Jane Wilmot-Smith v Hugh Patrick Burstall
| Jurisdiction | England & Wales |
| Judge | Master McQuail |
| Judgment Date | 03 May 2023 |
| Neutral Citation | [2023] EWHC 962 (Ch) |
| Docket Number | Case No: PT-2022-000236 |
| Court | Chancery Division |
[2023] EWHC 962 (Ch)
Master McQuail
Case No: PT-2022-000236
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
PROPERTY TRUSTS AND PROBATE LIST (ChD)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Alex Troup instructed by Human Law for the Claimant
Tom Stewart Coats instructed by Reynolds Porter Chamberlain LLP for the First Defendant
Sarah Harrison instructed by Clarion for the Second Defendant
Hearing dates: 14 March 2023
Approved Judgment
This judgment will be handed down remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 9.30am on Wednesday 3 May 2023
This Part 8 claim is brought by Jane Wilmot-Smith ( Jane), who is a residuary beneficiary of the estate ( the Estate) of her uncle, Nicholas Wilmot-Smith ( the Deceased). The defendants are a solicitor, Hugh Patrick Burstall ( Mr Burstall) of Burstalls of Hull, and one of Jane's brothers, David Wilmot-Smith ( David), who are the executors and trustees of the Deceased's estate. By the claim Jane seeks disclosure of certain documents pursuant to CPR 64.
History
The Deceased was a farmer. He died on 4 May 2001. He left a will dated 15 March 1994 by which he left his residuary estate to his brother's four children, Jane, David, Richard Wilmot-Smith KC ( Richard) and Charles Wilmot-Smith ( Charles) in equal shares.
The IHT return was dated 7 August 2001. Probate was granted to Mr Burstall and David on 4 September 2001. The net Estate was sworn at just over £3.59 million. The property assets of the Estate were the Deceased's farm at Gunby Hall in Yorkshire and a rental property with a total value of nearly £2.3 million. The Estate also included a share portfolio worth around £1 million, the value of the Deceased's farming business. some cash in bank accounts and household contents.
The residuary beneficiaries agreed to continue to run the Deceased's farming business in partnership ( the Partnership). David was the managing partner. He lived rent-free at Gunby Hall and was paid a salary. A partnership agreement was signed by the residuary beneficiaries on 17 September 2010; this provided that the Partnership was deemed to have carried on business from the date of the Deceased's death. The agreement referred to the initial capital being £50,000 plus the balance of the Deceased's capital account at his death. A further deed was signed by the residuary beneficiaries and David's wife on 18 April 2011 the effect of which was to constitute David's wife a partner and to divide David's profit share equally between David and her.
During the currency of the Partnership David says that there were annual meetings at which the partnership accounts were discussed. He says that no issue was raised by Jane about the accounts before the dissolution of the Partnership. That evidence is not contradicted by Jane.
At all material times there were two parallel entities in existence: the Estate and the Partnership. Jane, David (or David together with his wife), Richard and Charles were entitled to a one quarter share of each. Mr Burstall was primarily responsible for the Estate and its bank account and the preparation of Estate accounts while David was primarily responsible for the Partnership and its bank account and the preparation of Partnership accounts. The Partnership used Estate assets for the purposes of its business. In practice monies received by Mr Burstall were credited to the Estate account, monies received by David were credited to the Partnership account.
The Partnership was wound up in 2011–2012 and Gunby Hall and the remaining Estate assets were sold in 2012–2013.
Over the years the Estate, including in specie shares of the farming business, was distributed to the residuary beneficiaries so that by the time of the final distribution in June 2016 each had received £1,349,532.45. Mr Burstall produced final Estate accounts which he signed on 22 June 2016 showing that the net distributable Estate was some £5.4 million.
Beginning in 2013 Jane, Richard and Charles raised concerns about David's conduct in managing the financial affairs of the Partnership and the Estate.
Jane instructed Taylor Vinters, solicitors, in 2013 and that firm wrote to Burstalls and David seeking information about the administration of the Estate and the winding up of the Partnership on 3 July 2013. Mr Burstall replied on 29 July 2013. Among other matters he enclosed a copy of the Partnership accounts for the year to 5 April 2012 and explained his understanding that accounts for all previous years had been produced and distributed to the partners.
The other residuary beneficiaries instructed Mr Teckoe of Haines Watts accountants to review the partnership accounts to investigate concerns about David having mis-managed the Partnership's financial affairs. On 11 February 2014 Mr Teckoe reported by letter to Richard that having investigated he was broadly satisfied that the partnership accounts reflected the books and there was nothing untoward.
On 17 July 2014 Richard wrote to David complaining that he had overdrawn from the partnership account and that he had mixed estate and partnership funds and requesting that he resign as managing partner and executor and hand over the Partnership bank account to Burstalls and also requested that he preserve all documents relating to the Estate and Partnership.
A meeting took place on 30 July 2014, attended by Mr Burstall and the four residuary beneficiaries, at which concerns about David were aired. As a result, David agreed to retire as an executor, although no formal steps were taken to confirm that retirement.
Included in the bundle is an exchange of emails between David and his then solicitors, Rollitts, reporting that he had taken the partnership books to Haines Watts' Oxford offices for the purposes of their report and that the books had been returned to Burstalls to be available for inspection.
On 28 September 2015 Haines Watts reported at the request of Payne Hicks Beach, solicitors, who had been instructed by the residuary beneficiaries other than David as to partnership matters. It is apparent that Haines Watts had been supplied with partnership accounts for the purposes of their investigation.
On 17 May 2015 David's son Andrew wrote to Payne Hicks Beach, explaining what David had already produced by way of partnership records, being partnership invoices going back to April 2009 which had been examined by Haines Watts and cash books of which Jane was believed to have copies. The letter reported that David could give no more information: “further demands for information however formal will not recover what no longer exists.”
On 24 August 2016 Payne Hicks Beach wrote to David's children recording Jane's dissatisfaction with the answers to enquiries and reserving her position but stating “my client has come to the conclusion that there is little point pursuing this matter with yourselves further.”
On 7 March 2017, TA Matthews, solicitors instructed by Jane, wrote to Mr Burstall making 21 requests for information and documents. The letter was accompanied by 9 appendices of documents, including the Partnership accounts or extracts from them for a number of the years of its existence.
Burstalls provided a detailed response, with documents enclosed, on 19 April 2017.
On 31 May 2017 TA Matthews sent a further letter setting out 14 numbered requests for clarification and documents.
Mr Burstall again provided a detailed response on 21 June 2017 and sent TA Matthews a full set of the executors' bank statements and confirmed that the Deceased had had two bank accounts both disclosed in the Estate accounts one a Barclays account with account number ending 901 not paying interest and a second account that had earned a modest amount of interest only.
On 27 March 2019 Jane wrote a 10-page letter complaining about various aspects of alleged misconduct by Mr Burstall in connection with the Estate.
Included in the response dated 7 June 2019 was the information that Mr Burstall had asked Stephenson & Son, the selling agents, what had happened to the proceeds from the sale of entitlements associated with Lot 6a Gunby Hall and was awaiting a response.
Jane also made complaints to both the SRA and the Legal Ombudsman. There is no record of any complaint being upheld.
On 13 December 2019 Human Law, solicitors instructed by Jane, wrote to Burstalls. The letter refers to a concern that David had “illegally” taken money from partnership and to a belief that the “alleged fraud” may have taken place soon after the Deceased's death in 2001. The letter threatened proceedings for an inventory and account.
On 21 January 2020 Burstalls responded to what the firm considered to be the only previously unanswered query by confirming that the proceeds of the Deceased's Swire Pacific Limited shares had been credited direct to the executors' account on 12 June 2003. The letter enclosed printed copies of the 50 separate client ledger accounts opened during the administration.
On 12 March 2021 Human Law sent a letter before action to Burstalls and to David. The letter explained that Mr Muggridge, a forensic accountant, had been instructed to report which he had done in a letter of 2 February 2021. That letter recorded that Mr Muggridge had been requested to review the estate accounts (ignoring partnership matters as far as possible) and had been provided with Burstalls' client ledger reports, which were said to have been produced under cover of a letter of 24 March 2016 (which letter was not in the hearing bundle)....
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