Executor actions – The relevance of taking a neutral position in an Estate

Given current cases that we are working on the case of Lane v Lane is a helpful reminder in the field of advising executors and the cost consequences of actions by executors. There is nothing necessarily ground breaking in terms of the outcome but what the judgment does in my view is pull together the key issues that will be relevant when advising clients surrounding issues of removing or replacing trustees in particular and what cost consequences may come from seeking the court’s direction and assistance on interpretation. Lane -v Lane [2024] EWHC 275 & EWHC 752 (Ch) This case in early 2024 – as stated, it highlights I would suggest the importance of executors taking a neutral position and the position that the court can be expected to take when considering the costs incurred in resolving a Will dispute. Mr Jonathan Hilliard KC sitting as Deputy Judge of the High Court gave Judgment which provides insights for those dealing as personal representatives in an Estate. The case itself dealt with questions concerning both the effect of a Will, an interpretive question put to the Court and the manner of administration of the Estate. Breaking down the issues. Issue 1 – Whether a gift under the Will in question had adeemed (at law this is where the gift is of specific property that the testator owns when they make their Will and the testator disposes of that property during their lifetime, in those circumstances, the gift will fail). Issue 2 – Whether an executrix should be replaced by an independent solicitor. The Judgment on the facts held that the gift had not adeemed and that the executrix should be replaced by an independent solicitor. Essentially the first claim dealing with issues of construction and the second with a removal claim against an executrix. The executrix lost both. The removed executor sought to argue all costs should be paid by the Estate on an indemnity basis for all. Unsurprisingly perhaps the party that succeeded with regards to their views as to ademption and removal argued that the losing party should pay the costs of and occasioned by both claims and that there should be no indemnification for the losing party by the Estate. The court found:

• That in terms of the costs of removal claim the losing party should bear the costs to be assessed on the standard basis and those costs deducted from her share of the Estate and if exhausted then exhausted as an Estate expense. The losing party was not entitled to an indemnification in respect of her costs.
• However, the court held that the cost of the construction claim should be paid out of the Estate on an indemnity basis (the losing party as such being indemnified in part).

In terms of the removal claim, the Judgment provides useful direction as to what steps can be taken and most clearly that it will be wise for a personal representative to seek the direction of the court at an early stage indeed making an offer for the appointment of an independent party clearly will often be prudent. Resisting an application for removal will bring with it considerable risks in terms of costs. In terms of the construction claim, the Judgment usefully directs to the guidance which has long been the clear process but does so in useful summary. That reference being to Re: Buckton [1907] 2 Ch 406 and the relevant part of Lewin on Trusts. Crucially in this case the Court drew reference to the fact whilst generally it is accepted that trustees remain neutral again reference in Lewin it is clear that “ being neutral should not necessarily be equated with being passive …”. The Court drew reference to the fact that in deciding the construction claim there was assistance from both counsels and it was common ground between the parties that there was no previous case that had dealt with whether a gift of a share and interest in a partnership adeemed where the partnership had passed the point of dissolution before a partner’s death. In a nutshell, the point needed determining by the court and as such costs legitimately should be reflected as an Estate cost. Practical considerations: The big “take away” I would suggest is that the decisions and risks of action in this area can be nuanced and identifying objectively the appropriate way to manage those risks requires a calm and methodical approach. If you are faced with difficult decisions in terms of the administration of the Estate either as an interested party of executor please contact us to speak to a member of our Team. Case Link to Judgment: https://www.bailii.org/cgi-bin/format.cgi?doc=/ew/cases/EWHC/Ch/2024/275.html&query=Lane+v+Lane