Analysis
The claimants as respective settlor and trustees of two trusts of investment bonds sought declarations that the trusts had been completely constituted, or alternatively rectification so that such constitution has been properly made. The application was unopposed.
In 2013 the claimants (who were husband and wife) were advised by an independent financial adviser to purchase bonds issued by AXA (Isle of Man) Ltd, which on purchase would be settled on discretionary trusts for the benefit of a class of potential beneficiaries, including their only child, the defendant. The claimants were to purchase one bond each and the claimants and the defendant were to be the trustees of the trusts of each bond. The initial value of each bond was £325,000, reflecting the nil rate band limit at the time. Each trust was intended to be governed by the law of England and Wales.
The documentation intended to declare each trust consisted of standard form pre-printed documents expressed to be deeds, to be completed in part by the claimants and in part by AXA (although AXA was not a party to the deeds). In the event the documents were executed by the claimants and the defendant but not completed by AXA. As a result, each trust deed was left undated and the bond to be the property subject of each trust was not identified. In addition, the signature of the defendant to each deed was not witnessed. The bonds were issued to each claimant on payment of £325,000 per bond as requested. The bonds themselves were governed by Manx law.
AXA had deliberately not dated the trust deeds or inserted details of the relevant bond, on the grounds that it had noted that the defendant’s signature had not been witnessed and it had not received documentation in relation to her, which it asserted it required for Isle of Man regulatory purposes. These issues had been raised by AXA with the claimants’ financial adviser at the time but not remedied.
Held: that the trusts were validly constituted
The documents were valid as deeds without being dated on the footing that each settlor had intended the trust to take effect immediately when each bond was issued. The bond to which each trust deed related could be sufficiently identified by extrinsic evidence. There was no need for the defendant’s signature to be witnessed for each deed to be effective as a trust of the relevant bond, appointing her as well as the claimants as a trustee.
Any failure by AXA to comply with Manx law in respect of the defendant did not prevent the claimants from validly assigning the benefit of each bond to trustees to hold on the trusts of each deed as a matter of English law. The trust deeds included valid legal assignments of the benefit of each bond from each settlor (as applicant for the bond) to the three intended trustees. Alternatively, the trust of each bond was fully constituted when each settlor constituted themselves a trustee of the relevant bond on the terms of the trust deed. In view of the finding as to validity it was unnecessary to consider rectification.
JUDGMENT: HHJ PAUL MATTHEWS QC: Introduction [1] This is my judgment on a claim made by claim form under CPR Part 8, issued on 19 November 2019, and heard before me on 17 March 2020. Each of the two claimants (who are married to each other) seeks relief as settlor of a trust of an …Continue reading "Bowack & ors v Saxton [2020] WTLR 777"