Dobson v Heyman

MR JUSTICE EVANS-LOMBE: This is an appeal from the order of Deputy Master Cousins made on 8^th August 2007 in the estate of Vera Joan Heyman deceased, whereby he removed Klaus Hans Gustav Dobson as executor under her will and appointed a solicitor, Sandra Worth, as a co-trustee of a trust set up by him as executor under the will, of the main asset of the estate, namely the deceased’s house.

The deceased died on 6^th October 2004. Her last will is dated 10^th April 2002. The material provisions of that will are these. She gave “a lifetime interest in that part of my property consisting of” certain parts of her house to her sister Margaret Ashby (the second defendant) and a lifetime interest in other parts of the house to the first defendant, Mr Dobson, pending the death of her sister, Margaret, in which case the property was to be realised and its proceeds divided equally between Mr Dobson and her granddaughter, Emily Heyman. Finally, she bequeathed her residue to her granddaughter absolutely.

The domestic situation at the time of the death of the deceased appears to have been that Mrs Ashby was living in half of the house. In the other half of the house was living the deceased and Mr Dobson, who had been introduced to the deceased some years earlier when he came as an artisan to assist in refurbishment of the property. It appears that at the time of her death the deceased was something of an alcoholic.

The first defendant, Mr Dobson, applied for probate under the will and obtained that on 9^th November 2004. Simultaneously, solicitors instructed by him set up a trust of the house. Having first passed property in the house to himself, he entered into a trust deed whereby he declared himself to be a trustee of that property for himself and Emily in equal shares.

Nothing then happened materially until 21^st September 2005 when a copy of the will, together with a copy of the document conferring probate, was passed to the mother and next friend of Emily. Thereafter, correspondence started with a letter of 31^st March 2006 when solicitors instructed by Mrs Stone, Emily’s mother and next friend, wrote to solicitors instructed by the first defendant, asking for information with relation to the estate. In a letter of 3^rd May 2006 those solicitors wrote again, to which they got a response dated 11^th May 2006:

“Thank you for your letter, the contents of which are noted, although regrettably we have not received any instructions from Mr Dobson regarding these matters. We can only suggest that you write directly to Mr Dobson.”

It appears that by that stage instructions had been withdrawn from Messrs Fosters, the solicitors he had instructed.

The solicitors instructed by Mrs Stone wrote again on 26^th May 2006 saying:

“We are very concerned that Vera Heyman died on 6^th October 2004. Probate was granted on 9^th November 2004 and, since then, our client has heard nothing in relation to receiving a copy of the estate account, details of who the two trustees are, where the monies have been invested in relation to the trust, which was set up for her daughter, Vera Heyman’s granddaughter, further what steps have been taken in relation to the property, half of which should be placed in trust for Mrs Stone’s daughter. Delay in this matter being dealt with satisfactorily is wholly unacceptable… We have been in touch with Fosters Solicitors who it would appear are assisting you in the winding up of Vera Heyman’s estate, but they have advised us that they have received no instructions from you for some considerable time.”

There was no response to that letter.

On 26^th July the solicitors wrote again:

“It appears that there has been serious delay and lack of progress in relation to the administration of this estate and failure to implement the terms of the will. Regrettably our client has taken the view that you are intentionally delaying in the administration of the estate and refusing to communicate for whatever reason, which is clearly in breach of your duties as an executor and against the interests of the beneficiaries as a whole. Our client is not aware of any reason for such delay. In the circumstances we have been instructed to write in the following terms. Unless we receive express information with supporting evidence that steps are progressing in relation to the administration of this estate and the setting up of the necessary trusts with associated investment advice, then our client will have no option but to make an application to the High Court.”

There was no response to that letter.

The solicitors wrote again on 21^st August:

“We refer to our letter of 26^th July. We are most disappointed to note that we have not received a response. In the intervening period…”

They then set out some enquiries that they have made. Again there was no response to that letter.

There being no response, on 15^th May these proceedings were commenced by the issue of a claim supported by an affidavit. The claim claimed an order pursuant to section 50 of the Administration of Justice Act 1985 removing the defendant as executor and personal representative of the estate of Vera Joan Heyman deceased. The defendants are shown as Klaus Dobson and (inaudible) Gill. I should say that Mr Gill was actually never appointed. Although an executor under the will, probate was not obtained in his name but only in the name of Mr Dobson. Accordingly, it was only necessary to claim relief against Mr Dobson. Further, the claim asked for an order pursuant to section 44 of the Trustee Act appointing the same Miss Worth as an additional trustee of the property under the provisions of the trust established by Mr Dobson. That order was initially opposed, but, as I have said, the Deputy Master however made it, and there is no appeal by the appellants from that order.

The witness statement in support of the respondent’s application says this at paragraph 6:

“This application is being brought because I find it impossible to obtain any information about the administration of the deceased’s estate from the first defendant. At the time he took out the grant he had solicitors acting for him who finally wrote to me with a copy of the will, but after Robinsons Solicitors instructed me on Emily’s behalf began to press them for details of how the matter was progressing. They indicated in a letter of 11^th May that they were without instructions. The first defendant I note I am unsure whether Fosters will act for him at all, so I intend to serve this application on his personal address and I shall also send a copy to Fosters.

7.

In addition to her contention to a half interest in the property and the bequest to her of all the contents of the property, Emily is the sole beneficiary of the estate. It is now more than two years since probate was granted. I still have never seen any of the accounts of the estate and have no idea of the size of the residual estate or whether there are any liabilities that could eventually fall on Emily as residuary beneficiary and contingent half-beneficial owner of the property. I was not even provided with a copy of the deceased’s will until the end of September 2005 since Fosters indicated that they were without instructions Robinsons have written directly.”

She sets out the letters. No response whatsoever has been received. Copies of correspondence are exhibited. Finally:

“As matters stand I have no idea what, if anything, Emily’s interest in the residuary estate amounts to, what condition the contents of the property are in and whether or not all liabilities have been paid.”

On 9^th June 2007, as a reaction to that letter, Mr Dobson wrote a letter to the court in which he attempted to meet the criticisms made in the proceedings against him. I should have pointed out that those criticisms did not contain any allegation that Mr Dobson was guilty of any misconduct in his control of the estate, rather the only criticism advanced was the failure to provide information. The letter sets out the various matters which Mr Dobson has put in hand as executor, namely the maintenance of the property and the meeting of various expenses, but the letter does make plain that Mr Dobson, having initially had the advice of solicitors and discarded it and withdrawn his instructions from them, was proceeding without any professional advice at all in relation to his task as executor.

The proceedings were brought on for trial on 8^th August 2007, they having been listed for disposal by order of the court on 19^th June. At the hearing Mr Dobson appeared in person and produced the letter of 9^th June as his evidence to the court. The evidence on the other side was the witness statement which I have just read, together with its exhibits. The claimant appeared by solicitors and counsel, who has appeared on behalf of the respondent to this appeal before me. The Deputy Master gave judgment, having heard the arguments on either side. His judgment is a very short document, and I will read the material parts:

“I am going to make the order sought in paragraphs 1 and 2 of the application. I have heard the submissions of counsel for the applicant and the first and second defendants in person. I have read the witness statement of Marie Stone and letters from the first and second defendant and from solicitors on behalf of the third defendant. I have examined the will. So far as the claim for a substitute personal representative under section 50 of the Administration of Justice Act is concerned, that is set out in paragraphs 3 to 7 of Marie Stone’s witness statement, while the claim for an additional trustee under section 44 is set out under paragraphs 11 to 15. I do not propose to repeat those paragraphs. I adopt them as part of my decision. I note that the residue of the estate is left entirely to the applicant and so far as the trust of land is concerned she is one of the beneficiaries. There are various duties executors and trustees have under the general law. In this case nothing has been done and it appears that Mr Dobson does not know what his duties are.”

The rest of the judgment is merely concerned with the form of order. The text is the product of a note made by counsel for the respondents, but I think that the Deputy Master has initialled it as a reasonable record of what he said.

It appears, therefore, that the Master was basing himself on two grounds. The first is that Mr Dobson, as executor, was not administering the estate. Nothing has been done. Strictly speaking, that was an inaccurate statement to make. Mr Dobson had provided a letter which was treated as evidence by the Deputy Master, describing what had been done, and the letter does describe the practical matters which Mr Dobson had undertaken, in particular to look after the property and to meet expenses in relation to it. The second ground given by the Deputy Master was that Mr Dobson does not know what his duties are. It appears from the letter of 9^th June that that was certainly the case, and that is no criticism of Mr Dobson. Lay persons thrust into the job of executorship very often do not fully appreciate a need for professional advice in relation to what they are required to do in that situation. The fact remains, however, that Mr Dobson is and has since withdrawing his instructions from Messrs Fosters proceeded without professional advice.

I should say that, in addition to the matters I have referred to, there was before the Deputy Master a witness statement made by the second respondent, Margaret Ashby, describing the situation at the property and the history of her relationship with her sister, she having shared occupation of the property with her sister for many years, and the arrival of Mr Dobson on the scene, accompanied by Mr Ragbia Gill. That was a document which I am told Mr Dobson did not receive a copy of before the hearing, although it was filed and the Deputy Master read it. It contains some serious allegations with relation to Mr Dobson’s conduct. He did not have an opportunity to deal with it and reply to it before the Deputy Master and has not attempted to do so since.

It was submitted to me on behalf of the appellants that the correct reaction in those circumstances should be to make an order discharging the Deputy Master’s order and giving directions for a re-hearing which would enable Mr Dobson to file evidence in contradiction of the allegations of misconduct that had been made against him.

With an estate as relatively small as this – the property, which I am told is the only substantial asset of the estate, was valued in 2004 at £190,000, and the estate, therefore, is not large – one is inevitably concerned that it should not be consumed by costs incurred in protracted proceedings. If I was to take the course advanced to me by counsel for the appellants, that would require a further hearing after today and interlocutory steps between today and that further hearing. I am concerned, therefore, to see whether the Deputy Master’s order is inevitably undermined by what happened in the hearing, the criticism being that the hearing below was treated in a summary way, there was no cross-examination, albeit the appellants were not professionally represented, and the Deputy Master appears to have proceeded simply on the documents which he had before him. Further, it is said that his judgment does not give any clear idea of what it was that he relied on to come to the conclusion that he did. Nonetheless, it appears that, with the exception of the allegations of misconduct made in Miss Ashby’s witness statement, the basic facts of the case are not in issue. I propose therefore to proceed to examine those facts, disregarding the allegations of misconduct, to see whether the Deputy Master’s order can stand in the light of those accepted facts.

I turn, therefore, to consider the law which I should apply. Section 50 of the Administration of Justice Act 1985 provides as follows, so far as material:

“Where an application relating to the estate of a deceased person is made to the High Court under this subsection by or on behalf of a personal representative of the deceased or a beneficiary of the estate, the court may in its discretion—

(a ) appoint a person (in this section called a substituted personal representative) to act as personal representative of the deceased in place of the existing personal representative or representatives of the deceased or any of them…”

That section or its predecessors has been the subject of very little authority to guide the court as to how its provisions are to be applied. Those authorities appear to depend on the earliest of them, which is a decision of the Privy Council in Letterstedt v Broers (1884) 9 AC 371. This was a case that came from South Africa where the court was considering an application to remove a corporate trustee as trustee of a fund, it being accepted that the principles applicable to the removal of trustees and the removal and substitution of executors of wills are the same. The Privy Council give their view of the applicable law, starting at page 385:

“The whole of the matters which have been complained of, and the whole that, if this judgment stands, may yet have to be done by the Board, are matters which they had to do, as having accepted the burthen of carrying out the trusts which on the true construction of the will were imposed upon them, and so become trustees. What they had to do as executors merely, such as paying debts, collecting assets, &c., have long ago been over, and by the terms of the compromise the plaintiff cannot now say they have not been done properly. There may be some peculiarity in the Dutch Colonial law, which made it proper to make the prayer in the way in which it was done to remove them from the office of executor; if so, it has not been brought to their Lordships' notice; the whole case has been argued here, and, as far as their Lordships can perceive, in the Court below, as depending on the principles which should guide an English Court of Equity when called upon to remove old trustees and substitute new ones. It is not disputed that there is a jurisdiction "in cases requiring such a remedy," as is said in Story's Equity Jurisprudence, s. 1287, but there is very little to be found to guide us in saying what are the cases requiring such a remedy; so little that their Lordships are compelled to have recourse to general principles.

Story says, s. 1289, "But in cases of positive misconduct, Courts of Equity have no difficulty in interposing to remove trustees who have abused their trust; it is not indeed every mistake or neglect of duty, or inaccuracy of conduct of trustees, which will induce Courts of Equity to adopt such a course. But the acts or omissions must be such as to endanger the trust property or to shew a want of honesty, or a want of proper capacity to execute the duties, or a want of reasonable fidelity."

It seems to their Lordships that the jurisdiction which a Court of Equity has no difficulty in exercising under the circumstances indicated by Story is merely ancillary to its principal duty, to see that the trusts are properly executed. This duty is constantly being performed by the substitution of new trustees in the place of original trustees for a variety of reasons in non-contentious cases. And therefore, though it should appear that the charges of misconduct were either not made out, or were greatly exaggerated, so that the trustee was justified in resisting them, and the Court might consider that in awarding costs, yet if satisfied that the continuance of the trustee would prevent the trusts being properly executed, the trustee might be removed. It must always be borne in mind that trustees exist for the benefit of those to whom the creator of the trust has given the trust estate.

The reason why there is so little to be found in the books on this subject is probably that suggested by Mr. Davey in his argument. As soon as all questions of character are as far settled as the nature of the case admits, if it appears clear that the continuance of the trustee would be detrimental to the execution of the trusts, even if for no other reason than that human infirmity would prevent those beneficially interested, or those who act for them, from working in harmony with the trustee, and if there is no reason to the contrary from the intentions of the framer of the trust to give this trustee a benefit or otherwise, the trustee is always advised by his own counsel to resign, and does so. If, without any reasonable ground, he refused to do so, it seems to their Lordships that the Court might think it proper to remove him; but cases involving the necessity of deciding this, if they ever arise, do so without getting reported. It is to be lamented that the case was not considered in this light by the parties in the Court below, for, as far as their Lordships can see, the Board would have little or no profit from continuing to be trustees, and as such coming into continual conflict with the appellant and her legal advisers, and would probably have been glad to resign, and get out of an onerous and disagreeable position. But the case was not so treated.

In exercising so delicate a jurisdiction as that of removing trustees, their Lordships do not venture to lay down any general rule beyond the very broad principle above enunciated, that their main guide must be the welfare of the beneficiaries.”

What emerges from the Letterstedt v Broers’ judgment is that the Privy Council reversed the order of the court below which declined to remove the corporate trustees in question and made in place an order removing them, but did not require them to pay the costs of the proceedings, the costs of the successful applicants having to be born by themselves. This was the order made in circumstances where the Privy Council had taken note that no misconduct had been proved against the trustees or found by the court below against the trustees in the case. Nonetheless, it appears that they thought it appropriate in all the circumstances of the case, because of the conflict which the evidence showed had grown up between the trustees and the beneficiaries, that it was appropriate in the Privy Council’s view that the corporate trustees be removed, but because their actual conduct of the estate was not established as having involved any sort of misconduct or negligence, they should not be required to pay any of the costs.

That case was reviewed by Lewison J in Carvel v Carvel [2007] EWHC 1314 (Ch). In his judgment in that case, starting at paragraph 43 and ending at paragraph 49, Lewison J reviews the Letterstedt v Broers case and quotes extensively from its contents, all of which are included in the passage that I have included in my judgment. He adds this at paragraph 46 in his own brief summary of the law:

“The overriding consideration is, therefore, whether the trusts are being properly executed; or, as he put it in a later passage, the main guide must be ‘the welfare of the beneficiaries.’”

referring to the judgment of Lord Blackburne.

Another recent decision on the matter is Re Loftus [2005] 1 WLR 1890, a decision of Lawrence Collins J (as he then was). The facts of the case did not primarily concern an order removing the executor in this case, but they were an example of an extreme case of misconduct by an executor and that remedy was part of the relief claimed. Lawrence Collins J deals with this aspect of the case at paragraph 199, where he says:

“I accept the claimants' submission that there was no compromise agreement, and that in the absence of such an agreement, Margaret's conduct in retaining and converting to her own use the sale proceeds of 13 Gordon Road, Mr Loftus's personal chattels, the rents and profits of the Yard, raising a mortgage against the Yard, transferring it to her son in return for the redemption of the mortgage, and failing to provide information to the beneficiaries (and swearing an incorrect inventory and account) was in breach of trust.

200.

As regards the application for removal under section 50 of the Administration of Justice Act 1985, it is a matter for the discretion of the court, and that it is reasonable for the court to take a pragmatic approach, to consider the views of the beneficiaries and the interests of the estate as a whole.”

He cites authorities.

“I have no doubt that I should exercise my discretion to remove Margaret, and appoint an independent solicitor in her place.”

Finally, there was, as I understand it, cited to the Deputy Master and has been again cited to me by counsel for the respondents a passage from Williams Mortimer & Sunnucks on Executors, Administrators and Probate 18^th Ed, at page 850 paragraph 60-14. Having set out the provisions of the section:

“In particular, if the administration has come to a standstill because relations between the personal representatives have broken down or relations between the representatives and beneficiaries have broken down, the court will ordinarily remove the personal representatives and appoint new ones to enable the administration to be completed. It is not necessary to establish wrong-doing or fault by the personal representative to obtain its removal. If for whatever reason such as clash of personalities or the lack of confidence in the personal representatives by the beneficiaries, even if unjustified, it has become impossible or difficult for the administration to be completed by an existing personal representative, then an order for his removal will usually be made.”

It is true that in the present case there is no indication that the respondents intend to obstruct the administration of the estate, but it certainly appears that there is friction between the beneficiaries and Mr Dobson.

As I have said, this estate is not a large one, and I am concerned for the costs which are building up and which inevitably will detract from its value. It is certainly correct, as submitted to me, that the Deputy Master’s judgment is very limited, and his description of the matters he relied on in arriving at his conclusion is of the very shortest, consisting of one sentence which I have already quoted. One of those grounds appears to be incorrect in the sense that it does not acknowledge that Mr Dobson has been looking after the property and incurring expense in maintaining it. It is, however, not in issue that there has been a failure by Mr Dobson to supply material to the beneficiaries, in particular to Mrs Stone as representing her daughter, which was only rectified on the commencement of these proceedings. Mr Dobson also is a beneficiary under the trust of the property which he himself has set up and also under the provisions of the will in the sense that he has a 50% share in the net proceeds of sale of that property if it is realised and when it is realised. Therefore, to that extent he is competing with Emily Heyman as beneficiary. I do not mean competing in the sense that they are in active competition for the shares which are defined, but his interest in the estate is equal to hers, in fact slightly smaller, because he has no interest in residue discounting the value of the property. There is undoubtedly friction between Mrs Stone (as representing her daughter) and Mr Dobson, and also undoubtedly friction between Mrs Ashby and Mr Dobson – whether justified on Mrs Ashby’s part I am not in a position to decide because I have not heard Mr Dobson’s side of the particular allegations made.

Mr Dobson will remain, if the Deputy Master’s order stands, a trustee of the property and so maintain a degree of control over the disposition of what all agree is the substantial asset in the estate.

Bearing in mind my reluctance to burden this estate with further cost, I have concluded that the Deputy Master had sufficient material in the unchallenged facts which were before him to justify the order which he made. It seems to me that the fact that there is difficulty between the beneficiaries and a single sole executor in which the beneficiaries are reluctant to accept that executor’s account of dealings with the estate of the deceased, is sufficient ground, applying the discretion which Section 50 confers on the court in a pragmatic way, as recommended by Lawrence Collins J, and that there was before the Deputy Master sufficient material on which he could make the order that he did. This is an appeal against the exercise of the Deputy Master’s discretion. It seems to me that, in order to set aside the exercise of that discretion, I would need to find that there was no material on which he could properly have arrived at the decision which he did arrive at. I conclude that that submission fails.

It follows that this appeal must be dismissed.