Wight & Anor v Olswang

Factual and Procedural Background

This appeal arises from an order made by a judge in the Chancery Division under CPR Part 24, summarily dismissing claims for breaches of trust against a trustee of a settlement established in 1982 for the benefit of the settlor's children, who are the claimants. The trustee, a solicitor in private practice, was appointed in 1991 alongside a co-trustee whose claims were withdrawn before the hearing. The claimants alleged breaches relating to the trustee's refusal to consider a share purchase bid in May 1991 and the failure to implement a trustee resolution to sell half the remaining shares in September 1991. The shares in question were in a publicly quoted company forming the principal asset of the settlement. The claimants commenced proceedings in 1997 seeking damages for breach of duty. The appeal was granted permission by the judge to challenge the summary dismissal of their claims.

Legal Issues Presented

1. Whether the claimants have a real prospect of succeeding in claims for breach of trust based on the trustee's refusal to consider a bid for shares and failure to implement a resolution to sell shares.
2. Whether the "no reasonable trustee" test applies to the alleged breaches and if the claimants must plead and prove that no reasonable trustee could have done other than sell the shares at the relevant times.
3. The proper application of causation principles in assessing loss resulting from the alleged breaches, including the effect of subsequent events on causation.

Arguments of the Parties

Appellants' Arguments

• The trustee breached fiduciary and care duties by failing to warn the settlor of risks under the Companies Securities (Insider Dealing) Act 1985 before accepting the trustee appointment.
• The trustee failed to properly consider risks posed by the 1985 Act and did not seek appropriate advice or take steps to avoid conflicts preventing him from participating in decisions about selling shares.
• If the trustee had properly considered these matters, the trustees would have accepted the May 1991 bid and sold all remaining shares at 210p each, avoiding subsequent losses.
• The trustee also failed to implement the September 1991 resolution to sell half the remaining shares, causing further diminution in the trust fund's value.

Respondent's Arguments

• The claims should be summarily dismissed as the claimants cannot show that no reasonable trustee could have decided not to sell the shares in May or September 1991.
• Any breach of duty in May 1991 was overtaken by events in September 1991, so causation for loss lies in the non-implementation of the September resolution rather than the earlier refusal to consider the bid.
• The decision not to sell shares was one that a reasonable trustee could have reached, meaning the claimants cannot succeed on the breach of trust test.

Table of Precedents Cited

No precedents were cited in the provided opinion.

Court's Reasoning and Analysis

The court analyzed the claims by distinguishing the alleged breaches from the consequences of those breaches. The judge below had applied a "no reasonable trustee" standard to the decision not to sell shares, treating the retention of shares as the breach. The appellate court found this to be a mischaracterization of the claims, which instead allege that the trustee refused to consider a bid due to a conflict arising from insider dealing legislation, thereby placing himself in an untenable fiduciary position. The court emphasized that the breach was the refusal to consider the bid, not the mere retention of shares. Regarding the September 1991 events, the court noted that the trustees had resolved to sell half the shares but failed to implement that decision, which also constituted a potential breach. On causation, the court found it premature to determine at the summary stage whether losses were attributable to the May or September breaches, stating that these factual matters require trial evidence and full argument. Consequently, the court allowed the appeal to proceed to trial rather than dismissing the claims summarily.

Holding and Implications

The court ALLOWED THE APPEAL and set aside the summary dismissal of the claims. The claims against the trustee for breach of trust relating to the refusal to consider a bid and failure to implement a sale resolution were held to have a real prospect of success and must proceed to trial.

The direct effect of this decision is that the claimants' case will be fully heard with disclosure, evidence, and argument. The court did not decide the merits of the claims but clarified the proper legal approach to the issues of breach and causation at the summary judgment stage. No new precedent was established beyond the procedural ruling allowing the matter to proceed to trial.