UK: Contentious Trusts And Estates

Last Updated: 1 July 2011

Bircham Dyson Bell LLP, like everyone involved in the trusts world, is seeing not only an increase in litigious disputes relating to trusts and estates, but also many matters that are showing clear signs of contention and the question is whether a satisfactory settlement will be possible. As a result, Helen Ratcliffe, Head of Private Wealth, and Richard Langley, Head of Litigation, are delighted to welcome Nicholas Holland to Bircham Dyson Bell as the new Head of Contentious Trusts and Estates. Nick's heavyweight experience in this field will draw additional strength from the knowledge and expertise of the existing Contentious Trusts and Estates Team, which crosses the boundaries of the Private Wealth and Litigation Groups.

Why are contentious trusts and estates so important now?

Cases soar

When their expectations are disappointed people turn increasingly to litigation, and the fallout of the economic crisis in 2008 means that there are currently many disappointed people. Figures from the Ministry of Justice show that the number of claims in the High Court involving trusts jumped nearly 240% between just 2008 and 2009.

It would not be surprising if that trend is maintained, or even accelerated - and of course the cases that have actually reached court are only a fraction of those where a dispute has arisen and the threat of litigation is seen as a lever to achieve a good outcome.

The statistics in the High Court are matched by a seemingly inexorable rise in litigation in the offshore jurisdictions. This will often involve London advisers for some angle of the problem.

The demise of the Hastings–Bass principle?

The Hastings–Bass principle has led to much litigious activity in recent years, both offshore and onshore, as trustees in particular have sought the court's blessing to avoid the consequences of actions that had turned out to be unfortunate. The Court of Appeal in London has recently handed down a robust judgment saying that the law had "taken a wrong turn" by developing the so-called principle in Hastings-Bass, and that relief will no longer be available on this basis.

If that judgment stands (it is not yet certain whether there will be an appeal to the Supreme Court) then the scope for a relatively consensual resolution of difficulties will be greatly reduced, and an increase in hostile litigation against advisers can be expected. The decision will also, if it stands, leave the UK strangely out of kilter with the offshore jurisdictions where the principle has been flourishing and would have been expected to be followed. London SW1H 0BL

Meet the Team

Our Contentious Trusts and Estates Team comprises nine partners and seven assistants who share a niche specialism that draws on both our Private Wealth and Litigation Groups. Our Private Wealth Group is noted for its exceptional expertise in international as well as UK situations, and Nick's wide experience of multijurisdictional trust-related disputes complements this.

A few pointers about some of the key members of the Contentious Trusts and Estates Team:

Nicholas Holland, Head of Contentious Trusts and Estates

Nick's practice is a double specialism: contentious trusts and estates on the one hand, and commercial litigation on the other, deriving strength and breadth from the fact that he works at the nexus of private wealth, litigation and commercial law. At various times he has represented each of trustees, settlors, beneficiaries and protectors, generally in a cross-border context. In particular, he has represented institutional trustees and private clients in connection with all manner of disputes arising from the creation, administration and winding up of trusts or estates, ranging from investigations by the Serious Fraud Office and regulatory bodies through to disputes about the beneficiaries' respective entitlements. He is a member of ACTAPS (The Association of Contentious Trusts and Probate Specialists).

Some examples:

While working as lead counsel in the Cayman Islands Nick defended the institutional trustee of a commercial trust in a nine figure dispute over the net asset value of a hedge fund. He advised another institutional trustee, and instructed legal teams in the UK, USA, Switzerland and the Cayman Islands, in connection with the trustee's response to investigations led by the Serious Fraud Office and Securities and Exchange Commission as well ancillary investigations by the Swiss Federal Prosecutor. He advised an institutional trustee in connection with a nine figure potential fraud on the power. In another commercial trust he advised the institutional protector on its obligations to respond to various allegations that the trustee and others were in a conflict of interest.

Simon Weil, Partner

Simon has been a Partner in the firm for 28 years. A member of ACTAPS and previously Head of our Contentious Trusts and Estates Team, Simon was instrumental in recruiting Nick as its new head.

Simon looks, in the context of disputes, for fiscal planning designed to prevail upon the parties to draw back from confrontation in court, if at all possible. Where litigation is appropriate, he works as a team with his colleagues to devise creative, practical and cost-effective solutions to what are often intractable problems. This is particularly appropriate when there are complex family and financial arrangements that need to be unravelled in a sensitive manner.

Some examples:

A particularly interesting case involved acting for the two minor beneficiaries of a Cayman Islands trust worth in excess of Ł100m in a dispute that had arisen between the trustee and the clients' father. He, although excluded from benefit under the terms of the trust, claimed that he was entitled to receive $1 million per annum from the trust for life. As a result of a robust stance, designed to achieve a settlement which would both minimize the loss to the trust fund and avoid a contentious court hearing, but which always included the option of going through with a trial, the dispute was finally resolved, over three years after it had begun. Claims brought under the Inheritance (Provision for Family and Dependants) Act 1975 comprise an expanding element of the many cases in which Simon becomes involved.

Helen Ratcliffe, Head of Private Wealth

Helen heads one of the largest Private Wealth departments in London, with 13 partners and 23 other fee earners. She has a very busy practice advising both trustees and beneficiaries of onshore and offshore trusts about UK tax and trust issues. Increasingly, she is involved in trying to prevent disputes escalating into hostile litigation.

Some examples:

Helen has recently been advising offshore trustees on a restructuring for which it was eventually necessary to seek the directions of the court in conjunction with the local legal team. She has also recently advised another set of offshore trustees on the resolution of issues created by pre-existing imperfect documentation, working in conjunction with local advisers and English Counsel to find a court-blessed solution. Another current matter involves advising the executor and trustee of an onshore Will on a dispute which has arisen with their co-executor and trustee.

John Darnton, Partner

John's practice is principally based in England but many of his cases have an international flavour. He advises in connection with a wide range of disputes from those relating to the validity of Wills and challenges to trustees' decisions, to claims for financial provision following death. He also advises trustees in connection with matrimonial disputes including the taking of protective action. He is an advocate of alternative dispute resolution methods where appropriate, and a trained collaborative lawyer. He has been involved in a number of successful mediations which have avoided expensive trials.

Some examples:

John recently acted for the beneficiary of various family trusts seeking information from an unsatisfactory trustee based in the Isle of Man, and ultimately compelled a change of trustee. He has also been acting with Simon Weil in connection with a substantial claim for financial provision in respect of a multi-million pound estate that has been in the deceased's family since the 1400's. He has recently settled a probate dispute involving a testator who left estates both in this country and in Bosnia, and is presently advising in a case involving substantial sums held in Switzerland where the key issue is whether the deceased died domiciled in England or Persia. John acted in the important mistake case of Wolff v Wolff.

Richard Langley, Head of Litigation & Dispute Resolution

Richard is head of our Litigation and Dispute Resolution department consisting of 8 partners and 18 other lawyers. His wide-ranging disputes resolution practice includes complex negligence claims, including those relating to offshore matters.

Some examples:

Richard has acted for clients who came to him in relation to losses made as a result of the earlier unsuccessful implementation of tax avoidance structures. He is currently acting for a client pursuing a secret trust claim over assets alleged to be hidden in Swiss bank accounts and in the British Virgin Islands.

Elizabeth Neale, Partner

Liz joined Bircham Dyson Bell in 1998, becoming a partner in 2008. She has a broad private client practice advising both UK and international clients. Inheritance tax is a specialism, and her particular interests include international succession and estate administration, including estates with a multi-jurisdictional dimension.

Some examples:

Liz's contentious experience includes a leading case on domicile - Morgan v Cilento, where she acted in tandem with litigator John Darnton. She is currently advising on the inheritance tax issues arising in a complex international trust dispute where key uncertainties include the identity, tax status, and even the number of the settlor(s). Closer to home she also advises charities as both administrators and beneficiaries of estates.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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