Personal representatives hit with indemnity costs order

The case of Ali v Taj [2021] confirms that it is possible for personal representatives to be hit with an indemnity costs order if they fail in their duties.

Mr Taj and Mr Khan took out a grant of probate to a multi-million pound estate. Mr Ali was one of the beneficiaries of the estate and he considered that the executors had failed in their obligations to account to the beneficiaries. He therefore applied under s25 Administration of Justice Act 1925 and in 2019 the court ordered the executors to produce an adequate inventory and account of the estate. MacDonald J dismissed their appeal against that order confirming that:

‘the court will ordinarily exercise its discretion in favour of ordering an inventory and account and the circumstances in which it will not do so will be limited’.

MacDonald J has now dealt with the costs of the appeal. He applied the normal rule in civil litigation that the loser pays the costs of the winner but he also went further to direct that the costs be assessed on an ‘indemnity’ rather than the more usual ‘standard’ basis. That meant that the successful party would be able to recover an amount much closer to the costs actually incurred by him. In reaching this decision the judge found that:

‘rather than the executor simply doing what he had a duty to do and what the court had ordered him to do, he instead decided to put the respondents to further expense, delay and inconvenience by requiring them to meet an appeal of dubious merit after already waiting for over a decade’.

Our thoughts on the case

PRs should not assume that they have an automatic right to costs out of the estate no matter how they conduct themselves. PRs are just as susceptible to adverse costs orders being made against them personally if they fail to steer a neutral course or fail to act in the best interests of the beneficiaries.