Analysis
By his will dated 8 March 2016 (the will) Patrick Conlon (the testator) appointed the claimant, who was his niece, and her sister as executrices and divided his net residuary estate equally between the claimant and his three sons, the defendants. Probate of the will was granted on 19 October 2018 in respect to a net estate of about £516,000. The claimant’s sister was removed as an executrix by an order dated 26 October 2020. The first defendant, who had previously been in business with his father, claimed to be beneficially entitled to one half of 168 Headstone Drive, Harrow and the whole freehold reversion to 84 Canning Road, Harrow (the properties), which were registered in the testator’s sole name. The first defendant issued a claim against the claimant in her capacity as executrix, without joining in the other beneficiaries, on 26 February 2021. The claimant applied for Beddoe relief, an indemnity in respect to the costs of the claim, on 13 April 2021.
Held (granting the relief sought):
The application for Beddoe relief was appropriate in circumstances where personal representatives could be held personally liable for the costs if either they unsuccessfully brought or defended proceedings for the benefit of the estate against third parties and were deemed to have acted unreasonably in doing so or, conversely, for having failed to pursue a good claim or defend a bad claim for or against the estate. Where, however, all the beneficiaries were ascertained, competent and capable of deciding whether or not to pursue or defend a claim and were agreed as to the course they wanted a personal representative to take, then protection was completely assured and there was no need or justification for seeking the directions of the court.
Ordinarily, where the dispute was between rival claimants to a beneficial interest in the subject matter of a trust, the duty of the trustee was to remain neutral and to offer to submit to the directions of the court. The position was different where, as in this case, the claimant chose to sue only the trustee; the beneficiaries could not defend because they were not parties and, if the trustee did not defend the claim, then the claimant might win by default and, in the absence of evidence that there was no reasonable prospect of success in defending the claim, the trustee would be at risk of a claim from the beneficiaries. The first defendant had brought his claim as a third party seeking to establish a beneficial interest in the properties. If he were not a beneficiary of the estate, then the application of the principles would be straightforward and the executrix would be entitled to an order indemnifying her from the estate against the costs if the court were satisfied that it was reasonable and proper to defend the claim, having regard to the merits and other relevant factors. However, in this case, the first defendant was a beneficiary of the estate and the costs of an unsuccessful defence of his claim would be paid as to one quarter from his share of the residuary estate.
On the merits of the claim, it could not be said that there was no real prospect of success merely because the constructive trust pleaded relied on the existence of an oral agreement and it was not possible on the basis of the written evidence to form a clear view as to the likely outcome. The claimant had acted reasonably in defending the claim to date because neither she in her personal capacity nor the other beneficiaries were parties and, if she had not defended the claim and it succeeded by default, she would have been open to a claim for breach of duty. Neutrality on the part of an executor does not require acquiescing in the claim. She ought therefore to be indemnified for her costs to date by the estate. It followed that, unless and until the beneficiaries were joined in as defendants, the claimant was acting reasonably by continuing to defend the claim. The first defendant’s undertaking to join in the beneficiaries was not an answer because any joinder application required the consent (which might be declined) of the court. There was an obvious risk of injustice to the claimant if she were not relieved from personal liability for costs though there was also a risk of injustice, albeit lesser, to the first defendant if he succeeded in his claim. In those circumstances, the order that most appropriately managed the risk of injustice was one which provided for the claimant in her capacity as executrix to be indemnified in respect of all costs of the claim, insofar as they are not recovered from or paid by any other party.
JUDGMENT MASTER CLARK: [1] This is an application seeking Beddoe relief, made by Part 8 claim form dated 13 April 2021. [2] The claimant, Maria Clyne, is the sole executor of the estate of her uncle, Patrick Conlon, who died on 4 June 2018, leaving a will dated 8 March 2016 (‘the Will’). Probate of …Continue reading "Clyne v Conlon & ors [2021] WTLR 1231"