Albemarle John Cator & Ors v Ceawlin Henry Lazlo Thynn, Marquess of Bath & Anor

The second category of the Public Trustee v Cooper jurisdiction concerns the propriety of exercising an established trust power, not whether the power exists or what it means. The court asks whether the trustees made the decision, whether a reasonable and properly advised body of trustees could have made it, and whether any conflict vitiated it.

Following Denaxe Ltd v Cooper, court approval may protect trustees through issue estoppel only where an issue has been determined between the relevant parties or their privies. A representation order may therefore be appropriate to ensure that materially affected beneficiaries are represented and bound. Where the issue is binary, one suitably independent representative may suffice.

The claimant trustees sought approval for a proposed exercise of a power of advancement under family trusts. The proposed arrangement would confer on the first defendant a power to add his potentially excluded minor son, born through surrogacy, and the son's issue to the class of beneficiaries.

The proposed exercise could prejudice numerous existing, future and contingent beneficiaries. The application therefore concerned the proper constitution of the substantive approval claim. The trustees sought an order joining Caroline Jane Miller as a representative defendant for those beneficiaries whose interests opposed implementation of the decision.

1. Nature of the substantive jurisdiction. The first category of Public Trustee v Cooper concerns questions of construction, including whether a power exists. The second category applies where the power is established and the issue is whether its proposed exercise is proper in the circumstances. The usual inquiry is whether the trustees formed the relevant decision, whether a reasonable body of trustees properly instructed as to the trust could have made it, and whether the decision was vitiated by a conflict of interest (paras [48]-[50]).
2. Effect of Denaxe Ltd v Cooper. The Court of Appeal treated the protection obtained on an approval application as judicial shorthand for an issue estoppel, or potentially abuse of process, rather than as an immunity arising simply from approval. Protection depends on the issues decided and on the parties or privies bound by the earlier decision. The decision represented a significant change from the previous understanding of trustee directions. At least one defendant will ordinarily be required if the approval is to generate issue estoppel protection (paras [38]-[45]).
3. The effect of Denaxe Ltd v Cooper on the need for full and frank disclosure, and on the precise relationship between the second and third categories of Public Trustee v Cooper, remained uncertain and was not finally decided (paras [44], [50]-[52]).
4. Representation. Under CPR rules 19.2 and 19.9, a representative order was available for beneficiaries who could not readily be ascertained or who shared the same interest. No suitable adult beneficiary could fairly represent the opposing class. Since the issue was binary and the trustees would present one side, a single independent solicitor was sufficient to represent the beneficiaries whose interests favoured refusal of approval. Caroline Miller was suitably qualified and independent and was joined as second defendant (paras [53]-[58]).