A beneficiary of a discretionary trust was persuaded by a Barrister, to issue Statutory Demands to two executors personally.
Case was dismissed. A different Barrister represented him and agreed with the judge that the Stat Demand wasn’t the correct vehicle. Barrister 1 stands by his decision. Who is correct ? And is there any other avenue open to the beneficiary who has been waiting four years for his legacy.
I would opine that who is correct would depend on the facts regarding the alleged debt.
What to do next ? Gather the Evidence and shake the tree !
Had the Executors formally admitted in writing that they owed the Beneficiary a specific sum of money, or the Beneficiary had obtained a Court Judgement that the Executors do pay the Beneficiary a specific sum of money and the Executors had not paid, then the Beneficiary could have used a Statutory Demand as a “ gun to the head “ vehicle to persuade the Executors to cough up or face a Bankruptcy Petition to the Court, then Barrister 1 would probably be correct.
Without a formal admission of the alleged debt and the amount due by the Executors/Trustees or a Court Judgement then Barrister 2 would probably be correct as the Beneficiaries claim would have been premature in the circumstances and the Bankruptcy route to extracting payment would have been inappropriate.
I presume that the Executors/Trustees filed an Application to Set Aside the Statutory Demand, giving their reasons ( which you have not stated), and the Judge Set aside the Statutory Demand. Or did the Beneficiary actually file a Bankruptcy Petition that the Judge dismissed ( assisted by Barrister 2 admission that a Stat Demand in the circumstances of the Beneficiaries case, wasn’t the correct vehicle) ! ?
So no Appeal route and no chance of succeeding in another Stat Demand option until such time as the Beneficiary either has a formal admission from the Executors of a fixed sum debt payable or a Court judgement for a debt.
At this point the frustrated Beneficiary could now potentially take different routes based upon the documentary evidence available - or obtainable.
A Beneficiary could make a formal Subject Access Request to the Executors and Trustees and all the relevant Solicitors and Accountants acting, together with a Civil Procedure Rules request for document disclosure if indeed as a discretionary Beneficiary he has a claim…
Based upon the Evidence that becomes available then an appropriate course of action can be taken.
See here;
https://ico.org.uk/for-the-public/getting-copies-of-your-information-subject-access-request/
https://www.justice.gov.uk/courts/procedure-rules/civil/rules/pd_pre-action_conduct
https://www.justice.gov.uk/courts/procedure-rules/civil/rules/part31
Disclosure before proceedings start
CPR 31.16
(1) This rule applies where an application is made to the court under any Act for disclosure before proceedings have started.
(2) The application must be supported by evidence.
(3) The court may make an order under this rule only where–
(a) the respondent is likely to be a party to subsequent proceedings;
(b) the applicant is also likely to be a party to those proceedings;
(c) if proceedings had started, the respondent’s duty by way of standard disclosure, set out in rule 31.6, would extend to the documents or classes of documents of which the applicant seeks disclosure; and
(d) disclosure before proceedings have started is desirable in order to –
(i) dispose fairly of the anticipated proceedings;
(ii) assist the dispute to be resolved without proceedings; or
(iii) save costs.
(4) An order under this rule must –
(a) specify the documents or the classes of documents which the respondent must disclose; and
(b) require him, when making disclosure, to specify any of those documents –
(i) which are no longer in his control; or
(ii) in respect of which he claims a right or duty to withhold inspection.
(5) Such an order may –
(a) require the respondent to indicate what has happened to any documents which are no longer in his control; and
(b) specify the time and place for disclosure and inspection.
Precedent letter example
Where disclosure is not forthcoming.
“FAO: Data Protection Officer
XYZ Solicitors and XYZ Personal Representatives / Trustees
Dear Sirs/madams,
THIS COMPLAINT REQUIRES YOUR URGENT ATTENTION: Subject Access Request dated ( X date) for which the deadline for compliance was ( Y date - one calendar month after X date)
I ( name of Beneficiary ) of ( address) and ( email address )write further to the SAR notice I sent to you on (X date) by email in order to bring all disclosure up to date. You have failed to discharge your legal obligations to comply with the request I made. You have failed to provide a complete copy of my personal data by the deadline of ( Y date).
This letter of mine constitutes a formal complaint.
- I write to notify you that:
a. You have not provided my records in time. The law says that you must provide data within one month of my request. I made my request on 4 January 2025 and therefore you should have provided the records by no later than 5 February 2025.
b. In order to comply with my request, you should have provided me with allpersonal data you hold about me within the parameters I requested. This should have included all internal and external emails that relate to me, meeting notes, notes of any telephone calls, documents such as Trust documents, accounts, financial statements, decisions made, Counsels opinions, experts’ advice, accountants’ advice, and reasons for delaying payments to me and my appointed lawyers. I consider that you have clearly not made any disclosure and you have withheld;
( by way of example - amend as necessary )
i. Information about me and my interests and assets,
ii. information about “A”, the ABC Property Trust and the proceeds of sale of “CDE”, and its current whereabouts in all of which matters I am a Beneficiary,
iii. the Estate of ( “X” )
iv. Legal advice documents – trustees are entitled to take legal advice where they consider it necessary. Where trustees obtain legal advice and pay for that from the trust fund then even though the advice may be privileged as against third parties, it may not be privileged as against the beneficiaries, and therefore could be discloseable. In Lewis v Tamplin [2018] the court confirmed that even where trustees had provided information, the trustees could not rely on legal professional privilege as the basis to refuse disclosure of legal advice where the advice was obtained for the benefit of the trust as a whole (and not for the trustees personally in relation to potential liability for breach of trust). In that case the court held that the beneficiaries did not have to show suspicious circumstances before the court could exercise its supervisory discretion to order disclosure (although the court was satisfied that there were suspicious circumstances).
- You must take the following steps as a matter of urgency:
a. Provide me with a copy of all my data which is now overdue up to date as of the date of actual disclosure.
b. Provide me with the records that are missing from my data. Please refer to paragraph 1(b) including 1(b) i., ii., iii., iv. for the records that I consider are missing.
- Given your failure to comply with the notice dated ( X date ) and taking into account any response I receive to this letter, I reserve the right to make a complaint against you to the Information Commissioner and the Solicitor’s Regulation Authority and/or to pursue a claim under the data protection legislation against you in court for compensation and/or for an order requiring compliance. I therefore encourage you to deal with my request as a matter of urgency and promptly.
Complaint to the Information Commissioner
- The Information Commissioner’s Office is the UK’s independent body that upholds information rights. If a complaint is made, the commissioner will investigate whether there has been a breach of the law. The commissioner has the power to issue an enforcement notice to the organisation requiring certain steps to be taken. If the organisation fails to comply with that notice, the commissioner can issue a penalty notice against the organisation requiring a fine to be paid.
Claims and Proceedings against you under the data protection legislation
-
I am entitled to pursue a legal claim and/or proceedings against you because you have not followed the data protection legislation. I have suffered loss and damage as a result of your breach of the law. I could therefore ask for compensation from the court, and I could also ask the court to make an order requiring you to take steps to follow the legislation.
-
I reserve the right to seek any legal costs in respect of any such claims and/or proceedings against you.
Claims and Proceedings against you under other Civil and Criminal Proceedings
-
My request is also made in contemplation of both Civil and Criminal Proceedings against you and therefore my request is not just for information as a Beneficiary of the Trusts and Estate as of right, but also constitutes a Freedom of Information request, a Subject Access Request and also a disclosure request under the Civil Procedure Rules with a view to limiting costs, narrowing the issues and refining the Particulars of Proceedings to follow.
-
I intend to hold you XYZ, my Trustee to account and to have my Trusts properly administered and distributed within a reasonable time. I also intend to hold you the Personal Representatives to account and to have my late ( Mother’s / Father’s ) Estate properly administered and distributed within a reasonable time.
-
I also intend to recover my losses due to Causation etc and unreasonable delays and to seek damages caused by your coercive control and financial and economic abuse contrary to the Domestic Abuse Act. Economic Abuse is a form of Domestic Abuse and is included within the definition of Domestic Abuse Act 2021. It involves the control of a Partner’s or family member’s ( Brother/Sister etc) access to and use of resources including money and the things that money can buy, a home etc.
( include if a family member such as a Brother or Sister is a Personal Representative or Trustee ( even if not living together) and is unreasonably delaying the distribution of an Estate or Trust). See;
- I refer to the articles below that outline a Beneficiaries rights to information.
Steps to be taken
- As set out above at paragraph 2, please provide the requested information by return. All of my rights are reserved accordingly.
Yours sincerely,”
—-
Once you have obtained documentary evidence you could then approach the Court to hold the Trustees to account and to have the Trust properly administered and distributed within a reasonable time and obtain a Court Order.
Should the evidence prove Domestic Abuse in the context of coercive control and financial and Economic Abuse then you can report the matter to the Police and even issue your own proceedings in a civil or Criminal Court for the alleged Criminal offence and claim compensation etc.
The offence if proved carries a maximum of 5 years in jail and an unlimited fine on top of compensating the victim !
PR’s and Trustees who are family members and are abusing their powers to frustrate and drag out distribution to deliberately cause relatives financial and economic harm can now face severe punishment for all the sociopathic drama inflicted due to these new laws.
The discovery of the potential harsh punishment and criminal record can encourage malign actors to atone for their very naughty sins and quickly pull their fingers out !
Lawyers acting for malign actors may also find themselves facing a claim for “dishonest assistance” and become liable jointly with their client !
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A lot to digest here. I greatly appreciate the information.
I’m the Trustee for the settlors minors who are also beneficiaries once they come of age so have been watching this with interest.
It did occur to me last night why didn’t barrister 1 suggest a judgment first, though I understand there’s a monetary limit to that which this exceeds.
Would the fact that the solicitor confirmed in writing that the beneficiary was owed his legacy not be sufficient?
Yes, they applied to have the stat demand set a side. They cited conflict with another executor and claimed they didn’t have access to estate funds being held by the trust’s former solicitors who have stood down.
I don’t believe that a statutory demand could - or should - be used at all in these circumstances.
The only justification for issuing a SD is to establish that the debtor is insolvent. Failure to comply with the SD is deemed proof of insolvency, entitling the creditor to issue a bankruptcy petition.
However, even if there was no doubt that the debt was due to the creditor I don’t see how a trustee could be made bankrupt for failing to pay the debt.
This is because bankruptcy is absolute - it wouldn’t just apply to the assets in the trust, and a bankruptcy order would means that the trustee’s personal estate would be affected as well.
This would clearly be an absurd and completely unacceptable outcome. Even if the trust assets were insufficient to pay the debt the trustee does not assume personal liability for the debt.
Consequently, if it would be impossible to issue a bankruptcy petition against a trustee in this situation I would consider it an abuse of process to issue a SD, so that it should be set aside as of right, with indemnity costs against the creditor.
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My understanding is that, in these types of situation, the beneficiary (here the trustee for the minors) would apply to court for the executors to produce an account, which would provide appropriate substance for any necessary further action to enforce payment of the legacies.
Unless the executors had misappropriated the assets of the estate, I cannot see that a statutory demand would be appropriate (at least until or unless it has been established that the executors have misappropriated the estate and refused to restore it).
Paul Saunders FCIB TEP
Independent Trust Consultant
Providing support and advice to fellow professionals
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