Pemberton v Pemberton and Others

JurisdictionEngland & Wales
JudgeJudge Hodge QC
Judgment Date13 July 2016
Neutral Citation[2016] EWHC 2345 (Ch)
CourtChancery Division
Date13 July 2016
Docket NumberCase No: HC-2016-001796

[2016] EWHC 2345 (Ch)

IN THE HIGH COURT OF JUSTICE

CHANCERY DIVISION

The Rolls Building,

7 Rolls Building, Fetter Lane, London,

EC4A 1NL

Before:

His Honour Judge Hodge

Sitting as a Judge of the High Court

Case No: HC-2016-001796

Between:
Pemberton
Claimant
and
Pemberton & Ors
Defendants

Mr Robert Venables QC and Ms Mary Ashley appeared on behalf of the Claimant

Mr James Kessler QC appeared on behalf of the First, Second and Third Defendants

Mrs Amanda Hardy QC appeared on behalf of the Fifth, Sixth, Seventh and Tenth Defendants

Mr Oliver Marre appeared on behalf of the Fourth, Eighth, Ninth and Eleventh Defendants

Judge Hodge QC
1

This is my extemporary judgment on a Part 8 claim issued by Mr Richard Francis Anthony Pemberton in relation to the Pemberton Settled Estates. The settlement was originally created on 31 March 1965 by the claimant's grandfather, Sir Francis Wingate William Pemberton. The claimant, together with the first to third defendants, are the present trustees of the settlement. The claimant is represented by Mr Robert Venables QC leading Ms Mary Ashley. The first to third defendants are represented by Mr James Kessler QC. They are the present trustees together with the claimant, and they also have in mind the interests of unascertained and unborn beneficiaries. There are four adult defendants, defendants 4, 8, 9 and 11, who are represented by Mr Oliver Marre of counsel. Each of them has signed (or, in the case of the eleventh defendant, by his attorney has signed) letters consenting to the proposed variation. The fifth, sixth, seventh and tenth defendants are minor beneficiaries of the settlement and they are represented by Mrs Amanda Hardy QC.

2

The evidence in support of the variation is contained within the witness statement of the claimant dated 7 July 2016 together with 36 exhibits. The last of those is a detailed written opinion from Mr Robert Venables QC dated 5 July 2016. The proposed variation is set out in a scheme of arrangement varying the trusts of the settlement which appears at divider 5 of hearing bundle In his witness statement Mr Richard Pemberton, the claimant, begins by exhibiting a family tree at RFAP1 and then explaining the various other documents to which he makes reference in the course of his witness statement. He verifies the accuracy and completeness of the family tree and explains that the settlement had been created by his grandfather, Sir Francis Pemberton, and that the beneficiaries with present interests in possession are the claimant himself, his father Anthony (the first defendant), his son Henry (who is the seventh defendant) and his two daughters, Jemima and Rose (the fifth and sixth defendants). He refers to Mr Venables's opinion which sets out the relevant history of the settlement and verifies its accuracy.

3

At paragraph 5 he sets out the proposed variation to the terms of the settlement in summary. Essentially he is proposing:

(a) to set the perpetuity period running afresh for a further 125 years beginning with the operative date;

(b) to confer on the trustees additional administrative powers, particularly investment powers, in extension of the more limited powers conferred by law and by the 1965 settlement deed (none of those powers will adversely affect the beneficial interests);

(c) whilst preserving all existing interests in possession in the settled property, to create certain reversionary life interests for the surviving "spouses" of Anthony, the claimant, and the claimant's son and two daughters ("spouses" in this context is defined by clause 1.3 of the scheme of arrangement as extending to any civil partner or spouse to a same-sex marriage);

(d) subject to the foregoing, to create, in substitution for the present trusts, discretionary trusts during the remainder of the trust period (defined by reference to the new perpetuity period) for the benefit (subject to certain limited exceptions, which have been inserted for tax reasons) of grandchildren and remoter issue of the settlor, their "spouses" (as explained), and, provided the marriage or civil partnership terminated only on the death of such issue, their former "spouses"; and finally

(e) to ensure that the Settle Land Act 1925 no longer applies to the settlement.

4

At paragraph 6 the claimant points out that his minor children, who currently have revocable interests in possession in certain of the settlement funds, will continue to have such interests, which will continue to be revocable by the trustees with the claimant's consent during his lifetime. The claimant points out that all other interests of minor, unborn or unascertained beneficiaries on whose behalf the court is being asked to approve the arrangement are mere objects of discretions, and those interests have no value as they can be destroyed by the exercise of non-fiduciary powers vested in certain beneficiaries of full age and capacity whose consent to the variation will be necessary and who are parties to these proceedings. It follows that no minor, unborn or unascertained beneficiary will be worse of as a result of the proposed variation. It is said that the proposed variation will be for the benefit of the family as a whole and thus for each member of it. Persons will continue to be objects of discretionary powers reposed in the trustees. The settlement will have undergone a much needed overhaul and its potential life will have been expanded enormously. That is said to be very important as the settlement enjoys considerable inheritance tax and capital gains tax advantages which could not be replicated in any new settlement.

5

Under the proposed arrangement the power of revoking or restricting the reversionary life interests conferred on the surviving spouse of the persons currently entitled to an interest in possession is exercisable by the trustees during the claimant's lifetime only with his consent, which is not to be unreasonably withheld. The claimant explains that he has no intention of unreasonably withholding his consent to any proposed exercise of the power agreed by the trustees and the claimant appreciates that he would not be entitled to do so.

6

At paragraph 10 the claimant explains that if the proposed arrangement is not approved his intention would be to exercise his existing powers to create as near as may be new trusts as near as may be to those of the proposed arrangement. In particular, he would provide that discretionary trusts would take effect subject to the existing interests in possession and to new reversionary life interests which he would create, the extended class of objects of which would be the same as under the prescribed trusts set out in the first schedule to the proposed arrangement. Whilst that would require the consent of the claimant's wife, Helen, having discussed the matter with her he understands that she would be willing to give that consent. The claimant points out that that would be far less satisfactory than if the arrangement were to be approved. That is because the perpetuity period would not be set running afresh, the trust would still be governed by the Settled Land Act, and neither the trustees nor the tenant for life or other persons having the powers of the tenant for life would have the proposed extended administrative powers. The claimant therefore submits that the proposed arrangement is a fit and proper one for the court to approve.

7

The position of the other trustees is set out in a witness statement from the third defendant, Mr William Robert Bartle Edwards, dated 7 July 2016. Mr Edwards exhibits a copy of the opinion of Mr James Kessler QC dated 2 June 2016. Mr Edwards states that Mr Kessler had been instructed to advise the trustees generally. He confirms that Mr Kessler's understanding of the trustees' intentions is correct and that the trustees do intend, if they reasonably can, to make appointments in favour of the next generation of beneficiaries during the lifetimes of the spouses of Anthony and Richard, respectively the first defendant and the claimant. Mr Edwards records that Mr Kessler advised the trustees that this application is one that they should support; and Mr Edwards confirms that his fellow trustees and he have accepted Mr Kessler's advice and support the application.

8

The final witness statement before the court is from Mr Timothy James Lawson dated 6 July 2016. He is a chartered surveyor, although he is now retired; and he is the litigation friend of the infant defendants numbered 5, 6, 7 and 10. Their ages range (in the case of Jemima) from 14 to (in the case of Henry and Harriet) ten years of age. The other infant defendant, Rose, is currently twelve years of age. Mr Lawson exhibits instructions to leading counsel dated 18 June 2016 and the opinion of Mrs Amanda Hardy QC dated 4 July 2016. Mr Lawson states that he has read Mrs Hardy's opinion, which sets out the relevant provisions of the settlement. The opinion also sets out the terms of the variation to the perpetuity and accumulation periods and the trust provisions which have been proposed by the claimant in respect of the settlement and its supplemental deeds. He confirms the truth of matters of fact set out in the opinion. At paragraphs 5 through to 7 he sets out his professional experience, which has provided him with a sound understanding of trust and financial matters and knowledge of the financial, ethical and moral issues which can arise in relation to settlements containing substantial family wealth. He therefore believes that he can fairly and competently conduct these proceedings on behalf of the minor beneficiaries and that he has no interest in...

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1 cases
  • The Most Noble John Michael Edward, Duke of Somerset DL v Peter Robin Fitzgerald
    • United Kingdom
    • Chancery Division
    • 25 March 2019
    ...Appointment of Trustees Act 1996. It is a provision opting out of one statutory framework and into another. 25 In Pemberton v Pemberton [2016] EWHC 2345, His Honour Judge Hodge QC, sitting as a Judge of the High Court, was satisfied that the arrangement before him relating to the Pemberton ......
3 firm's commentaries
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    • Mondaq Jersey
    • 8 September 2017
    ...with article 47 of the Law. The Court referred to the English cases of Goulding v James [1997] 2 All ER 239 and Pemberton v Pemberton [2016] EWHC 2345 (Ch) and found that the consistent theme of those English decisions was that the Court, in considering whether to exercise its discretion, w......
  • Variations Of Jersey Trusts: Relevance Of Settlors' Views And Public Policy
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    • Mondaq Jersey
    • 18 August 2017
    ...contrary to public policy). The Court referred to two English cases, Goulding v James [1997] 2 All ER 239 and Pemberton v Pemberton [2016] EWHC 2345 (Ch) from which the Court was satisfied that the wishes of the Settlor, even though they were firm and clear during his lifetime, did not prov......
  • Trust Variation To Benefit Children From Same-Sex And Unmarried Families - The Facts, Considerations And Implications
    • Jersey
    • Mondaq Jersey
    • 13 September 2017
    ...with article 47 of the Law. The Court referred to the English cases of Goulding v James [1997] 2 All ER 239 and Pemberton v Pemberton [2016] EWHC 2345 (Ch) and found that the consistent theme of those English decisions was that the Court, in considering whether to exercise its discretion, w......

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