Cotterell & anr v Allendale & anr [2020] WTLR 1183

Analysis

The claimants as trustees of the Allendale 1949 Settlement applied to extend their administrative powers under s57 of the Trustee Act 1925 and the inherent jurisdiction of the court to include a power to re-appropriate assets between the various sub-funds comprised in the settlement, on the ground that they lacked the power under the settlement and it would be expedient for them to have such power in order to effect a certain tax mitigation strategy.

The claimants further applied for other administrative powers which they lacked to be conferred on them, even though they were not required for any transaction then being contemplated, namely the powers to establish entities for the purpose of conducting trust business, power to permit payment to the parent or guardian of a minor beneficiary, power to delegate management of investments to advisers and to delegate generally, power to give indemnities, power to permit trust corporations to charge remuneration, and powers to act notwithstanding a conflict of interest or self-dealing.

Section 57 provided that:

‘where in the management or administration of any property vested in trustees, any… disposition, or any… 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…’

The question was whether s57 gave the court jurisdiction to grant additional administrative powers where no particular disposition or transaction was then intended, a point on which the authorities were divided. The trustees submitted that they did, and that ‘the purpose’ referred to in s57 is not limited to a specific transaction, otherwise there would be no power to grant general powers.

Held:

1. 1) The application for powers to re-appropriate in contemplation of specific transactions was not controversial, and would be granted in accordance with well-established principles.
2. 2) As to the application for the conferring of administrative powers that might in the future prove useful, there was tension between the introductory words of s57, which appeared to refer to a particular transaction which the court considered expedient as the trigger for the jurisdiction, and the later words, which allowed the court to confer a power ‘generally’ as well as ‘in any particular instance’. The court accepted the trustees’ submissions and the position on the authorities as summarised in Lewin on Trusts (20th ed) para 52-14 that the jurisdiction extends generally to the enlargement of investment and other administrative powers, whether or not required for a particular disposition or transaction then under consideration and before the court: Anker-Petersen v Anker-Petersen [2000] and Re Portman Estate [2015] followed; Royal Society’s Charitable Trusts [1956] and Re Byng’s Will Trusts and Re Coate’s [1959] disapproved.
3. 3) However, the powers to be granted must relate to dispositions or transactions generally, and the court must still be satisfied as to the expediency of each element of the transaction; a wholesale rewriting of the trustees’ administrative powers or the grant of power to the trustees to add new administrative powers for themselves may or may not be expedient, depending on the circumstances of the case.
4. 4) The powers sought to establish entities, pay assets to a minor’s parent or guardian, appoint and delegate to investment advisers and give indemnities would be of real benefit to the trustees. They all related to the facilitating of transactions in general.
5. 5) As to the powers for the trustees to exercise their powers despite a conflict of interest or in cases of self-dealing, these were restricting the usual protections for beneficiaries but that purpose was adequately met by the requirement of there being an independent trustee.
6. 6) The power sought by the trustees to delegate generally was refused. It was not shown that it would be expedient to confer such a power on the trustees.
7. 7) The jurisdiction under s57 did not extend to authorising the remuneration of trustee corporations, that not relating to any transactions or dispositions in general, even though such authority would be expedient. Although the court’s inherent jurisdiction to grant additional administrative powers was limited to cases of ‘emergency’ or ‘salvage’ rather than mere ‘expediency’, the court has always had an inherent jurisdiction to authorise the remuneration of trustees: Duke of Norfolk’s Settlement Trusts [1982] applied.

JUDGMENT CHIEF MASTER MARSH: [1] The claimants are the trustees of the Allendale 1949 Settlement (‘the Settlement’). The first defendant is the fourth (and current) Viscount Allendale and the second defendant is his son. I will describe the first defendant as ‘Lord Allendale’ and his son (in the manner adopted in later deeds of appointment) …

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