Kershaw v Micklethwaite & Ors

I have before me an application by the claimant, Mr John Kershaw, for some or all of the defendants to be removed as executors of the Will of Mr Kershaw's mother, Mrs Adrienne Shaw Kershaw. The first and second defendants, Mrs Julia Micklethwaite and Mrs Jennifer Barlow, are Mr Kershaw's sisters. The third defendant, Mr Christopher Humphreys, is a trust accountant and a partner in PKF Accountants.

Mrs Kershaw died on 22 July 2008, leaving a Will dated 2 July 2004. That Will, as well as appointing the defendants as executors, contained, among others, the following provisions. By clause 2, Mrs Kershaw gave all her personal chattels to her three children in equal shares, with the exception of her jewellery, which she gave to Mrs Micklethwaite. By clause 3, Mrs Kershaw also gave her shares in K&W Investments Co Limited to Mrs Micklethwaite. By clause 5, Mrs Kershaw gave her residuary estate to her children in the following shares: as to two-fifths for Mr Kershaw, as to two- fifths for Mrs Micklethwaite and as to the remaining fifth for Mrs Barlow.

Clause 6.1 of the Will provided for the incorporation, subject to an immaterial exception, of the standard provisions of the Society of Trust and Estate Practitioners (1st Edition), paragraph 9(2)(c) of which states that a fiduciary may act even though he has a conflict of interest, provided that he has disclosed his interest and there is an independent executor who is not party to the conflict and also considers that the situation is not contrary to the general interest of the settlement.

Finally, clause 6.4 of the Will is in the following terms:

the freehold property or properties known as 53/66 Campo Lane Sheffield;

the freehold property known as Summerfield 4 Ashdale Road Sheffield.

Probate of Mrs Kershaw's Will was granted to the defendants on 8 June 2009. By then, Mr Kershaw had already instituted the present proceedings by a Claim Form dated 17 April 2009.

Mr Kershaw makes his application for the removal of the defendants as executors pursuant to section 50 of the Administration of Justice Act 1985. Section 50(1) of that Act provides as follows:

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; or

if there are two or more existing personal representatives of the deceased, terminate the appointment of one or more, but not all, of those persons."

Lewison J addressed the circumstances in which a personal representative should be removed in Thomas & Agnes Carvel Foundation v Carvel [2008] Ch

He stated as follows in paragraphs 44 to 47 of his judgment:

He continued, at p 386:

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". He referred to cases in which there was a conflict between trustee and beneficiary and continued:

He added, however, at p 389:

Mr Andrew Child, who appears for Mr Kershaw, pointed out that the Letterstedt case quoted by Lewison J was concerned with the removal of a trustee rather than an executor, and he suggested that the court would remove an executor more readily than a trustee. In support of this submission, Mr Child said that, unlike a trustee, an executor is not normally called on to exercise important discretions; his role is essentially to determine the extent of an estate and to divide it in accordance with the testator's directions.

However, it was accepted in Carvel that principles similar to those laid down by Lord Blackburn in Letterstedt should apply to the removal of a personal representative. The decision in Letterstedt was also quoted extensively by Evans-Lombe J in Heyman v Dobson [2007] EWHC 3503 (Ch), which concerned the removal of an executor. In any case, I can see no good reason for the court to apply a stricter test when considering whether to remove a trustee than it would apply with an executor. That an executor might not be expected to exercise discretion to the same extent as a trustee, and that an executor's role is likely to be more transient than a trustee's, suggest to me that, if anything, the court should remove a trustee more readily than an executor.

I note in this context that in Letterstedt Lord Blackburn said the following at page 387:

Mr Child initially suggested that a breakdown in relations between an executor and a beneficiary could, without more, justify the removal of the executor. However, Lord Blackburn observed in Letterstedt (at page 389) that:

There was some debate as to what, if any, weight, should be attached to the fact that a testator has chosen a person to be an executor. Mr Child submitted that the testator's choice is irrelevant; the "overriding consideration", as Lewison J noted in Carvel, is "whether the trusts are being properly executed" or "the welfare of the beneficiaries", and, argued Mr Child, a testator's selection of a person as an executor casts no light on whether an estate is being administered properly or where "the welfare of the beneficiaries" lies.

In contrast, Mr Francis Barlow QC, who appears with Mr Toby Boutle for the defendants, contended that the testator's intentions can be of significance. He referred me to a decision of the Irish Supreme Court, Dunne v Heffernan [1997] 3 IR 431. In that case, Lynch J, with whom the other members of the court agreed, said this at page 444:

For my own part, I agree with Mr Barlow that a testator's choice of executors is capable of being of relevance, if on no other basis then because the testator may be expected to have had knowledge of the characters, attitudes and relationships involved which a court will lack.

On the facts, Mr Child argued that the defendants should be removed as executors on the following grounds in particular. First, there is proper concern that the defendants have failed to value correctly the assets within the estate. Secondly, the defendants have failed to update Mr Kershaw and keep him properly informed about the estate's administration. Thirdly, the defendants have failed properly to identify the extent of the estate. Fourthly, Mrs Micklethwaite and Mrs Barlow have conflicts of interest. Fifthly, there is a breakdown in relations between Mr Kershaw and the defendants and a lack of confidence in their competence. I shall consider these points in turn.

As regards the suggestion that the defendants have failed to value correctly the assets within the estate, Mr Child suggested that probate valuations obtained in respect of the two properties, High Greave Farm and the Summerfield flats, were too low. Leaving aside, however, the conflict of interest point to which I shall come shortly, it seems to me that Mr Kershaw's complaints in this respect provide no basis whatsoever for the removal of the defendants as executors. The valuations which Mr Kershaw criticises were prepared by professional valuers. It is open to HM Revenue & Customs in the case of this estate, as with others, to challenge the figures if they wish to do so. Provided, however, that the valuation is not used in connection with the transfer of a property to Mrs Micklethwaite or Mrs Barlow in specie, I cannot see how the valuation of a property at a low figure for probate purposes could prejudice Mr Kershaw, nor how the valuations at issue could be said to cast doubt on the suitability of the defendants as executors. It would be strange indeed if the fact that a professional valuer had attributed a low figure to an asset in a probate valuation could, without more, provide any indication that an executor should be removed.

With regard to the complaint that the defendants have failed to update Mr Kershaw and keep him properly informed, Mr Child said that Mr Kershaw had been told by the defendants that he would receive copies of the probate papers once they were completed, but that Mr Kershaw had not in fact been sent the papers until 29 July 2009 although they had been completed on 22 April 2009. Mr Boutle attributed this to an oversight.

Next, Mr Child said that in April 2009 the defendants' solicitors had offered to provide Mr Kershaw with a monthly bulletin, but that only one such bulletin, dated January 2010, had in fact been received. In response to this, Mr Barlow agreed that Mr Kershaw had been offered a monthly bulletin, but said that he, Mr Kershaw, had not accepted or otherwise responded to the offer.

Next, Mr Child said that, although a letter outlining Mr Kershaw's issues had been sent on 10 August 2009, no substantive response had been received until 6 October 2009. Here, Mr Barlow accepted that there had been delay, but said that it was understandable, and he observed that it was an awkward time of year because of holidays and that the solicitor responsible for the matter had, as a result of her husband having been ill, been heavily committed at home.

Next, Mr Child said that, although an order for disclosure of documents by 14 September 2009 had been made in these proceedings, certain documents had in fact been supplied only recently. To this, Mr Barlow said that it was a serious question whether the additional documents were relevant at all, and he told me that none of them had found their way into the court bundles.

Finally, Mr Child said that estate accounts had been provided only in the last week or so. Mr Barlow told me that Mr Kershaw had been given the estate accounts as soon as they were ready.

Once again, it seems to me that these matters provide no basis for the removal of the defendants as executors. Even if things could have been handled better in certain particular respects, there is, in my judgment, no scope for any substantial criticism. In any case, as Lord Blackburn said in Letterstedt at pages 385 to 386, "… it is not indeed every mistake or neglect of duty, or inaccuracy of conduct of trustees", which will induce Courts of Equity to remove a trustee (or, I would add, an executor).

Turning to the allegation that the defendants have failed properly to identify the estate, Mr Child referred to the fact that the defendants had not yet succeeded in establishing the precise extent of High Greave Farm, but he accepted that this is an estate where it is difficult to establish exact boundaries, and he said that to say that a complaint was being made in this respect was to put matters too high. In my judgment, having regard to the explanations I have been given of the attempts the defendants have made to track down a missing conveyance, there is no basis for any criticism at all in this regard.

Mr Child also said that the defendants had failed to appreciate that the estate was entitled to some land in Birchover, Derbyshire and to some ground rents for land known as the Kerwin Estate. The defendants' response is essentially that they had not been aware of these assets, but took steps in respect of them once they learned of them. I can see no real foundation for criticism of the defendants.

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.

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.

With regard, finally, to the suggestion that there is a breakdown in relations between Mr Kershaw and the defendants and a lack of confidence in their competence, it is common ground, and in any event abundantly clear, that the relationship between Mr Kershaw and his sisters has broken down. It is symptomatic that the present proceedings represent the fifth piece of litigation which Mr Kershaw has instituted against Mrs Micklethwaite and/or K&W Investments Co Limited, with the running of which Mrs Micklethwaite was involved. I am not in a position to assess the rights and wrongs of this litigation. What matters for present purposes is that it testifies to the hostility which exists as between at least Mr Kershaw and Mrs Micklethwaite. It is indicative, too, that Mr Kershaw was expressing dissatisfaction with his mother's choice of executors very soon after her death and before he had had any experience of the defendants administering the estate.

As I have already said, however, I do not consider that friction or hostility between an executor and a beneficiary is of itself a reason for removing the executor. Mr Child suggests that, on the facts of this case, the hostility between Mr Kershaw and his sisters has the potential to create difficulties in the administration of the estate. While, though, it may well be that the administration of the estate could be carried out more quickly and cheaply were Mr Kershaw and his sisters to be on good terms, I do not think that the potential problems are such as to warrant the executors' removal. As I see it, the poor relations between the parties need not and should not either prevent or impede substantially the administration of the estate.

Mr Kershaw directs particularly criticism at Mrs Micklethwaite. He says, for example, that Mrs Micklethwaite failed to comply with proper formalities in her management of both K&W Investments Co Limited and Lee Croft Limited. He also complains that she failed to maintain the Summerfield flats adequately and that she was reluctant to allow a family trust to be wound up, even though that was her mother's wish.

Mrs Micklethwaite has responded to these allegations in her evidence. With regard to the points Mr Kershaw makes about the management of companies, she accepts that she may not fully have complied with Companies Act requirements, but she says that she was merely continuing with practices that her father, a solicitor, had established. She refers, moreover, to a letter which her mother wrote to Mr Kershaw in 2002 in which her mother said:

I am not in a position fully to resolve the issues between the parties in relation to these matters, but this does not matter. I know enough to be able to say that the criticisms which Mr Kershaw makes of Mrs Micklethwaite are not such as could conceivably show Mrs Micklethwaite to be unfit to be an executor; it is to be noted in this context that Mr Kershaw does not allege bad faith on Mrs Micklethwaite's part. In any case, Mrs Micklethwaite is only one of three executors. One of the others, Mrs Barlow, is an experienced business woman, was a magistrate for 20 years and has stated in the witness statement that she will not fall in with the wishes of her sister. The other, Mr Humphreys, is, as I have already indicated, a chartered accountant and partner in PKF Accountants. Moreover, he has extensive experience of being a professional executor and he has confirmed in evidence that he has no intention of doing anything other than properly and independently. Both Mrs Barlow and Mr Humphreys appear to me to be well qualified to act as executors. All three executors have, in any event, the assistance of an experienced solicitor, whose advice, Mrs Micklethwaite says, they have followed from the outset.

In all the circumstances, I have not been persuaded there is any good reason for any of the defendants to be removed as executors. The matters on which Mr Kershaw relies do not, either individually or taken together, provide any real basis for supposing that, if the defendants remain as executors, the estate will not be administered satisfactorily, nor that the "welfare of the beneficiaries" (to use Lord Blackburn's phrase in the Letterstedt case) calls for a change.

A factor weighing against the removal of the defendants or any of them as executors is cost. In this respect Mr Humphreys said the following in a witness statement:

It seems to me that there is considerable force in what Mr Humphreys says and that changing the personal representatives could indeed be expected to increase the costs of administration significantly, to the detriment of Mr Kershaw himself but also of Mrs Micklethwaite and Mrs Barlow as the other residuary beneficiaries.

The fact that Mrs Kershaw chose the defendants to be her executors also, in my judgment, militates against their removal. It is significant in this context that there is evidence that Mrs Kershaw devoted considerable thought to who her executors should be. For example, an attendance note made by the solicitor who prepared Mrs Kershaw's Will in respect of a conversation with her on the day before the Will was executed, records this:

My overall conclusion is that, attractively though Mr Child presented his case, I should not exercise my discretion to remove any of the defendants as executors, and I shall accordingly dismiss Mr Kershaw's claim.