Ulrich and Others v Treasury Solicitor and Others
| Jurisdiction | England & Wales |
| Judge | THE HONOURABLE MR. JUSTICE HART |
| Judgment Date | 28 January 2005 |
| Neutral Citation | [2005] EWHC 67 (Ch) |
| Docket Number | Case No: HC04CO1826 |
| Court | Chancery Division |
| Date | 28 January 2005 |
[2005] EWHC 67 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Strand, London, WC2A 2LL
The Honourable Mr. Justice Hart
Case No: HC04CO1826
Mr Paul Teverson (instructed by Messrs. Carter Bells) for the Claimants.
Mr. Michael King (instructed by Messrs. Carter Bells) for the Fourth Defendant.
Hearing dates: 20 th January 2005
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
………………………..
Mr. Justice Hart:
The claim in the present case raises the question of the validity of a trust purportedly established by a Trust Deed dated 7 th February 1927 for the benefit of employees of a company called Vine Products Company Limited (described in the deed and in this judgment as "the Old Company") and the widows and children of employees of a company then called Vine Products Limited, and now called Hiram Walker (1992) Limited (described in the deed and in this judgment as "the New Company").
The Deed defined "Employee of the Old Company" as meaning any person employed by the Old Company on 30 th March 1926 and in the employment of the New Company at 7 th February 1927 "other than any person directly concerned or engaged in the management of the New Company". It defined Employee of the New Company as "any person other than an employee of the Old Company now or at any time hereafter" employed by the New Company, again subject to the exclusion of management.
Clause 2 of the Trust Deed declared:
"A Fund to be called the Employees' Benefit Fund shall be constituted and established as hereinafter mentioned."
Clause 3 identified the property initially settled (consisting largely of certain shares in the New Company and some cash), and Clause 4 contained a wide investment clause which permitted investment in shares in the New Company.
Clauses 5, 6 and 7 contain the operative provisions of the trust and are in the following terms:
"5. The Trustees shall hold the said fund upon the trusts following that is to say
(a) Upon trust as to the income thereof at their discretion to pay the whole or any part thereof to such employees of the Old Company or their widows and children as the Trustees shall think fit or at such discretion as aforesaid to apply the same or any part thereof to or for the benefit of any of such persons in such manner as the Trustees shall think fit and
(b) Upon trust as to the residue (if any) of such income and after the death of all persons who might be entitled to benefit under sub-clause (a) hereof as to the whole of such income at their discretion to pay the whole or any part thereof to such employees of the New Company or their widows and children as the Trustees shall think fit or at such discretion as aforesaid to apply the same or any part thereof to or for the benefit of any such persons in such manner as the Trustees shall think fit
6. IT IS HEREBY DECLARED that if at any time the income of the said fund shall be insufficient to enable the Trustees to pay or apply all moneys which they shall have determined or shall determine to pay or apply hereunder the Trustees shall be entitled at any time and from time to time to sell and convert into money such part of the investments for the time being representing the capital of the said fund as will produce the amount by which such income is insufficient and apply the moneys received on such sale and conversion as though the same were income of the said fund
7. IT IS HEREBY FURTHER DECLARED that the Trustees may at any time and from time to time sell and covert into money such part of the investments for the time being representing the capital of the said fund as they shall think fit and apply the moneys received on such sale or conversion in such manner as they shall think fit in accordance with the trusts hereinbefore declared concerning the income of the said fund and may in particular apply any of such moneys in the purchase of a Government Annuity or an Annuity from an Insurance Office in the name and for the benefit of such person or persons eligible to benefit hereunder as the Trustees shall think fit"
The only other provision which it is necessary to note is clause 9 which reads as follows:
"NOTHING herein contained shall be deemed to constitute a trust for the benefit of any one or more of the employees of the Old Company or of the employees of the New Company or his or their widows or children and enforceable by him or them and the Trustees shall not be bound to apply the said fund or any part thereof to or for the benefit of any such employee or his widow or children"
The recitals to the Trust Deed give some, but not much, indication of the origins and purposes of the trust. By an agreement dated 15 th March 1926 the New Company had agreed to buy the assets and undertaking of the Old Company (which went into voluntary winding up on the same day) for a consideration which included £480,477 to be satisfied as to £180,484 in cash and as to £299,993 by the allotment to the liquidator of the Old Company of 299,993 £1.00 fully paid shares in the New Company. After reciting the desire to create a fund for the benefit of the employees of the two companies and their wives and children, the recitals then recorded the existence of a block of 30 shares in the Old Company, registered as owned by the Bank of Athens but which had been disposed of by the Bank of Athens to an untraceable disponee who had never sought to be registered and had never claimed declared dividends. The Bank of Athens made no claim to the shares or the dividends. Part 1 of the 2 nd Schedule to the Deed set out the shares in the New Company and the cash distributions to which the holder of that block of shares in the Old Company was entitled together with the unclaimed dividends. The whole consisted of 13 £1.00 preference shares and 78 £1.00 ordinary shares in the New Company, and cash of about £97.00.
The recitals then state that the holders of certain shares in the Old Company, entitled to 2960 £1.00 shares in the New Company had authorised the liquidator to transfer them to the Trustees "with a view to the creation of the Fund". These shares are described in Part 2 of the 2 nd Schedule.
From the foregoing it is possible to deduce that the value of the Trust Fund at its inception had a value of some £3,148.00. There is little evidence as to how large was the class of employees of the Old Company or of the New Company at the inception of the trust, but it is thought that there were probably no more than about 30 employees at that time. Nothing is known about the motives of those shareholders who contributed the 2960 shares in the New Company. Indeed the state of the New Company's records is such that those shareholders cannot, it appears, now be identified.
A fund of £3000 in 1927 might, I would guess (in the absence of any material before me) be expected to produce an income (at 4%) of £120 per annum. That figure has to be set in the context of 1927 monetary values. At that time many weekly wages would appear to have been in the range of between £1 and £2 per week: see. e.g. s. 8(3)(i) of the Workmen's Compensation Act 1925. Contemporary law reports show a "manager" in the boot and shoe industry as being entitled to a minimum wage of £4 per week (although the plaintiff in France v. J. Coombs & Co [1927] 1 KB 457 had only been paid £2/18/0); a machine operator in South Wales might have been earning over £2 per week (see Edward Curran & Co v. Kays [1928] 1 KB 469), as also would a collier (see Barber Walker & Co v. Flint [1929] 1 KB 256 showing a collier's wages in 1927 to be £2/14/- as compared with the nearly £4 per week which would have been commanded in 1919). A modest cottage in Woking could be rented for 2s.6d a week: see Oakley v. Wilson [1927] 2 KB 281.
Those illustrative examples enable me to say with a reasonable degree of confidence that the income generated by the fund was modest even in 1927 terms when viewed in the context of an immediate class of possible beneficiaries consisting of perhaps 30 persons and their wives and children. That supports the suggestion that the fund may have been conceived of as a fund the income of which was designed to be resorted to for the purposes of making one off, or continuing payments, to members of the class who, for one reason or another, found themselves in reduced circumstances, rather than for the purposes of providing general benefits to employees and/or their families.
So far as the evidence goes the income of the fund has indeed always been applied for such "hardship" purposes. That has certainly been the policy of the present trustees, of whom the earliest to be appointed was Mr Ulrich the first claimant (who was appointed as a trustee in 1973 and who had been employed by the New Company since 1940).
In 1995 one of the trustees, who was married to a solicitor, had his attention drawn by her to the possibility that the trusts declared by the Trust Deed were invalid on grounds of perpetuity. Advice was thereafter sought from counsel who confirmed the fear. The trustees have thereafter ceased to make payments. For reasons which are unclear on the evidence, steps were not taken until last year to bring the matter before the court. The fund is currently valued at some £600,000.
The present claim is brought by the trustees, who have been represented before me by Mr Paul Teverson. The first defendant, the Treasury Solicitor, was joined in order to...
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