Representation of Dunlop Settlement [2011] JRC138: recovery of trust documents from third party

Representation of Dunlop Settlement [2011] JRC138: recovery of trust documents from third party

This case concerns an application of a trustee to recover documents relating to a trust from the JFCU following the seizure of those documents from a former employee as part of a fraud investigation.

Facts

The Dunlop Settlement (the "Trust") was established in 1999. Stirling Trustees Limited ("Stirling") was appointed as trustee in February 2001. In September 2007 Stirling merged with Capita Trustees Limited ("Capita") with Capita being the continuing company.

Between 2001 and 2007 the affairs of the trust were dealt with on behalf of Stirling by Richard Arthur ("Mr Arthur") who was an employee and director of Stirling.

At the time of the merger Capita understood the Trust to be dormant. However, various issues subsequently arose and it transpired that there might have been assets and liabilities remaining in the Trust. In order to resolve those issues Capita required access to all the records of the trust during the period that Stirling was the trustee.

On discovering that the Trust records were incomplete and that Mr Arthur kept many of them at home or at his office, Capita wrote to Mr Arthur in February 2010 seeking all documentation in his possession which related to the Trust and to its assets. No response was received to that letter.

Subsequently the police, in the form of the Jersey Financial Crimes Unit ("JFCU"), seized documents from Mr Arthur as part of a fraud investigation, including documents relating to the Trust. Capita requested copies of the seized documents which related the trust from the JFCU, but the JFCU were unwilling to release copies of the documents to Capita without Mr Arthur’s written consent or an order of the court.

Whilst Mr Arthur indicated a willingness to give an appropriate letter of consent to the JFCU, he failed to do so and Capita accordingly brought an application for an order that the JFCU deliver up to Capita copies of all documents relating to the affairs of the trust which it had seized from Mr Arthur.

Decision

The Court ordered the JFCU to provide Capita with the Trust documents. The Court held that there could be no doubt that Capita were entitled to the documents. Capita was, as a result of the merger, the same company as Stirling, the trustee of the Trust and was entitled to demand the Trust documents from Mr Arthur. Mr Arthur was under an obligation to produce them to Capita. That the Trust documents were now in the possession of the JFCU, rather than Mr Arthur, did not affect the Capita's position.

Costs

As regards costs, the Court, citing Ogier Trustee Limited–v-C I Law Trustees [2006] JRC 158, confirmed that the normal order where a trustee fails in its duty to provide documents and information to an incoming trustee should be an order for indemnity costs. Notwithstanding that the situation in this case is not exactly the same, in that Mr Arthur was not the former trustee but the individual responsible for the affairs of the trust on behalf of the trustee, the same principle applied. In considering the order for costs, the Court stated that Mr Arthur behaved in a completely unreasonable fashion in failing to provide such consent, given that it would have been simple for him to do so. The Court did not see why the beneficiaries of the trust should have to bear the costs of the proceedings and ordered indemnity costs against Mr Arthur.

Comment

Notwithstanding the unusual facts of this case, the Court applied the established principles relating to the duty of a retiring trustee to deliver trust documents in circumstances where there had been a merger between the entities acting as trustee, rather than a retirement, and where the trust documents had been retained by an individual employee rather than the former trustee. The trustee was entitled to the trust documents and this was unaffected by their subsequent seizure by the JFCU.

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