Re Leek, deceased ; Darwen (Baron) v Leek
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE HARMAN,LORD JUSTICE RUSSELL,LORD JUSTICE SACHS |
| Judgment Date | 20 December 1967 |
| Judgment citation (vLex) | [1967] EWCA Civ J1220-4 |
| Date | 20 December 1967 |
| Court | Court of Appeal (Civil Division) |
[1967] EWCA Civ J1220-4
In The Supreme Court of Judicature
Court of Appeal
Civil Division
On appeal from Mr. Justice Buckley
Lord Justice Harman
Lord Justice Russell and
Lord Justice Sachs
In the Matter of The Trusts affecting a Policy of Assurance on the life, of Ivan George Elmer Leek deceased dated 25th September 1957 effected by Dosco Overseas Engineering Limited with the; North British and Mercantile Insurance Company Limited declared by a letter dated 1st December 1956 from the said Dosco Overseas Engineering Limited to the said. Ivan George Elmer Leek.
Mr. J.W. Mills, Q.C., and Mr. G.M. Godfrey (Instructed by Messrs. Beale & Co.) appeared on behalf of the first Defendant, Hilda Leek, widow, Appellant.
Mr. A.J. Balcombe (instructed by Messrs. Beale & Co.) appeared on behalf of the Plaintiff,
Mr. H.E. Francis, Q.C., and Mr. J.P. Marker (Instructed by the Solicitor of Inland Revenue) appeared on behalf of the sixth Defendant, Commissioners of Inland Revenue, Respondent.
There are no disputed facts in this case: they are set out in the affidavit in support of the originating summons and repeated so far as relevant in the judgment of the learned Judge below. The question raised by the summons and by the appeal is whether a sum of £17,890. 6s.8d. at present in the hands of the plaintiff is held by him upon trust for the assured's widow, the first defendant, by reason of a decision in her favour by the fifth defendant, Dosco Overseas Engineering Ltd., which they were empowered to make by the policy of assurance on the life of her husband, Colonel Leek, who died on the 25th September, 1957, and left his estate to her. The terms of the policy are stated by reference to a letter dated the 1st December, 1956, written by Dosco to Colonel Leek. If, upon the true construction of that letter, the trusts declared were valid, then no estate duty is payable on the policy monies on Colonel Leek's death. If, on the other hand, the trusts fail or are void, as the Judge below has held them to be, the monies pass to the first defendant, the widow, as the universal legatee of her husband, and, being part of his estate, must pay duty at the appropriate rate, which I understand to be some 45%.
The whole question turns upon one paragraph in the letter in question, which is in these terms: this is a letter addressed to Colonel Leek: "All sums arising out of (a) (b) and (c) above shall be held by the Company upon trust for the benefit of such one or more of the following persons as the Company in its absolute discretion shall decide namely your wife, children or other issue or such other persons as the Company may consider to have a moral claim upon you or falling them upon trust for the benefit of such one or more of the statutory next-of-kin In both cases in such shares and in such manner as the Company in its absolute discretion shall decide."
(a), (b) and (c) referred to in the paragraph appear in paragraph 6 of the letter, and the relevant event is the death of the assured while in the company's service and before the normal retirement date, for this is the event which happened.
The first question which the Judge decided was whether the first trust was an imperative trust "for all the objects mentioned, that is to say, the wife, children or other issue" (of Colonel Leek) "or such other persons as the Company may consider to have a moral claim upon you'. The Judge held that this imposed no obligation on the company to make a distributions it was enough for the company to consider the question whether they should do so, and they were perfectly at liberty to come to the conclusion that, they should not. The other view is that the trust is a trust to distribute the whole fund, the power of decision being merely a power to decide what objects of the trust should receive benefit and when and how.
There is all the difference in the world in law between these two views. If the trust be on its true construction a mere power imposing no obligation beyond consideration, then the trust is good from this point of view - Re ( Gestetner 1953 Ch. 672), a decision of my own at first instance which has I think received the approval of the, higher Courts. It is not necessary in a trust so framed to be able to say with certainty that the whole field can be surveyed. It is enough if the donee of the power can say of any particular person making a claim that he or she is or is not an object of it.
It was argued that even on this footing the trust was too vague, because the question whether A has a moral claim on B is not a question of fact but of mere opinion depending on so many imponderables and the personal views of the donee of the power, that it is impossible to say of any given claimant whether he or she has such a. claim. If the trust were for such persons as have moral claims, I would agree with this view, but this notthe trust. The trustees are made the arbiters and the objects are such persons as they may consider to have a moral claim: and I do not see why they should not be able on this footing to make up their minds and arrive at a decision.
On the other view the law is, as shown by the leading case of Re ( Ogden 1933 Ch. 678), a decision of Mr. Justice Tomlin, and recited in Gestetner (supra) - that the donee of the power must be in a position to know all the objects of It. This in my judgment they could not do in this case with sufficient certainty; and on that footing the trust would be bad.
The Judge below held that this was a mere power not coupled with a trust to distribute and therefore so far good. He founded himself I think upon the words "shall decide". My mind has wavered on this subject and I thought at one time that this was right, because it seemed unlikely that if there were no wife, children or issue, and the trustees could only find one person whom they considered to have a moral claim, it seemed very improbable that one person should be entitled to take the whole fund. It was, however, argued against this that under those circumstances there might well be other relations, not wife, children or issue, who might be considered to have moral claims on the testator; and on the whole I am of opinion that the first trust is a trust coupled with a duty and as such is bad for that reason, as I have explained. It is not possible for the donee of the power to be able to say that all possible objects are before it.
The learned Judge, while holding that the first trust passed the test of uncertainty, held It bad for perpetuity upon the footing that the decision might be deferred from time to time beyond the permitted range. See Lord Parker in Re De Sommery (1912) 2 Ch. 622 at page 632. I do not share this view. In my judgment, on the true construction of this clause the decision could not be deferred indefinitely but must be taken within a reasonable time, far less than 21 years. Successive interests may indeed be decided on, but the decision must be taken once and for all. If, therefore, I had thought that the trust passed the first test of uncertainty, I should have held that it passed the second test of perpetuity.
As it is, I must come to the next relevant words, which are "failing them". These words seem to me in their natural meaning to signify failing any objects of the first trust, and indeed I think it is admitted that that Rust be their meaning if the first provision be an imperative one. The alternative view is that "falling them" means in effect in default of appointment or failing persons among whom a selection Is made, and I should have been inclined to take this view if I held the power to be a mere power. As it is, however, I am of opinion that it cannot be said that there has been a failure, because the testator has been survived by a wife, children and issue. On this view the second provision does not arise and the gift fails altogether, with the result that under the well-known rule in Lassence v. Tierney the original trust for the assured on whose life the policy depended would survive under clause 2 of the letter which states that the "policy will be expressed as being effected by the company as trustee for your. The schedule to the policy itself shows that Dosco is the assured as trustee for the person whose life is assured, namely, the testator.
If I had held the trust to be in effect a mere power so that the first provision was good, I should have held that the words "falling them" mean in default of appointment, and should have held that the second provision arose, namely, such one or more of the statutory next-of-kin as the company should decide. Here again I think the decision must be made within a reasonable time, and this provision would therefore on that footing be good.The Judge held that the second trust was bad for perpetuity as being dependent on the first, but if it had arisen I should not have taken this view: see Re ( Abbott 1893 1 Ch. 54), and Re Canning 1936 Ch. 309.
In the event, therefore, I hold that the whole trust fails and that the money passes to the widow under the testator's will and will pay duty accordingly. I would dismiss the appeal, but not for the reasons given by the Judge.
The arrangement was in these terms, rewritten. The sum payable on Leek's death before retirement age under the policy shall be held by Dosco:- (A) upon trust for the benefit of such one or more of the following persons as Dosco in its absolute discretion shall decide (and in such shares and in such manner as Dosco in its absolute...
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