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In the Matter of the Estate of Sir James Wilson Savile, Deceased & Ors v Luke Lucas & Ors (2014)

Summary

A judge had not erred in approving a scheme put forward by the executor of an estate aimed at facilitating the resolution of personal injury claims against the estate. The scheme was neither intrinsically flawed nor one that no reasonable executor could have promoted.

Facts

The appellant trustees of a charitable trust appealed against a decision ([2014] EWHC 653 (Ch), [2014] B.P.I.R. 551) approving an application by the first respondent executor (N) for a scheme facilitating the resolution of personal injury claims against the estate of a deceased (S) and dismissing an application for removal of N as executor.

The trustees also appealed against a decision ([2014] EWHC 1683 (Ch)) ordering the trust to pay, on the indemnity basis, 80 per cent of N's costs and all of the PI claimants' costs of the approval application, and all of N and the other parties' costs of the removal application. S, a television presenter, had been accused after his death of being a serial child abuser and sex offender. A number of potential claimants sought compensation from his estate. N had agreed a scheme with the PI claimants and third parties and had sought approval of the scheme as a suitable mechanism for dealing with claims. The costs orders were imposed to reflect what the judge described as the trust's unreasonable conduct of the litigation, including its failure to engage with the parties to the scheme.

Held

(1) The issue in relation to the approval application was whether the judge had been in a position to reach a properly informed decision. He had fully understood what he was being asked to consider and had applied the correct test in deciding whether to approve the scheme. The order could only be set aside if the judge was obviously wrong in his assessment of whether N could properly have taken the decision to process the claims in that way. It had to be shown that the scheme was so inherently unsuitable, whether in terms of efficacy or cost, as to take it outside the range of what an executor acting prudently and in the best interests of the estate as a whole could agree to, or that the judge had had insufficient material on which to carry out that assessment. Neither of those contentions had been made out. The estate was faced with a significant number of PI claims which, if successfully pursued, would undoubtedly exhaust it. Although some claims might be exaggerated or fraudulent, a significant number were genuine and well-founded. The estate could not be fully administered until the scale of the genuine claims was determined, and those claimants would be creditors of the estate who had a claim on the available assets in priority to the beneficiaries. The only alternative had been to devise a scheme to scrutinise and assess the claims which was as comprehensive as possible. Neither N nor the court could compel the PI claimants to abandon their rights of access to the courts, but N could, in practice, achieve that result by obtaining the court's approval for a distribution of the estate once the PI claimants had been given an opportunity to submit their claims for consideration under a suitable scheme. The scheme, negotiated with the solicitors for the PI claimants at considerable expense, had the added advantage that it not only provided machinery for the scrutiny of claims, but also fixed the level of compensation at sums which were likely to be below those potentially available in civil litigation. It could be argued that the scheme's allowance for historic costs was over-generous and that there was no costs penalty for an unsuccessful claim, but those provisions were the result of a negotiation process inevitably involving a certain amount of give and take. They did not make the scheme impermissible. The scheme was not intrinsically flawed or one that no reasonable executor could have promoted (see paras 47-76 of judgment). (2) The appeal against the dismissal of the removal application involved a challenge to the judge's assessment that N had not acted unfairly or incompetently when handling the PI claims. The trustees' case was that relations had broken down between N and the beneficiaries so that they no longer had confidence in N's ability to administer the estate. However, direct intervention by the court in the administration of a trust or an estate by removing the trustee or personal representative had generally to be justified by evidence that their continuation in office was likely to prove detrimental to the beneficiaries' interests, Letterstedt v Broers (1884) 9 App. Cas. 371 considered. A lack of confidence or feelings of mistrust were not sufficient to justify removal unless the breakdown in relations was likely to jeopardise the proper administration of the estate. That had to be objectively demonstrated. The judge's finding that N had acted fairly and with proper regard to the beneficiaries' interests was determinative of that aspect of the appeal unless it could be demonstrated that the finding had not been open to the judge. The trustees had not established any grounds on which the instant court could interfere with the judge's conclusion (paras 80-98). (3) The judge had erred in relation to the costs orders. The trust's costs and those of the PI claimants in the approval application were to be paid out of the estate on the indemnity basis, and N was also to take its costs out of the estate. The trust was to pay N's costs of the removal application on the indemnity basis, with no order made in respect of the PI claimants' costs and those of the secretary of state in that application (paras 106-126).

Appeals allowed in part

Court of Appeal
Patten LJ, Gloster LJ, Bean LJ
Judgment date
16 December 2014
References

LTL 16/12/2014 : [2014] EWCA Civ 1632