Trustees' Powers and Duties - Variation of Trusts

Society of Lloyds v Robinson (1999)

If such ability is given by trust instrument, court will be vigilant to ensure that it is properly exercised for purpose for which it was granted and as intended by settlor

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Saunders v Vautier (1841)

Provided that they are adult, of sound mind and between themselves entitled absolutely to the trust property, the beneficiaries may unanimously dismantle the trust or vary its terms; known as consensual variation

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Thorpe v Revenue & Customs Commissioner (2010)

Rule not limited merely to fixed trusts and applies in principle also to discretionary trusts, including pension trusts

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Chapman v Chapman (1954)

HL: inherent jurisdiction limited to 3 instances: salvage and emergency; compromise; maintenance

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Re Jackson (1882)

E.g. where trust was varied to provide money to prevent collapse of a building owned by the trust

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Frith v Cameron (1871)

Here, court sanctioned rebuilding of mansion house where foundations of previous house were giving way, as otherwise the estate wold not have had a mansion house; it also shows how court sometimes strained “salvage” beyond strict meaning

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Re Tollemache (1903)

Variation is limited to giving trustees increased management and administration powers; it does not extend to variations of beneficial interests

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Re New (1901)

Here, trustees held legal title to shares in a particular company and, as emergency matter, sought to become involved in the capital reconstruction of that company; as a result, existing shares would be exchanged for new shares in the reconstructed e

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Re Powell-Cotton’s Resettlement (1956)

Compromises given strict meaning, requires there to be an element of genuine dispute before the court can interfere

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Chapman v Chapman (1954)

Thus, it does not include a mere family arrangement in which a beneficiary gives up a present right in return for a different right

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Mason v Farbrother (1983)

held: court refused to substitute a new investment clause under inherent jurisdiction; court was vary about possibility of the claimants inventing disputes so that the terms of the trust could be varied

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Havelock v Havelock (1881)

E.g. testator may make provision for his family, but might seek to postpone the enjoyment of the gift while the estate is increasing in value; the court will assume that testator did not intend for his family to go short in the interim period and can

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Revel v Watkinson (1748)

Jurisdiction is not restricted to urgent cases and maintenance is not limited to minor beneficiaries

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TA 1925, s 57(1)

Permits variation of a trust by the curt for the purposes of administration and management

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Southgate v Sutton (2011)

E.g. here, trustees did not have nec legal powers to enter a transaction that was in beneficiaries’ interests

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Re Downshire Settled Estates (1953)

However, s 57 gives no power to vary the beneficial interests under a trust

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Re Hope’s WT (1929)

Authorise sale of chattels

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Re Beale’s ST (1932)

Authorise sale of land where nec consents were refused

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Re Portman Estate (2015)

Give trustees a general power to trade and to appoint managers of trust property

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Trustees of the British Museum v Attorney General (1984)

To give trustees wider investment powers

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Settled Land Act 1925, s 64(1)

Gives court a widely-defined power to sanction departures from the trust that are for the benefit of the land or the beneficiaries provided that they could have been effected by an absolute owner

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Hambro v Duke of Marlborough (1994)

s 64(1) not limited to management and administration and can be used to alter beneficial interests

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Matrimonial Causes Act 1973, s 24

Allows High Court, when making an order of divorce of annulment of marriage, to make a property adjustment order

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Brooks v Brooks (1996)

jurisdiction caters for recasting of beneficial interests; here, husband’s pension scheme was viewed as creating a marriage settlement and was varied for the benefit of a divorced wife

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P v P (2015)

Held: trust varies to provide sum of £23,000 for wife absolutely; court also ordered sum of £134,000 be made available within 6 months for benefit of wife for life, with wife entitled to use capital sum towards the purchase of property for her occup

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Mental Capacity Act 2005, s 16

Gives Court of Protection power to make a settlement of a patient’s property

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MCA 2005, s 16(7)

Court is allowed to vary that settlement in such manner as it thinks fit where, prior to the death of the patient, either a material fact has emerged that was not originally disclosed or a substantial change in circum’s has occurred

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Re CWHT (1978)

Here, Court of Protection: certain property of a patient be settled on trust; this gave patient’s sister a life interest with remainder for the patient’s children and remoter issue; no power of revocation was reserved; subseq’y, trust was varied duri

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1958 Act, s 1

High Court has wide discretionary jurisdiction to approve an arrangement varying or revoking all or part of an expressly created private trust

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Re Steed’s WT (1960)

Lord Evershed MR: this is a “revolutionary discretion”

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Re Towler’s ST (1964)

However, here, court refused to approve an arrangement as it was tantamount to creating a new trust and could not be viewed as a variation; proposal would change the whole substratum of the trust by imposing a protective trust on a beneficiary who wo

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Allfrey v Allfrey (2015)

court: this was a variation and not a resettlement; accepted that there was no single litmus test for deciding question; issue must be determined according to view that would be taken of the transaction by a person with knowledge of trusts, and who u

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1958 Act, s 1(1)

Persons on whose behalf court may approve a variation (7 categories)

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Knocker v Youle (1986)

s 1(1) any person who may become entitled to an interest under the trust at future date or future event covers those with a mere expectation of entitlement under the trust and it is irrelevant that the interest is extremely remote

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Re Suffert’s ST (1961)

Buckley J: while he could approve variation on behalf of unborn and unascertainable, court could not approve arrangement on behalf of 2 cousins; cousins would have been entitled as next of kin had spinster been dead at date of court application, and

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Re Tinker’s ST (1960)

With exception of discretionary beneficiaries under protective trusts, the arrangement must be for benefit of persons on whose behalf approval is sought; if there is no benefit or reasonable chance of benefit, there can be no variation

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Bailey v Bailey (2014)

If there is a risk then it must be no more than an adult would be prepared to take

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Ridgwell v Ridgwell (2007)

Most cases concern financial adv; e.g., here, postponement of the children’s interest under a trust was outweighed by the tax savings to be made

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Re Remnant’s ST (1970)

Here, removal of a forfeiture provision, activated on becoming or marrying a Roman Catholic, was a benefit as its retention could cause trouble within the family; this was so even though the change would be financially detrimental to the beneficiarie

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Re CL (1969)

Mental Health Act patient sacrificed her life interest, for no consideration, for benefit of daughters; no financial adv for her personally; benefit was a moral one; court influenced by fact that her income greatly exceeded her outgoings, that she wa

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Re Weston Settlements (1969)

Settlor sought approval of arrangement under which property settled on his sons would be transferred from the existing English settlements to settlements based in the Channel Isles; purpose=avoid capital gains tax of around £163,000; drawback=settlor

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Trustees' Powers and Duties - Variation of Trusts

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