E.T. v J.P. and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Morgan |
| Judgment Date | 28 March 2018 |
| Neutral Citation | [2018] EWHC 685 (Ch) |
| Date | 28 March 2018 |
| Court | Chancery Division |
| Docket Number | Case No: NOT PROVIDED |
[2018] EWHC 685 (Ch)
IN THE HIGH COURT OF JUSTICE
BUSINESS AND PROPERTY COURTS
BUSINESS LIST (CHANCERY DIVISION)
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
THE HONOURABLE Mr Justice Morgan
Case No: NOT PROVIDED
William Massey QC (instructed by Birketts LLP) for the Claimant
Georgia Bedworth (instructed by Birketts LLP) for the Minor Beneficiaries
James Rivett (instructed by Birketts LLP) for the Trustees
Hearing dates: 8 March 2018
Judgment Approved
Introduction
This judgment deals with one point which arose in the course of an application for the court's approval to a variation of a trust pursuant to the Variation of Trusts Act 1958 (“the 1958 Act”). The particular point arose in relation to section 1(3) of the 1958 Act which provides, in summary, that in the case of certain persons suffering from mental incapacity, the question as to whether the proposed variation is for the benefit of such a person is to be determined by the Court of Protection rather than by the High Court. On the facts of the present case there was an issue as to whether a minor who was a beneficiary under the trust was a person within section 1(3) of the 1958 so that the question whether the proposed variation was for his benefit should be referred to the Court of Protection.
At the hearing, I pointed out that as I was a nominated judge of the Court of Protection, I would not need to adjourn the hearing to allow an issue to be referred to the Court of Protection but I could simply sit as a judge of the Court of Protection and determine the issue in that capacity. I also suggested that as I could sit both as a judge of the High Court and as a judge of Court of Protection I might not need to make a formal determination as to whether I was deciding the question of benefit for a relevant person in one capacity or the other. In response to that suggestion, it was pointed out that some applications for the court's approval under the 1958 Act are dealt with by Chancery Masters or by Deputy High Court Judges who are not nominated judges of the Court of Protection and in such a case the Master or Deputy Judge could not adopt an approach similar to the one I suggested but would need to know how to apply section 1(3) of the 1958 Act. I was told that there was no authority on the meaning of that subsection and it would be potentially helpful to have the court's ruling as to its meaning and effect.
In those circumstances, I heard argument as to the meaning of section 1(3) and I gave my ruling to the effect that I did not need to refer any question to the Court of Protection. I then heard the application for the court's approval of the variation of the relevant trust. I decided that the proposed variation was for the benefit for all persons on whose behalf the approval of the court was required and I made an order approving the proposed variation. I indicated that I would subsequently give written reasons for my ruling as to the meaning and effect of section 1(3) and this judgment contains those reasons.
The facts
I need recite very little of the facts of this case for the purpose of this judgment. The adult beneficiaries under the relevant trust had consented to the proposed variation of the trust. The variation could affect the position of three beneficiaries who were minors and also the position of unborn and unascertained beneficiaries and the court's approval was sought on behalf of the minor beneficiaries and the unborn and unascertained beneficiaries. One of the minor beneficiaries, to whom I will refer as “X”, was aged ten and was severely autistic. I am satisfied that it is appropriate to give this judgment in an anonymised form so as not to name X or to give other information as to the parties which might lead to the identification of X.
Section 1 of the 1958 Act, as amended, provides:
“1.—Jurisdiction of courts to vary trusts.
(1) Where property, whether real or personal, is held on trusts arising, whether before or after the passing of this Act, under any will, settlement or other disposition, the court may if it thinks fit by order approve on behalf of—
(a) any person having, directly or indirectly, an interest, whether vested or contingent, under the trusts who by reason of infancy or other incapacity is incapable of assenting, or
(b) any person (whether ascertained or not) who may become entitled, directly or indirectly, to an interest under the trusts as being at a future date or on the happening of a future event a person of any specified description or a member of any specified class of persons, so however that this paragraph shall not include any person who would be of that description, or a member of that class, as the case may be, if the said date had fallen or the said event had happened at the date of the application to the court, or
(c) any person unborn, or
(d) any person in respect of any discretionary interest of his under protective trusts where the interest of the principal beneficiary has not failed or determined.
any arrangement (by whomsoever proposed, and whether or not there is any other person beneficially interested who is capable of assenting thereto) varying or revoking all or any of the trusts, or enlarging the powers of the trustees of managing or administering any of the property subject to the trusts:
Provided that except by virtue of paragraph (d) of this subsection the court shall not approve an arrangement on behalf of any person unless the carrying out thereof would be for the benefit of that person.
(2) In the foregoing subsection “protective trusts” means the trusts specified in paragraphs (i) and (ii) of subsection (1) of section thirty-three of the Trustee Act, 1925, or any like trusts, “the principal beneficiary” has the same meaning as in the said subsection (1) and “discretionary interest” means an interest arising under the trust specified in paragraph (ii) of the said subsection (1) or any like trust.
(3) … the jurisdiction conferred by subsection (1) of this section shall be exercisable by the High Court, except that the question whether the carrying out of any arrangement would be for the benefit of a person falling within paragraph (a) of the said subsection (1) who lacks capacity (within the meaning of the Mental Capacity Act 2005) to give his assent is to be determined by the Court of Protection.
[…]
(5) Nothing in the foregoing provisions of this section shall apply to trusts affecting property settled by Act of Parliament.
(6) Nothing in this section shall be taken to limit the powers of the Court of Protection.”
By section 1(1) of the Family Law Reform Act 1969, a person attains full age on attaining the age of 18 and by section 1(2) of that Act, references in statutes to “infancy” (as in section 1(1)(a) of the 1958 Act) are to be construed accordingly.
The background to the 1958 Act
Under the rule in Saunders v Vautier (1841) 4 Beav 115, where all of the beneficiaries under a trust are sui juris and are together absolutely entitled to the trust property, they are entitled by agreement to bring the trust to an end or to vary the terms of the trust. The requirement that all of the beneficiaries under the trust must be sui juris is illustrated by the decision in Berry v Geen [1938] AC 575; see at 582. Therefore, this principle does not allow the adult beneficiaries under a trust to vary the trust where the beneficiaries include minors or unborn or unascertained persons.
In Chapman v Chapman [1954] AC 429, the House of Lords held that the High Court did not, at that time, have power to give its approval, on behalf of a beneficiary who was a minor, to a variation of the trust on the ground that the variation would be beneficial to the minor. The 1958 Act was passed to deal with the lack of power in the High Court, as declared in Chapman v Chapman, to give such approval and the 1958 Act now confers power on the High Court to give such approval on behalf of any person “who by reason of infancy or other incapacity is incapable of assenting” and also on behalf of unborn and unascertained persons. The history of the matter is explained in Goulding v James [1997] 2 All ER 239.
The effect of an order under the 1958 Act
The effect of an order of the court giving approval under section 1 of the 1958 Act was described in Goulding v James [1997] 2 All ER 239 at 247e – h, as follows:
“First, what varies the trust is not the court, but the agreement or consensus of the beneficiaries. Secondly, there is no real difference in principle in the rearrangement of the trusts between the case where the court is exercising its jurisdiction on behalf of the specified class under the 1958 Act and the case where the resettlement is made by virtue of the doctrine in Saunders v Vautier (1841) 4 Beav 115, [1835–42] All ER Rep 58 and by all the adult beneficiaries joining together. Thirdly, the court is merely contributing on behalf of infants and unborn and unascertained persons the binding...
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