Greenwold v Pike

An application for directions under section 48 of the Administration of Justice Act 1985 should not be used to determine a genuinely arguable dispute about the construction of a settlement. Where suitably qualified counsel disagree on the proper construction, the court should hear argument in the ordinary way. A strong possible rectification claim remains outside the section 48 jurisdiction, even if the evidence supporting it appears compelling. The court may also decline to give directions where a final and binding determination would better protect beneficiaries, particularly minors.

The claimants applied under section 48 of the Administration of Justice Act 1985 for directions to trustees administering the Philip Greenwold 2003 settlement. They sought directions that “spouse” in clause 1(8)(b) included “widow” and that clause 7.1 was void for being irreconcilable with the settlement’s specific terms.

The trustees had conflicting opinions from suitably qualified counsel on the construction of clause 1(8)(b). Evidence of discussions between the settlor and the draftsman also raised an arguable rectification claim. The issue was whether the court should give directions under section 48 or require determination at trial.

1. The statutory conditions for the court’s section 48 discretion were satisfied because the trustees had obtained advice from counsel with the required High Court qualification. The discretion remained subject to section 48(2).
2. Section 48(2) prevented an order where a dispute existed which made it inappropriate to proceed without hearing argument. There was a clear and genuine dispute about whether “spouse” included the deceased tenant for life’s widow. The court would not resolve that dispute summarily.
3. The admissibility for construction purposes of evidence about conversations between the draftsman and settlor was itself arguable. Such evidence might support rectification, but rectification lay outside the jurisdiction conferred by section 48.
4. It was preferable for the beneficiaries, including minors, to have the construction issue finally and bindingly determined rather than dealt with only by directions to trustees. The construction and arguable rectification issues could conveniently be determined together at a short trial.
5. The claimants were given leave to amend the claim form as necessary to enable determination in the ordinary way. Consideration was required as to joining Mrs Greenwold and a suitable representative of the remainder beneficiaries.