W v M & D
| Jurisdiction | Ireland |
| Judge | Miss Justice Laffoy |
| Judgment Date | 30 July 2010 |
| Neutral Citation | [2010] IEHC 505 |
| Court | High Court |
| Docket Number | [2010 No. 376 SP] |
| Date | 30 July 2010 |
[2010] IEHC 505
THE HIGH COURT
BETWEEN
AND
LAND & CONVEYANCING LAW REFORM ACT 2009 S24
LAND & CONVEYANCING LAW REFORM ACT 2009 PART V
LAND & CONVEYANCING LAW REFORM ACT 2009 S23
LAW REFORM CMSN REPORT ON THE VARIATION OF TRUSTS (LRC 63-2009)
LAND & CONVEYANCING LAW REFORM ACT 2009 S24(2)
LAND & CONVEYANCING LAW REFORM ACT 2009 S24(1)
RULES OF THE SUPERIOR COURTS (LAND & CONVEYANCING LAW REFORM ACT 2009) 2010 SI 149/2010
RSC O. 3 r11B
LAND & CONVEYANCING LAW REFORM ACT 2009 S24(4)
LAND & CONVEYANCING LAW REFORM ACT 2009 S24(5)
L (C), IN RE 1969 1 CH 587 1968 2 WLR 1275 1968 1 AER 1104
MCGHEE & ORS SNELLS EQUITY 31ED 2005 662
TINKERS SETTLEMENT, IN RE 1960 1 WLR 1011 1960 3 AER 85 (NOTE)
LAND & CONVEYANCING LAW REFORM ACT 2009 S24(4)(A)
LAND & CONVEYANCING LAW REFORM ACT 2009 S24(4)(B)
TRUSTS
Variation
Amendment of settlement - Life assurance policy - Proposed scheme of arrangement - Intended effect - Whether proposed scheme of arrangement would have intended effect - Jurisdiction of court to approve or refuse scheme of arrangement - Jurisdiction of court to approve amended scheme of arrangement - Whether court could approve scheme of arrangement subject to amendment or modification - Practice and procedure - Special summons - Relevant person - Whether special summons should specify relevant person - Benefit to settlor - Detriment to other relevant persons - Identity of residual beneficiaries - Whether personal representative of settlor would distribute estate in accordance with will or on intestacy - Mental capacity of settlor - Whether court had jurisdiction to approve scheme of arrangement where adult incapable assenting by reason of absence of mental capacity - Revenue Commissioners - Notice - Obligation on Revenue Commissioners to apprise court of attitude to scheme of arrangement - In re CL [1969] 1 Ch 587 and In re Tinker's Settlement [1960] 1 WLR 1011 considered - Land and Conveyancing Law Reform Act 2009 (No 27), Part 5 - Scheme not approved; liberty to amend granted (2010/376SP - Laffoy J - 30/7/2010) [2010] IEHC 505
W v M (apum) and D
Judgment of Miss Justice Laffoy delivered on the 30th day of July, 2010.
2 1.1 These proceedings, which were initiated by special summons which issued on 3 rd June, 2010, seek an order pursuant to s. 24 of the Land and Conveyancing Law Reform Act 2009 (the Act of 2009) approving the Scheme of Arrangement annexed to the special summons in respect of a declaration of trust made on 18 th July, 1997 (the trust document) the contents of which will be set out in extensor below. The plaintiff also seeks ancillary relief.
3 1.2 Section 24 of the Act of 2009 is contained in Part 5, which is headed "Variation of Trusts". There are only two sections in Part 5, s. 23, which is the interpretation section, and s. 24, which sets out the jurisdiction of the Court to vary trusts. In broad terms, Part 5 implements the recommendations of the Law Reform Commission in its report on The Variation of Trusts published in December 2000 (LRC 63 - 2000), although the Oireachtas departed from the recommendations in certain instances. Part 5 confers a novel jurisdiction on the Court. As far as I am aware, this is the first application to come before the High Court under Part 5.
4 1.3 Section 24 envisages the manner in which an application is brought to this Court being regulated by rules of court. For instance, subs. (2) provides that the Court shall not hear an application made to it under subs. (1) unless it is satisfied that the applicant has given notice in writing of the application, inter alia, "to such persons as may be prescribed by rules of court" at least two weeks before the hearing of the application. The only provision which has been made in the Rules of the Superior Courts (the Rules) regulating applications under s. 24 is the provision in the Rules of the Superior Courts (Land and Conveyancing Law Reform Act 2009) 2010 ( S.I. No. 149 of 2010) that an application for an order under s. 24 may be brought by way of special summons. There is no specific provision prescribing the giving of notice. The plaintiff in these proceedings has utilised the special summons procedure. Therefore, the application has been properly brought in accordance with Order 3 (11B) of the Rules. By way of general observation, notwithstanding the difficulties which the application raises, the plaintiff's legal advisers are to be commended in relation to the comprehensive manner in which the matter has been presented to the Court.
Sub-section (1) of s. 24 provides:
"An appropriate person may make, in respect of a relevant trust, an application to the court for an order to approve an arrangement specified in the application for the benefit of a relevant person specified in the application if the arrangement has been assented to in writing by each other person (if any) who - "
(a) is not a relevant person,
(b) is beneficially interested in the trust, and
(c) is capable of assenting to the arrangement."
Throughout s. 24 it is made clear that "the relevant person" whose benefit is at issue must be specified in the application. The expressions "appropriate person", "relevant person" and "relevant trust" are defined in s. 23, as is the word "arrangement", which, in relation to a relevant trust, is defined as meaning -
"an arrangement -"
(a) varying, revoking or resettling the trust, or
(b) varying, enlarging, adding to or restricting the powers of the trustees under the trust to manage or administer the property the subject of the trust."
2 2.1 In s. 23 "relevant person" is defined, in relation to a relevant trust, as meaning any of the following:
(a) a person who has a vested or contingent interest under the trust but who is incapable of assenting to an arrangement by reason of lack of capacity (whether by reason of minority or absence of mental capacity),
(b) an unborn person,
(c) a person whose identity, existence or whereabouts cannot be established by taking reasonable measures, or
(d) a person who has a contingent interest under the trust but who does not fall within paragraph (a)."
3 2.2 I am satisfied that the trust created by the trust document is a "relevant trust" within the meaning of that expression in s. 23. Accordingly, in accordance with subs. (1) of s. 24 the Court has jurisdiction to entertain an application for an order to approve an arrangement to vary, revoke or resettle the trust which is for the benefit of a relevant person, provided the arrangement has been assented to by all of the persons beneficially interested in the trust who, in broad terms, are identifiable and capable of assenting.
4 2.3 By virtue of subs. (4) of s. 24 the Court has two options as to the manner in which it shall determine the application, which are set out as follows:
a "(a) subject to paragraph (b), by making an order approving the arrangement specified in the application if it is satisfied that the carrying out of the arrangement would be for the benefit of -
(i) the relevant person specified in the application, and
(ii) any other relevant person,
(b) by refusing to make such an order in any case where -
(i) the court is not satisfied as referred to in paragraph (a), or
(ii) the Revenue Commissioners have satisfied the court that the application is substantially motivated by a desire to avoid, or reduce the incidence of, tax."
Sub-section (5) elaborates on what constitutes "an arrangement.... for the benefit of a relevant person" by providing that, in making a determination under subs. (4) -
"... the court may have regard to any benefit or detriment, financial or otherwise, that may accrue to that person directly or indirectly in consequence of the arrangement."
5 2.4 The relevant trust in this case, which was created by the trust document, related to a life assurance policy. It is necessary to consider the provisions of the policy and of the trust document in considerable detail.
2 3.1 The policy was issued by Irish Progressive Life Assurance Company Limited (Irish Progressive) on 15 th July, 1997. It was what was described as a "Term 100 Plan" policy. The lives assured were F, to whom I will refer as "the father", and his wife, M, who is named as the first defendant in these proceedings, and to whom I will refer as "the mother". At the time, the father was over 77 years of age and the mother was over 70 years of age. The sum assured under the policy is a very substantial sum. The yearly premiums, which have been paid since 1997 and are still being paid, are correspondingly substantial. The policy provided that the death benefit would be payable on the last death, that is to say, the survivor of the father and the mother. There was only one special condition in the policy document, which provided that the policy was issued subject to the terms of the trust document.
3 3.2 The trust document was based on a standard form issued by Irish Progressive, which I note was designated a "Flexible Trust Dual or Joint Life". I also note that it contained a disclaimer that, while every care had been taken in its drafting, Irish Progressive did not accept any responsibility for its suitability in any case, and that, in case of doubt, the policyholders should consult their professional adviser. The problem which has arisen in this case might have been avoided if they had done so.
4 3.3 At the commencement of the trust document, the father and the mother are referred to as "the Settlors" and there is...
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