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England and Wales High Court (Chancery Division) Decisions |
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You are here: BAILII >> Databases >> England and Wales High Court (Chancery Division) Decisions >> Howell & Ors v Lees-Millais & Ors [2009] EWHC 1754 (Ch) (17 July 2009) URL: http://www.bailii.org/ew/cases/EWHC/Ch/2009/1754.html Cite as: [2009] 2 P & CR DG22, [2009] EWHC 1754 (Ch), [2009] WTLR 1163 |
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CHANCERY DIVISION
Strand, London, WC2A 2LL |
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B e f o r e :
(Sitting as a Judge of the High Court)
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(1) PAUL JONATHAN HOWELL (2) ALISON RUTH ROBINSON (3) JOHN NEAL THOMPSON (AS TRUSTEES OF THE CAPTAIN EDWARD JOICEY 1948 SETTLEMENT AND THE MAJOR JOHN JOICEY 1968 SETTLEMENT) |
Claimants |
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- and - |
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(1) MARCUS LEES-MILLAIS (2) LORNA MILNE JOICEY (3) FIONA ASTRID LEES-MILLAIS (4) HECTOR FORWOOD (a child, by his litigation friend Edward Forwood) (5) LUCINDA LORAINE NEWALL (6) ALEXANDER NEWALL |
Defendants |
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Mr M HUBBARD appeared on behalf of the First Defendant
Mr M KING appeared on behalf of the Third Defendant
Hearing date: 29th June 2009
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Crown Copyright ©
Sir John Lindsay :
Introduction
The Documents
"2. As from the date hereof the Trust Fund and the income thereof shall be held upon such trusts and with and subject to such powers and provisions (including discretionary trusts or powers vested in any person or persons) in favour of any one or more exclusive of the other or others of the children and remoter issue of the Settlor as the Trustees shall from time to time during the Trust Period (but during the life of the Settlor only with his consent in writing) by deed or deeds revocable or irrevocable appoint "
After a proviso which I need not set out the 1977 Appointment, referring to the Major and Mrs Joicey's three daughters, continues, with my emphasis:
"In default of and subject to any such appointment the Trust Fund shall be held upon trust for the first or only son of Lucinda who shall attain the age of Twenty five years during the Trust Period absolutely or if there is no such son of Lucinda then upon trust for the first or only daughter of Lucinda who shall attain the age of Twenty five years during the Trust Period absolutely and if there is no such son or daughter of Lucinda then upon similar trusts for the first or only son or if there is no such son for the first or only daughter of Sabina or if there is no such son or daughter of Sabina then for such son or daughter of Fiona or if there are no such sons or daughters then upon trust for such of Lucinda Sabina and Fiona as shall attain the age of twenty five years during the Trust Period absolutely and if more than one in equal shares but if none of them shall attain that age then upon trust for the survivor of the said daughters of the Settlor absolutely."
The Issues
"1. A declaration as to whether on the true construction of the Deed of Appointment dated 29.3.77 relating and supplemental to the 1968 Settlement, and in the events that have happened:
a. The Power of Appointment given to the trustees of the 1968 Settlement by clause 2 of the Deed of Appointment is exercisable only prior to the attainment by the first or only son of Lucinda Loraine Newall of the age of 25 years; or
b. The Power of Appointment given to the trustees of the 1968 Settlement by clause 2 of the Deed of Appointment is exercisable throughout the whole of the Trust Period notwithstanding the attainment by the first or only son of Lucinda Loraine Newall to attain the age of 25 years."
The Authorities
"Nothing can be more plain, to my mind, than the intention of the testator that, during the period to which I have referred, the estate and the fund should be managed together by the trustees as a common concern, in order to utilise and improve the estate. That was his intention, and it would be a violation of his intention if I were to hold that it had come to an end by the absolute vesting of the beneficial shares. Nothing could be more inconvenient than for persons entitled to undivided eighths to have the management and carrying on of a concern of this kind. The case is very similar to that which would have occurred if the testator, being the owner of a business and land connected with it, had vested the business in trustees for the purpose of their carrying it on during the same period. It would be very difficult in such a case to say that the intention of the testator was that the power should come to an end when the beneficial interests in the business had become absolutely vested."
"The legal position in the case of a special power of appointment is not in any doubt at all. Referring to Farwell on Powers, 3rd ed., p. 310, I find this statement of principle, which will be found in exactly the same language in earlier editions of the book, and therefore is not in any way the creation of the editor: "The exercise of a power of appointment divests (either wholly or partially according to the terms of the appointment) the estates limited in default of appointment and creates a new estate, and that, too, whether the property be real or personal." Then there is a reference to a decision in the Duke of Northumberland v. Inland Revenue Commissioners (1), where this statement was adopted by Hamilton J., as he then was. The effect of this is that in the case of a special power the property is vested in the persons who take in default of appointment, subject, of course, to any prior life interest, but liable to be divested at any time by a valid exercise of the power, and the effect of such an exercise of the power is to defeat wholly or pro tanto the interests which up to then were vested in the persons entitled in default of appointment and to create new estates in those persons in whose favour the appointment had been made."
"Mr. Vinelott for Hugh Winston Sharp and Mr. Maurice Price for Penelope Bliss contend that the word "absolutely" used in relation to personalty denotes an interest which is not merely a vested interest in the entire capital and income of the property but is so vested free from any power or condition which may in the future defeat it; for instance, a power of revocation or condition subsequent. Mr. Nourse for Russell Sharp and Joanne Sharp contends that the word "absolutely" in relation to personalty denotes merely a vested interest in the entire capital and income of the property and none the less so by reason that this interest is subject to some power or condition which may in the future defeat it.
Leaving aside for the moment any consideration arising from the expression "in fee simple, absolute or determinable" used in relation to realty, I feel no doubt that Mr. Vinelott's contention is correct. The word "absolute" in its ordinary use in legal language denotes complete beneficial ownership and dominion over property, and I should have thought it an entirely unnatural use of the word to apply it to an interest which can be destroyed at any time by the exercise of a power or the fulfilment of a condition with the consequence that the property must be retained by the trustees until the power or the condition is spent. I was referred on this point to a definition in Fearne, Contingent Remainders and Executory Devises, 10th ed. (1844), vol. 2, p. 30, which is in these terms:
"With reference to the certainty of their duration, interests are divided into - 1. Defeasible. 2. Indefeasible, or absolute. A defeasible interest is an interest that is subject to be defeated by the operation of a subsequent or mixed condition. An indefeasible interest, or an absolute interest as opposed to a defeasible interest, is one that is not subject to any condition. With reference to the quantity of interest, they are divided into - 1. Absolute. 2. Limited. The absolute interest, as opposed to a limited interest, is an interest which comprises the entire ownership of which the entirety, or some portion of the entirety, of any hereditament, is susceptible. A limited interest is one which does not comprise that entire ownership."
I think that broadly, apart from some larger context, those definitions stated in 1844 as to the natural meaning of the word "absolute" are equally true today."
The accumulations in issue thus fell outside s.31(2)(i)(b) and hence, under s.31(2)(iii), accrued to the capital of the fund and thus accrued to the respective vested or contingent shares of the beneficiaries concerned, subject to the exercise of the power of appointment page 341 c to e.
The argument
Conclusion