Analysis
The claimant as one of the executors and trustees of the estate of Dame Zaha Hadid deceased, who died in 2016, brought proceedings under s50 of the Administration of Estates Act 1985 for the removal of the first to third defendants, the claimant’s co-executors and co-trustees. The claimant and the first to third defendants had had great difficulty working together in the administration of the deceased’s estate. By the time of the hearing an agreement had been reached between the parties.
Pursuant to that agreement, an employee benefit trust (EBT) was to be declared in the exercise of the will trustees’ powers of appointment under the deceased’s will. The EBT was to own the company (ZHL), continuing the deceased’s architectural practice for the benefit of the claimant and other current and future employees of the business. It was agreed that the terms of the EBT should include provisions for the appointment of a board of six trustees (including the claimant) and that key decisions could be made by a majority of them. The claimant and the first to third defendants could not however agree whether the claimant should hold a power of veto over majority decisions of the EBT trustees while he was one of them. The first to third defendants had put evidence before the court, which was disputed by the claimant, regarding the claimant’s personal characteristics. This evidence was relied upon in support of the defendant trustees’ position that the power of veto should not form part of the terms of the EBT. The court was asked to decide whether the power of veto should be included in the EBT, on a surrender of discretion by all the trustees of the will.
Held, that the court would accept the surrender of discretion and would exercise it against the inclusion of the disputed power of veto:
The court would accept the surrender of discretion as the issues that had arisen cried out for resolution, in the interests of all beneficiaries under the deceased’s will.
The court had regard to the deceased’s wishes as expressed in a letter of wishes. Those wishes did not require the claimant to have a power of veto, in circumstances where he was in any case to be a trustee of the EBT and a director of ZHL. In view of the agreed composition of the EBT board of trustees, there was no other need shown for the claimant to hold a power of veto. The exercise of such a power would in any case be likely to involve a conflict between the claimant’s duties as a fiduciary and his personal interests as a substantial beneficiary of the EBT. The holding of a power of veto appeared likely to generate difficulties in the administration of the EBT in future of a similar type to those now before the court. It was not necessary for the court to consider the disputed evidence of fact relating to the claimant’s personal suitability to hold the power in question. In the exercise of the discretion surrendered to it, the court decided that the terms of the EBT should not include the power of veto.
JUDGMENT CHIEF MASTER MARSH: [1] I am giving this judgment part way through a hearing today at which the court is being asked to do two things. First, as an initial step, on the basis of a complete surrender of discretion on the third ground set out in Public Trustee v Cooper [2001] WTLR 901, …Continue reading "Schumacher v Clarke & ors [2021] WTLR 353"