Hanspaul v Ward, 9 March 2017, High Court Chancery Division (unreported)
The Court determined the appropriate costs orders to be made after settlement during the trial of a dispute concerning a family trust, whereby the trustees and protector agreed to resign after an application had been sought for their removal.
Held:
Costs were awarded against the protector and trustees and they were not entitled to their usual indemnity from the trust fund.
- The protector had stood aside during the trial to prevent the court from deciding whether to order his removal. On the other hand, the claimants had acted reasonably before and after the litigation.
- After being appointed to their position, the trustees had not actively engaged with the claimants to reassure them that they would take an even-handed approach, rather they had immediately taken a hostile position against the claimants. Further, by closing their mind to the possibility of splitting the company, and by failing to recognise that it might be in the best interests of the beneficiaries for them to retire, the trustees had to take some responsibility for the litigation.
Pettigrew v Edwards [2017] EWHC 8 (Ch)
A Beddoe application by three trustees of a will seeking permission to defend a claim and to make a counterclaim against a life tenant, who was the deceased’s widower.
The residuary estate included a promissory note signed by widower to his deceased wife in respect of a loan. The trustees of the estate, who were the deceased’s sons from another marriage and her solicitor, demanded repayment of the loan and stopped making income payments in order to recoup the debt.
Held:
The application was dismissed.
- The counterclaim for repayment of the loan was for the benefit of the first two trustees in their capacity as capital beneficiaries and it was for them to decide whether to take the risk of that litigation. If a Beddoe application was allowed and the life tenant was successful, then the life tenant would, in effect, pay for it.
- The question of how the repayment of the loan bore on the trustees’ obligation to pay income to the widower and life tenant was not a candidate for a Beddoe application.
- The costs’ application could not succeed, as it was not clear who would succeed on the counterclaim and on the issue of payment of income to the life tenant, as this was a breach of trust claim, so the costs could not come out of the trust fund.
Dawson-Damer v Taylor Wessing LLP [2017] EWCA Civ 74
The Court of Appeal has determined that the Data Protection Act 1998 may be used by beneficiaries of trusts to obtain information which under established trust law principles they would not have had a right to. Our Jeremy Bell-Connell has written an article on the case, which you can read here.
Latchworth Ltd v Dryer, Chancery Division, 09 February 2017 (unreported)
The claimant was an investment vehicle for a wealthy family. In an earlier hearing, the court had found that the trustee had used the trust funds in ways which were not permitted under the trust and had paid some of the funds to himself, and some to third parties. The court had also found that an organisation holding the trust had paid some of the trust funds to a commodity trading company without the authority to do so.
Held:
As a trustee in principle, the trustee was liable to restore the entire sums of the trust fund. He was not entitled to rely upon s 61 of the Trustee Act 1925 (under which the court may relieve a trustee from liability) in the circumstances as he had not pleaded such relief, he was debarred from defending the proceedings, and the funds had remained in his custody as a result of his own misrepresentation. The trustee was liable to account for the whole trust, but credit was given for a balance of the fund that had already been returned.
Angel Group Ltd v Davey, Chancery Division, 28 March 2017 (unreported)
The court was required to determine costs in proceedings relating to the alleged misappropriation of trust property.
Held:
The claimant company was entitled to costs on an indemnity basis where its former director had sold trust property without informing it and, despite claiming to have no control over the sale proceeds, had authorised payment of a portion to herself and others.
MN v OP Chancery Division 02 March 2017 (unreported)
The court approved a variation of a settlement but refused to grant an anonymity order for the parties concerned. The proposed variation extended the perpetuity period to 125 years after the hearing date and extended the trustees’ powers for a further 101 years.
Held:
The order for anonymity was refused by the Court on grounds that a derogation from open justice required exceptional circumstances and cogent evidence, which the claimant failed to provide.
Henchley v Thompson Chancery Division 16 February 2017 (unreported)
The claimants sought an order directing the defendant to provide a full account in common form of his dealings with the assets of two trusts.
Held:
Judgment for claimants in part.
- De facto trustees were subject to the same duties as actual trustees, and both were obliged to account to the beneficiaries. Even though the duty to account was a minimum obligation of a trustee, there was no absolute entitlement to an order for an account in common form as the order is discretionary. The circumstances in which it would refuse to order an account would be limited.
- There was no limitation period applicable to a claim for an account in common form. The six-year limitation period provided for by the Limitation Act 1980 s.21(3) does not apply; the court was not to be influenced by potential limitation issues in respect of inchoate claims when all that was sought was an account in common form.
- Although it was acceptable for trustees to divide their responsibilities between themselves, the fact that one of the responsibilities had been “designated” did not absolve the others of their obligation to keep records and account to the beneficiaries.
