SELECT LIFESTYLES LIMITED v DEAN NORMAN

A fiduciary’s duty to account requires a narrative account of dealings with assets, enabling beneficiaries to understand their rights, liabilities and obligations. It is distinct from liability for misfeasance, and a beneficiary need not prove breach of trust to enforce it. A summary judgment application is ordinarily appropriate for such a claim and involves a low threshold. The court’s discretion to order an account requires consideration of any account already provided, its adequacy, the information available, the need for further information, the account’s utility and the reasons for seeking it. Broad or untargeted disclosure requests concerning authorisation or liability do not generally prevent the fiduciary from accounting. A specific issue may appropriately be determined summarily where that course is proportionate.

The claimants sought a summary judgment order requiring Dean Norman, a fiduciary involved in managing the finances of three claimant entities, to provide an account of specified loan transactions. Alternatively, they sought an interim account or directions for a preliminary issue. Mr Norman relied principally on a forensic accountants’ report and sought extensive further documents.

The court first dealt with defects in the application and the late service of Mr Norman’s witness statement. It then considered whether a duty to account existed, whether the report was an adequate account, whether missing documents hindered preparation of an account, and whether an account would serve a useful purpose.

1. Preliminary points. The court exercised its case management powers under Civil Procedure Rules 1998 rule 3.10 and directed that the application proceed as a summary judgment application. Any substantive defect had been cured, and Mr Norman’s witness statement, served one day late, was admitted notwithstanding the absence of a good reason for delay. The court also treated the application as including an interim-account application.
2. Nature of the account. An account is a narrative account by the fiduciary of dealings with assets under his or her control. It is not equivalent to ordinary company financial statements. The account must provide sufficient information and supporting documentation to enable beneficiaries to understand the relevant transactions and their rights, liabilities and obligations.
3. Duty and threshold. Mr Norman owed fiduciary duties in relation to each claimant separately. A beneficiary seeking to enforce the duty need establish the duty to account; proof of breach of trust is unnecessary, except insofar as the complaint concerns failure to account. Knowledge of the transactions does not discharge the fiduciary’s obligation.
4. Discretion. The court considered whether an account had been provided, whether it was adequate, and the overarching factors identified in Ball v Ball and Al-Dowaisan v Al-Salam, including information already available, the need for further information, utility and the motivation for seeking an account. The forensic report was inadequate because it did not constitute Mr Norman’s narrative account and did not explain the relevant lenders, borrowers, sources, destinations and circuitous movements of funds.
5. Untargeted requests for extensive bank statements and emails were not necessary to prepare the account. Limited HSBC statements were to be provided if available, but their previous absence had not prevented preparation of an adequate account. The account had substantial utility in clarifying the claimants’ potential liabilities and avoiding duplicated litigation.
6. The court granted summary judgment on the narrow issue and ordered an account, verified by affidavit, covering the transactions in the two schedules to the 10 February 2021 letter or an updated schedule. A penal notice was not presently necessary. The claimants received their application costs on the standard basis, with £65,000 payable on account; indemnity costs were refused.

The judgment records an earlier ruling during the same hearing that the application was properly to be treated as a summary judgment application. No appellate history is stated.