Analysis
William Reid (the deceased) died on 20 March 2018. He left a will dated 20 December 2004 and codicil dated 8 February 2012 (together the will), which appointed the claimants, Nicholas Parsons and Mark Hill (respectively the deceased’s solicitor and land agent), as executors and trustees, and left the residuary estate on discretionary trusts for classes including his children and grandchildren. The defendants, Stephen Reid and Judith Shaw, were the deceased’s children. The deceased also left a letter of wishes which expressed the wish that payments be made to Stephen reflecting various moral and financial obligations owed by the deceased to him, and then that his residuary estate be divided as to 60% for Stephen and 40% for Judith.
When the claimants began considering how the estate should be distributed by reference to the letter of wishes, Stephen provided the claimants with four schedules setting out the sums he said should be paid to him, totalling £951,684. These were a mixture of legal liabilities and loans, and payments reflecting the deceased’s moral obligations to Stephen as set out in the letter of wishes.
Judith expressed concerns about these schedules, saying, among other things, that the issues raised by Stephen would already have been taken into account by the deceased in deciding how to frame his letter of wishes and its instruction as to the distribution of the estate.
By a deed of appointment dated 3 January 2020 (the deed of appointment), the claimants appointed £600,965 to Stephen and the remainder of the residuary estate as to 60% to Stephen and 40% to Judith. At the time of the hearing they were holding approximately £455,000 as the balance of the estate remaining to be distributed.
After the making of the distribution, correspondence was exchanged in which Judith, through her solicitors, raised objections to the propriety of the course which the claimants had taken. Matters stalled, with Judith neither withdrawing her challenge nor issuing a claim in respect of the distribution of the estate. Thus, the claimants were left holding a substantial fund, with the threat that if they were to pay it out and Judith were to bring a claim, it could be held that they had paid out those sums under a defective or invalid deed of appointment. The claimants therefore sought directions from the court that they could ‘distribute the funds retained by them pursuant to the terms of the Deed of Appointment without being at risk of any later challenge to its validity or propriety’.
For Judith it was contended that the directions sought would in effect extinguish her claim, and that the claimants were therefore under a duty of full and frank disclosure and obliged to disclose all relevant facts and documents. Witness statements from the claimants setting out the considerations to which they had had regard were also sought, as was a three-day trial for the determination of the application. For the claimants, it was said that disclosure and further evidence were not required since the claimants were not truly seeking a blessing of the deed of appointment by the court; they were instead seeking a ‘Benjamin order’. Two years having elapsed since the deed of appointment, Judith had had every opportunity to challenge it; and in the absence of a challenge the court should grant the claimants permission to distribute, or at very least require her to bring a Part 7 claim within a specified time limit.
Held:
The disclosure and witness evidence proposed by Judith would be ordered, as it was necessary for the fair determination of the claimants’ claim. The duration of the trial would also need to reflect the consideration by the court of the merits of the claim intimated by Judith.
Disposing of the claim would require the court to consider whether Judith’s claim was insubstantial, remote or speculative. This would involve considering its merits and therefore all the available material relevant to those merits, including documents and information held by the claimants. It would not be sufficient for the court to consider whether Judith had been able to articulate her claim in a letter before claim.
The court would also need to be satisfied that it was fully informed before making the order sought, because once made it would extinguish the claimants’ liability. Because the order would have this draconian effect, Judith should be in no worse position as regards disclosure than if the claimants were seeking a blessing. Full disclosure was the price to be paid by the claimants for the exoneration they sought.
JUDGMENT MASTER CLARK: [1] This judgment deals with two points of principle which arose in the directions hearing in this claim: (1) whether the court has jurisdiction under CPR Pt 64 to make a so-called ‘put up or shut up order’ in respect of an intimated breach of trust claim; (2) if so, the nature …Continue reading "Parsons & anr v Reid & anr [2022] WTLR 1103"