The High Court directed that a preliminary question be tried in three Aforge proceedings seeking accounts from HSBC Institutional Trust Services (Ireland) Limited over its handling of assets in the Thema International Fund. Mr Justice Clarke’s judgment did not decide whether the company owed a duty to account or order the accounts sought.
The plaintiffs said the custodian owed them fiduciary duties because they had invested in the fund. They sought accounts of transactions, assets held at specified dates, safekeeping and segregation, and custody arrangements, including the use of sub-custodians. They made no allegation of wrongdoing in seeking an account at this stage.
HSBC Institutional Trust Services disputed that it was obliged to account to the investors beyond obligations expressly set out in the UCITS Directive. It also argued that the scope of any account sought was excessive. The judgment records that the company had offered to provide certain information without admitting legal liability; the plaintiffs considered the offer insufficient.
The court held that a plaintiff seeking an account as the first relief must establish a legal entitlement to it. It found that the defendant had raised substantial preliminary questions, including what obligations arose under the UCITS Directive and Ireland’s UCITS Regulations, and whether a trustee-beneficiary relationship or other fiduciary relationship existed between the custodian and the investors. The extent of any obligation to account would also need to be determined.
Justice Clarke directed that the preliminary question be tried on the affidavits already filed, together with any further affidavits permitted under directions to be discussed with counsel. He said the question should be linked to the wider Kalix proceedings, where related fiduciary-duty issues were also raised. But he stressed that linkage should not delay an early decision on Aforge’s claim to an account.
The court directed that the matter be listed for mention on the next date when the Kalix cases were before the court, to give directions on the timing of a trial of the legal question across the proceedings. The judgment did not determine whether a fiduciary relationship existed, whether the plaintiffs were entitled to an account, or what any account should contain.