Re Norfolk's (Duke of) Settlement Trusts
| Jurisdiction | England & Wales |
| Judge | LORD JUSTICE CUMMING-BRUCE,LORD JUSTICE FOX,LORD JUSTICE BRIGHTMAN |
| Judgment Date | 15 April 1981 |
| Judgment citation (vLex) | [1981] EWCA Civ J0415-8 |
| Docket Number | 81/0206 |
| Court | Court of Appeal (Civil Division) |
| Date | 15 April 1981 |
and
[1981] EWCA Civ J0415-8
Lord Justice Cumming-Bruce
Lord Justice Brightman
and
Lord Justice Fox
In The Matter of The Trusts of a Settlement Dated 1st April 1958 and Made By The Most Noble Bernard Marmaduke Duke of Norfolk
81/0206
1975 N No. 84
IN THE SUPREME COURT OF JUDICATURE
COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
GROUP A
(MR. JUSTICE WALTON)
Royal Courts of Justice,
MR. ROBERT WALKER (instructed by Messrs. Witham, Weld & Co., Solicitors, London SW1V 3RD) appeared on behalf of the Plaintiffs (Appellants).
MR. IAN ROMER (instructed by Messrs. Fisher, Dowson & Wasbrough, Solicitors, London SW1A 1PQ) appeared on behalf of the 6th and 7th Defendants (Respondents).
I have asked Lord Justice Fox to
deliver the first judgment on this appeal.
This is an appeal from Mr. Justice Walton. It is concerned with the jurisdiction of the court to authorise the payment out of trust property of remuneration to a trustee.
By a Settlement of 1st April 1958, made between the 16th Duke of Norfolk, as settlor, of the one part, and Lord Perth, George Bellord (who has since died) and Schroder Executor and Trustee Company Ltd. (SETCO), as trustees, of the other part, certain property was settled upon, in effect, discretionary trusts during a lengthy period (which might, in fact, endure until January 2038).
The provisions for remuneration of the trustees are contained in clauses 11 and 12 of the Settlement and are as follows:
"11. Any trustee hereof who shall he an individual engaged in any profession or business shall be entitled to charge and be paid all professional or other reasonable and proper charges for any business done or time spent or services rendered by him in connection with the trusts of this settlement…whether or not of a nature requiring the employment of a person so engaged and no trustee shall be liable to account for any benefits received by him through the employment by the trustees of any firm or company of which he is a member or officer or in which he is otherwise interested".
"12 (i) Schroder Executor and Trustee Company Ltd. hereinafter called 'the Company' shall be entitled to remuneration for its services as trustee hereof…in accordance with its usual scale of fees in force at the date hereof.
(ii) The Company may employ or consent in employing Messrs. J. Henry Schroder & Co. (hereinafter called 'the Bank') to act as banker to the trust and the Bank may make advances to the trust estate as fully and with the like protection and rights including non-accountability for profits made as a banker as if the Company were not a trustee hereof (iii) Lord Perth shall not be liable to account for any remuneration or other benefits received by him either from the Company or from the Bank". The 16th Duke died in 1975;
I shall refer to him as the settlor.
The property settled by the 1958 settlement consisted in the main of three items:
(a) The issued share capital of Fitzalan Howard Estates Ltd. The main asset of that company was the settlor's life interest in certain freehold land.
(b) An agricultural estate in Yorkshire of some 3,000 acres.
(c) The South East block of the settlor's Strand estate in London. That estate consisted of four blocks of property lying between the Strand and the River.
As a result of certain transactions (including the winding up of Fitzalan Howard Estates Ltd.) the trustees became entitled to certain agricultural estates and cash.
In 1966 the settlor added to the Settlement the north east block of the Strand Estate. In 1968 the settlor added the South West block of the Strand Estate in exchange for some of the agricultural land.
This concentration of the greater part of the Strand Estate in the hands of the trustees led to the substantial redevelopment of the Strand Estate which took place in recent years.
This development as the judge found, involved the trustees in work which was entirely outside anything which would reasonably have been foreseen when they accepted office.
The originating summons was issued by Lord Perth and SETCO as plaintiffs. The relief sought by the summons was, in essence, twofold:—
(i) The payment of an annual sum to Lord Perth as remuneration for his services as trustee. Clause 11 of the Settlement had never applied to Lord Perth.
(ii) The establishment of a new scale of charges for SETCO. Under the Settlement SETCO's remuneration was as follows:
(i) an Acceptance Fee which was paid when the Settlement was created;
(ii) a Management Fee of 2/- (10p) per £100 of capital held in trust (the capital being valued at book values in the last audited accounts);
(iii) a Change of Investment Fee of 2/- per £100 on the amount involved in the transaction;
(iv) a Withdrawal Fee of 5/- per £100.
The summons so far as SETCO is concerned asked, so far as material, for remuneration as follows:
(i) A sum in respect of services performed prior to the issue of the Summons (the services being services alleged to be outside the ordinary scope of a trustee's duties);
(ii) Sums in respect of its services to the trust during the two years ending 31st March 1976 and 1977 (which were periods after the issue of the Summons but before the hearing);
(iii) An increase in the management fee to 40 pence per £100. on the aggregate amount of the market values of the trust property. The investment fee and the withdrawal fee were to be left broadly as they were under clause 12 of the Settlement.
(iv) Additional remuneration for any services performed by SETCO after the date of the order on the originating summons, which are exceptional or outside the ordinary scope of a trustee's duties—such additional remuneration to be of such amounts as should from time to time be certified in writing as reasonable by Messrs. Coopers & Lybrands (or another firm of chartered accountants of similar standing) having regard to the difficulty of the work and to the time spent on it.
The evidence is that the general level of SETCO's fees is low compared with that of similar institutions and that the new scale proposed would still be below that charged by such institutions, especially the Public Trustee. There is also evidence that the amount of work transacted by SETCO as a trustee of the Settlement is such that SETCO is incurring a substantial and continuing financial loss in consequence of its trusteeship. That, it is said, is because the amount of work now involved in administering the trust is so greatly in excess of anything contemplated when the trust was established.
The judge came to the conclusion that he had jurisdiction to authorise the payment of additional remuneration, both to Lord Perth and to SETCO, in respect of work which they had done in the past which was outside the scope of any duties which could reasonably have been expected to be rendered by them as trustees. He made certain orders authorising payments accordingly. Those orders are not appealed from and I need not refer to them further.
The judge also decided, however, that he had no inherent jurisdiction to authorise for the future any general increase in SETCO's remuneration as provided by clause 12 of the Settlement. It is against that decision that this appeal is brought.
The living beneficiaries do not oppose SETCO's application for an increased scale of remuneration. The only beneficiaries who in fact appear on this appeal are the 6th and 7th defendants (the latter of whom was a minor when the proceedings started but is now of full age). They appear by Mr. Ian Romer. As unborn beneficiaries may be affected, the court invited Mr. Romer to act as amicus and he has addressed to us a full and helpful argument in support of the judge's decision.
At the request of the parties this court will decide the question of jurisdiction only. We are not asked to decide whether, if any jurisdiction exists, it should be exercised. The originating summons has accordingly been amended to ask for a declaration that the court has jurisdiction (whether under its inherent jurisdiction or under section 57 of the Trustee Act 1925 or otherwise) to authorise SETCO to charge remuneration at a rate higher than that to which it has previously been entitled under clause 12 of the Settlement. I should mention that, before the judge, the discussion extended to the inherent jurisdiction only.
I turn to consider the inherent jurisdiction. That depends, in the main, upon authority. An examination of a number of decisions is, therefore, necessary.
I start with Robinson v. Pett, 2 P. Wms. 249, which was decided in 1734 by Lord Chancellor Talbot. In that case the issue was whether "an executor who had renounced but had yet been assisting in the trust according to...
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