![]() |
[Home] [Databases] [World Law] [Multidatabase Search] [Help] [Feedback] [DONATE] | |||||||||
England and Wales Court of Appeal (Civil Division) Decisions |
||||||||||
PLEASE SUPPORT BAILII & FREE ACCESS TO LAW
To maintain its current level of service, BAILII urgently needs the support of its users.
Since you use the site, please consider making a donation to celebrate BAILII's 25 years of providing free access to law. No contribution is too small. If every visitor this month gives just £5, it will have a significant impact on BAILII's ability to continue providing this vital service.
Thank you for your support! | ||||||||||
You are here: BAILII >> Databases >> England and Wales Court of Appeal (Civil Division) Decisions >> Barnsley & Ors v Noble (Rev1) [2016] EWCA Civ 799 (02 August 2016) URL: https://www.bailii.org/ew/cases/EWCA/Civ/2016/799.html Cite as: [2016] WTLR 1501, 19 ITELR 532, [2016] EWCA Civ 799, [2017] 1 P &CR DG, [2017] 2 WLR 1231, [2016] WLR(D) 454, [2017] Ch 191, [2017] 1 P &CR DG3 |
[New search]
[Context]
[View without highlighting]
[Printable RTF version]
[Buy ICLR report: [2017] Ch 191]
[View ICLR summary: [2016] WLR(D) 454]
[Help]
ON APPEAL FROM THE HIGH COURT OF JUSTICE (CHANCERY DIVISION)
HIS HONOUR JUDGE NUGEE
HC-2010-000008
Strand, London, WC2A 2LL |
||
B e f o r e :
LORD JUSTICE PATTEN
and
LORD JUSTICE SALES
____________________
Barnsley & Ors |
Appellant |
|
- and - |
||
Noble |
Respondent |
____________________
Mr Joe Smouha QC and Mr Ciaran Keller (instructed by Debevoise & Plimpton LLP) for the Respondent
Hearing date: 14th July 2016
____________________
VERSION
OF JUDGMENT APPROVED
Crown Copyright ©
Lord Justice Sales:
"My Trustees shall have power to enter into and complete contracts or other transactions with themselves or any of them (acting in their own interests as individuals or in some other fiduciary capacity) for the sale purchase exchange or otherwise of any part or parts of my Residuary Estate provided that:-
(i) every trustee personally interested therein shall have acted in good faith and either:
(ii) at least one of my Trustees shall have no interest in the contract or transaction (as the case may be) save as one of my Trustees or
(iii) (in the case of a sale purchase exchange or like transaction) an independent and duly qualifiedvaluer
instructed by and acting exclusively for my Trustees in their capacity as such shall have certified that in his opinion my Trustees will receive full
value
in money or money's worth pursuant to such transaction."
Although paragraph 18 referred to Michael's Residuary Estate, and his business interests did not form part of his Residuary Estate but a separate fund called his Business Fund, clause 6(4) of the Will provided that Schedule 1 also applied to his Business Fund. By clause 2 of the Will "my Trustees" meant Michael's Executors and trustees appointed under the will.
"In the professed execution of the trusts and powers hereof no trustee shall be liable for any loss to the trust premises arising by reason of any improper investment made in good faith or for the negligence or fraud of any agent employed by him or by any other trustee hereof although the employment of such agent was not strictly necessary or expedient or by reason of any other matter or thing except wilful and individual fraud or wrongdoing on the part of the trustee who is sought to be made liable Provided Always that in the case of any trustee hereof who or whose firm for remuneration renders legal accountancy or other professional or business services to my Trustees nothing in this Clause shall exonerate such trustee or his firm from liability for negligence or other wrongdoing in relation to the services so rendered."
It is common ground that the word "trustee" includes an executor of the Will and that the clause is accordingly capable of being applied to Philip acting in his capacity as executor. I consider the arguments which arise on this clause below.
"Turning then to the particular matters which it is said should have been disclosed, the first is the fact that more claims had been filed since the initial claim filed by Mr Whitelaw [of PwC], and thatvery
substantial Fleming claims were in preparation. I have found above that Philip knew that Fleming claims could be put in that would go back earlier than the existing claims, and that such claims were under preparation, but that he did not know the amount of such claims. Philip also said that he assumed Mr Barnsley knew as much about this as he did. I find that Philip did not say anything to Mr Barnsley about the Fleming claims being prepared, and that this was potentially material information, but that in failing to say anything about it, Philip was not deliberately or consciously acting in a way he knew to be wrong. No-one had told him he needed to keep Mr Barnsley informed about the Fleming claims; Mr Barnsley obviously knew about the Linneweber claims, which had been referred to in the [report by Close Brothers, who advised both sides in relation to the demerger], and Philip assumed that Mr Barnsley knew what he needed to know to negotiate the split. In fact, as appears above, Mr Barnsley did not think he needed to know the size of the claims in order to negotiate a split. It is not surprising therefore that he never sought to check on the size of the claims: if he had wanted to do so he would not have asked Philip in any event."
Discussion
i) The Exoneration Clause has no application in respect of a breach of the self-dealing rule. The only provision in the Will which modifies the impact of that rule is the Transactions Clause, and the judge found that Philip could not bring himself within the scope of that provision. This was not an argument made below, but it is a pure point of law on the interpretation of the Will and is advanced in this court without objection from Philip and with the permission of the court;
ii) The Exoneration Clause has no application because in negotiating the demerger and in executing the documents to give effect to it there was no evidence that Philip had consciously thought about the exercise of the power in the Transactions Clause, with the result that it could not be said that he acted "In the professed execution of the trusts and powers [of the Will]". The judge rejected this argument at paras. [285]-[288]; and
iii) In negotiating the demerger and in executing the documents to give effect to it, Philip engaged in "wilful and individual fraud or wrongdoing" and hence could not bring himself within the protection of the Exoneration Clause. Mr Tager contends that the word "wilful" bears the very
wide meaning of "intentional", in the sense that a person acts intentionally if he intends to do a specific act or consciously makes a specific omission, and that act or omission happens to constitute wrongdoing (as the claimants say Philip's conduct amounted to wrongdoing, as being in breach of his fiduciary duties), whether or not the person knew his act or omission was wrongful and whether or not he intended to behave in breach of his legal obligations. The judge rejected this argument at para. [291].
At paras. [289]-[290] the judge rejected another argument of Mr Tager, that the words "wilful and individual" in the Exoneration Clause governed only the word "fraud" and did not apply to "wrongdoing". Mr Tager did not seek to resurrect that argument on this appeal.
"287. Mr Smouha [for Philip] submitted that this was not what the clause required. The effect of the words "in the professed execution of the trusts and powers hereof" was simply to confine the operation of the clause to acts of the Executors carried out qua executors. It would lead to absurd results if it had to be shown that the Executors knew they were acting under a particular power in the will.
288. I accept Mr Smouha's submission. In my judgment an executor is acting in the professed (or purported) execution of the trusts and powers of a will if he is dealing, (or purporting to deal) with the estate in his capacity as executor. He need not have the terms of any particular power in mind. In the present case there is no doubt that Philip was acting as Executor on behalf of the Estate (as well as in his personal capacity): thus for example the Share Exchange Agreement entered into in relation to Addbudget as part of Step 10 was executed by Philip twice, once in his personal capacity and once by him (as well as by Mr Barnsley and Gill) expressly "as Executor of the Estate of Michael Noble (Deceased)." This was in myview
plainly a transaction entered into by Philip in the professed execution of the trusts and powers of the Will. In fact those who drafted it may have had specifically in mind paragraph 9 of schedule 1 to the Will which empowered the Trustees to deal with property by way of, among other things, exchange; but it does not in my judgment matter whether they did or not. The execution of the document, and of all the other parts of the transaction to which Philip was a party in his capacity as Executor, was sufficient to attract the protection of the clause."
"I … agree with what was said in Bonhamv
Fishwick [at [2007] EWHC 1859 (Ch), at [23] and [28], per
Evans-Lombe
J] about "wilful … wrongdoing", namely that it means "conscious and wilful misconduct", what Millett LJ referred to in Armitage
v
Nurse [1998] Ch 241 at 252E as requiring "knowing and deliberate breach of duty or reckless indifference" to the possibility of such breach: see at [28]. In the light of my findings on Philip's good faith, I find that it has not been established that Philip is guilty of such wilful wrongdoing."
"If the [trustees] did not act against legal advice obtained from their counsel and solicitor they would be entitled to rely on the exemption from liability under [the exoneration clause]. An allegation of wilful wrongdoing by the [trustees] would not be arguable if they heeded the legal advice in the opinion and advice letter…".
Lord Justice Patten:
The Chancellor (Sir Terence Etherton):
"The suggested construction of clause 15 would thus confine its operation to unconscious or accidental, as opposed to conscious, breaches of trust. It would afford no protection in regard to a "judicious breach of trust … In my judgment, on the ordinary use of language, this construction attaches too narrow a meaning to the phrase "in the professed execution of the trusts and powers hereof". The New Shorter Oxford English Dictionary (1993) includes among other definitions of the word "professed" the meaning "alleged, ostensible". I agree with Rattee J that clause 15, on its true construction, must apply so as to exonerate the trustees, save to the extent excluded by the clause, in particular dishonesty, for anything done by them in the purported execution of the trusts and powers of the Bacchus trust deed—that is to say even though in fact not done in the exercise of such trusts or powers."
"a person is not guilty of wilful neglect or default unless he is conscious that, in doing the act which is complained of or in omitting to do the act which it is said he ought to have done, he is committing a breach of his duty, or is recklessly careless whether it is a breach of his duty or not."
"Wilful misconduct" means misconduct to which the will is a party, something opposed to accident or negligence; the misconduct, not the conduct, must be wilful."