Daniel v Tee
| Jurisdiction | England & Wales |
| Judge | Richard Spearman |
| Judgment Date | 01 July 2016 |
| Neutral Citation | [2016] EWHC 1538 (Ch) |
| Docket Number | Claim No: HC14A02206 |
| Court | Chancery Division |
| Date | 01 July 2016 |
[2016] EWHC 1538 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
Richard Spearman Q.C.
(sitting as a Deputy Judge of the Chancery Division)
Claim No: HC14A02206
Christopher Lundie (instructed by Gateley LLP) for the Claimants
Anthony de Freitas (instructed by BLM LLP) for the Defendants
Hearing dates: 20, 21, 22, 25 April 2016
Richard Spearman Q.C.:
Introduction and nature of the dispute
This is a claim for breach of trust. It raises questions concerning the duties of trustees, and in particular the extent to which professional solicitor trustees, who have no personal expertise in managing investments, may be said to have acted imprudently by relying on the advice of independent financial advisers which transpires to be incorrect.
The Claimants are the children of the late Jack Raymond Daniel, a chicken farmer who died unexpectedly young on 28 June 1999, and are the beneficiaries under the Jack R Daniel Will Trust ("the Trust") established by his will dated 19 June 1998 ("the Will"). At the time of Mr Daniel's death, the First Claimant, Glyn Daniel, was 13 years of age, and the Second Claimant, Amy Daniel, was 16 years of age. Clause 4 of the Will states:
"My trustees shall hold my Residuary Estate upon trust for my children GLYN THOMAS DANIEL and AMY LOUISE DANIEL in equal shares if they both shall survive me and shall attain or shall have attained the age of twenty five years but if one only of them shall survive me then for such survivor absolutely but if either of them shall die (whether in my lifetime or after my death) before attaining a vested interest in my Residuary Estate but shall leave a child or children alive at or born after my death who shall attain or shall have attained the age of twenty five years then such child or children shall take absolutely and if more than one then in equal shares the share in (or the whole of) my Residuary Estate (as the case may be) which his her or their parent would have taken had such parent lived to attain a vested interest therein."
Mr Daniel's solicitors were Stanley Tee & Co (now Stanley Tee LLP) ("Stanley Tee"), a provincial firm which has offices in Bishop's Stortford and a number of other towns.
The Third Defendant, Mr Osborne, was with Stanley Tee all his working life. He qualified as a solicitor in 1974 and retired in 2015. At all material times he was the partner in charge of the firm's Great Dunmow office. He advised Mr Daniel for a number of years in relation to property and business matters, and he drafted the Will.
In the late 1990s, Mr Daniel's marriage to his then wife Celia Janet Daniel ran into difficulties and the Second Defendant, Mr Redfern, was introduced to him by Mr Osborne to provide advice in relation to his matrimonial affairs. Mr Redfern joined Stanley Tee as an articled clerk in 1979, and has been with the firm ever since: he qualified as a solicitor in 1981, became a partner in 1983, was Managing Partner at the material time, and is now Senior Partner. He works at the Bishop's Stortford office.
By the Will, Mr Redfern and Mr Osborne (together "the trustees") were appointed as executors of Mr Daniel's estate and also as trustees of the Trust. Probate of the Will was granted to them on 21 September 1999. As professional trustees, and in accordance with Clause 1 of the Will, they were entitled to charge for their services as executors and trustees. During the time to which this claim relates Stanley Tee received a total of £91,865.95 for services provided in connection with the administration of the estate and the initial investment of the Trust funds.
The First Defendant, Mr Tee, joined the Bishop's Stortford office of Stanley Tee in 1979 with a view to setting up and becoming head of a Private Client department, and this is what duly occurred: he became a partner in 1983, was the head of the Private Client department at the material time, and is now a consultant. Mr Tee was appointed a trustee of the Trust on 4 February 2004 in place of Mr Osborne, but he was involved in the investment of the Trust funds from an early stage to an extent which he accepts meant that he effectively took on the role of trustee and is liable as a trustee de son tort.
According to Mr Redfern's witness statement, the role played by these three men at the time which is material to the present proceedings may be summed up as follows:
"It was an agreed decision between Paul [Osborne], Richard [Tee] and myself that Richard would lead the day to day management of the Will Trust as he had the greater expertise and skill in this area of business but Paul and I would stay engaged as trustees in terms of the decision making and strategy with the assistance of Richard's advice".
Although Mr Daniel had run a successful farming business, the three men reached a clear decision that the farm would need to be sold, possibly initially as a going concern, but in any event in whatever way seemed likely to secure best value from the sale of the farmhouse, the farm business and the land. The administration of Mr Daniel's estate was dealt with by Mr Tee and his team, with Mr Tee liaising with Mr Redfern with regard to the running of the farm business pending sale, the payment of wages, and catering for the needs of the Claimants (who were then still children). Consideration was also given to meeting a lump sum obligation to Mr Daniel's former wife Celia arising from the terms of the Will, although in the event it seems that nothing was paid to her. Strutt & Parker in Chelmsford were instructed on the sale of the land, and the proceeds of sale in the sum of £3,055,187.67 were received in February 2000. At that point a Will Trust file (numbered 87142–9) was set up at Mr Tee's instigation. A further property, Gifford's Farm, was sold in October 2000, generating a net sum of £351,874.
The Claimants make no complaint about these transactions. Nor do they complain about the way in which the Trust funds were invested after the decision was taken to move their management, with effect from early 2002, in house to Stanley Tee (and subsequently to Tee Financial plc), where the funds remained until about 2015.
However, the Claimants claim compensation in the sum of £1,476,076 for breach of trust in connection with the investment of the Trust funds in the period 2000 to 2002. During that time, the Defendants relied on advice provided by Taylor Young Investment Management Limited ("Taylor Young"), which they had previously chosen as investment advisers not only in respect of other trusts of which they (and, in the main, Mr Tee) were trustees but also, in the case of Mr Redfern and Mr Tee, in respect of their personal pensions. The Claimants do not allege that the Defendants were at fault in choosing Taylor Young as advisers for the Trust. Their case is that the Defendants were at fault in failing to take appropriate care to formulate and then implement a suitable investment strategy, and to review the investments made as time went on, and in relying on Taylor Young's advice and recommendations, which transpired in the events which happened to be poor and costly to follow. The Claimants' opening Skeleton Argument expressed the heart of the matter as follows:
"This period was affected by stock market volatility in the Tech, IT and Telecom sectors and this volatility exposed the lack of a considered investment strategy for the Trust and the failure on the part of [the Defendants] to invest in a properly diversified portfolio having regard to the objectives and risk profile of the Trust."
The Defendants dispute that they were in breach of any of their obligations as trustees, or that any breach of trust which may be established caused the claimed or any loss to the Claimants. If they fail on those points, the Defendants contend that they acted honestly and reasonably and ought fairly to be excused from the breach of trust, such that the court should exercise its jurisdiction to relieve them either wholly or partly from personal liability for the breach pursuant to section 61 of the Trustee Act 1925.
At one stage the Defendants contended that the claims, or some of them, were time barred pursuant to section 21(3) of the Limitation Act 1981, but that argument was abandoned during the course of the trial. The Defendants also intimated that an issue of laches would arise in the event that the Claimants sought some equitable remedy which went beyond a claim for compensation for breach of trust, but that also does not arise because the Claimants have not suggested that they are entitled to anything more than compensation for breach of trust. Nevertheless, each Claimant had 6 years after her/his future interest in the trust property fell into possession within which to bring the present claim, and they did not issue their claim form until 30 May 2014. Further, partly as a consequence of stays which were granted while attempts were made to resolve this dispute by mediation, which were sadly unsuccessful, it took until April 2016 for the case to come to trial. In these circumstances, the Defendants are being asked to deal with events which occurred long ago, and which they were first expected to reconsider well over a decade after they happened. This has an inevitable impact on their evidence, for which allowances need to be made. By the time the claim was begun some files had been destroyed, and their recollection of events is necessarily imperfect. However, they accept that they did not make a written record of their internal discussions in any event, so they have not been disadvantaged in that regard by loss or destruction of...
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