Analysis
By his will, dated 20 March 2006, William Owen Rawlings (the testator) left Wisteria Cottage, Sneachill, Spetchley, Nr Worcester, to the claimant and first defendant as trustees, to hold on trust for the third defendant (who was his step-granddaughter), for her lifetime and, thereafter, for her children at 21 in equal shares. The testator died on 3 October 2007, from which date the cottage was empty and fell into dereliction. The third defendant, who was living in Germany, had no wish to reside in the cottage. Section 6 of the Trusts of Land and Appointment of Trustees Act 1996 and s8 of the Trustee Act 2000 conferred powers to sell land and either invest the proceeds of sale or use them to acquire land for occupation by a beneficiary. Clause 4(4) of the will, however, expressly provided that the trustees should have no power to grant or dispose of any freehold or leasehold estate or interest in the cottage or any part of it, or to purchase any land out of the proceeds of sale, as the testator intended the gift to provide the third defendant with a home in England. The trustees applied to the court for an order permitting them to sell the cottage and to purchase a replacement property pursuant to s57 of the Trustee Act 1925, alternatively for an order under s1 of the Variation of Trusts Act 1958. At the date of application, the third defendant had two minor children, the fourth and fifth defendants. The cottage would fall into residue after the death of the third defendant if none of her children attained the age of 21 years, the beneficiaries of which would be the sixth and seventh defendants. The application was supported, or not opposed, by all parties.
Held (making an order permitting the trustees to sell)
Section 57(1) of the Trustee Act 1925 required the court to consider, firstly, whether it had jurisdiction to act; secondly, whether it was expedient to confer the power sought, and; thirdly, whether the court should, in the exercise of its discretion, confer that power on the trustees. As to jurisdiction, there was no doubt that the effect of clause 4(4) of the will was to exclude the application of the statutory powers conferred by s6 of the Trusts of Land and Appointment of Trustees Act 1996 and s8 of the Trustee Act 2000. It followed that there was an absence of the desired power vested in the trustees by the trust instrument or by law. However, the jurisdiction was limited to the management or administration of property vested in trustees, and did not permit the court to alter the beneficial interests under the trust. In this case, a sale of the cottage with or without the purchase of a replacement property was a transaction that altered the enjoyment of specific trust assets by the beneficiary, but did not involve an alteration of the beneficial interests under the trust. As to the question of expediency, having regard to the interests of the beneficiaries collectively, the evidence demonstrated that it was expedient to sell the cottage rather than retain it. However, it was not sufficient to show that it was expedient to use the net proceeds of sale to purchase a replacement property rather than to invest them in a more appropriate investment. As to the exercise of the discretion, taking into account the testator’s likely views in the expediency of the circumstances, if the cottage had to be sold it was probable that the question of whether the proceeds of sale should be used to purchase a replacement property or invest it in a more appropriate investment should depend on the third defendant’s wishes and intentions. A court order would be made conferring on the trustees’ power to sell the cottage, after which they would have to decide, in consultation with the third defendant and the other beneficiaries, whether to invest the proceeds of sale in something other than land. In this case they would not need to return to the court for any further power. However if they decided to use the net proceeds of sale to purchase a replacement property, they would need to apply again to the court for an order conferring the necessary power, but would have to file detailed evidence as to why that transaction would be expedient for the purposes of s57(1) of the Trustee Act 1925.
JUDGMENT MR JUSTICE MORGAN: The application [1] This is an application by trustees for an order under s57 of the Trustee Act 1925 (the 1925 Act), alternatively for an order under s1 of the Variation of Trusts Act 1958. The trust [2] The trust in question was created by the will of William Owen Rawlings. …Continue reading "Alexander v Alexander & ors [2011] EWHC 2721 (Ch)"