Sutton & Ors v England & Ors

Sutton & Ors v England & Ors

The court refused to confer powers of appropriation and partition under section 57 Trustee Act 1925 because such powers would alter the nature of the beneficial interests, which is not permitted except incidentally. The court sanctioned the historical approach to tax attribution but declined to grant trustees absolute discretion for future tax handling. The proposed advancement scheme was rejected as outside section 32. Modern administrative powers were granted except for the power to pay unenforceable tax liabilities.

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
Trusts Application / Judgment
Outcome
Application partly allowed, partly refused.
Legal Topics
Trustee Powers, Appropriation, Partition, Advancement, Inheritance Tax, Variation of Trusts, Administrative Powers
Trusts Equity Tax Trustee Powers Appropriation Partition Advancement Inheritance Tax +2 more

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

Trusts Application / Judgment

Legal Issues

  1. 1 Whether trustees should be authorised to retrospectively and prospectively deal with tax liabilities under the trust (Hotchpot issue)
  2. 2 Whether trustees can be granted powers of appropriation and partition under section 57 of the Trustee Act 1925
  3. 3 Whether trustees can exercise advancement powers to facilitate tax mitigation

Ratio Decidendi

The court refused to confer powers of appropriation and partition under section 57 Trustee Act 1925 because such powers would alter the nature of the beneficial interests, which is not permitted except incidentally. The court sanctioned the historical approach to tax attribution but declined to grant trustees absolute discretion for future tax handling. The proposed advancement scheme was rejected as outside section 32. Modern administrative powers were granted except for the power to pay unenforceable tax liabilities.

Court Disposition

Application partly allowed, partly refused.

Orders

  • Trustees need not revisit historical tax attribution (Hotchpot issue).
  • Trustees may act on opinion of senior chancery counsel for future tax issues, with notice to adult beneficiaries.