Perry & Anor v Neupert

This is an appeal from the judgment of Master Shuman dated 23rd January 2018, whereby she granted the Defendant's application for summary judgment on the Counterclaim in these proceedings.

The Claimants have brought a claim pursuant to section 50 of the Administration of Justice Act 1985. The Claimants seek the removal of the Defendant as executor of the will of Israel Igo Perry (“the deceased”), dated 29th August 2013, and the appointment of either the Claimants, or the Claimants and Graeme Kleiner, a solicitor at Charles Russell Speechlys and head of its Contentious Trusts and Estate Team, as personal representatives in substitution for the Defendant.

I should say that the appointment of Mr. Kleiner was originally a suggestion of the Defendant which was adopted as a fall-back position by the Claimants in their pleadings.

The deceased died on 18th March 2018 and probate has yet to be granted. The first Claimant is the sole beneficiary under the will and the deceased's widow. The Defendant is the sole executor under the will and is a Swiss lawyer. The Defendant brought a counterclaim, pursuant to section 50 of the Administration of Justice Act 1985, seeking to be removed as executor and replaced by Graeme Kleiner. The Defendant's initial position was to defend the claim in its entirety, but by the time the case came before the Master (if not before) the Defendant had made it clear that he felt obliged to stand down as the executor. The learned Master summarised this history in her judgment and said at [5]:

"That snapshot of the parties' current positions brings into sharp focus the issue between the parties on the substantive section 50 claim. Both agree that the Defendant should be removed as an executor and either on the Claimants’ case, the Claimants or the Claimants and Graeme Kleiner, or on the Defendant's case Graeme Kleiner alone, should be appointed as personal representative. The remaining issues are therefore the identity of the replacement personal representative or representatives and inevitably, given the manner in which this claim has been litigated to date, the costs of these proceedings."

The Master reserved the costs and I am not required to deal with them today.

The Master was presented by the parties with a binary choice: either to grant summary judgment on the Defendant’s application, or to order a seven-day trial in circumstances where the Defendant had decided to stand down as personal representative, where various allegations of dishonesty against the Defendant would nonetheless be pursued. She said at [7]:

"It is the overriding objective of the court to deal with cases justly and at proportionate cost. The court must seek to give effect to the overriding objective whenever it exercises any power under the CPR and when it interprets any rule and Practice Direction. Moreover, the parties must help the court in furthering the overriding objective. Given that the claim and counterclaim are currently listed for a seven-day trial when both parties agree that the Defendant should be removed as executor, the overriding objective is at the forefront of my mind."

In my view, the Master was quite right to consider the overriding objective and to remind herself that this was not a case about whether the Defendant should be replaced as personal representative. That was common ground. It was only a case about who should be substituted.

The Master said at [46] of her judgment:

"Given that both parties agree that the Defendant must be replaced, the only issue at trial will be the identity of a suitable substitute personal representative. Counsel for the Claimants argues that the Claimants wish to explore all the issues raised in this application and claim and counterclaim at trial, to investigate the actions of the Defendant and his motivation for making the accusations that he has against the Claimants."

She regarded that as an attempt to require a long trial about matters which were no longer relevant. I agree with her. However, it does not necessarily follow that this case was suitable for summary judgment. The alternative was to order a much shorter trial, confined to relevant issues which remain in dispute between the parties.

In his reasons for granting permission to appeal, Zacaroli J. said:

"The learned Master concluded that the appellants either do not understand the responsibilities of a personal representative or will not carry to out their duties to ensure that the deceased's estate is properly administered and debts paid and that there was no prospect of the appellant's position being any better off a trial. Accordingly, she concluded that the Appellants had no real prospect of successfully defending the claim."

That conclusion was based largely on the fact that the Claimants, by reason of having pleaded that the deceased's estate had no liability in respect of either of two alleged debts, and the trenchant nature of the allegations made against the Defendant regarding those alleged debts, had pre-judged the question of the estate’s liability. Zacorali J continued:

"There is a real, as opposed to fanciful, prospect of establishing that the Master erred in reaching that conclusion, without permitting the Appellants’ evidence as to their fitness to act as personal representatives to be tested at trial, on the basis that it is at least arguable that; (1) the primary duty of a personal representative is to act in the interests of the beneficiaries; (2) the interests of the beneficiaries lie in opposing a disputed claim against the estate, via litigation as necessary; (3) the two claims asserted against the estate were at least genuinely disputed and; (4) in those circumstances the fact that the sole beneficiary of the deceased's estate has expressed the belief that a claimed liability against the estate is a bad claim does not in itself demonstrate that such person either misunderstands or would not carry out the duties of a personal representative of the deceased's estate."

Finally, he said:

"That is not to say that the Appellants should have free reign to pursue allegations of wrongdoing pleaded against the Respondent in circumstances where it is now common ground that the Respondent would be removed as a personal representative. There is force in the learned Master's observations that it was inappropriate for such a matter to be pursued in the context of a claim under section 50 of the Administration of Justice Act, but that is arguably a matter for case management directions in light of the changing nature of the case since the original pleading, rather than a reason to deprive the Appellants altogether of a trial."

Mr. Chaisty QC, who appeared on this appeal for the Claimants, argued that this concise summary was not only a reason for granting permission to appeal but also encapsulated why the Master was wrong to grant summary judgment.

I should make clear that I have not relied upon the reasons for granting permission when reaching a decision on the merits of the appeal. Judges, when granting permission to appeal, generally only see one side of the case. They see the appellant's skeleton argument and not the respondent's skeleton argument. In contrast to orders refusing permission to appeal, where the unsuccessful applicant is entitled to see the reasons for the order, orders granting permission to appeal frequently do not provide reasons.

The key question is: was the Master right to conclude, on the evidence before her, that the Claimants had effectively pre-judged the issue of whether certain debts were due to be paid by the estate, or were they, as they claimed, merely expressing a belief that this was the case, and making it clear that they would look at the issue on the merits were they to be appointed personal representatives?

The essence of the Master's reasoning is at [46] to [53] of the judgment. She summarised, at [50], the nature of the debts that were said to be due These were two significant potential debts which it was suggested that the estate might be indebted in the sums of £13.7 million €14.128,955 to a single alleged creditor (“BH06”). She noted that if these claims were correct then the deceased's estate might be insolvent.

She then turned to the Particulars of Claim at paragraphs 14 to 17. She explained that the Claimants’ overarching position was that by the Defendant asserting that there might be liabilities of the deceased's estate so that the deceased's estate might be insolvent, he was adopting a position knowing that it was false and had made such assertions knowing that they were false and untrue. She then referred at [51] to the Second Claimant's third statement, dated 18th October 2017 at paragraph 40. In that statement the Second Claimant explained that she is an advocate qualified in Israel and that she had not yet been appointed to be the personal representative of the deceased. She said that:

"I do not have access to all the paperwork which a personal representative would ordinarily be able to access. Neither my mother nor I have a prejudged or fixed view as to whether BH06 is a creditor of the estate. It is simply too early in the process to say with certainty. The points that we made in the Particulars of Claim were made with an honest belief and at an early stage, without having access to all the documents. If we were appointed as the executors we would have full access to the documents and will be better placed to consider the arguments put forward by BH06 and of course make payments to any legitimate creditors. We are not seeking to prevent payment to any legitimate creditors. If BH06 is a creditor that in no way harms me as I am a beneficiary under the Lake Como Trust which owns the shares in BH06."

She also explained in a further witness statement that she was very qualified to carry out the position as executor of the estate, supported by her mother. She has extensive experience in finance and appears to be an extremely well qualified lawyer. She said:

"My mother and I are fully aware of the duties which would apply if we were appointed. We would fully comply with those obligations. There is no justification for the Defendant to assert otherwise. If this is contested at a trial I would of course tender myself for cross-examination, during which my positions and intentions, and similarly my mother's, could be fully explored and an assessment reached. My mother and I will consider every claim as may be made against the estate on its merits and give full and proper consideration to assessing what is comprised by way of assets in the estate."

She also referred to the fact that if appointed, there might be a need to engage solicitors and said at paragraph 52:

"In these circumstances the court may be assured that we will, if appointed, in any event consider any claims which BH06 or any other creditors might seek to advance. We will do so with the full information available as executors and with such legal assistance as may be required. The Defendant has referred to allegations in the Particulars of Claim as to the assets and solvency of the stated creditors. These points are made in the context of the Defendant's conduct. We have not reached any final view as to creditors or assets. We are not presently able to do so. If appointed we will of course consider any claims made against the estate as and when made."

She concluded:

"I repeat, we will discharge our obligations and duties properly, with professional assistance if required."

The Master did not accept the position set out in the witness statements to which I have just referred. She said at [52]:

"In a claim where there are two potential and significant liabilities against the deceased's estate, I must consider the interests of the creditors as well as those of the first Claimant as the only beneficiary. From the manner in which the Claimants have set out their case it is clear to me that they have prejudged these potential liabilities. When the Second Claimant now says that the Claimants will consider any and every claim against the estate, that has a hollow ring it to, paying lip service to the duties of a personal representative."

The reason why the Master reached this conclusion was because of unequivocal statements in the pleading that these debts were not owed as a matter of fact and that the Defendant was dishonest when he expressed the view that they might be owed. She continued at [56]

"I do not consider that the Claimants will be appropriate substitute personal representatives for the reasons that I have set out in this judgment. In particular, I consider that the manner in which they have conducted this claim, the assertions that remain in their pleaded case that the Defendant lied when he said that the class action debt and the Britannia debt were potential liabilities of the deceased's estate and lied when he said that the deceased's estate might be insolvent, reveal that they have indeed prejudged these issues despite their protestations to the contrary."

It therefore appears that the Master, on the evidence before her, concluded that the Second Claimant, Ms. Tamar Perry, was not telling the truth in her various statements when she said that the claimants had not prejudged the issues. I can understand why the Master reached that conclusion. If there is a trial it may be that the judge will conclude that the Claimants are not suitable to be appointed as personal representatives because, in fact, they have prejudged the issue.

The question is whether this is a suitable case for summary judgment. This depends on whether the Master was entitled to reach the conclusion that she did, namely to conclude that Ms. Tamar Perry's evidence was to be taken with a pinch of salt.

I will not set out the principles concerning summary judgment applications, which are well known. I shall only refer to the judgment of Mummery LJ in Doncaster Pharmaceuticals Group Ltd. v the Bolton Pharmaceutical Company 100 Ltd. [2006] EWCA Civ 661, at [4] - [6]. Mummery LJ set out the test for summary judgment: the court's function is to decide whether the Defendant's prospects of successfully establishing the facts relied upon are real, that is more than fanciful or merely arguable. He then said:

"Although the test can be stated simply, its application in practice can be difficult. In my experience there can be more difficulties in applying the "no real prospect of success" test on an application for summary judgment (or on an application for permission to appeal, where a similar test is applicable) than in trying the case in its entirety (or, in the case of an appeal, hearing the substantive appeal). The decision-maker at trial will usually have a better grasp of the case as a whole, because of the added benefits of hearing the evidence tested, of receiving more developed submissions and of having more time in which to digest and reflect on the materials."

I have concluded that this passage is apt to describe this case. It seems to me that it is not necessarily inconsistent for a deponent on the one hand (in a witness statement and pleading, supported by a statement of truth) to express the belief that certain facts are true, but nonetheless to state that his or her mind is open, as the full facts are not yet known. In the present case, there are arguable grounds to dispute the debts. I do not find that Ms Perry’s evidence is incredible, or obviously irreconcilable with previous statements made by the Claimants. I consider that it is only right that, having been accused of dishonesty, Ms. Tamar Perry should have the opportunity to vindicate herself during cross-examination at a trial.

I have been shown further material which may support the Defendant's position that the Claimants are not suitable to be appointed as personal representatives, including a judgment of the Liechtenstein court which concluded that the Claimants had improperly interfered with the administration of certain Liechtenstein trusts. This allegation, if relevant to these proceedings, must be put to the Claimants during cross-examination.

It has also been brought to my attention that BH06 objects to the appointment of the Claimants as personal representatives. To date, the creditor's application to be joined in these proceedings has been refused. If that application is renewed, in circumstances where Dr. Neupert has now accepted that he must stand down as personal representative, I consider that it would be appropriate for BH06 to be represented at the trial and to express its view. Similarly, if the trustees of the Liechtenstein trust, who also apparently object to the appointment of the Claimants, wish to express their view at trial, they should be able to do so.

This will not be a seven-day trial. I consider that it should last for no more than two to three days, should be properly confined to the issues that remain in play and should not be taken as an opportunity to ventilate allegations which are not relevant to the relatively narrow question that the trial judge will have to decide. In all the circumstances, I shall allow this appeal.

I should conclude by saying that the Master's judgment is extremely thorough. It may turn out at trial that she was in fact correct in her conclusion concerning Ms. Perry’s evidence, but that is not the question that I must decide. She was put in a difficult position by being presented with only the two alternatives to which I have referred, and by neither party proposing a much shorter trial, which I have concluded is appropriate.

this case involves a serious dispute of fact, where the credibility of the Claimants may well be crucial to the ultimate determination of the remaining issues. In those circumstances, in my judgment, a trial is unavoidable.