The claimants were the beneficiaries of two trusts created by the late WCC Henchley (‘Settlor’). The NE Henchley Trust (‘First Trust’), dated 1 September 1960, provided for the trust assets to be held upon trust for the Settlor’s wife for life or until remarriage with remainder for such of his children as were then living and if more than one in equal shares. The trust assets, which once included bank accounts and a portfolio of investments, now consisted of the residence of the Settlor’s wife at 395 Cockfosters Road, Whaddon Lodge (‘Property’). By a Deed of Appointment dated 20 November 1972 the Settlor’s wife purported to appoint the defendant as a new trustee of the First Trust. The appointment was treated as valid until 27 October 1998 when solicitors acting for members of the family pointed out that it was invalid. The defendant then endeavoured to retire as a trustee or de facto trustee, though title to the Property remained in his name until April 2011. The WCC Henchley Trust (‘Second Trust’), dated 12 September 1960, provided for the trust assets to be divided into two parts upon trust as to one part for two sons of the Settlor contingent on attaining the age of 21 and as to the other part upon trust to pay the income in equal shares to three daughters of the Settlor during their respective lifetimes with remainder during the lives of their respective children and grandchildren pending the dissolution of the trust. The trust assets consisted of shares in private limited companies which were run as family businesses by the Settlor. Although no document evidenced the defendant’s appointment as a trustee, there was no doubt that he acted as such together with others, including the book-keeper, Doris Watson, who died on 3 March 2003. No accounts were apparently prepared for the First Trust and the defendant had no recollection of what may have happened to the portfolio or its proceeds of sale. Copies of tax returns dating to the 1990s were obtained from HMRC in relation to the Second Trust. There were also financial statements, consisting of a balance sheet and an income and expenditure account. Tax computations were also available together with schedules showing the income received by the beneficiaries. However, there were no trust accounts. The claimants sought an order directing the defendant to provide a full account of his dealings with the assets of both trusts as a trustee or de facto trustee. They claimed to be entitled as of right, whether or not there had been any actual or suspected wrongdoing. The defendant’s response, in effect, was that he had already provided an account of his dealings and that it was impossible for him to provide more information or detailed accounts. Any claim to substantive relief was either statute-barred or defeated by laches. In any event it would, he said, be inequitable to order him to produce an account.
Held (declining to make an order for an account in respect to the First Trust but making an order for an account in respect to the Second Trust):
If no account has been provided and the beneficiaries have not released the trustee from his obligation so to provide, it was not the case that the Court had no discretion but to order an account. Persuasive authority suggested that entitlement to an account was not absolute. It was one thing for the duty to account being part of the irreducible core obligations of trustees but quite another to say that the Court must always, without exception, make an order for an account to be provided. Ordinarily the Court would, in the exercise of its discretion, make an order for an account where this has not been provided but there may be very limited circumstances in which it would be right to decline to make such an order. Section 23 of the Limitation Act 1980 provided that an action for an account could not be brought after the expiration of any time limit applicable to a claim for substantive relief under the Act but, as the claim in this case was brought regardless of whether there had been any wrongdoing, there was no underlying claim for substantive relief for which a limitation period had been prescribed by the Act. The order sought was essentially administrative in nature, arising from the Court’s supervisory jurisdiction over trusts and no limitation period was applicable under the Act. As for laches, consideration of this doctrine did not add anything more bearing in mind that delay on its own would be insufficient to make it out. The trustees’ duty to account should be seen alongside their obligation to keep and retain records. Although it was acceptable for trustees, amongst themselves, to divide responsibilities such that one of them was the designated record-keeper, that did not absolve them collectively from their duties to the beneficiaries and, on the facts of this case, it was not an answer for the defendant to say that he left record-keeping to Doris Watson and could, therefore, be absolved from providing an account because no documents had been retained. The surviving accounting documents, such as they were, went some way to providing the beneficiaries with relevant information, although at the same time giving rise to questions which could have been asked, but they were not adequate to provide the beneficiaries with an understanding of how the trustees had managed the trust assets during the relevant periods and, for this reason, they could not be said to be adequate as trust accounts. Although the defendant was elderly and it was possible that he could not produce full and detailed trust accounts at this remove, he had not done everything that was open to him to provide the beneficiaries with an account of the trustees’ dealings with the assets of the Second Trust. The position was, however, different in relation to the First Trust. Whilst it was troubling that no accounts were apparently ever prepared in any format, the Property was the only asset and the circumstances were sufficiently exceptional to persuade the Court that it should not exercise its discretion in favour of ordering an account in common form.Judgment CHIEF MASTER MARSH:  The claimants are the beneficiaries of two trusts created by the late WCC Henchley dated 1 September 1960 and 12 September 1960. He died in 1972. By this claim the claimants seek an order directing the defendant to provide a full account of his dealings with the assets …