CH-2025-BRS-000001 - [2025] EWHC 2373 (Ch)

Under this ground it is said that the judge went wrong in law by ordering the executor personally to bear the costs of the proceedings. Although an executor can be deprived of his indemnity against the estate, no sufficient finding of misconduct was made to justify such deprivation. Moreover, the judge wrongly overlooked the respondents’ own litigation misconduct.

On any view, the respondents were the successful parties. The judge was entitled to exercise his discretion to order Julian to pay the costs. A costs order against a trustee or executor is always personal, although the trustee or executor is entitled to an indemnity out of the trust fund or estate in respect of that liability if properly incurred. However, a trustee or executor is not entitled to an indemnity so long as he or she has committed an unremedied breach of trust or duty, and may be deprived of the indemnity if he or she has committed so-called “misconduct” (now summarised in paragraph 1 of CPR Practice Direction 46). In the present case, the judge ordered that Julian should be deprived of his indemnity in relation to the costs of the litigation, though not in relation to his costs of the administration of the estates and trust.

In the respondents’ skeleton argument prepared for the consequentials hearing on 3 December 2024, they argued that Julian should not be permitted to indemnify himself out of the assets of the estates or the trust in respect of the costs of and incidental to the litigation. Their draft order (which the judge used as the basis for his own) included such a provision. In his extempore judgments, the judge does not deal specifically with the decision to deprive Julian of his indemnity in relation to litigation costs, although at paragraph 14 he does say this:

“The question is whether this is trust litigation (in which the parties’ costs might be met from the estate) or hostile litigation (in which the usual inter partes principles regarding costs would apply). In my judgment, it is plainly hostile litigation”.

The transcript of the proceedings shows that the respondents’ counsel specifically raised the issue with the judge. He said:

“It is not my understanding that the claimant is saying that he can indemnify himself in relation to his own costs out of the estate or anything like that.”

To this the judge responded: “No, the draft order goes to administration costs”, and later added “Administration costs, they do mean administration costs, not litigation costs”.

Taking the remarks which the judge made in his costs judgment together with this exchange with the respondent’s counsel, in my judgment it is clear that the judge considered that Julian should not be entitled to an indemnity from the estates or the trust for his own hostile litigation costs and costs liability, even though he should be entitled to one for his costs of the administration of the estates and the trust. In other words, Julian acted “in substance for a benefit other than that of the estate, including the trustee’s own”, within the meaning of paragraph 1 of CPR Practice Direction 46, and therefore was no longer entitled to his indemnity. In my judgment, the judge was entitled on the material before him to reach that conclusion, and this ground of appeal also fails.