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The Law of Equity 17035006
IN THE HIGH COURT OF JUSTICE
Claim No: PT-2020-61137
BUSINESS AND PROPERTY COURTS IN HATFIELD
PROPERTY, TRUST, AND PROBATE LIST (ChD)
BETWEEN:
LADY MARGARET LASCELLES
Claimant
-and(1) CAPTAIN THOMAS MOUNTBATTEN
(2) MR WINSTON TOWNSEND
PARTICULARS OF CLAIM
The Parties
1. The C
is the sole beneficiary to a trust set up by
her aunt, The Right Honourable Viscountess Sandringham. Lady
Lascelles resides at 21 Piccadilly Street, Chemersham, Hertfordshire,
HP57 1CS.
2. The First Defendant
of 1 Balmoral Street,
Chemersham, Hertfordshire, HP57 1VI is the sole trustee to the same
trust. Captain Mountbatten was appointed by The Right Honourable
Viscountess Sandringham due to his previous service in the Royal Air
. He is a
close friend that has been trusted by the family for 50 years.
3. The Second Defendant
is a financial advisor to the trust.
He lives at 10 Equerry Avenue, Chemersham, Hertfordshire, HP57 6GC
although, he has been in the United States for a month. Mr Townsend has
provided financial advice to the trust and the families on many occasions
and operates on a contract for service basis.
The Facts
4. The trust was created on 11th April 2002 for a total sum of £2,000,000 and
was drawn up by Akindele, Foskett and Tan Solicitors.
5. Lady Lascelles is in a dispute with Captain Mountbatten and Mr
Townsend. A Part 7 Claim Form has been issued and preliminary
information from Lady Lascelles has been provided.
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6. The trust instrument states:
10 Powers of Investment
10.1 The application of the General Power of Investment under the Trustee
Act 2000 is excluded.
10.2 The Trustee(s) may invest in public limited companies provided that:
a) Reasonable care is taken to ensure that any investments create a
diverse portfolio.
b) Advice from a suitably qualified professional is obtained prior to making
any investment.
c) Any investment in any one company must be for less than 10% of the
initial trust capital.
d) Any investment is reviewed on a regular basis for its ongoing suitability.
7. On 3rd March 2020, Captain Mountbatten invested £200,000 of the trust
money in Crownwhich is
10% of the initial trust capital. Mr Townsend advised this was a sound
investment and facilitated the purchase by acquiring the shares on the
8. Initially, there were good returns with the share price, but the company
was forced to repay the value of a contract after failing to deliver. The
company went into administration on 2nd November 2020 and the trust
lost its investment.
9. Mr Townsend told Captain Mountbatten they had received a special rate
for their investment however after the company went into administration it
10. Mr Townsend was contracted by the company on 10th February 2020 to
broker deals. The contract contained the following clauses:
31.1 You will receive commission for each investment in the company that
you broker. The rate of commission will be as follows:
a) Investments of under £10,000 1% of the invested sum
b) Investments of between £10,000 and £99,999 3% of the invested sum
c) Investments of between £100,000 and £199,999 5% of the invested
sum
d) Investments of £200,000 and over 10% of the invested sum
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32. Gratuity Stock Options
32.1 Upon starting to act as our agent you will be granted a stock option in
the company of 5,000 shares underwritten by the company.
32.2 You must notify the company within 28 days of starting to act for the
company if you wish to take up this option.
32.3 If you take up the option you shall be prohibited from selling the shares
for a period of three years from the date of exercising the option. However,
you may make a gift of the shares, i.e., for no consideration, in full or part,
during this period.
11. Mr Townsend exercised his stock option on 20th February 2020 and gifted
his 5000 shares in the company on 3rd March 2020 to Captain
Mountbatten in a personal capacity to procure the investment.
The Defendants duties to the Claimant
12. Captain Mountbatten owes the following fiduciary duties:
a. A duty not to profit from his position
b. A duty to avoid conflicts of interests
c. A duty to not to act for their own advantage
d. A duty to act in good faith
e. A duty not to accept a bribe
13. Captain Mountbatten owes the duty to act in accordance with the trust
instrument as the sole trustee.
14. Mr Townsend owes the duty to act with reasonable care and skill under
the Financial Services Act 2000 and a duty of care under contract and
common law.
Allegations of breach
15. Captain Mountbatten has breached the trust. By investing 10% of the
initial trust capital, Captain Mountbatten breached clause 10.2(c) of the
trust instrument.
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16. Further or alternatively, Captain Mountbatten has breached the following
fiduciary duties:
a. The duty not to accept a bribe. Captain Mountbatten accepted
5000 shares in the company from Mr Townsend at no cost. This
was a bribe as it induced Captain Mountbatten to make the
investment and Mr Townsend procured the investment by
arranging for these shares to be transferred.
b. The duty not to act for their own advantage. For personal gain,
Captain Mountbatten invested £200,000 of the trust money in the
company in order to receive 5000 shares in a personal capacity.
17. Mr Townsend assisted Captain Mountbatten with the breach of trust by
advising Captain Mountbatten to invest in the company and taking it upon
himself to facilitate the purchase.
18. Mr Townsend acted dishonestly when assisting Captain Mountbatten in
the breach. Mr Townsend has satisfied the dishonesty test from Ivey v
Genting (UK) [2017]:
a. As the financial advisor to the trust, Mr Townsend was aware of
Clause 10.2(c) and as a broker for the company, Mr Townsend
knew shares were being freely traded, there was no special rate
for bigger investments and the larger the investment, the higher
his commission.
b. An ordinary, decent member of society with the same knowledge
as Mr Townsend would perceive his actions as dishonest. Mr
Townsend was aware that he was providing false information
about the rate of investment to Captain Mountbatten and abused
his position as financial advisor to the trust to encourage Captain
Mountbatten to invest £200,000 in the company even though he
knew this would be a breach of trust in order to gain a higher
commission.
19. Further or alternatively, Mr Townsend has received trust property
unconscionably when he received 10% of the invested sum as
commission from the company. Following El Ajou v Dollar Land Holdings
[1994]:
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a. There was a disposal of the
,
when £200,000 of the trust money was invested in the company
and clause 10.2(c) of the trust instrument was breached.
b. There was beneficial receipt of the assets by Mr Townsend which
are traceable as representing the assets of the Claimant. The
assets can be traced as Lady Lascelles is the equitable owner of
the trust property as sole beneficiary and there is a fiduciary
relationship between Captain Mountbatten, who disposed of the
property, and Lady Lascelles, the beneficiary of the equitable
interest in the trust property.
c. Mr Townsend knew that the trust property was disposed of in a
breach of trust as he was aware of the terms of the trust
instrument and assisted in the breach.
Remedies
20. The claimant has suffered the loss of £200,000 from the initial trust
capital.
21. Against the First Defendant the claim seeks:
a. A freezing injunction to prevent the Defendant from dealing with or
dissipating his assets due to concerns about his ongoing solvency,
b. A search order to secure documentary evidence of
communications between the two Defendants.
22. Against the Second Defendant the claim seeks:
a. A freezing injunction to prevent the Defendant from dealing with or
dissipating his assets due to concerns about him leaving this
jurisdiction.
23. The Claimant is claiming financial relief of £230,000, £10,000 for the court
fee and £30,000 for legal representative costs, totalling at £270,000.
AND THE CLAIMANT CLAIMS:
1. A freezing injunction ordering the First Defendant and Second Defendant
to pause dealing with or dissipating their assets,
2. Damages,
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3. A search order against the First Defendant which will allow
solicitors to enter their premises to search for, copy or remove
documentary evidence,
4. Costs.
JESSICA MILLER
Statement of Truth
The claimant believes that the facts stated in this particulars of claim are true. The
claimant understands that proceedings for contempt of court may be brought against
anyone who makes, or causes to be made, a false statement in a document verified
by a statement of truth without an honest belief in its truth.
Signed:
Peter Nourse
Print Name: PETER NOURSE
Role: Solicitor and Senior Partner
Date: 04/12/2020
Word Count: 1498
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