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Costs decision in claim for directions where court refused to approve capital appointment (Smith and another v Michelmores Trust Corp Ltd and others)

Published on: 14 June 2021
Published by: LexisPSL
  • Costs decision in claim for directions where court refused to approve capital appointment (Smith and another v Michelmores Trust Corp Ltd and others)
  • What are the practical implications of this case?
  • What was the background?
  • What did the court decide?
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Article summary

Private Client analysis: An executor sought court approval for making an appointment of capital to a discretionary beneficiary under the principles in Public Trustee v Cooper. The court had already decided that it would not approve that proposal and the judgment is reported in Smith and another v Michelmores Trust Corp Ltd and others. In this case, the executor sought an indemnity from the estate under the terms of the Will, pursuant to section 30(1) of the Trustee Act 2000 (TrA 2000) and under the general rule in CPR 46.3. The executor agreed with one discretionary beneficiary to pay that discretionary beneficiary’s costs and not to claim those costs from the discretionary trust. The court decided that the executor had not brought the claim as executor of the estate, but in her distinct capacity as trustee of the discretionary trust. As a result she was not ‘acting on behalf’ of the estate and so was not entitled to an indemnity under TrA 2000, s 30(1) or under the general rule in CPR 46.3. Even if that were wrong, the court decided that the executor had not been acting properly, as she had been attempting to achieve a proper object by improper means (conflict of interest and fraud on a power). On this basis the costs were not ‘properly incurred’ and the executor was not entitled to an indemnity in any event. Written by Evan Price, barrister at Ten Old Square, Lincoln’s Inn. or take a trial to read the full analysis.

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