Estate - Representor seeks the assistance of the Court in the administration of the estate.
Before : |
J. A. Clyde-Smith, Esq., and Jurats Blampied and Pitman. |
Between |
Mark Geoffrey Pugsley |
Representor |
And |
Jonathan Scott |
Respondent |
IN THE MATTER OF THE REPRESENTATION OF MARK GEOFFREY PUGSLEY
AND IN THE MATTER OF IN THE MATTER OF THE MOVABLE ESTATE OF THE LATE KAREN LOUISE SCOTT (FORMERLY DAVEY)
Advocate E. B. Drummond.
Mr Jonathan Scott appeared in person
judgment
the commissioner:
1. The representor seeks the assistance of the Court in the administration of the estate of the late Karen Louise Scott (formerly Davey) ("the deceased").
2. The deceased died on 5th October, 2017, aged 43. She had been living with the representor since 2009 but never married. The deceased was survived by the representor, her mother, step-father and her two brothers, Ian Scott who lives in Australia and the respondent, Jonathan Scott, who lives in Jersey. The deceased did not make a will, and therefore died intestate.
3. The real estate of the deceased comprised the property known as Mille Fleurs, Rue des Landes, St Peter, which she owned jointly with the representor for the survivor and the ownership of that property has devolved, therefore, upon the representor by survivorship, as have the contents which he says were jointly owned.
4. Having no descendants and not being married, her heirs at law on intestacy to her personal estate (which we will refer to as "the estate") are her two brothers. They renounced their right to administer the estate and the representor said he was best placed to carry out that role, having all of the deceased's paperwork and with the knowledge he had of her financial affairs, having helped her during her illness.
5. Letters of Administration were issued to the representor on 3rd January, 2018, the representor swearing the usual oath "to administer according to law all the personal estate of the said deceased, and to exhibit in the Probate Division of the Royal Court a true and perfect inventory of the said personal estate and to render a just and true account thereof whenever required by law so to do."
6. In March 2018 the representor started communicating over the estate with the respondent and Ian Scott through Facebook Messenger and relations between the representor and the respondent deteriorated rapidly thereafter, to such an extent that in August 2018, the representor instructed Bedell Cristin to advise on the administration of the estate, and to deal with the respondent's assertions and queries.
7. On 22nd August, 2018, Bedell Cristin wrote to the respondent and Ian Scott, saying that the administration of the estate had been completed and enclosing the estate accounts dated 16th August 2018, detailing all transactions in the administration.
8. Those accounts showed receipts of a pension in the sum of £104,728.86 and a Co-op dividend in the sum of £42.17p and expenses of £15,597.04p (including the administration fees of Bedell Cristin) resulting in a net estate of £89,173.99p divisible between the respondent and Ian Scott. Bedell Cristin also enclosed a "Form of Receipt, Discharge, Indemnity and Payment Instruction" ("the Form") for both to sign. The covering letter said this was a legal document upon which they may wish to obtain separate and independent legal advice before signing it. Ian Scott signed the Form on 18th September, 2018, and therefore there are no issues between the representor and him over the administration of the estate. He has received an interim distribution of £20,000. The respondent has refused to sign the Form.
9. On 4th October, 2018, the respondent sent a communication to the representor by e-mail via Bedell Cristin, in which he alleged "demonstrable breach of trust" on the part of the representor, as a consequence of which he said he needed to see and verify everything. The costs incurred by the representor were, he said, disproportionate due to the representor's "self-interest and misconduct" and would be contested. He also raised the representor's "claimed outright ownership of Mille Fleurs" which he asked to be substantiated.
10. Bedell Cristin responded on 9th October, 2018, having taken instructions, saying they had advised the representor that there was no evidence of the breaches of trust and misconduct alleged, which were unfounded and should be withdrawn. In the interests of transparency, however, they attached copies of some 30 pages of documents, to enable the respondent to verify the items listed in the estate accounts and enclosed a copy of the relevant contract confirming ownership of Mille Fleurs. They recommended that the respondent should seek legal advice on these matters.
11. On 1st November, 2018, Bedell Cristin e-mailed the respondent explaining that Mille Fleurs did not form part of the estate, but had passed by way of survivorship to the representor. Further e-mail exchanges took place and on 4th January, 2019, after a year and a day had expired from the date of the issue of the letters of administration, Bedell Cristin wrote to the respondent and Ian Scott, enclosing updated estate accounts, updated to take account of the increase in legal fees, so that the net amount distributable was now reduced to £86,564.74p. A further Form was enclosed, which again was signed by Ian Scott, but not by the respondent. Bedell Cristin gave notice that if he failed to complete the Form, an application would be made to the Court, which would cost between £5,000 and £15,000.
12. The representation was brought on 23rd January, 2019, and the respondent was convened to a hearing which took place on Friday, 8th March, 2019. At the hearing, the respondent made it clear that he had no trust in the representor at all and did not accept that the estate accounts were true. He wanted the representor removed as administrator and an independent professional appointed in his place, although he did not nominate a professional prepared to take on that role. There was no one else in the family who could be put forward. He accepted that the cost of a professional administrator could more than exhaust the modest sums available for distribution, but such was the depth of his feeling that this was of no concern to him.
13. The respondent produced copies of the Facebook Messenger exchanges, which track the rapid breakdown in his relationship with the representor, exchanges which did include threatening language on the part of the representor, which the representor regretted.
14. Without going into the detail of those exchanges, we can see that having obtained letters of administration, the representor wished to give effect to what he perceived to be the last wishes of the deceased, namely that her mother should receive £50,000 and her jewellery, with the balance going to the representor. That would entail the estate being gifted by the respondent and Ian Scott for that purpose.
15. Ian Scott was not in any financial position to make such a gift, which the representor respected, but the respondent was concerned almost from the outset that the representor had not been truthful to him about the assets of the estate. He wanted to know what the representor had excluded from the estate. A particular issue for him was that the representor had allegedly told him that there was no pension within the estate, something the representor denies, and that when it was received the representor paid it into his personal bank account. The representor accepted that the pension was initially paid into his personal bank account, as he said he was unaware of his duty to keep the estate money separate from his own. He says he became aware of this on 13th September, 2018, and within a week of that date, created a separate designated estate bank account, into which the funds were transferred.
16. The respondent has provided the Court with the notes he used for his address to the Court but in the interest of proportionality we cannot set out all of his criticisms and concerns. The underlying theme is that he has a complete lack of trust in anything the representor has said or done in relation to the estate, and he just will not accept the truth of the estate accounts. It would seem that there is nothing that the representor can do or say that will enable the respondent to change his position.
17. One of the allegations he made was that the representor had been guilty of intermeddling in the estate before letters of administration were issued to him. Article 23 of the Probate (Jersey) Law 1998 ("the Probate Law") provides as follows:-
"23 Penalty for intermeddling
(1) Subject to paragraph (2), if any person, other than a person acting in accordance with Article 19(3) or any other enactment, takes possession of or in any way administers any part of the movable estate of a deceased person without obtaining a grant, the person shall be guilty of an offence and liable to a fine or to imprisonment for a term not exceeding 12 months or to both.
(2) No person shall be guilty of an offence by reason only of the fact that the person has made arrangements for disposing of the body of the deceased person in any manner authorised by law or custom or from placing in safe custody or otherwise preserving the movable estate of the deceased."
18. From the papers supplied with the representation, it seems clear that the pension was released to the representor on 1st March, 2018, and her bank accounts closed on 8th March, 2018, both well after the grant of the letters of administration. There is a statement from the Co-op issued to the deceased dated 14th November, 2017, showing a dividend due of £42.17p and a receipt dated 18th May, 2018, when that account was closed, which does not appear to bear the signature of the representor. The respondent referred to debts of the deceased which the representor had discharged out of his personal funds prior to the letters of administration being granted, but we do not think the discharge of a debt of the deceased person could constitute intermeddling. In any event, we are dealing here with an alleged criminal offence, and if the respondent wishes to pursue the point, he will need to refer it to the Attorney General, so that the complaint can be investigated.
19. By his representation, the representor sought the following orders from the Court:-
(i) The Court approve the estate accounts dated 4th January, 2019, and declare that they are a true and perfect account of the estate and no further query may be made in respect to the same;
(ii) Order that the respondent provide his payment instruction to Bedell Cristin, lawyers for the representor, within 7 days;
(iii) Subject to (vi) below, authorise the representor to pay the sum held in the estate for the respondent to the account specified by him in accordance with (ii) above;
(iv) Subject to (vi) below, if the respondent failed to comply with order (ii) above, authorise the representor to pay the sum held in the estate for him into Court instead;
(v) Declare that payment by the representor in accordance with (iii) or (iv) above shall operate as a full discharge and release of the representor's obligations and duties as administrator of the estate towards the respondent;
(vi) Authorise the Representor to deduct from the sum held in the estate for the respondent the representor's costs of and incidental to this representation.
20. In discussion, Advocate Drummond accepted that in relation to prayer (i), it was not for the Court to declare that the estate accounts were true and perfect. In accordance with his oath, it is for the representor to exhibit before the Court a true and perfect inventory and a just and true account.
21. There were two matters which Advocate Drummond said required a further amendment to the estate accounts submitted on the 4th January, 2018. Firstly, they make no mention of the jewellery owned by the deceased, which the representor had valued at £1,125. It does seem that it was the intention that this jewellery should go to the deceased's mother, and during the hearing the respondent helpfully gave his consent for that to be done. Following the hearing Ian Scott also gave his consent. Nevertheless, it should still be listed as an asset within the estate accounts. The respondent also referred to a mobile telephone, which had belonged to the deceased and which he said had a value. Advocate Drummond was not in a position to respond to this. Secondly, the deceased owned a 2002 Mercedes car, which was not in running condition and which had been valued at £500. Again, that needs to go in the estate accounts as an asset. Following the hearing Ian Scott has agreed to the respondent receiving full ownership of this car.
22. There is no precedent for payment of estate monies into Court, so that the administrator can obtain a receipt and discharge, but we accept that the Court has jurisdiction to allow such a payment. Article 2 of the Probate Law provides as follows:-
"2 Jurisdiction of the Court
(1) The Court shall have all jurisdiction in relation to probates and administrations as it had immediately before this Law came into force, that is to say, jurisdiction -
(a) ...
(b) to hear and determine all questions relating to a testamentary cause or matter."
23. In K Jaiswal and Nine Others v A Jaiswal [2007] JLR 305 the Court of Appeal confirmed that the words "relating to" were words of the widest dimension. An inability to obtain a receipt and discharge from a beneficiary is a question that relates to a testamentary cause or matter.
24. It would seem that under English law, a personal representative obtains an effective discharge from his office by being given a valid receipt from the proper recipient of the interest in question. Advocate Drummond referred the Court to Executors, Administrators and Probate 18th edition by Williams, Mortimer and Sunnucks at paragraph 75 - 14:-
"75-14 A representative is entitled to a receipt on payment, but only in exceptional circumstances to a release by deed. To obtain an effective discharge he is, therefore, concerned to obtain a valid receipt from the proper recipient of the legacy or interest in question. The receipt of residuary legatees will normally be given by signing the residuary accounts."
25. He also referred us to Practical Law UK Practice Notes "Protection for personal representatives" which provides at note 6-592-5465 (2018):-
"Discharge
On distributing the estate to its beneficiaries, a PR will want to ensure that they obtain good discharge.
PRs are entitled to a receipt when they pay out a legacy (Re Roberts [1869] 38 LJ Ch 708). When they distribute the residue, they should ask the residuary beneficiaries to settle the accounts by signing them (Chadwick v Heatley (1845) 2 Coll 137; 63 ER 671).
Release
A PR does not normally have a right to require a beneficiary to sign a formal deed of release (King v Mullins (1852) 1 Drew 308; Tiger v Barclays Bank (1951) 2 KB 556). This is unless there are exceptional circumstances, such as an agreed variation in the distribution of the estate."
26. Reference is also made in this work to the situation where a personal representative cannot get a good discharge for a payment to a beneficiary:-
Payment of sums into court
Sometimes PRs may find that they cannot get good discharge for a payment to a beneficiary. Section 63 of the TA 1925 permits PRs (or the majority of them) to apply to pay sums into court. On receipt or certificate by the proper offices, the PRs are validly discharged.
Section 63 of the TA 1925 should only be relied on where there is no other way to deal with the money and get a valid discharge. If the court takes the view that the payment in should not have been requested, there is a danger that the PR will, at best, not be permitted to take costs out of the fund or, at worst, be ordered to pay costs. It is often better to ask the court for directions that (when followed) will give the PR protection (see Court guidance under CPR 64). However, the situation may arise where the only directions the court could give would be to order payment in. In those circumstances, PRs should make an application directly to pay sums into court. ...
It is still appropriate to use this mechanism where a beneficiary is known and believed to have capacity but is refusing to accept payment for unknown reasons. ..."
27. We do not have the statutory equivalent to section 63 of the Trustee Act 1925, but under Jersey law a personal representative is just as entitled to a receipt and effective discharge from the beneficiary and if that cannot be obtained by a receipt or in any other way, then the personal representative should be permitted to pay the sums into Court, thus obtaining a receipt and effective discharge from the Court.
28. This brings us to the Form which Bedell Cristin required the respondent to sign, and which as far as relevant is in the following terms:-
"FORM OF DISCHARGE AND PAYMENT INSTRUCTION
FOR THE ESTATE OF THE LATE KAREN LOUISE SCOTT
I, JONATHAN TINDALL SCOTT of An Clar La Route de Beaumont St Peter JE3 7BQ being an heir of the movable estate of the above named deceased ("the Movable Estate") hereby confirm that
1. I acknowledge receipt of the Estate Account of the Administrator Mark Geoffrey Pugsley in respect of the Movable Estate dated 4 January 2019;
2. I confirm that I am fully satisfied and shall raise no queries in relation to the contents of the said Accounts and I discharge the said administrator Mark Geoffrey Pugsley from any further liability in respect of the same;
3. I accept the sum of £43,282.37 (less any bank transfer charges) (the "Sum") by way of full and final satisfaction of all my claims and interest in the Movable Estate;
4. I hereby covenant that I will for myself, my heirs, executors, administrators and estate at all times hereafter keep and hold indemnified the said Mark Geoffrey Pugsley against all actions, proceedings, losses, claims, demands, expenses and costs in respect or arising out of the said Movable Estate;
5. I undertake to make any necessary filings or reportings in any tax returns which I may be obliged to file;
6. I hereby instruct the said administrator Mark Geoffrey Pugsley to make payment of the Sum to my bank account detailed hereunder ...."
29. There can be no objection to paragraph 1, in that it constitutes an acknowledgement that the respondent has received the estate accounts, or to paragraph 6.
30. We do not regard paragraphs 2 and 3 as reasonable. This would effectively require the respondent to have conducted an audit of the administration of the estate and to have satisfied himself that every asset has been properly accounted for and all liabilities properly discharged. That obligation has been placed in law on the representor and the respondent is entitled to rely on the representor having complied with his duties and obligations under law and pursuant to his oath. We can see no justification for the respondent giving the representor the covenant and indemnity contained in paragraph 4 or indeed to give the undertaking in paragraph 5.
31. Advocate Drummond said this was the standard form used by his firm's estate department, but he was not in a position to address us on the justification for paragraphs 2 to 5. We have therefore heard no argument on the matter. For the purposes of this case, it suffices to say that:-
(i) The representor is under a duty to produce a true and perfect inventory of the estate and a just and true account of its administration;
(ii) Having done so, the representor is entitled to a receipt for the monies shown as distributable to the respondent, which receipt will act as an effective discharge; and
(iii) That a receipt is normally given by the respondent signing the estate accounts, but he cannot be forced to sign them or to make good his complaints by issuing proceedings against the representor.
32. We decline to remove the representor as administrator and to appoint a professional person in his place for the following reasons:-
(i) We are not in a position to find that the representor has acted improperly in any way. Ian Scott is clearly satisfied with his conduct of the estate.
(ii) No professional administrator had been put forward by the respondent, but if one had been put forward and appointed, it would delay the making of any further distributions until such time as that professional administrator had completed his or her task and filed his or her estate accounts.
(iii) The costs of that professional administrator would be payable out of the modest sums left in the estate, with the potential for those sums to be exhausted in their entirety and this to the prejudice of Ian Scott.
(iv) The appointment of a professional administrator is not sought by Ian Scott and such an appointment would be prejudicial to his interests in having the balance of his share paid to him without any further deduction or delay.
(v) The estate accounts have been prepared by Bedell Cristin, who have been advising on the administration of the estate since August, 2018, so that the estate has received professional oversight from at least that time.
33. In discussion the respondent helpfully agreed that the balance of Ian Scott's half share of the estate could be paid to him without delay and without deduction in relation to the costs of this application, which he accepted that out of fairness, if ordered, should come out of his half of the estate. He had now agreed that the jewellery should go to his mother and his brother has said that he can have the car.
34. This is a modest estate in which an impasse has been reached between the representor and the respondent which is preventing the representor from finalising its administration. We wish to give directions, therefore, that might enable its administration to be finalised at minimal further cost. We therefore propose to make the following orders:-
(i) That the representor will exhibit in the Probate and Protection Division of the Court a true and perfect inventory of the personal estate of the deceased and render a just and true account thereof ("the estate accounts") and provide a copy of the same to the respondent.
(ii) We authorise the representor to request the respondent to sign and return a copy of the estate accounts and to sign a payment instruction for the sums shown by the estate accounts as payable to him. If the respondent at least gives the payment instruction then, once the payment is made in accordance with that instruction that alone will constitute a valid receipt and discharge.
(iii) If the respondent fails to provide the payment instruction within 30 days of receipt of the estate accounts, then we authorise the representor to pay the sums shown as distributable to him in the estate accounts into Court, the receipt of which by the Court shall act as a valid discharge.
(iv) To the extent that the representor remains in possession of the jewellery and the car, he will deliver the jewellery to the mother of the deceased and transfer the car to the respondent, authorising him to collect and take it away.
(v) We authorise the representor to distribute to Ian Scott the sums shown in the estate accounts as being distributable to him without deduction in relation to the costs of this application.
35. We should clarify for the benefit of the respondent that his receipt of the share shown as due to him under the estate accounts to be exhibited by the representor provides a discharge for the representor on the basis that the estate accounts are indeed a true and perfect inventory and that the representor has indeed rendered a just and true account of his administration of the estate. It does not prevent the respondent from subsequently pursuing a claim against the representor that the estate accounts are not in fact a true a perfect inventory and\or that the representor has not in fact rendered a just and true account of his administration of the estate, but the onus would be on the respondent to make good such claims which would be pursued at his own risk as to costs.
36. Advocate Drummond could not confirm the precise costs of the application, but informed the Court that they amounted to perhaps around £10,000. That is not, of course, the sum that his firm would necessarily bill the representor and we are sure that his firm's final account will be proportionate to the sums involved. He seeks an order that those costs should be paid out of the respondent's half share of the estate, and the respondent accepts that if there are any costs to be awarded, they should come out of his share. It is entirely fair to Ian Scott that this should be so.
37. We considered whether the representor should accept some element of blame for the terms of the Form which the respondent was required to sign, much of which we consider (without so finding) to be unreasonable, but it is clear that this was sent on the advice of Bedell Cristin on whose advice he relied and the respondent would have refused to sign it whatever its terms.
38. To the extent that we decline to give the representor his legal costs, he will stand to be personally liable for the balance due to Bedell Cristin out of his own funds, and it is well established that a personal representative, like a trustee, should not be expected to do any of the work at his own expense. He is entitled to be indemnified out of the estate for costs and expenses properly incurred in the course of his office (see Re Grimthorpe [1958] 1 Ch 615 at 623). It can be an onerous task taking on the duties of an administrator of an estate and it is important, therefore, for persons contemplating taking on such a role that their entitlement to an indemnity out of the estate, assuming they act properly, can be relied upon.
39. It is not appropriate for this Court to attribute blame for the breakdown in the relationship between the representor and the respondent, but the fact of the matter is that there was a complete breakdown and it was proper, therefore, for the representor to appoint Bedell Cristin to deal with the respondent and to finalise the estate. From that point, he has acted in accordance with their advice. Furthermore, in the light of the correspondence between Bedell Cristin and the respondent, we find it was proper for the representor to bring this application as advised by Bedell Cristin, so that the estate can be finalised.
40. As we have found that the representor has made this application properly, it would be wrong to deprive him of his right to be indemnified out of the estate. The costs should be borne out of the respondent's half share of the estate, on the trustee indemnity basis, and we so order.
Authorities
Probate (Jersey) Law 1998.
K Jaiswal and Nine Others v A Jaiswal [2007] JLR 305.
Court to Executors, Administrators and Probate 18th edition by Williams, Mortimer and Sunnucks.
Practical Law UK Practice Notes.
Trustee Act 1925
Re Grimthorpe [1958] 1 Ch 615 at 623.