“(3) Upon the attainment by the Beneficiary [defined earlier in the Recitals to the Trust Deed as the Defendant] of the age of Twenty five years to pay and transfer one half of the Trust Fund to her absolutely and as to the remainder of the Trust Fund to pay the income therefrom to the Beneficiary until she dies and on her death Upon Trust for such of her children as shall attain the age of Twenty one years and if more than one in equal shares absolutely. (4) If the Trusts hereinbefore declared in favour of the beneficiary shall fail then to hold the whole or the part of the Trust Fund in respect of which the trusts have failed as the case may require for such of the children of the Beneficiary as shall attain the age of Twenty one years and if more than one in equal shares absolutely and in relation to the income arising therefrom until they successively attain their majority the provisions contained in sub-clause (1) hereof shall apply mutatis mutandis as though they were set out herein [sub-clause (1) contained provisions applicable to when the Defendant was under the age of 21]. (5) If the foregoing trusts shall fail then To Hold the Trust Fund Upon Trust for my Son Roger Frank Kelly absolutely.”
“Work to be done You have asked us to advise you with regard to a possible release by the life tenant of part of her life interest in the trust fund so as to accelerate the interest of the ultimate remaindermen. This includes advising on the taxation implications, both on the life tenant and on the trustees and drafting the necessary documentation to effect that release.”
“Clearly there is a substantial trust fund and as you are no doubt aware in the event of your sister's death the value of that trust fund will be aggregated with her own estate for inheritance tax purposes and will potentially produce a significant IHT liability. The thinking therefore is that to the extent that she feels she can afford to do so your sister gives up or surrenders her life interest in part of the trust fund so that that part then accelerates the interest of her four daughters and passes to her four daughters. This has the advantage of starting the 'clock' running for inheritance tax purposes, and providing that she survives that release by a period of seven years, should result in no inheritance tax liability arising. Similarly it also assists her four daughters by providing them with a sum of cash at the present time, which I understand will be of considerable assistance to them. Under normal circumstances there would be a capital gains tax liability that would arise in relation to the part of the trust fund that the four daughters would become absolutely entitled to on the surrender by their mother. However discussions between John and the investment advisors have indicated that there are sufficient investments to avoid capital gains tax being an issue, and I understand that a number of sales have already taken place from the portfolio in order to raise the appropriate level of cash. Ultimately it was agreed with your sister that she would surrender or release her life interest in£800,000 worth of assets within the trust. That£800,000 worth of assets would be made up of£600,000 worth of cash and investments with the balance being made up of the£200,000 loan that is currently outstanding from Mrs Bullivant to the trustees, which I understand, was made some years ago. The effect of this is to reduce the value of the trust fund that would otherwise be aggregable on your sister's death by a sum of£800,000 , and assuming she survives that release by seven years would potentially result in a saving of inheritance tax of some£320,000 . That was the essence of the agreement that was reached when we met and I have subsequently been asked to draft the appropriate legal documentation to put this into effect. The terms of the trust are such that in effect your sister can give up her life interest in£800,000 worth of assets, and that will have the effect of accelerating the interest of her four daughters to the capital in which the life interest has been given up. This is therefore done by a simple deed of release, a draft of which I have sent to John Delaney for approval. The deed of release includes specifically reference to the debt for reasons I will explain later in this letter. Assuming the deed of release is acceptable it will need to be executed not only by Mrs Bullivant, but also by the three of you as trustees, and the date of that deed will then be the effected date of release for IHT purposes and will be the date on which the seven year clock starts to run. With regard to the debt, there was some discussion with myself, your sister and John Delaney about whether that debt had ever been recorded in any form of memorandum of loan. John, I understand has checked with David Wild, who cannot recall a memorandum ever being done, but the debt clearly exists and appears within the trust accounts. The question that arises is whether the debt was repayable on demand (almost certainly it would have been) and also whether it carried any requirement to pay interest. In the case of the latter I think it highly unlikely simply because any interest that would have been payable by Mrs Bullivant on the debt would therefore have immediately come back to her in her capacity as life tenant! The debt clearly represents an additional liability against Mrs Bullivant's estate and so it is worthwhile retaining the debt, and the question I have raised with John Delaney is whether once the debt has been assigned to her four daughters whether the terms of the debt should be renegotiated so as to carry a level of interest repayable, that is probably a matter for discussion between the four daughters and Mrs Bullivant rather than involving the trustees.”
“Recitals A. This Deed is supplemental to the settlement (The Settlement') and to the other documents specified in the First Schedule. B. The Trustees are the present trustees of the Settlement C. Under the Settlement the Life Tenant is entitled to the income of the Trust Fund D. The Life Tenant wishes to release her interest in the income of that part of the Trust Fund specified in the Second Schedule Operative Provisions A. This Deed is supplemental to the settlement (The Settlement') and to the other documents specified in the First Schedule. B. The Trustees are the present trustees of the Settlement C. Under the Settlement the Life Tenant is entitled to the income of the Trust Fund D. The Life Tenant wishes to release her interest in the income of that part of the Trust Fund specified in the Second Schedule 1. The Life Tenant hereby releases her interest in the income of that part of the Trust Fund specified in the Second Schedule to the intent that the provisions contained in clause 2 (3) of the Settlement shall take effect on the release of such interest. 2. The Trustees hereby agree to administer the Trust Fund in accordance with this Deed of Release. ……… Second Schedule£600000 cash and investments£200000 debt owed by the Life Tenant to the Trustees”
“Recitals A. This Deed is supplemental to the settlement (the “Settlement') and to the other documents specified in the First Schedule. B. The Trustees are the present trustees of the Settlement. C. Under the Settlement the Life Tenant is entitled to the income of the Trust Fund (as therein defined). D. The Life Tenant wishes to release her interest in the income of that part of the Trust Fund specified in the Second Schedule Operative Provisions 1. Release The Life Tenant hereby releases her interest in the income of that part of the Trust Fund specified in the Second Schedule to the intent that the provisions contained in clause 2 (3) of the Settlement shall take effect on the release of such interest. 2. Ongoing Administration The trustees hereby acknowledge the Life Tenant’s release and agree to administer the Trust Fund in accordance with the terms of this Deed. ……… The Second Schedule£90,000 loan owed by the Life Tenant to the Trustees”
“The Issue [24.] Upon taking specialist legal advice (privilege over which is not waived), it became apparent, inter alia, that the Trustees have purported to exercise a non-existent power of appointment in the 1962 Deed and that, technically, the class of remaindermen beneficiaries is not closed, see e.g. see Figg v Clarke[1997] 1 WLR 603 (Ch.). …… The Legal Framework The Court’s Approach to Incapacity of Childbearing [28.] As explained in Lewin on Trusts (20th Ed.) at 24-080, it was frequently held in the past that the Court would authorise trustees to administer their trust on the footing that a woman was past bearing children if, on taking account of her age and matrimonial history, the dates on which any children had been born, the evidence regarding any possibility of the birth of further children and any medical evidence, it appeared practically certain that she would have no child in the future, citing Re Westminster Bank Ltd’s Declaration of Trust [1963] 1 W.L.R. 820. [29.] On occasion, the Court has authorised distribution without the need for variation under theVariation of Trusts Act 1958 on the basis that a woman in her seventies would not have any further children, see Re Pettifor’s Will Trusts[1966] Ch. 257 (Ch.). HMRC’s Approach to Incapacity of Childbearing [30.] HMRC have recognised and accepted that the policy adopted in Re Pettifor’s Will Trusts (supra) should be applied in cases where the class of beneficiaries has not technically closed but the parties nevertheless wish to enter into a deed of variation. [31.] Specifically, IHTM35048, entitled “Who should make the instrument?: women past the age of child-bearing” provides the following guidance: “On the authority of In Re Pettifor’s Will Trusts, Roberts v Roberts and Others(1966) Ch 257 , it should be accepted that a woman in her mid-fifties has become incapable of child-bearing. Therefore in the example at IHTM35047, if instead of being left to Stuart the capital was left to Winnie’s daughter, Diane, who was aged 56 and either childless, or all her children were of age and parties to the variation, the instrument should not be challenged on the grounds that contingent interests of her children (born or unborn) had been adversely affected.”
“We refer to your letter dated18 March 2025 and your further letter dated25 June 2025 . We are sorry for the delay in acknowledging and responding to your letter of 18 March. We confirm that HMRC does not wish to be joined to the proceedings or make any comment on the claim.”
“We cannot see that there is any doubt that this was the intention [to surrender the Defendant’s life interest]”
“[a]lthough (i) interpreting the words which the parties have used in their contract and (ii) implying terms into the contract, involve determining the scope and meaning of the contract, interpreting the words used and implying additional words are different processes governed by different rules.”
“[17.] The well-known general principles of contractual construction are to be found in a series of recent cases, including Rainy Sky SA v Kookmin Bank[2011] UKSC 50 ;[2011] 1 WLR 2900 ; Arnold v Britton and others[2015] UKSC 36 ;[2015] AC 1619 and Wood v Capita Insurance Services Ltd[2017] UKSC 24 ;[2017] AC 1173 . [18.] A simple distillation, so far as material for present purposes, can be set out uncontroversially as follows: i) When interpreting a written contract, the court is concerned to identify the intention of the parties by reference to what a reasonable person having all the background knowledge which would have been available to the parties would have understood them to be using the language in the contract to mean. It does so by focussing on the meaning of the relevant words in their documentary, factual and commercial context. That meaning has to be assessed in the light of (i) the natural and ordinary meaning of the clause, (ii) any other relevant provisions of the contract, (iii) the overall purpose of the clause and the contract, (iv) the facts and circumstances known or assumed by the parties at the time that the document was executed, and (v) commercial common sense, but (vi) disregarding subjective evidence of any party's intentions; ii) The reliance placed in some cases on commercial common sense and surrounding circumstances should not be invoked to undervalue the importance of the language of the provision which is to be construed. The exercise of interpreting a provision involves identifying what the parties meant through the eyes of a reasonable reader, and, save perhaps in a very unusual case, that meaning is most obviously to be gleaned from the language of the provision. Unlike commercial common sense and the surrounding circumstances, the parties have control over the language they use in a contract. And, again save perhaps in a very unusual case, the parties must have been specifically focussing on the issue covered by the provision when agreeing the wording of that provision; iii) When it comes to considering the centrally relevant words to be interpreted, the clearer the natural meaning, the more difficult it is to justify departing from it. The less clear they are, or, to put it another way, the worse their drafting, the more ready the court can properly be to depart from their natural meaning. However, that does not justify the court embarking on an exercise of searching for, let alone constructing, drafting infelicities in order to facilitate a departure from the natural meaning; iv) Commercial common sense is not to be invoked retrospectively. The mere fact that a contractual arrangement, if interpreted according to its natural language, has worked out badly, or even disastrously, for one of the parties is not a reason for departing from the natural language. Commercial common sense is only relevant to the extent of how matters would or could have been perceived by the parties, or by reasonable people in the position of the parties, as at the date that the contract was made; v) While commercial common sense is a very important factor to take into account when interpreting a contract, a court should be very slow to reject the natural meaning of a provision as correct simply because it appears to be a very imprudent term for one of the parties to have agreed, even ignoring the benefit of wisdom of hindsight. The purpose of interpretation is to identify what the parties have agreed, not what the court thinks that they should have agreed. Accordingly, when interpreting a contract a judge should avoid re-writing it in an attempt to assist an unwise party or to penalise an astute party; vi) When interpreting a contractual provision, one can only take into account facts or circumstances which existed at the time the contract was made, and which were known or reasonably available to both parties.”
“[51.] In summary, the relevant principles can be drawn together as follows: i) A term will not be implied unless, on an objective assessment of the terms of the contract, it is necessary to give business efficacy to the contract and/or on the basis of the obviousness test; ii) The business efficacy and the obviousness tests are alternative tests. However, it will be a rare (or unusual) case where one, but not the other, is satisfied; iii) The business efficacy test will only be satisfied if, without the term, the contract would lack commercial or practical coherence. Its application involves a value judgment; iv) The obviousness test will only be met when the implied term is so obvious that it goes without saying. It needs to be obvious not only that a term is to be implied, but precisely what that term (which must be capable of clear expression) is. It is vital to formulate the question to be posed by the officious bystander with the utmost care; v) A term will not be implied if it is inconsistent with an express term of the contract; vi) The implication of a term is not critically dependent on proof of an actual intention of the parties. If one is approaching the question by reference to what the parties would have agreed, one is not strictly concerned with the hypothetical answer of the actual parties, but with that of notional reasonable people in the position of the parties at the time; vii) The question is to be assessed at the time that the contract was made: it is wrong to approach the question with the benefit of hindsight in the light of the particular issue that has in fact arisen. Nor is it enough to show that, had the parties foreseen the eventuality which in fact occurred, they would have wished to make provision for it, unless it can also be shown either that there was only one contractual solution or that one of several possible solutions would without doubt have been preferred; viii) The equity of a suggested implied term is an essential but not sufficient pre-condition for inclusion. A term should not be implied into a detailed commercial contract merely because it appears fair or merely because the court considers the parties would have agreed it if it had been suggested to them. The test is one of necessity, not reasonableness. That is a stringent test.”
“Invesco have sold assets to the value of£3,363,066.29 .. …… • KD confirmed that the majority of the portfolio (minus the Blakeney investments) is currently held in cash with Investec. He said that Investec were happy to hold onto this cash as long as we needed it in their cash account with no additional charges. • JD said that he will check the book cost versus his records and then plan to submit a tax return on5th April 2021 resulting in the CGT bill needing to be paid by January 2022. He suggested that on the basis that we will not know the final CGT figure until all investments have been liquidated and that there will be administration costs to pay by the Trust that an initial distribution of£2.5million be paid out to the 4 beneficiaries (the girls) and the rest held back to cover such expenses. GB confirmed that he also felt this was the right decision. • SW reconfirmed that the trust has a bank account so would be able to complete this transaction but JD suggested that the distribution to the girls be paid directly from Investec. He added that this was because there are no internet banking facilities on the trust bank and logistically this may be easier. • KD said this may be possible but he will need to check with Investec as to what will be needed. He and GB suggested that full ID and a copy bank statement may be required from each trustee. SW said that her and EAB will be able to speak to the beneficiaries and organise this if required. • JD asked if EAB will need to complete any paperwork to relinquish the life interest and GB confirmed that a deed will be needed for this but that will not hold up the distribution of the proposed amount of£625,000 per beneficiary. • GB confirmed that once all tax bills paid, all expenses paid and all final distributions paid that he will complete paperwork to wind up the trust. He stated that in the meantime there may be need for other documents and deeds such as a Trustees Resolution to confirm the distribution to the beneficiaries or perhaps a deed of appointment to authorise the payments directly from Investec. KD said that he will liaise with GB and JD as to what paperwork Investec will need for their internal procedures. • JD pointed out that Investec may be missing the last few trust documents that have been completed in the last 12-28 months. SW said that she would liaise with KD to make sure they have all these. • SW asked if everyone was in agreement and all parties confirmed they were happy with the initial distribution of£2.5m total /£625,000 per beneficiary. This will of course be correctly documented by official paperwork produced by GB from Fishers Law. • RK voiced that this has been a very prosperous Trust thanks to the works of KD and Investec. He said that his father would have been very happy. • SW said that it was a true legacy that her Grandfather had set out and that he would have been very proud. She said the beneficiaries will be very grateful for this wonderful gift. • EAB thanked everyone for their hard work and said that hopefully later that day, her and RK will raise a glass to their Father.”
“(1) Any absolute assignment by writing under the hand of the assignor (not purporting to be by way of charge only) of any debt or other legal thing in action, of which express notice in writing has been given to the debtor, trustee or other person from whom the assignor would have been entitled to claim such debt or thing in action, is effectual in law (subject to equities having priority over the right of the assignee) to pass and transfer from the date of such notice— (a) the legal right to such debt or thing in action; (b) all legal and other remedies for the same; and (c) the power to give a good discharge for the same without the concurrence of the assignor: Provided that, if the debtor, trustee or other person liable in respect of such debt or thing in action has notice— (a) that the assignment is disputed by the assignor or any person claiming under him; or (b) of any other opposing or conflicting claims to such debt or thing in action; he may, if he thinks fit, either call upon the persons making claim thereto to interplead concerning the same, or pay the debt or other thing in action into court under the provisions of theTrustee Act 1925 .”
“[38] I now turn to consider whether any assistance can be gained from the presumption of regularity, which is sometimes expressed in the Latin maxim “Omnia praesumuntur rite esse acta”
“The maxim, 'Omnia praesumuntur rite esse acta', is an expression, in a short form, of a reasonable probability, and of the propriety in point of law of acting on such probability. The maxim expresses an inference which may reasonably be drawn when an intention to do some formal act is established; when the evidence is consistent with that intention having been carried into effect in a proper way; but when the actual observance of all due formalities can only be inferred as a matter of probability. The maxim is not wanted where such observance is proved, nor has it any place where such observance is disproved. The maxim only comes into operation where there is no proof one way or the other; but where it is more probable that what was intended to be done was done as it ought to have been done to render it valid; rather than that it was done in some other manner which would defeat the intention proved to exist, and would render what is proved to have been done of no effect.”
“[57] ……… As Lord Macnaghten said in William Brandt's Sons & Co v Dunlop Rubber Co Ltd[1905] AC 454 at 462: “The statute does not forbid or destroy equitable assignments or impair their efficacy in the slightest degree.”
“If the class is not closed, then the trustees cannot distribute the property to the beneficiaries because they cannot tell whether the apparent share of a particular beneficiary will be reduced by the addition of further members to the class. Therefore absolute entitlement is deferred.”
“It seems to me that an application under the Variation of Trusts Act, 1958, to cover that contingency, namely, the event of the birth of a child to a woman of 78, is misconceived and is not a proper application to make under the Act. It was, of course, well established prior to the enactment of the Perpetuities and Accumulations Act, 1964, that for the purpose of the rule against perpetuities a woman was never to be presumed as past child bearing. On the other hand, it is equally well established that in administration the court will allow funds to be distributed on the footing that at a certain age, normally in the middle or late fifties, a woman has become incapable of childbearing. In the case of a woman in the seventies, not only would trustees be authorised to distribute a fund on that footing without any doubt or question, but the court would, I think, normally consider it an unnecessary waste of money for the trustees to come to the court and ask for leave so to distribute. Trustees can with complete safety and propriety deal with their funds on the basis that a woman of 70 will not have a further child. It does not seem to me that protection against this impossible contingency is a matter which can properly be dealt with by way of variation of existing trusts. The proper way to deal with it, if the intervention of the court were to be sought, would be by an application to the court in its administrative jurisdiction for leave to carry out the existing trusts without variation on the footing that the impossible will not happen. In the course of argument I suggested to counsel who appeared for the plaintiff that any doubts which he or those he was representing might feel in the matter would be covered if the summons were suitably amended and an order were made that the trustees be at liberty to deal with the settled share of Mrs. Roberts in the residuary estate of the testator on the footing that no child will hereafter be born to Mrs. Roberts. That order I am perfectly willing to make. Counsel for the plaintiff and counsel for all the defendants were willing to acquiesce in such an order, and I will make that order accordingly. I have thought it right to give this formal judgment because I do not think that an application to vary trusts so as to cover the contingency of a woman of 70 having a child is an appropriate use of the Variation of Trusts Act, 1958. The Act is concerned to vary trusts applicable in events which will or may happen and not to cover impossible contingencies.”
“[269.(1)] notwithstanding the decision of Bean J in Faulds, the Respondents are not barred, by reason of the doctrine of issue estoppel, from adopting the Primary Case Preferred Analysis or the Primary Case Alternative Analysis. That is because they were not party to the proceedings in Faulds and did not agree to be bound by the decision (see Faulds at paragraph [9]). In addition, as noted in paragraph 65 above, following the decision, no application was made under Rule 19.8A(2)(b) [now numbered Rule 19.13] of the CPR for the decision to bind the Respondents unless they applied under Rule 19.8(b) of the CPR to set aside or vary the order of the High Court. As such, the Respondents are free to advocate those analyses in the present proceedings;”