Shovlin vs Site Civils and Surfacing Limited and George Crosby

This case involved an appeal by Mary Shovlin, as sole surviving trustee of the SPH Trust, against a decision dismissing her claims for an account of profits and a declaration of trust over a property.

TLDR:

• Mary Shovlin, as trustee, alleged breaches of fiduciary duty by her co-trustee, Austin Fergus.
• Shovlin claimed that loans made to Site Civils and Surfacing Limited (SCS) were unauthorized and sought an account of profits.
• The High Court dismissed her claims, finding no breach of fiduciary duty or knowing receipt by SCS.
• The Court of Appeal upheld the High Court's decision.

The case involved the SPH Trust, established by Mary Shovlin with the assistance of Austin Fergus, a chartered accountant. Fergus made loans totaling £645,000 from the Trust to SCS, a company owned by George Crosby, without formal documentation or security. Shovlin alleged these loans were unauthorized and sought an account of profits from SCS and a declaration that a property (Greenacres) was held on trust for her.

The High Court dismissed Shovlin's claims, finding that Fergus did not breach his fiduciary duties. The court held that the loans were not contrary to the Trust's investment policy and that SCS was not liable for knowing receipt, as Crosby was unaware of any wrongdoing by Fergus. The court also rejected the claim for backwards tracing to Greenacres.

On appeal, Shovlin argued that the High Court failed to adequately analyze the terms of the loans and misapplied the law on knowing receipt and backwards tracing. The Court of Appeal, however, upheld the High Court's decision, agreeing that Shovlin had not proven a breach of fiduciary duty by Fergus.

The Court of Appeal emphasized the importance of evidence from Shovlin, noting her failure to testify or provide medical evidence explaining her absence. The court found that Fergus's actions, including sending bank statements to Shovlin and holding regular meetings with her, indicated transparency rather than deceit.

The court also highlighted the informal nature of Fergus's previous personal loans to Crosby, which lacked documentation and security, as context for the Trust loans. The court concluded that Shovlin had not demonstrated that Fergus acted disloyally or without authority.

Overall, the Court of Appeal's decision underscores the high burden of proof required to establish breaches of fiduciary duty and knowing receipt, particularly in the context of long-standing professional relationships.

Legal representatives: Martin Budworth (instructed by Sas Daniels Llp LLP) for the Appellant, David Uff (instructed by Public Access) for the Respondents.

Judicial Panel: Lord Justice Males, Lord Justice Snowden, and Lady Justice Falk.

Case Citation Reference: [2024] EWCA Civ 585