UK: Grounds For Hostility? The Removal Of Executors And The Jimmy Savile Charitable Trust – Re Savile (Deceased) [2014] EWCA Civ 1632

Last Updated: 3 February 2015
Article by Scott Taylor

Introduction

Testators have the freedom to choose who they want to be the executors of their estate, whether this be family members, friends, professionals or even charities. The court is generally reluctant to interfere with the testamentary freedom of a deceased testator without justification.

Sometimes during the administration of an estate, executors and beneficiaries find themselves engaged in personal conflict and a hostile situation ensues, preventing the timely distribution of the deceased's assets. This is not solely confined to situations between squabbling siblings; there are a number of cases whereby beneficiaries do not agree with the actions being taken by independent or professional executors.

One such estate which has recently been under media scrutiny is that of Jimmy Savile, who died on 29 October 2011. The recent Court of Appeal decision in Re Savile (Deceased) serves as a warning to beneficiaries of the threshold required to remove an executor from his office, and the cost implications of getting it wrong. There are lessons to be learnt from the actions taken by the trustees of the Jimmy Savile Charitable Trust, and charities should bear in mind the practical alternatives to court application ns when dealing with conflicts (or potential conflicts) with executors.

Why would an executor be removed?

Not all removals of executors are contentious; individually named executors may have personal or professional reasons for retiring as an executor, perhaps due to realising their inexperience or their unsuitability for the role, and will agree to step down by consent. There are statutory grounds by which an executor may be removed, such as the executor's refusal to act, being incapable to act by reason of illness or mental incapacity, or by bankruptcy. Further, there may also be grounds for removing executors where they have not administered the estate within a reasonable time or have caused undue delay.

Executors can be removed from their office if they are found to have been guilty of misconduct in their role. There are also situations which arise where executors end up in personal conflict with each other or with the beneficiaries of the estate, meaning that the administration of an estate cannot continue.

In special circumstances, the court has the power under s.116 of the Senior Courts Act 1981 to 'pass over' a nominated executor if it considers that it would be necessary or expedient to do so. The court has held that this power is for exceptional cases and is only possible before a Grant of Probate has been obtained. In order to replace an executor or terminate their appointment after obtaining a Grant of Probate, whether by agreement or through contentious proceedings, the Court will need to exercise its discretion under s.50 of the Administration of Justice Act 1985. Such an application to remove an executor can be made by a fellow executor or a beneficiary of the estate – and the latter is what happened in Re Savile.

Re Savile

Under his will, Jimmy Savile appointed NatWest as the sole executor of his estate, leaving a number of small legacies and lifetime interests to named individuals, with the vast majority of his estate (worth Ł3.3 million after expenses) going to the Charitable Trust. NatWest took out a Grant of Probate and began dealing with the administration of the estate. As may be familiar, an ITV documentary in October 2012 accused Jimmy Savile of having been a serial child abuser and sex offender. NatWest subsequently began to receive letters from a number of potential claimants seeking compensation from the estate for the personal injury sustained from the alleged assaults.

NatWest recognised that there were a vast number of potential claimants and there was a risk that the estate could become insolvent should many of the claims against the estate turn out to be meritorious. A meeting took place in March 2013 between NatWest, the Charitable Trust, representatives of the potential claimants, and other third party defendants (such as the BBC) to explore the agreement of a scheme to resolve the potential claims against the estate without the need to enter into costly court proceedings defending every claim. The Charitable Trust took a robust stance against the scheme, and accordingly were not invited by NatWest to a subsequent meeting at which the scheme was agreed.

As a result, in November 2013 the Charitable Trust issued an application to remove NatWest as the executors of the estate in favour of an impartial executor, on the basis that relations had broken down between NatWest and the beneficiaries so that they no longer retained confidence in NatWest to administer the estate due to (on the trustees' case) NatWest's failure to act in the interests of the beneficiaries.

Hostility and friction are not enough

When looking at the removal of an executor on the grounds of personal conflict, the court will take into account the proper administration of the estate and the welfare of the beneficiaries. On 1 April 2014, Sales J (in the High Court) dismissed the trustees' application to remove NatWest as executor and approved NatWest's proposed scheme. He stated that executors are involved in making judgments within the administration of an estate which attempt to strike a balance between competing interests, and stated that hostility and friction between executors and disappointed beneficiaries is not of itself a good ground to justify the executor's removal. In Sales J's view, NatWest and the Trust did have conflicting views on how to proceed, but NatWest took 'proper and reasonable judgments...about the best way to proceed to administer the estate, having proper regard to the interests of all those who may prove to have an entitlement in respect of it.' He therefore acquitted the bank of any improper hostility against the Trust, treating the disagreements as legitimate differences of opinion, and reiterating the broad discretion that executors have over the administration of an estate.

Sales J's decision was upheld by the Court of Appeal in December 2014. Lord Justice Patten, who delivered the judgment in the case, relied on the leading case in the removal of executors of Letterstedt v Broers, which stated that direct intervention by the court in the administration of an estate and the removal of an executor has to be 'justified by evidence that their continuation in office is likely to prove detrimental to the interests of the beneficiaries'. He went further, saying that 'a lack of confidence or feelings of mistrust are not...sufficient in themselves to justify removal' unless they are likely to jeopardise the proper administration of the estate. Lord Justice Patten agreed with the findings of Sales J and dismissed the appeal. He believed there would be no benefit to any of the beneficiaries in changing the executor; the scheme to deal with potential claims had already been approved by the court and the future administration would consequently be 'largely mechanical in nature', meaning NatWest's views (and alleged hostility) towards the Trust would not have 'any material effect' on the administration of the estate.

As a result of the appeal having been dismissed, the Charitable Trust was ordered to pay NatWest's costs relating to defending the removal application.

Practical considerations for charities and charitable trusts

As with any case where there are tensions between trustees and beneficiaries, they will turn on the facts of the case and Re Savile is no exception. It is clear that mere hostility is not enough to justify the removal of an executor. The case highlighted that the court takes into account the practical difficulties in removing an executor against his will, and charities or charitable trusts who are beneficiaries of an estate should bear in mind the increased costs and potential added delays to the administration of an estate should another executor be appointed, which may not be in the charity's best interests.

Re Savile reiterates the importance of taking a reasoned approach to any potential conflicts with executors, whether lay individuals or professionals. Mediation of the issues involved could reduce the costs involved, maximising the available legacies for each beneficiary. Where litigation is looking a likely outcome, consideration should be given by charitable beneficiaries to a neutral, professional executor as a replacement. Each case will turn on its own facts and where hostility is anticipated or arises, seeking advice from professionals at the earliest stage could assist in reducing costs and thereby maximising charitable legacies.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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