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3PB Probate Law Update Webinar 17 June 2021

June 21, 2021 3PB Barristers
3PB Podcasts
3PB Probate Law Update Webinar 17 June 2021
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3PB Podcasts
3PB Probate Law Update Webinar 17 June 2021
Jun 21, 2021
3PB Barristers

This probate law update is chaired by real property, trusts and probate specialist Cheryl Jones.

Martin Strutt speaks about: "Knowledge and approval and rectification: an overview of knowledge and approval and discussion as to whether rectification can in some circumstances cure a lack of knowledge and approval."

Martin deals with all aspects of contentious probate including challenging the validity of wills on the grounds of formality, incapacity, lack of knowledge and approval and undue influence. He also undertakes Inheritance Act claims.

Lydia Pemberton's talk is: “Put up or shut up. How to progress estate administration: an overview into the options available to PRs who need to progress the estate administration when there are adverse or competing claims from outside the estate".

Lydia has considerable experience of advising and acting in contentious probate matters.  She represents clients on a range of disputes, including those which involve international aspects.  Lydia has also undertaken a large number of Inheritance Act cases and has a firm understanding and extensive experience of TOLATA claims.

This update was recorded on 17 June 2021. Please do not rely on its contents; but instead seek legal advice before taking action.

Show Notes Transcript

This probate law update is chaired by real property, trusts and probate specialist Cheryl Jones.

Martin Strutt speaks about: "Knowledge and approval and rectification: an overview of knowledge and approval and discussion as to whether rectification can in some circumstances cure a lack of knowledge and approval."

Martin deals with all aspects of contentious probate including challenging the validity of wills on the grounds of formality, incapacity, lack of knowledge and approval and undue influence. He also undertakes Inheritance Act claims.

Lydia Pemberton's talk is: “Put up or shut up. How to progress estate administration: an overview into the options available to PRs who need to progress the estate administration when there are adverse or competing claims from outside the estate".

Lydia has considerable experience of advising and acting in contentious probate matters.  She represents clients on a range of disputes, including those which involve international aspects.  Lydia has also undertaken a large number of Inheritance Act cases and has a firm understanding and extensive experience of TOLATA claims.

This update was recorded on 17 June 2021. Please do not rely on its contents; but instead seek legal advice before taking action.

Cheryl Jones: 

Well, hello, and welcome to this 3PB update seminar for probate. I'm Cheryl Jones and a member of the probate team, and I have the privilege of hosting you today.

Before we start, I would just like to run through a little bit of housekeeping. We will be taking questions at the end for about 15 minutes.

We’ve already had a few questions in advance, but if you do have a question you would like to ask, then please do use the Q & A button.

We do have a large number of people signed up for today, but we will answer as many as we can, as we go along, or at the end. We will also be distributing notes and slides later today.

When I say we, I do of course mean in terms of distribution our marketing person and in respect to the questions our two speakers for today, Lydia Pemberton who is a full member of STEP and who acts for clients ranging from personal representatives of smaller estates right the way through to estates which have an international aspect. She also acts in respect of high value complex estates and she will be talking to you on the subject of “put up or shut up”. How to progress, estate administration, she will be giving an overview of the options which are available to personal representatives who need to progress the estate administration, when there are adverse or competing claims from outside the estate, something which can cause a great deal of difficulty if the incorrect steps are taken.

Firstly, however you'll be hearing from Martin Strutt one of our senior chancery practitioners, who specializes in contentious probate.

He is going to be telling you whether or not a lack of knowledge and approval by a testator can be cured by way of rectification of the will. This, I have to say, is something I am looking forward to hearing and so without further delay, Martin I'm going to hand over to you now.

Martin Strutt: 

Yes, good morning everybody I’m going in this talk to give you an overview of knowledge and approval and rectification where those two matters coincide.

And I should say at the outset that there are written notes that I have prepared for this talk, they will contain all the references to the cases that I will be referring to, and they will be emailed to all those who have subscribed to this talk.

To start my talk, by way of introduction as I’m sure most of you will know that contentious probate, certainly, in the last 20 years has become very much a growth area of litigation and this really has come about, as I see it, for two principal reasons.

Firstly, the context of such litigation originates from usually disputes within families and, of course, that means that family members, often have a sense of entitlement and feel very strongly if they perceive they've been dealt with unfairly in the will of a parent or another family member and my experience is very much that inter family disputes tend to be one of the most acrimonious forms of litigation when families, everything is all very happy when parents are alive, but when the last parent dies, and the children then see some money, possibly coming their way, that often is the catalyst for what can become very acrimonious litigation. And in effect, the combination of family passions and money is a toxic combination very often. However, I think the probably the main driving force of contentious probate litigation is the size and value of estates nowadays. That, of course, effectively results from the exponential increase in the value of property and you don't have to be regarded as particularly wealthy, if you own a house to actually have an estate that may well be worth in excess of half a million, mainly deriving from a property that the deceased owns. And, of course, what that means is that those who think they should be getting the benefit from this estate feel there's something worth fighting about, although of course and this is a salutarypoint, it doesn't take long if you go to a contested probate truck contentious probate trial for legal costs to make very significant inroads into that estate.

Now, as you will know, contentious probate involves challenging wills, and there are a number of different grounds, on which wills can be challenged, and that includes testamentary capacity, undue influence, fraud, what is sometimes rather delightfully called fraudulent calumny, in the way that the Victorians liked to characterize these things and, of course, knowledge and approval. It's my intention to concentrate in this talk on knowledge and approval. But what I would say is this, that in all forms of contentious probate, not least, where knowledge and approval is an issue, it is very instructed to read part of the judgment of Lord Justice Mummery in the case of Hawes v Burgess 2013 EWCA Civ 74 and I think all of us in the contentious probate area of law, we all regard Lord Justice Mummery, along with one or two others as being a very well regarded judge in these areas. He was dealing with a case that did involve testamentary capacity and knowledge and approval and he sort of summarizes the issue as to whether the particular will in question, did it arise the suspicions of the Court as to whether the contents truly represented the wishes and intentions of the deceased. And then the second question that was being asked was did the scrutiny of the various circumstances by the Court dispel those suspicions. And then he said this and I will read it not entirely in full, but he made the point that, in these cases, the Court has to consider and evaluate the totality of the relevant evidence from which inferences can be drawn on amounts of probabilities and he made the point that presumptions, which in days gone by were very popular way of addressing these issues of the presumptions are perhaps less well regarded by the courts, now they look at the whole of the evidence don't really rely on presumptions.

But he made the point that courts realistically recognize that, if a properly executed will has been professionally prepared on instructions, then explained by an independent and experienced lister to the maker of the will, it will be markedly more difficult to challenge validity, on the grounds of either lack of mental capacity or want of knowledge and approval, then in a case where these proven steps have not been taken.

And he also went on to say, which I think is again something well worth bearing in mind, he said, I should add the statement of the obvious in order to dispel any notion that some mysterious wisdom is at work in this area of the law.

The freedom of testation alive by English law means that people can make a valid will, even if they are old or infirm or in receipt of help from those who they wish to benefit, and even if the terms of the will are hurtful, ungrateful or unfair to those whose legitimate expectations of testamentary benefit are disappointed.

The basic legal requirement for validity are that people are mentally capable of understanding what they are doing when they make their will and that what is in the will truly reflects what they freely wish to be done with their estate on death and that, in my view, is a brilliant summary of the validity of wills, covering really all aspects and I would suggest that any practitioner, who is considering challenging a will reads that part of the judgment and calls and purchase with some care. Now turning specifically to knowledge and approval.

What is knowledge and approval? Effectively the testator must have known and approve the will and its dispositive provisions. What is actually meant by this?

There has been some conditional debate in the textbooks but effectively, the better view now is as set as in Gill v. Woodall [2011] WTLR 251.

A judgment of Lord Neuberger, another very highly regarded as I'm sure you all know. He said that the testator must understand what is in the will, when he signed it AND what its effect would be. And that was a probing of earlier case of Hoff v Atherton 2004 EWCA Civ 1554 another Court of Appeal decision of 2004, where it was said a testator cannot be said to know and approve the contents of this will, unless he is able to and does understand what he's doing and its effect.

And then, it says it is not enough that he knows what is written in the document he signs, so a testator must, even if the will is read over to him and he approves it, if in fact, because of some drafting error it doesn't represent his intentions, I think the better view is that there will not in those circumstances be knowledge and approval.

I should add this of course that that concept must be looked at in this context where you get an expert draftsman, to formulate the testator’s instructions and he deploys a somewhat esoteric inappropriate legal language, the fact that the testator might not really understand the language used by the draftsman, that doesn't mean that he doesn't have knowledge and approval of the will, because in such cases, the testator is deemed to have adopted the language in the will and knowledge and approval is imputed to him and the authority for that is Greaves v Stolkin 2013 EWHC 1140 (Ch).

Now as to proving knowledge and approval, I set out a number of principles. Of course, in the vast majority of cases there is an evidential presumption, which still stands notwithstanding the observations I've made about the courts’ current reluctance to set too much store by presumptions, but there is an evidential presumption of knowledge and approval arising from proof of the will being duly executed by a testator with testamentary capacity that is set out in a number of cases, including Sherrington v Sherrington 2005 EWCA Civ 326.

That presumption derives in turn from another presumption, which is the presumption of capacity, where the will is duly executed and rational on its face. Of course, the reality is in many cases the witnesses and the solicitors, who may be long dead or untraceable.

And, of course, in those cases, wills are routinely admitted to probate in common form, on the basis of those presumptions, without any actual substantive proof of knowledge and approval. However, the position is different, where there is a challenge to knowledge and approval and in those cases as set out in Gill v. Woodall [2011] WTLR 251 again, the view now is that it's really a single stage test, it's not the shifting presumptions.

The single stage test is, has the testator understood what is in the will when it was executed and what its effect would be which I've already indicated, and in determining that issue the court looks at all the circumstances of the case.

And again, in Gill v. Woodall [2011] WTLR 251 repeating what I’ve already said in Hawes v Burgess 2013 EWCA Civ 74, where a will has been professionally prepared and read over to the testator, that raises a very strong inference that there has been knowledge and approval, if not a natural legal presumption. And if there's no countervailing evidence, knowledge and approval will be inferred. Now in the textbook and reported cases, there are a number of factors that tend to suggest a lack of knowledge and approval and where those factors are present, the suspicions of the Court are aroused and the Court will be vigilant to ensure that actual notional approval is established, and in those cases the propound? of the will must produce positive evidence of knowledge and approval. How compelling and persuasive that evidence needs to be will depend really on the extent to which the court’s suspicions are aroused by the circumstances in which the will is executed and I give a number of examples of factors were suspicions are aroused, and I’ll set these out quickly. For instance, where a testator is blind, dumb or illiterate, where his mental capacity is impaired albeit, not to the extent of lacking testamentary capacity, where the will is drafted by a person who takes a central benefit under it, where a person is actively involved in procuring the making of a will under which he takes a central benefit by suggesting the terms of the will and choosing a solicitor to be instructed by the testator. Another example is where the terms of the will represent a radical departure from long held testamentary dispositions, particularly where the person in favour of whom the changes are made is involved in procuring the making of the new will and has some influence over the testator. Then there are the cases where substantial benefits are conferred on carers, I had a case where a carer, a 94-year-old testator gave her a legacy of a million. We settled the case at 600,000.

And another example, is where the beneficiary of the will is a doctor or solicitor or someone in a similar position, these are be the testator and that person is involved in procuring or executing the will. So those are the cases where suspicions of the Court can arise. Finally, on knowledge and approval you can have knowledge and approval of part of a will, and then reject the other parts, although it was said in Fuller v. Strum [2001] 1 WLR 1097 that the circumstances in which you could have knowledge and approval of any part of a will would be extremely unusual.

So, I turn now to rectification. So, as I said, above where there's been an error in the drafting of the will, this may have the result that the testator does not have knowledge and approval of the will, as drafted, to the extent that he cannot be said to have understood its legal effect. Now where that happens, a rectification may save the will and there are a number of ways this happens and there are 2 statutory provisions set out S20 and S21 Administration of Justice Act 1982. Now section 21 is the construction point because that provides that where any part of a will is meaningless or ambiguous, extrinsic evidence that testator’s subjective intentions may be adduced and I'm sure you all know that that's a departure from the usual rule of construction of legal documents, but the subjective intentions of the parties are actually not admissible.

And there is a case in Brooke v Purton 2014 EWHC 547 (Ch) called Brooke Purton, where it was held that ambiguity should be given a very wide and broad construction.

However, there may be cases where you can't cure the problem by deploying section 21 and construction and then in those cases, it may be possible to resort to section 20 of the Act, which provides that where the Court is satisfied the will as drafted fails to carry out the testator’s intentions due either to a clerical error, firstly and secondly, a failure to understand his instructions, then the Court may order rectification, to carry out those instructions. 

Now dealing firstly with a failure to understand the testator’s intention, I think it's acknowledged that this provision is of somewhat a limited scope, because it really applies to cases where the drafter of the will has failed to understand the instructions given.

It doesn't cover circumstances where the draftsman fails to understand the legal effects of the words he uses or uses the wrong technique in drafting, where he does in fact understand the testator’s instructions.

Now, so if you can't use a failure to understand the testator’s intentions you then come to the clerical error exception basis for rectification and that has received the attention of the Supreme Court in Marley v Rawlins 2014 UKSC 2 in 2014, which is the only case on rectification to have reached the House of Lords or the Supreme Court and they upheld there the definition of the expression “clerical error” set out in a case called Bell v Georgiou 2002 EWHC 1080 (Ch) where Miss Justice Blackburn said the essence, the matter is that a clerical error occurs when someone maybe the testator himself, or his solicitor or a clerk or typist write something she did not intend to insert or omit something which he intended to insert, the remedy is only available to establish not only if the will fails to carry out the testator’s instructions, but also what those instructions in fact were. 

Now in Marley v Rawlins 2014 UKSC 2, it was held that a will which was invalid, by reason of a draft error which would result in a finding of lack of knowledge and approval, that could be cured by rectification so invalid will, by reason of lack of knowledge and approval of that can be cured by rectification.

The reason they really gave for that was the Supreme Court said that section 20 should be construed as widely as possible, because the general thrust of Part Five of the Administration Justice Act in which sections 20- 21 are part, the whole thrust of that part was to make it easier to make a valid and effective will, and they also held that section 20 wasn't confined to correcting drafting errors, we could extend to other sorts of error, mistakes resulting from the way the will's been executed. Of course, in Marley v Rawlins 2014 UKSC 2 was the case where the husband and wife made mirror wills and accidentally the husband signed the wife's will and vice versa, and the Supreme Court said that's fine, that's a clerical error.

However, I think the general view is that Marley v Rawlins does not mean that section nine of the Wills Act can just be ignored, now I think the particular facts of Marley v Rawlins were totally exceptional. Finally, what I would say is that it seems to me the effect of Marley v Rawlins is that most drafting errors which would otherwise result in a testator lacking in knowledge and approval well, they can now be cured by the very wide interpretation of the meaning of clerical error, so that is the end of my talk on knowledge and approval and rectification, I will now hand back to Cheryl.

 

Cheryl Jones: 

Thank you, Martin, thank you, that was really interesting and we're now going to turn to Lydia, who, as I said earlier, is going to tell us about what to do when there are competing claims.

 

Lydia Pemberton:

Thank you. Just by way of a segue between our talks I was prompted by Martin's talk to the case of Re Boyes [2013] EWHC 4027 (Ch) from 2013 which was decision of Mrs Justice Proudman and it's a really good quote that I've used and opinions before at paragraph 137 and she says: the problem in this case, as in so many, is at the parties seem to think that a judge can look into the hearts of the witnesses and somehow divine the truth. That is not how the system works. A judge can only find facts on the evidence properly adduced, indeed sometimes where the facts cannot be determined to be ascertained on such principles, a case may have to stand or fall by default on the burden of proof. I cannot tell what actually happened, I can only as I've said find facts on the evidence.

So, with that in mind, what do we do when we have estates which pre-grant or post-grant are struggling to be administered because of problems being introduced by competing claims from people primarily saying that the will is invalid and seeking an early rule to be pronounced for, or because there is an intestacy, which will fall otherwise. 

So, I'd like to talk in respect of two topics. Probate claims that will challenges is pre-grant and will probate claims that challenges are post-grant. I don't pretend for a moment that the suggestions and the options, I give are exhausted in any way, because there are multiple ways to skin a cat when it comes to trying to undermine the will of a testator. What I want to do is talk in probate claims pre-grant there are some suggestions that can be made, and these fall into the non-contentious probate business, which is the principal registry or the probate registry, which is the High Court, Family High Court or through the contentious business side, which is the Chancery division.

 

SLIDE 3 – PROBATE CHALLENGES (PRE-GRANT)

Right, so probate challenges pre-grant. The suggestions I make are not exhaustive, but they should appear on the screen. So, when we're dealing with the first one rule 44(13). Rule 44 is the non-contentious probate rules 1987. Rule 44 deals with caveats or caveats depending on how you want to say it. So, a caveat is entered in form 3, a warning is entered in form 4 and then in respect of the next step, the caveator has two choices. If they have a contrary interest to the will, ie they say there is an earlier will which should stand or they take an interest under an intestacy, then they enter an appearance in form five.

If they don't have a contrary interest, then they can issue a summons for directions and a person doesn't have a contrary interest if they accept the validity of the will but don't, for example, accept that the appointed executor should take out a grant so in that situation it is essentially a precursor to a section 116 discretionary grant being made in favour of another person.

The rule at 44(13) shouldn't be overlooked, because what it provides for, is that once a caveat has been made permanent, so termed, there still remains the option for the person seeking to obtain a grant to issue by summons the person who’s entered the caveat to attend before the registrar or the judge. Essentially, to show cause as to why the caveat should remain in force and I found this kind of certain situations be particularly effective and particularly cheap.

So, when you have a reluctant person who is refusing to withdraw the caveat but doesn't really have the bones of a case, there can be summons before the registrar and I've been there before where it's being dismissed and the caveat’s being vacated because the person just doesn't really have anything to go on.

Alternatively, if it looks like there maybe the bones of something, but the person is just delaying what the registrar or district judge can do is make what is in effect an unless order to give them a period of time in which they have to issue a probate plane that failing which the caveat will be vacated.

This use of law 44(13) is obviously only limited to situations where somebody is really dragging their heels, or what they have said just doesn't hold any real water.

If the unless order is made in the probate registry, and the caveator doesn't then issue probate proceedings, then the cost that the person warning has gone to do will fall at the caveator’s door.

If they do then issue proceedings, usually those pre-litigation costs are dealt with in the validity proceedings themselves.

Downside, of course, is that, by using this process there isn't any permanency and, as I will say, touch on later on this is because, when one obtains the grant in common form through the probate registry through the family division, that theoretically can be challenged for the rest of time because there is no statutory limitation period on that.

If an executor or a beneficiary under a will want to prevent there being a subsequent challenge what they have to do is seek a grant in solemn form which can then only be later revoked in the event that a) it was obtained through fraud or b) there was a later will.

So, the second option, this is when we move into the contentious business side, and this will be in the Chancery Division.

Second option is pre-grant for an executor or beneficiary to simply say well I’m going to go and seek the will in solemn form. It has to be remembered, though that the beneficiaries cannot compel an executor to take that step.

Probate claims under part 57 put the ball firmly in the court of the person challenging it. So upon receipt of the probate claim and it's a specific procedure, it's a different form and it's a different period of time that you have to acknowledge and put in your defence at the same time.

And they're essentially four options for the challenger. They receive the probate claim, and they concede. They receive it and they contest. Thirdly, they can use the option under CPR rule 57.75, which is that they give notice that they don't raise a positive case but they insist on the person propounding will to propound it in solemn form. If that's a reasonable step for them to have taken, then all things being equal, they won't be forced to pay the costs in the event that they're unsuccessful unless they didn't have reasonable grounds for taking that stance.

And the fourth option, of course, which is always open to a defendant in litigation is simply to ignore it.

What happens in probate claims is slightly different to the rest of the procedure. Default judgment is not available, but what the person propounding the will can do is ask the Court to direct the matter to trial on the written evidence alone. So that's the second option.

At the third option is that an executor or the beneficiary can cite the executor of the later will to propound it. And that basically means we say that we've got the valid will. You’re saying that there is a later will and what we're going to do we're going to cite you under Rule 48 of the non-contentious probate rules so we're backing the probate registry and family division here. I'm going to cite you to propound that later will because I have a genuine belief that it's not valid.

If that person does not then seek to propound that later will, the executor or the beneficiaries of the earlier will can proceed on the basis that the later will was invalid and so that's an option available again within the probate registry. Slightly unusual one which I've no experience of either directly or indirectly, but obviously having to read around this topic for today's talk did come across.

The suggestion that what can be done is that those claiming under a previous will can issue the part 57 probate proceedings for an order pronounce them for that earlier will.

But if that fails, they can ask the Court to admit the will he propounds to probate in common form. I have to confess to not readily following how that works but the authors of Williams say that it's less common so as far as i'm concerned if they say it's less common, I don't believe that I need to be troubling you with it any further than simply by way of flagging it.

Finally, the final suggestion pre-grant is that, where you have no question over the validity of the will but there is, because you don't think there's a later one, and if you did, and you’d question that validity you'd use the rule 48 procedure.

But where you don't question the validity of the will, but you do question the validity of a codicil, the correct forces that are causing that situation is not to cite the executor or persons interested under the codicil but actually to seek the will in solemn form, a grant in the will in solemn form in probate proceedings, along with a declaration or decree pronouncing against the codicil.

And the reason for that is because underpinning all of this, is that an executor’s role, and this is all primarily driven towards executors and the will challenges, because an executor’s role is fundamentally to carry out the last wishes of the testator, so if there is a codicil ie a testamentary document subsequent to the will, it is incumbent on the executors to satisfy themselves as to whether or not it does represent the testator’s last wishes and if they have reasons to believe that it's invalid, then they need to adduce satisfactory evidence to the Court to demonstrate that.

  

SLIDE 4 – PROBATE CHALLENGES (POST-GRANT)

So. We've got a grant and we've got it in common form. Probate claims under part 57 are strictly in three. We may use probate claims as an umbrella, but within the CPR we’re strictly speaking about three types of claims. There are claims asking for a Court to pronounce for or against the validity of the will and to seek a grant in solemn form, there are interest actions or, also known as interest suits and there are claims for revocation of the grants, the grant or probate attained or the grant of letters of administration already attained. So, my focus is on the revocation.

So, as I’ve already stated, there is no statutory limitation period in respect of revocation so the danger to a personal representative, be it an executor or an administrator is that sometime after the estate has been fully administered, a beneficiary or those claiming a contrary interest will come out of the woodwork and seek to overturn the grant. Now section 27(1) of the Administration of Estates Act 1925 provides protection for personal representatives, where they act “in good faith”.

That protection is twofold. It means that if they've made dispositions or payments and the grant is subsequently revoked, providing they have been made in good faith, there will be no come back or personal liability on the PR. The second protection is afforded that where the PR has taken their expenses or their proper renumeration because they are a professional, then they're entitled to keep it because they did it all in good faith. When we're talking about good faith, that term is obviously debatable in a number of contexts, and it is subject specific but we're talking about good faith, because a PR has operated on the basis that they have no reason to doubt that they are administering the estate, in accordance, in this context with the testator’s last wishes. So, at the one end of the spectrum, we will have scurrilous vexatious ill-founded claims which are so ill-founded on their face that most executives shouldn't be concerned, they can proceed with the administration of the estate without troubling the courts for any sanction to do so. And then of course we've got claims, will challenges at the other end of the spectrum, which have so much teeth or so much flesh to the bones, that the executor says to the beneficiaries: we need to sort this out, you need to sort out between yourselves, otherwise I need to take the matter to the Court for directions, as to what to do here and in between those two situations, spanning that divide, are all other cases. 

 

SLIDE 5 – WHAT TO DO??

So, what I suggest, there are two options and this obviously only applies to an executor even when an executor has got a grant in common form they can “for their own convenience” go to court and seek a grant in solemn form to rid themselves of the challenge once and for all. They can't be compelled to do that and one has to query why they would incur the costs of a fully-fledged probate claim when they already have a common form grant.

But I have been on the other end of a couple of cases of this nature, where basically executors are sick to the back teeth of what's happened and just want to…, it's a similar “put up or shut up” point. 

But actually, the second suggestion I have, it's a cheaper option on the face of it, is to basically tell the person challenging the will to put their money where their mouth. So, when we come to “put up or shut up” orders, we have two cases to go to: Sherman v Fitzhugh Gates which is a 2003 decision. It's a very lengthy judgment but it's worth a read, and I say worth a read only in the context I don't suggest for a moment that anybody should be doing this and in their own personal time.

And the second is Cobden-Ramsay v Sutton and so if we hear somebody saying we'd like a Fitzhugh Gates order or a Cobden-Ramsay order what we're talking about are these “put up or shut up” orders.

They're very similar in nature to a Benjamin order, so the case re: Benjamin going back is when they couldn't ascertain the beneficiaries. It has a wider application and it basically means if the person representative wants to distribute the estate on the footing that a certain event has or hasn't occurred or the beneficiaries  are or are not alive, etc, they can go to the Court and say sanction me to do it this way, and if you grant me that sanction, I know I have the personal protection when I make that distribution.

That doesn't stop, of course, the rightful beneficiaries thereafter making a challenge and seeking to recover the estate assets from the people to whom they've been given. It all counts to protecting the PRs from personal liability for doing something they shouldn't have done.

 

SLIDE 6 – SHERMAN V FITZHUGH GATES (A FIRM)

So, Sherman v Fitzhugh Gates (a firm) when it got up to the Court of Appeal, it was actually an appeal in respect of the wasted costs order which had been ordered against the solicitors representing the executor.

There were three appearances in court, one before the master then on appeal to the High Court.

Then the wasted cost order was made, and then it was appealed from the wasted costs order but Sherman v Fitzhugh Gates is a really good case by way of chronology to set out just how patient this executor had been in offering the opportunity for the challenger Claudia Sherman, (also known as Borden) to basically set out her case. So, her uncle had died in 1994 and he'd made a mirror will with his sister who’d pre-deceased him and after she’d died he then changed it so it wouldn't be left to Claudia and her two siblings, but, subject to a small pecuniary legacy to Mrs Perkins the executrix,it was going to go to animal welfare charities. And these estates were nominal, in fact, I think, certainly the sister who had pre-deceased him with an insolvent estate and his estate was certainly… the game not being worth a candle is probably a nice way, to put it. But he dies in 1994. By 1998 Claudia Sherman who had been alleging lack of capacity, undue influence, etc, had still not put her cards on the table. So, in 99 following an originating summons by the executrix, the matter went before the master.

 

There was two points, one was an issue with severance of the joint tenancy which had been held by the deceased and his sister, because if the joint ownership had been severed, then the sisters’ 50% share would have fallen into her estate, which would actually have benefited Claudia Sherman as well, so that was the issue which was dealt with by the lower court.

But it was the issue of capacity that still loomed large, but what the master said, and I think properly, he couldn't rule on the capacity challenge, because what had happened, Mrs Perkins the executrix had asked the courts to direct whether or not this Claudia Sherman had an interest in the estate. Basically, the judge said that's not what I can do here, I can't answer capacity. So he said at 23, I think it's not possible for me, under the guise and inquiries as to whether or not she has an interest to determine whether or not the will should be valid and what he directed Claudia Sherman to do at that point was to bring probate proceedings, and when I say direct I don't mean any formal direction of a court order, which in this situation was problematic because it turned out that Claudia Sherman wasn't thereafter told what the master had said. Claudia was in Canada and she hadn't appeared in person, but by that point in time, we were five years post-death and still no probate claim on the table.

 

SLIDE 7 – CARNWORTH LJ

The matter ended up at the Court of Appeal, and it is worth reading the paragraph 50 odd onwards, because this is where Lord Justice Carnworth talks about these “put up and shut up” orders. So, what should an executor do when they have a challenger who is just refusing to put their cards on the table or nail their colours to the master, whatever the appropriate metaphor is in these situations.

The executrix’s hands were tied: she couldn't distribute the estate in the knowledge that, in the background, there remained at large, this issue over the capacity. But, equally, she couldn't delay because she had an obligation to duly administer the estate, in accordance with the will and give the residue estate to the welfare charities.

So, the judge said “the textbooks do not appear to offer an easy solution in such circumstances. There's no statutory time limits for proceedings, but it seems an action, maybe struck out if there has been unreasonable delay”. And this is where he says, “the powers of the Court to control abuse and delay have been strengthened by the new CPR and I see no reason why they could not have been used to impose a time limit on a potential challenge to the probate, in effect, a direction to “put up or shut up”, following which the executor would be free to distribute under the will and so that's where we get this notion from.

So at today if you realize that you've had on your books this potential challenge for a period of time, that it is they've had sufficient time to explore, sufficient time to investigate, the executor has been as forthright with information as is appropriate, that actually what you do is say I’m now going to issue my part 8 claim, proceeding under CPR 64 and I’m going to seek a direction from the Court that unless you do by 28 days issue a probate claim against me, I’m going to distribute the estate on the footing of the will. And, that as I say, should be in theory, a cheaper way then putting the executor to the cost of getting a grant in solemn form.

 


SLIDE 8 – COBDEN-RAMSAY V SUTTON

Just briefly and, finally, then Cobden-Ramsay v Sutton was a decision six years later. The challenge by the residue beneficiary on the particular point was them saying that there's no statutory basis for the Court to order that somebody either makes a claim, or they didn't and if the court is going to have that power, it has to have its footing in statute.

His Honour disagreed and said I’m going to make the order, you’re going to have 28 days to do this and I’m not debarring you from bringing the claim What I’m doing is in respect of the executor’s role and I’m permitting the executor distribute the estate. It doesn't stop you making a challenge.

Again, as I’ve said what it does, it protects the executor from the challenge from the beneficiaries, if they distribute in an estate, and they do it on the wrong basis.

So, I would urge everybody to bear in mind when we have reluctant challenges, but those who won't go away, to warn them that the Court has the power and are quite easily persuaded in my experience to make such an order, because it is efficient, it is usually proportionate and it ensures that everybody can move on with their lives so therein ends the lesson.

 

Cheryl Jones:

Thank you very much Lydia very interesting. We've got a number of questions that have come through and we'll take as many as we can in the next few minutes but there's one very relevant one Lydia which I would like to start off with you, and this is a question which I think might be quite helpful following on. Can “put up or shut up” orders be made prior to obtaining a grant or probate. If not, what is the best way and, what is the procedure, please?

 

Lydia Pemberton: 

So, I think my answer has to be no, because what you're asking the Court to do in a “put up or shut up” order is going before the chancery division as the executor of the estate, so whilst the power vests in the executor from the date of the will ultimately no real distributions can be undertaken until there's a grant of probate, so I would urge that if there's a caveat in place you use rule 44(13) and summons and if that doesn't get rid of them, if you have a genuine belief, so if you are satisfied on a proper basis that the later will that the challenge of seeks to prove it is the valid one, then you can cite them, but if there isn't a later will and they're saying just this will doesn't stand, then I think the first port of call has to be the 44(13) procedure, which is a similar thing, it's just the “put up or shut up” order in a different guise, because the registrar will be given the 28 days to wish you a probate claim rather than chancery division post grant giving 28 days to issue claim before the distribution can be made. So, my answer would be no it can't be.

 

Cheryl Jones: 

Thank you very much Lydia. Martin, I have a question for you and it comes in three parts and I’m going to just read it all out because I think you can give perhaps a composite answer.

What can a testator do to ensure when making a will their wishes are adhered to as far as possible to stop or reduce a wayward executor deviating from the will?

How can an executor overcome some beneficiaries from delaying to a certain degree, reading and distributing legacies to other entitled beneficiaries?

And how can a testator or testatrix best be guided to accepting it may be a good idea to make a lasting power of attorney at the same time as making a will?

 

Martin Strutt: 

As far as what the testator can do to ensure that his wishes are adhered to, to stop or reduce a wayward executor well, the first obvious point is, be careful, who you choose as an executor. Don't choose someone who you think might deviate and, obviously, in that regard, maybe the best way of doing that is to appoint a professional to that role, in other words a solicitor or an accountant. There may be some expense involved in that, but at least you know that, because of their professional status they are unlikely to deviate from the terms the will. Otherwise, the fact is that the will creates a trust and the executors are legally obliged to implement the terms of the will, because they're entrusted to do that, and if they don't, the relevant beneficiaries have claims against them. But I don't think there's really anything more that the testator can do in the time he makes his will to stop that happening.

As regards beneficiaries delaying, I mean it slightly depends on the context in which that has been done, I mean clearly the executor is the person who has legal control of the estate.

They are the persons who have the right to getting the estate, pay the debts and then distribute it according to the terms of the will and so I mean, in theory, a beneficiary doesn't have any power to delay that process. There may be cases where a beneficiary perhaps has a beneficial interest in a property jointly owned with the estate and might try and remain in the property, but in those cases really the executor, if necessary, would have to take proceedings maybe under TOLATA to force the sale of the relevant property, so that the testator’s share can be distributed under the terms of the will.

So far as the final point about LPAs well, it depends upon really when a will is being made because, in my experience, if you're dealing with people say under the age of 60, that’s a broad generalization but very often when they make wills, you know lasting powers of attorneys, are very far from their mind and they're probably unlikely to think of doing it. These things generally come about, because there is a particular medical problem or people are getting old. I mean clearly I think there's a general proposition if you've got someone who you trust, then an LTA is probably a good thing, but again, as with choice of executors, you know most LPAs are granted to family members, but I have seen cases where they have been abused and then you get an enormous battle between family members, when, after death as to whether the deceased’s estate has been wrongly depleted by the actions of the Attorney. So I think it's difficult to give a general answer to that but clearly there are practical advantages to having the LPA in place when you're dealing with elderly people, so I think that's probably the best answer I can give.

 

Cheryl Jones: 

Thank you, Martin. Lydia, I have another one for you and it's fairly short one. If an estate is insolvent due to the debts outweighing the assets, how can a creditor, I think it should be get the money from the assets, without probate.

Lydia Pemberton:

The answer to that must be they can't. They must be granted a probate and if there's one already, but the estate is insolvent, then the creditor can apply and should apply for an insolvency administration order, because the deceased’s estate and whether it is insolvent should be treated in the same way as if the bankrupt were living and the same test will be applied and, of course, what a creditor after death cannot do is the same as a creditor pre-death can't do is take a preferential payment and that once somebody is bankrupt, everything gets thrown into the pot and people get paid out, generally speaking on a pro rata basis, and so I think the answer has to be that to do things properly there has to be an insolvency administration order and the deaths and expenses get paid it in the usual manner.

 

Cheryl Jones: 

Thank you very much. Well, we're coming towards the end now. Unfortunately, time does fly past. So, I’m going to wind up now I don't think we've got any outstanding questions on the Q & A that haven't been answered. So, thank you all very much for attending today, and particularly thank you to Lydia and Martin for very helpful and instructive talks, and we hope to see you at the next 3PB Barristers webinar. Do keep an eye out for us, we like to think we give good value and so it's goodbye from me and it's goodbye from them.

 

 

This document is not intended to constitute and should not be used as a substitute for legal advice on any specific matter. No liability for the accuracy of the content of this document, or the consequences of relying on it, is assumed by the author. If you seek further information, please contact the 3PB clerking team.

17 June 2021

 |  | Cheryl Jones Barrister 3PB 0330 332 2633 [email protected] 3pb.co.uk

 

 |  | Martin Strutt Barrister 3PB 0330 332 2633 [email protected] 3pb.co.uk

 

 |  | Lydia Pemberton Barrister 3PB 0330 332 2633 [email protected] 3pb.co.uk



This document is not intended to constitute and should not be used as a substitute for legal advice on any specific matter. No liability for the accuracy of the content of this document, or the consequences of relying on it, is assumed by the author. If you seek further information, please contact the 3PB clerking team.