In The Matter Of The Representation Of Kenneth James Mackinnon (2009) JRC 218

This case considered for the first time the extent of the jurisdiction of the Royal Court to penalise an executor or a trustee by holding them personally responsible for the costs of an administrative action, and the relevant test to be applied in considering the imposition of such penalties.

Facts

The case concerned an application by the legatee of an estate (the "representor") for an order that the costs of a representation brought by the representor concerning the conduct of the executor be paid by the executor and that the executor be prevented from claiming his costs in respect of the representation from the estate. However, the decision will be of interest to trustees as the Court considered that no material distinction should be drawn in the context of the costs of an administrative action between the position of an executor and the position of a trustee as both owe fiduciary duties, either to the legatees or to the beneficiaries as the case may be.

Having established that the Court had a broad discretion to award costs incidental to proceedings in the Royal Court under Article 2 of the Civil Proceedings (Jersey) Law 1956 and a similar broad discretion under Article 53 of the Trusts (Jersey) Law 1984 in respect to the payment of costs out of trust property, three issues were identified by the Court for determination:-

Should an order for costs be made against the executor personally? Should it be on an indemnity basis? Should the executor be prevented from recovering his own costs in relation to the representation out of the estate? Decision

Firstly, as to whether an order for costs should be made against the executor personally, the Court considered that this question was discretionary. The Court stated that an executor or trustee has a margin of discretion and must be free to conduct himself, and to take decisions, within the parameters of a reasonable framework as he sees fit.

The Court left for another day consideration as to whether the margin of discretion for a professional executor or trustee who is being remunerated should be more narrowly circumscribed than that of an unremunerated executor or trustee.

However, the Court stated that an unremunerated executor or trustee will not lightly be ordered to pay the costs of litigation if he has made an innocent mistake or acted in a manner which has ex post facto been shown to be misguided or even careless. At the same time, a legatee or beneficiary is entitled to expect a...