England and Wales High Court (Chancery Division) Decisions

IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION

		Royal Courts of Justice Strand, London, WC2A 2LL
		10/02/2016

Master Matthews:

1. This is my judgment on a claim brought by Claim Form under CPR Part 8, issued on 9 December 2015. There was some urgency in the matter. Accordingly, having read the papers, on 7 January 2016 I heard Mr Tom Dumont of counsel, and made the order sought, stating that I would give my reasons later. Here I give those reasons. The facts found are derived from the Claim Form itself and the witness statement of the Second Claimant, dated 7 December 2015, to which a number of relevant documents are exhibited.
2. In the claim, the Claimants sought "an order under s 41 of the Trustee Act 1925 and/or the inherent jurisdiction of the court the Claimants are hereby appointed (and/or confirmed) as trustees of the Spen Cama Cricket Foundation, a trust created by order of the High Court in action number HC03C00509 and governed by a Deed of Trust dated 30 June 2004". The order was made by Mr Justice Patten in this Division on 27 January 2004, in an action concerning the will made in 1962 of the late Spenta Cama, who died in 2001.
3. The testator was a non-practising barrister, and a lifelong cricketer. His will made provision for various cricketing causes dear to him, including the Preston Nomads Cricket Club ("the Club"), of which he was a founder member, captain, and president until his death. But unfortunately the will was complex and confusing. The executor of the will consequently brought proceedings for the determination of issues of validity and construction. The order of Mr Justice Patten embodied a compromise between all interested parties.
4. Under the will, one fifth of the residue of the testator's estate, together with the Spen Cama Cricket Ground and a pecuniary legacy, were intended for the benefit of the Club. Under the order, these were instead to be paid to the trustees of the Foundation, a draft of whose constitutive deed was annexed. The First to Fourth Claimants, the Second Defendant and another gentleman, who retired in 2007, were the original trustees. All but the First Claimant (a former captain of Sussex County CC and former president of the MCC) were members of the Club. The assets due to them under the testator's will as compromised in the order were duly transferred to them. The Fifth and Sixth Claimants were subsequently appointed as additional trustees, in 2005 and 2006 respectively.
5. The Club has flourished since 2004. Unfortunately, in relation to the affairs of the Foundation, regard has not been had to the provisions of clause 7 of the trust deed of 30 June 2004. So far as material, this says:

"THE power of appointing a new trustee or new trustees hereof shall be vested in the trustees or trustee for the time being and any person wherever domiciled or resident may be appointed as trustee.

(a) The minimum number of trustees shall be 3 (save that if the number falls below 3, the remaining trustee or trustees may still exercise the power of appointment, and take any steps which are urgently necessary in the administration of the Foundation).

(b) Trustees (including the [original] Trustees) shall be appointed for 5 years. They are eligible for re-appointment at the expiry of any 5 year term.

[ …]

(e) No appointment may take effect until it is expressly accepted in writing by the appointee.

[ …]

(i) A trustee may retire if he gives notice in writing to the remaining trustees or a majority of them, and there remain more than 3 trustees on such retirement."

6. The appointment of the first trustee to retire (in 2007) took place at a time when there were at least three trustees remaining, and was therefore effective. The appointments of the other original trustees, however, simply ran out under clause 7(b) in June 2009, and those of the Fifth and Sixth Claimants in 2010 and 2011 respectively. So the question who can exercise the powers of the trustees of the Foundation (and which powers) has become a live issue. Quite apart from the usual questions of internal administration that need to be carried on, there is an urgency in establishing who are the trustees, because the process has been started of acquiring two properties as investments.
7. All the Claimants wish to be reappointed, or to continue, as trustees. The Second Defendant, who was an original trustee, does not. The First Defendant is a member of the Club, but has never been appointed a trustee. He is put forward to represent the members of the Club. Both Defendants acknowledged service, saying that they did not intend to contest the claim; on the contrary, they supported it.
8. Some things are clear at once. Notwithstanding the terms of the trust deed, all the Claimants, and the Second Defendant, remain legal owners of the assets of the Foundation which are personal property. Because of the provisions of the Law of Property Act 2915 and the Trustee Act 1925, only four of them (the evidence does not disclose which four, but for present purposes it does not matter) remain legal owners of the real property. As a general proposition, after the initial constitution of a trust, the appointment of a person as a trustee does not of itself vest the trust assets in that person, and removal or resignation from office does not take their ownership away. In trusts governed by English law, that general proposition is subject to the possible effect of section 40 of the Trustee Act 1925, which in cases of retirement and appointment of trustees by deed can sometimes operate to divest and vest trust assets automatically. But it is not relevant here.
9. As such legal owners the Claimants and the Second Defendant are still in an important sense trustees for the beneficiaries under the trust deed, although they must hand over the assets to trustees appointed in their place, when called upon to do so. In the meantime, in respect of their continuing ownership of the trust assets they owe fiduciary duties, and must account, to those beneficiaries. So long as they continue as such owners, but subject to the provisions of the trust deed, they are entitled to the rights of trustees under the general law, such as the recoupment of expenses properly incurred as such trustees (see the Trustee Act 2000, s 31), and they are able – indeed probably obliged – to take any reasonable action which they could take as common law owners to preserve the trust estate from loss and damage. But – and this is the important point – with one (probable) exception they are not entitled to exercise any of the powers of the trustees conferred by the trust deed, and nor are they given any of its protections.
10. That probable exception is that the last continuing trustee (in this case the Sixth Defendant) is probably able (and may be obliged) under clause 7(a) to "exercise the power of appointment, and take any steps which are urgently necessary in the administration of the Foundation". I say 'probable' because it could be argued that, after the Sixth Defendant's own five year term expired, in 2011, there was no-one left able to exercise trustee powers. There is a tension in the trust deed's terms. On the one hand the term is clearly fixed at five years. On the other, there is provision for the last continuing trustee to continue until a fresh appointment. For what it is worth, in my judgment the provisions of clause 7(b) show an intention to preserve the powers of the last continuing trustee until further appointments are made, rather than to cut them off when his or her term came to an end.
11. So it probably is the case that the Sixth Defendant could have simply reappointed all the trustees who so wished. It may also be that, since the trustees as they were undoubtedly constituted after 2007 have continued until now jointly to run the Foundation's affairs, and since also (i) the power of appointment is in the hands of the trustees for the time being, and (ii) no particular formality is required by the terms of the trust deed, they have each and all been impliedly reappointed when their respective terms came to an end. (There would still be a question about acceptance of the trusteeship, since clause 7(e) of the trust deed requires this to be express and in writing, but I do not need to deal with this now. Probably it is for the trustees' benefit and can be waived.) But in the absence of any authority on the point the Claimants, about to purchase real property investments, have sensibly sought a court order to put matters beyond doubt.
12. Under section 41(1) of the Trustee Act 1925, the Court has power

"whenever it is expedient to appoint a new trustee or new trustees, and it is found inexpedient difficult or impracticable so to do without the assistance of the court, make an order appointing a new trustee or new trustees either in substitution for or in addition to any existing trustee or trustees, or although there is no existing trustee.

In particular and without prejudice to the generality of the foregoing provision, the court may make an order appointing a new trustee in substitution for a trustee who… [lacks capacity to exercise] [his functions as trustee], or is a bankrupt, or is a corporation which is in liquidation or has been dissolved."

13. The Court also has power under its inherent jurisdiction to appoint new trustees in any administration action. The advantage of this is that it would be without the restriction imposed by the words "inexpedient difficult or impracticable". In cases where the court's inherent jurisdiction over trusts and trustees is to be invoked it was formerly common to add to the claim form a (largely illusory) claim "for administration, if and so far as may be necessary" in order to quell any doubts that the court did in fact have such jurisdiction. This was strictly unnecessary, as RSC Ord 85, rule 2, formerly provided that an action could be brought for the determination of any question or for any relief which could be determined or granted in an administration action, and a claim did not need to be made in the action for the administration or execution under the direction of the court. CPR rule 64.2(a) now proceeds on the same basis. Practice Direction A to CPR Part 64, para 1(2)(c) now states as an example of the types of claim that can be brought under Part 64 a claim for "an order directing any act to be done which the court could order to be done if the estate or trust in question were being administered or executed under the direction of the court".
14. As a result, I have no doubt that the inherent jurisdiction of the court to appoint trustees is exercisable even where there is no formal claim for administration on foot. But in any event it is clear in the present case that the reference in the claim form to appointment of trustees under "the inherent jurisdiction of the court" performs the same function as a claim to administration "if and so far as may be necessary".
15. The evidence placed before me was to the effect that the finances and other affairs of the Foundation were in good order. The accounts of the Foundation for the year ended 5 April 2015 were exhibited to the witness statement of the Second Claimant. There was nothing in the evidence to suggest that any maladministration had taken place or that any of the trustees was in any way unfit or unsuitable to be re-appointed. The one trustee who did not wish to be re-appointed (the Second Defendant) wrote a letter saying that he "fully support[ed] the case", and made no complaint about anything. The single Club member who was joined (the First Defendant) did likewise. I therefore saw no need for express evidence of the fitness of the Claimants to act as trustees, in order for them to be re-appointed.
16. At the hearing on 7 January 2016, after having discussed the matter with counsel, I decided that the best course was to appoint the Claimants for a further five year term from that date in substitution for themselves and the Second Defendant. I did this under the inherent jurisdiction, so that it was not in the event necessary to consider whether it was "inexpedient difficult or impracticable so to do without the assistance of the court". But I add that, if it had been necessary, I would have held that it was indeed both inexpedient and impracticable, in the circumstances, to make the appointment out of court, and so the court could have made it under section 41 also.
17. It was further agreed with counsel that there was no need for a vesting order, as the continuing and retiring trustees would arrange matters of vesting between themselves. Counsel also did not press for a representation order, by which the First Defendant would be ordered to represent the interests of all the other members as beneficiaries, as this claim was in effect agreed by everyone, and it was not realistic to conceive of any member complaining hereafter.