Royal firms named in Palumbo writ

A writ has been issued against Mishcon de Reya, solicitors to the late Diana, Princess of Wales, by the family trust of property tycoon Lord Palumbo, the man who introduced the princess to the firm.

Rugarth Investment Trust (RIT) accuses its former legal advisers Mishcons and accountancy firm Binder Hamlyn of negligence, breach of contract and breach of fiduciary duty.

Palumbo's son James and daughter Annabella participated in the management of the trust's assets in the spring of 1995 following a settlement of a legal action with their father, in which it was alleged that he had mis-handled the trust's assets leading to losses reported to be in the region of £60m.

Mishcons and Binder Hamlyn ceased acting for the trust in May 1995.

RIT was set up in 1955 by Lord Palumbo's father, Rupert Palumbo, to hold most of his wealth made from property developing. It is the sole shareholder of a clutch of companies which owns farms, properties in the City and a company dealing in fine arts.

Lord Palumbo is said to have introduced Princess Diana to Mishcons, which first acted for her in suing The Mirror when the newspaper published a picture of her in a gym.

The writ also contains a claim by the trustees, TWM Trustees, which was incorporated in April 1995, and one of the trust's companies, City Acre Property Investment Trust, against Lord Mishcon and Sir Charles Matthew Farrer, the former senior partner of Farrer & Co and former solicitor to the Queen.

The companies are claiming money allegedly paid to Mishcon and Farrer for the benefit of a charitable trust founded in May 1989. Mishcon and Farrer were trustees to the charitable body.

The writ also demands they both declare a deed of covenant made between them and City Acre Property Investment Trust in March 1990 is ultra vires and should be set aside.

Linklaters & Paines trust partner Nigel Reid, who is acting for the trust and issued the writ at Preston District Registry, refused to comment.