Nicholas John Walter Parsons v Stephen Paul Reid
| Jurisdiction | England & Wales |
| Judge | Master Clark |
| Judgment Date | 08 April 2022 |
| Neutral Citation | [2022] EWHC 755 (Ch) |
| Docket Number | Case No: PT-2021-000683 |
| Court | Chancery Division |
[2022] EWHC 755 (Ch)
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
Master Clark
Case No: PT-2021-000683
Sarah Haren QC (instructed by Sewell Mullins Logie) for the Claimants
Oliver Hilton (instructed by Edwin Coe LLP) for the First Defendant
Jordan Holland (instructed by Billy Hughes & Co. Solicitors) for the Second Defendant
Hearing date: 17 February 2022
Approved Judgment
I direct that this approved judgment, sent to the parties by email at 10am on 8 April 2022, shall deemed to be handed down on that date, and copies of this version as handed down may be treated as authentic.
This judgment deals with two points of principle which arose in the directions hearing in this claim:
(1) whether the court has jurisdiction under CPR Pt 64 to make a so-called “put up or shut up order” in respect of an intimated breach of trust claim;
(2) if so, the nature of that jurisdiction, and, in particular, what disclosure and further information should be ordered.
Parties and the claim
William (“Bill”) Reid died on 20 March 2018, leaving a will dated 20 December 2004 and codicil dated 8 February 2012 (together “the Will”). The claimants, Nicholas Parsons and Mark Hill (respectively the deceased's solicitor and land agent) are the executors and trustees appointed under the Will, but take no interest under it.
The defendants, Stephen Reid and Judith Shaw, are the deceased's children. For convenience and without intending any disrespect, I refer to them by their first names.
The principal asset of the estate was a farm, Swillbrook Farm, Minety, Malmesbury, Wiltshire SN16 9GA (“the Farm”). Under the Will, the deceased's residuary estate was left on full discretionary trusts for classes including his children and grandchildren. The net value of the estate is about £3.4 million.
On 28 July 2016 the deceased made a Memorandum of Wishes (“the letter of wishes”). This expressed the wish that payments be made to Stephen reflecting various moral and financial obligations owed by the deceased to him, and then that his residuary estate was divided as to 60% for Stephen and 40 % for Judith.
Probate was granted to the claimants on 11 March 2019. A sale of the Farm for £4.3 million was agreed in October 2019. The claimants then began considering how the estate should be distributed when the time came, by reference to the letter of wishes. On 19 November 2019, Stephen provided the claimants with 4 schedules (marked A to D), setting out the sums he said should be paid to him, totalling £951,684. These were a mixture of legal liabilities and loans, and payments reflecting the deceased's moral obligations to Stephen as set out in the letter of wishes.
The claimants did not accept all the sums claimed by Stephen. On 27 November 2019 they wrote to him setting out the payments they proposed to make to him before any distributions between him and Judith. These totalled £472,008.
At some point Stephen sent his schedules to Judith. On 9 December 2019, Judith emailed Stephen expressing concern about them, and continuing:
“I am therefore going to except ( sic) it is in the hands of the Trustees and executors. If they feel these costs are reasonable then I will take their advice.
However, I do feel that when you put your case to Dad to convince him that it was fair that you receive 20% more of his Estate than I then surely many of those issues were taken into account by him and you are therefore potentially doubling up.
…
If the sale of the Farm is held up as a consequence of me not signing something I don't want to, then so be it.”
On 11 December 2019, Judith also wrote to the claimants about the schedules. They replied the following day stating that they had not made any decisions as to the payments to be made to Stephen, but that they would not need to seek her agreement to such decisions. Judith's response was “Thank you for your email which has cleared up my queries”.
By a deed of appointment dated 3 January 2020 (“the Deed of Appointment”), the claimants appointed £600,965 to Stephen and the remainder of the residuary estate as to 60% to Stephen and 40% to Judith.
The sale of the Farm completed for the sum of £4.22 million on 20 March 2020. On the same day, in response to an email query from Judith, the claimants sent her a breakdown of the £600,965 appointed to Stephen, including those amounts which they had decided not to include. Interim distributions were then made in April/May 2020: £1.35m to Stephen, £700,000 to Judith.
There were further smaller interim distributions in September: £252,000 to Stephen and £140,000 to Judith. The balance now held by the claimants pending distribution is about £455,000.
Judith's solicitors wrote formally on 22 September 2020 complaining about “the nature and level of the costs and expenses” claimed by Stephen and the claimants, and seeking an undertaking by the claimants not to distribute the estate.
This was followed on 1 October 2020 by an extensive request, said to be under CPR 31.16 alternatively CPR 31.17, for disclosure by Stephen in relation to the schedules. No application seeking this disclosure has been made.
On 6 November 2020, the claimants' solicitors set out their position to both sides, including that:
(1) the claimants were under no obligation to consult either party regarding the exercise of their discretion;
(2) Judith had indicated in her email of 11 December 2019 that she was content with the items claimed by Stephen in schedules A, B and C, but was only content with schedule D if the claimants considered them to be legitimate costs;
(3) the claimants had exercised their discretion to reach a decision which was reflected in the Deed of Appointment;
(4) the matter was therefore concluded;
(5) if the parties could not reach agreement, the claimants would need to apply to court for permission to distribute the remainder of the trust fund.
On 10 December 2020, Judith's solicitors wrote a 13 page letter of claim setting out that Judith did not accept the propriety of what trustees had done. There matters have effectively stalled. Judith has not withdrawn her challenge, but has not issued a claim. The trustees are therefore left holding a substantial fund, with the threat that if they pay it out, and Judith brought a claim, it could be held that they had paid it out under a defective or invalid deed of appointment.
The claim was commenced by Part 8 claim form on 4 August 2021. The details of claim state that the claimants seek the court's directions that they may:
“distribute the funds retained by them pursuant to the terms of the Deed of Appointment without being at risk of any later challenge to its validity or propriety”
The formal relief sought is
“An order that they may distribute the funds retained by them pursuant to the Deed of Appointment dated 3 January 2020.”
The parties are at issue as to the nature of the claim and consequentially as to the directions to be made in it, particularly as to disclosure, further information and the length of the trial.
Judith's position
Judith's position is that the application is of the type made by trustees in relation to the exercise of powers vested in them, the four categories (often overlapping) of application having been identified by Walker J in the judgment quoted by Hart J at p922 of Public Trustee v Cooper [2001] WTLR 901:
(1) An application to determine whether an action is within the trustees' powers (which is ultimately a question of construction of the trust instrument, statute or both).
(2) An application to determine whether a proposed course of action is a proper exercise of the trustees' discretion where there is no real doubt as to the scope of the trustees' powers (known as a “ blessing application”). In this category, the trustees are not surrendering their discretion to the court.
(3) An application where the trustees surrender their discretion to as to whether and how to exercise a power to the court. If the surrender is accepted then the court will exercise the power instead of the trustees.
(4) Hostile litigation brought by a beneficiary seeking to attack the exercise of the trustees' discretion.
Judith's counsel submitted that the claimant's application was clearly an application under category (2) of Public Trustee v Cooper. As such, it would, he said, have the effect of extinguishing Judith's right to challenge the decision in question.
The consequence of this is, he submitted, that the claimants are under a duty of full and frank disclosure to provide to the court all relevant facts and documents (see Tamlin v Edgar at 25, set out below) and should disclose all documents which they have or ought to have which are materially relevant to their decision: referring to A and B Trusts [ 2007 JLR 444] at 22 and Thomessen v Butterfield Trust (Guernsey) Limited [ 2009–10 GLR 102] at 16.
The draft directions proposed by Judith reflect the proposed examination of the basis and reasons for the claimants' decision in the Deed of Appointment. They include:
(1) disclosure of documents “which are materially relevant to the Claimants' decision to execute the Deed...
To continue reading
Request your trial