Analysis
Lieutenant Colonel Sands died in 2000 leaving a will and codicil. He left a large and valuable collection of paintings and other chattels which, under clause 2 of his codicil, he gave to be held on trust by his trustee, Cripps Trust Corporation (CTC), for his wife Mrs Sands (who had passed away some time before the court case) for life and then to be divided between a class of beneficiaries that included galleries and museums. If CTC did not exercise this power the residuary beneficiaries of the will (in this case Lieutenant Colonel Sands’ grandchildren) would take the paintings and other chattels. The codicil did not specify a timeframe for exercising the power and the question arose as to whether the time frame had expired. Over a period of ten years the grandchildren fell out with CTC and alleged that CTC had caused unacceptable delays and incurred excessive charges in the administration of Lieutenant Colonel Sand’s estate and the trusts. The grandchildren proceeded to bring an action against CTC and sought a declaration from the court that the power of appointment under the codicil was no longer exercisable as the implied reasonable time for exercise of the power had expired and therefore the chattels should pass to them in equal shares. They also asked the court to remove CTC as trustees and to appoint their own solicitor in its place. CTC defended the application and provided evidence that attempted to justify its administration. CTC said that whether the timeframe for exercising the power had expired was not clear. CTC confirmed it would retire as trustee if the court thought it appropriate however, this could not have been done before the question of construction of the power had been addressed. During the proceedings CTC brought its own application for confirmation by the court that CTC would be entitled to its costs from the trust fund in connection with the construction point. Mr Justice Mann expressed surprise at CTC’s application and held as follows: Held:
- (1) It is a general principle that a trustee who acts reasonably and properly in the interests of a trust is entitled to an indemnity out of the trust assets for any costs and expenditure reasonably incurred.
- (2) It is unusual for a trustee involved in litigation which is genuinely perceived by them to be in the interests of the estate to seek an indication in advance on the point of costs, however if the court is to make such an order it requires all of the relevant information before it so as to judge where the costs should properly fall. If there is doubt about this then the proper course of action is for the court to leave the question for a time when it can clearly be decided.
- (3) No finding as to CTC’s behaviour in this case shall be made in determining CTC’s application.
(4) CTC’s application is unsuccessful. It is not clear that the court needed to rule on the construction point as the trustees may have determined never to exercise it and therefore this question would be academic. Furthermore, the trial judge may determine that CTC had acted unreasonably in arguing the construction point and insisting in not retiring earlier. On a final point it was possible that other factors may emerge in the proceedings which would support the argument that it was unnecessary to resolve the construction point.
JUDGMENT MR JUSTICE MANN: [1] This is an application by trustees for a ruling from the court at this stage of proceedings, namely some way before trial but sometime after they were started, to the effect that the trustees should be entitled in any event to take their costs of certain construction issues which are …Continue reading "Cripps Trust Corp v Sands [2012] EWHC 2229 (Ch)"