In the recent case of Gelber and another v Sunderland Foundation and others [2018] EWHC 2344 (Ch), [2018] All ER (D) 31 (Sep), the court was asked to consider whether the trustees of the Marlborough 1981 Settlement (Settlement) could be granted additional powers under section 57 of the Trustees Act 1925 (TA 1925) as the result would benefit both the trust and the beneficiaries. All of the parties supported the application.
Background
The Settlement was created by the 11th Duke of Marlborough and has offshore resident trustees. The income from the Settlement assets is paid to the current Duke of Marlborough. The Settlement assets included land around Woodstock in Oxfordshire which had been granted planning permission, although a condition was imposed whereby 70% of the development value had to be paid to the Blenheim Palace Heritage Foundation (BPHF), a charity whose primary objective is restoring and preserving Blenheim Palace and its park. Blenheim Palace is a World Heritage site and is also the home of the current Duke of Marlborough under the terms of a Parliamentary Settlement. There is therefore a close alignment of interests between the Settlement and the Parliamentary Settlement.
Whilst the Settlement would increase in value by developing the land, notwithstanding the substantial payment to BPHF, and in turn some of the beneficiaries of the Settlement would also benefit as BPHF maintain their home, the trustees of the Settlement did not have the power under the Settlement to make the payment.
A separate but connected issue was that the Settlement did not permit the appointment of a sole trustee, unless that was a trust corporation. In relation to the sole trustee, the definition of a trust corporation does not include an offshore (non-EU) company but it was preferable to administer the trust using the single offshore corporate vehicle.
The outcome
The court exercised its jurisdiction under section 57 TA 1925 which enables the variation of trustees’ powers in certain circumstances. The court can provide the trustees with a power, either generally or for a specific instance, in circumstances beyond those of salvage or emergency (as had not been the case prior to 1925), where the wider power or transaction would be in the best interests of the trust as a whole, rather than particular beneficiaries. The test is based on expediency.
The court held that permitting the development of the land, and in turn the payment to BPHF, would benefit the Settlement as a whole. The Settlement’s net assets would increase (the net sum the Settlement would receive would still be between 20 and 25 times the current agricultural value), the beneficiaries of the Settlement would benefit from the funds being spent by BPHF on Blenheim Palace and it would also satisfy a moral obligation as the trustees of the Settlement have an obligation to maintain and conserve Blenheim Palace. It was also held expedient to have a sole corporate trustee (a foundation) as the Settlement had always been managed outside the UK and the change would bring benefits for the Settlement and the beneficiaries.
The case demonstrates that the court will consider exercising its powers under section 57 TA 1925 where it is appropriate given the particular circumstances. It also confirms, for the first time in England, that the jurisdiction can extend to the powers to appoint or replace trustees.
