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  1. The Jimmy Savile estate saga

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    Jimmy Savile died on 29 October 2011. The current value of his estate, after allowing for a range of expenses that have been incurred, was about £3.3 million. Jimmy Savile left a will. Its executor and Jimmy Savile’s personal representative was National Westminster Bank plc (“the Bank”).

    In the Matter of the Administration of the Estate of Jimmy Savile, sub nom National Westminster Bank PLC v Lucas and others [2014] EWHC 653 (Ch) Ch D. (Sales J.)

    Various individuals were named in the will as beneficiaries (“the individual beneficiaries”). These included a small number of close relatives and friends, each of whom was given a relatively modest bequest.

    However, under the will, the bulk of the residue of Jimmy Savile’s estate was left to the Jimmy Savile Charitable Trust (“the Trust”). That Trust was intended to serve a number of very worthwhile and valid charitable causes, including Help for Heroes.

    First news of the abuse claims
    On 4th October 2012 a television programme was broadcast accusing Jimmy Savile of being a serial child abuser and sex offender. As a result of that programme and the publicity and further investigations into Jimmy Savile’s activities which followed, a large number of people (“the PI Claimants”) came forward to make claims that they were sexually abused by Jimmy Savile. At present 139 persons have made personal injury claims based on these allegations. The great majority of these claimants are being represented by Slater & Gordon, solicitors.
    In addition, there are satellite claims by the PI Claimants against and possible claims to contribution from the estate by such institutions as the BBC, “Mind”, Bernardo’s and such like (“the Third Party Defendants”).

    The starting point
    As a starting point, an estate can only be distributed after the claims of creditors have been satisfied (See Re Hubback, (1885) 29 Ch. D. 934) and for present purposes this would include those with valid personal injury claims. Indeed, there was and is the real risk that the estate might not be sufficient to discharge all the claims against the estate, which might become insolvent.

    The litigation
    The first round of litigation related to Jimmy Savile’s funeral expenses. Something around £70,000 had been spent on the funeral. The PI Claimants mounted a retrospective challenge to this expense as being unreasonable. This involved some issues entertaining for those who were not possible beneficiaries of the estate, because of the possible insolvency. There is some charming ancient case law on this subject; indeed as one Lord Holt once observed in 1693, if the estate is insolvent, no funeral expenses should be allowed at all except “for the coffin, ringing the bell, and the fees of the parson, clerk and bearers; but not for the pall or ornaments.” How very generous of spirit.

    However, in the event it was held that the issue of insolvency had not arisen at the time of the funeral and that a man is entitled to a “funeral commensurate with his reputation at time of his death”, and that the expenses were reasonable at the time.

    The second round of litigation dealt with the problem of how the Bank as executor and trustee of the will dealt with the estate in view of the many – as yet unproven – claims against the estate.

    In short, the individual beneficiaries and the Trust had the following concerns:

    • That some, and an unknown number, of claims being made against the estate were, as one might put it, subject to a degree of exaggeration and/or being opportunistically made; and
    • That the Bank, as executor and personal representative under the will, was less than anxious to test the veracity of these claims, and was willing to pay out and exit stage left with as much alacrity as possible, leaving the individual beneficiaries and the Trust with nothing.

    There had also been some criticism of overcharging by the Bank as executor and personal representative under the will which had been touched on in the previous hearing concerning the funeral expenses.

    There were two applications before the court. The first was an application d by the Trust seeking an order under section 50 of the Administration of Justice Act 1985 that an alternative professional executor be appointed as personal representative of Jimmy Savile in place of the Bank, “on the grounds (inter alia) that the Bank’s failure to act in the interests or for the benefit of the beneficiaries [i.e. including the Trust], the breakdown of the Bank’s relationship with [the Trust] … based on the mode in which the estate is being administered and caused by substantial overcharges claimed against the estate, prevents the trusts of the estate being properly and expeditiously executed.”

    The individual beneficiaries supported this application. The Bank, the PI Claimants and Third Party Defendants opposed it.

    The was a second application issued by the Bank seeking (i) a determination whether a proposed draft Scheme designed to facilitate the speedy and inexpensive resolution of personal injury claims was a suitable mechanism by which the personal injury claims that have been and may in future be made against the estate can be dealt with and (ii) ratification by the court under section 284(1) of the Insolvency Act 1986 of various expenses incurred by the Bank in the course of executing the will and administering the estate, including substantial legal expenses which have been incurred. The request for approval of the Scheme is supported by the PI Claimants and the Third Party Defendants. The Bank’s applications were opposed by the Trust and the individual beneficiaries.

    Scales’ judgment
    As the judge noted, whilst the claims against the estate remain untested, there is no serious dispute that some, perhaps many, of the claims may be well founded and if such claims are substantiated there is the serious possibility that they would exhaust the money remaining in the estate, leaving the individual beneficiaries and the Trust with nothing.

    The first issue the judge dealt with was the question of how the executors/estate ought to deal with the large number of claims, some valid, some perhaps not valid, and how these might be sifted and assessed, bearing in mind the Trust’s concerns that the Bank might not be making a fair fist of screening the same. And as ever, the question of costs loomed large. As the judge said:

    “There was a previous hearing before me on 20 February 2013 on an application by the Bank seeking directions. My judgment on that occasion is reported at [2013] EWHC 770 (Ch). In the course of that hearing, I emphasised to all parties the importance of trying to minimise the costs of resolution of disputes in respect of the various claims, so as to avoid what counsel had described as “a feeding frenzy for the lawyers” and to preserve as much of the money in the estate as possible to meet the claims of those with entitlements in respect of it. I said this:

    “I would encourage everyone here to be as imaginative as possible in terms of trying to work out sensible ways in which the claims can both be scrutinised, but also dealt with at a minimum of expense in terms of advisors’ fees on all sides. I think it is important that, although the estate is significant, it is not hugely valuable when set against the possible claims which may be brought against it. I am very concerned … that it not be swallowed up, in effect, in advisors’ fees and legal fees going forward.”

    The Bank, the PI Claimants and the Third Party Defendants have taken that observation very seriously. They engaged in negotiations to try to devise a scheme which would allow effective scrutiny of the merits of the personal injury claims at the least possible cost. The negotiations have been lengthy and difficult, but they have borne fruit in the form of the Scheme, which I discuss in detail below.

    Also at the hearing on 20 February 2013, counsel then appearing for the Trust mentioned the possibility that the Trust might be involved in some way in scrutiny of and defending the personal injury claims being brought forward against the estate, perhaps even on the basis that the Trust took over the defence of those claims on behalf of the Bank. This was only an idea, not a detailed worked out proposal, and there was little discussion about it. I indicated that the court might be open to accepting such an arrangement, if it was acceptable to the Bank and if it appeared sensible and viable.

    In the event, despite some discussion between the Bank and the Trust regarding the possibility of the Trust taking on responsibility for conducting the defence of the personal injury claims, no arrangements acceptable to the Bank could be agreed. The Bank pointed out that it could potentially be at risk in relation to costs orders in the personal injury proceedings and said that it would not be willing for steps to be taken in its name over which it had little control. It also thought it inappropriate that the Trust, as but one party with a potential claim in respect of the estate, should have its costs of litigating over such entitlement paid out of the estate while other claimants in respect of the estate, the PI Claimants, had to bear for themselves the cost risks of such litigation. These were, in my view, all proper grounds on which the Bank could fairly decide not to permit the Trust to take over the defence of the personal injury claims from itself….”

    In fact, these negotiations appear to have been conducted in an atmosphere of some mutual antipathy and acrimony, which spilled out in some personal comments made in the course of the hearing before the judge, with one Counsel being referred to as being “the problem”. The judge neatly and rightly defused this little spat. As an aside, I have a very clear view about which party or parties, if any, might have been “the problem”. But upon that I shall say no more.

    But back to the case. The Scheme could not, of course, bind those who may wish to litigate against the estate, but was intended to facilitate the early scrutiny of claims, and settlement if possible. It was as follows.

    If a person with a personal injury claim against the estate (and, as may be, against a Third Party Defendant) chose to make an application under the Scheme, the Bank (and any relevant Third Party Defendant) will be required to consider the claim according to a set time-scale and procedure and to decide whether to accept or reject it.

    The consideration of the claim will involve all relevant evidence in relation to it being referred to a barrister to review. The barrister will then produce a recommendation whether the claim should be accepted, rejected or accepted in part. If it is accepted, the claimant will have the option to enter into a settlement agreement with the Bank. If it is rejected or if the claimant chooses not to settle, the claimant will have to decide whether to commence legal proceedings against the Bank, acting for the estate.

    As the judge put it:

    “The main object of the Scheme is to try to achieve as much clarity as possible, as quickly as possible and at the least cost possible, regarding the extent of liabilities of the estate. It is only when the extent of those liabilities is known, or can reasonably be estimated, that it will be possible for the correct distribution of money in the estate to be worked out. At that stage, it is contemplated that the Bank would make an application to court for sanction and approval of payments to be made by the Bank out of the estate. Settlements of claims made pursuant to the Scheme will not, in themselves, involve payment out of money from the estate, but only agreement to the quantification of those claims as a necessary and important step towards allowing payments out of the estate (in whatever appropriate sum) in respect of those claims.

    “The Scheme is similar to those which operate in relation to certain road traffic accidents and employment and public liability claims under Protocols under the Civil Procedure Rules, which likewise seek to promote fair scrutiny of claims and settlements at the least cost which can be achieved.”

    One of the initial features of the Scheme was that it was possible to construe it in such a way that no information about the identity of PI Claimants was to be supplied to the individual beneficiaries. This was important because the individual beneficiaries maintained that in certain cases they had information about the PI Claimants which might be highly material to the assessment of the veracity of the case being put forward. In short, the individual beneficiaries claimed to know certain material facts about whether a PI Claimant might have had or not had any contact with Jimmy Savile at all, and if so, what the nature of the contact and effect (or apparent lack of it at the time) might have been.

    It seems that some objection to disclosure of the identity of the PI Claimants. There seems to have been some unfortunate ambiguity about this under the proposed Scheme, with the PI Claimants initially suggesting that relevant information would be available under the terms of the Scheme. However, that was not entirely clear. The Judge said:

    “Clause 4 did not originally say in terms that the Bank and Third Party Defendants would be entitled to seek to obtain information about claims made under the Scheme from any other person who might have relevant information bearing upon such claims, but [Counsel] for the PI Claimants assured me that this was properly covered by clause 4 as it stood, since that would be something to be done in making the assessment whether to accept or reject the claims. Since the individual beneficiaries maintained that they had information which might be relevant to assessing whether some claims were bogus or not, and were concerned that the Bank would not have regard to this in assessing such claims under the Scheme, I indicated that it seemed desirable to allay those concerns by making express provision in the Scheme allowing for this to be done.”

    But the PI Claimants then took a different tack. They said it was not possible for this scrutiny to take place. It would be unlawful, because so to do would mean the names of claimants would have to be disclosed to the Trust by the Bank, the BBC and others.The PI Claimants maintained it was contrary to: ‘the Sexual Offences (Amendment) Act 1992 for the Bank or Third Party Defendants to identify to others a person who was making a claim in relation to sexual abuse.”

    The learned judge reflected on this as follows:

    “I was concerned by this, both because no-one had presented any detailed reasoned argument to me to explain why this would be the effect of the 1992 Act (and I was doubtful, absent such argument, that it would be) and because it appeared to make the operation of the Scheme potentially unfair to the Trust and the individual beneficiaries, in that it might well in practice disable the Bank or Third Party Defendants from seeking from them information which could have a material bearing on the question whether a particular claim has merit or not.”

    In the face of what appears to have been a certain degree of (justified) judicial skepticism the PI Claimants, the Bank and the Third Party Defendants finally agreed a modification of the Scheme to provide that any claimant wishing to make a claim under the Scheme will have to give consent for their name to be provided to such sources of information (including the individual beneficiaries) as the Bank and the Third Party Defendants might consider helpful to allow for evidence to be obtained to respond to the claim.

    With this concession the Scheme was approved notwithstanding other criticisms by the Trust. These criticisms were rejected thus:

    “The Trust submitted that the Scheme was defective for a number of other reasons. Ms Summers, in her first witness statement, complained that the Scheme is “unworkable and futile”, and that costs to negotiate it and operate it should not be recoverable out of the estate.

    I do not accept this criticism. It is true that claimants are not required to claim under the Scheme and that those who do are not obliged to settle at the level which might be indicated under the Scheme. Until they settle, claimants retain the right to launch proceedings in court. However, there are considerable potential benefits for claimants in using the Scheme and it is likely that claiming under the Scheme will be attractive to many or all of them. Use of the Scheme will provide a good opportunity for their claims to be quickly and inexpensively scrutinised by a barrister, so that they have a reasonable chance of reaching a settlement at an agreed level which can be regarded as fair. Agreement about that will in turn help the Bank to get to a position in which the full amount of valid claims is known, so that it can decide whether and in what amounts they can be paid out of the estate and whether and in what amounts the claims of the Trust and the individual beneficiaries upon the estate can be met. This will allow the Bank to come to court for sanction of payments out of the estate, so that those who are entitled to the money remaining in the estate can actually receive what is due to them.

    Personal injury claimants who do not claim or settle under the Scheme will have a difficult choice. They can go to court, but that may involve them in expense which may prove to be irrecoverable; they may fail in their claim and receive nothing; they will be on risk for an award of costs being made against them in favour of the estate if they lose, or if they have failed to apply under the Scheme without good reason; and taking that step will be likely to lead to the Bank being forced to incur legal expenses which will deplete further the balance remaining in the estate, so diminishing whatever recovery they might hope to obtain (in contest with all the other personal injury claimants) at the end of the day. Even if some claimants do pursue this course, despite the risks they will face, it is reasonable to think that the numbers are likely to be comparatively small and easier to deal with than if the Scheme was not put in place.

    The case is perhaps helpful in its analysis of the duty of an executor and what constitutes behaviour which justifies removal of an executor and personal representative. In respect of the former the judge concluded that:

    “… I wish to emphasise that in my view the relevant question is not so much whether the court thinks that the making of the Scheme is a good idea in the circumstances (which I do), as whether an executor and personal representative faced with the practical problems confronting the Bank in administering the estate could reasonably and lawfully assess that it should enter into the Scheme. The further question, then, is whether in light of that assessment the court should give its sanction for the executor to do so. I discuss the relevant legal test below…

    …On the test to be applied on the question whether an executor and personal representative should be removed and replaced by order of the court, the principal authority remains the decision of the Privy Council in Letterstedt v Broers (1884) 9 App Cas 371, in which the court’s power to remove and replace a trustee was confirmed and discussed. It was common ground that similar principles govern the question whether an executor and personal representative should be removed by the court: see Thomas and Agnes Carvel Foundation v Carvel [2007] EWHC 1314 (Ch); [2008] Ch 395, [44]-[47] per Lewison J; Kershaw v Micklethwaite [2010] EWHC 506 (Ch), [6]-[14] per Newey J. In Letterstedt, at 385-386, Lord Blackburn referred with approval to the discussion in Story’s Equity Jurisprudence at section 1289:

    “But in cases of positive misconduct, Courts of Equity have no difficulty in interposing to remove trustees who have abused their trust; it is not indeed every mistake or neglect of duty, or inaccuracy of conduct of trustees, which will induce Courts of Equity to adopt such a course. But the acts or omissions must be such as to endanger the trust property or to shew a want of honesty, or a want of proper capacity to execute the duties, or a want of reasonable fidelity.”

    In the end the Judge concluded:

    “I accept the submission of [Counsel] for the Bank, and of [Counsel] for the PI Claimants, that proper execution of the Bank’s obligations – what, in the context of Letterstedt, Lord Blackburn called the proper execution of the trusts – in the circumstances of this case requires the Bank to have regard not only to the interests of those claiming under Jimmy Savile’s will (the individual beneficiaries and the Trust) but also to the interests of those among the PI Claimants, possible future claimants and the Third Party Defendants who may have meritorious claims against his estate. If personal injury claimants or Third Party Defendants have meritorious claims against the estate, the proper fulfillment of the executor’s role is to see that such claims are paid out of the estate before making any distribution under the terms of the will. On the material available to the Bank and before the court, the assessment can properly be made that there are likely to be at least some meritorious claims. That is not a possibility that can be discounted on the basis that the claims all appear to be weak or without substance.

    The interests of the beneficiaries under the will (including the Trust) cannot automatically be promoted above those of the various personal injury claimants and Third Party Defendants who may have good claims against the estate. I reject the submission by [Counsel for the Trust] that the Bank was obliged to treat the interests of the beneficiaries under the will as superior to those of the claimants against the estate. The entitlements of both beneficiaries and claimants depend, in substance, upon the same contingency, namely whether and to what extent there may be valid and meritorious claims against the estate. It is that contingency which the Scheme is designed to address and, so far as may be possible, determine.

    In light of the claims against the estate, and the real risk that it may prove to be insolvent because of them, the Bank is obliged to have regard to the interests of the class of claimants against the estate as well as to the interests of the beneficiaries under the will. The position is in significant respects analogous to that of a company which faces a real risk of being unable to pay its creditors, where the directors are bound to consider the interests of the creditors and not simply those of the shareholders: see e.g. West Mercia Safetywear Ltd v Dodd [1988] BCLC 250, CA, 252-253, and Hellard v Carvalho [2013] EWHC 2876 (Ch), [88]-[89].”

    Now it is clear that the Bank as executor and personal representative does indeed face a tricky task, and the aim of the Judge was to endorse a pragmatic system for sifting the claims, even though I suspect there may well have been more force than the Judge might have given credit for in the Trust’s and Individual Beneficiaries’ concerns about, amongst other matters, the Bank’s commitment to scrutinising claims.

    On a wider note, these cases of so called “historic sexual abuse” have become something of a phenomenon. The very term “historic sexual abuse” has always seemed an odd term to me, because to my pedantic historian mind it suggests some act with politico-religious significance, such as the rape of Boudicca’s daughters by Roman legionaries – an act which triggered a revolt which may have left more than one hundred thousand dead. Be that as it may, it is the vexed question of very old allegations, typically, but not always, made against so called “celebrities.” There are, of course, a number of truly difficult legal and to the extent that it is materially different evidential and even psychological issues involved in these cases. There is another, less reported but much more common aspect to claims concerning allegations of sexual abuse – that being claims against professionals such as teachers, who may often find their careers blighted and even ended on the strength of allegations made against them. Your writer has been invited to a conference being facilitated by the Oxford University Faculty of Criminology on the topic later in the Spring. I shall report back.