Duke of Somerset v Fitzgerald & Ors

Under the Variation of Trusts Act 1958, the court may approve a comprehensive variation where, viewed as a whole, it benefits unborn and unascertained beneficiaries. Extending the perpetuity period, modernising administrative machinery, and moving from a Settled Land Act framework to a trust of land do not necessarily create a resettlement. The question is whether the trust’s beneficial substratum remains and its original purpose is being effectuated by other means. Where beneficial trusts and administrative powers are varied together, the application may properly proceed under the 1958 Act without a separate application under the Trustee Act 1925 or Settled Land Act 1925.

The claimant sought approval under the Variation of Trusts Act 1958 for an arrangement varying a 1971 family settlement. The proposed changes included extending the trust period, adding accumulation and heritage-maintenance powers, modernising the administrative framework, widening the beneficial class to include civil partners and same-sex spouses, and requiring trustee consent for the life tenant’s appointments.

The court considered whether the arrangement benefited unborn and unascertained beneficiaries, whether it effected a resettlement, and whether separate applications under the Settled Land Act 1925 or Trustee Act 1925 were required.

The arrangement was approved. It was a variation, not a resettlement, and no supplemental application under the Settled Land Act 1925 was required.

1. Under section 1(1) of the Variation of Trusts Act 1958, the court must consider the arrangement as a whole and ask whether it benefits each beneficiary or class represented. The substantial fiscal and practical benefits of extending the trust period outweighed the disadvantage of bringing later generations into the potential class.
2. There is no bright-line test for variation versus resettlement. The relevant question is whether the settlement’s beneficial substratum remains. Here the dynastic beneficial core, trustees and principal structure remained, although the statutory framework was modernised. Ceasing to be governed by the Settled Land Act 1925 did not itself cause a resettlement.
3. Where beneficial trusts and trustee management powers are varied together, section 1 of the 1958 Act provides the appropriate jurisdiction. A separate application under section 57 of the Trustee Act 1925 or section 64 of the Settled Land Act 1925 is unnecessary. Where only management powers are altered and beneficial interests are untouched, the better practice is to proceed under section 57.
4. The court approved accumulation, a heritage-maintenance fund, modification of self-dealing restrictions, and a power allowing trustees to alter administrative provisions subject to written advice from an appropriately experienced lawyer. The foreseeable transition away from the Settled Land Act framework justified that conclusion.
5. The court also approved widening the beneficial class, requiring trustee consent to the life tenant’s appointment powers, and conferring a flexible overriding power on the trustees.

The arrangement was approved under the 1958 Act.