Former trustee's duty to provide accounts

It is a fundamental principle of trust law that a beneficiary must be able to enforce the trust and to hold a trustee to account for his conduct in relation to the administration of the trust. To allow the beneficiary to enforce the trust, he must receive sufficient information about the trust assets. A trustee therefore has a duty to provide certain information to beneficiaries, which will include trust accounts. 

In the recent case of Henchley v Thompson [2017] the court was asked by the beneficiaries of two family trusts to provide an order that a former trustee, who ceased to be involved in the trusts some 20 years previously, provides trust accounts. 

The court had to consider whether such an order could be made to compel a former trustee to account to beneficiaries, and whether an order should be made in this case given the amount of time that had passed since the former trustee's involvement. 

The facts

The two family trusts in question, namely "The Henchley Trust" and "The Children's Trust" were created in 1960. The defendant trustee had purportedly been appointed as trustee of one of the trusts, and had taken on the same de facto role for the other, in 1972. Sometime in the 1990s he formally retired as trustee from one trust, and ceased to have any involvement with the other. 

The claimant beneficiaries brought claims against him seeking, amongst other things, an order that he provide trust accounts. 

The conclusion

Chief Master Marsh had to consider the following points:

1. Whether the court has a discretion to order an account.
2. The concept of "laches", i.e. does an unreasonable delay in bringing a claim which can prevent a party from pursuing it, apply to a trustee's obligation to account.
3. Whether the claim to account was statute barred (i.e. so the claim was no longer legally enforceable because of a prescribed period of limitation having lapsed).

Master Marsh rejected the beneficiaries' argument that the court had no discretion in the matter and was obliged to make the order requested. He held however that the court will, in the exercise of its discretion, usually make the order requested and that "there may be very limited circumstances in which the court will decline to make such an order". Nevertheless, beneficiaries should recognise that they do not have an automatic entitlement to obtain an order for an account as the court does retain a discretion, even if it is one to be applied frugally. 

With regards to limitation, on considering section 21 of the Limitation Act 1980 which provides for a limitation period of 6 years in relation to claims of breach of trust, Master Marsh held that there was no limitation period applicable to a claim for an account "in common form". He said that "an application for an account in common form is not based upon a breach of trust and has never been seen as being contingent on any adverse finding against a trustee… Subject to the court's discretion, the order is essentially administrative in nature, and arises from the court's supervisory jurisdiction over trusts." Master Marsh also dismissed the defendant trustee's submissions on laches. 

With regards to the two trusts in this case, Master Marsh ordered that an account should be provided in relation to the former trustee's dealings regarding The Children's Trust. With regards to the Henchley Trust, however, while he considered the request for an account was a proper and reasonable one, in the circumstances he used his discretion and declined to make an order. This was because The Henchley Trust only consisted of a property. While it was believed to have originally also included a small portfolio of investments and bank accounts, those would have been exhausted many years ago. 

This case clearly highlights the lasting risks and obligations associated with having taken on a fiduciary role - and emphasises how important it is to retain proper records, irrespective of whether and when that fiduciary role has come to an end.  

Please contact our Disputed Wills and Trusts Team by telephone on freephone 0800 0931336, or by email at willdisputes@ashfords.co.uk for a no obligation chat to see how we can help you.