Anthony Gold Solicitors successful in Beddoe Application

Anthony Gold Solicitors (“AGS”) were successful in their application on behalf of Mr David Wedgwood – as personal representative of the Estate of the late Mr Aleem Hosein (“the Deceased”) – for Beddoe Relief. The application was heard before Master Marsh (sitting in retirement) on 11 July 2024. The Judgment was published on 24 July 2024 by Master Marsh:

Wedgwood v Hosein & Anor [2024] EWHC 1836 (Ch) (24 July 2024)

Background

AGS act for Mr Wedgwood a court appointed Administrator of an Estate which is the subject of multiple claims. The main claim concerns a claim by the former employer of the Deceased – FFS (2023) Limited – for breach of fiduciary duties. Mr Wedgwood sought Beddoe Relief so that the legal costs of defending the main claim and other claims would be indemnified by the Estate. This was particularly important as, if the primary claim succeeds and the Estate becomes insolvent, any and all payments sanctioned by the personal representative in administering the Estate – which includes legal costs defending the litigation – could be challenged under section 284 of the Insolvency Act 1986 by an insolvency practitioner, unless ratified by the Court. FFS (2023) did not object to the granting of Beddoe Relief to Mr Wedgwood but opposed any order under section 284. Had FFS (2023) been successful, the Administrator would be protected from claims by beneficiaries, but there would have been no protection from creditors.

Considerations

The section of the Judgment contemplating Re Beddoe began by noting that the Court’s decision to grant Beddoe Relief was at the discretion of the Judge. Master Marsh considered that the Court’s decision as to whether to grant Beddoe Relief should be guided by “what a reasonably minded litigant, fully advised and with a cautious approach to risk would do in the circumstances.”

Ms Clare Stanley KC, for FFS (2023), argued that the test in paragraph 12.8.8 of the Practice Direction should be applied for an order under section 284. This test requires that the Court must be satisfied that there is credible evidence that the debtor is solvent and able to pay their debts. Mr David Rees KC, for Mr Wedgwood, referred to the approach adopted by Sales J in Re Savile. Sales J stressed that the executor of an Estate – in that case NatWest – owes duties not only to claimants against the Estate but also beneficiaries under the will.

The Judgment also outlined Master Marsh’s consideration of FFS (2023)’s other arguments; i) Mr Wedgwood was seeking Beddoe Relief for the benefit of his solicitors; and ii) that the widow of the Deceased should indemnify Mr Wedgwood’s costs. The former was roundly rejected as Master Marsh considered that solicitors would rarely accept an appointment as an Administrator if the office holder could not obtain the benefits of Beddoe Relief. The latter too was rejected on the basis that the Deceased’s widow – by issuing a counterclaim – had placed herself in a position of conflict with the Estate.

Decision

The key takeaway from this Judgment is Master Marsh’s determination that the correct test for approving an order under section 284 requires a consideration of the interests of both the creditors and the beneficiaries. Master Marsh considered the merits and quantum of FFS (2023)’s claim and Mr Wedgwood’s counterclaim in some detail. Master Marsh concluded that the benefit to the beneficiaries in allowing Mr Wedgwood to continue to defend the main claim (and pursue a counterclaim) outweighed the potential detriment to creditors.

Permission was allowed to proceed, but only to a specified point in the litigation, after which further relief would be required.