Summary

At the request of an executor of an estate, a court sanctioned a scheme which aimed to facilitate the resolution of personal injury claims against the estate in a speedy and inexpensive manner.

Facts

he applicant executor (N) applied for the court's approval of a scheme to facilitate the resolution of personal injury claims against the estate of a deceased (S) and for the ratification of expenses incurred in the execution of S's will and the administration of his estate. The first and second respondent trustees of a charitable trust (T), which was the residual beneficiary of S's estate, sought N's removal as executor and the appointment of a professional executor.

A year after the death of S, who had been a television presenter, allegations that he had been a serial child abuser and sex offender were broadcast on television, as a result of which a large number of people came forward claiming personal injury on the basis that S had abused them (the PI claimants). Many of the PI claimants had also indicated that they had claims against third parties with whom S had been associated. Although the claims were as yet unsubstantiated, there was a serious possibility that they would exhaust trust funds leaving the individual beneficiaries and T with nothing. In order to resolve those personal injury claims in a speedy and inexpensive manner N had agreed a scheme with the PI claimants and the third parties and sought its approval as a suitable mechanism for dealing with claims that had been, and which might be, brought. The time period within which notice of any potential claim could be received was 12 months from the date of the scheme's advertisement, after which the estate would be wound up and any beneficiaries' entitlements would be distributed. The issues were whether (i) the scheme ought to be sanctioned; (ii) N should be replaced as executor; (iii) legal expenses N incurred in relation to the ordinary course of the administration of the estate, and legal expenses involved in dealing with personal injury claims, should be validated under the Insolvency Act 1986 s.284.

Held

(1) It was just and appropriate to approve and sanction N entering and operating the scheme. N had been entitled to negotiate the scheme with the PI claimants and third party defendants, and it was lawful and appropriate for N to enter and operate the scheme with a view to securing fair scrutiny of the personal injury claims being brought forward and their settlement to the greatest extent possible. Notice of the scheme to be given by advertisement would be long enough to give a fair opportunity to all who thought they had a claim against the estate, but who had not yet come forward, to do so. It was also likely that, after the scheme was brought into operation, the court would sanction payments to be made out of the estate and for the estate to be wound up in accordance with the timetable under the scheme (see paras 111-112 of judgment). (2) It would not be appropriate for the court to take the further step of removing N as executor unless there was a real risk that N would not act fairly and conscientiously or if N could not be expected to carry out the administration of the estate in an effective and proper manner, Letterstedt v Broers (1884) 9 App. Cas. 371 applied. T and the individual beneficiaries had failed to show that there was any real risk that N would not act fairly and conscientiously as executor. The fact that N had waived its usual fees for acting as executor, had negotiated the scheme in a responsible way and had even subsidised the administration by agreeing to pay out of its own resources for certain expenses amounting to about £20,000 were all strong indicators that N had acted, and would continue to act, fairly and conscientiously as executor. The points on which there had been conflicts of view between T and N, or when T had felt badly treated, were the result not of hostility but of N's proper and reasonable judgments about the best way to administer the estate, having regard to the interests of all who might prove to have an interest in it. Moreover, friction or hostility between trustees and the possessor of the trust estate, or beneficiary, was not of itself a ground for removal of the trustee; something more was required, Letterstedt followed. On a fair and proper analysis, all that had happened in the instant case was the former. The instant case was also not one in which an executor had refused to resign without any reasonable ground; on the contrary there were good grounds, based on the fair and effective administration of the estate, to justify N's decision to remain executor (paras 80-82, 85-86, 89, 110). (3) All expenses incurred in the ordinary course of the administration were clearly proper expenses and it was appropriate to grant a full validation order in respect of them. It was also appropriate to make a validation order in relation to the second class of expenses; N had acted properly, and for the due administration of the estate, in seeking agreement in relation to the scheme, and was in principle entitled to recoup the proper and reasonable legal expenses involved, without prejudice to any person with an interest in the estate to make an objection in due course (paras 114-116).

Judgment accordingly