‘Put up or shut up’ orders in breach of trust claims

What factors does a court consider when the beneficiary of a will indicates that they will claim against the will’s trustees, but the trustees ask for an order to bring the issue to a head?

Here we look at the decision in Parsons v Reid [2022] EWHC 755 (Ch) when the court considered whether to grant a ‘put up or shut up’ order on a beneficiary’s intimated claim for breach of trust against the will’s trustees.

What is a ‘put up or shut up’ order?

These orders, also known as Cobden-Ramsay orders, impose a time limit, or certain date, by which a person disputing a will must issue their claim.

What is an intimated claim?

An intimated claim is where one party has sent the other notice of their claim but legal proceedings have not formally been issued. In cases such as Parsons v Reid, this usually means that the trustees of the will are reluctant to distribute the estate while the threat of legal action looms over them.

Parsons v Reid – the facts

The High Court was asked to determine whether it had jurisdiction to grant the order in relation to the beneficiary’s intimated breach of trust claim against the trustees of her father’s will.

He passed away in 2018. The will contained an estate which included a farm of significant value. The beneficiaries of the will were his son Stephen and daughter Judith. He wished that payments be made to Stephen reflecting “various moral and financial obligations owed by the deceased to him” and that the residuary estate was to be split 60/40 between Stephen and Judith respectively.

Stephen gave the trustees schedules for payments due to him totalling £951,64 to be paid before the residuary estate was to be distributed. Judith and the trustees disputed the amount provided by Stephen. The trustees then made a payment of £600,965 to Stephen before selling the farm.

The farm sold in March 2020 for £4.2m. Interim distributions were made to Stephen (£1.35m) and Judith (£700,000) from the sale, but some of the estate still needed to be distributed.

Shortly after the interim distributions, Judith sent a letter of claim to the trustees detailing that she didn’t agree with the amount Stephen had been given or the costs claimed by the trustees. This was therefore an intimated claim on her part.

The trustees subsequently applied to the court for a ‘put up or shut up’ order to impose a time limit on Judith’s ability to issue her intimated claim. She argued that the trustees were asking for the court to approve their proposed distribution of the estate.

She therefore submitted that the trustees should provide disclosure of the facts and documents used in deciding on the amounts to be paid to who from the estate.

Parsons v Reid – the court’s decision  

The court said, based on previous case law, they do have jurisdiction to impose such an order, specifically imposing a time limit on a potential claim or challenge to probate.

However, the court decided not to grant this in Parsons v Reid because:

• The court needed to consider the intimated claim and whether it is “insubstantial, remote or speculative”. In doing so, the court would need to consider the merits and all available material in relation to the claim. The court held that this had not been possible to do here as the materials to assess had not been available to Judith when writing the letter of claim.
• A ‘put up or shut up’ order would have the effect of “extinguishing” Judith’s right to challenge the trustees’ decision making and therefore limiting the trustees’ liability. The court would therefore need to be “fully informed before making the order sought”.

Conclusion

The court’s decision in Parsons v Reid gives an insight into the considerations made when deciding whether to grant a such an order in intimated claims for breaches of trust by trustees of a will. These considerations are:

• Whether the intimated claim is insubstantial, remote or speculative
• The merits and all available material for the intimated claim
• Whether the order will extinguish the potential claimant’s right to challenge the trustee’s decisions
• Whether the order will limit the liability of the trustees of the estate.