Mitchell v Halliwell (2005)
On the facts, the executors and trustees were liable to restore the sum of a commuted annuity, which had been gifted to the deceased's friend and solicitor, to the deceased's estate because the beneficiary children of the deceased had not received independent legal advice about the effect of the commutation.
The claimants (M), executors and trustees of the will of the deceased (N), sought summary judgment for the restoration of disbursements, together with other interest and other administrative relief, to the estate of N's deceased father (S) by the defendants (H), who were S's executors and trustees. H cross applied for an order that M procure the payment to them of sums standing to the credit of a joint account in the names of the parties' respective solicitors. S died before N. N was a substantial beneficiary under S's will. During the administration of N's estate, M became concerned about disbursements that had been made by H from S's estate and the impact of those disbursements. The disbursements were in excess of £1 million and had been paid on account of certain legacies to a number of specified beneficiaries and an annuity given to the first defendant (P), friend and solicitor of S, under S's will. Interim accounts appeared to indicate that H had not made payment of the pecuniary legacies and the annuity in the order specified in the Administration of Estates Act 1925 for the application of assets of solvent estates but had paid the legacies before it had satisfied the debts and liabilities of S's estate. Additionally, the annuity was commuted but the children of S, beneficiaries under S's will, were not advised by H to seek independent legal advice in relation to the implications of that commutation. The money which H sought in its cross application represented the balance of the proceeds of a property specifically given to N in S's will.
(1) H had failed to advise S's children to obtain independent legal advice about the proposed commutation of the annuity. Accordingly S's children had not given informed consent to the commutation and payment. H was liable to restore that sum to S's estate. M were entitled to summary judgment on their application in relation to that payment. (2) In relation to the pecuniary legacies, H was given permission to defend the proceedings upon payment into court of the amount paid out in settlement, or part settlement, of those pecuniary legacies. That decision was made on the basis that there was a dispute about the amount of information given to S's children about the payment of those legacies. No order was made in relation to H's cross application.
Application granted in part.