Contentious Trusts Handbook

Book Reviews

Review for ‘Trusts & Trustees’ (OUP) by J. J. Meagher published 08.06.2021

‘There are a few key texts often found within easy reach of every contentious trusts or estates practitioner, be they barrister or solicitor. Often you will find the Chancery Guide, a copy of Lewin or Snell (depending on one’s preference), usually a book on Drafting Trusts and Will Trusts (perhaps by Kessler QC), then one of the texts on the laws of probate, and a copy of the White Book. In terms of the actual practice of and preparation for the contentious area of Chancery litigation, specifically practice and precedents one would then turn to Chancery Practice and Procedure or Chancery Litigation Handbook, published by Jordans in 2001 and 2005.1 Now, a much needed and updated text has been commissioned by the Law Society and authored by barrister Mr Carl Islam of 1 Essex Court, Contentious Trusts Handbook: Practice and Precedents.2 This soon to be indispensable new work is sure to be staple not only for the preparation of contentious matters, but also for those who wish to pre-empt and ward-off problems arising in the administration of trusts and the relationship with beneficiaries and the courts supervisory jurisdiction.

As explained by Toby Graham, who provides the forward to this work, the publication of Mr Islam’s text reflects the fact that the risk of trustees, beneficiaries and their advisors ending up in court is ever on the rise. Of necessity “[t]his handbook provides the busy practitioner with a practical overview of themes that are commonly encountered. It will guide them through every stage of proceedings, from pre-action action protocols through discovery to settlement and trial”.3 What is perhaps even more valuable, is that the work provides the tools to head-off and anticipate potential contentious proceedings as well as to litigate and manage them, thus this work proves itself to be both a guide in times of crisis and gives the non-contentious private client practitioner the benefit of hindsight before the event. Examples of this forward-thinking analysis can be found at various stages throughout the text, which sets out in plain language the equitable principles and the leading cases which may be cited in reliance to further your cause. This handbook can also be used as a guide for trustees to take action (or to take pause) but also to draft from the included CD of precedents.

The chapter on Claims4 covers areas which other texts do not, and is exceedingly thorough in its coverage and application. For example, under the heading ‘Declaration of a Beneficial Interest in Property’5 the author considers the various constructive trust claims and how they can be made out—this is a results focused text. Equally useful, and under the discussion of a claim for removal of trustee appears the heading ‘Trap for the unwary’ along with the warning that “removal [of a trustee] does not automatically ensure that the trust property will be vested in the remaining and any new trustees”.6

The chapters on Equitable Remedies, Litigation, Costs, ADR and Settlement, are particularly relevant to private client and contentious trust practitioners as they place those subjects within the context of trust and Chancery practice—something which general texts do not. That is, “The particular features of trusts can make it difficult to analyse whether privilege attaches to any given communication”,7 those features are then analysed along with a discussion of Dawson-Damer v. Taylor Wessing LLP. Costs are always a factor of concern, to both trustee clients, and or beneficiaries in distress, the work clearly outlines the cost implications to all parties in the context of a trust dispute and it is useful to see the cost implications of Beddoe orders spelt out clearly along with reference to the accompanying precedent.8

For some this text will hold value in its specialised precedents which for the purposes of this area of practice are in my mind superior to more general works on precedents and pleadings.9 These stretch from Beddoe application, Calderback offers (equitable compensation), all the way to a Confidential note to the mediator, Particulars of Claim for: Breach of Trust, Tracing, Breach of Fiduciary Duty, Accessory Liability, as well as TOLATA applications. The work also includes specialist notes by experts Pandora Mather-Less on Art and heritage assets and the duties of trustees, Hector Robinson QC on Trust litigation in the Cayman Islands, and A meditator’s view by Anthony Trace QC.

Mr Islam concludes his preface by observing that “[t]he bridge that fuses the traditional technical skill set of company and commercial lawyers with that of trust lawyers (who in solicitors’ firms used to live in separate boxes) is, however, a relatively recent phenomenon outside of the Chancery Bar.” The author hopes that his text will be of value to all “who need to apply first principles when confronted with complex and novel facts that engage the ‘super-highway’ of equitable remedies and principles, when proceedings are issued” or contemplated.10 I can indeed confirm that his Contentious Trusts Handbook fits that description and is sure to be a staple text found within easy reach of every Equity and Trusts practitioner.’

Footnotes

  1. Vivian Chapman & Lynne Counsell (editors), Chancery Litigation Handbook (2005, Jordans, London); Chancery Practice and Procedures (2001, Jordans, London).

2. (Law Society, London, 2020) – available for £100, CD of precedents included.

3. Ibid., xiii

4. Chapter 7.

5. 115.

6. At 7.6.10: the author goes onto explain the deed requirements under the TA 1925 s40(1).

7. 208.

8. At 11.2.3 per Green v Astor [2003] EWHC 1857 (Ch).

9. Included in hard copy in the Appendices and also included on CD.

10. xv.

Review for the Law Society by Ian Mayes QC, Head of Chambers, 1 Essex Court, London EC4Y 9AR

‘This practical overview of contentious trusts sets out a clear route from letter before claim to costs orders. Its logical and helpful structure enables readers to find what they want to know exactly where they would expect to do so. The case analyses are cogent and commendably concise. The reviews of the law on liability for ‘dishonest assistance’ and Beddoe orders are models of their kind. The author is to be commended on succeeding in providing a portable reference work covering all aspects of the law and practice governing trust disputes in the English courts.’

Review for ACTAPS by Henry Frydenson LLB MBE TEP CTAPS

‘Carl Islam has an impressive set of credentials and has much experience in advising on all aspects of contentious trusts. In his work Contentious Trusts Handbook, he has produced a practical reference guide for practitioners, enabling them to undertake litigation in this complex and specialist area of law. As a practical and comprehensive reference work for busy practitioners, the author is to be commended.’

Review published in the STEP Journal Issue 5, 2021, Monday, 18 October 2021, written by Richard Dew, Barrister Ten Old Square Chambers and Chair of the STEP Contentious Trusts and Estates Special Interest Group

‘As the foreword to this book states, the unfortunate fact is that the risk of trustees becoming involved in court proceedings is on the increase. This book, described as a handbook, aims to provide the busy practitioner with a practical overview of the key themes and to guide them through each stage of proceedings, from pre‑action to settlement or trial.

The book contains a series of concise chapters covering the core concepts of contested trusts, including the powers of trustees, trustee duties, breach of trust, claims, equitable remedies and defences. Each chapter quotes from, or references, the key authorities in the area such that the reader has no doubt as to the key applicable principles and their effect. Importantly, for a book on contentious trusts, it goes on to describe the process and core concepts for litigation in England and Wales and the key principles relating to costs, and it has a whole chapter devoted to alternative dispute resolution and settlement. There are also three brief notes, written by experts, on art and heritage assets, trust litigation in the Cayman Islands and mediation.

For many – and especially for those new to the area or looking to practise in an area not core to them – the appendix will be invaluable, containing as it does a number of precedents for applications and claims involving trusts, alleging breach of trust, making Part 36 offers (under the Civil Procedure Rules) and so on. Inevitably, not every precedent that could be desired is there, but most will find that those that are there can be adapted to their purposes.

This is not, and does not pretend to be, a Lewin on Trusts. For detailed discussion of difficult areas of the law, the reader will need to look elsewhere. In many ways, though, this is a key advantage of this book, as it is not weighed down by lengthy discussions of disputed areas of law, but instead gives the reader what they need to know when arguing – or defending – a contentious case.

Overall, the book admirably meets the authors aims. It fills a clear need for a simple guide to the principles and conduct of trust litigation and should be a welcome addition to all practitioners’ libraries.’

Book Review by Sangeeta Rabadia published in the Law Society Gazette 28.06.2021

https://www.lawgazette.co.uk/reviews/technical-guide-to-navigating-trust-disputes/5108987.article

Ordering Links

Contentious Trusts Handbook – Law Society Bookshop

Wildy & Sons Ltd — The World’s Legal Bookshop : Islam, Carl

Foreword written by Toby Graham, Partner and Head of the Contentious Trusts and Estates Group at Farrer & Co LLP, Co-editor of Trust & Trustees (Oxford University Press)

‘Sir John Baker explains that the publication in 1837 of “A Practical Treatise on the Law of Trusts” authored by Thomas Lewin signified a shift away from perceiving trusts as principally an adjunct of conveyancing of land towards an institution in their own right. Trusteeship shifted from being a relatively passive office ancillary to landed settlements towards a more general and demanding role. Trusts ceased to be the exclusive preserve of the aristocracy also becoming a vehicle for the wealth of Victorian England’s middle classes. The book is now known as Lewin on Trusts. It continues to dominate the English texts.
Similar observations might be made of the Contentious Trusts Handbook commissioned by the Law Society and written by Carl Islam (who like Thomas Lewin is a leading barrister practicing in the field). This is because its publication reflects the unfortunate fact that the risk of trustees becoming involved in court proceedings appears to be on the increase. Such proceedings are increasingly hostile and hard fought. This handbook provides the busy practitioner with a practical overview of themes that are commonly encountered. It will guide them through every stage of proceedings, from pre-action protocols through discovery to settlement and trial. It contains a detailed discussion of mediation and arbitration and it is accompanied by a set of useful precedents and contributions from an art expert (Pandora Mather-Lees), an expert in trust litigation in the Cayman Islands (Hector Robinson QC) and a mediator (Anthony Trace QC).
The handbook will enable practitioners to anticipate and head off problems, thus hopefully reducing the risk of litigation, as well as providing guidance if and when proceedings are necessary. As with its non contentious cousin, authored by Gill Steel, Mr Islam’s handbook will become a well established staple on our bookshelves. The author and the publishers are to be congratulated.’

Preface
‘Trust litigation takes place within a sophisticated theoretical and policy framework in which the legal principles governing: (i) the exercise of powers; (ii) the performance of duties; (iii) the rights of beneficiaries; and (iv) the equitable remedies and defences available on a specific set of facts, have been formulated, applied, and developed by courts of equity in England and throughout the common law world, for centuries. Consequently, the building blocks of equity are almost monolithic. The Contentious Trusts Handbook aims to provide a clear practical and comprehensive exposition of the English law principles that apply in commonly encountered trust disputes, and of the practice and procedure governing trust litigation in the English courts. The book also discusses mediation and arbitration in trust disputes, and is accompanied by a suite of precedents.
My aim throughout, has been to write a practical, accessible and authoritative handbook for the busy practitioner, which is a portable reference that covers all aspects of the law and practice governing trust disputes in the English courts. The book contains a comprehensive bibliography of current research sources, and practitioners should note that the new 34th edition of Snell’s Equity has just been published, and the 20th edition of Lewin on Trusts is due to be published in January 2020.

Many of the principles discussed in this book also apply to commercial disputes involving allegations of breach of fiduciary duty/trust. This has recently been illustrated by:
(i) Faichney & Anor v. Aquila Advisory Ltd & Ors [2018] EWHC 565 (Ch), a breach of fiduciary duty/constructive trust claim in which the judge applied the law of illegality and the doctrine of ex turpi causa to breach of fiduciary duty claims following the recent Supreme Court cases of Bilta v Nazir [2016] AC 1 and Patel v Mirza [2017] AC 417;
(ii) Credit Agricole Corporation and Investment Bank v. Papadimitriou (Gibraltar) [2015] UKPC 13, in which the proceeds of an antique collection worth $15 million was misapplied in breach of trust, and the claimant pursued a proprietary claim against the bank which received the money; and
(iii) Stobart Group Ltd v. Tinkler [2019] EWHC 258 (Comm), in which Judge Russen QC found that the former Chief Executive of the infrastructure group Stobart, had acted in breach of his fiduciary duties in: speaking to Stobart’s investors; criticising management; and agitating for the removal of the company’s chairman.
(See also, ‘Breach of Fiduciary Duty Claims and the Quiet Fiduciary Thesis’, by Carl Islam, Trusts & Trustees, Volume 25, Issue 2, March 2019, pp 237–265).
As Lord Briggs of Westbourne said in the 2018 Denning Society Annual Lecture, ‘Equity in Business’, delivered in the Old Hall at Lincoln’s Inn, ‘There can be no general principle which ring-fences all commercial dealings from equitable intervention. Nor is it right that there is less need for the intervention of equity in business rather than personal or family relationships. Business people can be just as abusive, unconscionable and plain beastly to each other as members of a family.’
Company and commercial disputes (including joint-venture and shareholder disputes) that hinge upon proof of breach of fiduciary duty, are on the increase. The bridge that fuses the traditional technical skill-set of company and commercial lawyers with that of trust lawyers (who in solicitors firms used to live in separate boxes), is however, a relatively recent phenomenon outside of the Chancery Bar. I therefore hope, that this book will also be of value to Solicitors who need to apply first principles when confronted with complex and novel facts that engage the ‘super-highway’ of equitable remedies and principles, when proceedings are issued in any of the lists and courts that constitute the Business and Property Courts of England and Wales. That is how equity evolves. Furthermore, for fiduciary disputes, the Rolls Building in London, is used by litigants as the venue to determine high value disputes, worldwide.
Carl Islam
1 Essex Court
Middle Temple, London
Michaelmas Term 2019.’

Contents

CHAPTER 1 – INTRODUCTION
1.1 Aim
1.2 Introduction
1.3 Classification of trust claims
1.4 Trusteeship
15 Trusts and powers
1.6 Terms of the trust
1.7 Irreducible core of the trust
1.8 Duties
1.9 Decision making
1.10 Breach
1.11 Rights to information
1.12 Equitable jurisdiction
1.13 Remedies
1.14 Liability of trustees
1.15 Standing
1.16 Case preparation
1.17 Letter before claim
1.18 Proof
1.19 Disclosure
1.20 ADR
CHAPTER 2 – SUPERVISORY JURISDICTION OF THE COURT
2.1 Introduction
2.2 Supervisory jurisdiction
2.3 Limits
CHAPTER 3 – POWERS OF TRUSTEES
3.1 Introduction
3.2 Administrative or managerial powers
3.3 Dispositive powers
3.4 Powers of appointment
3.5 Simple general powers
3.6 Special powers
3.7 Duties of donees
3.8 Delegation
3.9 Failure to exercise a power
3.10 Fraud on a power
3.11 Rule in Hastings-Bass
CHAPTER 4 – DUTIES OF TRUSTEES
4.1 Introduction
4.2 Fiduciary duties
4.3 Fiduciary relationships

4.4 Scope and content
4.5 Self-dealing rule
4.6 Fair dealing rule
4.7 Statutory duty of care
4.8 Investment

CHAPTER 5 – BREACH
5.1 Introduction
5.2 Breach of trust
5.3 Breach of fiduciary duty
5.4 Quiet fiduciary thesis
5.5 Wrongful distribution
CHAPTER 6 – THIRD PARTY LIABILITY
6.1 Introduction
6.2 Trustee de son tort
6.3 Unconscionable receipt
6.4 Accessorial liability
6.5 Summary
CHAPTER 7 – CLAIMS
7.1 Introduction
7.2 Personal and proprietary claims for breach
7.3 Construction
7.4 Directions
7.5 Benjamin order
7.6 Removal of a trustee
7.7 Declaration of a beneficial interest in property
7.8 Sham trusts
7.9 Illusory trusts
7.10 Capacity
7.11 Undue influence
CHAPTER 8 – EQUITABLE REMEDIES
8.1 Introduction
8.2 Personal and proprietary remedies
8.3 Election
8.4 Rescission
8.5 Equitable compensation
8.6 Account in common form
8.7 Account of profits
8.8 Tracing
8.9 Injunctions
CHAPTER 9 – DEFENCES
9.1 Introduction
9.2 Limitation
9.3 Laches
9.4 Exemption clauses
9.5 Section 61 TA 1925
9.6 Consent
9.7 Set-off
CHAPTER 10 – LITIGATION
10.1 Introduction
10.2 CPR
10.3 Chancery Division
10.4 County Court
10.5 Transfer
10.6 Claim
10.7 Defence
10.8 Case management
10.9 CPR compliance and sanctions
10.10 Disclosure
10.11 Pre-action disclosure
10.12 Non-party disclosure orders
10.13 Norwich Pharmacal Orders
10.14 Bankers Trust Orders
10.15 Privilege
10.16 Part 18 Requests
10.17 Presumptions
10.18 Inferences
10.19 Trial
10.20 Adducing evidence at trial

CHAPTER 11 – COSTS
11.1 Introduction
11.2 Beddoe Orders
11.3 Non-party costs orders
11.4 Security for costs against a non-party
11.5 Part 36 Offers
11.6 Calderbank Offers

CHAPTER 12 – ADR & SETTLEMENT
12.1 Introduction
12.2 Methodology
12.3 Communication
12.4 Mediation
12.5 Arbitration

APPENDICES
A Precedents
A1 Beddoe Application – Details of Claim
A2 Benjamin Order
A3 Calderbank Offer (Equitable compensation)
A4 Calderbank Offer (Rescission)
A5 Confidential Note for Mediator
A6 Draft CMC Directions Order
A7 Draft Order (Interim application)
A8 Initial Disclosure List
A9 Mediation Position Statement & Offer
A10 Norwich Pharmacal Order
A11 Particulars of Claim (Breach of Fiduciary Duty/Accessory Liability/Powers of Investment/Information)
A12 Particulars of Claim (Breach of trust)
A13 Particulars of Claim (Liability to account)
A14 Particulars of Claim (Tracing)
A15 Part 36 Offer (Equitable compensation)
A16 Part 36 Offer (Rescission)
A17 Request For Further Information (‘RFI’) – Letter
A18 Skeleton Argument
A19 Tomlin Order and Tomlin Schedule
A20 Trusts of Land and Appointment of Trustees Act 1996, section 14 Application

B Notes
B1 Art & Heritage Assets – Duties of Trustees, by Pandora Mather-Lees
B2 Trust Litigation In The Cayman Islands, by Hector Robinson QC
B3 A Mediator’s View by Anthony Trace QC, 4 Pump Court, Temple, England

C Bibliography