ON APPEAL FROM THE HIGH COURT OF JUSTICE
THE HON MR JUSTICE MANN
Strand, London, WC2A 2LL
B e f o r e :
LADY JUSTICE SMITH
LORD JUSTICE WILSON
| CHRISTOPHER SOUTHGATE & ANOR
|- and -
|PETER SUTTON & ORS
MRS SHAN WARNOCK-SMITH QC (instructed by Charles Russell LLP) for the 1st, 2nd & 3rd Respondents
Hearing date: 22nd October 2010
Crown Copyright ©
Lord Justice Mummery:
"Where in the management or administration of any property vested in trustees, any sale, lease, mortgage, surrender, release, or other disposition, or any purchase, investment, acquisition, expenditure, or other transaction, is in the opinion of the court expedient, but the same cannot be effected by reason of the absence of any power for that purpose vested in the trustees by the trust instrument, if any, or by law, the court may by order confer upon the trustees, either generally or in any particular instance, the necessary power for the purpose, on such terms and subject to such provisions and conditions, if any, as the court may think fit and may direct in what manner any money authorised to be expended, and the costs of any transaction, are to be paid or borne as between capital and income."
The Settlement and the proposal
A. Appropriation/partition point
"This therefore being a case where partition cannot be effected under any power vested in the trustees by the trust instrument or by law, I am entitled to consider whether it is expedient and ought to be carried into effect. If so I can authorise the trustees to effect it under the Trustee Act, 1925, s.57, provided that I am satisfied that it cannot be effected in any other way…"
Discussion and conclusions on appropriation/partition
"The right to one moiety of the income of a fund is quite a different thing from the right to the income of a severed moiety of the fund. And the difference is not just a technicality. The advantages from the point of view of investment and administration in keeping a large fund intact may be substantial."
"…it is manifest that an interest in half the income of an undivided fund is quite different from the whole income of a divided half of that fund."
B. Advancement point
"(1) Trustees may at any time or times pay or apply any capital money subject to a trust, for the advancement or benefit, in such manner as they, in their absolute discretion, think fit, of any person entitled to the capital of the trust property or of any share thereof, whether absolutely or contingently on his attaining a specified age or on the occurrence of any other event, and whether in possession or in remainder or reversion, and such payment or application may be made notwithstanding that the interest of such person is liable to be defeated by the exercise of a power of appointment or revocation, or to be diminished by the increase of the class to which he belongs:
(a) the money so paid or applied for the advancement or benefit of any person shall not exceed altogether in amount one-half of the presumptive or vested share or interest of that person in the trust property; …
"50. …Thus a distinction is drawn between an interest in the trust property on the one hand , and the trust property itself on the other. An advancement under the section deals with the latter. The proposal of the trustees deals with the former. What they are proposing is a variation of the trusts to exclude contingent interests, not the application of 'capital money [property] subject to a trust'. "
Lady Justice Smith
Lord Justice Wilson