Particulars of Claim and Interim Order.
Instructions to Counsel
I am writing to you having been instructed to represent Lady Margaret Lascelles, sole beneficiary of a trust set up by her aunt, The Right Honourable Viscountess Sandringham. Lady Lascelles is in a dispute with her trustee, Captain Thomas Mountbatten and a Mr Winston Townsend, the trust’s financial advisor. We would, in turn, like to instruct you to represent our client in this matter.
We have already issued a Part 7 Claim Form (enclosed with this letter) at the Chancery Division of the High Court in the Hatfield District Registry of the Business and Property Courts and stated that the Particulars of Claim will follow. We are still compiling formal witness statements, but we have received the following preliminary information from Lady Lascelles who asserts her belief in its truthfulness.
The trust in favour of Lady Lascelles was created on 11th April 2002 and was for a total capital sum of £2,000,000. The trust instrument was drawn up by us, Akindele, Foskett, and Tan Solicitors. Captain Thomas Mountbatten is the sole trustee of the trust. He was appointed trustee by the settlor, The Right Honourable Viscountess Sandringham as he had served in the Royal Air Force with Viscount Sandringham and Sir Phillip Churchill, Lady Margaret’s father. He had been a close friend of the family for around 50 years and we are told was trusted implicitly. However, recent years have not been kind to Captain Mountbatten. He lost a significant proportion of his wealth in an overseas property investment and while it is not said in public, our instructions are that he has developed an issue with gambling in trying to retrieve his fortune. We understand that he is not quite at the stage of bankruptcy, but Lady Lascelles believes it is a possibility. Since the death of his wife, it is also said that he drinks far more than is advisable.
The trust instrument is a fairly standard form document and the terms of the trust are pretty ordinary. However, there is one particular area where it differs from the standard provisions required by law and which goes to the heart of this matter. The trust instrument does not give the trustee complete freedom over how the trust fund can be invested. The specific clause of the trust instrumentstates:
10 Powers of Investment
10.1 The application of the General Power of Investment under the Trustee Act 2000 is excluded.
10.2 The Trustee(s) may invest in public limited companies provided that:
a) Reasonable care is taken to ensure that any investments create a diverse portfolio.
b) Advice from a suitably qualified professional is obtained prior to making any investment.
c) Any investment in any one company must be for less than 10% of the initial trust capital.
d) Any investment is reviewed on a regular basis for its ongoing suitability.
Mr Winston Townsend is a financial advisor to the trust and has also advised all of the families over the years regarding their financial affairs (this predates the creation of the trust so it is over 20 years). In fact, the one-time Captain Mountbatten did not seek his advice was when he lost his fortune on the overseas investment. Mr Townsend operates on a contract for service basis so is paid ad hoc as and when the trust needs financial advice, but he is always used, particularly around investments. He has made a lot of money for not just the trust, but also the wider families too as part of their own wealth management. Lady Lascelles has stated how she and Captain Mountbatten have personally told him how grateful they are for his advice and how much they trust his judgment. He should be under no illusions according to Lady Lascelles how much he is relied on, especially by Captain Mountbatten.
The specific dispute for which we have been instructed regards an investment of £200,000 in Crown-Windsor Medical Supplies PLC (the company), consisting of 100,000 shares at a share price of £2 per share. The shares were acquired on 3rd March 2020, we were not involved in the transaction. The company produces medical supplies and equipment to hospitals and veterinary surgeries. The sum invested was exactly 10% of the initial capital sum left on trust and so is a clear breach of clause 10.2(c) of the trust instrument. The investment initially saw good returns with the share price rising upon the company securing a £40,000,000 government contract on 29th April 2020 to supply PPE equipment to the NHS for the supply of PPE. The trust was at that time looking at a profit of £200,000 if it had sold its stake as the share price rose to £4 per share. However, the company failed to deliver on the Government contract, supplying faulty equipment that could not be used for the first delivery. Consequently, it had to repay the value of the contract to the Government and subsequently lost all other orders. This has caused the company to enter administration as of the 2nd November 2020 and the value of the shares has been wiped out losing the trust its investment.
Prior to making the investment, as per the trust instrument, Captain Mountbatten did as required under the trust instrument, seek financial advice and this was given by Mr Townsend who also facilitated the purchase by making the acquisition of the trust’s behalf. At various stages after the investment was made, questions were asked by Lady Lascelles about the size of the investment and the retention of it when a significant profit could have been made, Captain Mountbatten repeatedly informed her that he had been advised by Mr Townsend that the investment was sound and would keep growing, and thus make a significant profit for the trust. In a letter dated 1st May 2020 Captain Mountbatten wrote to Lady Lascelles stating,
“Winston always tells me, you need to speculate to accumulate. We are only getting the return we are because of the size of the investment. Winston told me without significant investment the company would not have been in a position to win the Government contract and we got a special rate for that investment as a result. Your aunt would have approved, of that I have no doubt. Your uncle was always playing the stock market and look how that turned out.”
Since the company went into administration, we have discovered the following information that we feel is pertinent to the matter:
· Shares in the company were freely traded at the time of the investment and had a public value of £2 per share, there was no special rate for bigger investments.
· Captain Mountbatten was also gifted 5,000 shares, worth £2 per share, in the company, receiving them in a personal capacity. The transaction also took place on the 3rd March 2020, the same day as the trust’s investment, and with the previous owner being Mr Townsend.
· Mr Townsend had the company as a client, with Mr Townsend contracted to broker deals leading to investments in the company. Disclosure of documents from the company reveal that Mr Townsend’s contract commenced on 10th February 2020 and contained the following clauses:
31. Payments of Commissions
31.1 You will receive commission for each investment in the company that you broker. The rate of commission will be as follows:
a) Investments of under £10,000 – 1% of the invested sum
b) Investments of between £10,000 and £99,999 – 3% of the invested sum
c) Investments of between £100,000 and £199,999 – 5% of the invested sum
d) Investments of £200,000 and over – 10% of the invested sum
32. Gratuity Stock Options
32.1 Upon starting to act as our agent you will be granted a stock option in the company of 5,000 shares underwritten by the company.
32.2 You must notify the company within 28 days of starting to act for the company if you wish to take up this option.
32.3 If you take up the option you shall be prohibited from selling the shares for a period of three years from the date of exercising the option. However, you may make a gift of the shares, i.e. for no consideration, in full or part, during this period.
· Mr Townsend exercised the stock option on the 20th February 2020.
Lady Lascelles claims that Captain Mountbatten was induced to make the investment in breach of trust by Mr Townsend with the offer of shares for himself. In turn, it is claimed that Mr Townsend, despite knowing he was being relied on, let his own personal gain influence his advice to the trust and took advantage of Captain Mountbatten’s vulnerability.
Lady Lascelles has informed us that Captain Mountbatten is very traditional and lacks digital skills. Consequently, he always corresponds by written letter and will print any emails he receives and stores them. While she has a copy of the trust instrument any claim will be stronger if we can secure documentary evidence between both defendants. We wonder if in light of the situation faced by Captain Mountbatten, we should be concerned with the security of any evidence. Our client has also shared concerns about the ongoing solvency of Captain Mountbatten for the reasons mentioned above, and that Mr Townsend may be in the process of leaving this jurisdiction. We understand that Mr Townsend is currently in Wilmington, Delaware in the United States and has been there for around one month now. He also has a home in Jersey and has set up a new financial services company registered in the British Virgin Islands. His British advisory service does still seem operational for now though. Therefore, we would like you to bear all this in mind and make any interim applications that you feel are necessary to support the claim and protect our client’s position. If you do feel such an application is necessary, we will complete the associated application forms, but would instruct you to draft any order you choose to seek from the court. If you feel that none are need, please can you let me know by way of a memo so I can keep Lady Lascelles updated.
Pursuant to any interim order sought, and the matter generally, I have also received the following information:
· The case, including any interim matters, will be presided over by Mr Justice Murad.
· The court clerk has indicated that we would be able to have a remote without notice pre-trial application hearing no later than Tuesday 12th January 2021 if one were to be needed with a return date of no later than 9th February 2021.
· We have a meeting arranged to secure a sworn affidavit by Lady Lascelles on 4th December 2020, to be filed on behalf of our client at the date or your choosing, if at all. This will be the first sworn affidavit in this matter by Lady Lascelles and the date can be used in any court documentation being drafted.
We are happy for you to use your own initiative and judgment for any other matters where information is required.
Please also note that the firm’s trainee that I am supervising, Donald Wilberforce will be assisting me in all matters related to this claim. We also have the services of Nicholas Walker, a local solicitor with Scott Nicholls and Co. who specialises in Chancery matters if we need any assistance from outside of Akindele, Foskett, and Tan Solicitors.
Solicitor and Senior Partner
Akindele, Foskett, and Tan Solicitors
2 Boardman Court
DX 2001437 Chemersham 38
For the purposes of your assignment, please assume there is a district registry in Hatfield.
For the purposes of the assessment, you do not need to worry about submitting the trust instrument or any other documents referred to in this document, alongside the particulars of claim.
Please note that there is no actual affidavit for you, and you do not need to worry about submitting one with your work. Also, if you are minded to seek an interim order, please note you are not expected to demonstrate any compliance with any template undertakings.