Andrew Frank Pitman Hubbard & Anor v Robert William Pitman Hubbard & Anor [2025] EWHC 1538 (Ch)

[2025] EWHC 1538 (Ch)IN THE HIGH COURT OF JUSTICE CLAIM NO. PT-2023-000595BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALESPROPERTY TRUSTS AND PROBATE LISTMASTER MARSH (sitting in retirement)Venue Rolls Building, Fetter LaneLondon EC4A 1NL
Between
ANDREW FRANK PITMAN HUBBARDClaimantsNIGHAT HUBBARDClaimantsROBERT WILLIAM PITMAN HUBBARDDefendantsANN VERONICA HUBBARDDefendantsNIGEL WOODHOUSE instructed by Benchmark Solicitors LLP appeared for ClaimantsThe First Defendant appeared in person for in personJAMES FENNEMORE instructed by Sinclair Gibson LLP appeared for Second DefendantJUDGMENTHearing 10 June 2025This judgment will be handed down remotely by circulation to the parties' representatives by email and release to The National Archives. The date and time for hand-down is deemed to be 10:00am on Friday 20 June 2025
[1]At a hearing on 10 June 2025 the court dealt with consequential issues arising from the judgment handed down on 23 April 2025. The judgment followed the trial of an account between the parties in which the defendants were the accounting parties as trustees (in the case of the second defendant as a former trustee). The claimants and defendants are beneficiaries under the trust. The background and the issues that arose in the account are dealt with fully in that judgment.[2]This judgment provides reasons for a decision made during the ‘consequentials’ hearing. I will where it is convenient adopt the same shorthand as in the main judgment.[3]I rejected Mr Fennemore’s submission made on behalf of the second defendant that payments included in the account as ‘distributions’ to Mr and Mrs Chart and Mr and Mrs Jull from the proceeds of sale of the Countryside sale (respectively amounting to £845,727 and £374,088) should be treated as being proper discharges from trust funds and taken into account when calculating the claimants’ entitlement under the trust.[4]Mr Fennemore’s submissions are set out in his skeleton argument in the following way: “9. The procedure for the taking of an account is straightforward. The trustees submit an account showing what they say has been done with the trust fund. The challenging beneficiaries then raise any objections that they have as to what has been done with the fund.[10]In this case, there were 63 objections. Those objections did not include the £845,727 and £374,088 payments. The parties did not therefore adduce evidence directed to the propriety of those payments, and the Court did not hear argument on that topic. It is not now open to the Claimants to argue that those payments were improper and fall to be ignored when calculating the net distributable value of the fund. If they wished to make that argument, the payments should have been challenged in their objections.[11]Not only is that argument not now open to the Claimants, it is apparent from the evidence that the Court does have that there was good reason for those payments to be treated as distributions from the fund that fall to be deducted from the sums available for distribution to the beneficiaries. Mr Chart and Ms Levine had the benefit of a charge over SK248663 (the First Property) dated 2 August 2005 – that is before the Declaration of Trust dated 16 August 2005. The property settled onto the Trust was therefore subject to an already existing charge; the property in which the beneficiaries had an interest was therefore always subject to that charge, and it follows that their interest in the proceeds of sale of that property was an interest in the net proceeds once the chargee had been paid. The Court has less evidence about the position of the Julls – though that absence of evidence arises because this was not an issue raised by the Claimants – but again, the Court does know that as a condition of the payment of the £374,088, the Julls entered into a deed releasing the trust property “from any Security whether in law or equity”.[12]It is not, therefore, permissible for the Claimants to seek to challenge those payments, which must be treated as proper discharges on the part of the Defendants, and which therefore fall to be deducted when calculating the distributable value of the Trust fund.”[5]In essence the second defendant relies upon two points. First, that it is not open to the claimants at this stage to say that the two distributions were improper and, secondly, in the case of Mr and Mrs Chart, their charge registered against one of the trust properties provides a positive reason why the court should conclude that the distribution was proper. This second submission ignores the terms of the release entered into by Mr and Mrs Jull which made clear that the payment to them took into account development activity other than the development at the trust properties.[6]At the hearing, Mr Fennemore correctly submitted that the process of taking an account in relation to a trust and the purpose of trust accounts is to tell beneficiaries what the trust assets were, what has been done with them, what they currently comprise and what distributions have taken place: see Ball v Ball [2021] EWHC 1020 (Ch) at [24].[7]Distributions feature in the accounts produced by Thomas Quinn although, as I observed in the main judgment, the manner in which the accounts are presented is not entirely coherent. The accounts comprise an income and outgoings statement and balance sheet. The balance sheet includes an item deducting ‘distributions made and due (App 1)’ from the net profit figure. Although this was not explored at the trial, ‘distributions made and due’ would naturally mean distributions to beneficiaries with other payments from trust funds being treated as trust expenditure and properly included in the income and outgoings statement. A distribution would not naturally be the same as an item of trust expenditure that is deducted as part of calculating the balance that is available for distribution.[8]However, a hybrid position was adopted in the accounts with:8.1 None of the money paid to Robert by Mr and Mrs Chart and Mr and Mrs Jull treated as income, unlike, for example, bank borrowing. It is notable that the whole of the Chart investment was made before the trust came into being.8.2 Payments made to Mr and Mrs Chart and Mr and Mrs Jull (as shown in the purported 2014 spreadsheet) being treated as a cost incurred by the trust but the later payments to them not being categorised in that way.[9]It is also right to note that distributions were not the principal focus of the account. Distributions to the beneficiaries would naturally be in line for adjustment after objections relating to income and expenditure had been resolved when the net sum due to be distributed would be known.[10]The first and second defendant are the accounting parties and the trial dealt with the claimants’ objections to their account. It is right that the second defendant had no hand in the preparation of the account. However, she adopted a cautious approach to the account by saying in relation to each objection that did not disagree with any of the first defendant’s replies to the claimants’ objections and said that to the extent the court accepted the first defendant’s response, she adopted it.[11]The claimants made their position clear about the balance sheet and distributions in their objections.[12]As to the balance sheet the claimants said at objection 45: “The purported balance sheet is irrelevant in connection with the ordered account but for the avoidance of doubt Cs do not accept … amounts due /and/or whether distributions made by Ds authorised or proper …”.[13]A similar approach was adopted by the claimants at objection 47 where the claimants specifically addressed appendix 1, the distributions schedule.[14]In their responses to both objections, neither of the defendants engaged with the case put forward by the claimants about distributions. As the accounting parties, the burden was on them to establish that distributions, in sums claimed as trust expenses, paid to parties other than the beneficiaries were proper. They did nothing to discharge this burden. No positive case was put forward by them.[15]The claimants objected to the Chart and Jull payments shown in the costs incurred section of the accounts. These were objections 41 and 42 and were dealt with at paragraphs 243 to 248 of the main judgment. As the judgment notes at paragraph 247, the defendants’ evidence does not explain how the ‘investments’ said to have been made by Mr and Mrs Chart and Mr and Mrs Jull relate to the trust. The judgment goes on to say:
“Robert has not explained into which account the loans were paid in or for what purposes these sums were expended. Furthermore, the loans are not treated in the account as being loans to the Trust because, unlike bank loans, they do not appear as income.”
[16]There was also no explanation provided by the second defendant.[17]The Chart and Jull ‘investments’ were also considered earlier in the judgment: “64. Robert describes himself as a retired property developer. Like his brother he is also a retired police officer. He says he made arrangements with Mr and Mrs Chart and Mr and Mrs Jull for them to invest in his proposed development of High Trees. He undertook a development at 15 Barrowgate Road and 11 Russell Gardens, Kensington but says nothing about them in his statement albeit that at least one of them overlapped with the High Trees development. The Chart and Jull investments totalled £375,000. In making those contributions they acquired, as between themselves and Robert (and possibly Ann), a share of the future development value in return for providing working capital to pay professional fees and carry out works of renovation to the Bungalow. Their investments were repaid in 2021 and 2022 respectively at £845,727 and £374,088.22. In the case of Mr and Mrs Jull the repayment included sums in respect of 15 Barrowgate Road and 11 Russell Gardens.” [my emphasis]

[my emphasis]

[18]The judgment includes, therefore, findings of fact that the funds provided by Mr and Mrs Chart and Mr and Mrs Jull were not loans to the trust and any interest they acquired in the development related to Robert’s and possibly Ann’s shares. The funds paid were not income received for the trust and payments to them were not a cost incurred by the trust.[19]It follows that in light of these findings of fact, it is not open to the second defendant to assert that the purported distributions were properly made.[20]Mr Fennemore relies upon the charge registered in favour of Mr and Mrs Chart before the trust was declared. However, although part of the land that was included in the trust (the charge relates only to title number SK248663) was charged it is not correct to say that the trust was created subject to the charge. In light of the findings of fact made in the main judgment the charge only related to Robert and Ann’s shares and not to the claimants’ shares.[21]In summary therefore, the claimants made their position plain in their objections. The defendants did nothing in their responses to the objections to put forward a positive case about the distributions. The issues that were dealt with at the trial were agreed between the parties and rightly, on the basis of the position taken by the defendants, it was not thought to be necessary for the distributions account to be added to the long list of issued to be tried. In any event, the findings of fact made in the main judgment suffice to resolve the position in favour of the claimants.[22]At the hearing I expressed surprise that the second defendant felt it was appropriate to take this point about distributions which in my judgment has no merit whatsoever.