Analysis
Veronica Edwards (the deceased) died on 2 April 2003, and her will was proved by the claimants (as her executors and trustees) (the trustees) in October 2003. Under the will, the deceased left her residuary estate to the trustees pay the income to her fourth husband (the defendant) for life, and subject thereto, to the First and Second Claimants (who were also her sons by her first marriage) in equal shares. The residuary estate was valued at £521,897.53, and it included a promissory note signed by the defendant to the deceased in the sum of £100,000. This represented the value of a loan made by the deceased to the defendant in respect of works to his property where they both lived. The loan was intended to be repaid following the death of the defendant.
Following the deceased’s death, the Trustees sought security for the loan. None was forthcoming. The defendant subsequently remarried, and transferred the Old Rectory to himself and his new wife jointly. In May 2015, the Trustees demanded repayment of the loan, and threatened to withhold the income otherwise due to him under the trusts of the deceased’s residuary estate. In June 2015, the defendant denied the existence of any liability to the deceased’s estate, and shortly thereafter, the Trustees ceased payments to the defendant. The defendant alleged breach of trust, and asserted that the ‘alleged debt’ was in any event statute-barred and unenforceable. He then issued a claim in the Chancery Division principally seeking payment of outstanding income, and a direction that they pay income to him during his lifetime. The claim was issued under CPR Part 8. The trustees counterclaimed seeking repayment of the loan. They then made an application to the High Court for (i) permission to defendant het claim and to make a counterclaim; and (ii) to be indemnified out of the trust fund in respect of all costs properly incurred by them in connection with the claim and counterclaim.
Held:
[1] The defendant was right to assert that it would be unjust to make a Beddoe order in relation to the third party claim. The part of the litigation claiming that the promissory note was valid and enforceable against the defendant was being carried on for the benefit of the first and second claimants in their capacity as capital beneficiaries. They were adults and sui iuris, and could decide whether they wished to fund and take the risk of that litigation.
[2] It was not necessary to deal with the question of whether the court should make a Beddoe order in favour of the third claimant on the grounds of his conflict of interest arising out of the fact that he advised the deceased and the defendant on their estate planning, and on the promissory note (indeed he had drafted it). However, it was noted that this should not have prevented a Beddoe order’s being made.
[3]There was no scope of making a protective costs order in circumstances where the Court did not consider that it could tell whether any of the Trustees’ costs should come out of the trust fund (because it had refused a Beddoe order).
JUDGMENT MASTER MATTHEWS: Introduction [1] This is an application by claim form under CPR Part 8 issued on 25 July 2016 for an order that the claimants as trustees of the will of Veronica Ann Edwards deceased (i) have permission to continue to defend a claim brought against them by the defendant to this claim, Neale Edwards, …Continue reading "Pettigrew v Edwards [2017] EWHC 8 (Ch)"