High Court Preserves Indemnity For Unsuccessful But Honest Executor Removal Applicants

The High Court has confirmed that classification of executor removal proceedings as ‘hostile litigation’ does not automatically deprive unsuccessful applicants of their trustee indemnity, provided their conduct in bringing the application was honest and reasonable.

SHUFFLEBOTHAM & MILNER V SHUFF-WENTZEL [2025] EWHC 3321 (Ch)

In Shufflebotham & Anr v Shuff-Wentzel the claimants, two of three executrices, applied to replace all executors and trustees and to remove the defendant, the third executrix. HHJ Charman, sitting as a High Court judge, permitted the claimants to resign but refused to remove the defendant, appointing a professional trustee to act alongside her and a family representative. The defendant was the overall successful party entitled to her costs. The court was required to determine whether the claimants should pay those costs personally and whether they could recoup them from the estate. Applying Re Buckton and Price v Saundry, the judge characterised the proceedings as hostile litigation closest to a ‘beneficiaries dispute’, making the claimants jointly and severally liable personally. However, examining their conduct against the principles in Lewin on Trusts, the judge held they had acted honestly and reasonably in bringing necessary proceedings to address a genuine deadlock. Their right to indemnity from the estate was preserved, entitling them to recoup the costs paid.

In my judgment, the Claimants acted honestly and reasonably in bringing the application and in including in it an application for relief which included the removal of the Defendant. The fact that I ultimately decided not to remove her does not establish that seeking her removal at all was necessarily unreasonable. I do not consider that it was. In my judgment, the application was not one brought for the First Claimant's own benefit or for the benefit of some beneficiaries over others. There was a genuine deadlock as a result of the breakdown in the relationship between the Claimants (in particular the First Claimant and members of her immediate family) and the Defendant. The application was necessary.

Citations

Re Buckton [1907] 2 Ch 406 Addressed categories of trustee claims concerning cost liability, distinguishing between trust disputes, beneficiary disputes, and third-party claims, forming the basis for determining whether costs should come from the estate or be personally borne. Price v Saundry [2019] EWCA Civ 2261 Asplin LJ categorised trust-related litigation into three types and affirmed that costs properly incurred in administering the trust, including litigation for the trust’s benefit, may be indemnified out of the estate. Hanson v Coleman [2025] EWHC 116 (Ch) Reaffirmed the need to examine the substance and conduct of proceedings to determine whether they represent hostile beneficiary disputes or matters pursued for the trust’s benefit, relevant to trustees’ cost indemnity rights. Jones v Longley [2015] EWHC 3362 Demonstrated that trustees ordered to pay another party’s costs may still recoup those sums from the estate if the proceedings were reasonably and properly pursued.

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Key Points

The characterisation of proceedings as hostile litigation, rather than a claim brought for the benefit of the trust or estate, is a key factor in determining whether the unsuccessful party should pay the successful party’s costs personally, as opposed to those costs being paid from the trust fund. [22, 23]
Where proceedings are characterised as hostile litigation, the general principle that costs follow the event applies, and the unsuccessful party will be ordered to pay the successful party’s costs. [10, 14, 23]
A trustee’s right to an indemnity from the trust fund for costs incurred extends to costs which have been both honestly and reasonably incurred in the execution of the trust, and a doubt is to be resolved in the trustee’s favour. [18, 19, 32]
A trustee may lose the right to indemnity in respect of costs if they are improperly incurred, such as where the trustee acts for their own benefit or for the benefit of some beneficiaries against others. [19, 20, 30]
A trustee who is ordered to pay another party’s costs personally may still be entitled to recoup those costs from the trust estate via their right of indemnity, provided the costs were not improperly incurred. [18, 21, 28, 33]

"It follows that in my judgment, whilst these proceedings do not fall squarely within any one of the three conventional categories of claims by trustees, they are closest to a beneficiaries claim, and in my judgment more importantly for the purposes of determining the issues before me, this was hostile litigation. It follows that in my judgment, the Defendant is entitled to a costs order against her opponents rather than the estate."

Key Findings In The Case

The proceedings were found to constitute hostile litigation rather than a claim brought in the general interest of the estate, given that the principal relief sought was the removal of the Defendant as an executrix against her will, and that the application and supporting evidence positioned the Defendant in an adversarial role; accordingly, the litigation attracted the usual rule that costs follow the event [22–23].
Both Claimants were ordered to pay the Defendant’s costs personally on a joint and several basis, with the court rejecting the argument that the Second Claimant should be treated differently; she had aligned herself with the First Claimant throughout the proceedings and was indistinguishable in the relief sought and conduct adopted [24–27].
The Claimants were deemed to have acted honestly and reasonably in bringing the application and including within it relief seeking the Defendant’s removal; this was found not to be for the benefit of select beneficiaries but rather a consequence of genuine deadlock within the administration of the estate [30].
The court held that the Defendant’s costs had not been incurred as a result of misconduct on the part of the Claimants and therefore refused to displace their right to call on their trustee indemnities to recoup those costs from the estate [29, 33].
Although the Claimants rejected the Defendant’s offer of 5 August 2025, the court found that their rejection did not amount to unreasonable conduct, especially as the offer would have excluded the First Claimant’s side of the family from ongoing representation in the trusts created by the Deceased’s will [31].

"Whilst there is some force in Mr Poole's points that they could have responded to the Defendant's proposals more constructively and that some of their criticisms were overblown, trustees, and in this case lay trustees, should not be held to a standard of perfection. The bringing of the application was a reasonable step by the Claimants. I do regard some of the criticisms of the Defendant's conduct which they advanced as exaggerated but not all of them There was a breakdown in the relationship between the parties and the Defendant's conduct was part of the cause for the breakdown. Mr Perrin points out that when giving judgment I stated that there were merits on both sides and that the decision whether to remove the Defendant was not an easy one."

The High Court’s decision in Shufflebotham v Shuff-Wentzel [2025] EWHC 3321 (Ch) confirms that trustees who bring an honest and reasonable application may retain their indemnity to recoup costs from the estate, even when ordered to pay the successful party’s costs personally.

Background

The case concerned an application made by two of the three executrices and trustees of the estate of Alan Shufflebotham (deceased), the claimants, for their replacement and for the removal and replacement of the third executrix and trustee, the defendant. The application was heard on 14 August 2025, resulting in an ex tempore judgment. The claimants were unsuccessful in their bid to remove the defendant from her office. However, they were permitted to resign (which was unopposed), and the court ordered the appointment of a professional executor and trustee to act alongside the defendant and a lay representative from the first claimant’s branch of the family. The claimants had originally proposed Mr Taylor as the professional trustee, but he subsequently withdrew his consent to act and another professional was appointed.

A significant procedural feature was that the defendant had substantially changed her position only nine days before the hearing. Until a fairly late stage — and in any event until her without prejudice save as to costs offer of 5 August 2025 — the defendant had opposed the appointment of Mr Taylor without providing any proper reason and had proposed either that she continue alongside a lay trustee or that a different professional trustee of her own choosing be appointed. The 5 August offer proposed that Mr Taylor replace all parties as sole executor to complete the administration of the estate, with the defendant and Mr Taylor then becoming the trustees of the testamentary trust. Acceptance of that offer would, as the judge later held, have left the first claimant’s branch of the family entirely unrepresented on the trust.

Following the substantive decision, the question of costs was disputed. The court determined that the claimants were entitled to their own costs from the estate under their trustee indemnity and that the defendant, as the overall successful party, was entitled to her costs of the application. However, significant disagreement remained over whether the defendant’s costs should be paid by the claimants personally or directly from the estate, and whether the claimants could recoup any personal liability via their indemnity. The court invited sequential written submissions on these issues, received on 23 September 2025 for the claimants and 9 October 2025 for the defendant.

Costs Issues Before the Court

The court was required to determine two distinct but related costs issues. The first was whether the defendant’s costs should be paid by the claimants personally or directly from the assets of the estate. The second, contingent on the first, was whether the claimants, if ordered to pay the defendant’s costs personally, should be permitted to recoup that outlay from the estate pursuant to their trustee indemnity.

The Parties’ Positions

The claimants, represented by Mr Perrin, argued that the case did not fit neatly into the conventional categories of trust litigation. They submitted it was more akin to a ‘trust dispute’ brought for the benefit of the estate to break a deadlock, rather than hostile litigation. They contended that as the application was necessary and brought reasonably in the execution of their duties, the defendant’s costs should be paid from the estate. In the alternative, if the claimants were ordered to pay personally, they argued they should be entitled to indemnify themselves from the estate, as their conduct was not improper. Distinction was also sought for the second claimant, who was not a beneficiary and was said to have played a neutral role, merely seeking her own removal.

The defendant, represented by Mr Poole, argued the proceedings were a hostile ‘beneficiaries dispute’ where costs should follow the event against the unsuccessful party personally. She submitted the claimants’ primary aim was her removal, which constituted hostile litigation. She further contended that the claimants had acted unreasonably by ignoring pre-action proposals, advancing overblown criticisms, and rejecting her reasonable settlement offer made on 5 August 2025. On this basis, she argued the claimants should not only pay her costs personally but should also be denied the right to recoup those costs from the estate via their indemnity.

The Court’s Decision

The court held that the defendant’s costs should be paid by the claimants personally, but that they were entitled to recoup those costs from the estate under their indemnity. In reaching this conclusion, the judge applied the principles summarised by Asplin LJ in Price v Saundry [2019] EWCA Civ 2261 and the traditional categories from Re Buckton [1907] 2 Ch 406.

On the character of the proceedings, the judge found that while the case did not fall squarely into one category, it was closest to a ‘beneficiaries dispute’. The central purpose of the claimants’ application was the removal of the defendant against her will, which was properly characterised as hostile litigation. Consequently, the correct order was for the unsuccessful claimants to pay the successful defendant’s costs. The judge rejected the argument that the second claimant should be treated differently, noting she had chosen to join the joint application, was represented by the same lawyers, advanced the same evidence, and had not distinguished her position until the costs submissions.

On the indemnity issue, the court found no basis to deprive the claimants of their right to recoup the costs from the estate. The judge held that bringing the application was a reasonable step to address a genuine deadlock in the administration of the estate. The claimants had acted honestly and not for their own personal benefit or for the benefit of one group of beneficiaries over another. While some criticisms of the defendant were exaggerated, trustees — particularly lay trustees — were not to be held to a standard of perfection. The rejection of the defendant’s 5 August offer was not unreasonable, as accepting it would have left one branch of the family unrepresented on the trust, an outcome the court itself later deemed inappropriate. Applying the principle from Lewin on Trusts that doubts should be resolved in favour of trustees, the judge ordered that the claimants’ right of indemnity remained intact.

The final order was that the claimants were jointly and severally liable for the defendant’s costs, but were entitled to call upon their indemnity from the estate in respect of that liability.

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