NIALL DAVID BAKER v BDS

Under section 57 of the Trustee Act 1925, the court may confer a general administrative power where a transaction is expedient but cannot be effected under the trust instrument or existing law. The jurisdiction may extend administrative powers prospectively, but cannot alter beneficial interests. It may therefore be used to remove a requirement for a professional trustee where the beneficiary has capacity and expertise to manage the fund, the trust can be administered safely without that trustee, and continuing professional fees are no longer justified.

The claimant, a trustee, made a Part 8 application concerning a personal injury trust established for BDS, who had suffered a birth-related brain injury and received substantial damages. The trust deed required at least one trustee to be a professional trustee and restricted dealings with capital if that requirement was not met.

BDS had reached adulthood and was found to have capacity to manage his property and financial affairs. The central issue was whether the court could use section 57 of the Trustee Act 1925 to authorise departure from the deed by removing the continuing professional-trustee requirement.

1. The application was granted. From the date of the order, the trustees no longer had to include a professional trustee, provided that there were two trustees or a trust corporation. They could accordingly deal with the capital without satisfying clause 7 of the trust deed.
2. Section 57 of the Trustee Act 1925 permits the court to confer a necessary power either generally or for a particular instance. The jurisdiction is not confined to a single transaction and may be used to authorise a new administrative power. It cannot alter beneficial interests, but it can extend the trustees’ administrative powers.
3. The court had power to sanction a departure from the professional-trustee requirement. The relevant question was whether the proposed administrative change was expedient. The evidence established that BDS had the ability and expertise to manage the fund, which had increased substantially in value, and that there was no continuing need to incur professional-trustee fees.
4. A professional trustee will ordinarily be required when a trust is approved to hold damages, particularly while the beneficiary is a minor, so that the fund is properly supervised. That consideration did not justify continuing the requirement after BDS had reached adulthood and could manage his affairs.
5. The court also noted that BDS could have required the fund to be paid to him once he had attained 21, but preferred the trust to continue. The parties’ agreement to depart from the deed did not remove the need for court approval. The court directed that the claim be treated as validly before it despite delay in service and acknowledgement of service.

This was a first-instance Part 8 application. The judgment records that the trust terms had previously been approved by Mitting J on 26 July 2001; no appellate history is stated.