Andrew Frank Pitman Hubbard & Anor v Robert William Pitman Hubbard & Anor

In an account in common form, beneficiaries need not prove breach of trust. Trustees must establish the income received and justify expenditure claimed as chargeable to the trust. The burden for expenditure rests on the trustees, who should provide documentary and oral evidence and make reasonable efforts to reconstruct missing records. The court determines what was actually received and spent; it does not investigate what ought to have been done, as it would on an account based on wilful default.

A court may allow reasonable remuneration or an allowance where the trust’s nature and the trustee’s work justify it. A claimed specific expense cannot be replaced by an arbitrary lesser allowance without an evidential basis. The court may reject unsupported expenditure while postponing questions of breach of trust, limitation and consequential relief.

The claimants sought an account from the defendants concerning their dealings as trustees of land held under a declaration of trust dated 16 August 2005. The trust covered land developed and sold over a number of years. The defendants’ account included income from sales and rent, together with extensive claims for professional fees, borrowing costs, development expenses and remuneration.

Following procedural directions, the matter proceeded as a trial of objections to the defendants’ final account. The central issues were the proper valuation of Robert’s selected plot, the income to be brought into account, whether claimed expenditure had been incurred and was properly chargeable to the trust, and whether Robert was entitled to remuneration or an allowance.

1. Account in common form. The court confirmed that the account concerned what had actually been received, spent and distributed. It was not an inquiry into what the trustees ought to have done. The claimants were entitled to put the defendants to proof of expenditure without alleging or proving breach of trust.
2. Burden and evidence. The defendants bore the burden of proving expenditure. The court considered whether expenditure was plausible, supported by documents or oral evidence, incurred for the trust rather than personal purposes, and accompanied by reasonable efforts to locate missing records. The defendants’ limited documents, unreliable evidence and inadequate efforts to reconstruct records meant that most expenditure claims failed.
3. Income and plot valuation. Robert’s plot was defined as an undeveloped plot. Its value was therefore a proportion of the land sale price, not the value of a completed dwelling. The court valued Plot 69 at £50,690. Rental income was increased to £107,500.
4. Borrowing and legal costs. Trustees had power to borrow under section 6(1) of the Trusts of Land and Appointment of Trustees Act 1996 and section 8 of the Trustee Act 2000. They nevertheless had to prove that borrowing and interest were for trust purposes. The claimed borrowing costs and Williams Solicitors’ fees were not established. Barker Gotelee’s charges were recoverable.
5. Remuneration. No contractual or trustee-authorised entitlement to a fixed annual payment or 15% developer’s fee was proved. However, the trust contemplated development and Robert had undertaken substantial work. Applying the principles concerning allowances for work, risk and skill, the court allowed £375,000, rather than the £825,000 claimed.
6. Consequences. The account was adjusted for the stated income and disallowed expenditure. Questions of limitation, breach of trust, Ann’s liability and consequential relief were left for consideration after finalisation of the account. Costs were reserved.