Can an executor be penalised for costs of a Representation relating to the administration of an estate, and if so, what are the relevant tests to be applied?
This judgment is helpful in that it is the first time that the issue of a personal costs award against an executor appears to have been considered. The Royal Cost considered an application for costs by the representor arising from his Representation complaining about aspects of the administration of the estate of his deceased mother, by the respondent, his brother and the executor of the estate. The Representation was heard in May 2009, and the court issued a number of directions against the respondent, largely in the terms of the Representor's draft order, although the court noted that the modifications were not insignificant.
The discretionary nature of the court's power to award costs (conferred by Article 2 of the Civil Procedure (Jersey) Law 1956), by its very definition renders it impossible to lay down hard and fast rules. Nonetheless, the court noted that a legatee or beneficiary is entitled to expect a reasonable level of competence, proportionality and good sense from the person entrusted with protecting his interests. It held that an element of intransigence or unreasonableness is required before an executor can be held liable to pay the costs of a legatee in an administrative action, and that the applicable standard was that the executor's conduct must have crossed beyond the threshold of reasonable justifiable behaviour, explicitly rejecting the contention that there was a pre-requisite for either fraud and / or dishonesty.
The judgment draws a distinction between categories of executors and trustees, suggesting that the margin of discretion for a professional should be more narrowly circumscribed than that of a non professional, and further, that an unremunerated executor or trustee will not be lightly ordered to pay the costs of litigation if he has made an innocent mistake, or acted in a manner which was misguided or even careless.
On the facts, the court found that the respondent's peremptory rejection of the representor's sensible and pragmatic proposals made in correspondence was the point at which his conduct crossed the threshold of what was proportionate, justifiable and reasonable. Further, the court stated that where a personal costs order was made against an executor, it was likely to follow that they would be deprived of the usual indemnity for costs from the gross of the estate, any contrary ruling clearly being illogical. Accordingly, they ordered that the respondent pay the costs of and incidental to the Representation, and that he be deprived of his usual indemnity from the estate for his own costs, from that date.
However, as to the question of indemnity costs, the court held that the respondent's breach was not sufficiently grave as to justify indemnity costs. The court was not persuaded as to the presence of 'some special or unusual feature' or a 'particular reason for departing from normal practice'.