English & Ors v Keats & Ors

Equity may remedy the defective execution of a power where the donees intended to exercise the power and made an attempted exercise which failed through a formal defect. The distinction is between non-execution, which equity will not assist, and defective execution, which may be aided where the equitable conditions are met. A failure by one trustee to sign a deed may constitute defective execution where all trustees intended to exercise the power and the trust required unanimous action. Proprietary estoppel will not succeed merely because beneficiaries acted on an assumed valid execution. The claimant must establish overall detriment, and an estoppel cannot ordinarily bind persons, including strangers to the trust, who were not parties to the representation.

The claimants were beneficiaries under three family settlements. Deeds of Appointment were intended to confer interests in possession on them, but only three of the four trustees signed. The claimants sought relief by proprietary estoppel and, alternatively, under the equitable jurisdiction to remedy defective execution of a power.

The estoppel claim raised issues concerning detriment and whether an estoppel could bind the trust, other beneficiaries and HMRC. The alternative claim concerned whether the trustees had attempted to exercise their power despite the missing signature, and whether the equitable doctrine remained available in modern law.

1. Estoppel. The claimants failed to establish proprietary estoppel. Although payment of tax on trust income was a detriment considered in isolation, the court had to assess the claimants’ overall financial position. On the evidence, they were better off as a result of the intended arrangements. No significant contingent detriment was established.
2. An additional conceptual difficulty was that the proposed estoppel would bind the trustees in relation to non-claimants who had received no representation and would potentially affect HMRC. The claim therefore sought an effect equivalent to rectifying the trust or creating an estoppel in rem. The concerns identified in Redrow Plc v Pedley [2002] PLR 339 and endorsed in Steria Ltd v Hutchison [2006] EWCA Civ 1551; [2006] Pens. L.R. 291 applied.
3. Defective execution. The equitable doctrine distinguished between non-execution and defective execution. It was sufficient that all four trustees intended to exercise a power which they were entitled to exercise and purported to do so by the signatures of three trustees. The missing signature made the attempted exercise defective; it did not mean that the power had not been exercised at all.
4. The recent pension cases concerning specific enforceability did not confine the older line of authority beginning with Tollet v Tollet (1728) 2 Peere Williams 489. The conditions identified in Bas Trust Corporation Ltd v MF [2012] JRC 081, including an intention to exercise the power, an attempted exercise, and a formal defect, were satisfied. The intended appointment was a proper exercise for the benefit of the claimants, who were children of two appointors and within the relevant equitable relationship.
5. The Deeds were therefore effective to give the claimants interests in possession under the respective settlements. The estoppel claim failed, but the alternative claim succeeded.

First instance decision. No prior appellate decision was stated in the judgment.