In brief
- The case clarifies how Re Buckton costs principles apply when an unsuccessful construction application is brought by a party serving as both administrator and beneficiary of an estate.
- Master McQuail categorised the application as either Buckton category (1) or (2), meaning all parties’ costs were paid from the estate, as there was no neutral administrator to bring the claim and the claimant had acted reasonably in bringing the claim.
- The Judgment highlights the importance of obtaining early legal advice when considering construction applications, as this can influence the Court’s approach to costs.
- The decision suggests that most construction applications by administrators or trustees are likely to fall within Buckton categories (1) or (2), rather than being treated as hostile litigation.
The recent decision in British Camelids Limited v Brooke Hospital for Animals and Others clarifies how the costs principles established in Re Buckton apply when an unsuccessful claimant in a contested construction application serves as both administrator and beneficiary of an estate.
Construction application
The main proceedings concerned the estate of Ms Candia Midworth, a keen animal enthusiast with a particular interest in llamas (the Estate). Ms Midworth died in April 2022, leaving her residuary estate to six animal charities under a will executed in 1994 (the Will). However, complications arose because one named charity had ceased to exist since 1994, and three others had changed their names and/or charity numbers upon incorporation.
Amongst the named beneficiaries was a llama and alpaca protection charity, British Camelids Limited (British Camelids), which obtained a grant of letters of administration in relation to the Estate. British Camelids subsequently made a construction application to the court for determination of the terms of the Will and seeking orders to the effect that the gifts to the three originally unincorporated charities that had changed name and/or charity number would fail, leaving the Estate to be distributed between itself and the remaining charity (the Application).
The original three unincorporated charities opposed the Application on the basis that they had transferred their respective assets to the subsequently incorporated entities.
Ultimately, the court decided in favour of the defendants. Master McQuail held that charitable gifts should "not necessarily fail on the original named entity ceasing to exist if the broad charitable purposes of the gifts continue".
The Buckton categories
When considering how to award costs in trust and probate proceedings, the court will generally consider and apply the case of Re Buckton [1907], which refers to three categories of proceedings:
- The first is where a trustee or personal representative makes an application for guidance from the court on the construction of a trust instrument, or a question of law, arising in the administration of the trust in question, or in relation to the trust on which the subject property is held. In such cases, the costs of all the parties are typically ordered to be paid out of the trust, or estate, as the costs are treated as being necessarily incurred for the benefit of the beneficiaries as a whole.
- The second relates to an application made by someone other than a trustee or personal representative but raises the same kind of issues as in category (1). The same principle on costs applies as in category (1), but it may be harder to demonstrate that the applicant was acting reasonably and for the benefit of the trust or estate.
- The third involves an application made by someone other than a trustee or personal representative (but with a beneficial interest in the trust or estate) and has the characteristics of a hostile claim founded on a point of law or construction. What differentiates this category from the other two is that it can be said that such a claim is brought for the benefit of the applicant, as opposed to the beneficiaries as a whole. Here, the general principles of trust litigation usually apply and the unsuccessful party may be ordered to pay the costs of the successful party.
It should be noted that the above categories are not conclusive on costs, and the court will take into account whether or not the applicant has acted unreasonably in bringing the claim.
Costs in British Camelids Limited v Brooke Hospital
When considering the issue of costs in this matter, a dispute arose between the parties as to which category of Buckton would apply to costs awarded in the claim.
The defendants argued that since the only construction question concerned rival beneficiaries' entitlements to the Estate's assets, this was a Buckton category (3) case, requiring the claimant to pay their costs. British Camelids contended this was a Buckton category (1) or (2) application, meaning all parties' costs should be paid from the Estate on an indemnity basis.
Master McQuail held that the case was either a Buckton category (1) or (2) application on the grounds that (i) there were proper arguments to be made as to how the Will should be construed, and (ii) there was "no neutral trustee in this case" (i.e. no other administrator without an interest in the Estate) to bring the question before the court for resolution. Master McQuail in her Judgment went on to acknowledge that where the losing party had acted unreasonably in the proceedings, an adversarial costs order may be made, irrespective of it being a Buckton category (1) or (2) application; however, she concluded that this was not the case in this matter. She also made reference to the fact that the claimant had taken advice at an early stage as to the merits of the Application. As such, the parties' costs were ordered to be settled out of the Estate on the indemnity basis.
Comment
This decision demonstrates the court's willingness to categorise trust and probate proceedings as Buckton category (1) or (2) where a party serves as both administrator (or trustee) and beneficiary. Where a party brings a construction application regarding a will or trust instrument, it appears difficult to envisage scenarios falling outside categories (1) or (2); however, it will be interesting to observe how the case law develops on this point.
The decision also highlights the importance of obtaining early legal advice on the merits of a contemplated application, as this is relevant to the court's assessment of whether bringing the application was reasonable.