Cotton & Anor v Brudenell-Bruce, Earl of Cardigan & Ors

On an application to approve a trustee’s momentous decision, the trustees must provide sufficient evidence to show that they have fulfilled their duties and formed a view which reasonable trustees could properly form. The court must act cautiously because approval prevents a later challenge, but caution operates in both directions. Approval should not be withheld without good reason where adequate material establishes that the transaction is proper and benefits the beneficiaries.

Trustees may rely on clear, competent and cogent professional advice. They need not second-guess that advice merely because another course carries a possibility of greater value. Alleged failings by professional advisers remain distinct from breaches of duty by trustees. Where genuinely material factual disputes arise, the court may direct disclosure, oral evidence or determination under ordinary contentious procedure.

The trustees of the Savernake Estate sought the court’s approval under Part 8 of the Civil Procedure Rules 1998 for a conditional sale of Tottenham House for £11.25 million. The deteriorating listed property had been marketed confidentially to a small group of selected bidders on professional advice. One beneficiary opposed the transaction, arguing that inadequate marketing and valuation work might have prevented the best price being obtained.

A deputy High Court judge would have approved the sale but initially adjourned the application pending proceedings seeking the trustees’ removal. Rose J later authorised completion after the removal trial was delayed and the trust’s financial position deteriorated. The beneficiary appealed both decisions.

The central issue was whether the trustees had supplied a proper evidential basis for concluding that the proposed sale was a decision which reasonable trustees could properly take in the beneficiaries’ interests.

1. Both appeals dismissed. The trustees had shown that entering into and completing the intended sale was a decision which reasonable trustees could properly take in the beneficiaries’ interests. By acting on GVA’s professional advice, they would fulfil their duties to the beneficiaries: per Vos LJ, with whom Black and Moore-Bick LJJ agreed.

2. In a category 2 application concerning a momentous decision, the trustees bear the burden of placing sufficient and appropriate material before the court. The court must be satisfied that they have fulfilled their duties and formed a view which reasonable trustees could properly form. The exercise is supervisory and evidential. It differs from a later hostile claim in which a beneficiary must prove a breach of trust.

3. The trustees were entitled to accept GVA’s clear and cogent advice that confidential, targeted marketing offered advantages over an open campaign. Those advantages included speed, lower cost, certainty and access to specialist bidders. The advice intelligibly addressed the valuers’ warning that an open-market sale might produce a higher price. The trustees were not required to second-guess competent professional advice or obtain a prescribed number of valuations.

4. There is a material distinction between a trustee’s duty to beneficiaries and a professional adviser’s duty to the trustee. Possible negligence in selecting bidders might found a claim against the adviser, but did not establish a breach by trustees who reasonably accepted competent advice. The court should not speculate about wrongdoing without concrete evidence.

5. The court must act cautiously because approval protects the trustees from a later challenge. It is not a rubber stamp. Equally, approval should not be withheld without good reason where the evidence warrants it. A beneficiary’s procedural disadvantage in Part 8 proceedings does not itself justify refusal, and consent should not be withheld merely because better information might later emerge.

6. If genuinely contested facts become central, the court may direct their determination under Part 7 of the Civil Procedure Rules 1998, or after disclosure and oral evidence. No such factual issue was central here. The limited information about how particular bidders emerged did not prevent approval because there was no evidence of wrongdoing and the successful bidder met the professionally selected criteria.

1. Court of Appeal (Civil Division): Dismissed both appeals and endorsed the decisions approving the intended sale.

2. High Court, Chancery Division — Rose J: Varied the earlier order and authorised the trustees to complete the intended sale after delay to the removal proceedings and deterioration in the trust’s financial position.

3. High Court, Chancery Division — Nicholas Lavender QC, deputy judge: Adjourned the approval application to the removal trial, while stating that he would otherwise have authorised completion and providing for authorisation unless the trial court ordered differently.