England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL.
(Appeal of Plaintiffs from Order of Mr. Justice Plowman, London,
dated November 2, 1972.)

		Royal Courts of Justice,
		14th March 1974.

LORD JUSTICE HEGAW: The judgment which Lord Justice Buckley is about to deliver is the judgment of the court.

LORD JUSTICE BUCKLEY: This appeal raises a difficult question relating to an advancement under the Trustee Act 1925, Section 33 by way of sub-settlement, some of the beneficial trusts of which are void for perpetuity. The appeal is from a judgment of Mr. Justice Plowman delivered on 2nd November, 1972.

By a settlement dated 1st April, 1947 (which we will call "the 1947 settlement"), made on the marriage of Peter Robin Hood Hastings (who later assumed the additional surname of Bass, and whom we will call "Captain Hastings-Bass) his uncle, Sir William Bass, settled property upon trusts under which the beneficial interests were as follows: (a) a protected life interest for Captain Hastings-Bass; (b) after his death upon trust for such of his sons or remoter male issue as Captain Hastings-Bass should by deed revocable or irrevocable or by will or codicil appoint; (c) in default of and subject to any such appointment upon trust for such son of Captain Hastings-Bass as should first attain the age of 25 years before the expiration of 21 years after the death of Captain Hastings-Bass and, if there should be no such son, upon trust for such son of Captain Hastings-Bass as should first attain the age of 21 years; (d) with remainders upon similar trusts to two other nephews of the settlor and their respective male issue and an ultimate trust in favour of a named person; (e) with power for Captain Hastings-Bass by deed revocable or irrevocable executed prior to and in contemplation of any marriage or by will or codicil to appoint a life or less interest in not exceeding one half of the trust fund in favour of any wife who might survive him. Captain Hastings-Bass had four children, a son (William) born on 50th January, 1948, a son (Simon) born on 2nd May, 1950, a son (John) born on 5th June, 1954, and a daughter.

By a revocable deed of appointment dated 2nd January, 1958, Captain Hastings-Bass in exercise of his power in that behalf under the 1947 settlement appointed that the trustees should from and after his death (and subject to any interest appointed in favour of his widow) stand possessed of the trust fund in trust for his son William, if and when he should attain the age of 25 years absolutely. William was then nearly ten years old, and he was bound to attain the age of 25 years, if at all, within 21 years of his father's death. The appointment appears to have had no significant effect upon his contingent interest.

In the preceding year, on 29th October, 1957, Miss Diana Hastings, a sister of Captain Hastings-Bass, had made a settlement of a sum of £500 upon trusts under which the beneficial interests were as follows: (a) a life interest for William; (b) after his death in trust for such of his issue as he without transgressing the rule against perpetuities should by deed revocable or irrevocable or by will or codicil appoint; (c) in default of and subject to any such appointment in trust for his children who should attain the age of 21 years and if more than one in equal shares subject to hotchpot; (d) if there should be no such child of William in trust for such of the issue of Captain Hastings-Bass living at the date of the failure of the foregoing trusts as the trustees without transgressing the rule against perpetuities should by deed appoint; (e) in default of and subject to any such appointment in trust for Captain Hastings-Bass's youngest son John absolutely; (f) with power for William by deed made in contemplation of marriage or by will or codicil to appoint to any wife who might survive him a life or lesser interest in the whole or any part of the trust fund. This settlement (which we will call the 1957 settlement) contained a power for the trustees in their absolute discretion from time to time and at any time after William should have attained 21 to hand over the whole or such part of the capital of the trust fund to him free from the trusts of the settlement as they might think fit. It also contained a power for the trustees at their discretion with the consent in writing of William to revoke by deed all or any of the trusts therein contained concerning the whole of the trust fund or any part or parts thereof and to declare such new or other trusts for the benefit of William or any child or remoter issue of his as the trustees might think proper.

The rate of estate duty prospectively payable upon property passing upon the death of Captain Hastings-Bass was high, and accordingly the solicitor to the 1947 settlement trustees devised a scheme which was described by Captain Hastings-Bass in a contemporary letter as "a scheme whereby some of the enormous death duties may be reduced on the settlement". This scheme took the form of a transfer by the 1947 settlement trustees under the statutory power of advancement to the 1957 settlement trustees upon the trusts of the 1957 settlement of a fund valued at £50,000. On 21st March, 1958, the 1947 settlement trustees with the consent of Captain Hastings-Bass and in exercise of the statutory power of advancement transferred out of the 1947 settlement to the trustees of the 1957 settlement investments to the value of £50,000 by way of advancement for the benefit of William to be held on the trusts of the latter settlement. The trusts of the 1957 settlement, as applied to the trust fund settled by that settlement, were innocent of any offence against the perpetuity rule. It is evident that the trustees' solicitor conceived that the trusts of the 1957 settlement as applicable to the funds transferred out of the 1947 settlement would also escape infringing the perpetuity rule. This view was consistent with the subsequent decision of Mr. Justice Danckwerts dated 14th May, 1959, in Re: Pilkington's Will Trusts (1959 1 Ch. p.699). But the Inland Revenue appealed from that decision and eventually in the House of Lords (1964 A.C. p.612) it was held that a power of advancement was a special power and that accordingly trusts called into existence by its exercise must be written into the instrument creating the power far the purposes of applying the perpetuity rule.

William was not a life in being at the date of the 1947 settlement, and accordingly it is now common ground that all the powers and beneficial trusts of the advanced fund declared by reference to the 1957 settlement other than the life interest of William are void for perpetuity.

It is also common ground that, if the transaction of 21st March, 1958, was effective to create a life interest in possession in William in the advanced fund, no estate duty became payable on that fund upon the death of Captain Hastings-Bass, which occurred on 4th June, 1964. The Inland Revenue, however, contend that the effect of the transaction was not to create any new beneficial interests in the £50,000 fund, but that this fund at all times remained subject to the trusts of the 1947 settlement. On this footing it is clear that estate duty would have become payable on the fund upon Captain Hastings-Bass's death.

In these circumstances, the plaintiffs, who are the present trustees of the 1947 settlement, applied by originating summons in the Chancery Division for the determination of the question whether estate duty did or did not become payable on the death of Captain Hastings-Bass in respect of the advanced fund. The only defendants to these proceedings are the Commissioners of Inland Revenue. William attained the age of 25 years on 50th January, 1975, and accordingly no-one but he has any interest in the capital of the 1947 settlement fund, and the only persons interested in the income of that fund are himself and his mother, who is at present entitled under a testamentary appointment made by Captain Hastings-Bass to half the income of the fund. She does not, however, seek to assert that the 1958 advancement was not effective to create a life interest in possession in William in the advanced fund.

The case came in due course before Mr. Justice Plowman for decision, and, following an earlier decision of Mr. Justice Cross (as he then was) in Re: Abrahams' Will Trust (1969 1 Ch. p.463), the learned judge held that the result actually produced by the 1958 advance was substantially or essentially different from the intentions of the 1947 settlement trustees when they made it. Following Mr. Justice Cross, Mr. Justice Plowman took the view that the 1947 settlement trustees never effectively exercised the power of advancement, and that accordingly the £50,000 fund at all times remained subject to the trusts of the 1947 settlement. He therefore decided that estate duty did become payable on that fund upon the death of Captain Hastings-Bass. From that decision the plaintiffs appeal.

We have had the advantage of excellently clear arguments on both sides in the appeal. The contentions can be shortly stated in this way. The appellant plaintiffs contend, first, that, notwithstanding that the 1958 advancement did no more than create a valid life interest for William, it was nevertheless for his benefit and fell within the terms of the trustees' statutory power of advancement; secondly, that in these circumstances, the advancement having been made in good faith, it was valid and was not invalidated by reason of the fact that the beneficial interests intended to take effect after William's death were, contrary to the trustees' understanding, void for perpetuity; thirdly, that Re: Abrahams was wrongly decided; and fourthly, that if this was not the case, Re: Abrahams is distinguishable on its facts from the present case. We add parenthetically that Mr. Slade reserved the right to argue in the House of Lords that Re: Pilkington's Will Trusts had been wrongly decided in their Lordships' House. The respondent Commissioners contend, first, that Re: Abrahams was rightly decided and cannot be distinguished from the present case; secondly, that the statutory power of advancement confers a fiduciary discretion which can only be properly exercised after giving due consideration to all relevant factors and, in particular, the benefit proposed to be conferred upon the person advanced; thirdly, that the essential features of a power of advancement are (a) that it is a power to pay or apply capital, and (b) that it is exerciseable for the benefit of one person only, namely, the person advanced, and that beneficial interests for other persons can only be conferred as incidental to and part and parcel of the benefit to him; fourthly, that consequently trustees making an advancement by way of a sub-settlement must have a proper understanding of the effect of that sub-settlement, for, if they do not, they have not exercised it validly; fifthly, that in the present case the trustees never directed their minds to an advancement which merely gave William a life interest in income; sixthly, that the court cannot retrospectively substitute its own discretion for that of the trustees by determining that the advancement in its attenuated form of a mere life interest for William was for his benefit, since the discretion was conferred upon the trustees; finally, that Section 52 does not authorise either (a) an advancement by way of sub-settlement under which all capital interests are void for perpetuity or (b) a sub-settlement creating no interest at all in capital.

The facts in Re: Abrahams were in many respects similar to those in the present case. By the combined effect of the Will of a testator and of a settlement made upon the occasion of the marriage of his son, Gerald, under a power in that behalf contained in the Will the residuary estate of the testator was at the relevant time held upon trust for Gerald for life (in part protected) and thereafter upon trust for Gerald's children or remoter issue as he should appoint and in default of and subject to such appointment in trust for any or all of his children who should attain the age of 21 years or, being female, marry under that age, and if more than one in equal shares absolutely, with remainder upon trust for the children and remoter issue of another son of the testator and an ultimate remainder in favour of nephews and nieces of the testator living at his death. Gerald had two children only, daughters born after the death of the testator. In 1957, when these two children were aged respectively & and 6 years, the trustees with Gerald's consent purported to made an advancement of £25,000 for the benefit of each of them by way of sub-settlement under the trusts of which in each case the daughter took a protected life interest with trusts in remainder for the benefit of her children and remoter issue and otherwise which were all void for perpetuity. If the advancements were effective, they operated to create valid defeasible interests in favour of the daughters respectively but created no other valid powers of beneficial interests. Counsel for the Inland Revenue there contended that the trustees had exercised the newer of advancement on the footing that they were producing a certain result and that in fact they produced a totally different result and so could not be rightly sail to have exercised the power at all. Mr. Justice Cross dealt with this argument (at p.484E) as follows:

"The power which the trustees purported to exercise by setting up Carole's fund (to take her as an example} and declaring the trusts of it which are contained in the 1957 settlement was a power exercisable for the benefit of Carole, and for nobody else. The various other persons to whom the settlement purported to give benefits were not objects of that power of advancement. The position was that the trustees had a discretion as to the manner in which they would benefit Carole, and they considered that an appropriate way to benefit her would be to create this settlement under which beneficial interests were given to other members of her family besides herself. IT one looks at the matter in that way, it seems to me reasonable to hold that the effect of the invalidity of some of the limitations in the settlement by reason of the rule against perpetuities may not be the same as it would have been had the settlement been created by the exercise of a special power of appointment under which all the supposed beneficiaries were objects. It is one thing to say that if a trustee has power to appoint a fund to all or any of a class of objects and he appoints a life interest to one object which is not void for perpetuity and remainders to other objects which are void, then the life interest survives the invalidity of the remainders; but it is another thing to say that if a trustee has power to benefit A. in a number of different ways and he chooses to benefit him by making a settlement on him for life with remainders to his issue, which remainders are void for perpetuity, then A. can claim to obtain that part of the benefit intended for him which is represented by the life interest. The interests given to separate objects of an ordinary special power are separate interests, but all the interests created in Carole's fund were intended as part and parcel of a single benefit to her."

The learned Judge went on to say that, if the invalidity caused by the operation of the rule against perpetuities were quite small as compared with the parts of the sub-settlement which were unaffected by the rule, the court might be prepared to say that the valid parts of the sub-settlement would survive intact; but he went on to say that on the facts of the case before him there was no doubt that the effect of the operation of the rule was wholly to alter the character of the sub-settlement, and accordingly he held that the trustees had never validly exercised the power of advancement. As we understand him, Mr. Justice Cross decided this question upon the basis of what we have called the fourth submission of the Commissioners in the present case. We must therefore consider whether that submission is sound in principle.

Mr. Browne-Wilkinson for the Commissioners supports the submission upon the following grounds. The power of advancement is, he says, a fiduciary power, and as to this we think there is really no dispute. He says that the trustees can only properly exercise such a power after giving due consideration and weight to all relevant circumstances. As they must weigh the benefit which the advancement will confer upon the person advanced against those interests under the settlement which will be adversely affected by the advancement, they cannot give due consideration and weight to the benefit to be conferred on the person advanced unless they appreciate the true nature of that benefit. Mr. Browne-Wilkinson contends that, if in the present case when the trustees made the advancement they believed that all the trusts of the sub-settlement would take effect, they cannot have applied their minds to the right question.

In support of these contentions he relies upon what was said in this court in Re: Pauling's Settlement Trusts (1964 1 Ch. p.303 at p.333):

"Being a fiduciary power, it seems to us quite clear that the power can be exercised only if it is for the benefit of the child or remoter issue to be advanced or, as was said during argument, it is thought to be 'a good thing' for the advanced person to have a share of capital before his or her due time. That this must be so, we think, follows from a consideration of the fact that the parties to a settlement intend the normal trusts to take effect, and that a power of advancement be exercised only if there is some good reason for it. That good reason must be beneficial to the person to be advanced; it cannot be exercised capriciously or with some other benefit in view. The trustees, before exercising the power, have to weigh on the one side the benefit to the proposed advancee, and on the other hand the rights of those who are or may hereafter become interested under the trusts of the settlement."

He also relied upon observations made by Lord Justice Upjohn and Lord Radcliffe in Re: Ellington's Will Trusts (1961 1 Ch. p.466 and 1964 A.C. p.612). That case related to a testamentary settlement to which the statutory power of advancement was applicable. The trustees, being minded to make an advancement under the statutory power on the terms of a sub-settlement, applied to the court for directions whether they could lawfully so exercise the power. The trusts of the proposed sub-settlement were such that, as in the present case, they would have been to a considerable extent void for perpetuity, although this fact was not realised by the trustees. In the Court of Appeal the case was decided upon the basis that the statutory power did not enable the trustees to make a sub-settlement. Of the judges who constituted the court, only Lord Justice Upjohn dealt with the perpetuity point, on which he disagreed with the view which had been expressed by Mr. Justice Danckwerts, referred to earlier. Having held that all the trusts proposed to be declared in respect of the period after the date when the child advanced should have attained the age of 50 were void for perpetuity, he said this:

"The effect therefore of the rule against perpetuities on the proposed settlement is basic: It entirely alters the settlement, and that seems to me to be fatal to this case, for the trustees have never been asked to express an opinion as to whether they would think the proposed settlement, modified by reason of the rule against perpetuities in the manner I have mentioned, is for the benefit of Penelope. That is a matter to which they have never addressed their minds, and, therefore, it cannot possibly be justified under Section 52, for it has not been shown that the trustees think that the settlement, as so modified, is for the advancement or benefit of Penelope".

The House of Lords differed from the Court of Appeal on the main ground of decision, holding that it is within the powers of trustees to make an advancement under the statutory power by way of sub-settlement, but they agreed with Lord Justice Upjohn's view upon the perpetuity point. They accordingly reached the conclusion that there were legal objections to the proposed sub-settlement which the trustees had placed before the court, which, as Lord Radcliffe said at page 642, went to the root of what was proposed.

It is, in our opinion, important to bear in mind that in Re: Pilkington's Will Trusts the trustees were seeking the directions of the court before taking action. The court would of course not authorise trustees to set up a sub-settlement many of the trusts of which would be void. The trustees were not asking the court to consider any other form of sub-settlement, nor had they presumably applied their own minds to that question at all.

It is at this point relevant, we think, to state that at the death of Captain Hastings-Bass the value of the advanced fund was £57,318 and that there were investments representing accumulations of income of that fund which were then of the value of £8,573. If Captain Hastings-Bass were liable for surtax in respect of the income of the advanced fund this liability amounted at the time of his death to £7,500. Accordingly, at his death the estimated net value of the fund and accumulations (if surtax was payable) was £58,191. If duty became payable upon his death in respect of that fund, it would have amounted to £42,318, and the total additional liability in the event of the funds becoming aggregable for estate duty purposes, including the surtax liability, would have been £59,588. The rate of duty payable on Captain Hastings-Bass's death in respect of the aggregable assets which were liable to duty at the full rate was 75 per cent, with the benefit of marginal relief. Accordingly, the duty on the advanced fund would have been at the rate of, say, 73 per cent.

If the advancement was effective, William thereupon became entitled to an indefeasible life interest in possession in a fund of £50,000. If the advancement was ineffective his interest in that £50,000 remained a contingent interest dependent upon his attaining 25 in a net sum of 27 per cent, of £50,000 or £13,500. There can be no doubt that the capitalised value of an indefeasible life interest in possession in £50, 000 for a boy of 10 would greatly exceed the value of a right for the same boy to receive a capital sum of £13,500 in the event of his attaining the age of 25. In this respect, apart from other considerations, the advancement was calculated to benefit William very greatly.

We can feel no doubt that in such circumstances the duty-saving aspect of the scheme was a primary consideration in the minds of the trustees. The trusts of the sub-settlement which were intended to take effect after William's death in favour of his issue could also (had they been capable of taking effect) legitimately be regarded as beneficial to him as making some provision for any issue he might have for whom he would otherwise be expected to wish to make provision out of his free estate, and as securing the fund for that end. The intended power for William to make provision for a widow under the sub-settlement could also legitimately be regarded as benefiting William indirectly in a similar manner, and the power for the trustees to pay capital to him for his own use could also clearly be regarded as conferring a contingent benefit on him. But, in our opinion, these indirect or contingent benefits (had they been capable of taking effect) should be regarded as mere make-weights which might be treated as enhancing the benefit to William of the scheme as a whole, but which were of far less significance than the major benefit of the saving of death duties coupled with an acceleration of William's interest.

In these circumstances, to what considerations is it reasonable to suppose that the trustees addressed their minds before making the advancement? No doubt it is right to say that they should and would have considered whether the aggregate of all the provisions of the sub-settlement (if fully effective) would be for William's benefit, but in doing so they could not, we think, have failed to consider to what extent each of those provisions could properly be regarded as contributing to the aggregate benefit, and in particular they could not have failed to consider to what extent the conferring upon William of an immediate and indefeasible life interest in possession would benefit him. The circumstances of the case, in our view, make it clear that this aspect of the arrangement must have been the prime consideration in the minds of the trustees, and this is, we think, borne out by the terms of Captain Hastings-Basses contemporary letter to which we have already referred.

The fact that the ulterior trusts of the sub-settlement failed for perpetuity cannot decrease the element of direct benefit to William in the scheme. Moreover, the effect of the failure of those trusts was to leave William's contingent interest in capital under the 1947 settlement intact. He was consequently left with a greater prospect of securing the ownership of the capital of the fund than would have been the case had the trusts of the sub-settlement taken effect in full.

As regards weighing the benefits to William of the intended sub-settlement against the expectant interests of others under the 1947 settlement, the true effect of the sub-settlement necessarily affected those expectant interests less adversely than the sub-settlement would have done, had it taken effect as intended. Instead of those expectant interests being entirely displaced, so that, for instance, Simon would have been cut out entirely, they were left intact with the benefit of the saving of estate duty at a high rate on the death of Captain Hastings-Bass. Had it occurred to the trustees that the ulterior trusts might all fail for perpetuity, they could not reasonably have thought that this could tip the scales in the weighing operation against the scheme. The law cannot, in our judgment, require the trustees' exercise of their discretion to be treated as a nullity on the basis of an absurd assumption that, had they realised its true legal effect, they would have reached an unreasonable conclusion as the result of the weighing operation.

In these circumstances, can it be said that the trustees have never exercised their discretion under Section 32. There can be no doubt that the transfer of investments to the 1957 settlement trustees was an exercise of some kind of discretion. What the 1947 settlement trustees did was not obligatory: they chose to do it. If one asks what discretion they exercised, there can be no doubt that they believed themselves to be acting under Section 32. They made the transfer to the 1957 settlement trustees because they considered that it would benefit William. Can the fact that they believed their action would have a different legal effect from the limited effect which alone it could have result in the transfer not having been an exercise of their discretion under that subsection? There is no reason to suppose that, in the light of their own understanding or advice as to the law, they failed to ask themselves the right questions or to arrive in good faith at a reasonable conclusion. Amongst the questions they must have asked themselves was the question whether a sub-settlement limiting William's interest in the advanced fund to a life interest would be for his benefit. For reasons which we have already indicated, the only answer which they could reasonably have given themselves to that question would have been affirmative, even without regard to any indirect or contingent benefits intended to be conferred on William by the other provisions of the sub-settlement. They may not have asked themselves whether to give William an immediate life interest without any further variation of the trusts of the 1947 settlement would benefit William, but the consequence would not, in our opinion, be that their action should be regarded as something other than an exercise of their discretion under Section 52.

Where trustees intend to make an advancement by way of sub-settlement, they must no doubt genuinely apply their minds to the question whether the sub-settlement as a whole will operate for the benefit of the person advanced; but this does not, we think, involve regarding this benefit as a benefit of a monolithic character. It is, in our opinion, more naturally and logically to be regarded as a bundle of benefits of distinct characters. Each and all of those benefits is conferred, or is intended to be conferred, by a single exercise of the discretion under Section 32. If by operation of law one or more of those benefits cannot take effect, it does not seem to us to follow that those which survive should not be regarded as having been brought into being by an exercise of the discretion. If the resultant effect of the intended advancement were such that it could not reasonably be regarded as being beneficial to the person intended to be advanced, the advancement could not stand, for it would not be within the powers of the trustees under Section 32. In any other case, however, the advancement should in our judgment, be permitted to take effect in the manner and to the extent that it is capable of doing so.

In Re: Abrahams the beneficial interest of such daughter in her advanced fund was a protected life interest only, not, as in the present case, an indefeasible one. This was the only beneficial interest under the sub-settlement in that case which was capable of taking effect; and the interest of each daughter under the head settlement - that is, the combined effect of the will and marriage settlement - in the capital of her advanced fund was a right to one half only of the capital contingently upon her attaining the age of 21 or marrying. Mr. Justice Cross might well have been justified in that case in considering that the intended sub-settlement in its attenuated form could not reasonably be regarded as beneficial to he daughter intended to be advanced and so could not be treated as an exercise of discretion falling within the terms of Section 32. If so, we think he reached the right conclusion. His decision should not, in our judgment, be regarded as authority for the fourth contention of the Commissioners in the present case. It should not, we think, be treated as laying down any principle applicable in any case other than one in which the effect of the perpetuity rule has been to alter the intended consequences of an advancement so drastically that the trustees cannot reasonably be supposed to have addressed their minds to the questions relevant to the true effect of the transaction. We do not consider that the operation of the rule has produced such a drastic effect in the present case.

To sum up the preceding observations, in our judgment, where by the terms of a trust (as under Section 52) a trustee is given a discretion as to some matter under which he acts in good faith, the court should not interfere with his action notwithstanding that it does not have the full effect which he intended, unless (1) what he has achieved is unauthorised by the power conferred upon him, or (2) it is clear that he would not have acted as he did (a} had he not taken into account considerations which he should not have taken into account, or (b) had he not failed to take into account considerations which he ought to have taken into account. In the present case (2) above has not, in our judgment, been established; but the Commissioners contend that for reasons stated in their third submission, sub-head (a), and their final submission what the trustees achieved in the present case was in excess of their power.

Before dealing with that point we should say one word about the Commissioners' sixth contention. In our judgment, the court is not being asked to exercise any discretion, but only to determine whether the trustees have validly exercised their discretion. Accordingly, we think that there is nothing in this submission.

The Commissioners' third submission, sub-head (a), and their last submission can be conveniently considered together and amount in the present case to this: that since the sub-settlement was ineffective to create any beneficial interest in the capital of the advanced fund, there was no payment or application of capital within the contemplation of Section 52. In our judgment, the 1947 settlement trustees did "apply" part of the capital of the trust fund within the meaning of the section when they transferred the investments to the 1957 settlement trustees. This was manifestly a disposition of a part of the capital assets of their trust. The fact that the sub-settlement declared no effective beneficial trusts of capital but created only a limited beneficial interest in income does not, in our judgment, deprive the transaction of that character. Its effect was that the 1957 settlement trustees held the transferred assets on an express trust for the persons beneficially interested therein under the 1947 settlement with the powers and subject to the provisions conferred by and contained in the latter settlement. The position is, we think, no different from what it would have been had the sub-settlement expressly declared such constructive trusts. The 1947 settlement trustees parted with the transferred assets and could not, we think, have recovered them even after William's death. They parted with the legal ownership and had no equitable interest in the transferred assets which would have enabled them to assert any claim to them at any time thereafter. We consequently feel unable to accept these submissions of the Commissioners. In Re: Pilkington's Will Trusts Lord Radcliffe (at page 636) said that he had been unable to find in the words of Section 32 anything which in terms or by implication restricted the width of the manner or purpose of advancement. We also can find nothing in the language of the section to limit the power of trustees thereunder to making an advancement in a manner which creates new beneficial interests in capital.

For these reasons, we allow this appeal and substitute for the order of the learned Judge a declaration that estate duty did not become payable on the death of Captain Hastings-Bass.

(Appeal allowed, with costs in Court of Appeal and below. Leave to appeal to the House of Lords, conditional upon the Crown not seeking in the House of Lords to disturb order for costs made as to costs in Court of Appeal and below.)