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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> PTNZ v AS & Ors [2020] EWHC 3114 (Ch ) (18 November 2020) URL: https://www.bailii.org/ew/cases/EWHC/Ch/2020/3114.html Cite as: [2020] EWHC 3114 (Ch ) |
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BUSINESS AND PROPERTY COURTS OF ENGLAND AND WALES
PROPERTY TRUSTS AND PROBATE LIST (ChD)
Fetter Lane, London. EC4A 1NL |
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B e f o r e :
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Claimant |
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- and – |
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(1) AS (2) CFS (3) AMS (4) MIB (5) FS (6) CS (7) NS (8) SS (9) THE UNBORN BENEFICIARIES (10) CA |
Defendants |
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Gregory Pipe and Ciar McAndrew (instructed by Cooke, Young & Keidan LLP) for the Second to Fourth Defendants
Clare Stanley QC and William Buck (instructed by RPC LLP) for the Sixth and Seventh Defendants
Elspeth Talbot Rice QC and Elizabeth Weaver (instructed by Stewarts) for the Eighth Defendant took no part in the hearing
Mark Hubbard (instructed by Rosenblatt Limited) for the Tenth Defendant
Hearing dates: 11 to 13 May 2020
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Crown Copyright ©
Covid-19 Protocol: This judgment was handed down by the judge remotely by circulation to the parties' representatives by email and release to BAILII. The date and time for hand-down is deemed to be 2pm on 18 November 2020.
MASTER SHUMAN :
(1) whether the appointment of the 10th defendant as protector of the trusts on 9 October 2019 was valid or void ("the validity issue");
(2) if the 10th defendant was validly appointed as protector:
(a) whether his consent is required in relation to the decisions of the trustee that are the subject of the blessing application
(b) whether there should be any restriction on the role he should play at all in relation to the blessing hearing
("the protector issues").
THE PARTIES
THE FACTUAL MATRIX
"… settle four new NZ trusts which in turn will each hold a Bahamian company (BAH) …. settled by [the 1st defendant]. The assets of each BAH will be cash - €300m : €25m : €25m : €25m.
[The 1st defendant] will be the Protector to each trust and appoint his successor."
"the trustees wish to appoint the original protector as the 1st protector of the trust and the original protector has been joined as a party to this deed to confirm his acceptance of the appointment."
THE VALIDITY ISSUE
"… the person (if any) who in accordance with paragraph 1 of schedule 3 (appointment of protector) shall be the protector of this trust for the time being."
Clause 14 provides that the governing law of the trusts is English law but under clause 14.2 that,
"the trustees shall have power … to carry on the general administration of the trusts in any jurisdiction in the world whether or not such jurisdiction is for the time being the proper law of this trust or the courts of such jurisdiction for the time being the forum for the administration of these trusts …".
"The Protector for the time being, or in the event of his death his executor, administrator or personal representative, shall have power by instrument in writing delivered to the Trustees to appoint a replacement or additional Protector. Any instrument in writing delivered in accordance with this paragraph appointing a replacement Protector shall specify whether the appointment is to take effect immediately or only upon the current Protector ceasing to hold office due to his death, Incapacity, retirement or removal."
The Law
"19. When interpreting a contract, the court is concerned to find the intention of the party or parties, and it does this by identifying the meaning of the relevant words, (a) in the light of (i) the natural and ordinary meaning of those words, (ii) the overall purpose of the document, (iii) any other provisions of the document, (iv) the facts known or assumed by the parties at the time that the document was executed, and (v) common sense, but (b) ignoring subjective evidence of any party's intentions. …
20. When it comes to interpreting wills, it seems to me that the approach should be the same. Whether the document in question is a commercial contract or a will, the aim is to identify the intention of the party or parties to the document by interpreting the words used in their documentary, factual and commercial context. As Lord Hoffmann said in Kirin-Amgen Inc v Hoechst Marion Roussel Ltd [2005] 1 All ER 667, para 64, "No one has ever made an acontextual statement. There is always some context to any utterance, however meagre." To the same effect, Sir Thomas Bingham MR said in Arbuthnott v Fagan [1995] CLC 1396, that "[c]ourts will never construe words in a vacuum".
21. Of course, a contract is agreed between a number of parties, whereas a will is made by a single party. However, that distinction is an unconvincing reason for adopting a different approach in principle to interpretation of wills: it is merely one of the contextual circumstances which has to be borne in mind when interpreting the document concerned. Thus, the court takes the same approach to interpretation of unilateral notices as it takes to interpretation of contracts – see Mannai Investment Co Ltd v Eagle Star Life Assurance Co Ltd [1997] AC 749 , per Lord Steyn at 770C-771D, and Lord Hoffmann at 779H- 780F".
"The court's task is to ascertain the objective meaning of the language which the parties have chosen to express their agreement. It has long been accepted that this is not a literalist exercise focused solely on a parsing of the wording of the particular clause but that the court must consider the contract as a whole and, depending on the nature, formality and quality of the drafting of the contract, give more or less weight to elements of the wider context in reaching this view as to that objective meaning."
"Textualism and contextualism are not conflicting paradigms in a battle for exclusive occupation of the field of contractual interpretation. Rather, the lawyer and the judge, when interpreting any contract, can use them as tools to ascertain the objective meaning of the language which the parties have chosen to express their agreement. The extent to which each tool will assist the court in its task will vary according to the circumstances of the particular agreement or agreements."
"23. In order to understand what the Declaration of Trust actually achieved, it is necessary to construe its terms. The approach to that task cannot be in doubt. Lifetime settlements are no different from other documents in that the subjective intentions of their authors are irrelevant. What counts is the objective meaning that the words of the document convey to the court when considered as a whole in the light of the surrounding circumstances — see Lewin on Trusts at paragraph 6.03[1] .
24. In the task of ascertaining the surrounding circumstances, the parole evidence rule applies. That is to say that no evidence of extrinsic circumstances is admissible to add to, contradict, vary or alter the terms of a deed or another written instrument — see Lewin, paragraph 6.03, page 201.
25. The surrounding circumstances can and must be taken into consideration however in interpreting the instrument. This is not to contradict, vary or alter its terms, but to apply them. The circumstances or facts so admissible for this purpose are objective external facts. They do not include direct evidence of the subjective intention of the settlor except in case of a latent ambiguity. But the settlor's written instructions may at times be admitted not as evidence of subjective intention, but to find out the state of a settlor's knowledge — see Lewin, paragraph 6.08."
Executor, administrator or personal representative
Decision
"I dispose of my hereditary estate under the laws of Quebec, Canada.
I confirm all acts of donation effected by me in the past in favour of my heirs; assets having been thus donated shall not be included in my estate for the purposes of my succession".
"1(1) Real estate to which a deceased person was entitled for an interest not ceasing on his death shall on his death, and notwithstanding any testamentary disposition thereof, devolve from time to time on the personal representative of the deceased, in like manner as before the commencement of this Act chattels real devolved on the personal representative from time to time of a deceased person.
(2) The personal representatives for the time being of a deceased person are deemed in law his heirs and assigns within the meaning of all trusts and powers.
(3) The personal representatives shall be the representatives of the deceased in regard to his real estate to which he was entitled for an interest not ceasing on his death as well as in regard to his personal estate."
"- individually own the assets as continuators of the deceased through the legal fiction of saisine héréditaire;
- collectively own the assets as coparceners."
THE PROTECTOR ISSUES
(a) The protector has powers vested in him or her: by clause 8 to appoint trustees; clause 9.2 to remove trustees; and clause 13 to restore hostile beneficiaries to the class of beneficiaries.
(b) The trustees shall not exercise specified powers and discretions without the written consent of the protector, these include in summary:
(i) clause 3.1(b) to pay or apply trust income during the accumulation period;
(ii) clauses 4.1 and 4.2 the power to appoint the trust fund or any part of it and to create any provisions including discretionary trusts and the power to pay or apply the whole or any part of the capital of trust fund for the advancement or benefit of any beneficiary;
(iii) clause 6 to add any person to or remove any person from the class of beneficiaries;
(iv) clause 12 the power to vary the provisions of the trusts;
(v) schedule 1, paragraph 16.1 the power to lend the whole or any part of the trust fund to specified classes including any beneficiary and in respect of the latter to treat it as either an investment loss or a distribution to a beneficiary who is directly or indirectly benefited;
(vi) schedule 1, paragraph 17.1 the power to charge the trust fund and guarantee debts;
(vii) schedule 1, paragraph 32 the power to change the governing law of the trusts.
The Law
"the significance of the fiduciary obligation is that the donee of a fiduciary power owes a duty to the objects of the power to consider from time to time whether and how to exercise it and they have various remedies open to them if the donee does not or cannot do so. He is not bound to exercise it merely by virtue of its being a fiduciary power: the duty is to consider its exercise, though in the case of what is called a trust power he is bound to exercise it."
"as requiring the court to be satisfied, after proper consideration of the evidence, that:
(1) The trustees have in fact formed the opinion that they should act in the way for which they seek approval;
(2) The opinion of the trustees was one which a reasonable body of trustees, correctly instructed as to the meaning of the relevant clause, could properly have arrived at; and
(3) The opinion of the trustees was not vitiated by any conflict of interest under which any of the trustees was labouring."
If it is so satisfied the court will give approval of a trustee's momentous decision.
The decision
"in my view, however, Klug v Klug does not assist Mr Cross. The position in the present case is not that of a trustee refusing or failing to exercise a discretionary power. The parties to this settlement thought fit to provide the discretion conferred on the trustees should not be exercised without the consent of a particular person. In those circumstances I do not think that the court can say that the power shall be exercised without the consent of that person. Nor do I think that Klug v Klug is any authority for saying that the court can take that course."
"Wills and settlements have for many generations conferred powers that are exercisable by persons other than the trustees. The donees may, for instance, be beneficiaries, or the settlor himself, or a friend or adviser of the settlor with no beneficial interest. … Example of powers frequently given to third parties include powers of appointment, powers to appoint new trustees and powers to direct investments. Settlements and Wills have likewise often required the consent of third parties to the exercise of various powers by the trustees, the requirement thus conferring a power of veto. … in the absence of a consent by the terms of the power a purported exercise is simply invalid."
Note 1 The previous edition of Lewin. Set out fully in the 20th Ed, para 7-004-7-011. [Back] Note 2 Williams Mortimer & Sunnucks on Executors, Administrators and Probate (21st Ed) para 5-02. [Back] Note 3 The filing orders dated 4.7.19 and 16.7.19 respectively record that the 2012 will and the 2019 will were presented to the Monegasque Court. [Back] Note 4 “Qu’il a laissé pour seuls héritiers de droit, habiles à recueillir la totalité des biens composant sa succession …” [Back] Note 5 JG’s report, point 2, page 6. [Back] Note 6 Summarised in the 10th defendant’s skeleton argument, para 68. [Back]