Bathurst v Bathurst [2016] EWHC 3033 (Ch)

WTLR Issue: Summer 2017 #168

BATHURST & ANR

V

BATHURST & ORS

Analysis

This was an application under the Variation of Trusts Act 1958 to change a provision relating to the appointment of new trustees of a settlement. Following the death of the settlor, the statutory power under s36 Trustee Act 1925 applies. The variation proposed was that for the future, the principal beneficiary for the time being should have the power to appoint need trustees, with the written consent of the trustees for the time being.

All of the adult beneficiaries of the settlement, and three of the four current trustees supported the change. It was opposed by the fourth trustee, who preferred the alternative suggestion that the power of nomination and appointment should remain with existing trustees with a veto provision being given henceforth to the principal beneficiary. The fourth trustees offered three arguments in support of his position:

1) the trustees may be better placed to identify suitable candidates;

2) in the case of a veto being exercised, lasting discord would be less likely if the veto is that of the principal beneficiary, as a veto by the continuing trustees of the choice of the principal beneficiary would cause real offence;

3) there have been cases of unsuitable or compliant trustees being overborne by beneficiaries for their own ends.

Held (allowing the application):

1) The settlor reserved the power of appointing new trustee to himself, so the arrangement was not a radical departure from the structure the settlor created;

2) each of the two possible versions of the revised power involved a nomination by one side and a veto power in the other. Either option was far removed from an unfettered power of appointment. The difference between the arrangement proposed by the fourth trustee and that with which he would be satisfied is small.

3) The reasons offered by the fourth trustee did not favour his option over the alternative; the power to nominate new trustee would be a fiduciary power, and would be the power of veto. Both parties would take their responsibilities seriously and in the unlikely event that they didn’t the courts could put them right.

4) Of the two alternatives, the one put forward by the majority of trustees was preferable, as the principal beneficiary in each generation as the obvious candidate for selection new trustees.

JUDGMENT MATTHEWS M: [1] In this application under the Variation of Trusts Act 1958, a small part of the scheme of arrangement proposed involves a change to the provision for the appointment of new trustees. The original settlement provided for appointment by the settlor during his life. He is now dead, and so the statutory …
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Counsel Details

Francis Barlow QC (3 Lincoln’s Inn Fields, London WC2A 3AA, tel 020 7242 9700, email mail@harcus-sinclair.co.uk) and James MacDonald (3 Lincoln’s Inn Fields, London WC2A 3AA, tel 020 7242 9700, email mail@harcus-sinclair.co.uk), instructed by Harcus Sinclair LLP (3 Lincoln’s Inn Fields, London WC2A 3AA, tel 020 7242 9700, email mail@harcus-sinclair.co.uk) for the claimant.

Richard Dew (3 Lincoln’s Inn Fields, London WC2A 3AA, tel 020 7242 9700, email mail@harcus-sinclair.co.uk) and Susannah Meadway (3 Lincoln’s Inn Fields, London WC2A 3AA, tel 020 7242 9700, email mail@harcus-sinclair.co.uk), instructed by Harcus Sinclair LLP (3 Lincoln’s Inn Fields, London WC2A 3AA, tel 020 7242 9700, email mail@harcus-sinclair.co.uk) for the defendants.

Cases Referenced

Legislation Referenced

  • Trustee Act 1925 s.36
  • Variation of Trusts Act 1958