The background to the case of Ali v Taj and others is that the deceased died in 2007 and a grant of probate was made in favour of Mr Taj and a Mr Khan. The executors swore at the time of extracting the grant a gross value of the estate of in excess of £18 million and a net value of in excess of £8 million, although the judgment in the matter considers that the estate value may have in fact been as much as £118 million.
The primary case pursued by the Claimant, Mr Ali, who is one of the beneficiaries of the estate, was that the executors had failed in their obligations to account to the beneficiaries and accordingly applied to Court, pursuant to section 25 of the Administration of Justice Act 1925, which confirms:
“The personal representative of a deceased person shall be under a duty to—
(a) collect and get in the real and personal estate of the deceased and administer it according to law;
(b) when required to do so by the court, exhibit on oath in the court a full inventory of the estate and when so required render an account of the administration of the estate to the court;
(c) when required to do so by the High Court, deliver up the grant of probate or administration to that court.”
Unsurprisingly (given that the Courts will in most circumstances order an executor to account to the beneficiaries), the Judge, at first instance, granted the application for an account and enquiry into the executors’ dealings with the estate property. The executors appealed the decision.
Mr Justice MacDonald in his judgment in the appeal handed down in February 2020 dismissed the appeal on all grounds stating:
“The court will ordinarily exercise its discretion in favour of ordering an inventory and account and the circumstances in which it will not do so will be limited. The Respondent beneficiaries, the Deceased’s widow and three children from his first marriage, have now been without a proper understanding of the extent of and the administration of their inheritance for over a decade. It would be unconscionable for this situation to pertain any longer. It is high time that the Appellant discharged his cardinal duty to provide when called upon an inventory of the estate and an account of his administration of that estate. This court now expects him to do so in accordance with the order it has made…Within this context, having reheard the matter afresh and for the reasons I have given, I am satisfied that an order for an inventory an account pursuant to s 25 of the Administration of Justice Act 1925 is appropriate in this case.”
The matter then proceeded to a further consideration by Mr Justice MacDonald in respect of the costs of the appeal. The Appellant accepted that he should be responsible for the costs of the appeal but contended that costs should be assessed on the standard basis (i.e. the basis that costs in proceedings are usually assessed, which usually results in a successful party recovering around 60-70% of their legal costs).
Mr Justice MacDonald, however, stated:
“As I noted in my substantive judgment, at the point of the appeal, there was no dispute that the Administration of Estates Act 1925 s. 25(b) expressly requires an executor to render and inventory and account when required to do so by the court, that the appellant had sworn, when he applied for a grant of probate, that he would produce an account of the Estate when required to do so by the court and that the appellant had, ultimately, accepted this duty and had promised to produce an account. Within this context, instead of accepting the order of the District Registrar that required appellant do what he accepted he had a duty to do, that he had promised to do and which he had delayed for over a decade in doing, he decided to put the respondents to further expense, delay and inconvenience by requiring them to meet an appeal of dubious merit. All this notwithstanding that, as I again observed in the judgment, the appellant’s obligation to account was of cardinal importance, that the Respondent beneficiaries, the Deceased’s widow and three children from his first marriage, had been without a proper understanding of the extent of and the administration of their inheritance for over a decade and that it was unconscionable for this situation to pertain any longer…Within this context, I am entirely satisfied that it is not appropriate that the respondents’ should be at risk of having to bear any of the costs that they were required to expend in meeting the appellant’s appeal. This is a clear case for the awarding of costs on an indemnity basis…Finally, with respect to the quantum of costs, I am not in any event persuaded by the submissions carefully made by Ms Stanley regarding the heads of costs set out above.”
Comment
This case should act as a stark warning to all executors when they are asked by a beneficiary to account for their dealings with the estate. The Courts will usually side with the beneficiary in these applications and accordingly it is far better to cooperate than face a heavy costs order against you.
Written by Kevin Modiri of Nelsons Law.
Article first appeared here.
