England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BIRMINGHAM DISTRICT REGISTRY

		Priory Courts 33 Bull Street Birmingham B4 6DS
		19 December 2011

HIS HONOUR JUDGE PURLE QC:

1. This is an application in the course of the insolvency of Wedgwood Museum Trust Limited ("the Museum Company") by its administrators. They seek directions as to whether or not a collection, known as the Wedgwood collection, is available to meet the costs, charges and expenses of the insolvency, or the liabilities of the Museum Company to its creditors or to any of them and, if so, which.
2. The Wedgwood collection is a unique collection of pottery and other artefacts and items of historical importance built up over many decades by (formerly) Josiah Wedgwood and Sons Limited ("the Trading Company"), and then the Museum Company following its incorporation in 1962 and a gift made to it in 1964 of the collection as it then stood.
3. There are two main points which arise for decision. The first is whether the collection is the property beneficially of the Museum Company or whether it holds the collection or any part of it on a special charitable trust which takes it outside the property available for distribution amongst the Museum Company's creditors generally. The second point is whether or not, even if the assets are held upon a special trust, they should be made available to satisfy liabilities incurred by the Museum Company as trustee, via the trustee's right of indemnity. That raises the question of whether the particular liabilities were properly incurred.
4. It was common ground when this hearing was called on before me that the evidence was not then in a state sufficient to enable me to reach a final view on the second question. I therefore limited the hearing to determining the first question. If the answer to that question is that the collection is available for distribution among the creditors of the Museum Company generally, then the second question will not arise. It is only if there is a special charitable trust, the assets of which are separate from the Museum Company's assets, that the question of the trustee's indemnity arises.
5. I heard no oral evidence but witness statements were put in and have been accepted as truthful. The principal witness statement was that of Derek John Miller. There are three other statements, some of a rather technical nature, of Wendy Joy Davies, Michael Stoddard and Denise Gaye Blake-Roberts.
6. The narrative emerges from the witness statement of Mr Miller, who in turn annexed four other witness statements, those of Arthur Brian (now deceased), Peter Williams (now deceased), Sir David Wilson and George Stonier. They were all former directors of the Trading Company or the Museum Company or both. The statements were all prepared when the problem that now faces the Museum Company first became apparent.
7. The problem that has befallen the Museum Company is this. The Museum Company was incorporated in 1962 and took a gift of the collection in 1964 from the Trading Company. A separate company was set up in order to insulate the collection from exposure to the risk of adverse trading activities of the Trading Company. Subject to one point (to which I shall return later) concerning a gift made by Dr Ralph Vaughan Williams, the composer who was also related by marriage to the Wedgwood family, it is tolerably clear that all the assets making up the Wedgwood collection were, prior to the 1964 gift, the beneficial property of the Trading Company. They were charged to its bankers, from whom a release had to be negotiated before the gift could be effected. Purchased items were also included in the accounts.
8. It appears that from sometime around 1930 trustees had been appointed every year at the annual general meeting of the Trading Company, but they were no more than custodians of the company's property, holding it for the company. There had been desultory discussions which had for many years come to nothing about, firstly, setting up a charity and then a charitable company. Eventually, the charitable company route was chosen. This route was thought to afford greater administrative flexibility, and the Wedgwood family, which then still owned the Trading Company, retained control.
9. The 1964 gift was made by delivery. That delivery consisted of a symbolic delivery of a vase representing the whole collection, as was confirmed in a deed poll of the Trading Company dated 1 July 1964. Shortly before that deed was executed it was explained to the members at the annual general meeting of the Trading Company that the purpose of putting the collection into the hands of the Museum Company was to ensure that there would be a permanent inalienable collection. There is ample other evidence that the subjective beliefs of those involved at the time was that the collection would be held in perpetuity and would be inalienable. Nonetheless, the deed poll which recorded the gift did not reflect those subjective beliefs. It provided as follows:

"This deed made this first day of July 1964 witnesses that we, Josiah Wedgwood and Sons Limited, hereinafter called 'the company', whose registered office is situated at Barlaston in the city of Stoke-on-Trent, do hereby declare that on the 30th day of June 1964 the Deputy Chairman of the company, as agent of the company, did present to Geoffrey Noden Bell of 31 The Iron Market, Newcastle, Staffordshire, a member of the Council of the Wedgwood Museum Trust Limited, and to William Alexander Billington of 18 Kingsley Street, Silverdale, Newcastle, Staffordshire, curator of the museum, item number 73 on the inventory attached hereto, being one of the first of six vases with encaustic decorations made at Etruria on the 13 day of June 1769, by Josiah Wedgwood FRS and did ask the said Geoffrey Noden Bell and William Alexander Billington to accept the said item as a symbolic delivery to them of all the items specified in the inventory attached hereto, to hold the same on trust for the Wedgwood Museum Trust Limited."

10. It will be seen that that deed did refer to a trust, but it did not refer to a separate charitable trust taking the collection outside the ownership of the Museum Company. On the contrary, the Museum Company was identified as the beneficiary. It is now said by Mr Pearce QC, for the Attorney General, that the Museum Company was not in truth the beneficiary but was itself a trustee under a special charitable trust. This, he says, is the only way the intention of those making the gift (viz., that the collection should be permanent and inalienable) could be achieved, and that I should give effect to that intention accordingly.
11. I have no doubt that the evidence before me is all honest evidence, but there is also no doubt that what prompted it was the threat that the collection came under following the insolvency of the Wedgwood group of companies in 2009. By then, the employees managing the museum, previously employed by the Trading Company, had, following a takeover, been transferred to the Museum Company. The reason, it was said, was for the Museum Company to establish for itself a clearer, separate identity. That also resulted in the Museum Company becoming a participating employer in the Wedgwood group pension plan

.

12. The total liabilities of the Museum Company have now been estimated to be £134.7 million by reason of a pension deficit affecting the whole of the Wedgwood group. That is a result of section 75 of the Pension Act 1995 (as amended) and the regulations made under that Act. Under those regulations, as the administrators appear to accept (though Mr Pearce QC for the Attorney General has reserved his position on the point) the last man standing becomes liable for the entire debt owed by all participating employers, calculated on a full buy-out basis. The Museum Company was the last man standing because it was not thought to be insolvent when all the other Wedgwood companies went into administration. It was only subsequently, when the penny dropped relating to the potential effect of section 75 and the regulations, that the insolvency of the Museum Company was recognised.
13. Neither the Pensions Act 1995, nor anything like it, was contemplated in 1962, when the Museum Company was incorporated, or in 1964, when the gift was made. Had the Museum Company's liabilities been limited to the amount needed to cover its own employees' pension deficit, there would have been a liability of approximately £100,000. The collection itself is valued at somewhere between approximately £11.5 million and £18 million. Accordingly a liability of £100,000 would have been manageable, but a liability of £134.7 million is not.
14. It is thus evident why Mr Pearce QC for the Attorney General wishes to characterise the original 1964 gift of the collection, and all other gifts, as gifts for special charitable purposes, which have the effect of vesting property in the Museum Company only as trustee on charitable trusts, and not beneficially. He says this follows from the intentions of all concerned to establish and maintain a permanent, inalienable, collection. The collection is, he says, the trust's permanent endowment, which companies do not have, only trusts do. He prays in aid a number of advisory publications of the Charity Commission, which indicate how it is that charitable trusts may affect a charitable company, and how different assets may be held upon different trusts even within a charitable company. I have no doubt that Mr Pearce QC is correct to contend that charitable companies may have categories of assets some of which may be held on particular charitable trusts, some of which may be held on different charitable trusts, and some of which may simply be held as the property of the charitable company, to be applied for its general purposes. The question here is whether this is a case where all or any of the Museum Company's assets have been made the subject of a charitable trust. Such a state of affairs may be brought about by express declaration, which is not (on the evidence I have read) this case, or impliedly from a course of conduct and dealing which is consistent only with the existence of a charitable trust.
15. Mr Herbert QC, on the other hand, who appears for the Wedgwood pension plan trustee and the Pension Protection Fund (who stand behind the plan trustee), contends that the point here is a simple one. The Trading Company in 1964 did what was recited in the deed of gift. It may well be that the intention on the part of the directors giving effect to that gift, and the intention of all those who have acted as directors and managers of the Museum Company since, has been to maintain a permanent collection, but in law these are the assets of the company and, as insolvency has intervened, the assets of the company must be available for its creditors in accordance with the requirements of the insolvency legislation.
16. That companies do not hold their assets on trusts corresponding to their objects is settled as regards companies generally at the highest level by the House of Lords in Bowman v The Secular Society [1917] AC 406. The law is also settled at first instance as regards charitable companies
17. The first instance decisions which are relevant here are In re Vernon Will Trust, reported as a note at [1972] Ch 300, a decision of Buckley J, Liverpool and District Hospital v The Attorney General [1981] Ch 193, a decision of Slade J, and In Re ARMS (Multiple Sclerosis Research Limited) [1997] 1 WLR 877, a decision of Neuberger J. The general approach is summarised by Neuberger J at page 883H to 884A of the latter case:

"The concept of the general purposes of a company does not have any special meaning, in my judgment. It seems to me that the general purposes of a company while it is solvent are the purposes identified from time to time in its memorandum and articles of association, subject in the case of a charitable company to any special incidence of charity law. Once the company goes into insolvent liquidation then its general purposes change and are governed by the insolvency legislation. However, the company does not cease to have general purposes."

Those observations were made in answer to the point that a gift "for the general purposes of ARMS" created a charitable gift.

18. In this case, looking at the deed poll of 1 July 1964, one finds, as I have said, a trust under which the Museum Company is the beneficiary but no indication of a sub-trust. Moreover, the solicitors acting for both the trading company and the Museum Company explained in a letter dated 17 June 1964 that the only purpose of the deed poll was "to make assurance doubly sure", given that there was to be a gift by delivery. A delivery without more would be presumed to be an outright gift for the general purposes of the Museum Company. In fact, the delivery was to Mr Bell as Council member (the equivalent of a director) of the Museum Company and Mr Billington (the museum curator) as trustees for the Museum Company. A receipt was given by those two recipients which also confirmed that the gift was received and was accepted on behalf of the Museum Company. There is no suggestion in that receipt that there was a sub-trust for charitable purposes. The receipt, at least ostensibly, was for the Museum Company beneficially, though the gifted collection was no doubt to be held for the general purposes of that company set out in its Memorandum of Association.
19. At the time of that gift it was not contemplated that the Museum Company would, at least in the foreseeable future, incur any liabilities. The Trading Company was expected to and did pay all the costs and expenses incidental to the running of the museum and housed the collection. The chief objective at that stage was to protect the collection from possible trading misfortunes of the Trading Company. This was achieved by transferring the collection to the Museum Company. The creation of a trust was not necessary to achieve that result.
20. The Museum Company had a memorandum and articles of association which did not on their face create a charitable trust. It was however open to the Museum Company under its objects to support and establish charities. It would therefore have been intra vires the Museum Company to establish a special charitable trust of the type advocated by Mr Pearce QC. It does not follow from this that it did so.
21. So far as the original memorandum and articles of association were concerned, there was nothing of particular materiality in the articles, but the memorandum stated as the first object as follows:

"(a) To establish a museum for the public exhibition of objects of art, documents, pictures and objects of historic interest produced by the late Josiah Wedgwood, the firm of Josiah Wedgwood and Sons and the company Josiah Wedgwood and Sons Limited, and of other works of art, documents, pictures and objects of historical interest in connection with the said Josiah Wedgwood, the said firm and the said company, and in connection with the pottery industry in the county of Stafford or elsewhere, and for that purpose to acquire the museum which has been established for the purpose aforesaid by the said Josiah Wedgwood and Sons Limited."

22. The last words, referring to the acquisition of "the museum which has been established" was a reference to the collection as it then stood and there is nothing in that object which supports the idea that the Museum Company was to acquire that collection upon a charitable or any other trust. There is the name "trust" in its title, but I do not think that that is sufficient to overcome, without a great deal more, the proposition that the general purposes of a charitable company are not trust purposes.
23. Had it been the case that the existing collection was already held on charitable trusts by the Trading Company, then those trusts would not have been overridden by the gift to the Museum Company. The Museum Company would be a volunteer and would get no better title than the Trading Company had. That much is obvious and was recognised by Buckley J in Re Vernon. However, that was not the case here. That conclusion is however subject to one particular matter which I have already mentioned, but to which I now return relating to Dr Ralph Vaughan Williams.
24. A  letter was sent by Dr Vaughan Williams to the Trading Company in June 1944. That letter has not survived but we know what it said because it is referred to in another letter written by a member of the board to Sir Ralph Wedgwood. The letter from Dr Vaughan Williams, as recorded in that letter, read as follows:

"The family pictures and china at Leith Hill Place have been left to me with a request, with which I thoroughly agree, that if they are given or left by me they should not pass out of the family.

"What I should like best would be to give them to the Wedgwood Museum at Etruria. Would the trustees of the museum accept them? If so, would you or some other expert come Monday to Leith Hill Place and examine the pictures and china there and decide what you think would be suitable for the museum?

"As doubtless you know, there are among other things the Reynolds portraits of Josiah and his wife, the Romney of Mrs Wedgwood, a specimen of the Portland vase and a case of cameos. They cannot actually leave the home until after the valuation for probate, but I hope that will be fairly soon. If the trustees decide to accept I would suggest that they should send down their own expert packer and transport the things at their own risk and that I shall pay the cost of carriage."

25. As it happens, there was then, as all including Dr Vaughan Williams must have known, no museum in the sense of a public exhibition. All the museum goods were stored in the basement at the works, with the exception of a Stubbs portrait of the Wedgwood family, which was then loaned by Phoebe Wedgwood, and temporarily displayed at the Wedgwood premises.
26. The gift of Dr Vaughan Williams was made and accepted even though there was then nowhere, and no present or immediate intention, to display the works thus gifted. For reasons I will come to, that was expected to change eventually, unsurprisingly as the object of the gift was for public display.
27. Dr Vaughan Williams was proposing a gift to "the Wedgwood museum" if "the trustees" would accept the gift. The "Wedgwood Museum" was the collection then owned and held by the Trading Company. "The trustees" were those appointed at annual general meetings of the Trading Company and who were custodians for the Trading Company itself. They were not holding the collection on a separate charitable trust. This troubled one of the Wedgwood directors, who wrote to the Trading Company's solicitors on 24 September 1945 as follows:

"In the past our museum has nominally been under the control of trustees appointed annually at the shareholders' meeting. These trustees fulfil the useful function of refusing to lend pieces to persons whom the company did not think reliable. Actually, however, their position has always been, as far as we can ascertain, entirely bogus. There seems little doubt that the Wedgwood Museum goods are in fact the property of the company and constitute part of its assets, although only those actually purchased by the company appear as assets in the balance sheet.

"By the generosity of Dr Ralph Vaughan Williams OM the museum has been presented with a number of very valuable family pictures which have come into his possession. Dr Vaughan Williams is no doubt under the impression that he has presented these pictures to a special Wedgwood trust. This is unfortunately not the case at all. The presentation of the pictures very greatly increases the value of the museum goods. We feel therefore that it is now time to form a proper trust to take charge of them so that all can be entirely separated from the company's assets. This trust will be in the hands of the same trustees as previously but will continue to be re-elected annually, the senior director being official chairman of the trustees. The trust would receive a nominal income from the company.

"We should be glad if you will kindly inform us what steps can be taken in order to legalise this arrangement."

28. Although that appeared to kick-start some renewed thinking of setting up a trust, nothing in fact happened until the establishment of the Museum Company in 1962 and the gift that was made in 1964.
29. Were it the case that Dr Vaughan Williams made a gift to what was represented to be and what he thought to be a special Wedgwood trust, that might have given rise to an implied or even an express declaration of a charitable trust. However, I do not think that the evidence, despite the fears expressed by the writer of the last letter, goes that far. As I have said, Dr Vaughan Williams was a family member, albeit by marriage, and one must assume that he knew something of the set-up of the Trading Company and in particular that the trustees he was referring to in his letter were those annually elected and who acted merely as custodians for the Trading Company. Whether or not that is so, there is no direct evidence that Dr Vaughan Williams ever did do anything other than hand over his additions to the collection. He was suggesting the trustees send their own packers. There is no contemporaneous evidence that any special condition was attached to the gift. The presumption is that the items gifted were additions to the existing collection, to be held on the same terms, which meant they were the Trading Company's.
30. Many years later, in April 1974, Dr Vaughan Williams' widow, Ursula, wrote a letter after she had read of an exhibition at the Tate Gallery of the Wedgwood Stubbs exhibition, saying:

"This seems a good moment at which to write to you about the Wedgwood family portraits which you have at Barlaston. These were inherited by my husband and were given to the firm on the understanding that they would be hung in a Wedgwood museum, which it was then intended to build. I know that such a museum has not proved a practical possibility and I believe that the portraits now hang in the directors' dining room. I think that there are now no members of the Wedgwood family in the firm so I wonder if it would be possible for the portraits to be somewhere where they can be seen by members of the public -- which was my husband's wish when he gave them -- and I write to ask what you feel about this? Perhaps the National Portrait Gallery would be the best place of all, but there may be somewhere suitable and nearer."

31. Whilst referring to "the firm" in that letter there is no doubt that Ursula Vaughan Williams was referring to the Trading Company, which was technically a limited company, not a firm. She did not say that the portraits were subject to a special trust. She was wondering, not demanding, if it was possible for the portraits to be publicly displayed. The highest she put her husband's state of mind was that the portraits in question were given "on the understanding" that they would be hung in a museum when built. Looking at all that evidence overall, it is clear that Dr Vaughan Williams did not expect his pictures immediately to be hung. It was understood that they would be hung, but a museum was first to be built. I cannot get from the totality of the evidence anything other than an unconditional gift to, as Ursula Vaughan Williams' put it, "the firm", which meant the Trading Company. Accordingly it does not seem to me that that transaction was sufficient to create a special trust.
32. I should just mention in this connection that Mr Peter Williams on 18 April 1974 replied to Ursula Vaughan Williams expressing his understanding that the pictures and all other assets had been transferred by the Trading Company to the Museum Company, "in order to ensure their protection in perpetuity". That, as I have said, is consistent with all of the evidence that has come from people having any involvement in the history of the collection. It is, in my judgment, more in the nature of an aspiration or statement of intention as to future conduct rather than a reflection of any condition that was ever imposed, in 1964 or at any other time.
33. In 1998 the Memorandum of the Museum Company was changed in a significant respect. Under the new clause 3.1 the objects of the trust became educational, relating to the history of pottery and the like, but the means of education was, amongst other things:

"By the acquisition and presentation of items of historical and technical interest connected with the above [the above being defined as the collection] and the provision and maintenance of a museum for that purpose."

34. It is thus clear that even under those altered objects, which coincided with the building of a new museum, the running of a museum was not the sole function of the Museum Company but the acquisition of a collection (as under the original memorandum) was the other side of the coin. I make this point because Mr Pearce QC has from time to time made a distinction between the holding of the collection and the running of a museum, suggesting that the Museum Company's function is limited to the latter. It is clear from the provisions both the original Memorandum already mentioned and of this new clause 3.1 that this argument is untenable. The collection was always to be acquired, as in fact occurred.
35. There was also a new clause 3.22, which gave the company power:

"To accept (or in the discretion of the trust disclaim) any property, real and personal, which may from time to time be devised, bequeathed or given to the trust upon the objects and from time to time to dispose of any item held on such terms as the trust shall think fit, provided always that such disposal shall be made only for the purpose of improving, enhancing or extending the quality and interest of the collection and in furtherance of the objects and providing that any such item is offered first to any museum which is administered by any public authority or charitable trust, by gift or private treaty, shall before such item is offered for sale to the public at auction or in any other manner."

36. It is said that that clause recognised that anything given for the purpose of the objects was subject to restrictions on disposal which made the items thus collected a permanent endowment and therefore (the argument goes) trust property. That in my judgment is reading far too much into that clause and I do not think Mr Pearce QC ultimately pressed the point, though the administrators did mention the point in their skeleton argument. Clause 3.22 is a restriction on the power of the company contained in its memorandum of association. It is not the language of trust, nor is it necessary to construe it as a trust in order to give it proper effect. The object might in theory be changed, albeit that would need the consent of the Charity Commission. Most importantly, from the authorities I have referred to earlier, the restriction falls away upon an insolvency because the insolvency regime then takes over. That is the critical difference between a charitable company and a charitable trust.
37. Moreover, under another alteration - clause 3.22(a) - the Museum Company was expressly permitted to grant a charge, notwithstanding clause 3.22, in favour of the National Heritage Fund to secure its obligations under a grant agreement made in March or April 2006. Whilst the charge that was given excluded inalienable items in the museum collection, which the charge apparently assumed existed and were therefore incapable of being charged, the Memorandum in fact gave such a power. That as a matter of construction of the Memorandum militates against the existence of a trust by virtue of clause 3.22. The fact that this may not have been fully appreciated when the subsequent charge came to be executed is neither here nor there so far as construction of the Memorandum is concerned.
38. Mr Mark Herbert QC relied, as did Mr Robert Pearce QC also, but for different purposes, upon certain of the presentations in the accounts. The financial statements of the Museum Company, both before and after the alterations to the Memorandum of Association, demonstrate, according to Mr Herbert QC, that the collection was not held on separate trusts. Mr Pearce QC says that the accounts are consistent with his submissions.
39. Significantly the Museum Company's accounts all contain a note from 2002 onwards along the following lines:

"The collections owned by the trust have been gifted to the trust by Josiah Wedgwood and Sons Limited. The collections are designated as being of great national importance and as such it is not possible to place values on them. Therefore the collections have not been valued in the financial statements."

40. The collections are clearly described as being owned by the trust, which in context means the Museum Company. In addition, the following note also appears in all the accounts in evidence:

"The assets of the company representing those items held for display in the museum are not valued in the balance sheet. These assets have been donated to the company and in the opinion of the directors the cost of obtaining a valuation is prohibitive and could not be justified."

41. Again a description of the collection as comprising assets of the company and donated to the company seems to me, as Mr Herbert QC submits, accurately to reflect the 1964 deed poll.
42. Mr Pearce QC points to the treatment in later accounts satisfying the more stringent requirements of the Statement of Recommended Practice for Accounting and Reporting by Charities ("SORP"). Later accounts have items for inalienable property, heritage assets, and the like. There are also references to restricted and unrestricted funds. These do suggest that there may be trust property within the accounts, but it is not clear what the trust property (if any) is, and Mr Herbert QC was able to point to treatment of particular assets or classes of assets as assisiting his case. I do not regard those accounts as resolving the issue before me. They take the form they do more because of the requirements of SORP, and the assumptions of those preparing and auditing the accounts. As explained by Mr Stoddard of the Museum Company's accountants and auditors in his witness statement, the references to the collections in the accounts have no bearing upon whether they are alienable or inalienable in the hands of the directors or, as now, its administrators. He says it has never been necessary for his firm to have any discussion with the directors as to the nature of the ownership by the Museum Company of the collections. He explains that SORP requires not just assets beneficially owned but also "inalienable assets" to be capitalised and disclosed in the balance sheets of charities.
43. Looked at overall, even with that later accounting treatment, the accounts strongly indicate to me that there is and was no separate trust in relation to the Museum Company's assets. This is consistent with the conclusions I have reached on the remainder of the evidence. I should also say that, with the exception of the Stubbs portrait I am about to mention, there is no evidence of anyone having ever donated to the Museum Company items upon a special trust. On the contrary, I was shown an on-line donation form that was consistent only with an outright gift to the Museum Company. There is no reason to suppose that earlier donations since 1964 have been on any other basis.
44. I need, however, to consider one additional item, namely, the Stubbs portrait to which I have already referred. It will be recalled that this was initially loaned to the Trading Company by Miss Phoebe Wedgwood, who owned it. She was then minded to leave the portrait in her will to the Trading Company, so long as it was displayed. The matter was referred to as early as in a letter of 30 October 1957 where one of the Wedgwoods wrote to the Trading Company's solicitors, Messrs Knight and Sons, following Miss Phoebe Wedgwood telling him that she was definitely leaving the picture to "the firm" in her will "provided we can find somewhere suitable to hang it at Barlaston". That in turn triggered discussion as to whether there should be a separate trust, but clearly Miss Phoebe Wedgwood was not on the face of it proposing a charitable trust, unless a proviso that it should be hung in a particular place would have that effect, which I do not think it would.
45. Phoebe Wedgwood then entered the debate herself, saying on 4 November 1957 that she would be prepared to make alterations to her will were that necessary. We glean the terms of her will from a letter dated 6 November 1957, under which the writer, someone from Knight and Sons, said this:

"I cannot at present think of any better way of carrying out your wishes regarding the portrait other than those already set out in clause 3 of your will, of which I think you have a copy. It is there provided that the portrait is bequested to Messrs Josiah Wedgwood and Sons Limited, Barlaston, on condition that the firm shall at the time of your death have a suitable museum in their works at Barlaston in which to hang the portrait and that they shall keep it hung there. The clause provides that in the event of the firm being unable to satisfy your trustees that they can and will comply with the condition, then you bequeath the painting to the Stoke Corporation and request them to hang the same in one of the museums in the city, preferably the Handley Museum, and you express the hope that the painting will always be kept in north Staffordshire."

46. So it is clear from that that the terms of the will were much stronger than the indication given in the earlier letter from the Wedgwood director to Knight and Sons. Had that remained the same, then the position in relation to the Stubbs portrait would be very different factually to what it became.
47. The matter really faded out in 1957 and did not revive for another ten years or so. On 20 February 1967 it appears, from a letter of that date to Dr John Wedgwood from Knight and Sons, that Miss Phoebe Wedgwood was then considering a lifetime gift, but she wished to agree a site for the portrait's display. There is an attendance note of 22 February 1967 which explained the intentions of Miss Phoebe Wedgwood more fully. It was there recorded that Miss Wedgwood said at a meeting at Barlaston, at which were present members of the council of the Museum Company, that she was fully prepared to make the gift at once provided that a suitable place was found to exhibit it and proper precautions were taken with regard to heating and ventilation, et cetera. The Long Gallery was raised as a possible location. Miss Wedgwood was not particularly happy with that until the suggestion of having a special showcase made for it was advanced. Following expert technical advice it emerged that the Long Gallery would be suitable but only for a relatively short period of two to three years, provided works were carried out in relation to the provision of air conditioning units. This advice was passed on to Miss Wedgwood on 30 March 1967, when she was told:

"We thought that the site, although not ideal as a permanent resting place for the picture, would be quite suitable and he [the expert] has made recommendations in regard to the humidity, temperature, et cetera, which we in turn will put into effect. I think the preparation of the site will take about six to eight weeks to complete. All should then be ready for the picture to be installed in the Long Gallery."

48. It was recorded in a later letter of 11 October 1967 to Knight and Sons from the secretary of the Museum Company that Miss Phoebe Wedgwood presented the portrait and that the gift was actually made on 26 April 1967. It was explained in that letter that the portrait was presented:

"On the understanding that the portrait would be prominently and suitably displayed at the factory at Barlaston."

49. The stated understanding was not limited in point of time but it was not said to be forever either. In fact, the solution that had by then been proposed (and accepted by Miss Phoebe Wedgwood) was a temporary solution. I cannot read from the terms of that stated understanding or from Miss Wedgwood's actions in presenting the portrait that there was a condition or term sufficient to create a charitable trust. She was presenting the portrait to the Museum company, which had as its sole object in practice the maintenance of the collection. Further, the Museum Company was actually taking steps to display this particular painting. The Museum Company was separate from the Trading Company though in the fortunate position (then) of having all its expenses covered by the Trading Company. The creation of a charitable trust was not necessary for the fulfilment of Miss Phoebe Wedgwood's wishes.
50. Curiously, although that later letter recorded that the gift was actually made on 26 April 1967, there was a letter from Knight and Sons wondering what the position was on 6 June 1967. I infer from that that there was no further input from Knight and Sons in the meantime. They advised that there might be much to be said for getting it on record that the gift had already taken place.
51. There was also talk of a deed of indemnity being given by the Museum Company to Miss Phoebe Wedgwood in respect of capital gains tax, which was consistent with the Museum Company acquiring ownership, although it could be said that this was equally consistent with it acquiring the portrait beneficially or as trustee. There was also a file note of Knight and Sons of 22 September 1967 under which Miss Phoebe Wedgwood was inquiring whether the Museum Company had or had not accepted the gift. That file note also confirmed that the gift had in fact been made when the portrait in question was moved from Cheadle some time previously. Accordingly it seems that the most that might be said as to the terms or condition upon which the gift was made was that the portrait should be prominently and suitably displayed. This condition (if in truth it was a condition) was satisfied.
52. The minutes of the annual general meeting of the Museum Company, held on 28 November 1967, record in paragraph 3 as follows:

"It was reported that during the year Miss Phoebe Wedgwood had generously presented to the trust the portrait of the Wedgwood family painted by George Stubbs RA on the understanding that the portrait would be prominently and suitably displayed at Barlaston. The thanks of the members of the council have already been conveyed to Miss Wedgwood and the portrait will be installed in the suitably designed and specially conditioned case in the Long Gallery in February or March 1968. In this location there is likely to be an audience of approximately 30,000 visitors in each year in addition to our own work people."

53. It is notable from that, therefore, that the gift was made well in advance of the case actually being ready, despite the earlier estimate of six to eight weeks. This suggests that Miss Phoebe Wedgwood took the Museum Company on trust (in the non-technical sense) and that the gift was, when made, unconditional.
54. Accordingly I do not, in the light of those documents, consider that there was any special condition attached to the gift which would have the effect of creating a charitable trust, or indeed any other sort of trust. The Stubbs portrait, like the rest of the collection, became the property of the Museum Company. That is what the collection as a whole became in 1964, including the Dr Vaughan Williams additions. That is what it remained after the Stubbs portrait wad donated, and after the Memorandum was changed. The position has not changed down to today.
55. Accordingly, the answer to the question I am asked to consider is that the collection is available to satisfy the insolvency costs and the liabilities owed to creditors of the Museum Company. That includes, if the advice the administrators have received is correct, the substantial pension deficit liability across the whole of the Wedgwood group.
56. This is a sad conclusion for those who are concerned to preserve a collection which is, as everyone recognises, part of our cultural heritage and of immense importance, but it is the combined result of the pension protection and insolvency legislation. It is at least a legitimate view that the tragedy that befalls working people when their pensions are affected by insolvency is at least as great as the tragedy that has befallen, or may now befall, the collection in this case. Quite what will happen to the collection next will be a matter for the administrators and not, at least at this stage, for me.