Tiffanyany Wight (First Appellant) Felix Wight (Second Appellant) v Simon Olswang (First Respondent) Roger Peters (Second Respondent)
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE PETER GIBSON |
| Judgment Date | 29 April 1999 |
| Judgment citation (vLex) | [1999] EWCA Civ J0429-23 |
| Docket Number | CHANI 1998/0953/3 |
| Court | Court of Appeal (Civil Division) |
| Date | 29 April 1999 |
[1999] EWCA Civ J0429-23
IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVILDIVISION)
ON APPEAL FROM ORDER OF MR JUSTICE FERRIS
Royal Courts of Justice
Strand
London WC2
Lord Justice Peter Gibson
Lord Justice Potter
Mr Justice Blofeld
CHANI 1998/0953/3
MR CHARLES TURNBULL (Instructed by Messrs Hecht & Co of London) appeared on behalf of the Appellants
MR ALAN STEINFELD QC and MR TERESA PEACOCKE (Instructed by Messrs Barlow Lyde & Gilbert of London) appeared on behalf of the First Respondent
MR FRANK HINKS (Instructed by Messrs Reynolds Porter Chamberlain of London) appeared on behalf of the Second Respondent
This is the judgment of the court.
Once again this court is asked to determine the meaning and effect of certain trustee exemption clauses intended to exempt trustees from liability for certain acts or omissions for which they otherwise would or might be liable. The subject has recently been considered in two cases before this court: Armitage v Nurse [1998] Ch.241 and Bogg v Raper The Times, 22 April 1998. But the issues raised in the present case turn primarily on the true construction of the particular clauses of the Settlement with which this appeal is concerned.
The Settlement was made on 20 December 1982 by Robin Wight ("the Settlor") of the one part and the Settlor and his wife as trustees of the other part. By the Settlement the Trust Fund therein defined was directed to be held by the trustees subject to an overriding power of appointment exercisable by the trustees in favour of a defined class of beneficiaries and subject thereto on specified trusts. The trustees were given wide administrative powers including powers of investment and of sale, and by clause 4 they could permit what did not consist of money to remain invested for so long as they in their absolute discretion should think fit. The power of appointing new trustees was vested in the Settlor during his life and he had the power to appoint individual or corporate trustees. The clauses particularly material to this appeal are the following:
"11 In the professed execution of the trusts and powers hereof no trustee shall be liable for any loss to the Trust Fund arising by reason of any investment or investments made in good faith or for the negligence or fraud of any agent custodian sub-custodian investment adviser or investment manager employed by it or him or by any other Trustee hereof although the employment of such agent custodian or sub-custodian investment adviser or investment manager was not strictly necessary or expedient or by reason of any mistake or omission made in good faith by any Trustee hereof or by reason of any other matter or thing except wilful and individual fraud and wrong doing on the part of the trustee who is sought to be made liable ….
15(A)Any Trustee hereof (other than the Settlor or any spouse of the Settlor) being a person engaged in any profession or business shall be entitled to be paid all usual professional or proper charges for business transacted time expended and acts done by him or his firm in connection with the trusts hereof including acts which a trustee not being in any profession or business could have done personally
(B)The Trustees and any other body corporate …. (whether or not the same shall be a Trust Corporation) which may at any time be appointed to be a Trustee or the sole Trustee of these presents may as such Trustee as aforesaid act upon its standard conditions in force at the date of its appointment as Trustee hereof (as if the same were herein set out) and may charge and deduct remuneration as provided by those conditions and such corporate Trustee's standard scale of fees in force at the date of its appointment with power to charge remuneration in accordance with any later standard scale of fees of such corporate Trustee for the time being in force ….
18(A)Every discretion or power hereby or by law conferred on the Trustees shall be an absolute and uncontrolled discretion or power and no Trustee shall be held liable for any loss or damage accruing as a result of the Trustees concurring or failing to concur in the exercise of any such discretion or power
(B)No trustee (other than a Trustee charging remuneration for so acting) shall be liable for any error of judgment or mistake of law or other mistake or for anything save wilful misconduct or the wilful breach of this Trust by such Trustee and each Trustee shall be held harmless against any claims losses death duties taxes and impositions arising in connection with the Trust Fund or any part thereof".
On 25 January 1990 the trustees exercised the overriding power of appointment in such a way that in the events which have happened the Trust Fund became held for the three children of the Settlor who are living at the expiration of the Trust Period defined in the Settlement or who earlier have attained or will attain the age of 25 years. Two of the children, Tiffany and Felix Wight, are the Plaintiffs.
The Trust Fund initially consisted of £100, but to that were added substantial holdings in Aegis plc ("Aegis"). On 23 January 1991 the trustees held 228,014 ordinary shares and 3,465 convertible cumulative preference shares in Aegis. On that day the Settlor and Mrs. Wight retired as trustees and the Settlor appointed two practising solicitors, the First Defendant, Simon Olswang, and the Second Defendant, Roger Peters, as trustees in their place. Mr. Olswang is the senior partner in Simon Olswang & Co. and Mr. Peters is a partner in Gordon Dadds. At the time of Mr. Olswang's appointment his firm was one of two firms which had been appointed solicitors to Aegis. On 22 January 1991 at a meeting between Mr. Olswang, Mr. Peters and the Settlor, Mr. Olswang disclosed that his firm were solicitors to Aegis and he instructed his assistant solicitor to check whether there were any Stock Exchange or Insider Trading Regulations which might interfere with the trustees' freedom to dispose of shares in Aegis.
On 9 April 1991 the trustees, having regard to the desirability of diversification and to the potential volatility of Aegis ordinary shares and having taken advice from the stockbrokers to the trustees, decided in principle that the ordinary shares should be sold. That day they sold 50,000 ordinary shares at £2.30 per share. On 25 April 1991 Mr. Olswang wrote to Mr. Peters saying that in his professional capacity he was in receipt of price-sensitive information relating to Aegis and that for the time being he was not in a position to give any instructions in relation to share sales. Mr. Peters that day replied, stating that the stockbrokers were keeping the position under daily review and that he would report to Mr. Olswang regularly. On 26 April Mr. Olswang repeated the position he was in and said that he believed this would preclude any dealings until he was out of "purdah". Mr. Peters on 30 April replied saying that he believed Mr. Olswang to be correct in his approach and asked when he would come out of purdah. On 7 May Mr. Peters was informed by the stockbrokers that they had received an offer for 250,000 Aegis shares at £2.10 per share. Mr. Peters consulted Mr. Olswang who stated that he was still unable to deal, and so the stockbrokers were told that the trustees could not accept the offer. On 24 June Mr. Olswang told Mr. Peters that he had become free to comment on the sale of the shares. By then the market price had fallen to about £1.80 per share.
Between 3 April 1992 and 10 November 1993 142,000 shares were sold by the trustees at prices between £1.17 and 18p per share. To the remaining 32,014 ordinary shares were added 139,506 ordinary shares received on the conversion of the convertible preference shares. 64,506 ordinary shares were sold in 1996 at prices between 50p and 61p per share, leaving in the Trust Fund a holding of 75,000 ordinary shares which in June 1997 were said to have a market value of about 60p per share.
The Plaintiffs commenced proceedings on 20 March 1997, claiming that the assets of the Trust Fund had been diminished in value by breaches of duty and trust committed by Mr. Olswang or Mr. Peters or both of them, for which the Plaintiffs sought to obtain an order that compensation be paid to the Trust Fund. In para. 14 of the Amended Statement of Claim Mr. Olswang, when considering whether to accept appointment as a trustee of the Settlement, is said to have owed to the Settlor and his wife as the then trustees of the Settlement and to the beneficiaries under the Settlement " a fiduciary duty and/or a duty to take reasonable care (a) to consider whether he was likely to be able properly to perform the duties and exercise the powers of a trustee under the Settlement and (b) (if he came to the conclusion that he might not be able to do so) to inform [the Settlor] and/or the existing trustees of that fact." In para.15 it is alleged that in breach of those duties Mr. Olswang failed prior to or at the time of his appointment to consider whether there was a risk that he might be prevented or inhibited by the provisions of the Company Securities (Insider Dealing) Act 1985 ("the 1985 Act") from participating in a decision whether or not to sell Aegis shares as a result of his receipt of price-sensitive information.
In para. 16 it is alleged that Mr. Olswang in breach of trust failed, after his appointment as trustee and until shortly before 25 April 1991, to consider whether there might be a similar risk and alternatively to inform Mr. Peters or the Settlor that he considered there to be such a risk.
In para.18...
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