Please see Part 1 for the law and criteria the Court will consider on an application to remove an executor or trustee. This article is Part 2 and focuses on the procedure, which can be highly technical.
Applications to remove a trustee or PR are made by the Part 8 procedure within the Civil Procedure Rules. Whereas Part 7 is the "normal" procedure where a party sets out its particulars of claim and this is responded to in the form of a pleaded defence, Part 8 procedure is for questions which are unlikely to involve a substantial dispute of fact, or where a rule or Practice Direction provides that Part 8 procedure must be used.
PD57 – information about the estate and new trustee’s fitness to act
It is essential that the requirements of Practice Direction 57 are followed, in particular
the information about the estate (para 31.1 (2)) and
written evidence concerning the consent and fitness to act (of the new trustee) under power 13.2 must be provided.
In practice this might mean that if you are seeking to have a professional (Solicitor) executor appointed, this could be a short statement from their Senior Partner attesting to the appointee’s qualities and experience. In reality, a Court is likely to accept an experienced Solicitor with appropriate qualifications being fit to act providing there is no conflict or other reason they should not be appointed.
If the respondent to the application wants someone other than the person proposed by the applicants they should provide their alternate with the evidence required under para 13.1.
CPR 57 - evidence
Part 3 of CPR 57 (substitution and removal of personal representatives) needs to be closely followed in relation to how the claim is brought. It is also helpful to follow this if removing a trustee rather PR. The key provisions are
to include a sealed or certified copy of the Grant (13.1 1A),
written evidence of the grounds of the claim including brief details of the property,
liabilities of the estate,
names and addresses of person in possession of documents relating to the estate,
names of beneficiaries and respective interests and
name, address and occupation of proposed substituted personal representative (see 13.12 a-e)
The evidence in support of the claim under 13.1 (2) may be provided in a witness statements from the Solicitor. It is important to consider however whether that Solicitor can give direct evidence as to the matters complained of and whether that is better coming from the individuals involved (PRs or beneficiaries).
Importantly for trustees or PR is, they must maintain their neutral stance which is likely to be difficult in what is essentially a hostile application if resisted to the point of a hearing. So far as possible the evidence should stick to the facts and be persuasive as to what is appropriate.
Do you need to prove that serious wrongdoing?
See more in Part 1 for the criteria the Court will assess, but as evidence is important to procedure, I cover this question here. If there is clear evidence of serious wrongdoing that is certainly going to help in an application for removal. It is not strictly necessary however, and the key provision is to look to the best interest of all the beneficiaries - is it best that the incumbent executor is removed?
In the case of Re Folkes, Deputy Master Linwood held:
"it seems to me that the appropriate test to be applied to each allegation is whether there appears to be on the evidence before the Court, or that such evidence that appears likely to be obtained at proportionate cost, the basis for a claim which has reasonable prospects of success, subject to consideration of potential defences. Such a claim must enhance the value of the estate relative to the cost of pursuing it. Evidence for a claim or defence before the Court is unlikely to be determinative but must not be speculative or dependent upon matters which may or may not happen."...Then the question of the replacement of the executors must be considered in the context of their position as far as knowledge and possible conflicts of interest are concerned".
This judgement shows how the Courts will view the application through the lens of the various claims and complaints, the proportionality of investigating and pursuing those, accumulative effect of claims, and applying that to the question of whether removal is the best thing for the beneficiaries.
What happens to the legal costs in a removal application?
If the application is successful and the trustee or executor is removed, Courts will consider the usual rule set out in CPR 44.2 as to who should bear the costs, meaning that the unsuccessful party (who opposed the application) normally pays the costs of the successful party. Courts will at this stage consider the conduct of the parties, any without prejudice save as to costs communication, for example an offer seeking consent to the removal on the basis that costs are borne by the estate. As with most cases, the Courts has a wide discretion on costs.
Are outgoing executors protected from costs orders?
The starting point under CPR 46.3 is that PR or Trustees are entitled to be paid the costs of the claim out of the estate. Importantly, PR’s or trustees can be deprived of that indemnity, and Practice direction 46 provides guidance as to what circumstances the Court may take into account. It will consider to the extent that the indemnity applies, to costs "properly incurred", and will look to all the circumstances of the case including whether the PR obtained directions from the Court (which might have given them some protection), acted in the best interests of the fund or estate, and whether they acted unreasonably in bringing or defending proceedings.
The position on costs therefore, for an applicant considering removal application, requires getting over quite a few hurdles. In cases of misconduct, it may be easier to get over that hurdle and achieve a costs order that the outgoing PR or executor or trustee pays the applicant's costs personally (i.e. they are deprived of their indemnity). In other cases, it will be necessary to make good and detailed submissions pointing to the conduct of the trustee, perhaps including that they should have agreed to their removal at an early stage if that is what the Court has ordered. Either way, one should consider carefully an application for removal of a trustee/PR given the prospect of the cost of the whole claim coming out of the estate, or if brought by a beneficiary out of their own funds (unless they recover their costs from the estate).
This article was written by Toby Walker, Dispute Resolution Partner at Allan Janes LLP. In addition to experience of successfully having removed executors, Toby and his Team have specialist expertise in the area of contested probate, trusts and proprietary estoppel claims. Please do not hesitate to contact us for a free no obligation telephone discussion.
Note from the author: this article Part 1 and Part 1 attempts to summarise the lecture by Chief Chancery Master Marsh to the ACTAPS annual lecture on 9 November 2020