Newman v Clarke


Reference:
[2016] EWHC 2959 (Ch); [2017] 4 WLR 26

Date:
18th November 2016

Court:
High Court

Facts:

One of the trustees of a settlement (D1) sought to exercise his statutory rights under the Leasehold Reform Act 1967, as a tenant of a house, owned by the settlement of which D1 was a trustee, to acquire the freehold reversion, at a price to be determined by the London Residential Property, First Tier Tribunal. One of D1’s co-trustees, and two of the beneficiaries, sought an injunction restraining D1 from pursuing his application on the grounds that the acquisition of the freehold reversion was contrary to the rule against self-dealing whereby a trustee is barred from purchasing trust property. D1 (and one other trustee) applied for summary judgment and/or a strike out of the claim on the basis that the self-dealing rule was not infringed where (as in D1’s case) a trustee was unilaterally seeking to exercise rights which vested in him prior to his appointment as a trustee. D1 became a tenant of the trust property prior to the trustees acquiring the freehold reversion, and prior to his appointment of trustee.


Judge:
Jonathan Klein

Comment:

Charles Holbech acted for D1, and succeeded in obtaining summary judgment on the basis that D1 was unilaterally exercising a statutory right, vested in him on the grant of the tenancy, prior to his appointment as a trustee. He did not forfeit those rights by agreeing to act as a trustee. 


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