Citation Codes
Equivalent Citations
citation codes
Attorney(S)
- Judgment on an application without a hearing,
- with written submissions from Simon Taube QC (instructed by Boodle Hatfield) for the Claimant
Judges
- THE HONOURABLE MR JUSTICE LLOYD
See more information ...
Click here to read the full judgment
CD (a minor) v. O
Smart Summary
Factual and Procedural Background
The proceedings concern the proceeds of two life insurance policies held on trust in equal shares for three minors, including the Plaintiff. The trusts were established by deeds of assignment, granting the trustee certain powers of appointment which were not exercised, resulting in the fund being held equally for the three minors by default. Although the fund has not been formally divided, it is treated as if separate funds exist for each beneficiary. This application focuses on the Plaintiff's share ("Plaintiff's Fund").
The income from Plaintiff's Fund has been used to pay her school fees but is now insufficient. Part of the capital has been advanced under section 32 of the Trustee Act 1925 for the same purpose. The current application seeks approval to extend the statutory power of advancement to allow the whole capital of Plaintiff's Fund to be applied for her benefit, specifically for her education and maintenance.
Legal Issues Presented
- Whether the court has the jurisdiction to approve an extension of the statutory power of advancement under section 32 of the Trustee Act 1925 to apply the whole capital of a minor beneficiary’s trust fund for her benefit.
- Whether the Variation of Trusts Act 1958 applies to a bare trust held absolutely for a minor and can be used to vary the trusts to lift the statutory limit on advancement.
- The appropriate legal basis for authorising the proposed variation and extension of the power of advancement.
Arguments of the Parties
The opinion does not contain a detailed account of the parties' legal arguments.
Table of Precedents Cited
| Precedent |
Rule or Principle Cited For |
Application by the Court |
| Re Kehr deceased [1952] Ch 26 |
Confirmed that trustees could exercise powers under the Trustee Act 1925, including sections 31 and 32, in respect of a minor absolutely entitled to a share of an estate. |
Supported the conclusion that section 32 applies to the present trusts where the minor is absolutely entitled to her share. |
| Chapman v. Chapman [1954] AC 429 |
Recognised the ancient Court of Chancery jurisdiction to authorise application of income and capital for a minor's maintenance even if not authorised by the trust terms. |
Indicated a possible basis for the court’s jurisdiction to approve the advancement in this case. |
| Worthington v. M'Craer (1856) 23 Beav 81 |
Illustrated the court’s ability to authorise expenditure of capital absolutely entitled to a minor for maintenance. |
Reinforced the court’s power to authorise advancement of capital for the Plaintiff’s benefit. |
| Allen v. Distillers Company (Biochemicals) Ltd [1974] QB 384 |
Considered the applicability of the Variation of Trusts Act 1958 to funds held for minors and the ability to defer vesting of property for their benefit. |
Distinguished the present case by noting that the 1958 Act did not apply to funds without prior trusts; however, the court found the 1958 Act applicable here due to the trust nature of the fund. |
| Re Pilkington's Will Trusts [1964] AC 612 |
Discussed the potential to exercise powers under section 32 to avoid immediate vesting of trust property in a beneficiary. |
Noted as a theoretical possibility, but not applicable to the present facts where it would not benefit the Plaintiff to divert funds from her. |
Court's Reasoning and Analysis
The court began by confirming that the Plaintiff is absolutely entitled to her share of the trust fund but cannot access it due to her minority. Section 31 of the Trustee Act 1925 permits income application for her benefit, and section 32 authorises trustees to apply capital for advancement or benefit, including where the beneficiary is absolutely entitled. The statutory limit under section 32 restricts advancement to no more than half of the beneficiary’s share unless otherwise authorised.
The court found that lifting this limit would benefit the Plaintiff, given the inadequacy of income and the need for capital to meet her educational expenses. The court considered two potential legal bases: the ancient Chancery jurisdiction and the Variation of Trusts Act 1958. Although the 1958 Act does not remove existing jurisdiction, it was deemed more appropriate to proceed under it if possible.
The court analysed whether the 1958 Act applies to a bare trust held absolutely for a minor. It concluded that the fund qualifies as "property held on trusts arising under any will settlement or other disposition," making the Act applicable. The court distinguished the present case from Allen v. Distillers Company, where the 1958 Act was held inapplicable due to absence of a prior trust.
The court rejected the notion that the Act requires multiple beneficial interests, holding that it can apply to a fund held absolutely for a minor. It further found that the proposed variation—allowing the entire fund to be applied under section 32—would accelerate the Plaintiff’s benefit, which is consistent with her interests.
Holding and Implications
The court APPROVED the variation of the trusts applying to the Plaintiff's Fund to permit the exercise of powers under section 32 of the Trustee Act 1925 over the whole fund, rather than being limited to half.
This decision directly enables the trustees to apply the entire capital of the Plaintiff's Fund for her education and maintenance, addressing the inadequacy of income and partial capital advances. The ruling does not establish new legal precedent but clarifies the application of the Variation of Trusts Act 1958 and section 32 in the context of a bare trust held absolutely for a minor.
Click here to read the full judgment