Howes v Howes: The importance of record-keeping by executors
Stephanie Kerr, Associate in the Litigation Team at Brabners has shared her views on the Howes v Howes case and the importance of record-keeping by executors.
In the recent case of Howes v Howes, the High Court highlighted the importance of records being kept by executors of their dealings with estate assets. The court confirmed that an executor can be required to produce accounts to individuals not directly benefitting from an estate.
The Claimant, Alison Howes, brought a claim against her brother John Howes, the Defendant, for an account of their late mother’s estate, of which they were both beneficiaries, as well as an account of their late step-grandfather’s estate even though neither John nor Alison were direct beneficiaries of that estate.
The Defendant had acted as Executor of both estates. He and the Claimant were equal residuary beneficiaries of their late mother Carol Howes’ estate which was made up of assets inherited from her late step-father, Mr Crozier.
Mr Justice Mellor had to consider a number of issues in the administration of the two estates, being the Crozier estate and the Howes estate, the latter of which Alison was a beneficiary of. Some of the issues included:
- Sale proceeds from a property being paid into an account in the Defendant’s name;
- Those sale proceeds being depleted by transfers over one year to another account;
- The purchase of a second property using funds from the Defendant’s wife, with the Defendant’s name being recorded on the Land Register;
- An alleged shortfall of £304,000 in their late mother’s estate; and
- A conflict between the parties as to their late mother’s spending patterns.
In making an order that the Defendant should produce an account of the Crozier estate to explain the balance in the Howes estate, the judge emphasised that he had “not been able to identify any point at which it could be said that the Defendant’s administration of the Crozier estate concluded” and that the Defendant appeared to have “continued in a capacity as fiduciary” to his late mother when dealing with her funds.
The judge ordered the Defendant’s account to cover the administration of the Crozier estate down to the administration of the Howes estate or the point at which the Crozier estate funds were reduced to £100 or less, whichever date is the earlier.
In respect of the costs of the proceedings, the judge was unable at that point to decide which of the parties was right or wrong, but he envisaged that the costs of seeking the account would be dealt with in any further proceedings or, if no further proceedings were necessary, the parties were given permission to make an application to court dealing with those costs.
As a final note, the judge firmly stated that he did not encourage further litigation which would potentially “eat up what remains of their mother’s legacy” instead suggesting that the parties should engage in ADR to explore their views and reach a compromise if possible.