Analysis
By a trust instrument dated 29 April 1986 (the 1986 deed), Stephenson Clarke Shipping Ltd, a subsidiary of Powell Duffryn plc and member of the Powell Duffryn group of companies (the PD Group), as the named settlor, settled cash and securities on a discretionary trust for the benefit of employees and former employees of the PD Group (the trust). The trust defined the beneficiaries as ‘the employees and their spouses and dependants and the former employees and their spouses from time to time during the trust period [being the period expiring eighty years from the date of the trust] of the Powell Duffryn Group’. The trust defined the PD Group as meaning ‘Powell Duffryn plc and any holding Company or subsidiary Company (as defined in section 735 of the Companies Act 1985) of Powell Duffryn plc’.
Following the dissolution of Powell Dyffryn plc on 14 December 2016 and a deed of retirement and appointment of the trustees of the trust dated 1 November 2018, the claimant was appointed as an independent trustee. The former trustees had had doubts as to the construction of the trust and the identity of the beneficiaries and had sought the advice of counsel, Adam Cloherty, who continued to advise the claimant by a written opinion dated 27 March 2018, which formed the basis of the submissions made in support of the claim. Since none of the former trustees sought to be joined as a party, independent counsel was appointed by the claimant as an advocate to the court to ensure full arguments on the points to be determined were presented.
The claimant sought a declaration as to whether there were any potential beneficiaries, and if so how they should be ascertained. It fell to be determined by the court:
- (i) whether employees and former employees of the PD Group ceased to be such because the PD Group no longer existed; and
- (ii) whether reference to the PD Group meant that corporate group and its constituent companies as it and they were constituted from time to time, or as at the date of the 1986 deed.
Held (making the order):
The Deputy Master found that the correct interpretation of ‘beneficiaries’ was the employees and their spouses and dependants and the former employees and their spouses and dependants of the PD Group, provided their employment occurred during the trust period and provided that the relevant contract of employment subsisted while the employer was a member of the PD Group (as defined).
The Deputy Master recognised that to give clarity to the meaning, words of proviso must be treated as added, viz, ‘provided that the employment occurred during the trust period, and provided that the relevant contract of employment subsisted while the employer was a member of the PD Group (as defined)’.
Having considered the construction of the trust as a whole, the Deputy Master did not consider that the relevant former employees (and their spouses and dependants for the time being) had ceased to be beneficiaries. The trust was objectively intended to benefit former employees of the PD Group, whether or not their employer remained in the group. The demise of the PD Group thus did not prevent former employees from falling within the class of beneficiaries.
The Deputy Master acknowledged that, in framing the claim, the claimant was aware that if the trust was held to have beneficiaries, an issue would arise as to its administration and that the claimant had put forward five potential ways of proceeding to administer the trust, including inviting the court to exercise its supervisory jurisdiction over trusts, such as under the Public Trustee v Cooper [2001] and Re Benjamin [1902] jurisdiction.
The Deputy Master found that his role was to act as a reasonable trustee could be expected to act having regard to all the material circumstances. He considered that the claimant’s discretion should be exercised so as to appoint the balance of the trust fund in as tax-efficient a manner as possible to those former employees who were beneficiaries and whose identity and contact details had been ascertained by a date to be fixed. The Deputy Master was of the view that equal division among former employees was the fairest approach, given that the trust existed for the benefit of individuals by reference to their employment, and enabled practical effect to be given to the trust, which was the very purpose of the inherent jurisdiction of the court.
In light of the difficulties experienced by the claimant in dealing with the administration of the trust without any contemporaneous knowledge of the PD Group companies, and given the relatively modest size of the trust fund, the court would make an order declaring the identity of the beneficiaries as found at para [41] of the judgment and directing that the claimant distribute the remaining assets of the trust among such beneficiaries as it is aware of and has located in equal shares and at a date to be fixed.
JUDGMENT MASTER BRIGHTWELL: Introduction [1] In 1986, Stephenson Clarke Shipping Limited (‘Stephenson Clarke’) was a subsidiary of Powell Duffryn plc, and thus a member of the Powell Duffryn group of companies (‘the PD Group’). The PD Group was a well-known shipping and logistics business whose roots can be traced to the 19th century, part of …