Royal National Lifeboat Institution & Ors v Headley & Anor

A beneficiary’s right to an accounting is distinct from an automatic right to every trust document or every category of information. The court’s supervisory jurisdiction requires disclosure sufficient to enable the beneficiary to appreciate, verify and, if necessary, vindicate rights against the trustees.

A capital remainderman may obtain an account of trust capital before the interest falls into possession, including capital receipts, capital expenditure and supporting vouchers. The remainderman is not ordinarily entitled to accounts of income paid to prior income beneficiaries, or expenses charged to income, where that information does not affect the remainderman’s interest.

Trustees who unreasonably refuse to account may be ordered to pay costs personally and may lose their indemnity from the trust fund for costs not properly incurred.

Five charitable remaindermen sought, under Part 8 of the CPR, an order requiring the trustees of a will trust to provide accounts and information. The claim concerned the period from 1 October 2007 and followed years of unanswered requests.

The first defendant had died before issue and was removed from the proceedings because the surviving trustee held the relevant trust information. The substantive dispute concerned the scope of the claimants’ entitlement as capital remaindermen while two prior life interests continued: whether they could require capital accounts, income accounts, investment information, trustee-expense details, trust instruments and confirmation of the trustees’ and life tenant’s status.

1. Disposition. The claim succeeded in substantial part. The surviving trustee was required to provide capital accounts and investment lists from 1 October 2007, together with supporting documents and vouchers for capital expenditure. The claimants were not entitled at that stage to accounts of income accrued or paid to the life tenants, or expenses charged to income.
2. The statement in Armitage v Nurse [1998] Ch 241 means that every beneficiary, including a beneficiary in remainder, is entitled to an accounting and to documents supporting it. It does not mean that all beneficiaries receive identical information. The necessary disclosure depends on what is required in the circumstances to protect the beneficiary’s rights.
3. The right to an accounting and to inspect trust documents derives from the court’s inherent jurisdiction to supervise trust administration, as explained in Schmidt v Rosewood Trust Ltd [2003] 2 AC 709. Disclosure is therefore fact-sensitive rather than automatic.
4. A capital remainderman may obtain information concerning capital before the interest falls into possession. The account should identify capital receipts, capital expenditure and relevant investment information. The court applied Nestle v National Westminster Bank (1988) 10 Tru LI 112; [2000] WTLR 795, holding that a capital beneficiary has no present entitlement to accounts of income in which the beneficiary has no interest. After the surviving life interest ends, the claimants will be entitled to an account of future capital and income.
5. The claimants were also entitled, absent special circumstances, to see instruments appointing or retiring trustees and to obtain confirmation of the current trustees, applying O’Rourke v Darbishire [1920] AC 581 and Murphy v Murphy [1999] 1 WLR 282. The trustees also had an obligation to inform remaindermen when their interests fell into possession, by extension of Burrows v Walls (1855) 5 De GM&G 233 and Brittlebank v Goodwin (1868) LR 5 Eq 545.
6. The surviving trustee’s prolonged and unwarranted refusal to engage justified an order for the claimants’ costs, including the costs of removing the deceased defendant. Under Trustee Act 2000 s 31(1), CPR r 46.3 and Practice Direction 46, costs were not properly incurred for the benefit of the trust, so the trustee was denied reimbursement from the trust fund. Costs were summarily assessed.