Strand. London. WC2A 2LL
B e f o r e :
(sitting as a deputy Judge of the High Court)
| FRANK DAVID GEORGE CATTLEY
LIAM JAMES PAUL O'MALLEY
|NIGEL GUY POLLARD (1) and others
LINDA JANE POLLARD (12)
|FRANK DAVID GEORGE CATTLEY
LIAM JAMES PAUL O'MALLEY
|LINDA JANE POLLARD
David Halpern QC (instructed by Max Engel & Co) for the Defendant, Linda Jane Pollard
Hearing dates : 30, 31 October and 1 November 2006
Crown Copyright ©
Mr Richard Sheldon QC (sitting as a deputy Judge of the High Court):
The Danish monies and the Warrender monies
i) £224,585.78 held to the credit of an account in the name of Mr Shearer at Copenhagen Handelsbanken ("the Danish monies") was fraudulently transferred to the credit of Bourne Ltd, a company registered in the Isle of Man, at the request of Mr Pollard using a Power of Attorney granted to him by Mr Shearer prior to the latter's death.
ii) The shares in Bourne Ltd had been transferred to Mr Pollard by Mr Shearer before he made his Will with the intention that the shares be held by Mr Pollard on trust for Mr Shearer and, following his death, on trust for the beneficiaries under the terms of the Will.
iii) The Danish monies were transferred to Bourne Ltd's account at Barclays Bank plc in the Isle of Man which held other funds acquired from the Estate. Of the total sum of £504,861.77 held by Bourne Ltd between 30 August 1987 and January 1990, £155,188.19 was stolen by Mr Pollard from the Estate.
iv) Of that sum of £155,188.19, between 27 November 1989 and 10 January 1990 Mr Pollard deposited £110,687.52 at accounts in the name of Warrender Ltd at Barclays Bank plc, Isle of Man, until about July 1996 when £89,839.72 was transferred out to the personal benefit of Mr Pollard. Between 26 March 1990 and 4 July 1996 a further £46,437.23 was paid to Mr Pollard or for his benefit representing interest that had accumulated on the accounts of Warrender Ltd. Accordingly, the total monies stolen from the Estate which passed through the accounts of Warrender Ltd totalled about £157,000 ("the Warrender monies").
v) Warrender Ltd was a company registered in the Isle of Man formed on behalf of Mr and Mrs Pollard in late 1989. Mr and Mrs Pollard were the sole directors and each 50% shareholders. The only monies ever credited to Warrender Ltd's bank accounts were the Warrender monies.
14 Geldock Rd
vi) In addition, in May 1988 Mr Pollard stole from the Estate sums of £11,000, £20,000 and £50,300 (a total of £81,300) which were used towards the purchase in his own name of 14, Geldock Road, Little Billing, Northamptonshire ("14 Geldock Rd") - Mrs Pollard moved into the property with Mr Pollard. On 20 April 1995, Mr Pollard transferred 14 Geldock Rd into the joint names of himself and Mrs Pollard (then Linda Jane Clarke). On about 9 October 2002, Mr Pollard (whilst he was in prison following the criminal convictions to which I refer below) transferred 14 Geldock Rd into the sole name of Mrs Pollard. That is where she still resides.
The First Proceedings
The Second Proceedings
"arising from [Mrs Pollard's] dishonest part, and her knowing assistance, in the fraudulent breaches of trust by [Mr Pollard] from which she benefited and her own breaches of duty as a constructive trustee (or such duties as arise as if she is to be treated as a constructive trustee) which has caused loss and damage to the Estate.."
6.5 It is the Claimants' case that insofar as [Mrs Pollard] has any legal or beneficial interest in 14 Geldock Road, she is a constructive trustee (or to be treated as such) in respect of all monies used in the purchase of 14 Geldock Road insofar as that money derived from the payments (totalling £81,300) made by Mr Pollard from monies stolen from the Estate.
6.6 As a constructive trustee (or treated as such), the Defendant owes and owed the Estate and the beneficiaries fiduciary duties including the duty to safeguard all assets of the Estate.
8.1 It is the Claimants' case that the Defendant is liable to the Claimants and/or liable to indemnify the Estate as she was a dishonest party to and has knowingly and dishonestly assisted and benefited from each of the fraudulent acts of Mr Pollard highlighted in paragraphs 4 to 6 above.
8.2 Further and in the alternative, insofar as 14 Geldock Road is concerned [Mrs Pollard] is in breach of her duties as a constructive trustee (or such duties as arise if she is to be treated as a constructive trustee).
i) by virtue of s. 21(1) of the 1980 Act, there is no limitation period.
ii) Further the action is said to have been brought on behalf of beneficiaries of the Estate entitled to a future interest in trust property which has not yet fallen into possession. By virtue of s. 21(3) of the 1980 Act time does not start to run against such beneficiaries until their interest falls into possession.
iii) Alternatively, if there is a limitation period, it is said that, by virtue of s. 32 of the 1980 Act, any period of limitation does not begin to run until the claimants discovered Mrs Pollard's fraud or could with reasonable diligence have discovered it and they say that this only occurred or could have occurred after 6 years before the Second Proceedings were commenced (i.e. after 7 November 1999).
i) Does s. 21(l)(a) of the 1980 Act apply to the Dishonest Assistance Claims with the consequence that there is no applicable period of limitation? ("the Section 21(l)(a) Issue");
ii) If the Dishonest Assistance Claims are subject to the six year primary limitation period under s 21(3) of the 1980 Act, has time begun to run given that there are beneficiaries entitled to a future interest in the trust property which interest has not yet fallen into possession? ("the Section 21(3) Issue");
iii) If there is a six year primary limitation period, do the provisions of s. 32 of the 1980 Act as applied to the facts postpone the running of time and, if so, did time begin to run after 7 November 1999 (being the date 6 years before the Second Proceedings were commenced) with the consequence that the Second Proceedings are not time barred? ("the Section 32 Issue");
iv) Does the doctrine of laches have any application and if so does it avail Mrs Pollard? ("the Laches Issue").
The Section 21(1) Issue
21 Time limit for actions in respect of trust property
(1) No period of limitation prescribed by this Act shall apply to an action by a beneficiary under a trust, being an action-
(a) in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy; or
(b) to recover from the trustee trust property or the proceeds of trust property in the possession of the trustee, or previously received by the trustee and converted to his use.
(3) Subject to the preceding provisions of this section, an action by a beneficiary to recover trust property or in respect of any breach of trust, not being an action for which a period of limitation is prescribed by any other provision of this Act, shall not be brought after the expiration of six years from the date on which the cause of action accrued....
Argument and discussion
a) S. 21(l)(a) is not confined to an action against the trustee (unlike s.21(l)(b));
b) The provision clearly envisages that a fraud may involve more than one person (or party);
c) It applies to "any fraud. ..to which the trustee was a party..".
If there is created in expressed terms, whether written or verbal, a trust, and a person is in terms nominated to be the trustee of that trust, a Court of Equity, upon proof of such facts, will not allow him to vouch a Statute of Limitations against a breach of that trust. Such a trust is in equity called an express trust. If the only relation which it is proved the defendant or person charged bears to the matter is a contractual relation, he is not in the view of equity a trustee at all, but only a contractor; and equity leaves the contractual relation to be determined by the common or statute law. If the breach of the legal relation relied on, whether such breach be by way of tort or contract, makes, in the view of a Court of Equity, the defendant a trustee for the plaintiff, the Court of Equity treats the defendant as a trustee become so by construction, and the trust is called a constructive trust; and against the breach which by construction creates the trust the Court of Equity allows Statutes of Limitation to be vouched.
There was an express trust created, but Ashwell was not at any time nominated as a trustee of that trust. He was the solicitor of the nominated trustees. As such solicitor he was entrusted by the nominated trustees to take and have in his hands the trust money, with a direction on their behalf to deal with it according to the terms of the trust. Assume that he misappropriated that money to his own use, and that that was all; the misappropriation would at once of itself make him the holder of the money in trust for the rightful owner, but, if that were all, only a trustee by construction of a constructive trust. But the questions in this case are whether Ashwell was not, in view of a Court of Equity, a trustee of the money before the alleged breach by misappropriation, and, if he was, under which class of trust he was with regard to limitations. The moment the money was in his hands, he was in a fiduciary relation to the nominated trustees; he was a fiduciary agent of theirs; he held the money in trust to deal with it for them as directed by them; he was a trustee for them. He was therefore a trustee of the money before he committed, if he did commit, the alleged breach of trust, and was in possession of and had control over the money before he committed, if at all, the alleged breach of trust.
The cases seem to me to decide that, where a person has assumed, either with or without consent, to act as a trustee of money or other property, i.e., to act in a fiduciary relation with regard to it, and has in consequence been in possession of or has exercised command or control over such money or property, a Court of Equity will impose upon him all the liabilities of an express trustee, and will class him with and will call him an express trustee of an express trust. The principal liability of such a trustee is that he must discharge himself by accounting to his cestui que trusts for all such money or property without regard to lapse of time.
There is another recognised state of circumstances in which a person not nominated a trustee may be bound to liability as if he were a nominated trustee, namely, where he has knowingly assisted a nominated trustee in a fraudulent and dishonest disposition of the trust property. Such a person will be treated by a Court of Equity as if he were an express trustee of an express trust I am of opinion that the present case is within the description of that which is treated as and is called in equity an express trust, and that the inquiry as to the alleged breach cannot be stopped by the Statute of Limitations.
I am clearly convinced by the evidence that Ashwell became on receipt of the money a trustee of it, and that, as he has not been shewn to have accounted for it, the defendant, his executrix, is liable as such for a breach of trust by him. (Emphasis added)
The question therefore arises whether the claim of the plaintiff can be barred through lapse of time, by analogy to the Statute of Limitations. That time (by analogy to the statute) is no bar in the case of an express trust, but that it will be a bar in the case of a constructive trust, is a doctrine which has been clearly and long established….
An express trust can only arise between the cestui que trust and his trustee. A constructive trust is one which arises when a stranger to a trust already constituted is held by the Court to be bound in good faith and in conscience by the trust in consequence of his conduct and behaviour. Such conduct and behaviour the Court construes as involving him in the duties and responsibilities of a trustee, although but for such conduct and behaviour he would be a stranger to the trust. A constructive trust is therefore, as has been said, "a trust to be made out by circumstances." It is not unreasonable in the latter class of cases, where the liability of a stranger to the trust arises from his conduct and depends on the proof of his contemporary acts, that time should run in favour of the person to be charged. In such cases conflicts of evidence are possible or probable, and to deny to the person to be charged the shelter or benefit of a period of limitation would be obviously dangerous and unjust.
Although this general principle of justice has been authoritatively laid down in Courts of Equity, there has been some variety and inconsistency both in the language used about constructive trusts and in the line of demarcation that has been drawn between the cases of express and constructive trusts. First, the doctrine that time is no bar in the case of express trusts has been extended to cases where a person who is not a direct trustee nevertheless assumes to act as a trustee under the trust. This extension of the doctrine is based on the obvious view that a man who assumes without excuse to be a trustee ought not to be in a better position than if he were what he pretends. Secondly, the rule as to limitations of time which has been laid down in reference to express trusts has also been thought appropriate to cases where a stranger participates in the fraud of a trustee. Thirdly, a similar extension of the doctrine has been acted on in a case where a person received trust property and dealt with it in a manner inconsistent with trusts of which he was cognizant. Fourthly, in some other cases, language has been employed in regard to the question of limitations of time in certain instances of constructive trust which can scarcely be reconciled with the language held., in other cases.
It is not necessary in the present appeal to discuss the somewhat fluctuating expressions that can be discovered in equity authorities on the subject of constructive trusts. One thing seems clear. It has been established beyond doubt by authority binding on this Court that a person occupying a fiduciary relation, who has property deposited with him on the strength of such relation, is to be dealt with as an express, and not merely a constructive, trustee of such property. (Emphasis added)
Lord Bowen went on to hold (at p 398) that Ashwell fell into the category of persons he describes in the last paragraph. Accordingly the passage emphasised is again obiter. It is also not easy to reconcile with some of the language he uses in the second paragraph of the passage I have quoted but it is clear that he treated a person who had dishonestly assisted a nominated trustee in a fraudulent and dishonest disposition of the trust property as being an exception to that rule and that no limitation period would apply to such a person.
The exception [in the equivalent of s 21(l)(b)] no doubt applies, not only to an express trustee named in the instrument of trust, but also to those persons who under the rules explained in Soar v Ashwell and other cases are to be treated as being in like position.
At first sight this might lend support to Mr Godsmark's submission. However, this sentence must be read in context. The immediately two preceding sentences read as follows:
The expressions "trust property" and "retained by the trustee" properly apply, not to a case where a person having taken possession of property on his own behalf, is liable to be declared a trustee by the Court; but rather to a case where he originally took possession upon trust for or on behalf of others. In other words, they refer to cases where a trust arose before the occurrence of the transaction impeached and not to cases where it arises only by reason of that transaction.
And the sentence relied on by Mr Godsmark is qualified by the immediately following words:
but in their Lordships' opinion [the exception] does not apply to a mere constructive trustee of the character described in the judgment of Sir William Grant.
The latter is a reference to the judgment in Beckford v Wade (1805) 17 Ves 87, 97 where Sir William Grant drew a distinction between direct trusts and constructive trusts imposed by a Court of equity after the facts and circumstances, from which the constructive trust arises, have happened.
44-44 A person who dishonestly assists a trustee to commit a breach of trust is himself liable as a constructive trustee. It is now clear that the liability is based on the dishonesty of the accessory and the honesty or dishonesty of the formally appointed trustee is irrelevant. Previously it was thought that liability was based on knowing assistance in a fraudulent breach of trust on the part of the trustee; it was then well established [citing Soar v AshwellJ that the accessory was himself treated as an express trustee and before the Trustee Act 1888 was not entitled to raise a defence of limitation. The rule may be regarded as exceptional, since the accessory has not assumed the duties of a trustee, and so appears to be a constructive trustee of the second kind, though the trust pre-dates his involvement, but the principle of the rule survived the Trustee Act 1888 and has apparently survived the redefinition of the accessory's liability as not dependent on the dishonesty of the formally appointed trustee, hi other words, accessories fall outside the category of constructive trustee who is always entitled to raise a defence of limitation notwithstanding section 21(l)(a)ofthe 1980 Act.
44-45 The consequence is probably that the accessory remains always unable to plead a defence of limitation, since his dishonesty will suffice to bring himself within s 21(l)(a). That follows if dishonesty necessarily constitutes a "fraud or fraudulent breach of trust which the trustee was a party or privy" within that paragraph, as it appears to do, and if the accessory is to be regarded as "the trustee" for the purposes of that paragraph, as it is thought he is...
Regrettably, however, the expressions 'constructive trust' and 'constructive trustee' have been used by equity lawyers to describe two entirely different situations. The first covers those cases already mentioned, where the defendant, though not expressly appointed as trustee, has assumed the duties of a trustee by a lawful transaction which was independent of and preceded the breach of trust and is not impeached by the plaintiff. The second covers those cases where the trust obligation arises as a direct consequence of the unlawful transaction which is impeached by the plaintiff.
A constructive trust arises by operation of law whenever the circumstances are such that it would be unconscionable for the owner of property (usually but not necessarily the legal estate) to assert his own beneficial interest in the property and deny the beneficial interest of another. In the first class of case, however, the constructive trustee really is a trustee. He does not receive the trust property in his own right but by a transaction by which both parties intend to create a trust from the outset and which is not impugned by the plaintiff. His possession of the property is coloured from the first by the trust and confidence by means of which he obtained it, and his subsequent appropriation of the property to his own use is a breach of that trust In these cases the plaintiff does not impugn the transaction by which the defendant obtained control of the property. He alleges that the circumstances in which the defendant obtained control make it unconscionable for him thereafter to assert a beneficial interest in the property.
The second class of case is different. It arises when the defendant is implicated in a fraud. Equity has always given relief against fraud by making any person sufficiently implicated in the fraud accountable in equity. In such a case he is traditionally though I think unfortunately described as a constructive trustee and said to be 'liable to account as constructive trustee'. Such a person is not in fact a trustee at all, even though he may be liable to account as if he were. He never assumes the position of a trustee, and if he receives the trust property at all it is adversely to the plaintiff by an unlawful transaction which is impugned by the plaintiff. In such a case the expressions 'constructive trust' and 'constructive trustee' are misleading, for there is no trust and usually no possibility of a proprietary remedy; they are 'nothing more than a formula for equitable relief...
The importance of the distinction between the two categories of constructive trust lies in the application of the statutes of limitation. Before 1890 constructive trusts of the first kind were treated in the same way as express trusts and were often confusingly described as such; claims against the trustee were not barred by the passage of time. Constructive trusts of the second kind however were treated differently. They were not in reality trusts at all, but merely a remedial mechanism by which equity gave relief for fraud. The Court of Chancery, which applied the statutes of limitation by analogy, was not misled by its own terminology; it gave effect to the reality of the situation by applying the statute to the fraud which gave rise to the defendant's liability.
In support of the latter proposition Millett LJ cited the passage of Lord Esher in Soar v Ashwell at p 393 which I have quoted earlier. Again it is I think of some significance that Category 2 were described as being "not in reality trusts at all, but merely a remedial mechanism by which equity gave relief from fraud."
(10) A principled system of limitation would also treat a claim against an accessory as barred when the claim against the principal was barred and not before. There is, therefore, a case for treating a claim against a person who has assisted a trustee in committing a breach of trust as subject to the same limitation regime as the claim against the trustee: see J W Brunyate Limitation of Actions in Equity (1932). But the borrowers, who obtained the money by deceit and were the principal wrongdoers, were neither trustees nor fiduciaries. If guilty of fraud, they can plead the statute. It would be extraordinary if the defendants were liable in equity as accessories or co-conspirators without limit of time when the claim against the principal wrongdoers was barred.
Within the second category able to plead the Limitation Act are included persons who knowingly receive trust property in breach of trust, or who innocently receive trust property for their own benefit but who then insist on retaining it or dealing with it as if it were their own property after becoming aware that it was trust property that they had received, and persons who dishonestly assist in a breach of trust or other fiduciary duty. [Emphasis added]
In support of the proposition I have emphasised, the authors refer to Birks & Pretto Breach of Trust (2002), Chapter 6 Assistance by C Mitchell pp 209 -211. In fact this does not support (or at most only partly supports) the proposition stated. Having doubted the view expressed in Lewin that "the accessory [probably] remains always unable to plead a defence of limitation, since his dishonesty will suffice to bring him within section 21(l)(a)", Mr Mitchell states:
The better view must rather be that if an action for dishonest assistance is relevantly an action "in respect of a primary breach of trust - and it is submitted that it is - then the action will be affected by section 21(l)(a) in the event that the trustee has acted fraudulently, but if he has not then it will not be affected. And in the latter case, section 21(3) would therefore seem to apply again on the assumption that an action for dishonest assistance is an action "in respect of the primary breach.
Thus, Mr Mitchell is of the view that no limitation period will apply if there is dishonest assistance in a fraudulent breach of trust but such a period would apply if there is dishonest assistance in a non-fraudulent breach of trust -which as he later points out could be regarded as anomalous since the decision in the Royal Brunei renders the distinction between a fraudulent and non-fraudulent breach of trust irrelevant to the liability of a dishonest assister.
In the latter case the Lord Justice Clerk (Scott Dickson) explained, at p 110, that the distinction was between a trust which arose before the occurrence of the transaction impeached and a claim which arose only by reason of the transaction. In the former case the defendant is treated as a trustee even though not expressly appointed as such; in the latter case he is a stranger to the trust at the time of the transaction.
Lord Millett is here focusing on whether the defendant has assumed the position of trustee before the transaction impugned. Even if there is a preexisting trust, a stranger who is only sought to be made liable as a constructive trustee by reason of the transaction impugned would not be treated as if he were an express trustee.
141 Unlike HB in Mara v Browne  1 Ch 199, Mr Amhurst did not assume the position of a trustee on behalf of others. He never had title to the trust funds or claimed the right to deal with them on behalf of those properly entitled to them. He acted throughout on his own or his confederates' behalf. The claim against him is simply that he participated in a fraud. Equity gives relief against fraud by making any person sufficiently implicated in the fraud accountable in equity. In such a case he is traditionally (and I have suggested unfortunately) described as a "constructive trustee" and is said to be "liable to account as a constructive trustee". But he is not in fact a trustee at all, even though he may be liable to account as if he were. He never claims to assume the position of trustee on behalf of others, and he may be liable without ever receiving or handling the trust property. If he receives the trust property at all he receives it adversely to the claimant and by an unlawful transaction which is impugned by the claimant. He is not a fiduciary or subject to fiduciary obligations; and he could plead the Limitation Acts as a defence to the claim, [emphasis added].
As a matter of statutory construction the question turns on the meaning of the opening words of s 21(1) of the 1980 Act (re-enacting in similar terms the opening words of s 19(3) of the 1939 Act. As Harpum noted in his influential article "The stranger as constructive trustee" (1986) 102 LQR 267 at 288, these are not apt to cover constructive trusts of the second kind. This is because they refer to ".. an action by a beneficiary under a trust... to which the trustee...". As Harpum observed, these words would appear to be prima facie applicable only to those whose trusteeship precedes the occurrence which is the subject of the claim against them and not those whose trusteeship arises only by reason of that occurrence.
In that article, Mr Harpum, to support the observation referred to, points out that s. 21(l)(a) speaks of an action "by a beneficiary under a trust", the substance of which is some claim against "the" (not "any") trustee.
The Section 21(3) Issue
(3) Subject to the preceding provisions of this section, an action by a beneficiary to recover trust property or in respect of any breach of trust, not being an action for which a period of limitation is prescribed by any other provision of this Act, shall not be brought after the expiration of six years from the date on which the cause of action accrued.
For the purposes of this subsection, the right of action shall not be treated as having accrued to any beneficiary entitled to a future interest in the trust property until the interest fell into possession.
Oddly, ss 21(1) and (3) only apply at face value to actions by a beneficiary under a trust, so that an action by a trustee on behalf of his beneficiaries (who maybe unborn or unascertained) against a cotrustee or former trustee or a third party (owning trust property or in its traceable product or personally liable in respect of dishonest assistance in breach of trust or dishonest dealings with the trust property) is neither helped nor hindered, so the result of an action against such a defendant depends on whether it be brought by a beneficiary or a trustee. This cannot be justified: the courts will surely apply the six year period by analogy with the statutory period for actions by beneficiaries so that the position is as it was under the Trustee Act 1888.
Section 21(3) of the 1980 Act applies in terms only to actions by beneficiaries. It does not therefore apply to bar an action brought by the Attorney-General to enforce a charitable trust for the benefit of the public at large: there is no beneficiary in such a case [Att-Gen v Cocke.  Ch 414] The same may not be true of a charitable trust for the benefit of a defined class, even if the Attorney-General is the claimant [Magdalen College Oxford v Att-Gen, (1857) 6 HL Cas 189].
Even in the case of a non-charitable trust, however, it may happen that a trustee sues on behalf of his beneficiaries to recover the trust property, or compensation for breach of trust, from his defaulting trustee. The question may then arise as to whether the six year period in section 21(3) applies to such an action. The corresponding section of the Trustee Act 1888 applied to such an action, but the section did not contain the words "by a beneficiary". It seems that such actions were not excluded from the express terms of section 21(3) by design and that (except where the trustee sues to recover trust land) the court would apply the six-year period by analogy with the statutory period for actions by beneficiaries: for it would seem strange if the result of an action against a defaulting trustee depended on whether it was brought by a beneficiary or by his trustee on his behalf.
The Section 32 Issue
.... where in the case of any action for which a period of limitation is prescribed by this Act, either
(a) the action is based upon the fraud of the defendant; or
(b) any fact relevant to the plaintiffs right of action has been deliberately concealed from him by the defendant....
the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it.
References in this subsection to the defendant include references to the defendant's agent and any person through whom the defendant claims and his agent.
The question is not whether the plaintiffs should have discovered the fraud sooner; but whether they could with reasonable diligence have done so. The burden of proof is on them. They must establish that they could not have discovered the fraud without exceptional measures which they could not reasonably have been expected to take.
I was also referred to Peco Arts Inc v Hazlitt Gallery  1 WLR 1315 at p 1322-3. I bear these passages in mind when applying the words of the section to the facts as presented to me.
1995 - December 1997
27. More seriously, what is being said by the respondents about the applicants is that they well knew that Mr Pollard was up to no good, and particularly in the case of [Mrs Pollard] were actively involved in his misfeasance [at para 22(b) the allegation of Ms Lawrence was said to have been that Mrs Pollard in particular was well aware of the defrauding of the Estate, which had been the source of funds which purchased the house which she now occupied with Mr Pollard]
28.... The evidence produced on behalf of the respondents was not, in the view of the tribunal, sufficient to justify the Tribunal in rejecting either [Mrs Pollard's] or Mrs Buckton's account of the extent to which either of them was aware of any default by Mr Pollard: and so we accept the applicants' accounts....
30.... there is no direct evidence (other than the applicants' references on letters) that either of the applicants did have actual knowledge of Mr Pollard's misfeasance.
We have made contact with Mr Curtis, the investigating officer from the Northamptonshire Fraud Squad and he has expressed serious reservations about the early disclosure of facts to [Mr Pollard]. He is still in the process of fact gathering about the case and to date he can see little evidence of fraudulent activity. He will of course be continuing his detailed investigation but until this process is completed he feels that a Civil action would be premature. Furthermore, he felt that the Crown Prosecution Service may refuse to prosecute if too many facts have been revealed to Pollard.
Mrs Craig then expresses concern about the costs of instructing counsel and whether it would be borne by the Estate or the beneficiaries.
He has made it clear that he did not say that he could see little evidence of fraudulent activity. As I understand it, he made it clear that... he was in the early days of his investigation. He was not in a position to say accordingly whether or not an offence of fraud would follow Mr Curtis also expressed the same concern in respect of the civil action, and the extent to which it might prejudice the investigation, that I also expressed. It is for that reason, amongst others than I made it very clear at the meeting that in the first instance we should obtain Counsel's Opinion, not only in respect of the breach of trust but also the general winding up of the estate. During the meeting I also made it very clear to you that in my view, and as a result of what I had discovered, you have an exceptionally good case in fraud, breach of trust, and indeed negligence.
The rival contentions
"It seems to be that there are several possibilities re Shearer:
(1) Theft of Danish Kroner(2) Obtaining by deception of interest on client account....(3) If Danish Kroner and Bourne Ltd is his - then massive tax evasion(4) If either are his then a large mixing of trust funds."
It occurs to me that if of course it is shown that the Danish money did in fact belong to him then by and large the mixing of money is serious but not as serious as it would be if it shown [sic] that the Danish money was not his.
She then refers to letters from Mr Pollard which appear to state contradictory positions on whether the Danish monies belonged to him.
|RH Shearer deed||50,300|
...I can't remember when she told me but [Mr Pollard's] mother told me that there was some money in an account in Denmark and that [Mr Shearer] had always wanted [Mr Pollard] to have it.
Although in her oral evidence before me, Mrs Pollard continued to deny that that there had been wrongdoing on the part of Mr Pollard, in her Defence she accepts that Mr Pollard stole the Danish monies.
The Laches Issue
The inquiry should require a broad approach, directed to ascertaining whether it would in all the circumstances be unconscionable for a party to be permitted to assert his beneficial right.
i) The Claimants knew or ought to have known of the alleged fraud well before 1999. It would be unconscionable for the claimants to have more time in equity than they would be given for a claim for deceit at common law.
ii) The claimants in any event had a considerable amount of material available to them in early 1998.
iii) The allegations of fraud made by Ms Lawrence against Mrs Pollard (such as in the Industrial Tribunal proceedings), following an enquiry she made at the expense of the Estate, have never gone away.
iv) The Claimants brought proceedings in 2003 against Mrs Pollard but the claims against her were not properly spelled out against her until more recently: the allegations should have been made promptly and should not have been left hanging over Mrs Pollard's head.
v) Mrs Pollard has faced uncertainty over whether she will lose her home.
i) Section 21(l)(a) of the 1980 Act does not apply to the Dishonest Assistance Claims and that the normal primary period of limitation of 6 years from the date of the accrual of the cause of action applies;
ii) Section 21(3) of the 1980 Act applies to postpone the running of the primary period of limitation as regards the beneficiaries with future interests with the consequence that the Second Proceedings are not time barred;
iii) Section 32 of the 1980 Act also applies to postpone the running of the primary period of limitation until after 7 November 1999 with the consequence that the Second Proceedings are not time barred;
iv) The doctrine of laches has no application to the claims made in the Second Proceedings.