Francis Andre Malcolm Cook & Anor v No Defendant

Where the terms of a lost trust cannot be established with sufficient certainty, the court should not declare that a particular person is absolutely entitled if doing so could prejudice a later claim by an unknown beneficiary.

However, the court may make a Benjamin order authorising trustees or personal representatives to distribute assets on an assumed footing. Such an order protects them from personal liability for misapplication but does not extinguish the rights of a beneficiary who later proves entitlement. The recipient bears the residual risk.

The claimants were the personal representatives of Patricia Fassam and held £168,000 representing the proceeds of a life assurance policy assigned to a 1987 trust. The trust instrument could not be found, and the original trustees and terms were unknown.

The claimants sought directions under CPR Part 8, without naming a defendant, as to whether they could distribute the entire fund to the deceased’s surviving son, Jason. The evidence consisted principally of the family history and the terms of two later life assurance trusts. The central issue was whether that evidence justified an outright declaration of Jason’s entitlement or instead warranted protective directions.

1. Procedure. A trust or estate claim may be issued without naming a defendant in the circumstances identified by CPR rule 8.2A and the specialist provisions of CPR Practice Directions 64A and 64B. No separate permission application was required in either of the potentially applicable routes.
2. Lost trust instrument. Where sufficient secondary evidence establishes the terms of a lost trust, the court may direct that the fund be held on those terms, as illustrated by Hansell v Spink. That principle did not justify an outright order here. The fund was held by personal representatives rather than by the court, and there was no direct evidence of the trust terms.
3. Protective relief. In cases of continuing ignorance about essential trust terms, the court should avoid an order which would shut out a later claim by a third party who could prove an entitlement. It may instead order payment into court under the Trustee Act 1925, section 63, or authorise administration on an assumed footing by a Benjamin order. Such an order transfers the risk of payment from the trustees or personal representatives to the recipient; it does not cancel another beneficiary’s rights.
4. Application. The evidence supported an inference that the trust principally benefited the family, but it did not establish positively that Jason was the only person entitled. It was nevertheless sufficient to authorise payment to him on the assumption that he was the sole remaining beneficiary. The claimants were protected against personal liability for misapplication, while any later claim against Jason remained open.
5. Order. The claimants were at liberty to pay the policy proceeds to Jason on that assumption. No separate costs order was made because, as personal representatives, they were generally entitled to an indemnity from the estate under CPR rule 46.3 and Practice Direction 46, paragraph 1.