advancing that submission and it did not find favour with Chief Master Marsh, who considered that the case was entirely suitable for trial by a Master, commenting as follows:
- […] The question I have to determine can, I think, be deconstructed, because this is not a category A case; it is not a case of the greatest substance or great difficulty or of public importance. It is not a case which warrants only a trial by a High Court Judge. It is, of course, important to the parties and to the beneficiaries, but I am satisfied that it is not a category A case.
- Further to that, the determination about the level of judiciary who should try the case is not quite as simple as simply suggesting it should be a High Court Judge or a Master. In reality, the overwhelming likelihood if this case is referred by me for trial by a High Court Judge is that it will be heard by a Deputy High Court Judge. The jurisdiction that the court is called to exercise in this case is one which, in London, if not the preserve of the Chancery Masters, is exercised by the Chancery Masters in the vast majority of cases. It is an area in which the Chancery Masters have a considerable degree of experience. On the basis that the claim will proceed as a three day hearing without cross-examination, I can see no compelling reason why the claim should be referred to a High Court Judge for trial. The estate is not especially large. It is common for the Chancery Masters to deal with many estates and trusts which are of greater value than this estate, and it is not right to suggest that the case involves particularly complex issues.
- It is suggested that because Dame Zaha was a well-known public figure and the parties have high profiles, particularly in the art world, trial by a more senior judge than me is appropriate. I can see that may be a factor pointing in favour of trial by a more senior member of the judiciary in some cases. It is, however, important to focus on the issues the court will have to determine. And the notion that fame or celebrity of itself brings with it an entitlement to trial by the senior judiciary is not one that I recognise.
The judgment also contains helpful observations on both the approach to s.50 applications and as to procedure. Chief Master Marsh summarises the nature of the jurisdiction as follows:
(i) The claim is between the executors and trustees and the beneficiaries, but it is only in part about them. It is primarily about the estate, or the trusts, seen separately from the persons who are its custodians and the beneficiaries. As I have said, the claim is not an ordinary in personam claim.
(ii) An application under s.50, or under the inherent jurisdiction invariably in the course of the administration of the estate or the trusts, and delay can be damaging. It would be wrong to characterise the procedure under s.50 or under the inherent jurisdiction as a summary one, but it needs to lead to a resolution as quickly as possible. Similarly, an application under s.116 of the Senior Courts Act 1981 made before a grant has been obtained needs to be resolved quickly.
(iii) The administration of an estate or a trust can often lead to tension and indeed feelings often run high. It is essential for the court to avoid as far as possible providing a forum for the parties merely to vent their complaints about each other. The core issue is whether the continuation in office of one or more of the parties is detrimental to the interests of the beneficiaries.
(iv) Often the application to remove an executor or administrator or a trustee is a precursor to a devastavit claim, or a claim for breach of trust. It is very important that when dealing with such an application, as in the claim before me, the court does not make findings of fact which, in another context, may be of influence.
The claimant had issued the proceedings by Part 7, instead of Part 8 and a defence filed which ran to some 36 pages. Chief Master Marsh was deprecating of this approach and emphasised that s.50 applications should proceed as Part 8 claims:
The procedure in this claim, as I have indicated, was by the claimant issuing a Part 7 claim. This was of some concern to me when the claim was referred to me at an early stage. CPR 57.13 does not say that a claim under s.50 of the Administration of Justice Act 1975 must be brought as a Part 8 claim, but this is clearly, to my mind, what is intended by Practice Direction 57, para.13, which requires the claim form to be accompanied by written evidence containing the grounds of the claim as well as other specified particulars. It seems very likely that a claim made under the inherent jurisdiction to remove a trustee is a claim to determine a question arising in the administration of an estate of a deceased person or the execution of a trust. If that is right, as it seems to me it is, CPR 64.3 requires the claim to be brought under Part 8. This appears to be the view taken by the current editors of the White Book, and it is suggested by them as correct in the notes at CPR 8.0.1.
It is notable, however, that CPR 57.13 contrasts with CPR 57.16. The latter deals with Inheritance Act claims where the requirement to bring a Part 8 claim is an express requirement. This is a point, I suggest, the Civil Procedure Rules Committee may wish to consider. It is a point which has real practical significance in a number of ways. It is important as to normal approach to the disposal of the claim and it is important in light of the differences between the way in which statements of case and witness statements are treated for the purposes of CPR 5.4C(1)(a). The former are open to inspection as of right; the latter are not. No doubt the draftsman of CPR 64.3 had in mind this difference and it would be surprising if it was intended to treat s.50 claims in a different way to a claim under the inherent jurisdiction concerning a trust.
Note also that the mode of trial will usually be submissions based upon the written evidence, without cross-examination.
As to the mode of trial, it hardly needs to be emphasised that it is for the court to control the way in which claims are disposed of, whether at a trial or a more limited hearing. It is not open to the parties to demand a full trial, or to demand a certain number of days for a trial. The allocation of the court’s resources is a matter for the court to determine. Similarly, it is for the court to allocate the appropriate level of judiciary to the claim. When dealing with such issues, the court firmly has in mind the provisions of the overriding objective. These include, of course, the importance of the case and its complexity. They also include, however, the desirability of expedition and the need for fairness.
It is, for the reasons I have already explained, exceptional for a s.50 application, or an application under inherent jurisdiction, to necessitate a full trial. I do not consider that a compelling case has been made out here making a full trial with cross-examination necessary. It is unfortunate that Mr Schumacher commenced this claim using the Part 7 procedure. I am not able to say that he was, by doing so, certainly in breach of the Civil Procedure Rules, but I consider that it was neither wise nor desirable. The use of the Part 7 procedure in relation to a s.50 application, or an application under the inherent jurisdiction, does not inevitably lead to a trial with cross-examination of the witnesses. It is for the court to decide what is appropriate. […].
[…] The powers of the court can be exercised based on many different circumstances, and it is unnecessary for the court to find wrongdoing. It is significant that this claim does not include a claim in devastavit or breach of trust. At the end of the day the issue for the court is whether the claim can be tried fairly and as a s.50 claim or under the inherent jurisdiction on the basis of the authorities to which I have referred. I am satisfied that a fair trial can take place without the witnesses being cross-examined.
Key learning points for practitioners: s.50 applications
- s.50 applications should always be initiated by Part 8 and it should be expected that they will be dealt with by way of a disposal hearing before a Master in which submissions are made on the written evidence, rather than by way of a full trial with cross-examination of the witnesses.
- The approach that will be taken by the court is pragmatic and it will not normally be necessary for the court to make factual findings about the allegations made by the beneficiaries.
- The approach to allegations made against the personal representative is essentially to apply the test for summary judgment – do the allegations have a reasonable prospect of success on the evidence that is available, or that may become available? However, the court should consider whether or not the allegations would enhance the value of the estate and whether or not they require investigation.
- Where there is significant wrongdoing, such as to endanger the estate, personal representatives are very likely to be removed.
- In cases of less clear cut wrongdoing, the court will need to consider whether or not it has become difficult or impossible for the personal representative to administer the estate.
- The core question is whether or not removal is required for the welfare of the beneficiaries.