England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		21 November 2002

Mr Justice Lloyd:

1. This judgment is given on an application by the Claimant, Coutts & Co, as the executor of the estate of the late Miss Prunella Clough-Taylor, for directions whether to take proceedings in relation to a particular chattel. If the chattel was an asset of the estate, it is given by the will to the First Defendant, so that the benefit of its recovery would go to her, whereas residue is given in equal shares to the other Defendants. The case involves a consideration of the incidence of costs in relation to an asset which is the subject of a specific legacy and of the duties of an executor as regards such an asset.
2. The hearing took place, and judgment was given, in private. Publication of the full judgment is not permitted. This is a version of the judgment edited for publication, so that the decision on the point of law can be made known, while retaining privacy for matters which ought to remain confidential. The matters of fact which need to be stated for this purpose are reduced to a minimum, and no reference is made to any submissions other than those arising on the point of law.
3. Miss Clough-Taylor left all but a few of her personal chattels to the First Defendant beneficially, with the request (not imposing any trust or binding obligation) that she distribute them in accordance with any wishes made known to her during her lifetime or found in writing at her death. After pecuniary legacies and a devise of her house, she left her residue to be divided into seven equal shares to be given to charities or for charitable purposes. The Second to Eighth Defendants are entitled to these seven shares of residue.
4. Among the chattels which would be included in the gift to the First Defendant there is one, which I will call the Chattel, which was in her house at her death, but has since been removed by a person who asserts that she gave it to him during her lifetime. He has since sold it to a third party. The First Defendant says that the executor is under a duty to collect the Chattel and get it in as part of the estate, and should take proceedings to recover it. The residuary beneficiaries argue to the contrary, that the executor should not take any such proceedings unless it were indemnified against the cost by the First Defendant, and that the executor's proper course of action is to assent in favour of the First Defendant in respect of the Chattel, and if necessary assign to her any cause of action, and leave her to take proceedings if she wishes. In the light of this conflict of views, the executor decided to apply to the court for directions, surrendering any relevant discretion to the court. The Chattel is not needed for any purpose of the administration of the estate.
5. Mr Dumont, appearing for six of the residuary beneficiaries, in submissions which, like those of Mr Arkush for the specific legatee, were admirably clear and economical, argued that as a matter of law the specific legatee must bear the costs of getting this asset in (or trying to do so, whether or not successfully).
6. The principle that a specific legatee bears costs incurred in connection with the subject of the gift has been established in relation to a number of kinds of expenditure. Taking only a selection of the cases, costs of packing, transport and insurance are covered in Re Fitzpatrick [1952] Ch 86, costs of upkeep, care and preservation in Re Pearce [1909] 1 Ch 819, and Re Rooke [1933] Ch 930, and foreign duties payable in Re Scott [1915] 1 Ch 592. No case has considered the costs of litigation incurred when seeking to recover the asset from a third party, still less those incurred when attempting to do so unsuccessfully. However, these cases do shed light on the question of principle. Re Pearce concerned costs including the expense of maintaining and keeping in good order the furniture and effects in the testator's house and his horses and carriages by retaining a large part of his domestic staff, the furniture, effects, horses and carriages having been left specifically to his widow, and having been the subject of assents at various times. Eve J held that because the effect of the assent related back to the death, and the legatee became entitled to any accrued profits as from the death, so she had to bear the costs of upkeep, care and preservation of the relevant assets as from the death.
7. In Re Scott the testator had left valuable tapestries in his house in Paris, which were bequeathed specifically to a legatee (Victoria Sackville-West) but which under French law were subject to a mutation duty payable by the legatee, and a penalty if not so paid within 8 months after the death (as it was not). The case was argued both on the terms of the will (which gave the legacy "free of legacy duty", held to mean only English duty and not French) and on the basis that it was the executors' duty to deliver the asset to the legatee in England, which they could only do by paying the French duty. The Court of Appeal rejected that proposition, and said that the first duty of the executor in relation to a specific legacy is to decide whether or not he assents to it. If he does, then it is for the legatee to do what he wishes or needs to do: see Lord Cozens-Hardy MR at 606-7 and Phillimore LJ at 609-610. The latter says that executors would not be chargeable (that is to say by the residuary legatees) for having gone to the expense of packing up a picture or some valuable chattel and sent it to the legatee in England, but that they are under no duty to bring a chattel to the testator's domicile or to bring it from foreign parts to deliver it to the legatee. Of course, there the concern was not about packing costs (though they might have been substantial) but about the French duty, but the clear implication from the judgment is that, while no one would or could object to executors bearing moderate and reasonable expenses of packing and transport in relation to a specific legacy, it is not their duty to incur anything out of the ordinary, and expense of that sort must be borne by the specific legatee. He concludes:

"If the argument is worth anything it would involve this, that whenever chattels specifically bequeathed are locally situated in some foreign country and there is a duty of any sort payable on these chattels by reason of the death of the testator, it falls to the executors to redeem these chattels, to ransom them, as it were, from the foreign country and bring them away and deliver them safely to the legatee. By this time if there were any such duty upon executors there would have been authority for it, and I decline to hold that there is any such duty."

8. Re Fitzpatrick concerned bequests by a deceased who had lived in Monte Carlo and left chattels there specifically, with residue going to another person. The executor went to Monte Carlo, took possession of the items and arranged for them to be shipped back to England, at a cost, including insurance in transit, of some £1,000. Harman J held, following Re Scott, that this expense had to be borne by the specific legatee, not by residue. He observed that an executor may need to take possession of assets situated abroad for the estate generally if they may be needed to pay debts and expenses, but said that if they are not so needed, then the executor need do no more than assent in respect of them in favour of the legatee.
9. Mr Arkush seeks to distinguish those cases by saying that they are all concerned with expenses arising naturally from the nature of the asset or from its geographical location at the time of the death and that of the legatee to whom they are bequeathed. He contrasts the present case where the expense arises from events after the death and in particular action by a third party adverse to the estate. He submits that it is the executor's duty to get in this asset, under section 25 of the Administration of Estates Act 1925, and that accordingly any expense incurred is part of the administration expenses and properly to be borne by residue. He further submits that it is not open to the executor in the present case to assent in respect of the Chattel, because it is not in the possession of anyone who admits to holding it on behalf of the estate.
10. Section 25 of the 1925 Act provides that the personal representative of a deceased person

"shall be under a duty (a) to collect and get in the real and personal estate of the deceased and administer it according to law."

11. This text was new in 1971, introduced by section 9 of the Administration of Estates Act 1971. As originally enacted the section dealt only with the duty to provide an inventory and account of the real and personal estate of the deceased, now covered by section 25(b). Mr Arkush submitted that the terms of section 25(a) mean that it is the executor's duty to get in all assets, even those specifically bequeathed and not needed for purposes of administration, and that therefore the costs of doing so are administration expenses which must be incurred and discharged before residue is ascertained. If that were right the section would have overruled Re Scott and the other cases cited above. The generality of the terms of section 25(a), and in particular the words "according to law", suggest that the new provision was not intended to change the existing law in any respect. Reference to the Law Commission's Report on Administration Bonds etc., on which section 9 of the 1971 Act was based, confirms that the intention was to restate the existing duties of personal representatives in general terms, not to change them: see Law Commission Report 31, 1970, Cmnd. 4497, in particular at page 17. I therefore do not accept that the section has changed the duty of an executor in these circumstances.
12. As for the proposition that the executors cannot assent in respect of the Chattel, I can see no basis for it. An assent is no more than an acknowledgement by the personal representative that a particular asset is not required for the payment of debts, expenses or general pecuniary legacies: Kemp v. IRC [1905] 1 KB 581. Of course there are particular types of asset in respect of which something other than an assent is required to vest them in a legatee, for example shares in a company registered under the Companies Acts. But as a general proposition there is no basis for saying that if a chattel which is the subject of a specific legacy is an asset of the estate, there are circumstances in which it cannot be vested in the legatee by an assent.
13. Accordingly, it seems to me that Mr Dumont's submission based on the judgment of the Court of Appeal in Re Scott, followed by Harman J in Re Fitzpatrick, is correct. On the basis that the Chattel was, or may have been, an asset of the estate at the date of Miss Clough-Taylor's death, and given that it is not required for payment of debts or expenses or for any other purpose of the administration, it is open to the executor to vest it in the First Defendant by assent. That is what the executor ought to do. It is no part of the executor's duty in those circumstances to take any other than normal or routine steps to collect the asset and see that it is delivered to the legatee. Of course it may be that, in the particular circumstances, if the legatee did wish to take proceedings to recover the Chattel, it would be helpful, even if not strictly necessary, for the executor to assign to the legatee any cause of action it may have arising from the events as regards the Chattel since the death. It would be proper for the executor to offer the legatee such an assignment in order to assist her title. But the fact that this may be desirable, or even necessary, and that the legatee cannot be forced to accept an assignment, does not mean that the executor can be required by the legatee to do anything else, unless it be done at her expense. I do not suggest that it was not a proper course of the executor to investigate the position as regards the Chattel, but, having got to the present position, I think it right for the executor to draw a line and not to take further steps other than to assent and, if called for, to execute an assignment of the cause of action. In this way, the specific legatee would bear the cost, and the risk of failure, of any steps taken to recover the asset as the corollary of obtaining the benefit of such recovery if it were successful.
14. Accordingly, I hold that the executor ought not to take proceedings for the recovery of the Chattel, but ought at most to offer to assent in favour of the First Defendant and to execute an assignment of any relevant cause of action in her favour.