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Dispute over control

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The Court of Appeal's judgment suggests that in certain circumstances the courts may be willing to order the disclosure of documents that are not physically within a litigant’s control. 

The obligation to disclose

During a dispute a party has an obligation to disclose certain documents to the other side. This obligation is limited to those documents which are, or have been in its control (CPR 31.8). In addition to this obligation the CPR provides that the court may order a judgement debtor to attend court and provide information about their means and to produce documents in their control as required by the order (CPR 71.2). Although there is no definition of ‘control’ in CPR 71.2, the same term is used in CPR 31. In North Shore Ventures Limited v Anstead Holdings Inc the Court of Appeal treated ‘control’ as having the same meaning as in CPR 31.8.

CPR 31.8 provides that:

  1. A party’s duty to disclose documents is limited to documents which are or have been in his control.
  2. For this purpose a party has or has had a document in his control if:
  • it is or was in his physical possession;
  • he has or has had a right to possession of it; or
  • he has or has had a right to inspect or take copies of it.

North Shore Ventures Limited v Anstead Holdings Inc [2012]

North Shore Ventures Limited (‘North Shore’) was seeking to enforce a judgment debt (£35m) against Anstead Holdings Inc (‘Anstead’). Anstead claimed that they had transferred almost all of their assets into off-shore trust funds which they had established and under which they were also beneficiaries. North Shore obtained an order under CPR 71.2 for the disclosure of all trust documentation. Anstead appealed the decision on the basis that they did not have possession or control of the documents.

Anstead submitted that the original judge had erred in law, mistakenly taking the view that a party’s ability to obtain documents could be equated with actually having the document in their control. Anstead argued that documents that were not in their possession would only be in their ‘control’ if they had an enforceable legal right to their possession, or to take copies of them. They argued that a beneficiary under a discretionary trust has no immediate right to possession or to take copies of trust documents.

North Shore argued that on the facts, the judge was entitled to conclude that Anstead were in fact in control of the relevant documents, the trustees had not acted as independent trustees, but rather had acted in order to fulfil the wishes of Anstead. They argued that in reality they had access to the trust documents that were sought.

The Court considered the factors of the case, and in particular analysed the relationship between Anstead and the trust. It was noted that such trusts were a “well-known possible device for trying to place assets ostensibly beyond the reach of creditors”. The circumstantial evidence gave reasonable grounds to suggest that there was some understanding or arrangement between Anstead and the trustees, and was such that the trustees would take whatever steps that Anstead wished in the administration of the trusts.

It was therefore held that the first instance judge had been entitled to make the order that he had made for disclosure due to the close relationship between the Anstead and the trustees. The order was therefore upheld.

Implications

The facts in this case were very particular, but the outcome provides important guidance as to what the court may interpret as ‘control’ of relevant documents. It illustrates the willingness of the court to extend the definition of ‘control’ to include documents not physically in the possession of a party to dispute proceedings. Where relevant documents are in the possession of a third party who is connected to one of the parties to proceedings, then the court will analyse the nature of that relationship. In particular the court will consider the true nature of the relationship, and consider whether the third party is acting as agent for the litigant. If such a finding is made, then this case demonstrates that the court will not hesitate in making an order for disclosure of such documents. In most cases concerning beneficiaries and trust documents such orders will perhaps not be considered proper, but they will clearly be appropriate in situations where trusts are being used in an attempt to hide assets beyond the reach of creditors.

For additional information please contact Justin Emerson of Gepp & Sons on 01245 228113 or email emersonj@gepp.co.uk

The above is not legal advice; it is intended to provide information of general interest about current legal issues.