Analysis
The second defendant (Mr Mosley) appealed against the judgment of Deputy Master Bartlett of 9 May 2012 dismissing his application to strike out the claim brought against him by the claimant (Mr Popley). Mr Popley’s father had caused a trust known as the Blue Ridge Trust (the trust) to be settled in St Vincent and the Grenandines. The shares in the first defendant company (Atem) were held by the third defendant corporate trustee on the terms of the trust. In 2000, Atem purchased White Owl Barn, Tenterden, Kent. Atem remained legal and beneficial owner of the property until 2011. In May 2011, the trustee resolved to wind up Atem and the property was subsequently sold to Mr Mosley by Atem’s liquidator. It was common ground that the property itself was not, and had not been, trust property.
Mr Popley brought claims for breach of trust and fiduciary duty against the trustee and claimed in dishonest assistance against Atem and Mr Mosley. The proceedings sought to set aside the sale of the property by Atem to Mr Mosley and to obtain rectification of the register. Mr Popley’s claim was put as a personal remedy for equitable compensation only and was said to be neither a proprietary claim nor dependent upon lifting the corporate veil. It was submitted for Mr Popley that equity’s arsenal of remedies was large enough to extend to requiring a party who had dishonesty assisted in a breach of trust to return property to a transferor that was itself owed by a trust. It was said that the court always has power to require a wrongdoer to reverse a transaction.
Mr Mosley argued that the claim was unarguable in law because the property was never trust property and Mr Popley was a third party to the transasction between Atem and Mr Mosley and could bring no claim in respect of it. It was submitted for Mr Mosley that the claim seemed to be in substance a proprietary claim because it sought rectification of the register in respect of a specific property, but was unarguable because it lacked the basic requirement of the property ever having been part of the trust.
Held (allowing the appeal):
- (1) The Deputy Master erred in failing to consider what was trust property and what was not. The fact that beneficiaries desire the return of something that is not in their view adequately remedied by monetary compensation does not get over the hurdle that the trust simply does not own the property (paras [24], [27] and [28]).
- (2) There is no basis for saying that equity’s remedies, broad though they are, extend to allowing property of the trust to be returned because the trustee may have some form of control over the party to whom the return is to be made (para [26]). It is an oversimplification to say that the court can require a wrongdoer to reverse a transaction; the wrongdoer can be required to reverse a transaction but it cannot be required to rescind or repay to a party who is not the trust or anyone representing the trust (paras [31]-[32]).
- (3) Mr Popley is the wrong claimant for this relief. If any party has a claim then it is Atem (para [30]). The claim has no prospect of success and discloses no reasonable cause of action (para [33]).
Continue reading "Mosley v Popley [2012] EWHC 3905 (Ch)"