V v T and Another
| Jurisdiction | England & Wales |
| Judge | Mr Justice Morgan |
| Judgment Date | 23 October 2014 |
| Neutral Citation | [2014] EWHC 3432 (Ch) |
| Court | Chancery Division |
| Docket Number | Case Nos: XXXXX |
| Date | 23 October 2014 |
[2014] EWHC 3432 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Royal Courts of Justice
Rolls Building, Fetter Lane,
London, EC4A 1NL
Mr Justice Morgan
Case Nos: XXXXX
Mr William Massey QC (instructed by Macfarlanes LLP) for the Settlors
Mr James Rivett (instructed by Macfarlanes LLP) for the Trustees
Mr Francis Barlow QC (instructed by Macfarlanes LLP) for the Minor Beneficiaries
Hearing dates: 10 October 2014
Introduction
This judgment concerns applications which were made in three related claims. In each claim, the Claimant sought an order under section 1 of the Variation of Trusts Act 1958 ("the 1958 Act") approving an arrangement proposed to be entered into in relation to an existing trust on the grounds that the arrangement was for the benefit of the minor beneficiaries under that trust and for the benefit of future, yet unborn, beneficiaries under that trust. The three trusts are in similar terms, as are the proposed arrangements in each case.
In each case, the claimant was the settlor of the trust and in one of the cases the settlor was also a trustee of the trust. The principal defendants were the trustees (or in one case, the other trustees), the adult beneficiaries (who have consented to the proposed arrangement) and the minor beneficiaries (acting through their litigation friend).
The substantive issues which arose under the 1958 Act were the usual issues under that Act, namely:
(1) was the proposed arrangement a variation of the existing trusts?
(2) was the proposed arrangement for the benefit of the minor beneficiaries?
(3) was the proposed arrangement for the benefit of the unborn beneficiaries? and
(4) should the court approve the proposed arrangement?
Before the hearing, the parties had contacted Chancery Listing and obtained its agreement that the cases would be listed for hearing in the Daily Court List with initials being used in place of the names of the parties.
At the hearing, Mr Massey QC appeared on behalf of the Claimants, Mr Barlow QC appeared on behalf of the minor beneficiaries acting through their litigation friend and Mr Rivett appeared on behalf of the trustees who had rightly taken on the role of "watchdog" for the unborn beneficiaries: see Re Druce's Settlement Trusts [1962] 1 WLR 363 at 370. Each counsel had provided me in advance with detailed and thorough written submissions and I had been asked to do, and had done, extensive pre-reading of the documents before the court.
At the beginning of the hearing before me, Mr Massey applied for the cases to be heard in private. I inquired whether the other counsel who appeared supported or opposed this application. I was told that they supported the application. I inquired whether there was anyone in court who wished to be heard on the application. Only the parties and their representatives were present. Although, as a result of pre-reading, I was doubtful whether I would ultimately direct that these cases should be heard in private, in order not to pre-judge the issue, I directed that the court would sit in private to hear the application for an order that the substantive cases be heard in private. At the conclusion of the submissions on the application, I announced my decision which was that the cases should be heard in open court but that it was appropriate to impose reporting restrictions as to the proceedings. I indicated that I would subsequently give reasons in writing for my decision. I also indicated that the written reasons would be in the form of an anonymised judgment.
Following my ruling on the application, I sat in open court and heard submissions on the substantive issues. I was satisfied that the proposed arrangement was a variation of the existing trusts within the 1958 Act, that it was for the benefit of the minor beneficiaries and the unborn beneficiaries and that it was appropriate for the court to make an order approving the arrangement under the 1958 Act. I then ordered accordingly.
This judgment contains my reasons for my decision that the cases should be heard in open court and that it was appropriate to impose reporting restrictions in relation to the proceedings.
The submissions
The parties relied upon CPR 39.2(3). I will set out the whole of Rule 39.2 which provides as follows:
" General rule—hearing to be in public
39.2 (1) The general rule is that a hearing is to be in public.
(2) The requirement for a hearing to be in public does not require the court to make special arrangements for accommodating members of the public.
(3) A hearing, or any part of it, may be in private if—
(a) publicity would defeat the object of the hearing;
(b) it involves matters relating to national security;
(c) it involves confidential information (including information relating to personal financial matters) and publicity would damage that confidentiality;
(d) a private hearing is necessary to protect the interests of any child or patient;
(e) it is a hearing of an application made without notice and it would be unjust to any respondent for there to be a public hearing;
(f) it involves uncontentious matters arising in the administration of trusts or in the administration of a deceased person's estate; or
(g) the court considers this to be necessary, in the interests of justice.
(4) The court may order that the identity of any party or witness must not be disclosed if it considers non-disclosure necessary in order to protect the interests of that party or witness. "
The parties relied in particular on sub-paragraphs (c), (d) and (f) of rule 39.2. It was submitted that:
(1) the evidence in the three cases revealed that the value of the assets of the trusts was very high and much higher than was typical in a case under the 1958 Act;
(2) the evidence disclosed information about the dividends policy of a company the shares of which were owned directly or indirectly by the trusts;
(3) the evidence as to the dividends policy would indicate the levels of profit made by the company;
(4) the company was a private company and its customers and its competitors were generally not aware of the levels of profit made by the company;
(5) if the company's customers became aware of the levels of profit made by the company, those customers (some of whom were powerful enterprises) could squeeze the profit margins of the company;
(6) apart from the adverse commercial consequences for the company and consequentially for the trusts, public knowledge of the value of the trust assets would create a risk as to the personal security of both the adult and the minor beneficiaries;
(7) these cases involved uncontentious matters arising in the administration of trusts.
Counsel did not cite any authority as to the principles I should apply in relation to the application that the cases should be heard in private. I indicated in the course of the hearing that I might reach the conclusion that the reasons put forward were not sufficient to justify a decision that the cases should be heard in private. However, I was concerned about the special position of the minor beneficiaries. I inquired whether it would be appropriate to impose some restrictions to safeguard the children from the adverse consequences of them becoming aware at too early an age of the extent of their likely wealth and to protect them from friendships and relationships with others who were inappropriately influenced by knowing about the likely wealth of the children. I inquired whether a reason of that kind would be accepted in the Family Division as a sufficient reason for hearing a case in private. The parties asked for, and I granted, a short adjournment to consider that matter and when the hearing resumed I was provided with a witness statement dealing with that matter and I heard further submissions. Mr Massey then cited to me Cooper-Hohn v Cooper-Hohn [2014] EWHC 2314 (Fam) and K v L [2011] EWCA Civ 550 in relation to the practice in family courts and Mr Barlow cited to me Spens v IRC [1970] 1 WLR 1173 and Re Trusts of X Charity [2003] 1 WLR 2751 in support of a submission that Article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms ("the Convention") did not apply to applications under the 1958 Act.
Private hearings: the legal principles
Although the parties relied on CPR 39.2(3) as the governing rule, this provision is an exception to the general rule stated in rule 39.2(1) which is that a hearing is to be in public. Rule 39.2(3) identifies a number of cases where a court may direct that a hearing, or a part of it, should be in private. Apart from the particular cases in sub-paragraphs (a) to (f) of rule 39.2(3), the rule ends with sub-paragraph (g) which refers to a case where the court considers it is necessary in the interests of justice to conduct the hearing in private.
Rule 39.2 is to be applied against the background of long established common law rules as to the fundamental principle of open justice and against the background of Articles 6, 8 and 10 of the Convention, set out in schedule 1 to the Human Rights Act 1998, coupled with section 12 of that Act dealing with freedom of expression. These rules have been the subject of a large number of highly relevant decisions over the decades. One can trace the authorities from the leading case of Scott v Scott [1913] AC 417 through R v Legal Aid Board ex parte Kaim Todner [1999] QB 966 (see, in particular, at 977) to a fairly recent discussion of the principles in Global Torch Ltd v Apex Global Management Ltd [2013] 1 WLR 2993, a case which concerned proceedings in the Companies Court. The authorities establish the following general propositions:
(1) There are two dimensions to open justice. The first is that the public are entitled to attend court proceedings to see what...
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