LADY CATHERINE ANNA BRUDENELL-BRUCE v THOMAS JAMES BRUDENELL-BRUCE, VISCOUNT SAVERNAKE [2022] EWHC 843 (Ch)

If this Transcript is to be reported or published, there is a requirement to ensure that no reporting restriction will be breached. This is particularly important in relation to any case involving a sexual offence, where the victim is guaranteed lifetime anonymity (Sexual Offences (Amendment) Act 1992), or where an order has been made in relation to a young person This Transcript is Crown Copyright. It may not be reproduced in whole or in part other than in accordance with relevant licence or with the express consent of the Authority. All rights are reserved

[2022] EWHC 843 (Ch)

Venue Rolls Building, Fetter Lane

London, EC4A

Thursday,18 February 2022

Before

DEPUTY MASTER LINWOOD

Between

LADY CATHERINE ANNA BRUDENELL-BRUCEClaimant

THOMAS JAMES BRUDENELL-BRUCE, VISCOUNT SAVERNAKEDefendant

(as executor/trustee of the estate of Rosamond Jane, Countess of Cardigan,Defendant

and personally)Defendant

__________

Hearing: 16 th February 2022

MR S. BALL (instructed by Burges Salmon) appeared for Claimant.

MR H. MARTIN (instructed by Charles Russell Speechlys LLP) appeared for Defendant.

_________

J U D G M E N T

THE DEPUTY MASTER:

Date 2022-02-18

[1]This is my judgment on the claimant’s Part 8 claim for removal of the defendant, her brother, as executor of their late mother’s estate. I will refer to the parties by their first names for ease of reference with no disrespect intended. Catherine also appears in certain correspondence by nicknames, such as “Bo” and “Beebs”. This is another unfortunate case of sibling distrust. Tom and Catherine’s mother, the Countess of Cardigan, made a Will on 5 March 2012.

[2]It is very simple, clause 1(a) provides, “ I APPOINT my son THE RIGHT HONOURABLE THOMAS JAMES VISCOUNT SAVERNAKE, and my daughter LADY CATHERINE ANNA BRUDENELL-BRUCE, to be my executors and trustee” Clause 2, “I GIVE all my property not otherwise disposed of (‘my residue’) to such child or children of mine as shall survive me if more than one equally but if any child of mine dies before me leaving a child or children then that child or those children shall on obtaining twenty-one take if more than one equally the share of my reside which his her or their parent would otherwise have taken.” However, what lies behind it is not as simple as I will come to.

[3]Not long afterwards, on 4 July 2012, she died. Tom and Catherine were to share the estate equally, the main asset of which is Leigh Hill House. Tom obtained a grant of probate on 1 March 2013 in his name with power reserved to Catherine. The gross value of the estate was stated as being £1,585,669, the net value a little less. The probate value of the property was then stated to be £1,250,000. Currently, the most recent valuation was for £1.7 million but that was not an agreed valuation. Whilst almost eight years have passed, the estate remains unadministered in the sense that the property has not been realised.

[4]Tom has lived in the property since probate was obtained. Catherine says that her brother refused to progress the realisation or sale of the property and division of the proceeds unless she agreed the amount of a substantial debt she owed to him, both as an executor and in his personal capacity. Catherine says that the determination of the sum due to her is his precondition to him winding up the estate, and that Tom is using that as a lever in view of her impecuniosity as she has substantial debts not only due to Tom.

[5]In essence, Catherine accepts that she owes Tom money, but says the resolution of that amount should not hold up the realisation of sale of the property and finalisation of the estate. But, as Tom has failed to progress the administration, she says he should be removed and a professional administrator be put in his place, namely, a Mr Westbrook, a probate specialist and a partner in Thrings, solicitors.

[6]Tom contests his removal. He says, in summary that(a) over the years 2012 to 2015, his sister did not want the property sold then

(b) from 2015 to 6 February 2020 – being the date of a letter before action from Catherine’s solicitors - Burges Salmon, she agreed that the property be retained and she would both receive rent from her brother of his occupation of the property at £20,000 per annum and payment of £1,667 per month by way of a loan against her future share of the estate. Now, since the Burges Salmon letter of 6 February 2020, Tom says that he is willing to realise the property and complete the administration of the estate.

[7]On that basis, Tom says that the appointment of a professional administrator will serve no practical benefit, but will increase costs and delay matters, so the removal claim should be refused and the outstanding issues regarding the property can be dealt with, if necessary, by the court giving directions unless the parties themselves can reach agreement.

[8]In addition to the removal claim, Tom claims that the amount of money that is due to him from his sister, which was paid out of her interest in the estate (which I will call the “account claim”). When this matter was before me for directions on 13 October 2021, Mr Ball, for Catherine, submitted that the removal claim should proceed to trial ahead and separate to the account. Mr Martin strongly objected and he wanted them heard together. I ordered that they should run separately as it was in no way necessary, in my view, to hear them together, with the consequent delay, with the removal claim first, and so at this hearing directions will be given in the account claim.

The background facts

[9]I now will set out as neutrally as I can the background and history in more detail. Each of Catherine and Tom have made two witness statements; they are rightly heavy on fact and low on submission or argument. The exhibits, plus the other documents before me, total over 1,000 pages, as this matter has been going over ten years, although some of the documents relate solely to the account claim. Below I will quote from certain parts of the lengthy correspondence between Tom, Catherine and others and their solicitors. I have endeavoured to ensure that the quotations are in context and representative of the issues or matters at the time.

[10]The property was transferred to the deceased pursuant to a consent order in the Family Division approved by Coleridge J on 17 March 2009. That order records in Recital B, “The essence of the terms of settlement is that the Petitioner will have sole absolute ownership of a property called Leigh Hill House (valued at £1.25 million including stable and paddock) subject to a right of pre-emption in favour of the Trustees.”

[11]The order then provides at para.I(i) “Upon the Petitioner receiving a survey of Leigh Hill House which does not cause her to return the matter to Coleridge J in accordance with paragraph G above the Respondent shall transfer forthwith (with the approval and cooperation of the Trustees already given herein above to ensure that he is sole beneficial owner of the same) all his interest in Leigh Hill House (as described above) to the Petitioner, the parties and the Trustees agreeing that, in the event of the Petitioner wishing to sell the property in the future, the Savernake Trustees (and that term shall include not only the present Savernake Trustees but the trustees from time to time of the 1951 Conveyance (described above)) shall have first refusal to purchase the property for the Estate at such price as may be agreed between the Petitioner and the Savernake Trustees or, in default of agreement on the price within 28 days of offer, at such price as shall be assessed as being the value of the property by a valuer agreed between the Petitioner and the Savernake Trustees or, in default of agreement within 14 days of first suggestion, appointed by the President of the Royal Institute of Chartered Surveyors.”

[12]Mr Martin submits, relying on Kennewell v. Dye

[1949] Ch 517

, that the right of pre-emption binds the deceased’s personal representative after her death. Mr Ball, for the purpose of this application, accepts that. Accordingly, the sale of the property must be effected by complying with the process I set out above.

[13]Recital B also records the trustees of the trust on which the Savernake estate is held approved this. The trusts concerned are what is called the 1951 Conveyance and the 1987 Trust. Both Catherine and Tom had an interest in the 1951 Conveyance and both were beneficiaries of the 1987 Trust which Mr Martin refers to as a sub-trust. In 2018, the 1987 Trust was appointed entirely to Tom. One trustee since 1988 is a Mr Wilson Cotton, a chartered accountant.

[14]From July 2012 to about early 2015, the contemporaneous correspondence shows that Catherine wished to retain the property, as did Tom. He said this in an email dated 16 October 2012:

“What we need is two probate valuations (which are lower than the market value). So we are getting Carter Jonas to formally value it at £1.2m, and Knight Frank to do the same with an informal valuation. This will leave us a final tax bill of about £350,000. However, with Charles' advice we will be able to reduce this figure.”

Then subsequently, “The advice I've had from several agents is to hang on until the summer and then sell.” Her reply the same day was:

“But why would we want to sell the house now?”

. However, it appears that Catherine’s financial position worsened and, on 28 January 2014, following an email from Catherine, he said, “look, I dont want to get into a huge fight about all this. I can see all this is hugely stressful for you and you are upset about it. … I am not blaming you for the sale of the house. I had hoped to keep hold of it until Tottenham was sold, but the fact is that it seems you need the money tied up in it to pursue your career. Correct me if Im wrong. It is not your fault that we need to sell the house. We cant afford to keep it long term…” And then subsequently, “The point is that your personal account is backed by your share of the house account. If you run up debts, they are ultimately paid off by the house account.” Catherine replied the same day, saying, amongst many other matters, “’it seems you need the money tied up in the house to pursue your career.’ FALSE. don't twist scenarios, i know where u learnt that. yes,i could choose the option of borrowing against the hou considering I OWN HALF THAT HOUSE. but i also can keep my career separate from the house and pay instalments if it means that you don't get to use the loan as a horrible weapon against me.”

[15]On 29 July 2014, Catherine emailed Tom and said, “.. the only real financial security I have is that house while I try and do my job and make a career, so I'm sure u understand that I don't want to have to sell yet if everyone is advising not to. I think we should take another small loan our to cover the upkeep costs till we know whats going on with the house.” However, six months later, in an email dated 23 January 2015, her position seemed to change, as she said, “Hi, tommy, i really need to access my half of the house and bit gutted we aren't selilng, before you go on holiday can we sort 5omething out, i am really panicking and should've had my loan or half the house sale. Xx” But then at some point it seems Catherine agreed with Tom that the property would be retained and that she would receive rent from him for his occupation and the monthly advance that I have mentioned. In the evidence are minutes of a meeting held on 24 October 2016; present at that meeting were Catherine, her husband, Henry, his father and Tom. The heading states, “The purpose of the meeting was to explore Bo and Henry’s financial situation.” Paragraph 3:

“Leigh House. Tom said that the 2012 value of Leigh House was £1.7m and that Bo owned 50% of the house [£850,000]. His plan was to buy Bo out and keep the house for himself if the trustees agree. The timetable for this was uncertain but likely to be between one to four years. 4. Bo is receiving £20,000PA rent from Tom for his use of Leigh House and £20,000 PA loan against her share of the house. David asked Tom to identify what other current and historic loans BO had received as there did not seem to be clarity on this. A figure of £30,000 was mentioned.”

At the bottom of the page it says “Circulation all present”. There seems, notwithstanding “Circulation all present”, to have been no objection to these minutes.

[16]Some six months later on, 24 January 2017, Catherine emailed Wilson Cotton and Tom and says, “Dear Both … As you know, there was a moment when Leigh Hill House was on the market and Tom decided he no longer wanted to sell. This upset me, as I would very much like to get on with my life and be separated financially, but Tom, you assured me that I was in a great financial situation with a sympathetic bank allowing overdrafts, and if needed, could borrow against my share of the house via borrowing from Tom/Savernake estate.” Then later, “I begrudgingly went along with this agreement so Tom could continue living at Leigh Hill and do what he wants in the time he wants, with him renting my legal half off of me. I am also patiently waiting to hear about when exactly Tom will be honouring Mums wish that the house be mine once he inherits. Meanwhile, I am paying rent out which is obviously not ideal. It now seems I am in a very tricky situation and I would like to hear from someone about how to move forward as soon as possible.” Then finally at the end, “I urgently need a solution from you guys (Tom??) because when I look at the big picture, I feel like I am being taken for a massive ride, and this is now rather serious and not fair.” Mr Martin submitted in his skeleton that the first evidence of Catherine’s wish to terminate the agreement was her solicitor’s letter before action on 6 February 2020. Ten minutes before the start of the hearing, Mr Ball apparently handed to Mr Martin a clip of emails which showed a different picture. This was unfortunate as it was, I believe, an unintended ambush. Mr Martin said that I should attach little weight to the emails. I said that all of the emails are to or from Charles Russell Speechly (CRS) and included Tom in them as well. I said to Mr Martin that he could make written submissions by 10 a.m. today if he felt that it was necessary, as he was concerned that the emails could be taken out of context.

[17]On 27 February 2019, CRS wrote to Catherine and Tom and said, “Having now had a chance to review Forster’s file and client ledger, I thought that it would be helpful to write to each of you in your capacity as beneficiaries of your mother’s estate to highlight what is needed from you both in order to finalise matters. Leigh Hill House. From a distribution point of view, the situation regarding Leigh Hill House needs to be agreed. We understand from Tom that there was a financial arrangement in place whereby market rent is paid to you, Catherine, in relation to your half share of the property, and the same amount is loaned in relation to Tom’s half share. I understand the intention behind this agreement was to equalise the position at a later date using the evidential proceeds of sale.” Going forward, the two of you, as beneficiaries need to agree the position between yourselves and, if, indeed, the property has not been sold, then an alternative arrangement that is acceptable to you both needs to be agreed and formalised.”

[18]On 8 April 2019, Catherine replied to CRS, copying Tom and said, “Apologies Catherine for the delay in reply. It is certainly time to resolve the position on Leigh Hill House. It has dragged on for nearly 7 years and in the meantime its condition has continued to deteriorate. There appear to be a limited number of options. One is for the present position to continue. This is not acceptable to me. At the moment I am locked into the ownership of a property which I do not live in, which is in a deteriorating state of repair and which also means I cannot buy somewhere of my own to live. One alternative is for Tom, you to buy me out of my half share of the house. If you are not prepared to do that then I cannot see any other alternative but for us to sell the house just as we attempted to do in 2013 and accepted an offer for it. As Tom changed his mind after that, it is only fair to create a new situation that works for us both.” Then:

“If you want to buy me out of my half share now, I am prepared to wait for a time for the other half, but we need to come to an agreement about how long this goes on for. … Thank you Catherine for outlining what needs to be done, I Hope Tom has explained by now that I’m no longer receiving a loan from him (haven’t for a year or so) but that the rent for his half of the house is still ongoing.”

Then on 1 May CRS prompted Tom and said, “Dear Tom, I am conscious that you have been working on the figures needed to arrive at a reconciliation here, but please could you update as to progress. I am sure both you and your sister would like to wind up your mother’s estate and move on, so please could I encourage you to respond to your sister about how this might be resolved between you.” On 29 May 2021, CRS emailed Catherine and say, “We have not spoken for a while; I hope you are keeping well. In terms of the administration of your mother's estate, as we have discussed before, I am waiting for Tom to produce figures showing the movement of funds between both of you and your parents, and a net position that he believes needs to be reconciled in the distribution of the estate. As yet I have not received those figures from him, but am continuing to chase. In the hope of further encouraging Tom to engage with this, I have mentioned the situation to one of the partners here who I know is seeing him in the course of next week. Once I have more news I will of course share it with you. Catherine replied the same day and said:

“Hi, Gareth, Thanks for your email. I have had to instruct lawyers … Burges Salmon you should be hearing from them …”

CRS’ response was that they thought the instruction by Catherine of her own solicitors, would:

“ …act as an added incentive for him to give us something to work with.”

[19]There was not, on the basis of the contemporaneous documentation I have set out, a clear cut divide from 6 February 2020, when Burges Salmon’s letter before action was sent to CRS that marked, as Mr Martin submits, the start of the termination of the state of affairs. In that letter of 6 February, Burges Salmon say at para.3, “Your client is in breach of his duties under the Administration of Estates Act 1925. Our client is not aware of any legitimate reason for justifying the ongoing delay in the administration of the estate. We require a clear timeframe for the administration of the estate including your client's proposals for the sale of the property on the open market or, alternatively, his purchase of the property. 4. Our client has been extremely patient over the past seven years. She has tolerated your client's occupation of the property on the understanding that your client was dealing with the estate administration. That has not happened. Our client has been reasonable and has tried to resolve matters with her brother without the involvement of lawyers. Regrettably, your client has made it clear to our client that he will only proceed with the administration in his own time. This is clearly not in accordance with his fiduciary duties to the beneficiaries of the estate or his duties as an executor and trustee.” They threatened this application if proposals to conclude the administration are not received.

[20]CRS, in their letter of 10 February 2020 in reply say, “Weunderstand that the only assets in the Estate are Leigh Hill House and c£5k in this firm's client account. The current issues are required to be resolved between our respective clients as beneficiaries before there is anything further to do on the administration of the Estate.” Then under the heading “Estate Administration”, “The delay in administering the Estate has been due to the dispute between our clients as beneficiaries to the Estate. In attempts to resolve this dispute, Viscount Savernake has been attempting to consider the complex matrix of income, distributions (including to your client) and liabilities in relation to the Estate and to calculate the allocation of these. However in seeking to do this, he has not been assisted by your client. We will set out our client's position in detail shortly in the hope that the dispute can then be resolved. To assist with this, we would appreciate you please confirming the following points: 1. Details and value of the items taken by your client (or on her behalf) from Leigh Hill House prior to the Deceased's date of death; and 2. Details and value of the items taken your client (or on her behalf) from Leigh Hill House following the Deceased's date of death.” Those proposals were rejected by Burges Salmon in their reply of 12 February 2020. In particular they said, “Wealso note your surprising statements that ‘there is no positive action required by Viscount Savernake...as Executor’and that you consider that that the current issues are to be resolved between our respective clients is beneficiaries. These statements are not understood. You have stated that your client has been attempting ‘to consider the complex matrix of income, distributions (including to your client) and liabilities in relation to the Estate’. We should be grateful if you would explain how those are not matters which engage your client in his capacity as executor. Our client is not aware of any dispute between herself and your client as beneficiaries. She is aware that your client has repeatedly given as his excuse for not proceeding with the administration the suggestion that he is trying to calculate an asserted liability between either himself and our client, or the Estate and our client. To characterise this as a ‘dispute’ appears unrealistic.” After various reminders as to the dispute, CRS say, on 26 February 2020, “… we are instructed that there is an agreement between our clients that the substantial payments made by our client, and those he has approved from the Savernake estate, by way of loan to your client are to be set off against your client's share of Leigh Hill House (the 'Property'). Our client is now close to finalising the sums he believes your client is liable for and we will, as previously indicated, respond to you shortly in this regard.” Then under “Chattels”, “As part of this exercise, we are considering the chattels owned by the Deceased. It is our client's understanding that your client has in fact removed a large majority of the Deceased's chattels. You are yet to respond to our request … Please now provide this.” There was a clear contrast between this and the emails exchange in April, May and November 2019.

[21]The chattels issue, Burges Salmon say in reply on 9 March 2020, was no more than a smokescreen. Details had been provided in 2015 and 2019. CRS then replied in a letter dated 13 March 2020 setting out Tom’s position, wherein they say, “As stated in our letter of 26 February 2020, Tom and the Savernake estate (via Tom's interest in the Savernake estate) have since this time advanced monies to Catherine (in addition to those made previously lo her). These advances were made, in agreement with the relevant trustees, on the basis that they were a loan and should be set off against Catherine's share of the Estate: specifically, given the value it represents, Catherine's share in the Property. We enclose an email setting out this arrangement. Catherine has requested that the Property now be sold and the Estate distributed according to the terms of the Will. Tom is in agreement that the administration of the Estate must be finalised and final distributions made as appropriate but requires the monies owed by Catherine lo him be accounted for. Account The advances made to and for the benefit of Catherine are numerous and the table below may not constitute a full account of these. We have summarised the various individual items (listed in the schedules enclosed) that we are currently aware of into separate categories·. These are set out below”. Then there is a table and then the headings “Description” and “Value”. Descriptions: education £79,000; medical expenditure, £89,000; professional fees, £36,000; general advance and other, £279,000; rent, £100,000; property deposits, £22,000. The total, (excluding interest) £606,392.15. They concluded by saying, “Tom agrees that administration of the Estate must be finalised. As we have stated however, the delay in this has been due to Catherine obstructing the resolution of the account between Tom and Catherine. We suggest that the sooner Catherine agrees her liability to Tom the sooner the administration can be finalised. Any application by Catherine to remove Tom as an executor would appear premature prior to such account being resolved. To assist in understanding the Estate assets, we enclose draft Estate accounts prepared by Forsters on 5 August 2014.

[22]The email referred to is dated 14 November 2016 and is from Mr Cotton to the parties. He said – wrongly I believe - that Catherine was never a beneficiary of the children’s trust - the so-called “sub-trust” - whereas at one time she was. He then said, “Your mother's death gave rise to a large inheritance tax liability, which was payable on and by her estate. As the most valuable asset was Leigh Hill House, which is illiquid, tax could only be paid by either selling it or borrowing. The tax could be paid in ten equal annual instalments, which is effectively a way of borrowing from HMRC.” And then, “The outstanding tax was paid by the estate and in line with the arrangement above advanced by the estate to Tom, with half being treated as a loan by him to Beebs. If you do not understand this point please let me know.” Detailed correspondence between solicitors followed. In particular, on 21 April 2021, CRS said, “Plainly, the chief remaining asset of the Estate is the Property. Your client alleges in her draft witness statement that Carter Jonas gave a market appraisal of the Property in May 2020 of £1.85 million. No evidence of this valuation has been provided. Further it is common ground that our client resides in the Property and he has no knowledge of Carter Jonas having attended in May 2020. We are unclear therefore how the figure has been arrived at.” Then at 1.2, “Our client thinks it important however that a valuation of the Property is now arranged in order to facilitate the settling of matters. He has approached Dominic Birkmyre at Carter Jonas and Nick Loweth at Knight Frank in the capacity as executor, all of whom are prepared to carry out a valuation of the Property. Given the continued and aggressive threat of litigation by your client he is keen to for her to agree a valuation of the Property. Please therefore provide this by return.” A few pages on, it says, "We would reiterate that our client is willing to engage in mediation that combines all of the issues at hand. The account between our clients that has delayed finalising the administration of the estate should be resolved at the same time as any mediation regarding' her claim against him in his capacity as executor.” That mediation took place very recently, but was unfortunately unsuccessful. These proceedings were then issued on about 27 April 2021.

[23]CRS provided updated estate accounts as at 1 June 2021, being an update on those of 2014. I do not recite the entirety of the correspondence as it is unnecessary to do so, but the next important letter is from CRS to Burges Salmon was on 12 October 2021 in which they said, under the heading, “Proposed mechanism for realisation of your client’s interest in Leigh Hill House”, “With that in mind and in an effort to expedite the resolution of matters and the move to a mediation, our client makes the following proposal to your client, subject to contract: 1 That a valuation of Leigh Hill House is obtained (as above) and our clients seek to agree on the value of your client’s interest in the property. 2 Our client buys your client’s interest at the agreed value, with the purchase price to be payable as follows. 3 Our clients shall seek to agree the sum owing by your client or failing agreement the sum shall be determined by the court. Upon either of these eventualities, the sum owing by your client in accordance with the agreement or determination shall be deducted from the value of your client’s interest in the property and the balance paid to your client in 90 days.”

[24]Clearly, Tom continued to insist on agreement of all monies between the parties or else determination by the court.

[25]Most recently, on Monday of this week, 15 February, CRS wrote, enclosing a detailed valuation by Carter Jonas as of 19 February 2022 at £1.7 million to take into account the need for expenditure of some £750,000 to bring it up to an acceptable standard. They continued by saying, “However, regardless of those concerns, he considers the Report comprehensive and reputable, and proposes relying upon it as a valuation of the Property for the purposes of the mechanism for realising your client’s interest as set out in our 12 October 2021 letter. A sale to our client would save the usual costs of sale being agents costs of c£30,600 (being 1.5% of the sale price plus VAT) and legal costs of approximately £4,500-£5,000 plus VAT. This would reduce the net proceeds of sale to £1,663,400. We have discussed the position with the Trustees of the Savernake Estate and they would agree not to exercise any right of pre-emption in relation to any sale of the Property that may exist in relation to a transfer to our client.” Then they set out the valuation and then, “On agreement to the above, we would propose that the Property be transferred to our client, £382,508.52 be transferred to your client and the balance of £224,074.14 await final determination of the Account Claim”

The Law

[26]Counsel agree that the principles that I should apply are as summarised by Chief Master Marsh in “Harris and Others v Earwicker and Others

[2015] EWHC 1915 (Ch)

at para.9, namely, “i. It is unnecessary for the court to find wrongdoing or fault on the part of the personal representatives. The guiding principle is whether the administration of the estate is being carried out properly. Put another way, when looking at the welfare of the beneficiaries, is it in their best interests to replace one or more of the personal representatives? ii. If there is wrongdoing or fault and it is material such as to endanger the estate the court is very likely to exercise its powers under section 50. If, however, there may be some proper criticism of the personal representatives, but it is minor and will not affect the administration of the estate or its assets, it may well not be necessary to exercise the power. iii. The wishes of the testator, as reflected in the will, concerning the identity of the personal representatives is a factor to take into account. iv. The wishes of the beneficiaries may also be relevant. I would add, however, that the beneficiaries, or some of them, have no right to demand replacement and the court has to make a balanced judgment taking a broad view about what is in the interests of the beneficiaries as a whole. This is particularly important where, as here, there are competing points of view. v. The court needs to consider whether, in the absence of significant wrongdoing or fault, it has become impossible or difficult for the personal representatives to complete the administration of the estate or administer the will trusts. The court must review what has been done to administer the estate and what remains to be done. A breakdown of the relationship between some or all of the beneficiaries and the personal representatives will not without more justify their replacement. If, however, the breakdown of relations makes the task of the personal representatives difficult or impossible, replacement may be the only option. vi. The additional cost of replacing some or all of the personal representatives, particularly where it is proposed to appoint professional persons, is a material consideration. The size of estate and the scope and cost of the work which will be needed will have to be considered.”

[27]Mr Ball emphasises that this is not a complicated estate or trust, as indeed there is no trust at all, but an unadministered estate where the property is held pending distribution in equal shares. Mr Ball also submits that this is not, as Tom treats it, a property he enjoys with Catherine on a beneficial co-ownership basis. I think there is some substance in that, as Tom makes very clear in his evidence his attachment to the property and how, and I quote, “it has great importance and sentimental value to me, as it did to my mother, as a family home and as a Savernake Estate property which remains in family hands.” Mr Ball emphasises that the parties only entitlement as beneficiaries to have the proper administration carried into effect, including a sale of the property, a principle he submits commenced in Lord Sudeley v The Attorney General 1897 AC 11.

[28]Foremost in Mr Ball’s submission – and the inter- solicitors’ correspondence - is the conflict of interest for Tom as beneficiary and executor. Mr Martin says that the Harris v. Earwicker principles should be applied taking into account(a) whether there had been wrongdoing as a result of conflict and, if not,

(b) whether the conflict makes it difficult or impossible for Tom to complete the administration of the estate. I would add

[29]Mr Martin submits that an executor is not prevented from acting where, as here,(a) he has been placed in the conflict of interest and duty by the deceased or by the terms of the will or

(b) the beneficiaries do not object or

[30]Mr Martin referred me to Lewin on Trusts at Chapter 46, headed, “Exceptions to the self-dealing rule” at para.46-010, “A trustee is not disabled from purchasing the trust property if: … (2) the purchase is made in circumstances where the trustee has not placed himself in a position of conflict of interest and duty but has been placed in that position by the settlor or the terms of the trust; or … (4) the purchase is made with the concurrence of the beneficiaries, all being of full age and capacity, after a full and proper disclosure has been made to them; or (5) the purchase is made with the sanction of the court.”

[31]Kershaw v Micklethwaite & Ors

[2010] EWHC 506 (Ch)

was a claim for removal of executors, namely, Mrs Micklethwaite and Mrs Barlow. One ground was a conflict of interest in a situation where self-dealing was to the fore. Newey J, as he then was, said at para.25, “Turning next to possible conflicts of interest, Mr Kershaw has expressed a concern that it might be in the interests of Mrs Micklethwaite and Mrs Barlow for High Greave Farm to be valued at a low figure because they might themselves wish to acquire some or all of the land. Mr Barlow had a short answer to this, that neither Mrs Micklethwaite nor Mrs Barlow is interested in buying any part of the High Greave Farm. Issues remain, though, in relation to the Summerfield flats, in particular because of the possibility of these being transferred to Mrs Micklethwaite or Mrs Barlow in specie. 26. However, Mr Child accepted that Mrs Micklethwaite and Mrs Barlow had not chosen to put themselves in a position of conflict but had been placed there by their mother. Mr Barlow, moreover, argued that any conflicts which might arise could be satisfactorily managed. If needs be, paragraph 9(2)(c) of the STEP standard provisions could be used; alternatively, an application could be made to the court. Mr Child's response to the latter suggestion was that the appointment of an independent person in place of the existing executors would obviate the need for any application to the court, but that is not necessarily so. It is by no means inconceivable that, in the present case, such a person would himself conclude that it was appropriate to apply to the court. In any case, I do not think that the potential conflicts of interest are such as to require the removal of the defendants as executors. I would add that I agree with Mr Barlow that there must often be a possibility of similar conflicts of interest where family members are executors.”

[32]As to the practicalities of how I should approach the directions where an executor and beneficiary wishes to purchase the deceased’s home, in a situation where another beneficiary objects, Mr Martin referred me to the decision of Master Teverson in Brown v Brown

[2019] EWHC 138 (Ch)

, where he rejected the submission that the property could be marketed on the open market by someone other than the executor/beneficiary and permitted purchase at a price offered by the executor/beneficiary. 33 At para.37, Master Teverson says, “On behalf of the Defendant, much weight was placed by Mr Smith on the self-dealing rule. There was in the present case a conflict or potential conflict between the interest of the Claimant as intending purchaser and his position as executor. It was in my view unwise that the Claimant initially sought and obtained the Defendant’s agreement to a sale at the probate valuation. That was done at a time before either the Claimant or the Defendant had legal advice.” “38. On an application of this type, by an executor or trustee seeking permission to purchase, the court must be satisfied that the proposal is fairly made. Where it is not possible for a trustee to obtain the consent of all beneficiaries because some are children or unborn, the court expects to have before it evidence from a surveyor or valuer instructed independently of the purchasing trustee: see Lewin on Trusts 19th edition para 20-141. In the case of two adult beneficiaries who cannot agree over price, that exact model does not work and the executor beneficiary faced with this difficulty is in my view acting fairly and properly in accordance with his duties by obtaining a valuation report from a fully qualified valuer who is instructed to give his report on the same basis as an expert witness for the court.”

[34]Mr Martin submits that the facts in Brown are very similar to the position here, but Mr Ball disagrees and says that Brown can be distinguished on its facts as, first, those proceedings were brought by the potential purchaser, Mr Brown and secondly, the position was different in that the beneficiaries injected cash to pay the IHT – see [8].

[35]Further, thirdly, the approach as to valuation was different in that in Brown the executor could weigh up the various independent valuers reports, who were instructed in an impartial manner, so it was possible to decide if the price was less or more than market value and, if so, whether it should go on the open market – see [21].

[36]I agree that Brown can be distinguished from the position here for the above reasons. I also emphasise that Master Teverson at para.38 said that the valuer instructed by the executor beneficiary should report “… on the same basis as an expert witness for the court”. I do not think that that appears to have happened here in respect of any of the valuations, although I do appreciate that the most recent valuation was undertaken without the involvement of Catherine, notwithstanding CRS’ attempt to involve her.

Submissions

[37]There has been an element of the parties coming together, at, as, Mr Ball puts it, the margins. Mr Ball submits that there has been a certain shift in terms of Tom’s position to him saying he is an executor who wants to buy the property but the other beneficiary refuses to agree. Hence, he submits, Mr Martin’s submissions concentrate on the court being able to sanction the purchase of the property by appropriate directions.

[38]Mr Ball submits, however, that Tom is not dealing impartially and that any purchase by him – which he does not and cannot in my view rule out – should be administered without Tom in the driving seat. Tom has said outright in his statement of 2 June 2021 that he is “…willing to market the property for sale in accordance with [Catherine’s] wishes. However I would first like the opportunity to buy Catherine out rather than being forced to sell the property to a third party purchaser.”

[39]Mr Ball submits that Catherine was clear Tom could have bought her share – her email of 8 April 2019 - but nothing happened. In particular, notwithstanding the emphasis at one point on the need to approach the Savernake trustees as to the pre-exemption right, there was no evidence of that being done at any time but only that it was raised as an obstacle, as, as Tom put it at para.35, the trustees “are likely to consider exercising the right of pre-emption in consultation and co-operation with me.”.

[40]That position has changed substantially in that CRS in their letter of 15 February 2022, one day before the hearing said, “We have discussed the position with the Trustees of the Savernake Estate and they would agree not to exercise any right of pre-emption in relation to any sale of the Property that may exist in relation to a transfer to our client.”

[41]The fact that that obstacle has been cleared imminently before this does not seem to me to be the actions of an executor who is acting diligently and expediently.

[42]Mr Ball emphasises that it is apparent from the solicitor correspondence after February 2020 that matters went beyond reconciliation of drawings from estate funds, which is a proper concern of any executor, and expanded into the personal loans position between Tom and Catherine. This, he submits, was never set out in detail until CRS stated that £606,000 had been advanced to Catherine in their letter of 13 March 2020 and that that was a factor in the administration.

[43]Mr Ball emphasises that CRS in their letter of 15 February 2015 is the first time that Tom has suggested that the property could be realised without the loan account being determined first. However, he submits that, even in that last-minute letter, Tom’s proposal is favourable to him personally in a manner an independent custodian would find difficult to swallow as the proposal is for Catherine to receive a payment which takes account of the undisputed element of her financial interest but the disputed element remains under Tom’s control pending resolution. Accordingly, to the extent that she was successful, she is kept out of her money for longer.

[44]Mr Ball also criticises the costs of the sale. The letter states a sale to Tom would save professional fees of approximately £40,000. Deducting that sum would reduce the net proceeds to £1,663,375 of which Catherine would receive an equal split of £831,200. But that gives a financial advantage for Tom because he gets the first personal benefit of avoiding sale costs but does not give any benefit or credit for that substantial saving to Catherine – indeed the opposite, her share is reduced to take into account non-existent sale costs.

[45]Mr Ball also submits that the valuations do not add up: first, the probate valuation can be discounted as it is exactly that. I think in the context of Tom’s above correspondence that point must be correct. Then there is the valuation, or, rather, as it has been described, the market appraisal by Carter Jonas of £1,850,000 addressed to Catherine on 23 April 2020, a valuation that Tom did not know had taken place. I note that the fees are said to be 1 per cent plus VAT, contrary to the amount that CRS quoted in their letter in terms of the deduction as mentioned above of 1.5 per cent. In any event, Mr Martin has rightly objected to this valuation taking its place in the chronology in the bundle as this was not known of at the time.

[46]The formal Red Book valuation from the same office of Carter Jonas, but by another person, dated 19 January 2022 states a market value of £1.7 million with a gross development value of £2.4 million. Mr Ball submits that the value has therefore not increased since the 2013/14 valuation when it was originally marketed and that I should take judicial notice that country house prices have increased substantially but this one has not. Similarly, Mr Ball submits that the deterioration in the property, as seen from the photographs in the report and those taken by Catherine recently is clear evidence that Tom has neglected to maintain the property.

[47]I do not think that I can make any decision or conclusion as to movement of country house prices without further valuation evidence, and the like as to the origins of the cause of the deterioration, which would need specialised reports.

[48]Mr Martin in his submissions emphasised an overarching point that the purpose of the jurisdiction to remove is not a punishment but that this is a practical jurisdiction focused on the future and completion of the administration, referring to Letterstedt. I must, he submits, consider what is best for the beneficiaries going forward – replacement or is there another route which is better. His emphasis was on looking to the future. I agree.

[49]Mr Martin concentrates on the principles in Harris. First has there been wrongdoing or fault? His answer was no, as for most of the administration period since 2012 retention of the property was with the agreement of Catherine, so it cannot be said to be wrongful, especially as Tom was not living there rent free. So from 2012 to 2015, there can be no issue. I think that that is accepted by Mr Ball.

[50]As to 2015 to 2020, Mr Martin placed emphasis on the meeting notes that I have quoted from October 2016 with a timetable was one to four years, whilst rightly acknowledging that this is not expressed as an agreement. Then the period ended - Catherine says 2019 and Tom says February 2020. Mr Martin also submitted that the clip of emails I quote from above is “…a little snippet” which I “…cannot fairly draw anything from”.

[51]In that respect, I gave Mr Martin until 10 o'clock this morning to consider the context of these emails and then make further submissions. He initially objected saying his solicitors should not work through the night. My reaction to that was I thought that highly unlikely as this is a small set of emails, all of which are on CRS’ document management system with the advantage of easy searching and identification of email strings. I could not see such a workload in any sense. Mr Martin said that texts and ‘phones would need to be reviewed. I think not because as the ‘phone screenshot was one of the emails CRS has. In any event, just before 10 o'clock, Mr Martin indicated that he did not wish to adduce any further correspondence.

[52]Continuing with the timeline, Mr Martin accepted that for the period from 6 February 2020 to today marks a change as any agreement was terminated and Catherine seeks realisation. He emphasised the need for Catherine to account for her share of inheritance tax on any resolution, which I think is accepted.

[53]Mr Martin emphasised Tom had not placed himself in a conflict of interest position, but his mother had. She could have chosen someone independent, but chose not to do so. Further, Catherine should not complain about Tom acting with her agreement -Lewin at para.46-010 subpara.(4). Further, she agreed to that position, namely loans from Tom, and, having agreed, she cannot say that the loans give rise to a conflict.

[54]In summary, Mr Martin submits that Tom has not acted wrongfully nor is he at fault, in that he was put into his position and remained there with the agreement of Catherine. Next, as to the Harris principles, Mr Martin referred to the question of whether the estate had been materially endangered, which he says has not happened. The alleged decrease in value is not accepted as being due to failure to maintain by Tom. The probate valuation was accepted by HMRC at £1.25 million and now Mr Ball says in his skeleton that it is worth circa. £2 million. So it has gone up. Therefore it not obvious how an argument could be made that by not selling the estate has been endangered.

[55]In summary, on the first limb of Harris, Mr Martin submits Tom has, first, not committed any wrongdoing and, secondly, has not endangered the estate.

[56]The next limb Mr Martin referred to is [9(vi)] namely has it become impossible /difficult for Tom to complete the administration of the estate? Mr Martin submits not at all; all elements save realisation of the property are complete, as all assets have been collected in, debts to third parties paid including tax and up to date estate accounts have been provided, all accompanied by a detailed narrative in his witness statement. All that needs to be done is to realise the property. So what is the fair market value of Catherine’s share of the property? .

[57]Mr Martin said going forward this is easily solvable with directions of the court namely, 1) independent surveyor reports on the market value, 2) Savernake Trustees with the right of pre-emption and, if necessary, Tom given the opportunity to purchase at that value and, 3) if they both decline sell the property on the open market.

[58]I asked Mr Martin if he was asking me for directions on those lines and if so had they been put in open correspondence? He said they had, referring me to CRS’ letter of 12 October 2021, which I have set out above.

[59]I disagree. That letter does not make a proposal on the same basis as the pre-emption right is not mentioned and there are conditions as to the distribution of the purchase price which as ver go back to a holding by Tom pending agreement between the parties or determined by order of the court and only then payment after some three months have elapsed.

[60]But in any event, Mr Martin emphasised that this court can give directions to realise the property with Tom remaining in place as executor. Likewise, he submits conflicts can be managed see Kershaw at [25-26], and even if there is a conflict the directions of the court can ensure it can be managed. This, Mr Martin submits, is not shown by appointing an independent person.

[61]As to the debts owed this is before the court for directions, so it is axiomatic that it will be dealt with. Now, the disputed element is some £234,000. That is not something that an independent personal representative can or should assist with as it can be resolved by agreement or a short trial. Rightly, Mr Martin accepts the wishes of the beneficiaries do not assist here, but there is he submits, additional cost if an independent personal representative is appointed. Whilst the estimate is £10,000 to £15,000 plus VAT, he submits that it is likely to be an underestimate and the costs could double.

Discussion

[62]The overriding principle is the interests of the beneficiaries – is it in their best interests to replace an executor? I accept Mr Martin’s submission that this is a forward looking exercise, so I must consider for the future what remains to be done and can this executor administer it properly and fairly and with expedience? However, in my judgment, that forward looking exercise must be tempered in the light of what has occurred to date. Here, the past can inform the future.

[63]It can be - and I think it is here - a delicate balancing exercise of my discretion in the light of what has happened but with a view to what reasonably can be done and, from the beneficiaries’ standpoint, the best way to achieve that in the shortest time reasonably possible at the minimum cost proportionate to the value of the estate. Clearly here Tom has a conflict of interest between his position of executor and as beneficiary. That is not a conflict of his making nor of itself does it endanger the estate.

[64]The difficulty, as I see it, is where an executor creates an external conflict. This also, for example, could arise if the executor was not the beneficiary but, as executor, wished to purchase the property but such conflicts can be managed with transparency and a fair process.

[65]Overall, it may in certain circumstances, as I think obtain here, be necessary to undertake a holistic review of the overall position, not determining the matter purely on past facts and conduct but taking them into account when looking to the future. A conflict of interest is not in itself a good reason, but the type of conflict must be considered. Is it an external one that an executor has brought on himself? If so, can it be managed properly and fairly?

Decision

[66]I will remove Tom as executor in the circumstances and for the reasons that I refer to below.

[67]I do not accept that the administration of the estate has been or will in future be carried out properly. Whilst in the initial period from 2012 to 2015, Catherine did wish to retain the property, her position changed in January 2015. The emails that I have set out above show her desperate need for money. It appears, though, that Tom must have pacified her concerns, as appears from the minutes of meeting in October 2016. But that was not a firm agreement of a one-to-four-year period and in my judgment it certainly ended, as appears in the email exchanges, in February - May 2019. But Tom, as executor, took no action whatsoever to progress the sale or the realisation of the property. Matters then came to a head in February 2020 with Burges Salmon’s letter before action.

[68]CRS’ reaction then was to link the payment of the debt, some due as part of the estate, such as inheritance tax, and some certainly not so as a pre-condition of the sale. That is not, in my judgment, proper administration; it was designed to put one beneficiary at a disadvantage compared to another who is also the executor.

[69]As I have set out that debt was originally said to be £605,000. That, in my judgment, was clearly an exaggerated sum. For example, it included £70,000 for Catherine’s school fees going back decades which are not part of the administration of this estate. Whilst this has been conceded that it should not have been advanced in the first place.

[70]Catherine accepts that £80,862 is due to Tom. Her share of the inheritance tax is £144,254. That, with other concessions results in the £605,000 originally claimed by Tom having reduced to £224,000. Likewise, I consider the stance taken as to chattels by Tom was a delaying tactic. Whilst no more is made of it, it is another historic factor that I should take into account going forward.

[71]I do not find wrongdoing or fault but I consider Tom’s control of the main asset is with a view to preferring himself as beneficiary over his sister and ignoring his responsibilities as executor. An example of this is the proposed allotment of non-existent sale expenses in CRS’ letter of 15 February 2022. That is a substantial, approximately £20,000, disadvantage to Catherine put forward by Tom as executor which works in his favour as beneficiary. Proposing a division on that basis is not the actions of a neutral executor acting in the best interests of the beneficiaries.

[72]Likewise the valuations do give me cause for concern. I do not have sufficient evidence to make findings, but I do not need to do so. The position appears somewhat unusual - and this applies to both parties - in that there was no valuation undertaken on the basis of joint instructions. I consider that an independent personal representative will ensure that a market valuation is obtained.

[73]I also consider the external conflict of interest that arose from Tom’s wish to purchase the property to be of concern. Another potential conflict of interest has arisen due to that intention due to the pre-emption right. Here, Tom’s obligations as executor conflict with his interests as a beneficiary under the Savernake Trust as those trustees are, I assume, likely to have to consider his interests. The final external conflict of interest arises from his decision to make recovery of personal loans to his sister part of his administration of the estate.

[74]My above criticisms are not minor ones that do not affect the administration for the future; I am concerned that the interests of the beneficiaries could be harmed in view of the conduct of the administration to date..

[75]That is also evidenced by the time that transpired when very little has been done, as evidenced by CRS’ own emails in February, May and November 2019. There was clearly an action by Tom as executor. When the pace picked up with the instruction of Burges Salmon an open, transparent approach which would have resolved matters was not forthcoming; instead the linking of personal loans and chattels was raised.

[76]I have taken into account the wishes of the deceased, that her children were to be both executors and beneficiaries, a common state of affairs in families. But here I have found that the administration has not been carried out properly and my doubts that it will not improve in future mean that I must put this consideration aside.

[77]No point arises as to the wishes of the beneficiaries in these circumstances. Looking at what needs to be done, I am not satisfied that, even with court directions, the position can be resolved. The breakdown in relations here necessitates replacement.

[78]As to the additional cost, and in particular the appointment of a professional administrator, whilst to an extent I share Mr Martin’s concerns that Mr Westbrook’s initial estimate of £10,000 to £15,000 plus VAT may be too low, a substantial element of his fees is dependent on the co-operation of the parties. I also note in any event Tom instructed solicitors himself, so their fees will be similar. Overall, looking at the size of the estate, a property worth approximately £1.7 million or more, and the scope of the work, realisation of that asset at market value means that it is proportionate.

[79]I have taken into account that the estate accounts are well advanced. I also note that Tom, on the basis that he is to be replaced, has not objected to the appointment of Mr Westbrook as to his fitness to act. In summary, I am satisfied that it will be in the best interests and the welfare of the beneficiaries for Tom to be replaced. I will now hear counsel as to the terms of the order and costs. LATER

[80]The first point I must decide as to costs is principle. Mr Ball following my judgment says that he has been successful and he asks for the usual order as to costs. Mr Martin says that he accepts the principle that this would follow but he asks for me to reserve the costs, as he wants to put in certain without prejudice material from the costs correspondence and he cannot do so because it concerns the whole proceedings, including points I have not yet determined.

[81]So Mr Martin’s solution is to reserve the costs until determination of the account claim. Mr Ball disagrees and he says that the most significant problem is thes50 removal application and the account claim are two separate things; if Tom wanted to protect himself in this claim he should have confined himself to this claim.

[82]I am not going to reserve costs and I will not leave it for another day for these reasons:(1) I cannot and should not take into account that I have not seen nor heard of;

(2) There are two separate issues here, the account claim and the removal claim. The removal claim was linked with the account claim simply because, under the overriding objective, it makes sense to determine all that is in dispute between the same parties. But they are two separate matters.

(3) Any such without prejudice correspondence will be looked at, if necessary, in due course on the account claim.

(4) It seems to me that the defendant must be in part the author of his own misfortune by attempting to rely upon such correspondence that I have not seen. I am not going to have the position of a successful party adversely affected, because I have not seen and I cannot see the correspondence.

(5) If I am wrong as to that, appropriate adjustments can be made, if necessary, upon sight of the correspondence upon conclusion of the proceedings or by agreement.

[83]In those circumstances, I am going to make an order for costs in principle. I do need to hear from counsel now as, of course, where there is no statement of costs, I am obliged to consider the appropriate level of an interim payment. ___________ CERTIFICATE Opus 2 International Limited hereby certifies that the above is an accurate and complete record of the Judgment or part thereof. Transcribed by Opus 2 International Limited Official Court Reporters and Audio Transcribers 5 New Street Square, London, EC4A 3BFTel: 020 7831 5627 Fax: 020 7831 7737 civil@opus2.digital This transcript is approved by the Judge