Wilson Cotton and Another v David Michael James Brudenell-Bruce, Earl of Cardigan and Others
| Jurisdiction | England & Wales |
| Judge | Lord Justice Vos,Lady Justice Black,Lord Justice Moore-Bick |
| Judgment Date | 17 October 2014 |
| Neutral Citation | [2014] EWCA Civ 1312 |
| Docket Number | Case Nos: A3/2014/1277 and 1278 |
| Court | Court of Appeal (Civil Division) |
| Date | 17 October 2014 |
[2014] EWCA Civ 1312
Lord Justice Moore-Bick
Lady Justice Black
and
Lord Justice Vos
Case Nos: A3/2014/1277 and 1278
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
NICHOLAS LAVENDER QC SITTING AS A DEPTY JUDGE OF THE HIGH COURT
MRS JUSTICE ROSE
Claim Number HC13D03789
Royal Courts of Justice
Strand, London, WC2A 2LL
Ms Penelope Reed QC and Mr Thomas Entwistle (instructed by Thrings LLP) for the Claimants/Respondents
Mr Gilead Cooper QC and Mr James Weale (instructed by Berwin Leighton Paisner LLP) for the 1 st Defendant/Appellant
Mr Christopher Tidmarsh QC (instructed by Forsters) for the 2 nd and 3 rd Defendants/Respondents
Hearing dates: 24 th and 25 th September 2014
Everyone now agrees that Tottenham House, Savernake, Wiltshire ("Tottenham House") which is the principal asset of the Savernake Estate, must be sold. It has been unoccupied since the 1990s, is decaying fast, and is on English Heritage's 'at risk' register. It comprises two huge properties: the grade 1 listed house itself running to some 92,000 square feet, and the extremely dilapidated grade II* listed stable block amounting to some 24,000 square feet. The question in this case is simply whether the court should approve the proposed sale to the existing buyer.
The Savernake estate is the generic name for a trust established by a conveyance dated 29 th September 1951 (the "trust") of which the claimants in this action are the present trustees (Mr Wilson Cotton and Mr John Moore, whom I shall call "Mr Cotton" and "Mr Moore", together the "trustees"). Mr Cotton is a professional chartered accountant. In these proceedings (which I shall call the "approval action"), the trustees sought the approval of the court for their momentous decision to sell Tottenham House to an unnamed buyer ("Mr A") under a conditional contract for sale dated 19 th August 2013 for £11.25 million (the "intended sale").
The beneficiaries of the trust are the first defendant, the Earl of Cardigan ("Lord Cardigan"), and a settlement created on 27 th May 1987 (the "1987 settlement"), of whom Mr Cotton and the second defendant in the approval action, Mr Richard Ford, are the trustees (the "1987 trustees"), and under which the third defendant, Viscount Savernake, Lord Cardigan's son, is the main beneficiary ("Lord Savernake"). The 1987 trustees support the trustees in seeking the approval of the intended sale. Lord Cardigan opposes the intended sale.
Two judgments are under appeal. In the first, Mr Nicholas Lavender QC, sitting as a deputy judge of the High Court, decided on 23 rd December 2013 to adjourn the trustees' application for the approval of the intended sale to be heard with the trial of an earlier action numbered HC12A03886 (the "removal action"). In the removal action, Lord Cardigan as claimant seeks the removal of the trustees broadly on the grounds that they are unfit to act. Mr Lavender stated in his order that he would have ordered that the trustees be authorised to complete the intended sale, were it not for Lord Cardigan's claims in the removal action. He also ordered that the court hearing the removal action would only reconsider whether the trustees should be authorised to complete the intended sale if it thought fit to do so.
At the time of the hearing before Mr Lavender, the removal action was expected to be tried in March 2014. In the event, however, it was delayed, and the trustees applied successfully to Rose J under the liberty to apply allowed by Mr Lavender's order, effectively to lift the stay on the approval of the intended sale. Rose J's order in fact simply authorised the trustees to complete the intended sale. Lord Cardigan originally contended that Rose J was wrong to upset Mr Lavender's direction that the question of the approval of the intended sale should be available for reconsideration alongside the removal action. But this contention has been overtaken by the fact that the removal action was ultimately tried before Newey J between 3 rd and 21 st July 2014. Newey J has reserved judgment until after judgment in these appeals. He refused to hear evidence about, or to consider the approval of, the intended sale, because that issue was, as he saw it, already the subject of a pending appeal.
In these circumstances, Mr Gilead Cooper QC, counsel for Lord Cardigan, submits in his supplemental skeleton argument that Mr Lavender's direction that the trustees' application for approval of the intended sale be adjourned to be heard with the removal action has "been rendered nugatory". Instead, Lord Cardigan submits that the main question before this court is whether Mr Lavender and Rose J were correct, in effect, to approve the intended sale.
The parties differ as to whether the intended sale price is a good one that represents an opportunity not to be missed (as per the trustees), or whether the price is inadequate and has been the result of an ineffective and inadequate marketing exercise (as per Lord Cardigan). The intended purchaser, Mr A, would originally have ceased to be bound by the intended sale contract on 19 th August 2014, but has agreed with the trustees to extend the long-stop date to 6 th April 2015.
The appeals raise questions as to the proper approach of the court to applications to approve a momentous decision made by trustees. The approval action was, as is normal, a claim brought under Part 8 of the CPR. There was no order for disclosure and the judges below heard neither oral evidence nor cross-examination. As will become apparent, that has provoked some discussion to which I shall return. The procedure for approval of a trustee's decision is to be contrasted with the procedure for challenging a trustee's decision after the event. In that situation the challenger would bring a claim under Part 7 of the CPR that would be tried in the normal way with disclosure and oral evidence.
This case is somewhat unusual in that there is now, as I have said, no continuing dispute as to the trustees' actual decision to sell Tottenham House. What is in dispute is the process by which that sale should be achieved. Thus, whilst the court was asked to approve the intended sale itself, if it were to do so it would also be approving the process by which that sale had come about; otherwise, there would have been no point in the trustees approaching the court at all.
Although the basic tests that the court will apply in dealing with an approval application have not been much in dispute, the argument revealed an important difference of approach between the two sides. In essence, it was as to the circumstances in which the court might approve a transaction when expert advice had been followed by the trustees. Mr Cooper's argument was that the expert advice that the trustees received raised a number of questions that ought to prevent the court approving the intended sale, whereas Ms Penelope Reed QC, counsel for the trustees, and Mr Christopher Tidmarsh QC, counsel for the 1987 trustees, submitted that if the trustees received and followed expert advice, they should not be required to second guess it and the court should not withhold its approval. As will appear in due course, I think it is important to distinguish carefully between allegations that trustees have not fulfilled their duties to the beneficiaries, and allegations that trustees' professional advisers have acted in breach of their duties to the trustees.
In these circumstances, it has been necessary for this court to consider the facts in detail. Before doing so, however, it is useful to set out the uncontentious legal background.
The legal background
In Public Trustee v. Cooper [2001] WTLR 901, Hart J repeated Robert Walker J's now well-known categorisation of cases in which trustees may seek the approval of the court. These proceedings fell into the second of Robert Walker J's categories (see page 923 in Cooper), namely where there is no real doubt as to the nature of the trustees' powers and the trustees have decided how they want to exercise them "but, because the decision is particularly momentous, the trustees wish to obtain the blessing of the court for the action". In Cooper, Hart J said at page 925 that the duties of the court in a category 2 case depended on the circumstances of each case, but that in that case, it had to be satisfied, after a scrupulous consideration of the evidence, of three matters as follows:-
i) That the trustees had in fact formed the opinion that they should act in the particular way relevant to that case;
ii) That the opinion of the trustees was one which a reasonable body of trustees properly instructed as to the meaning of the relevant clause could properly have arrived at;
iii) That the opinion was not vitiated by any conflict of interest under which any of the trustees was labouring.
In Richard v. Mackay 4 th March 1987, (1987) 11 TruLI 23 (but also later reported at [2008] WTLR 1667), Millett J said this as to the approval of the court at page 1671:-
"Where, however, the transaction is proposed to be carried out by the trustees in the exercise of their own discretion, entirely out of court, the trustees retaining their discretion and merely seeking the authorisation of the court for their own protection, then in my judgment the question that the court asks itself is quite different. It is...
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