Bowser v Smith [2023] and its importance for Personal Representatives

Bowser v Smith [2023] EWCA Civ 923 is a sobering lesson for personal representatives on a number of matters, including what to do when contemplating hostile litigation, conflicts of interest and personal costs liabilities.

Background

Ian Smith died unexpectedly in his 40s during a police chase.  He was survived by his widow, Julie, whom he had been in the process of divorcing, and their ten children (nine under the age of 18).  Julie and a solicitor, Mr Bowser, were named as his executors under a Will which gave the estate to his ten children, with no provision for his widow.

A week after the death, Mr Bowser asked Julie to step down as executor (“renounce probate”) on the basis of a conflict of interest.  Two weeks later, he threatened to issue proceedings to remove her as executor and to seek costs against her personally.  Julie did not respond as she was still dealing with the unexpected loss and aftermath with her children.  Two months after the death, Mr Bowser issued an urgent application to remove Julie who then instructed solicitors and offered to step down if Mr Bowser also agreed to do so.

The matter came before the Court and, after the Judge made quite strong remarks about the case, both parties agreed to a consent order removing both executors and appointing an independent solicitor to act as personal representative.  The parties could not, however, agree on costs and, after written submissions, the Judge ordered Mr Bowser to pay Julie’s costs and deprived Mr Bowser of his right to claim his costs from the estate.  Mr Bowser appealed the costs order.

Hostile litigation

Mr Bowser’s initial letter to Julie was found to be reasonable in tone by the Court.  However, it quickly became hostile and the Court found that none of his letters could be said to be pre-action letters so he had issued proceedings without complying with any Pre-Action Protocol.  It is long established that, if a trustee or personal representative brings or defends an action unsuccessfully and without the permission of the Court, it is for him to show that the costs so incurred were “properly incurred”: In re Beddoe [1893] 1 Ch 547.  In that case, the Judge said that “all litigation should be avoided, unless there is such a chance of success as to render it desirable in the interests of the estate that the necessary risk should be incurred”.  A Beddoe application has to be made in separate proceedings, to which the beneficiaries are joined as parties, and the Court has to form a view as to whether it is for the benefit of all the beneficiaries that the proceedings should be issued.  This can be an expensive and time-consuming exercise.

Mr Bowser did not seek Beddoe relief and his correspondence did not suggest this had even occurred to him as a necessary step prior to issuing proceedings.

The Court of Appeal (CA) emphasised the need for hostile litigation to be the last resort.  Personal representatives must take care how they word their correspondence, comply with pre-action protocols and consider whether to get Beddoe relief before issuing proceedings by or on behalf of the estate.

Conflict of interest

In principle, it is possible for a personal representative to bring a claim under the Inheritance (Provision for Family and Dependants) Act 1975 (“the 1975 Act”) and there is no principle of law that means such a situation automatically gives rise to a conflict of interest requiring the personal representative to step down.  Both an applicant for reasonable financial provision and the estate beneficiaries share a common interest in the proper administration of the estate and the maximisation of assets to satisfy all beneficial interests, whether they be under a Will, intestacy or the terms of an order under the 1975 Act.  There is no case law on this but various legal textbooks are unanimous on this point: “Making a 1975 Act claim is in no way inconsistent with the claimant’s role as personal representative; they are not, by doing so, challenging the will, nor are they making a claim adverse to the estate, as they would be if (for example) they were claiming a beneficial interest in an asset which the deceased had purported to dispose of by their will.  They are merely seeking a redistribution of the estate at the expense of the existing beneficiaries.” (Ross on Inheritance Act Claims, 4th ed (2017).

The Court of Appeal in Bowser agreed that Julie was not conflicted from acting as executor despite notifying of her intended 1975 Act claim and that Mr Bowser was incorrect to seek to remove her on the ground of conflict of interest.

The writer is aware that conflicting advice may be given by the SRA Ethics Helpline in these matters and, ultimately, it will come down to the facts of each case.  Personal representatives who also wish to bring a claim under the 1975 Act will, effectively, “wear two hats”: one ‘hat’ as personal representative where they are essentially neutral and under a duty to act in the best interests of the estate as a whole (i.e. owing duties to all the beneficiaries); and the other ‘hat’ as applicant under the 1975 Act.  In such a situation, the personal representative will have to be careful to keep these two capacities separate and their legal advisers will have to ensure this is stressed and maintained throughout.

If an individual personal representative feels they cannot keep this role separate, or if they give instructions that give rise to a conflict between these two capacities, they must consider renouncing probate or (if the grant has already issued) applying to be removed as personal representative.  This will be particularly important if they are the sole personal representative.

To rub salt into the wound, it then turned out, when the new personal representative was handed the files, that Mr Bowser himself was subject to a conflict of interest due to his involvement in a transfer of assets by the deceased out of his estate when it was clear the marriage had broken down.  The CA stated that the transaction will require careful scrutiny by the divorce lawyers and in the context of any 1975 Act claim because section 10 deals with ‘Dispositions intended to defeat applications for financial provision’.  This was held to show the apparent existence of a substantial conflict of interest on the part of Mr Bowser himself who had failed to put this evidence before the court when making his application.

Costs

In general, a personal representative is entitled to be reimbursed from the estate for expenses properly incurred when acting on behalf of the estate (ss.31 and 35 of the Trustee Act 2000, CPR 46.3 and CPR PD 46, para.1.1).  However, as Mr Bowser had started proceedings without a pre-action letter or a Beddoe order, and his claim was unsuccessful, he was ordered not only to pay Julie’s costs but also his own costs personally.

The CA upheld the lower Court’s decision that Mr Bowser’s conduct in applying to remove Julie as co-executor (and engaging in unduly aggressive correspondence) was not a “proper and reasonable exercise of his powers as executor”.  The proceedings were started with inappropriate haste, without any serious attempt being made to establish a productive working relationship with Julie, without waiting until she had obtained legal representation, and without even writing a proper letter before action.  His ground for removal on the basis of conflict of interest was also misconceived and this misunderstanding would have been corrected if he had sought Beddoe relief.

This is a valuable lesson to personal representatives everywhere to take a cautious and measured approach and encourage all parties to attend a mediation or use alternative dispute resolution options prior to issuing proceedings. 

To discuss this or any other related matter with Kerry directly, please call us, start a live chat or email us at info@hartbrown.co.uk.

*This is not legal advice; it is intended to provide information of general interest about current legal issues.

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Kerry Dunn

Barrister

Kerry is a barrister in our Woking office. Kerry was called to the Bar (Middle Temple) in 1999. She practised at 3 Stone Buildings (now...

Barrister

Kerry Dunn

Kerry is a barrister in our Woking office.

Kerry was called to the Bar (Middle Temple) in 1999. She practised at 3 Stone Buildings (now Three Stone following a merger) until 2018 when she took a planned career break to spend time with her young family. During her time at the Bar, she specialised in private client work, both contentious and non-contentious. She has a wealth of experience advising on: trusts and estates; Wills, LPAs, probate and family provision (1975 Act claims); related inheritance taxation and professional negligence claims; Court of Protection and Elder Law; and co-ownership disputes.

An experienced litigator and advocate, Kerry also qualified as a mediator in 2008 and is keen to work with clients to find sensible, cost-effective solutions to problems as they arise. She is experienced at advising clients across the spectrum, including HNW and UHNW clients.

Kerry was a full member of STEP from 2005 to 2017 and will be reactivating her membership in due course. She was a committee member of the STEP Mental Capacity SIG from 2016-2017.

Kerry is keen to give back to the community and was on the panel for the Bar Pro Bono Unit (now Advocate) from 2006-2017, volunteered at Surrey Law Centre and at Refugee Action Kingston. She is happy to give talks to the wider community, including care settings and at local schools.

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