Davies & Anor v Sharples & Anor

Limitation for breaches of trust occurring after administration of a testamentary estate is governed by Limitation Act 1980, section 21(3), rather than section 22(a). The latter provision concerns claims arising from the administration of a deceased person’s estate, including restitutionary claims against recipients of unauthorised distributions. It does not govern later breaches committed by trustees properly so called.

For a claim for relief from mistake under section 32(1)(c), time is postponed until the mistake was discovered, or could with reasonable diligence have been discovered. Reasonable diligence requires both a sufficient reason to investigate and sufficiently diligent investigation once that reason exists. Mere physical possibility of discovery is insufficient.

The claimants, representing the estates of Betty and Hilda Cunliffe, sought recovery of income and capital allegedly overpaid to beneficiaries of the Sharples share of a testamentary trust. The overpayments resulted from applying a 5:3 distribution ratio without adjusting for a £5,000 legacy previously paid from that share.

The defendants relied on limitation under sections 21 and 22 of the Limitation Act 1980. The second claimant also claimed personally as a trustee for recovery of mistaken payments. A preliminary issue was ordered concerning limitation, and the question was whether the claims were statute barred or postponed under section 32(1)(b) or (c).

1. Claims against trustees. Claims against John and Jack Sharples for trust property received and converted to their own use fell within section 21(1)(b) of the Limitation Act 1980. Non-fraudulent claims outside that provision were subject to the six-year period in section 21(3). John Sharples therefore remained liable for overpayments personally received within the relevant period, but claims concerning payments made by him to others were prima facie time-barred unless section 32 applied.
2. Section 22(a). Re Diplock [1948] Ch 465, affirmed by Ministry of Health v Simpson [1951] AC 251, established that section 22(a) could apply to restitutionary claims by beneficiaries or next of kin against recipients of unauthorised estate distributions. Its reasoning concerning the starting date of limitation was obiter. Section 22(a) nevertheless did not govern breaches committed after estate administration had ended, when the personal representatives acted as trustees properly so called.
3. Once the testamentary estate had been administered, subsequent overpayments were governed by section 21(3), whether the claim was against the trustees or a recipient of trust property. The personal claim based on common law recovery of mistaken payments was ordinarily subject to six years from payment, subject to section 32.
4. Section 32(1)(c). The personal claims were actions for relief from mistake. The relevant question was whether the claimants could with reasonable diligence have discovered the mistake earlier. This required consideration of whether they were put on inquiry and, if so, whether they investigated sufficiently diligently. The claimants had no reason to distrust the professional advisers administering the estate, and the error required extensive investigation of historic papers. Time therefore did not begin before early 2002, so the personal claims were not statute barred.
5. The evidence did not establish deliberate concealment by Jack Sharples under section 32(1)(b). The limitation issue was determined on the stated assumptions, with quantification left for trial or a subsequent taking of accounts.

First-instance determination of limitation issues in ongoing proceedings. No appellate history was stated in the judgment.