PQ & Anor v RS & Ors (Rev 1)

A trustee may exercise a widely drafted power to revoke existing trusts and create new trusts where the power’s proper construction permits that course. The relevant question is whether the proposed arrangement benefits the persons for whose benefit the power was granted. That benefit may include responsible long-term management of family wealth, provision for children, avoidance of family dissension and implementation of the family’s established wishes.

Where a settlement predates legislation changing the construction of status-based references such as “children” or “issue”, later appointments are not necessarily new dispositions. The court may proceed on the basis of uncertainty in the authorities without deciding a controversial authority’s correctness. An anonymity order requires a careful balancing of open justice against the rights under Articles 8 and 10 of the Convention, with any restriction no wider than necessary.

The claimants were trustees of a discretionary settlement executed in 1968 for the settlor’s children and remoter issue. The current trusts arose through later appointments in 1979 and 1987. They provided for the children of the settlor’s grandchildren, but did not define whether that expression included children born before their parents’ marriage.

One child, V, was born shortly before her parents married. The trustees sought the court’s assistance under the jurisdiction described in Public Trustee v Cooper [2001] WTLR 901, asking the court to confirm their power to execute a deed replacing the existing trusts with discretionary trusts expressly including legitimate, illegitimate, legitimated and adopted children, and to bless the proposed course.

The court also considered whether the proceedings should remain anonymised and confidential.

1. The court confirmed that the trustees had power to execute the proposed deed and that doing so would be a proper exercise of the power. The application was therefore granted.

2. The statutory changes concerning the construction of references to legitimacy and adoption operated prospectively. The relevant disposition was the 1968 settlement. The 1979 and 1987 appointments were not dispositions for the purposes of the later legislation because exercising the powers did not necessarily create a new settlement. The court regarded it as natural for common language in connected instruments to bear the same meaning unless the documents indicated otherwise.

3. Clause 8(2)(i) of the 1987 Appointment was construed in context. Although it used the word “appointing”, it gave the trustees power to revoke existing trusts and create new trusts for the benefit of RS and TU. The power was therefore wider than a limited power merely to select beneficiaries or fill a gap. The proposed deed did not impermissibly delegate the trustees’ discretion; it used the power for the purpose for which it had been granted.

4. The proposed appointment was for the objective benefit of RS and TU. It provided for their children, avoided premature absolute vesting of substantial wealth, permitted responsible long-term management and reduced the risk of family dissension. The inclusion of V was capable of benefiting RS because it benefited his child and accorded with the family’s wishes.

5. The court expressed no view on whether Re Hand’s Will Trust [2017] Ch 449 was correctly decided. It proceeded on the basis that there was appreciable uncertainty whether that decision would be followed or approved on appeal.

6. The anonymity and confidentiality orders were maintained. The court balanced Articles 8 and 10 of the European Convention on Human Rights and concluded that preventing the children being identified with a potentially stigmatising birth-status issue, and protecting details of substantial family wealth, justified a restriction on open justice no wider than necessary.