In re Duxbury’s Settlement Trusts

Under the Public Trustee Act 1906, section 5(1), the Public Trustee may be appointed sole trustee whenever a private trustee could be appointed, even if the trust instrument requires a minimum number of trustees.

The same statutory addition enables him to act alone. A trust provision preventing a sole trustee from exercising discretionary powers is effectively a restriction on acting as sole trustee and is overridden for this purpose. Appointment and capacity to act are inseparable.

A 1959 discretionary settlement provided that its discretions and discretionary powers could not be exercised while fewer than two trustees remained in office, at least one of whom had to be outside the class of discretionary objects. The original trustees appointed Barclays Bank Trust Company Limited as sole trustee in 1978. Barclays later appointed the Public Trustee as sole trustee.

On an originating summons, Rattee J held that both appointments were valid but answered negatively the question whether the Public Trustee could exercise the relevant discretions and discretionary powers alone. The Public Trustee appealed against that answer. The central issue was whether section 5(1) of the Public Trustee Act 1906 overrode the restriction in the settlement.

Appeal allowed. Lord Justice Nourse gave the leading judgment. Lord Justice Henry and Sir John Megaw agreed.

1. Section 5(1) of the Public Trustee Act 1906 is a positive and independent enactment. It enables the Public Trustee to be appointed in every case in which a private trustee could be appointed, with the additional power to appoint him as sole trustee even where two or more trustees were originally appointed.
2. The Court of Appeal approved the decision in In re Moxon [1916] 2 Ch. 595, including its conclusion that the statutory provision overrode a trust-instrument requirement that the number of trustees should not fall below a specified minimum.
3. The reasoning in In re Moxon necessarily extended to the Public Trustee’s capacity to act as sole trustee. Appointment and action were inseparable for this purpose. A prohibition expressed as preventing the sole exercise of discretions and discretionary powers was, in substance, a prohibition against acting as sole trustee, and there was no reason why section 5(1) should override the appointment restriction but not the corresponding restriction on action.
4. Rattee J’s negative answer to question 3 was therefore wrong. The order on that question was discharged and replaced with an affirmative answer. Costs were to be raised and retained or paid out of the capital of the funds not comprised in the 1963 settlement, with taxation both here and below on the indemnity basis.

• Court of Appeal: allowed the appeal and substituted an affirmative answer to question 3: [1994] EWCA Civ 21.
• High Court, Chancery Division: Rattee J held that Barclays and the Public Trustee had been validly appointed, but that the Public Trustee could not exercise the relevant discretions and discretionary powers alone.