“2. The family trusts concerned in this claim are three. The first is known as the Longleat House and Chattels Settlement. It was created in 2004, following the amalgamation of two earlier settlements established in 1993 by the Seventh Marquess. The second is known as Lord Bath’s Own Longleat Settlement. It was created in 1987 by the Seventh Marquess before he succeeded to that title, when he was known as Viscount Weymouth. The third is known as Lord Bath’s Longleat Settlement (Ceawlin’s Fund). This also was created in 1987 by Viscount Weymouth, later the Seventh Marquess. By virtue of the working out of provisions in the first and second settlements, the assets of those settlements are now held on the trusts of the third settlement. The first defendant is the life tenant of the third settlement.”
“3. The substantive claim itself is one under the first and/or second head of the well-known Public Trustee v Cooper[2001] WTLR 901 jurisdiction. In cases under the first head, as Hart J said in his decision (at 923), “the issue is whether some proposed action is within the trustees' powers. That is ultimately a question of construction of the trust instrument or a statute or both. The practice of the Chancery Division is that a question of that sort must be decided in open court and only after hearing argument from both sides.”
“6. … the trustees understand (and have been advised) that the LBLC settlement is drafted in such a way that Henry would not be entitled to benefit as Lord Bath’s son, while the settlement remains in its current form. Put another way, although Henry is Lord and Lady Bath's biological child and is to all intents and purposes a child of their marriage, the fact that he was carried to term by a surrogate mother means that he is treated differently under the LBLC settlement from his elder brother John, born in October 2014, who was carried to term by Lady Bath. 7. The trustees consider this inequitable to Lord Bath and to Henry. We have given careful consideration as to how best to deal with this issue, including the attitude we should be taking to the possibility that the assets of the settlement will become separated from the title of Marquess of Bath. We are advised by Leading Counsel (in respect of which legal advice privilege is not waived) that the terms of the settlement confer on us power to make an advancement for the benefit of Lord Bath, which could be used to insert Henry and his issue at some stage as beneficiaries in the line of succession after John should it prove desirable to do so. We have canvassed with Lord Bath the possibility of using this power in that way and Lord Bath has confirmed to us that he considers the proposal to provide a benefit to him. 8. We therefore wish to exercise the power so as to bring about this effect and a draft deed is annexed to the draft order presented with the Claim Form (and is exhibited at page 872). However, we recognise that this is a momentous decision and request the court to approve the decision we have made in principle to execute the deed. I deal below with the details of the way in which we propose to exercise the power. [ … ] 18. Critically, the trusts of LBLC include a power at clause 9 of the May 1996 Deed for the trustees to pay transfer or apply capital for the benefit of the life tenant for the time being – i.e. currently Lord Bath. I understand that the trustees therefore have power to apply the capital of the LBLC Fund for Lord Bath’s benefit. I understand that this power is of sufficient breadth to enable the trustees to use the power in the manner contemplated below, provided that the trustees reasonably take the view that to do so would be for Lord Bath’s benefit. [ … ] 20. … The trustees have been advised that the effect of clause 1(f) of the LBLC settlement deed is that Henry would not be treated as a son of Lord Bath for the purposes of clause 6(b) of the May 1996 Deed and/or as issue of the Sixth Marquess for the purposes of the definition of the appointable class at clause 1(c) of the settlement deed … 21. Upon receiving this advice, the trustees considered whether it would be appropriate for them to exercise their power to apply capital for the benefit of Lord Bath in such a way as to allow the inclusion of Henry within the appointable class of beneficiaries. The trustees have considered the matter and take the view that this is a course of action they would wish to adopt. 22. In reaching this decision, three points seemed of particular weight to us. 23. First, Henry is the son of Lord and Lady Bath. Not only is he treated by them and will be treated by the world in general as a child of Lord and Lady Bath’s marriage, but he is also their genetic child. It would be unfair on Lord Bath and on Henry to treat Henry as if he were not Lord Bath’s son. 24. Second, although these trusts have clearly been historically connected with the title of Marquess of Bath, that does not seem to us to be a reason why Henry should not be included within the appointable class of beneficiaries. This is for two reasons … [not necessary to be set out] 25. Third, for the reasons which we describe below what is proposed is merely a first step towards including Henry within the line of succession to the trust property. At this stage, all that is proposed is that Lord Bath is given the power to add Henry to the class of prospective beneficiaries of the trusts. In fact, the most likely outcome must be that any exercise of this power will not come into effect until after Lord Bath’s death. [ … ] 31. In the circumstances, it does seem to me and to my fellow trustees that exercising the power in this way is the right thing for the trustees to do. 32. I should say that the trustees are not family members or potential beneficiaries of the LBLC settlement, or any other of the Longleat settlements. I am not aware of any actual or potential conflict of interest that exists in the matters which are the subject of this application. [ … ]”
“In exercise of the Powers of Advancement and any other powers them enabling and subject to any further exercise of the Powers of Advancement, the Trustees declare that the trusts applicable to the LBLC Trust Fund, the LBOL Fund and the LHCS Fund shall henceforth take effect as if clause 1(d) of the May 1996 Appointment had read as follows: ‘1(d) “the Restricted Appointable Class” means: (i) Ceawlin and all other grandchildren and issue remoter than grandchildren of the Sixth Marquess (ii) The respective husbands wives widows and widowers of the Sixth Marquess’s said grandchildren and remoter issue (iii) Such of the Additional Beneficiaries as Ceawlin may by deed (whether irrevocable or revocable before the perpetuity date) executed with the consent of the Trustees during Ceawlin’s lifetime, or by will, or codicil without the consent of the Trustees appoint 1(da) ‘the Additional Beneficiaries’ means: (i) Henry Thynn (ii) any child or remoter issue of Henry Thynn (iii) the respective husbands wives widows and widowers of Henry Thynn his children and remoter issue’.” ‘1(d) “the Restricted Appointable Class” means: (i) Ceawlin and all other grandchildren and issue remoter than grandchildren of the Sixth Marquess (ii) The respective husbands wives widows and widowers of the Sixth Marquess’s said grandchildren and remoter issue (iii) Such of the Additional Beneficiaries as Ceawlin may by deed (whether irrevocable or revocable before the perpetuity date) executed with the consent of the Trustees during Ceawlin’s lifetime, or by will, or codicil without the consent of the Trustees appoint 1(da) ‘the Additional Beneficiaries’ means: (i) Henry Thynn (ii) any child or remoter issue of Henry Thynn (iii) the respective husbands wives widows and widowers of Henry Thynn his children and remoter issue’.”
“I have to consider whether a settlement made for the benefit of the plaintiff's wife and child would be for his benefit. To some extent it would be to benefit objects other than objects of the power, because the wife and children might be the persons to benefit. But I cannot doubt that it would be for the plaintiff's benefit that some provision should be made for them. The plaintiff and his wife are not in a position to make provision for the future. That a man should be married and have a family and have no means of making any sort of provision in the event of his death is a prospect that, to many of us, would be so appalling, that some provision for the man's wife and children would seem to be for the benefit of that man, because he would be relieved from what would be a very anxious position so long as no provision was made. Having regard to the very wide terms in which the word ‘benefit’ has been construed in the past, I consider that the trustees may, under this power, raise a part not exceeding one half, and have the part so raised settled for the benefit of the plaintiff, his wife, and his children. I think that, in any settlement which was proposed for that purpose, the only persons who could properly be included would be the plaintiff's wife and children, and any ultimate trust would, in my view, have to be for the ultimate residue of the testator's estate. Subject to that, I declare that the trustees have power to make an advancement for this purpose, if they think fit. I leave it to the trustees to say whether they will exercise the power, and on what terms.”
“ … if the disposition itself, by which I mean the whole provision made, is for [the beneficiary’s] benefit, it is no objection to the exercise of the power that other persons benefit incidentally as a result of the exercise.”
“42. That passage emphasised the potentially limiting effect of the requirement (from which none of the authorities have departed) that there be some sense in which the beneficiary's material situation can be said to be improved by the situation. The same point is made by Walton J's reductio ad absurdum in Hampden Re Hampden's Settlement Trusts [1977] TR 177, subsequently also reported at[2001] WTLR 195 . (see para 39 above). In the present case I find it impossible to see how this requirement can be satisfied. It cannot be said that the proposed advance is relieving the wife of an obligation she would otherwise have to discharge out of her own resources if only because the amount proposed to be advanced exceeds the amount of her own free resources. In any event the court has no reason to suppose that, in relation to her free assets, she will regard the advance as having discharged her moral obligation. The moral imperative informing her request to the trustees might logically be thought to apply to her own assets regardless of whether or not an advance is made out of the trust fund. 43. I entirely accept that in distinguishing between the objective existence of a moral obligation on the one hand and the beneficiary's own recognition of it on the other there is a danger of the court being cast adrift in an open sea. How, as Mr Le Poidevin asked rhetorically, can the court assess the validity and nature of a moral obligation otherwise than by reference to the beneficiary's own views on the subject? That is certainly not a question to with [sic] the court can give an abstract answer, whether by reference to the Bible or to Bentham, to Kant or the Koran. The answer has to be found in the concrete examples provided by the decided cases and the reliance placed in them on generally accepted norms applicable in the context of dealings with settled wealth. No such case goes anywhere near recognising the existence of a moral obligation of the extent in question here. 44. For those reasons I do not think that I can conclude that it is open to the trustees to make the proposed advance … ”
“11. … As Farwell J observed some 75 years ago, for a man to have no means of making effective provision for his children puts him in an anxious position. Exactly the same observation may be made as regards a mother who may lack the ability to make the sort of provision for the child that she has had as is made for a legitimate child, or will be made should she have another legitimate child, and therefore, give rise to inequality as between her children.”
“48. … the word ‘benefit’ is to be construed widely and goes beyond mere financial benefit. It encompasses all sorts of ways in which a beneficiary’s position can be made better. Nevertheless, it is not open-ended … Most importantly, the question of benefit is to be considered in a realistic and commonsense manner rather than in a theoretical or academic way.”
“40. The Royal Court was also entitled, in my view, to reject GT’s contention that the so-called improvement in Sheikh Fahad's moral or ethical position, which, GT said, would be brought about by having the victim of his fraud at least pro tanto compensated and by Sheikh Fahad ‘confronting his dishonesty’, would be a real and discernible benefit to Sheikh Fahad. It may be that the law generally approves and reinforces what is generally accepted as good moral behaviour in the society in which it operates and disapproves and penalizes what is regarded as bad moral behaviour, such as dishonesty and unfair dealing … However, even accepting that the power to advance or apply capital is regarded as a paternal one, and that a trustee has power to make a payment to reduce the debts of a beneficiary’s creditors without his consent, where the trustee considers it for the beneficiary’s benefit to do so, nonetheless I agree with the Royal Court’s conclusion that, ‘in the circumstances of this case’, the Trustee (and therefore the Court) cannot properly regard the so-called moral benefit of confronting his fraud as the type of benefit that will ‘improve the material situation’ of Sheikh Fahad, to use Lord Radcliffe’s words.”
“57. So the appointment proposed by the trustees would not put more money into John's pocket, and would not enable more than a fraction of his bankruptcy debts to be paid. There is no suggestion that any other indirect benefit would accrue as a result to John, eg the ability to carry on a new trade, to become a member of a club he wished to join, or to live a new life of some kind. Yet, the very next day, he would be discharged from both his bankruptcy and these debts, and any subsequent appointment in his favour would flow directly to him. In my judgment, it was impossible to say that the proposed appointment was for John's benefit. It would not have objectively benefited him, and I have great difficulty in seeing how the trustees could subjectively have thought that it did, as opposed to benefiting the testatrix's estate, which the first claimant represented. So, in my judgment it was not within the scope of the power at all. Accordingly, the claim failed at the first hurdle.”
“43. Here, the beneficiaries of the Longleat Settlements, both under the default trusts in clause 6 of the 1996 Deed and as objects of the power of appointment, are expressly confined to the legitimate issue of the Sixth Marquess (and their spouses etc.). The deliberate inclusion of the restricted definition as to how terms of relation are construed, so as to exclude adopted and illegitimate children has been a consistent conscious decision throughout the relevant history of these trusts, not only in the 1987, 1993 and 1996 Deeds, but elsewhere … ”
“What then are the duties of the court in considering a category (2) case? They will depend on the circumstances of each case. In the present case, before the court can give general liberty to the … trustees to carry into effect the decision made by them on 20th October to accept the bid, ie to grant the declaration sought, it must be satisfied, after a scrupulous consideration of the evidence before it, of at least three matters. First, that the … trustees have in fact formed the opinion that special circumstances exist which render it desirable that they accept the bid; first and foremost it is their opinion which counts. This is one of those cases where the governing instrument plainly constitutes the trustees as the forum to determine the precipitating event. As to this, while some attempt was made by [counsel opposing the application] to suggest that the … trustees had not ever formed an opinion on the question, it was clear that, insofar as the evidence did not already formally cover the point, the … trustees stood ready to attest that they had, and, in the event, I permitted them to adduce a further witness statement from [a solicitor on behalf of the trustees] dealing with this point and which I accept. Secondly, was the opinion which the … trustees formed one at which a reasonable body of trustees properly instructed as to the meaning of the relevant clause could properly have arrived? Thirdly, was the opinion at which that body had arrived vitiated by any conflict of interest under which any of the trustees had been labouring, either because such conflict actually had, or because it might have had, an effect on the decision which they took?”