Chapman and Others v Chapman and Others

JurisdictionEngland & Wales
CourtHouse of Lords
JudgeLord Chancellor,Lord Oaksey,Lord Morton of Henryton,Lord Asquith of Bishopstone,Lord Cohen
Judgment Date25 Mar 1954
Judgment citation (vLex)[1954] UKHL J0325-1
Docket NumberParliamentary Archives, HL/PO/JU/4/3/1024

[1954] UKHL J0325-1

HOUSE OF LORDS

Lord Chancellor

Lord Oakscy

Lord Morton of Henryton

Lord Asquith of Bishopstone

Lord Cohen

Parliamentary Archives, HL/PO/JU/4/3/1024

Chapman and Others
and
Chapman and Others
Lord Chancellor

MY LORDS,

1

This appeal raises questions of considerable importance and for that reason, though I have had the privilege of reading the Opinion which my noble and learned friend. Lord Morton of Henryton, is about to deliver and agree with it in its reasoning and conclusions. I think it desirable to make same observations upon the main argument of the Appellants. By way of preliminary explanation, it is only necessary to say that your Lordships are invited to hold that a Judge of the Chancery Division of the High Court of Justice has an inherent jurisdiction in the execution of the trusts of a settlement to sanction on behalf of infant beneficiaries and unborn persons a rearrangement of the trusts of that settlement for no other purpose than to secure an adventitious benefit which may be and, in the present case, is, that estate duty, payable in a certain event as things now stand, will, in consequence of the rearrangement, not be payable in respect of the trust funds.

2

This argument, which found favour with Lord Justice Denning, is based, as I understand it, on two separate lines of thought which are for this purpose blended. On the one hand it is said that the Chancellor, the Court of Chancery and the Chancery Division of the High Court of Justice, exercising in turn on behalf of the Sovereign as parens patriae a peculiar jurisdiction over infants, had and has power to dispose of an infant's property in any manner beneficial to him in which he, if of full age. could have disposed of it; and, on the other hand, it is said that the same Court whose duty it has been for some centuries to execute and administer trusts has jurisdiction to remodel those trusts by agreeing on behalf of infants and unborn persons to any rearrangement which it deems to be advantageous to them.

3

These two lines are happily united in the proposition of the learned Lord Justice which I quote—

"He "[that is Lord Hardwicke]" proceeded on the broad principle that the Court had power to deal with the property and interests of infants and other persons under disability in a manner not authorised by the trust, whenever the Court was satisfied that what was proposed was most advantageous for them provided, of course, chat everyone of full age agreed to it. I hope to show that this is the true principle to-day."

4

It was natural that die learned Lord Justice should, upon the basis of an unlimited inherent jurisdiction, proceed to the conclusion that, whenever the Court had in the past asserted a want of jurisdiction, it had of its own motion placed limitations on its own jurisdiction and, giving as examples of this abnegation its declared inability to remove a married woman's restraint on anticipation, to permit a sale of heirlooms or to sanction an unauthorised transaction for the sake of expediency, should observe that in all these cases the intervention of the legislature to vest these powers in the Court must not be read as delimiting the jurisdiction of the Court, but rather as removing limitations which the Court had imposed on itself. These statutory provisions he says "show that the Judges of the late nineteenth century made a mistake in tieing their own hands in these matters. We ought not to make the same mistake to-day."

5

My Lords. I am unable to accept as accurate this view of the origin, development and scope of the jurisdiction of the Court of Chancery. I do not propose to embark on the arduous task of tracing to its sources this peculiar jurisdiction. Many volumes have been devoted to it, and I have refreshed my memory by reference to some of them. Nowhere can I find any statement which would support the broad proposition for which the Appellants contend. Moreover, the Law Reports contain many cases in which the scope of the jurisdiction has been discussed, everyone of them a work of supererogation if its scope was unlimited.

6

In my opinion, the true view that emerges from a consideration of this jurisdiction through the centuries is not that at some unknown date it appeared full-fledged and that from time to time timid Judges have pulled out some of its feathers, but rather that it has been a creature of gradual growth, though with many setbacks, and that the range of its authority can only be determined by seeing what jurisdiction the great equity Judges of the past assumed and how they justified that assumption. It is, in effect, in this way that the majority of the Court of Appeal in the present case have approached the problem and, in my opinion, it is the right way. It may well be that the result is not logical and it may be asked why, if the jurisdiction of the Court extended to this thing, it did not extend to that also. But. my Lords, that question is as vain in the sphere of jurisdiction as it is in the sphere of substantive law. We are as little justified in saying that a Court has a certain jurisdiction, merely because we think it ought to have it, as we should be in declaring that the substantive law is something different from what it has always been declared to be, merely because we think it ought to be so. It is even possible that we are not wiser than our ancestors. It is for the Legislature, which does not rest under that disability, to determine whether there should be a change in the law and what that change should be.

7

My Lords, I have indicated what is, in my view, the proper approach to the problem and do not propose to traverse the ground which has been so ably covered by the majority of the Court of Appeal and will be explored again by my noble and learned friends. The major proposition I state in the words of one of the great masters of equity. "I decline," said Sir George Farwell, "to accept any suggestion that the Court has an inherent jurisdiction to alter a man's will because it thinks it beneficial. It seems to me that is quite impossible." It should then be asked what are the exceptions to this rule. They seem to me to be reasonably clearly defined. There is no doubt that the Chancellor (whether by virtue of the paternal power or in the execution of a trust, it matters not) had and exercised the jurisdiction to change the nature of an infant's property from real to personal estate and vice versa, though this jurisdiction was generally so exercised as to preserve rights of testamentary disposition and of succession. Equally, there is no doubt that from an early date the Court assumed the power, sometimes for that purpose ignoring the direction of a settlor, to provide maintenance for an infant, and, rarely, for an adult, beneficiary. So, too, the Court had power in the administration of trust property to direct that by way of salvage some transaction unauthorised by the trust instrument should be carried out. Nothing is more significant than the repeated assertions by the Court that mere expediency was not enough to found the jurisdiction. Lastly, and I can find no other than these four categories, the Court had power to sanction a compromise by an infant in a suit to which that infant was a party by next friend or guardian ad litem. This jurisdiction, it may be noted, is exercisable alike in the Queen's Bench Division and the Chancery Division and whether or not the Court is in course of executing a trust.

8

This brings me to the question which alone presents any difficulty in this case. It is whether this fourth category, which I may call the compromise category, should be extended to cover cases in which there is no real dispute as to rights and, therefore, no compromise, but it is sought by way of bargain between the beneficiaries to rearrange the beneficial interests under the trust instrument and to bind infants and unborn persons to the bargain by order of the Court.

9

My Lords, I find myself faced at once with a difficulty which I do not see my way to overcome. For though I am not as a rule impressed by an argument about the difficulty of drawing the line since I remember the answer of a great Judge that, though he knew not when day ended and night began, he knew that midday was day and midnight was night, yet in the present case it appears to me chat to accept this extension in any degree is to concede exactly what has been denied. It is the function of the Court to execute a trust, to see that the trustees do their duty and to protect them if they do it, to direct them if they are in doubt and, if they do wrong, to penalise them. It is not the function of the Court to alter a trust because alteration is thought to be advantageous to an infant beneficiary. It was, I thought, significant that learned counsel was driven to the admission that since the benefit of the infant was the test, the Court had the power, though in its discretion it might not use it, to override the wishes of a living and expostulating settlor, if it assumed to know better than he what was beneficial for the infant. This would appear to me a strange way for a court of conscience to execute a trust. If then the Court has not, as I hold it has not, power to alter or rearrange the trusts of a trust instrument, except within the limits which I have defined, I am unable to see how that jurisdiction can be conferred by pleading that the alteration is but a little one.

10

It remains to say a few words on the authorities. Counsel have not cited, and I have not found, any case before the twentieth century in which the Court has given to the term "compromise" a meaning which it does not legitimately bear and sanctioned an alteration of trusts where no dispute existed. Two cases were brought to your Lordships' notice which occurred in the early years of this century. One of them, re Wells, a decision of Farwell, J.,...

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