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Abacus Trust Co (Isle of Man) Ltd v National Society for the Prevention of Cruelty to Children
[2001] STC 1344, [2001] 35 LS Gaz R 37, (2001) Times, 25 September, [2001] All ER (D) 207 (Jul)
Court: Ch D
Judgment Date: 17/07/2001
Cases referring to this case
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Treatment | Case Name | Citations | Court | Date | Signal |
Applied | Sieff v Fox | [2005] EWHC 1312 (Ch), [2005] 3 All ER 693, [2005] 1 WLR 3811, [2005] All ER (D) 273 (Jun) | Ch D | 23/06/200 |
Cases considered by this case
Annotations: All CasesCourt: ALL COURTS
Treatment | Case Name | Citations | Court | Date | Signal |
Applied | Hastings-Bass, Re, Hastings-Bass v IRC | [1975] Ch 25, [1974] 2 All ER 193, [1974] 2 WLR 904, [1974] STC 211, 53 ATC 87, [1974] TR 87, 118 Sol Jo 422 | CA | circa 1975 |
SETTLEMENTS - POWER OF APPOINTMENT - DEED OF APPOINTMENT - VALIDITY OF APPOINTMENT - TRUSTEES' FAILURE TO FOLLOW ADVICE OF LEADING COUNSEL - TRUSTEES' FAILURE TO TAKE INTO ACCOUNT FISCAL CONSEQUENCES OF MAKING APPOINTMENT - WHETHER DEED OF APPOINTMENT VOID AB INITIO
The claimants, the trustee and protector of a settlement made by deed dated 15 October 1991, sought a declaration that a deed of appointment executed on 3 April 1998 in favour of the defendant, NSPCC, was void ab initio. It was said that in making the appointment the claimants and each of them by their directors failed to have regard to the advice of leading counsel that the appointment should not be made before 6 April 1998 and that the consequence of making the appointment before that date would be to give rise to a deemed disposal by the trustee of the entire trust fund and a liability to capital gains tax on the settlor by virtue of the provisions of s 86 of the Taxation of Chargeable Gains Act 1992.
Held - Trustees, when exercising powers of appointment, were bound to have regard to the fiscal consequences of their actions and where it could be demonstrated that a proper consideration of those matters would have led to the appointment not going ahead the court was entitled to and should treat that as an invalid exercise of power in the sense of it being void ab initio. The financial consequences for the beneficiaries of any intended exercise of a fiduciary power could not be assessed without reference to their fiscal implications. If the effect of the intended appointment was likely to expose the fund or its beneficiaries to a significant charge to tax that was something which the trustees had an obligation to consider when deciding whether it was proper to proceed with the appointment. Once relevance was established then a failure to take those matters into account vitiated the exercise of the power unless it was clear that on a proper consideration of all relevant matters the decision would still have been the same. In the instant case the court was satisfied that the trustee through its directors failed to take relevant matters into account in the form of leading counsel's advice when considering whether to execute the deed of appointment in favour of the NSPCC which was made on 3 April 1998. Since that was highly material to their decision and given that the appointment would not have been made had the advice been taken into account it followed that the exercise of the power of appointment made on that day was invalid and of no effect.
