Recent Caselaw Guidance on Applications to Remove Executors and Trustees
At Field Seymour Parkes we are seeing ever increasing numbers of disputes between executors/trustees and beneficiaries, and clients seeking the removal of a trustee/executor. Katharine Riley, Head of Will Disputes and Contentious Probate reviews a recent case which summarises the principles and procedure.
Practitioners advising on applications to remove personal representatives or trustees could perhaps not do better than to start with the exposition provided by Chief Master Marsh in a recent judgment (Schumacher v Clarke 2019 EWCH 1031). The judgment addresses both the legal principles which determine such claims, and important procedural questions.
The Estate and the Dispute
The case involved the £67.25M estate of renowned international architect, Dame Zaha Hadid who died in 2016. Dame Zaha’s Will appointed four executors/trustees: the Claimant who was her long term business partner plus the three Defendants: her niece and two friends.
After legacies of £2.2M, the estate was left on discretionary trusts with a potentially very large class of beneficiaries, including the Claimant as well as past current and future employees. In her letter of wishes the deceased stated her wish that the Claimant was to continue running her companies and, insofar as practicable, be “in control of them”, as well as benefiting from “at least 50% of the income and capital”, the balance to be held for the wider members of the class (the employees etc) and her charitable foundation as the default beneficiary.
There was a dispute between the Claimant and the Defendants who were the other three executors/trustees appointed by the Will. The Claimant applied for the removal of the other three under s50. He alleged failure of the Defendants to act unanimously; that they were hostile to him; that they had ignored the Letter of Wishes and that accordingly his relationship between them had broken down.
The Defendants denied the allegations. They said that they were willing to work with the Claimant when the trusts had been constituted (which they had not yet). As the trusts had not been constituted, they could not have ignored the letter of wishes (as trustees). They said that in fact the Claimant’s actions had been detrimental to the businesses and they counterclaimed to remove him.
Summary of the Court’s approach to removal of executors and trustees
Chief Master Marsh provided a useful reminder of the approach which will be taken by the Courts to an application for removal of personal representatives/trustees. He emphasised that:
- The Court’s power under s50 to remove personal representatives is a wide power, as is the Court’s inherent jurisdiction to remove trustees (which is exercised essentially on the same principles).
- Mere “falling out” between executors/trustees and beneficiaries is not sufficient and the executor/trustee should not be hostage to potentially “mischievous” allegations.
- It is not necessary to find wrong-doing for removal to be ordered.
- The core issues are whether there is any detriment to the beneficiaries and the efficient administration of the estate/trust by the person remaining in office. The overall interests of the beneficiaries are key.
- To avoid undue delay in the administration of the estate/trust, while this is not a “summary judgment” jurisdiction, the dispute should be dealt with promptly.
Approach to procedural issues in applications to remove
In addition to the substance of the dispute, the parties here could not agree as to how the claim should proceed, and how it should be tried. Chief Master Marsh ruled on the issues in dispute on procedure and gave some useful guidance on the procedure for these applications.
The Claimant had issued under Part 7 procedure, and at an early hearing, pre-Defence, the Chief Master made clear that the matter should not become a “battle royal” but should be swiftly resolved by the Court. The parties disagreed as to whether the matter should be dealt with at trial by a High Court Judge (rather than a disposal hearing by the Chief Master) and whether or not cross examination of witnesses of fact was required at a full trial to determine the issues. It was in issue whether there were in reality allegations of bad faith and, if so, how that affected the appropriate type of hearing
In his Judgment on the procedural issues Chief Master Marsh ruled that :
- The proper approach is to issue applications of this nature under Part 8.
- The majority of applications will then be decided by Chancery Masters, who have expertise in deciding them, at a disposal hearing without a full trial or cross examination of witnesses.
- Application to the Master may be made for witnesses to appear and be cross examined if that is appropriate.
- While (in this case) it had been appropriate here not to incur the additional cost and delay of converting the claim to a Part 8 claim, the claim did not need to be heard by a High Court Judge, and the Chief Master could and would hear it.
- The swiftness of resolution was of very high importance to avoid ongoing uncertainty for the beneficiaries.
- The Court can determine cases of this type without making adverse findings of fact about the executors based on cross-examination.
- Where there was not any claim for breach of trust or devastavit (which often follow an application for Removal) indeed it may be important not to make adverse findings of fact which may affect a future claim of that type, if brought later.
- The mode of trial and level of judge are matters for the Court to decide, and they will decide how Court resources should be allocated in accordance with the overriding objective.
Conclusion on removal applications
To conclude with the words of Chief Master Marsh:
“The claim is between the executors and trustees and the beneficiaries, but it is only in part about them. It is primarily about the estate, or the trusts, seen separately from the persons who are its custodians and the beneficiaries. As I have said, the claim is not an ordinary in personam claim…The administration of an estate or a trust can often lead to tension and indeed feelings often run high. It is essential for the court to avoid as far as possible providing a forum for the parties merely to vent their complaints about each other. The core issue is whether the continuation in office of one or more of the parties is detrimental to the interests of the beneficiaries.”