The T Settlement

CourtRoyal Court
JudgeHamon, Commr. and Jurats Le Brocq and Bullen
Judgment Date06 February 2002
Date06 February 2002
Hamon, Commr. and Jurats Le Brocq and Bullen

T.J. Le Cocq for the trustees;

Miss G.S. Robinson for the minor and unborn beneficiaries.

Cases cited:

(1) C.L., In re, [1969] 1 Ch. 587; [1968] 1 All E.R. 1104; sub nom. In re L (1968), 112 Sol. Jo. 254, distinguished.

(2) Clore's Settlement Trusts, In re, [1966] 1 W.L.R. 955; [1966] 2 All E.R. 272; (1966), 110 Sol. Jo. 252, followed.

(3) Hampden Settlement Trusts, In re, [1977] T.R. 177, considered.

(4) Inglewood (Lord) v. Inland Rev. Commrs., [1983] 1 W.L.R. 366; [1983] STC 133; (1982), 127 Sol. Jo. 89, considered.

(5) Irving, Re (1975), 66 D.L.R. (3d) 387; 11 O.R. (2d) 443, considered.

(6) N, In re, 1999 JLR 86, considered.

(7) Osias Settlements, In re, 1987-88 JLR 389, considered.

(8) S Settlement, In re, 2001 JLR N [37], followed.

(9) Tinker's Settlement, In re, [1960] 1 W.L.R. 1011; [1960] 3 All E.R. 85n, referred to.

Additional cases cited by counsel:

Pilkington v. Inland Rev. Commrs., [1964] A.C. 612; [1962] 3 All E.R. 622; (1962), 106 Sol. Jo. 834; 40 T.C. 416; sub nom. In re Pilkington's Will Trusts, [1962] T.R. 265; (1962), 41 A.T.C. 285.

Legislation construed:

Trusts (Jersey) Law 1984, art. 43(2): The relevant terms of this paragraph are set out at para. 18.

Trustsvariation"for the benefit of" minorscourt may vary trust under Trust (Jersey) Law 1984, art. 43 for "benefit" of minor and unborn beneficiaries"benefit" may include discharge of moral obligationcourt may infer that moral obligation unanimously accepted by adult beneficiaries also accepted by minor and unborn beneficiaries

The trustees of a settlement applied for a variation of the trust deed.

The settlor, her four children and their spouses and remoter issue were the beneficiaries of a discretionary Jersey settlement. When the settlor moved to the United Kingdom, she was excluded from the settlement to avoid UK income tax liability and a sub-settlement was created to provide her with a modest income. The Finance Act 1998 subsequently made her liable for any capital gains realized by the sale of trust investments. Her modest income under the sub-settlement was insufficient to discharge this unforeseen and potentially substantial tax liability and she was not entitled to benefit from the trust due to her exclusion. Moreover, her advanced years prevented her from leaving the United Kingdom.

The trustees of the settlement sought the court's approval of a variation of the trust deed, under art. 43 of the Trusts (Jersey) Law 1984, to allow tax, incurred as a result of the operation of the settlement, to be paid by the settlement. They submitted that the variation was for the benefit of all the beneficiaries as it discharged their moral obligation to the settlor. The adult beneficiaries unanimously supported the trustees' application and accepted that they had a moral obligation to support the settlor.

In reply, it was submitted on behalf of the unborn beneficiaries that they had no moral obligation towards the settlor as she was not dependent on them, and therefore they could not benefit from its purported discharge.

Held, approving the variation:

The court would exercise its power under art. 43 to approve the agreement to vary the terms of the trust, as it was for the benefit of all the beneficiaries. In this context, "benefit" was not confined to a direct financial advantage and could include the discharge of a moral obligation. Moreover, the court could infer that as the moral obligation to provide for the settlor was unanimously accepted by the adult beneficiaries, it was also accepted by the minor and would be acccepted by the unborn beneficiaries ( paras. 18-19).

1 HAMON, COMMR.: This is an application by Regent Trust Company and Mr. Peter Lesley Pexton who are joint trustees of the T Settlement. Advocate Le Cocq represents the trustees and Advocate Gillian Robinson (who was appointed by the court) appears for the minor and unborn beneficiaries of the T Settlement. Although no other beneficiaries are represented all have communicated their acceptance of the proposals put before the court by the trustees.

2 The settlor of the T Settlement ("Mrs. T") and her husband came to Jersey in 1969 to live. They formed an investment company. It prospered hugely. Her husband died in 1970 and by reason of that fact Mrs. T inherited the company. The company held what were described to us by Advocate Le Cocq as "family investments." In 1976, Mrs. T settled in a fully-discretionary Jersey settlement all the shares in the company. The original beneficiaries were Mrs. T, her children and remoter issue and their spouses. There are 4 children, a total of 17 adult beneficiaries and 22 minor beneficiaries, all great-grandchildren.

3 The letter of wishes made by...

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6 cases
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    • Royal Court
    • 28 December 2011
    ...arrangements she had voluntarily entered into (In re Clore's Settlement Trusts, [1966] 1 W.L.R. 955, distinguished; In re T Settlement, 2002 JLR 204, distinguished). If she had been in need, a moral obligation could well have arisen. ...
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    ...Seale's Marriage Settlement, In re, [1961] Ch. 574; [1961] 3 All E.R. 136; (1961), 105 Sol. Jo. 257, considered. (22) T Settlement, In re, 2002 JLR 204, referred to. (23) T's Settlement Trusts, In re, [1964] Ch. 158; (1963), 107 Sol. Jo. 981; sub nom. Towler's Settlement Trusts, Re, [1963] ......
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