Wight & Anor v Olswang

On an application for summary judgment, a breach-of-trust claim must be assessed according to the conduct actually pleaded. A trustee’s refusal to consider a sale opportunity because of a conflict between fiduciary duty and personal exposure under insider-dealing legislation is not properly reduced to a claim that the trustees made an unreasonable decision to retain assets. Where trustees have decided to sell trust assets, failure to implement that decision may itself support a breach claim, subject to explanation and evidence. Causation involving alternative opportunities and later market movements ordinarily requires evidence and should not be finally resolved summarily where breach remains a live issue.

Two beneficiary children brought claims against a solicitor trustee for alleged breaches of trust concerning shares held in their family settlement. They alleged that the trustee refused to consider a bid because of potential liability under the Companies Securities (Insider Dealing) Act 1985, and later failed to implement a resolution to sell half the remaining shares.

Neuberger J summarily dismissed the claims under CPR Part 24, holding that they required proof that no reasonable trustee could have retained the shares and that causation was insufficiently established. The beneficiaries appealed. The central issues were whether the claims had been mischaracterised and whether breach and causation could properly be determined without a trial.

1. Appeal allowed. Lord Justice Mummery delivered the judgment, with which Lord Justices Latham and Simon Brown agreed. The court directed that the claims proceed to trial; it did not determine the merits in the beneficiaries’ favour.
2. The judge had mischaracterised the May claim. The pleaded breach was not simply failure to sell or an unreasonable decision to retain the shares. It was alleged that the trustee’s conduct placed him in conflict between his duty to consider the bid in the beneficiaries’ interests and his personal concern about committing an offence under the Companies Securities (Insider Dealing) Act 1985. The trustee allegedly refused to consider the bid. The “no reasonable trustee” test was therefore inapplicable to the main case pleaded.
3. The September claim was similarly mischaracterised. The trustees had resolved to sell half the remaining shares, but the sale was not implemented. The beneficiaries were entitled to an explanation and, if no satisfactory explanation were given, could invite the trial court to infer a dereliction of duty amounting to breach of trust.
4. Causation was premature for summary determination. If breach were established, the trial judge would have to assess what would have happened absent the May refusal or the failure to implement the September resolution, including the effect of the lost opportunity to sell at a higher price and subsequent market falls.
5. The respondent was ordered to pay the appellants’ costs in the Court of Appeal and those incidental to the summary-judgment application below.

• Court of Appeal (Civil Division): Appeal allowed. The claims were directed to proceed to trial. [2000] EWCA Civ 310.
• Chancery Division: Neuberger J summarily dismissed the claims under Civil Procedure Rules 1998 Part 24 on the basis that the pleaded breach and causation cases could not succeed.