22 May 2020 - Article
Ali v Taj is the story of a remarkable estate, and a cautionary tale for executors. It was sworn for probate in 2008 at £8.7 million (net). 12 years on the estate remains to be administered. It appears it may now have a value of up to £118 million, subject to a possible claim by HMRC. And the executors have (only) just been ordered by the High Court to provide an inventory and account.
In early 2019 the beneficiaries formally requested from the executors information concerning the assets in the estate and an account of how the executors had been dealing with them.
The active executor (the other executor claims he was cut out of the administration) refused to provide that information on the basis that it would be ‘meaningless’. His position was that the delay in concluding the administration or providing an account to the beneficiaries was because there had been an extensive investigation by HMRC, and subsequent discovery of offshore companies that may significantly increase the value of the estate, subject to a claim by HMRC.
Not satisfied with that response, the beneficiaries asked the Principal Probate Registry to order the executors to provide an inventory and account. The District Registrar made that order under the non-contentious probate rules in August 2019.
The active executor challenged the District Registrar’s order before the High Court on three grounds:
• First, there were procedural irregularities in the way the application was made and dealt with.
• Second, the District Registrar had exceeded his jurisdiction because the application for an account was not ‘non-contentious’ probate business.
• Third and finally, he said the District Registrar had been wrong to order the account because the dispute was highly contentious and suitable only to be dealt with by the Chancery Division.
The High Court appeal proceeded by way of a re-hearing of the beneficiary’s application for an account. That cured the ‘serious procedural irregularity’ the executor complained of (albeit the judge acknowledged that the procedure before the Probate Registrar had been ‘sub-optimal’).
On the more substantive grounds of appeal, the High Court confirmed that non-contentious probate business – including an application for an inventory and account – does not become contentious and outside the scope of the District Registrar’s discretion simply because there is a dispute between the parties. In other words, an application for an account can be dealt with under the non-contentious probate rules even where there is a dispute and/ or a claim has been issued.
Nor will practical difficulties (ie locating missing millions) excuse an executor from its obligation to account.
For executors and beneficiaries Ali v Taj is a useful reminder that the duty to account is paramount and it is only in the rarest circumstances that an executor will be able to resist a request. Where the executor cannot obtain relevant information the guidance is clear; provide what you can and explain the gaps.