Barclay v Smith [2016] EWHC 210 (Ch)

Analysis

The claimants and first defendant were or had been trustees of a trust governed by a deed of trust. The trust assets had been transferred to the original trustees (the first to fourth claimants and the second defendant) upon their original appointment.

Under the deed of trust each trustee was appointed for a fixed five year period, after the expiry of which he was eligible for reappointment. The power of appointing new trustees was vested in the current trustees. However no regard had been paid to the clause in the trust deed requiring reappointment after five years and therefore the appointment of each of the trustees had simply run out after five years.

The claimants sought an order under s41 Trustees Act 1925 and/or the court’s inherent jurisdiction reappointing them as trustees of the trust.

The claim was unopposed.

Held

1. 1) Notwithstanding the terms of the trust deed, the claimants and first defendant remained the legal owners of the trust assets consisting of personal property and (due to the provisions of the Law of Property Act 1925 and Trustee Act 1925) four of them remained legal owners of the trust assets consisting of real property. As such they remained trustees for the beneficiaries under the trust although they were required to hand over the assets to any trustees appointed in their place if called to do so. In the meantime they owed fiduciary duties to the beneficiaries, must account to the beneficiaries and were entitled to the rights of trustees under the general law.
2. 2) However, with one probable exception, they were not entitled to exercise any of the powers of the trustees conferred by the trust deed nor given any of its protections. The probable exception being the trustee whose term had most recently expired who probably remained able under the terms of the trust deed to take any steps which were urgently necessary to the administration of the trust. This probably included the power to appoint trustees.
3. 3) Under s41 of the Trustee Act 1925 the court had the power to appoint trustees where inexpedient difficult of impracticable to do so without the assistance of the court. Further the court has the power under its inherent jurisdiction to appoint new trustees in any administration action. The court’s inherent jurisdiction to appoint trustees was exercisable even where no formal claim for administration was afoot but in any event the reference in the claim form to appointment under the inherent jurisdiction performed the same function as a claim to administration. There being nothing to suggest any maladministration by the trustees and no opposition to the claim, express evidence of the fitness of the claimants to act as trustees was not necessary for them to be reappointed. Consequently the claimants were reappointed as trustees for five year terms under the court’s inherent jurisdiction.
4. 4) OBITER: If it had been necessary, the court would have held that it was inexpedient, difficult or impracticable to appoint the trustees without the assistance of the court and therefore would have appointed them under s41 Trustee Act 1925.

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 …

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