Pauline Ann Price v Valery Ann Saundry
| Jurisdiction | England & Wales |
| Judge | Lady Justice Asplin,Lord Justice Arnold,Lord Justice Underhill |
| Judgment Date | 18 December 2019 |
| Neutral Citation | [2019] EWCA Civ 2261 |
| Court | Court of Appeal (Civil Division) |
| Docket Number | Case No: A3/2019/1125 |
| Date | 18 December 2019 |
[2019] EWCA Civ 2261
Lord Justice Underhill
Vice-President of the Court of Appeal (Civil Division)
Lady Justice Asplin
and
Lord Justice Arnold
Case No: A3/2019/1125
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM BRISTOL DISTRICT REGISTRY
His Honour Judge Paul Matthews
C30BS640
Royal Courts of Justice
Strand, London, WC2A 2LL
Mr Alexander Learmonth (instructed by Michelmores LLP) for the Appellant
Mr Leslie Blohm QC and Mr Ewan Paton (instructed by Powells Law) for the First Respondent
the Second Respondent did not appear and was not represented
Hearing date: 3 December 2019
Approved Judgment
This appeal is concerned with the circumstances in which a trustee is entitled to be indemnified from the trust fund in respect of costs incurred by her and awarded against her in litigation.
The issue arises in the context of a claim which was commenced by the Appellant, Mrs Pauline Price, against the First Respondent, Mrs Valerie Saundry, and a Mr Martin Sanders, who were the trustees of a trust which was declared in a document dated 6 July 2009 and which was made by Mrs Price and Mr Alan Saundry, Mrs Valerie Saundry's husband (the “Declaration of Trust”). By the Declaration of Trust the interests in the properties set out in the schedule, the legal titles to which were vested in Mr Saundry, the net proceeds of sale and the net income until sale were held upon trust for Mrs Price and Mr Saundry as beneficial tenants in common in equal shares. Mr Saundry was appointed as the sole trustee. On his death in 2013, his widow, Mrs Saundry became trustee as a result of being her husband's sole personal representative. By an undated deed executed on 10 December 2015, Mrs Saundry appointed her brother, Mr Martin Sanders, as an additional trustee of the Trust. Mr Sanders died after Mrs Price had commenced these proceedings and his widow and executrix, the Second Respondent, Mrs Sanders, was substituted as a party. (Mrs Sanders was not represented and has taken no part in the appeal before us.)
The proceedings were commenced by the issue of a Part 8 Claim Form dated 14 June 2016. Mrs Price, who was the Claimant and is now the Appellant before us, sought an order removing the then trustees of the Trust, Mrs Saundry and Mr Sanders, and their replacement with professional trustees, on three main grounds. They were that: Mrs Saundry had refused to appoint Mrs Price as a trustee but had appointed her brother, Mr Sanders, instead; that Mrs Saundry had attempted to buy one of the trust properties at what was alleged to be an undervalue; and that there had been a lack of disclosure of financial and accounting information. Further relief was sought in the form of: “Such further Orders (for example as to the sale of Trust assets and the taking of accounts and enquiries as appears to the Court to be necessary)”. I will refer to this aspect of the litigation as “the Removal claim”.
A month before the hearing of the application to remove the then trustees, the majority of the properties which were the subject of the Trust having already been sold, the parties agreed that the focus of the litigation should change and that it should proceed as the taking of an account in common form. As a result, an order dated 13 September 2017 was made by consent by Mr Simon Monty QC, sitting as a Deputy Judge of the High Court, vacating the pre-trial review and the trial of the Removal claim and giving directions for the then trustees to “produce a final account of the capital and income trust and the dealing with it, verified by a witness statement to which the account is exhibited”. Detailed directions as to what the account should include, the date on which it should be produced and filed, the date by which any objections should be lodged, along with the date for any reply to such objections, were also set out. I will refer to this aspect of the litigation as the “Account claim”.
Three attempts having been made to lodge accounts in accordance with the directions which had been made and objections having been lodged, the Account claim proceeded before HHJ Matthews, sitting as a Judge of the High Court. During the taking of the account an issue arose as to whether one of the properties was subject to the Trust at all. Mrs Saundry claimed that it had been included by mistake and that the Declaration of Trust should be rectified in order to remove it. That issue was dealt with separately and is not directly relevant to the issue on this appeal. Nevertheless, for completeness I should add that the judge decided that the property in question, at 7 Linwell Close, Cheltenham, was trust property and, therefore, was subject to the account which was in the process of being taken. I will refer to this aspect of the litigation, if necessary, as the “Rectification claim”.
On the hearing of the Account the judge dealt with each matter as it arose. We have not seen a transcript of the judgment. From what we were told, I understand there to have been a series of ex tempore judgments. I shall refer in more detail to some of the points raised on the Account and the judge's determination of them, below. In any event, as a result of the judge's decisions, amendments were made to the Account and ultimately, Mrs Saundry was found liable to pay £52,701.54 plus interest in the agreed sum of £4,000 to the credit of the Trust.
Mrs Saundry's liability in respect of the credits and interest to which I have referred was set out at paragraph 1 of the judge's order dated 3 May 2019. By paragraphs 2 and 3 respectively, permission to amend the Part 8 Acknowledgment of Service to include the Rectification claim was granted and that claim was dismissed. It is the parts of the order which are concerned with costs and, in particular, with Mrs Saundry's entitlement to be indemnified in relation to costs of and incidental to the litigation which are relevant to this appeal. First, the judge made no order as to costs in relation to the proceedings up to and including the date of the consent order, in other words, in relation to the Removal claim, save that Mrs Saundry and Mrs Sanders be entitled to their costs in that regard out of the Trust fund, on the indemnity basis. Secondly, as to the costs of the Account claim in the proceedings after 13 September 2017, up to and including the trial, Mrs Saundry was ordered to pay Mrs Price's costs of the account: up to 28 December 2018 subject to a detailed assessment on the standard basis, if not agreed; and in relation to her costs of the Account after 28 December 2018 subject to a detailed assessment on the indemnity basis, if not agreed. The significance of 28 December 2018 is that Mrs Price had made a Part 36 offer which expired on that date, which had not been bettered on the taking of the Account. The judge went on to order that, save for the costs attributable to the Rectification claim, Mrs Saundry be entitled to the costs of the Account from the Trust fund on the indemnity basis, to include her own costs of those proceedings and the adverse costs order made against her.
The right to an indemnity from the trust fund in relation to both the costs of the Removal claim and the Accounts claim are the subject of this appeal.
What the judge found on the taking of the Account
As I have already mentioned, we were not provided with the transcript of the judge's ex tempore judgments on each point of challenge to the Account. However, Mr Learmonth, who appeared both before the judge and before us on behalf of Mrs Price, set out what he says is the gist of the judge's main findings in favour of Mrs Price, in his supplementary skeleton. He cross-referenced this summary to items in a schedule, described as a “ready-reckoner” which he relied upon before the judge for the purposes of the costs hearing. It sets out each positive change to the Account which was required as a result of the judge's findings and decisions on the Account and its monetary effect. The items in the schedule total the £52,000 odd which Mrs Saundry was ordered to re-pay to the Trust. The content of the ready-reckoner is not in dispute.
The adjustments to the Account which were ordered and which were remedied by the order that Mrs Saundry restore £52,000 odd to the trust fund related to thirteen matters which were either admitted or were the subject of adjustment on the taking of the Account. Mr Learmonth relied upon the following seven items which he says all amounted to breaches of trust. They were: (i) a payment of remuneration to Mr Martin Sanders, Mrs Saundry's brother, when he was a trustee of the Trust in the sum of £21,367.85; (ii) a payment to Karl Saundry, Mrs Saundry's son, at a time when Karl was occupying trust property rent free, the amount of rent which should have been set off being £2,400; (iii) payments to Mrs Saundry's daughter, Jessica, some of which were accepted as being unjustified and some of which were disallowed by the judge in the sum of £3,349.84; (iv) payment of Mrs Saundry's late husband's income tax liability and personal accountant's fees in the sum of £4,916.09 and £3,880.32 respectively; (v) payment of interest to Mrs Saundry herself in the sum of £1,032.79; (vi) failure to account for proceeds of sale of a former trust property at Atlas Road which were in Mrs Saundry's hands in the sum of £4,305.74; and (vii) numerous other payments which Mrs Saundry was unable to justify in the taking of the Account.
Although the judge makes no mention of it in his judgment, we were informed by Mr Blohm QC, who appeared together with Mr Paton on behalf of Mrs Saundry, that the total value of the items which had been challenged by Mrs Price in the Account was in the...
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