Wyndham v Egremont & Ors

Under section 1(1) of the Variation of Trusts Act 1958, the court may approve an arrangement which introduces a new perpetuity period, including a period measured by specified lives in being plus 21 years. The jurisdiction permits a variation of existing trusts but does not extend to approving a resettlement.

Whether an arrangement is a variation or a resettlement depends on the substance and practical effect of the changes. There is no bright-line test. Relevant considerations include whether the trustees, subsisting trusts and administrative provisions remain substantially the same, assessed against the trust’s substratum and purpose. An arrangement may still be a variation despite substantial changes in form or means. The court may approve changes benefiting unborn beneficiaries overall, even where some provisions are not specifically advantageous to them.

George Ronan Valentine Wyndham sought approval under section 1(1) of the Variation of Trusts Act 1958 for an arrangement varying the trusts of George’s Fund, held under Lord Egremont’s 1969 Settlement.

The arrangement extended the Vesting Day, removed George’s contingent capital interest, altered the remainder trusts in favour of male-line descendants, and sought to preserve the Petworth estates while deferring substantial tax liabilities. George was the only living beneficiary. His future eldest or only son, and potentially that son’s eldest or only son, were unborn beneficiaries represented by the trustee defendants.

The central issues were whether the arrangement benefited the unborn beneficiaries, whether it was a permissible variation rather than a resettlement, whether a new perpetuity period could be introduced, and whether the arrangement created adverse tax consequences.

1. Approval and benefit of unborn beneficiaries. The arrangement was approved under section 1(1) of the Variation of Trusts Act 1958. The relevant question was whether the arrangement, viewed overall, benefited the unborn beneficiaries potentially entitled under the existing trusts. It did so by reducing the likelihood that George would take the whole fund and by postponing a substantial capital gains tax charge. The fact that some additional provisions were not specifically for their benefit did not prevent approval where the arrangement as a whole benefited them.
2. Perpetuity period. The court had power to approve a new perpetuity period. The jurisdiction under the 1958 Act is a statutory extension of the consent principle in Saunders v Vautier. That power could be used to introduce a common-law period measured by specified lives in being at the date of approval plus 21 years, just as a statutory period could be introduced under the Perpetuities and Accumulations Act 1964.
3. Variation or resettlement. Section 1(1) authorises approval of an arrangement varying or revoking trusts, not a resettlement. There is no bright-line test. The court must assess the proposed arrangement as a whole, having regard to the trust’s substratum and purpose and applying the practical, common-sense approach described in Roome v Edwards. The usual indicia of a separate settlement are helpful but not decisive.
4. On the facts, the arrangement remained a variation. The trustees, subsisting trusts and administrative provisions were largely unchanged. The principal alterations concerned the remainder trusts and the extended perpetuity period, while the ultimate trust in favour of George and his personal representatives remained intact.
5. Tax consequences. The arrangement did not constitute a resettlement and therefore did not give rise, on that basis, to a deemed disposal under section 71(1) of the Taxation of Capital Gains Act 1992. The court noted that it would generally be reluctant to approve an arrangement producing adverse tax consequences for the beneficiaries unless outweighed by other benefits. The conclusion did not bind HM Revenue and Customs.