Sutton & Ors v England & Ors [2009] EWHC 3270 (Ch) (11 December 2009)

Sutton & Ors v England & Ors [2009] EWHC 3270 (Ch) (11 December 2009)

The court will not require the trustees to revisit their historical approach to tax allocation, as it was reasonable and unchallenged. However, the court cannot confer a power of appropriation or partition under section 57 where it would fundamentally alter the nature of beneficial interests, as this is not merely incidental to administration. The proposed exercise of the power of advancement is not within section 32, as it concerns interests under the trust, not trust property. Modern administrative powers may be conferred, except for a power to pay unenforceable tax liabilities.

Citation
[2009] EWHC 3270 (Ch)
Parties
Claimant: Peter William Sutton; Claimant: Michael Francis Coker; Claimant: Adam Vere Balfour Broke; Defendant: Michael England; Defendant: Christopher Southgate; Defendant: David Worster; Defendant: Simon Cadby; Defendant: Lancashire & Yorkshire Revisionary Interest Company Limited; Defendant: Southgate Investments LLC
Jurisdiction
England and Wales
Judgment Date
11 December 2009
Procedural Posture
Trustee Application for Directions and Powers Under Trust and Statute / Judgment After Hearing of Application
Outcome
Application granted in part, refused in part
Legal Topics
Trustee Powers, Trust Administration, Partition and Appropriation of Trust Assets, Taxation of Trusts, Variation of Trusts
Trusts and Estates Equity Trustee Powers Trust Administration Partition and Appropriation of Trust Assets Taxation of Trusts Variation of Trusts

Case Brief

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Parties

Peter William Sutton

Claimant

Michael Francis Coker

Claimant

Adam Vere Balfour Broke

Claimant

Michael England

Defendant

Christopher Southgate

Defendant

David Worster

Defendant

Simon Cadby

Defendant

Lancashire & Yorkshire Revisionary Interest Company Limited

Defendant

Southgate Investments LLC

Defendant

Procedural Posture

Trustee Application for Directions and Powers Under Trust and Statute / Judgment After Hearing of Application

Legal Issues

  1. 1 Whether the court should sanction the historical method of attributing tax liabilities (the Hotchpot issue)
  2. 2 Whether the court can confer powers of partition and appropriation under section 57 of the Trustee Act 1925
  3. 3 Whether the trustees can be given liberty to exercise powers of advancement to restructure beneficial interests for tax purposes

Ratio Decidendi

The court will not require the trustees to revisit their historical approach to tax allocation, as it was reasonable and unchallenged. However, the court cannot confer a power of appropriation or partition under section 57 where it would fundamentally alter the nature of beneficial interests, as this is not merely incidental to administration. The proposed exercise of the power of advancement is not within section 32, as it concerns interests under the trust, not trust property. Modern administrative powers may be conferred, except for a power to pay unenforceable tax liabilities.

Court Disposition

Application granted in part, refused in part

Orders

  • Trustees need not revisit historical tax allocation methods.
  • Trustees not granted an absolute discretion for future tax allocation; may act on senior counsel's opinion with notice to beneficiaries.