Analysis
The claimants were trustees of a 1983 children’s trust, and a trust called the Lower Green Farm trust. The 1983 trust had been created by Anthony Samuel Edgar (the testator) in March 1983 for the benefit of his four children. The fund was divided in four equal shares, and each to be held for each child contingently upon attaining 25. The share was to be retained by the trustees on life interest trusts to pay the income to the child for life with a power to advance the capital of that share to him/her.
The Lower Green Farm trust had been made in the testator’s will of December 1991, providing for his farm to be held by his trustees in trust for his son, the third defendant, contingently on attaining the age 50. His residuary estate was to pass to his three daughters upon attaining 35 in equal shares with income to be paid to each daughter for life, and subject thereto to her issue upon attaining 18. He died on 24 April 1992.
On 1 October 1991, the trustees executed a deed of appropriation in respect of the share of each child under the 1983 trust. At the time of the proceedings, the shares were worth between £365,000 and £508,000. Lower Green Farm was sold in 1995, and the fund subject to that trust was worth about £2m.
The trustees made an application for approval of the court to their proposals to exercise their powers of advancement and application of capital in such a manner as would terminate both trusts and vest the capital in the beneficiary who was entitled to the income and contingently, to the capital. The application fell under the second category described by Hart J in Public Trustee v Cooper [2001] WTLR 901.
Held:
- 1) The fact that the decision of the trustees is momentous, and that the decision is that of the trustees, not of the court, made it more important that the court was put in possession of all relevant facts so as to be satisfied that it is proper and for the benefit of the appointees and advances.
- 2) It was not enough that they were within the class of beneficiary and that the relevant disposition was with in the scope of the trustees’ power. The exercise of their discretion must be untainted by any collateral purpose such as might engage the doctrine misleadingly called a fraud on the power. They must satisfy the court that they considered and properly considered their proposals to be for the benefit of the advancees or appointees.
- 3) This required full and frank disclosure to the court of all relevant facts and documents. The court was not a rubber stamp and parties and their advisors must be astute not to appear to treat them as such.
- 4) The evidence provided at the genesis of the application was limited, and without the addition of further evidence, it was likely that the application would have been rejected. However, there was now no ground upon which to reject the application.
Continue reading "Tamlin & anor v Edgar & ors [2011] EWHC 3949 (Ch)"