BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
PROPERTY, TRUSTS AND PROBATE LIST (ChD)
Fetter Lane, London, EC4A 1NL |
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B e f o r e :
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NASLOOM ASLAM |
Claimant |
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- and - |
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(1) MARIA SEELEY (2) SONAL MADAN |
Defendants |
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The First Defendant appeared in person
Louis Grandjouan (instructed by Taylor Rose MW) for the Second Defendant
Hearing date: 24 October 2024
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Crown Copyright ©
This judgment will be handed down remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 4:00pm on Friday 10 January 2025
Master Brightwell :
'Our client has been extremely patient and has given the executor considerable time to deal with the administration, in the hope that things would work out without any application by our client to remove her and incur significant cost. Things were ultimately taken out of our client's hands when the Claimant in this matter decided to make a court application to appoint independent administrators. She made the decision not to take any steps to defend the application as, in her view, the appointment of independent administrators is the best way to progress this matter and ensure that the property can finally be sold and the estate distributed.'
The parties' positions
Relevant principles
'19. …. The general proposition in relation to reimbursement of a trustee from the trust fund is now to be found in section 31(1) of the Trustee Act 2000. It provides as follows:
"(1) A trustee—
(a) is entitled to be reimbursed from the trust funds, or
(b) may pay out of the trust funds,
expenses properly incurred by him when acting on behalf of the trust."
Mr Learmonth also took us to the predecessor of section 31(1), section 30(2) of the Trustee Act 1925. That was in a slightly different form. It provided:
"A trustee may reimburse himself or pay or discharge out of the trust premises all expenses incurred in or about the execution of the trusts or powers."
20. In relation to the costs of proceedings in which a trustee is or has been involved, there are specific provisions in the CPR. CPR 46.3 is concerned with the powers of the court to award costs in favour of trustees or personal representatives. It applies where a person is or has been a party to any proceedings in either of those capacities and costs are not payable under a contract to which CPR 44.5 applies. The general rule is that such a person:
"(2) . . . is entitled to be paid the costs of those proceedings, insofar as they are not recovered from or paid by any other person, out of the relevant trust fund or estate."
Those costs will be assessed on the indemnity basis: CPR 46.3(3). The Rule is supplemented by 46PD.1 which provides as follows:
"1.1 A trustee or personal representative is entitled to an indemnity out of the relevant trust fund or estate for costs properly incurred. Whether costs were properly incurred depends on all the circumstances of the case including whether the trustee or personal representative ("the trustee")—
(a) obtained directions from the court before bringing or defending the proceedings;
(b) acted in the interests of the fund or estate or in substance for a benefit other than that of the estate, including the trustee's own; and
(c) acted in some way unreasonably in bringing or defending, or in the conduct of, the proceedings.
1.2 The trustee is not to be taken to have acted for a benefit other than that of the fund by reason only that the trustee has defended a claim in which relief is sought against the trustee personally."
21. The relevant Supreme Court Rules which preceded CPR 44.6 were also in a slightly different form. Order 62, r 6 which was headed "Cases where costs do not follow the event" provided (in its 1994 form, at least) where relevant, as follows:
"Where a person is or has been a party to any proceedings in the capacity of trustee . . . he shall be entitled to the costs of those proceedings, in so far as they are not recovered from or paid by any other person, out of the fund held by him in that capacity . . . and the court may order otherwise only on the ground that he has acted unreasonably or, in the case of a trustee . . . has in substance acted for his own benefit rather than for the benefit of the fund."
22. It was common ground that the source of the right to an indemnity is to be found in section 31(1) of the Trustee Act 2000 and that the provisions of the CPR can only be a commentary upon and complementary to that section. That must be right and must also have been the case in relation to section 30(2) of the 1925 Act and Order 62 r 6 of the Supreme Court Rules. There was some discussion as to whether section 31(1) had changed the law and that the earlier case law should be seen in that light. It seems to me that that was not the effect of section 31(1) of the Trustee Act 2000. On the contrary, it seems to me that it was an attempt to codify the law as it stood.
23. Although many more trustees are remunerated as a result of express provisions in the trust deed than in Victorian times and in the early twentieth century, the policy behind the availability of an indemnity has not changed. It is designed to ensure that the trustee is not out of pocket when acting in his capacity as trustee on behalf of the trust and that the trust is efficiently and properly administered. Nothing has changed. The right to an indemnity is part of the fabric of the relationship between the settlor, the trustees and the beneficiaries: see Turner v Hancock (1882) 20 Ch D 303 per Jessel, MR at 305.'
'17. I cannot deprive executors of their indemnity out of the estate for costs or other expenses or liabilities which they have incurred for the estate unless they have incurred them improperly. This in summary form is the effect of section 31 of the Trustee Act 2000 (applied to executors by section 35) and CPR Part 46 Practice Direction, paragraph 1, acting as an exception to the general rule in CPR rule 46.3. In the caselaw before the CPR and the 2000 Act it was sometimes put (and is still sometimes put) in the form, had the executors or trustees behaved unreasonably, or committed misconduct? But I do not think the variation in words makes any difference in substance.'
'54. Mr Ham responded that a beneficiary has no duty to consent to action proposed by an administrator, or indeed to be polite. That is no doubt correct, but equally, in my judgment, a beneficiary cannot expect to be immune from liability in costs irrespective of his conduct. An order of costs is not to be applied as a sanction for the intemperate and frequently insulting language of Mr Astor's correspondence. But in my view, where unreasonable conduct by a beneficiary is responsible for generating substantial costs on the part of a trustee or personal representative as regards an application to the court, it is appropriate that the burden of those costs should be borne by that beneficiary and not fall on the trust or estate and thus the beneficiaries as a whole.'
'55. Mr Astor evidently lost all confidence in Mrs Green as administrator and wished to be in a position where he had before him all the information available to Mrs Green so that he could, in effect, verify all the steps she took in administration of the estate. I have quoted above relatively short extracts from some of the very many emails which Mr Astor sent to Mrs Green. It is his conduct, alone among the beneficiaries, which has led Mrs Green to seek the approval of the court to the Partition Agreement on which she had favourable advice from a Swiss lawyer, which advice she shared with the beneficiaries, and to which the other beneficiaries consented. Further, I consider that it is the conduct of Mr Astor in the litigation which has done much to escalate the costs until, in the light of the agreement "brokered" by Peter Smith J on 2 May 2013, Mr Astor made clear by his counsel for the first time at the opening of the trial that, subject to the question of the power under Swiss law, he was not opposing Mrs Green's exercise of her discretion in entering into the Partition Agreement.
56. Although in form an application that comes within category (1) of Buckton, I do not think it falls neatly within Kekewich J's tripartite classification. It has far more the character of hostile litigation, in which the other individual beneficiaries support the position of the personal representative, who has faced sustained hostility and opposition from the one beneficiary who has opposed this claim. Having regard to the overall justice of the case, I do not regard this as one where the costs should fall on the estate, and thus be at the expense of all the beneficiaries. The appropriate order, in my judgment, is that the costs referable to the second head of relief should be paid by Mr Astor.'
Discussion
The claimant's costs
The second defendant's costs
Conclusion