Christina Mary Millar v Robert John Millar
| Jurisdiction | England & Wales |
| Judge | Paul Matthews |
| Judgment Date | 25 July 2018 |
| Neutral Citation | [2018] EWHC 1926 (Ch) |
| Docket Number | Case No: D31BS664 |
| Court | Chancery Division |
| Date | 25 July 2018 |
[2018] EWHC 1926 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
BRISTOL DISTRICT REGISTRY
Bristol Civil Justice Centre
2 Redcliff Street, Bristol, BS1 6GR
HHJ Paul Matthews
(sitting as a Judge of the High Court)
Case No: D31BS664
Christopher Jones (instructed by Royds Withy King LLP) for the Claimants
The defendants were not represented
Claim dealt with on the papers, without a hearing
Judgment Approved
Introduction
This is my judgment on a claim made by claim form under Part 8 of the CPR issued on 3 October 2017 by the claimants' solicitors, Royds Withy King LLP. It concerns a deed of settlement dated 7 December 2005 executed by the claimants. They seek an order for
“(a) the construction of the settlement so that clause 13 is either of no effect or there is no bar to the claimants or their spouses receiving a benefit from the fund or act of the trustees, or (b) the rectification of the instrument by the deletion clause 13”.
The defendants are the first claimant's husband and three sons, and Her Majesty's Attorney-General (representing charity). All of the defendants (including the Attorney-General) have filed acknowledgements of service indicating that they do not intend to contest the claim. The covering letter dated 27 October 2017 from the government legal service also indicates that the Attorney-General would not intend to be represented at any hearing. In fact there has been no hearing, as, after consideration of the documents in the case, I decided to deal with the matter on the papers.
The claim is supported by the witness statement of the first claimant dated 19 July 2017 and the witness statement of the second claimant dated 18 July 2017. These two witness statements have been prepared with the title as in this claim, and each containing a statement of truth, as required by the CPR, rule 22.1(1)(c), although they appear to have been signed some months before the claim was actually issued. There is no explanation as to why this is so. In addition there are several documents, one from each of the first four defendants, each called “Statement”, but not titled in this claim and not containing a statement of truth (and therefore not complying with the relevant rules in the CPR). They too are dated long before the claim was issued. Each such statement is in identical form. It confirms that the writer has seen the claimants' witness statements, and the draft order, and gives consent to the claim. Finally, there is a brief witness statement dated 26 April 2018 from Heather Redman, the solicitor who drafted the settlement question
Background
The claimants are the two daughters of the late Christopher Pearson and his wife Janet Pearson. Mrs Pearson died on 1 July 2005 and Mr Pearson on 30 March 2015. The first claimant was born in August 1959 and the second claimant in December 1961. The first claimant is married to the first defendant and they have three sons, the second to fourth defendants. The second claimant is not married, and has no children.
The late Mr and Mrs Pearson were co-owners of the property known as 15 Mill Lane, Iffley Village, Oxford (“the property”). They were joint tenants at law and beneficial tenants in common. When Mrs Pearson died in 2005 by her will made in 1993 she left her residuary estate to the claimants in equal shares absolutely. The effect of this was that Mr Pearson became the sole owner at law of the property, holding on trust for himself as to 50% and as to 25% for each of the claimants.
The claimants consulted Heather Redman of Marshall & Galpin solicitors (a predecessor firm to Royds Withy King LLP) to act in the administration of the estate of their late mother. She advised the creation of a lifetime trust whereby their mother's one half share in equity in the property would be held on trust for their father during his lifetime, subject to that on trust for any spouse of the claimants for life, and subject to that on trust for the claimants themselves. As appears from a letter dated 1 November 2005 from Heather Redman to the second claimant, the motive for the creation of this trust was inheritance tax planning. I am not, of course, concerned with whether this was successful.
The settlement
The claimants are not only the settlors of the trust constituted by the settlement, but are also its trustees. The material terms of the settlement are as follows.
“1.3. The “Beneficiaries” shall mean: (a) Christopher Gresley Pearson (b) the Settlors; (c) the spouses and children of the Settlors
[…]
3. Subject to the powers and provisions hereinafter contained the Trustees shall divide the Trust Fund into two separate sub-funds so that the property which derives from each Settlor can always be identified and shall stand possessed of the capital and income of the Trust Fund thus identified upon trust as follows
4.1. The income of the Trust Fund shall be paid to Christopher Gresley Pearson during his lifetime.
4.2. Subject thereto the income of each sub fund shall be paid to the Settlor during that Settlor's lifetime and subject thereto the income thereof shall be paid to the spouse of that Settlor and subject thereto the Trustees shall hold the capital and income of each sub-fund to its respective Settlor absolutely if living at the end of the Trust Period provided that if the Settlor dies before acquiring an absolute interest leaving issue living at the end of the Trust Period such issue shall take and if more than one in equal shares the share which his or her parent would have taken had such parent survived.
5.1. Notwithstanding the above, the Trustees shall have power to appoint the whole or any part of the Trust Fund for the benefit of such of the Beneficiaries, at such ages or times, in such shares, upon such trusts (which may include discretionary or protective powers or trusts) and in such manner generally as the trustees That shall in their discretion think fit. […]
6. In the event of the failure or determination of the above trusts, the capital and income of the Trust Fund shall be held upon trust for such charity or charities as the Trustees shall in their absolute discretion appoint.
[…]
13.1. No discretion or power conferred on the Trustees or any other person by this Deed or by law shall be exercised, and no provision of this Deed shall operate directly or indirectly, so as to cause or permit any part of the capital or income of the Trust Fund to become in any way payable to or applicable for the benefit of the Settlor or any person who shall previously have added property to the Trust Fund or the spouse for the time being of the Settlor or any such person.
13.2. The provisions of subclause 13.1 shall not preclude the Settlor or any such person from exercising any statutory right to claim reimbursement from the Trustees for any income tax or capital gains tax paid by him in respect of income arising to the Trustees or capital gains realised or deemed or treated as realised by them.
13.3. Subject to subclause 13.2, the prohibition in this clause shall apply notwithstanding anything else contained or implied in this Deed.”
It will be seen that clause 13 of the settlement flatly contradicts the earlier provisions in clauses 4.2 and 5 of the settlement. Clause 4.2 gives vested interests in reversion to the settlors, and clause 5 creates a power of appointment exerciseable in favour of the settlors amongst others. This claim is accordingly about how (if at all) to resolve this contradiction.
The parties
As I have already said, the parties to this claim are the two settlors (and trustees) as claimants, the present husband and children of the first claimant as defendants, and the Attorney-General, as representing charity under the ultimate default trust in clause 6, as fifth defendant. As a general proposition, in the absence of contrary statutory provision, it is for the claimants to decide who they wish to sue: Dollfus Mieg v Bank of England [1951] Ch 33. The corollary is that, again subject to contrary statutory rule ( eg CPR r 19.8A), only the persons joined are bound by the order made.
However, there are two important points to bear in mind about the terms of the settlement in the present case. First, it makes a contingent gift to any spouse of either of the settlors. The spouse concerned can only be identified as at the time that the interest falls into possession and income falls to be paid to such spouse. In the case of the first claimant, who is already married, this is likely to be the first defendant. But it may not be. In the case of the second claimant, who is not married, it may be that this gift never takes effect. But on the other hand it may. These possibilities are not infinitesimal or illusory, but real, even if at present unlikely. Accordingly, on the face of it possible future spouses of both claimants need to be represented in these proceedings. Otherwise such possible future spouses will not be bound by any order made. However, I understand that the claimants have decided not to make application for a suitable representation order (no doubt because it is so unlikely that there would be any possible future spouses), and so the order I make will not bind any that there may be.
The second point is that the settlement by clause 5, coupled with the definition in clause 1.3 (c), makes both the spouses and the children of the settlors objects of a power of appointment. So far as this relates to possible spouses other than the first defendant (who is of course already a party), the same point arises as in relation to the gifts of life interests already referred to. So far as this relates to existing children of...
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