Erskine 1948 Trust, Re

The phrase “statutory next of kin” in a private settlement made before modern adoption legislation refers to the persons entitled under the statutory intestacy scheme incorporated by the settlement. Ordinarily, the meaning of an existing settlement is not retrospectively altered by the Human Rights Act 1998. Exceptionally, a Convention-compatible construction may be adopted where this causes no unfairness and the settlement creates only an expectancy, contains no express exclusion of adopted children, and has come to an end. Articles 8 and 14 require discrimination to be avoided where such a construction is feasible, but the court must not rewrite the settlor’s words or disregard an express distinction.

This Part 8 claim concerned the distribution of a trust fund under a 1948 settlement. The relevant clause directed the trustees to hold the fund for the statutory next of kin of the settlor’s daughter, on the footing that she had died a spinster.

The daughter died in 2010 without issue, parents or living siblings. Her only sibling had died earlier, leaving two adopted sons. The issue was whether those sons were entitled as statutory next of kin, or whether the fund passed to more remote relatives. The claimants, as trustees, sought the court’s construction of the settlement. The central questions were the meaning of the statutory reference and the possible effect of articles 8 and 14 of the Convention, given the Human Rights Act 1998.

1. Construction under domestic law. The phrase “statutory next of kin” had a statutory meaning under section 50(1) of the Administration of Estates Act 1925. It referred to the persons who would take beneficially on an intestacy under that Act, including the statutory trusts in sections 46 and 47. The relevant law was the law incorporated when the settlement was made. The later Adoption Acts did not affect the 1948 disposition.
2. Section 5 of the Adoption of Children Act 1926 expressly provided that adoption did not confer inheritance rights unless a contrary intention appeared. The settlement contained no express contrary intention. On that basis alone, the adopted nephews would not qualify.
3. Convention considerations. The court took into account sections 2(1), 3(1) and 6 of the Human Rights Act 1998, together with the ECtHR authorities. The Convention does not generally alter the construction of an existing private disposition, particularly where doing so would unfairly alter vested or contingent interests. The requirement of fairness limits any retrospective operation.
4. The guidance derived from Pla and Puncernau v Andorra was that the court should avoid an unreasonable, arbitrary or blatantly discriminatory construction; should not put words into the settlor’s mouth; and should give effect to an express distinction between biological and adopted children. The court criticised the extent to which the ECtHR majority appeared to substitute its own construction for that of the domestic court.
5. In this settlement, the relevant interest arose only on the daughter’s death and was merely an expectancy before then. There was no express exclusion of adopted children, the statutory exclusion was discriminatory in effect, the adopted nephews had been members of the family for many years, the competing cousins were remote and some unidentified, and the trust had come to an end. These cumulative features made a Convention-compatible construction possible without unfairness.
6. The court therefore declared that the trust fund vested in the two adopted nephews on the daughter’s death. A representation order was made. Costs were to be borne by the trust fund, with the third defendant’s costs assessed on the indemnity basis if not agreed.