North Shore Ventures Ltd v Anstead Holdings Inc

For the purposes of disclosure and judgment enforcement, control of documents depends on the true relationship between the litigant and the person holding them. A court may find that trust documents are within a judgment debtor’s control where the evidence supports an inference that the trustees act at the debtor’s behest in administering assets transferred to shelter them from creditors.

The categories in Civil Procedure Rules rule 31.8(2) do not exhaust the ordinary meaning of control in rule 31.8(1). Mere status as a beneficiary or former beneficiary of a discretionary trust, however, does not itself establish control of trust documents.

North Shore sought to enforce a substantial judgment debt against the judgment debtors. Shortly after the debt was asserted, they transferred assets to family trusts and later said that they had no material assets or control over the trustees.

Floyd J ordered production of specified trust documents under Civil Procedure Rules rule 71.2. The order was not qualified by words limiting it to documents within the debtors’ knowledge, possession, custody or control. They appealed from that order, made in proceedings following the High Court judgment [2010] EWHC 2648 (Ch).

The central issue was whether documents held by the trustees were within the debtors’ control for the purposes of rules 71.2 and 31.8.

1. The appeal was dismissed unanimously. Toulson LJ gave the judgment, with which Arden and Pill LJJ agreed. Floyd J had jurisdiction to order production of the trust documents under Civil Procedure Rules rule 71.2.

2. Whether documents physically held by a third party are within a litigant’s control under rule 31.8 depends on the true nature of their relationship. Rule 31.8(2) identifies circumstances in which control exists, but its wording does not make those circumstances exhaustive. Documents may therefore be controlled in fact even where a strict legal right to possession cannot be shown.

3. On the material before Floyd J, he was entitled to infer an arrangement under which the trustees would act as the debtors wished in administering assets transferred to protect them from creditors. In that situation, the trustees’ documents concerning the trusts could properly be treated as within the debtors’ control. The situation was akin to agency or to a person acting as a puppet master.

4. The short notice of the application did not make the order improper. Disclosure is a continuing case-management process. If unable to comply, the debtors could adduce evidence explaining the true relationship with the trustees and seek reconsideration.

5. The court also rejected the respondent’s broader alternative submission. A beneficiary’s status alone, including that of a former discretionary beneficiary, does not provide a sufficient foundation for an order under rules 31.8 or 71.2. Any entitlement to trust documents depends on the document, the trust terms and the supervisory jurisdiction over trusts, as explained in Schmidt v Rosewood Trust Limited [2003] AC 709.

• Court of Appeal (Civil Division): Dismissed the appeal and upheld Floyd J’s order requiring production of the specified trust documents under Civil Procedure Rules rule 71.2.
• High Court, Chancery Division: Floyd J made the production order under appeal in enforcement proceedings following the judgment [2010] EWHC 2648 (Ch).