Lynn Smith v Michelmores Trust Corporation Ltd

JurisdictionEngland & Wales
JudgePaul Matthews
Judgment Date07 June 2021
Neutral Citation[2021] EWHC 1521 (Ch)
Date07 June 2021
CourtChancery Division
Docket NumberCase No: PT-2021-BRS-000045

[2021] EWHC 1521 (Ch)

IN THE HIGH COURT OF JUSTICE

BUSINESS AND PROPERTY COURTS IN BRISTOL

PROPERTY TRUSTS AND PROBATE LIST (ChD)

Bristol Civil Justice Centre

2 Redcliff Street, Bristol, BS1 6GR

Before:

HHJ Paul Matthews

(sitting as a Judge of the High Court)

Case No: PT-2021-BRS-000045

Between:
(1) Lynn Smith
(2) Patrick Michael Gaskins
Claimants
and
(1) Michelmores Trust Corporation Ltd
(2) Michael Patrick
(3) Simon Dennar Crawshay
(4) Arthur John Morris Crawshay
Defendants

Oliver Wooding (instructed by Kitsons) for the Claimants

Evan Price (instructed by Athena Law) for the Fourth Defendant

The First and Second defendants made no submissions

The Third defendant made a written submission on his own behalf

Decision on written submissions

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

Paul Matthews HHJ

Introduction

1

On 27 May 2021 I handed down written reasons, under neutral citation [2021] EWHC 1425 (Ch), for my oral decision on 14 May in a Part 8 claim seeking directions form the court. This claim was in effect to approve a proposed appointment by the claimants, as trustees of a discretionary trust created by the will of the late Hope Crawshay, of all the liquid funds in the trust fund, £55,000 (advanced by the claimant as executrix of the will out of the one quarter share of residue left to the trustees). The proposal was to appoint these funds to the fourth defendant absolutely, as an object of the power of appointment.

2

My decision at the conclusion of the hearing was to refuse to approve the proposed appointment, for the reasons subsequently given in writing. I now have to decide what costs orders to make. For this purpose I have received written submissions from the claimant and two of the four defendants. The third defendant made his own submission. The fourth defendant made a submission by counsel. The other two defendants indicated that they did not wish to make submissions.

3

The fourth defendant submitted a draft order providing for the claimants to pay his costs summarily assessed in the sum of £2,700 plus VAT, totalling £3,240, and for no part of those costs or the claimants' costs of the claim to be paid from the quarter share of residue given to the trustees of thew discretionary trust. The claimants agreed both those orders.

4

But the claimants themselves

“seek their costs from the remaining 3/4 of the estate under the principle that they should be entitled to an indemnity under the general rule in CPR r. 46.3 and/or from the provisions of the Will itself”.

It is not clear from this whether the claimants seek not only their own legal costs but also the costs they will be ordered to pay to the fourth defendant. For present purposes I will assume that they do: cf Singh v Bhasin [2000] WTLR 275, 280G.

5

As I have said, the first and second defendants have made no submissions. But the third defendant has, and he opposes the claimants' application. He says the claimants should not be entitled to the usual indemnity available to trustees and personal representatives. He says the first claimant had a conflict of interest from the beginning and acted hastily in pursuit of this claim.

The will

6

The claimants claim an indemnity not only under the general law, but also or in the alternative by virtue of the will itself. It is convenient therefore to begin with the will. That does not contain any express provisions concerning trustees' or personal representatives' indemnity. However, by clause 7 it incorporates the Standard Provisions of the Society of Trust and Estate Practitioners (1 st edition), except clause 5. Those Standard Provisions make provision for trustee remuneration (clause 11) and for limiting trustees' liability (clause 12), but there is nothing concerning the trustees' right to indemnity out of the trust fund. Accordingly, the matter is governed by the general law, to which I now turn.

The law

7

In principle, trustees and personal representatives are entitled to an indemnity out of the trust funds or estates which they control. Under the general law this appears in the Trustee Act 2000, section 31(1), which provides:

“A trustee –

(a) is entitled to be reimbursed from the trust funds, or

(b) may pay out of the trust funds,

expenses properly incurred by him when acting on behalf of the trust.”

This is applied to the personal representatives of estates by section 35 of the same Act.

8

In passing, it may be noted that, in referring to the trustee “acting on behalf of the trust”, this section contains an interesting modern example of the personification of the trust concept. But every student of the law of trusts knows (or should know) that a trust is not a corporation or other legal person. It is instead a legal relationship between persons in relation to assets. I am not aware of any UK primary legislation before this Act which treats the trust as a person. (Other examples in this Act are to be found in sections 28, 29, 32, and 33.) No-one, for example, would refer to someone as providing services “to or on behalf of a contract”. The predecessor provision, the Trustee Act 1925, section 30(2), referred instead to “expenses incurred in or about the execution of the trusts or powers”, which, if I may say so, is entirely orthodox. In Price v Saundry [2019] EWCA Civ 2261, Asplin LJ, with whose judgment Underhill and Arnold LJJ agreed, said (at [22]) that section 31 of the 2000 Act did not change the law. So a trust is still not a person, but continues to be a legal relationship.

9

Nevertheless, inapt as they may be, the meaning of the words used in section 30(1) is clear enough. The indemnity is available for expenses properly incurred on trust business. In the context of costs incurred in trust and estate litigation, however, there are special rules to be found in the CPR, both at rule 46.3 and also at paragraph 12 of the Practice Direction to Part 46. In Price v Saundry, Asplin LJ (again at [22]) described these as “a commentary upon...

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