B e f o r e :
THE MASTER OF THE ROLLS
(Lord Evershed)
LORD JUSTICE WILLMER
and
LORD JUSTICE UPJOHN
IN THE MATTER of the TRUSTS declared by the WILL OF JOSHUA OWEN STEED deceased
concerning LOTT FARM COCKFIELD in the COUNTY of SUFFOLK
and the sum of £4,000 for the benefit of GLADYS LOUISE SANDFORD
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Between:
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GLADYS LOUISE SANDFORD
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Appellant (Plaintiff)
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THE HONORABLE AUDBREY MELFORD STEED SETEVENSON Knight HUGH COURTNEY BAKER and MICHAEL HENRY BUCKMASTER
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Respondent (Defendants)
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IN THE MATTER of THE VARIATION OF THE TRUSTS ACTS 1958
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IN THE MATTER of THE TRUSTS ACTS 1925
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(Transcript of the Shorthand Notes of the Association of Official Shorthandwriters, Ltd.,
Room 392, Royal Courts of Justice, and 8, New Square, Lincoln's Inn, W.C.2.)
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MR. G H NEWSOM Q.C. and E. W. GRIFFITH (Instructed by Messrs. Field, Roscoe & Co)
appeared on behalf of the Appellant.
THE HONORABLE L H L COHEN (Instructed by Messrs. Sharpe, Pritchard & Co)
appeared on behalf of the Respondents.
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HTML VERSION OF JUDGMENT
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Crown Copyright ©
(As Revised)
THE MASTER OF THE ROLLS: This is in more ways than one, including matters of procedure, a somewhat unusual case, as Mr. Newsom observed. It is also in many respects an unhappy case, and I cannot refrain from expressing my own sympathy for the Plaintiff on the one side, and for the three defendant trustees on the other.
I propose in this judgment to forbear from entering, except where absolutely necessary, into matters of fact which might only serve to rub salt into existing wounds. Suffice it to say that the Plaintiff was one who served loyally and most skilfully for a long period of time the Testator and the Testator's wife. In consideration for those services the Testator included in his will provisions for her benefit, contained in clauses 9 and 10.
It is, I think, quite plain on the evidence that the Testator, while anxious to show his gratitude to Miss Sandford was no less anxious that she should be well provided for and not exposed to the temptation, which he thought was real, of being, to use a common phrase, sponged on by one of her brothers. I fully realise that Miss Sandford's natural affection for that brother is not a matter which one can in any sense condemn. Blood is, after all, thicker than water, and the happiness of Miss Sandford, according to her own view at any rate, is very much linked up with the association with that brother and the brother's daughter and wife.
On the other side, however, are these trustees on whom has been placed an obligation, a duty to give effect to the intentions of the man who provided the money. Mr. Newsom pointed out (and it is an unfortunate aspect of this case) that during the years since the Testator died, that is, a little over five years, relations between the Appellant and these trustees have become somewhat strained because the trustees took a view which Miss Sandford thought unkind to her.
The duty of a trustee is not always an easy one. Indeed, I may recall the famous saying of Professor Maitland: "Equity evolved one novel and fertile institution, namely the trust" the effects of which have become internationally famous. Though trustees may sometimes take the easy line, on other occasions trustees may feel that they must try to do, to the best of their ability, the duty cast on them, however distasteful.
I will now state the procedural anomaly in this case. In May, 1958, the present appellant issued a writ against the trustees in which she sought to restrain them from giving effect to a sale of a certain farm which was part of the property, the subject of the trusts I have mentioned. The farm is known as Loft Farm, Cockfield. In extent we were informed it was fifty acres, or perhaps a little over; but since the proceedings were started an added trouble has arisen. The farmhouse appears to have been substantially destroyed by fire. We understand, however, that to nothing with which we are concerned is that really relevant. The writ was issued because the trustees in the exercise of their powers and discretions, to which I will allude more fully in a moment, were on the point of giving effect to a bargain which they had made for the sale of the farm. I have used rather loose phrases deliberately because there is a question whether the trustees are in law bound in any case to the proposing purchaser. It will suffice for me to say, because Mr. Newsom conceded so much, that it may be that if the proposing purchaser took the appropriate steps he could bring proceedings in respect of the bargain if the trustees did not fulfil it; but he has not done so. He seems to have been a most amiable purchaser.
The proceedings having started, a summons was then taken out in the action in which the equitable jurisdiction of the court to control trustees was invoked. Later still, when the matter came before the court, the summons was by leave and by consent amended so that it now is also entitled "In the matter of the Variation of Trusts Act, 1958" in order to invite the court to exercise the powers under that Act to approve the "arrangement" (according to the word used in the section) which Miss Sandford, the Appellant, has put forward. It is by way of appeal from the learned Judge's refusal to grant any relief on that summons that the present matter now has come before the court. Nothing now turns on the procedural aspect of the matter, as I conceive, but I have thought it right to refer to it.
I now must make some reference to the trusts, already briefly alluded to, of Mr. Joshua Owen Steed's will. By Clause 9 he gave and devised to his trustees (and I have said they are the Defendants)
"my farm known as the Loft Farm Cockfield upon trust to sell the same with power to postpone such sale for so long as they in their absolute discretion shall consider desirable and until any sale shall be effected to hold such property and on sale the proceeds of sale thereof upon protective trusts as defined by section 33 of the Trustee Act, 1925, for the benefit of the said Gladys Louise Sandford - the Appellant - during her life and from and after the death of the said Gladys Louise Sandford Upon trust to hold the said properties or the proceeds of sale thereof in trust for such person or persons as the said Gladys Louise Sandford may by deed revocable or irrevocable or by will or Codicil appoint."
Then there are trusts in default of appointment.
The clause continues:
"Provided nevertheless and I hereby Declare that the settlement of this property upon the said Gladys Louis Sandford is made for the purpose of providing for her during her life but it is my wish that she shall have the use and enjoyment of the capital value thereof if she needs it during her life And I direct that if and when such property shall be sold my trustees may apply capital moneys from such sale to or for her benefit at such times and in such proportions as they may consider to be most to her advantage."
Then there is an administrative provision, and the will continues:
"provided that they shall consider the necessity for retaining sufficient capital to prevent her from being without adequate means at any time during her life … "
There followed a clause in which the Testator gave a sum of £4,000 to his trustees to be held on trusts similar to those elaborated in the previous clause. That second clause ended with this expression:
"The amount of this legacy is intended as a recognition of the interest which I feel sure the said Gladys Louise Sandford will take in the welfare" of a named brother, not being the brother whom I have previously mentioned.
The relevant facts can be very briefly stated, and O have already said I expressly forebear form any unnecessary elaboration. The Testator died in December, 1954, Miss Sandford then being forty-eight years old and unmarried. Some little time after the Testator's death, out of the capital fund, a sum of a little under £2,000 was applied in buying for the Miss Sandford a cafe in Long Melford. Unfortunately Miss Sandford's conduct of that business has not been very successful, and she feels she would like to be relieved of it. That may happen, but it is not one of the issues before us.
So far as the farm is concerned, at all relevant times, including the time before the Testator's death, her brother, to whom I earlier alluded, was the tenant. So far as this farming enterprise is concerned, the evidence seems to show he has done quite a lot of work on it and may well have improved it. His own financial position, however, appears to be, at times at any rate, precarious (to say the least). There is a question whether he has in fact paid any rent, though the evidence indicated that the Appellant, Miss Sandford who would be in effect entitled under the trusts to receive it, has given him receipts.
The Trustees came to the conclusion more than two years ago that this farm was not a desirable asset from the point of view of the trusts which they were under a duty to administer. There is a problem about the rent. In addition, and bearing in mind the financial standing of the brother, the Trustees were more than a little concerned about the liabilities that might fall on them for capital expenditure in the way of repairs and otherwise to the premises. They took the best advice they could get. They were informed by qualified experts that the value of the farm with the sitting tenant there was something not much above the figure named for probate, £1,300 odd. But the trustees cast about and eventually obtained an offer of £2,500 from the proposing purchaser, which on the evidence before the court, I have no hesitation whatever in saying is shown to be a very good offer indeed, on the footing that the purchaser takes with the sitting tenant in occupation.
Mr. Newsom put forward an argument that the proposed sale was an improvident exercise of the discretion on any footing. He said that if they wanted to get rid of the farm, the thing for the trustees to do was to get rid of the tenant and then sell with vacant possession, when they would get very much more. There is no reliable evidence that they would get very much more if they took that step, and we all know that to get rid of a sitting tenant in these days, particularly where the evidence shows what he has done to his farm, would be no easy matter at all, nor does it come very naturally so to suggest from the advocate for the Appellant. I cannot, I am afraid, pay much regard to that view.
I think that the matter—and I am not so far saying anything about the Variation of Trusts Act jurisdiction - is really capable of being put in the smallest compass. In what circumstances are the trustees to be overridden in exercising their discretion as they propose by selling, notwithstanding the very firm opposition of the Miss Sandford? Her interest in the property is not now confined to that of a life interest, for about the time when these proceedings started she exercised her power under Clause 9 irrevocably to appoint to herself, so that on her death her estate becomes entitled to the corpus of the trust property.
She is at the moment still unmarried, so that there is no other living person who can be ascertained, at any rate, who has any interest in the property. I put it in that form because, of course, there may be someone to whom later Miss Sandford will become married. There may marry more than one. So long as the protective trusts survive and are not displaced by an exercise of the jurisdiction under the Act of 1958, Miss Sandford is incapable of putting an end to the trusts and requiring that the property be handed over to her.
So, I repeat, the problem seems to be: ought the Trustees to exercise their discretion as they propose by a sale, or should they succumb to Miss Sandford's wishes, she being the person who has such an overwhelmingly preponderant interest in the trust property? I put it in that form. It may well be that other trustees might have been, as I earlier indicated, submissive and said: "Well, in all the circumstances, money, as Miss Sandford said, is not everything, and we will let the matter stand as it is. If Miss Sandford chooses to part with her money, that is her affair," but they have not taken that line. The line which they have taken has been a deliberate exercise of the discretion and a deliberate discharge of the duty. There is no ground whatever for suggesting that they have done any wrong thing, as that word is ordinarily understood. How then can the Court now be asked to over-ride the discretion which the Testator conferred on them, particularly in the circumstances which, as is proved clearly by the evidence, were in his mind, and for the purposes of preventing which the trusts were imposed?
The learned Judge in the course of his judgment may perhaps have based himself, according to the language I find at page 360 of Re Steed's Will Trusts (reported onm 1959 Chancery Division, page 354), on the view that the Court had no power to interfere with the Trustees' exercise of their discretion unless the case was one in which a decree for administration or execution of the trusts, if not asked for, at any rate would have been granted on the material before the Court if it had been asked for.
Mr. Cohen, for the Trustees, has not founded himself on so broad a proposition. He said that in the absence of mala fides or some other special circumstances which would show at least grave misdirection of themselves by the Trustees, the Court will not interfere, particularly in a case where there is an express trust for sale and where the trusts as declared clearly impose, and are intended to impose, a duty in the discharge of which, as the evidence shows, the Trustees have reached their conclusion.
Mr. Cohen, cited the language of Mr. Justice Simonds in Re Mayo (reported in 1943 1 Chancery, page 302) which, I think, supports the general proposition as Mr. Cohen put it. I, therefore, would not desire to base myself on the suggestion which appears to underlie the language of the learned Judge in Steed's case at page 360. On the other hand, I am quite satisfied on the general principles which are applicable to these matters, that this court ought not to interfere, and will not interfere here with the exercise of the trustees' discretion. Why, after all, one may ask, when the testator who has given this bounty has made plain what his purpose is, if the Trustees have established that they have done their utmost to give effect to the duty which is imposed on them, should the Court disregard the testator and overrule the Trustees out of a natural sympathy for the Appellant? I think the answer to that is, there is no reason whatever. That is all I propose to say on that part of the case.
I now come to what has caused me greater difficulty, namely, the effect of the Variation of Trusts Act, 1958. I do not take time to read the whole of Section 1 or the sub-sections, but the relevant language of section 1 is that where property is held on trusts, the Court
"may if it thinks fit by order approve on behalf of"
and there are then set out in four lettered paragraphgraphs the classes of person, which include infants and unborn persons. Under paragraphgraph (d) is included
"any person in respect of any discretionary interest of his under protective trusts where the interest of the principal beneficiary has not failed or determined".
The sub-section continues
"any arrangement (by whomsoever proposed, and whether or not there is any other person beneficially interested who is capable of assenting thereto) varying or revoking all or any of the trusts."
There follows a proviso:
"Provided that except by virtue of paragraph. (d) of this subsection the court shall not approve an arrangement on behalf of any person unless the carrying out thereof would be for the benefit of that person."
There was some discussion of the use of the word "arrangement". Again, if I may respectfully say so, the language used by the learned Judge seems to indicate that an arrangement must be in some sense inter partes, some kind of scheme which two or more people have worked out. I do not myself accept that. I think that the word "arrangement" is deliberately used in the widest possible sense so as to cover any proposal which any person may put forward for varying or revoking the trusts.
In the present case, the proposed variation (that is the "arrangement") which the Appellant puts forward may be most briefly and accurately stated as involving this: in Clause 9 of the will the words: "upon protective trusts as defined by section 33 of the Trustee Act, 1925" should be omitted, and similarly in the next clause the word "protective" should be omitted. If those words were omitted, the result would be that Miss Sandford would become absolutely entitled to the property, because she would then be the life tenant, having appointed by irrevocable deed to herself the reversion; and that is what she seeks.
The Trustees have taken the view that it is not an arrangement which, having regard to their conception of their duties and the wishes of their testator, they should approve. For my part, I do not think that approval on behalf of the Trustees is the Court's function in this case, though the Court in exercising its general discretion will certainly pay regard to what the Trustees say and the grounds for their saying it. Nor can I see, if this was the learned Judge's view, that the Court is called on by the language of this section to approve the arrangement or proposal on behalf of the proposer; that is to say, whether they think she was wise or unwise to put her idea forward.
The duty of the Court, as I read the section on the facts of this case, is that they must approve it on behalf of the only person or persons who might have an interest under the discretionary trusts and whose presence under the trusts now prevents Miss Sandford saying that she can put an end to the settlement.
Having regard to Miss Sandford's age, no doubt it is true to say that she will not and cannot now have children, but she might marry, and marry more than once. She says, with some reason, that having lived for 53 years unmarried she does not feel in the least likely to marry now. Well, that may well be right, though many have said that before and subsequent events have proved them wrong. That, however, is neither here nor there. There does exist a discretionary trust, and a future husband of Miss Sandford's is a person interested under those trusts, on whose behalf the Court must now approve the proposal.
Having regard to what has happened between Miss Sandford and her brother, it is possible that strictly speaking there has been a forfeiture and if so, the future husband or husbands would be within paragraph (b) of the sub-section, but if not he or they would be within paragraph (d). Again, I think that does not, for present purposes, matter.
I repeat that the duty of the Court is now to consider whether in the exercise of its discretion, which is framed in the widest possible language, it should approve the arrangement on behalf of what has been described in argument as the spectral spouse of Miss Sandford. In doing that, what must the court consider? Not, I conceive, merely the material benefit or detriment of such spouse. Certainly not if he is to be regarded as being a person under paragraph (d), though if he is to be regarded as falling under paragraph (b) it is expressly enjoined that the Court shall not approve the arrangement unless it is for his benefit.
As I have said, I do not so read this Act as to mean that the Court's duty in the exercise of this very wide and, indeed, revolutionary discretion is confined to saying:
"Would it really much harm this spectral spouse if we approve the proposal?"
Bearing in mind, of course, the admitted possibility that the spouse might cease to be spectral and become a reality, I think what the Court is bound to do is to see whether, looked at on behalf of the person indicated, it approves the arrangement. It is the arrangement which has to be approved, not just the limited interest of the person on whose behalf the Court's duty is to consider it.
If that is right, it then follows that the Court must regard the proposal as a whole and so regarding it then ask itself whether in the exercise of its jurisdiction it should approve that proposal on behalf of the person who cannot give a consent, because he is not in a position to do so. If that is a right premise, then it follows that the Court is bound to look at the scheme as a whole, and when it does so, to consider, as surely it must, what really was the intention of the benefactor. That such is a proper approach is at least supported by the provisions of Order 55, Rule 14A, Sub-rule (3A) (Annual Practice, 1960, p 1489) which provides that in the case of an application under this Act, where there is a living settlor the living settlor is to be a party before the Court. That rule seems to me to reinforce what I conceive to underly this provision, namely, that the Court must, albeit that it is performing its duty on behalf of some person who cannot consent on his or her own part, regard the proposal in the light of the purpose of the trust as shown by the evidence of the will or settlement itself, and of any other relevant evidence available.
Having so formulated the duty, I have, for my part, come to the conclusion that it would not be right for the Court in the exercise of its discretion to approve this variation or arrangement. I am not uninfluenced in coming to that conclusion by any means by the circumstance that the learned Judge obviously did not think it was a proposal which should be approved, though it is quite true that for reasons which I have indicated it may be said that he was looking at it and basing his jurisdiction on an interpretation of the section which I have not been altogether able to share, namely, it was his duty to approve it on behalf of the proposer, Miss Sandford, and also that the scheme must be regarded as intended to be in some sense inter partes and, therefore, that he had to approve it on behalf of the trustees.
Disagreeing, if that is a fair view of his judgment, with that premise, nevertheless it is quite clear, I think, that the judge was by no means unsympathetic to the feelings and views of Miss Sandford, but on the other hand was no less clear in his mind that the arrangement was one which so cut at the root of the Testator's wishes and intentions that it was not one the Court should approve.
After all, if one is asked to approve this proposal on behalf of a spectral spouse, (if I may revert to that phrase) one must ask why is the spectral spouse there at all under the trust? If one asks that question, nearly everything else, as it seems to me, follows. There is no doubt why the spectral spouse is there. It was part of the Testator's scheme, made as I think manifest by the language which I have read from the clauses in the will, that it was the intention and the desire of the Testator that this trust should be available for Miss Sandford so that she would have proper provision made for her throughout her life, and would not be exposed to the risk that she might, if she had been handed the money, part with it in favour of another individual about whom the Testator felt apprehension, which apprehension is plainly shared by the trustees.
For those reasons, therefore, I also conclude adversely to the Appellant that we should not exercise jurisdiction under the Act of 1958 to approve the arrangement which has been put forward, and which I have tried to define. That is the end of the case. I only repeat the sympathy I have felt in a distressing matter of this kind, both with Miss Sandford and with the Trustees, whose difficulties in discharging their duty are obvious. I should like to express the hope that perhaps time, the healer, will do much to put an end to these troubles.
LORD JUSTICE WILLMER: I entirely agree, and I do not find it necessary to add any words of my own.
LORD JUSTICE UPJOHN: I also agree. When considering applications under the Variation of Trusts Act, I agree that this Court is not confined to the narrow duty of inquiring into the effect of a proposed scheme on those on whose behalf approval by the Court is sought. The Court must be satisfied that the scheme, looked at as a whole, is proper to be sanctioned by the Court. Upon that matter, the views of the Trustees are entitled to respect, but are not conclusive.
In the circumstances, and for the reasons stated by my Lord, I agree that this is not a scheme that is proper to be approved by the court.
Appeal dismissed. No order as to the Appellant's costs, eccept an order under Schedule III to the Legal Aid and Advice Act, 1949, for taxation of her costs as between soclcitor and client. Trustees' proper costs to be paid out of the corpus of the trust.
