Trust Beneficiaries
Cases
In the Matter of Irish Board Mills Ltd (In Receivership)
William McCann v Irish Board Mills Ltd, James O’Hara, Patick Hickey, Peter Thomas and Frances Lynch
1979 No. 531 Sp
High Court
16 October 1980
[1980] I.L.R.M. 216
(Barrington J)
BARRINGTON J
delivered his judgment on 16 October 1980 saying: The applicant in this case is the receiver of Irish Board Mills Ltd. The first named respondent is the said company. The second, third and fourth named respondents are *217 the trustees named in an assignment of a personal accident insurance policy No. 7427X50399 dated 16 August 1978 and wherein the respondent company is named as the insured. The last named respondent is the widow and personal represntative of the late David (otherwise Daniel) Lynch who died, as a result of an accident, on 7 July 1978.
Irish Board Mills Ltd was incorporated under the name Inisturk Ltd on 8 April 1974 and changed its name to Irish Board Mills Ltd on 26 June 1974.
Irish Wallboard Co Ltd, a company incorporated on 9 February 1939, after several changes of name, changed its name to Irish Board Mills Ltd on 17 August 1973 and subsequently changed its name to Inisturk Ltd on 26 June 1974 and by agreement dated 17 December 1974 transferred its assets to the respondent company with effect from 4 May 1974.
On 29 October 1973 the company, then bearing the name Irish Board Mills Ltd, through their then brokers, Bowater Hammond Ltd, made a proposal to the Norwich Union Fire Insurance Co Ltd for a group personal accident and sickness policy under the insurance company’s optional scheme for cover for eight employees of their company. The insurance company’s proposals form is headed as follows:
Personal Accident and Sickness — Group
Injury to an employee can cause loss to a business through the absence from work of such person. The loss may be—
1. Fall in turnover consequent upon non-performance of the work normally undertaken by such person.
2. Increased cost of another person having to do this work.
3. The payment to the injured person of some part of his/her normal wage.
Provision for such loss or extra expense can be made by a personal accident insurance providing compensation for injuries to employees during the course of employment only or during leisure and employment.
Incapacity by sickness can also be covered to provide even wider protection.
The policy number filled in to the proposal form is 74210A50020. The final question in the personal form was ‘to whom are the benefits under the policy to be payable?’ and this was answered in the case of both types of benefits with the words ‘the employer’.
A policy dated 22 March 1974 was issued on foot of that proposal for a period from 22 October 1973 to 21 October 1974. Condition 4 of that policy states that in the event of a claim under the policy any benefit should be payable to ‘the insured’; the words ‘person who is the subject matter of that claim or his or her personal legal representative’ being struck out. This policy may well have been renewed from year to year in subsequent years but the plaintiff, as receiver, has not been able to find any such policies.
On 22 October 1975 the deceased Mr Lynch was offered and accepted the position of Marketing Co-ordinator with the defendant company under the terms of a letter dated 22 October 1975. There is no mention in that letter of any insurance scheme other than the contributory life assurance/pension scheme. Mr Lynch while he held the important position of marketing co-ordinator, and, later, marketing manager, with the company was not at any time a director of the company.
*218
Subsequently the company created the following charges on its property namely:
(a) On 10 December 1976 a floating charge in favour of the Northern Bank Ltd on its undertaking and all property whatsoever situate both present and future including its uncalled capital for the time being to secure to the bank all and every sum or sums of money which were then or should at any time be owing to the bank by the company on the accounts therein mentioned.
(b) On the same date a specific charge in favour of Foir Teo on the company’s freehold and leasehold property and its uncalled capital and a floating charge on all its other property both present and future to secure the payment to Foir Teo of all monies due or to become due by the company either as principal or as surety to Foir Teo.
(c) On 27 July 1977 a debenture in favour of Foir Teo creating a specific charge on the lands hereditaments and premises specified and supplied in part one and part two of the schedule thereto and an assignment to Foir Teo of all its fixed and movable plant and machinery, implements and utensils, and a first floating charge on all the company’s undertakings and assets whatsoever both present and future including its uncalled capital, to secure all sums as might from time to time for any time be due and owing by the company to Foir Teo pursuant to a loan agreement bearing even date therewith therein referred to or otherwise or any account or in any manner whatsoever.
I was informed by Mr Hamill on behalf of the receiver, that the debenture holders were notified of the present proceedings, that they did not wish to be made parties to these proceedings, and that they were prepared to abide by any order made by court.
On 18 July 1978 a policy number 7427X50399 was issued by the insurance company and was expressed to be for the period 1 July 1978 to 30 June 1979. It was in similar terms to the policy mentioned earlier except that it covered 14 officers and employees of the company including a marketing manager, in respect of whom the sum of £60,000 was to be payable if he should sustain bodily injury caused by accident which injury, solely and independently of any other cause, resulted in his death.
As previously stated Mr Lynch died on 7 July 1978 as a result of an accident and the sum of £60,000 accordingly became payable under this policy to the company. On the face of the policy itself this sum of £60,000 would appear to be payable to the company for the company’s sole benefit and the receiver has, therefore, properly sought a direction from the court as to whether this sum of £60,000 is properly to be treated as assets of the company or whether, in the events which have happened, it is to be treated as being the property of the legal personal representative of the late Mr Lynch. The receiver has clearly taken great pains to lay all the relevant material before the court and the court is grateful to him for his efforts in that behalf.
The court has also had the assistance of affidavits from several directors of the company who state that, even though the insurance policies referred to were expressed to be for the benefit of the company, in fact the settled policy of the company was that benefits payable in respect of an employee were to be paid to the employee or, in the case of death, for his dependants, and that the company did not intend to accept any benefit under these policies. The Norwich Union Insurance Co., I have been told, admits that the sum of £60,000 is payable and is prepared to pay it in accordance with any direction made by the court.
Some five weeks after the death of Mr Lynch the company — on 16 August 1978 — executed a deed of assignment from the company to the second, third *219 and fourth named defendants (all of whom were directors of the company) and who were therein referred to as the ‘new trustees’ of the said insurance policy whereby, after reciting the proposal of 29 October 1973, the policy and its terms, the assignment stated that notwithstanding that the proceeds of the said policy were payable to the company, the company effected the policy as a perquisite of office of certain employees and for the benefit of those employees or their legal personal representatives and not for its own benefit and on the understanding that all sums of money which would be paid to the company pursuant to the said policy would be received by the company as trustees for the benefit of the employees referred to. The assignment went on to provide that the company being desirous of appointing new trustees to be trustees of the policy in its place, assigned to the new trustees the policy and all the monies which should become payable thereunder and the new trustees thereby declared that they held the policy in trust for the employees referred to. The assignment was approved by a minute of the board of directors dated 16 August 1978 which also records that the company would not reopen on 28 August 1978 unless a major positive development occurred and that, in the event of an unchanged position, steps would be taken to wind up the affairs of the company after 1 September 1978.
In fact, however, production was resumed by the company on 3 September 1978 and continued until 29 of that month when there was a close down due to shortage of supplies of raw materials for a further two weeks. Production was resumed on 15 October 1978 but under the supervision of the plaintiff, who had been appointed receiver and manager by Northern Bank Ltd under its debenture on 29 September 1978. Production continued until 22 December 1978 when production ceased finally because there were not sufficient funds to enable the receiver to carry on.
The receiver takes the view that the company was on 16 August 1978 in serious financial difficulties. The directors, however, prepared what appears to be a carefully drawn statement of affairs pursuant to the provisions of s. 319(1)(b) and s. 320 of the Companies Act, 1963 on 29 September 1978. This indicates that the directors’ view then was that the company had an estimated surplus amounting to over £500,000. It would appear that at that date, and indeed on 16 August 1978, the directors saw serious difficulties ahead for the company but hoped that, provided certain conditions were met, the company would surmount these difficulties.
In approaching this case I am satisfied that the insurance policy referred to is on its face for the benefit of the company and not from the benefit of the employees. I must, therefore, approach it on the basis that on the date of Mr Lynch’s death on 7 July 1978, prima facie, monies payable under the policy as a result of his death were the property of the company and that the onus of proof rests on anyone who seeks to prove otherwise. I am also satisfied that it is not sufficient for a person seeking to discharge this onus of proof to show that Mr Lynch would have had a ‘reasonable expectation’ that his dependants would benefit under the policy in the event of his death. In this respect I fully accept the law as laid down by the English Court of Appeal in Green v Russell [1959] 1 QB 28.
*220
Mr Murphy SC (for the widow and personal representatives of the late Mr Lynch) accepts that the onus of proof is on him to establish that a trust exists in favour of his client. He submits that the trust which he seeks to establish is a trust of pure personalty and does not therefore need to be in any particular form: see Re Kayford Ltd [1975] 1 WLR 279. He submits that there is no doubt as to the subject matter of the trust property or the objects of the trust. The only problem is to prove the intention of the company to create a trust. Mr Murphy SC claims to be able to prove this from the conduct of the directors going back over a number of years, see Bolton (Engineering) Co Ltd v J.J. Graham & Sons Ltd [1957] 1 QB 159, and from the other matters hereinafter referred to.
A number of affidavits have been filed on behalf of directors and officers of the company who state that the understanding of the board at all times over a number of years past has been that the insurance policy, though expressed to be in the name of the company, was in fact taken out for the benefit of the defendants of certain officers of the company and was, in effect, a perquisite of office of these officers. The deponents referred to have not been cross-examined. They have no personal interest in the outcome of these proceedings. They come before the court as reputable businessmen and I have no hesitation in accepting that they have told the truth.
Looked at in the light of these considerations there are four factors which convince me that the insurance policy, though taken out in the name of the company and not referred to in the deceased’s conditions of employment, was in fact, at the date of the deceased’s death, held by the company in trust for the deceased and his dependants.
1. The first is the traditional practice of the company and its predecessors in business in relation to insurance policies of a similar kind. Mr Jeffrey R. Morgans in his affidavit says that for many years the defendant company was a partly owned subsidiary of Bowater Corporation Ltd, a company incorporated in the United Kingdom, and that the policy of conditions of employment in the defendant company followed the general conditions laid down by Bowater Corporation Ltd for its subsidiaries. He says that some time in 1973 Bowater Corporation Ltd sold its shares in Bowater’s Irish Board Mills Ltd to Inishturk Estates Ltd and that it was a term and condition of the said agreement for the sale of the shares that all existing contractual obligations between employees of Bowater’s Irish Board Mills Ltd would be upheld and accepted in full by Inishturk Estates Ltd. He exhibited a copy of a memorandum dated 8 May 1968 and entitled ‘Bowater Staff Benefits.’ Among the ‘benefits’ listed are ‘personal accident insurance.’ This section of the memorandum contains the following sentence:
All staff will be insured by the company during all times when employed on the company’s business, for a sum equivalent to four times the annual salary and payable in the event of death from accidental causes.
The memorandum continues:
Having regard to general conditions applicable to this type of insurance, the policy is in favour of the company who must retain certain rights over the allocation of any money received under a claim.
*221
It appears to me that if the insurance policy had been taken out for the benefit of the company it would be inappropriate to refer to it in a memorandum headed ‘Staff benefits.’ It also appears to me that the reference to the policy being in favour of the company ‘who must retain certain rights over the allocation of any money received’ is inconsistent with an intention on the part of the company to keep the insurance monies itself.
There is no doubt that there was a certain reticence on the part of the company as to the exact purpose of the insurance cover. But it is not difficult to visualise reasons for such reticence. It appears to me that this staff policy of the Bowater Corp Ltd casts some light on the policy of the respondent company and helps to explain the purpose of the insurance policy in the present case and the reason why there is so little reference to it in the records of the company.
2. In fact Mr O’Hara who was chairman of the respondent company for many years and who took an active role in the management and decision of the company says, in his affidavit, that one of the reasons why insurance was effected in the manner outlined was to ensure that the insurance monies would not become part of the deceased’s estate, in the event of death, and that they could be paid to the widow or appropriate representative of the deceased without waiting for a grant of representation to be raised. Mr O’Hara also remembers Mr Lynch being appointed marketing manager some time around 1977. At that time Mr Lynch was making frequent trips to Nigeria in the course of the company’s business. Nigeria was then in an unsettled condition and on one occasion Mr Lynch unwillingly found himself on the fringe of a riot and narrowly escaped serious injury. Mr Lynch was, in the circumstances, understandably nervous about returning to Nigeria but Mr O’Hara was able to reassure him that he was covered by the company’s insurance policy and made a remark to the effect that if anything happened to Mr Lynch his wife would be a rich widow. Mr Patrick Hickey, who was also a director of the company was present and confirms Mr O’Hara’s recollection on this point.
Mr Peter Thomas who was also a director of the company, confirms that the insurance policy was frequently referred to at board meetings and that the general intention of the board was that the policy should be held for the benefit of certain employees and not for the company. This was also the understanding of Mr Manuel Macedo who was elected a director of the company in January 1976. In these circumstances one can ask oneself the question as to what the position would have been had the late Mr Lynch been killed in Nigeria after the conversation referred to with the chairman of the board in the presence of another director. Surely no court would have allowed the company to repudiate the chairman’s promise in such circumstances. Mr Lynch was not killed in Nigera. Indeed it does not appear that the accident which resulted in his death took place in the course of his employment with the company. Nor of course is the company attempting to repudiate the chairman’s promise. But nevertheless the question casts light on the purpose of the insurance policy and the nature of the relationship between the parties.
3. The receiver has discovered among the papers of the company the following document. It is headed: ‘Amendment to the Minutes of the Board Meeting of *222 Irish Board Mills Limited held at Athy, County Kildare on 5 April 1977.’ It is signed by Mr O’Hara, the chairman of the board, and by Mr Macedo a director. The text of the document reads as follows:
It was agreed by the Board of Irish Board Mills that the payment of life insurance benefits under the group’s personal accident policy be paid to the dependants of the insured as beneficiaries and that the company waives all rights to claim any benefits which may arise now or in the future under this personal accident policy.
This document, if authentic, is decisive. The receiver has misgivings about it for two reasons and he has properly placed these misgivings before the court. The two reasons are that it was not found in the minute book of the company and that it does not bear any date. On the other hand Mr O’Hara and Mr Macedo have both sworn that the minute is authentic and, while they cannot state the date on which they signed it, Mr Macedo has sworn that they signed it before Mr Lynch’s death. Moreover, while the document was not found in the minute book of the company it was found in the book of the company entitled ‘Copies of Minutes’ and which contains other important records of the company. In the circumstances I have no hesitation in accepting the word of Mr O’Hara and Mr Macedo that it is an authentic amendment to the minutes.
4. Finally, on 16 August 1978 the company executed the assignment of the insurance policy above referred to to the trustees. In this assignment they recited that the policy was executed by the company as a perquisite of office of certain employees and on the understanding that all sums of money which would be paid to the company pursuant to the said policy would be received by the company as trustee for the benefit of the insured persons. The deed went on to assign the policy to trustees and contains declarations by the trustees that they hold the policy in trust for the employees referred to and an undertaking to pay all monies which become due or recoverable upon any claim pursuant to the policy to the employee who is the subject of the claim or to his legal personal representative. In my view the company in this assignment of 16 August 1978 was merely formally ratifying what was already the position.
Taking the view, which I do, that the company was not dealing in this assignment with assets of its own but merely with assets which it held on trust, I do not find it necessary to deal with Mr Murphy’s alternative submission that the deeds of 16 August 1978 constitutes an independent disposition of the insurance monies for the benefit of Mr Lynch’s personal representatives.
In the circumstances there will be a declaration that the sum of £60,000 payable in respect of the death of one David (otherwise Daniel) Lynch on 7 July 1978 and on foot of a personal accident and sickness insurance policy number 7427X50399 effected by the company with the Norwich Union Fire Insurance Society on 19 July 1978 and covering the period from 1 July 1978 to 30 June 1979 on foot of a proposal dated 29 October 1973 was at the date of the appointment of the plaintiff as receiver of the defendant company on 29 September 1978 held by the defendants James O’Hara, Patrick Hickey and Peter Thomas in trust for the personal representatives of the said David (otherwise Daniel) Lynch and a direction that the said sum of £60,000 together with any interest should be *223 paid to the said personal representative accordingly.
Leggett & Others v Irish Sailors’ and Soldiers’ Land Trust and The Attorney-General
Supreme Court.
29 July 1933
[1946] 80 I.L.T.R 33
Kennedy CJ., FitzGibbon, Murnaghan JJ.
Appeal from Johnston, J., who, in the course of his judgment, said:—
This case may be said to be the direct outcome of the hideous dislocation of society for which the Great War was, and is, responsible. Amongst those who suffered most from that dislocation, were those men who had served in His Majesty’s forces by land and sea and in the air, and who were thrown back in large numbers into civilian life with meagre resources and a very doubtful future. Those men who had been injured, whether permanently or partially, in the course of the struggle, were assisted through the medium of an elaborate scheme of pensions and gratuities and by free medical and surgical treatment; but outside and beyond that class there was a large body of men who had lost their place in the social economy and who required help to gain a footing again — help which could not—which certainly ought not to—be regarded as in the nature of a charity, but more in the nature of a right. That help, in the main, could only come from the public as a whole but it is evident that Parliament recognised a degree of responsibility in the matter, and accordingly a number of Acts were passed, beginning in a modest way with the Small Holding Colonies Act, the War Charities Act, and the Sailors and Soldiers (Gifts for Land Settlement) Act of 1916, in which the element of governmental responsibility was clearly initiated.
Something of a more practical character was commenced in Ireland in 1919, when two classes of legislative machinery were brought into operation—the Land Purchase Acts and the Labourers Acts—for the purpose of the carrying on of this very necessary work of assisting the ex-servicemen to get back into the economic life of the community. The Land Commission was empowered to provide holdings in accordance with the conditions in the Act, for “any men who have served in any of His Majesty’s naval, military or air forces in the present war and who satisfy the Estates Commissioners as to their fitness and suitability”; and the Local Government Board for Ireland was empowered to carry out schemes under the Labourers Acts “for the provision of cottages, with or without plots or gardens, for the accommodation of men who have served as aforesaid and who satisfy the Board of their fitness and suitability.” In the former case the transaction would be carried through as a sale under the Land Purchase Acts, the soldier-purchaser paying the purchase money for his farm by means of a purchase annuity within the statutory number of years; in the latter case, the expenses of the Board in purchasing land and building cottages were to be defrayed out of moneys provided by Parliament, and the receipts of the Board “in respect of cottages, plots, and gardens provided under such schemes” were to be paid into the Exchequer. In the one case, therefore, the ex-serviceman became the absolute owner of his farm subject to the payment of his purchase annuity; in the other he became the tenant of the Board subject to all liabilities of a tenant-labourer under the Labourers Acts; and when any cottage ceased to be required for the accommodation of “any such man as aforesaid,” it might be let or otherwise disposed of in any way that the Board, with the approval of the Treasury, might determine. This legislation was admirably designed to benefit the exservicemen; and would no doubt have gone a long way towards providing a comfortable settlement for such of them as resided in this country; but it contained no element of a fiduciary character, whether by way of a private trust, or a charitable use, which could have received recognition in any Court of equity in this country.
When the constitutional change in 1921 and 1922, however, occurred, a new set of conditions arose. The Provisional Government (Transfer of Functions) Order, 1922, which transferred to the Provisional Government the whole body of public officials, expressly excepted the naval, military and air forces of the Crown. Clause 9 provides this:—“Nothing in this Order shall affect the control or administration of any of the existing naval, military or air forces of the Crown; or transfer to any department of the Provisional Government any of the powers of any existing department in relation to any of those forces (including powers and duties with respect to pensions and allowances payable to persons who have been members of or in respect of service in any such force or their widows or dependants, and provision for the training, education, and assistance for the reinstatement in civil life of persons who have ceased to be members of any such force). …”
The new Government therefore undertook no liability in respect of the reinstatement in civil life of the ex-servicemen and their dependants; and new machinery had to be designed for the carrying on of that work in Ireland. Accordingly, a section was inserted in the Irish Free State (Consequential Provisions) Act, 1922 (which became law on 5th December, 1922, the same day as that of *34 the passing of, and immediately following, the Irish Free State Constitution Act, 1922) for the purpose of creating a corporate body to carry on the work of reinstatement under the direction of the Treasury, throughout the whole of Ireland. That section provided for the creation of a corporate body of five members, one of whom was to be appointed by the President of the Executive Council and one by the Prime Minister of Northern Ireland; it conferred upon that corporation all the powers which the Act of 1919 had given to the Local Government Board for Ireland to initiate and carry out housing schemes; it transferred to the corporation all the property, assets, rights and liabilities that the Board had enjoyed or borne in respect of schemes that were already in existence; it gave power to the Treasury to advance money to the extent of a million pounds and a half to be applied by the corporation for the purposes for which it had been established; it enabled the Treasury to make regulations as to the procedure of the corporation as to the application of the proceeds of sale, and generally as to the manner in which the corporation should carry out its powers and duties; and, lastly, it provided that the section was not to come into operation until the Treasury certified that the Government of the Irish Free State had passed legislation enabling the corporation to hold land and vesting in the corporation any land or other property which was intended to be transferred to that body.
It was suggested—or rather adumbrated—during the course of the argument for the plaintiffs that that enactment—or perhaps I should say the defendant’s view of that enactment —was not quite consistent with the dignity and sovereign power of the Irish Free State. Nothing could be farther from the truth. On the contrary, the section is the best possible tribute to the reality and completeness of the political change that had been brought about and the good faith of the British Government. The whole machinery of government had been transferred to the Provisional Government, with all the departmental property connected with the same, and s. 3 represents nothing more, to my mind, than an offer by the British Government to Ireland as a whole, that the Treasury was willing to continue to be responsible to a limited extent for the provision of housing accommodation for ex-servicemen in Ireland if the two Irish Governments agreed and were willing to give facilities for the carrying on of this work by an agent for the Treasury. It is unnecessary to consider what happened in Northern Ireland in response to that offer; but in the Irish Free State, on 16th July, 1923, the Free State Government, with equal good faith, passed an Act of Parliament—the Land Trust Powers Act, 1923—which, after reciting the Act of 1922, provided that the Irish Sailors and Soldiers Land Trust (the corporate name of the new body) should have power to acquire by agreement and hold land in Saorstat Eireann and “such other powers as may be necessary to enable the Trust to carry out in Saorstat Eireann the purposes of s. 3 of the Irish Free State (Consequential Provisions) Act, 1922.” But the Act did more. It conferred powers upon the departments of Saorstat Eireann ( a ) to acquire land compulsorily for transfer to the Trust, ( b ) to carry out and complete schemes which had been made by the Local Government Board previously to 6th December, 1922, ( c ) to vest in the Trust any land, property or rights acquired by the Local Government Board under the Act of 1919, and even ( d ) to enter into arrangements with the Trust “for the exercise and performance, on behalf of the Trust, of any powers or duties of the Trust” under that Act and s. 3 of the Act of 1922. I may state as a matter of history that the Minister for Local Government, by Order, dated 7th February, 1924, transferred to the Land Trust all land, property or rights acquired by the Local Government Board, subject, of course, to all liabilities of the Board incurred in respect of the same.
The plaintiffs do not suggest that the Act of 1919 conferred upon them any rights of a fiduciary character; but, says counsel for the plaintiffs, when the constitutional change arrived and the Trust was created under the Act of 1922, an entirely different situation arose—the matter then is to be viewed from a new orientation. But is that so very clear? The description of the men who may be benefited as set out in s. 3 of the Act of 1922 is almost word for word the same as that in the Act of 1919. The benefit that may be conferred on them is exactly the same—“the provision of cottages, with or without plots or gardens, for the accommodation of the men who have served as aforesaid.” In both cases the funds for the carrying out of the work were to be supplied by Parliament—in the one case by the Parliament of the United Kingdom; in the other by the Parliament of Great Britain. The executive authority under the Act of 1919 was the Local Government Board for Ireland subject to the control of the Treasury in regard to finance. Under the Act of 1922, the executive authority is a corporate body which derives its immediate authority from the Parliament of the Irish Free State and which has authority to transfer, by arrangement, its *35 entire powers and duties to an Irish governmental department. The case was argued by the plaintiffs as if the Irish Sailors and Soldiers Land Trust was a private corporation which ought to be treated as a body quite independent of outside control; but that attitude is not in accord with the fact that the Trust carries on its work with the assent of the Free State legislature and even with the promised co-operation of the Government.
The statement of claim in this case displays much skill and resource on the part of the learned counsel who framed it; but I am bound to say that, having studied its phraseology with the utmost care, it shows a want of clarity—a certain elusiveness that has caused me some perplexity. A trust in favour of certain individuals, whether named or merely indicated, whether born or unborn, whether numerous or few, and whether the right arises by virtue of an Act of Parliament, a charter, a deed or will, or by act and operation of law, I know and understand. A charitable use for the benefit of the public or a particular class of the public enforceable by the Attorney-General as representing the Crown or the State, I also know and understand; but the trust that is set up in this statement of claim is something that I have difficulty in placing. There is an interesting passage in the judgment of Romilly, M.R., in Evan v. Corporation of Avon, 29 Beav. 149, which seems to be well worth quoting in this connection. He says: “The trust may be of two characters, it may be of a general character or of a private and individual character. A person might leave a sum of money to a corporation in trust to support the children of A.B. and pay them the principal at twenty-one. That would be a private and particular trust, which the children could enforce against the corporation if the corporation applied the property for its own benefit. On the other hand, a person might leave money to a corporation in trust for the benefit of the inhabitants of a particular place or for paving or lighting the town. That would be a public trust for the benefit of all the inhabitants, and the proper form of suit, in the event of any breach of trust, would be by an information by the Attorney-General at the instance of all or some of the persons interested in the matter.”Paragraph 29 of the statement of claim states that the Attorney-General of Saorstát Éireann, having declined to allow the present proceedings to be brought in his name, had been joined as a defendant, to represent “potential beneficiaries.” The Attorney-General having been joined against his will as a defendant, has filed a defence in which he says that the matter raised by the statement of claim is not a trust or matter capable of being represented by him, that the trusts (if any) are not charitable trusts, that his introduction as a defendant into the proceedings is misconceived and that he should be dismissed from the action with costs. In the face of the Attorney-General’s refusal to allow these proceedings to be taken in his name and this strongly worded repudiation of his joinder as a defendant, it is difficult to see how the plaintiffs could succeed in establishing a charitable trust in respect of the premises. Sir Edward Sugden, when Lord Chancellor of Ireland, in his classic judgment in Incorporated Society v. Richards 1 Dr. and War. 258, explains (at p. 314) that the Attorney-General’s status and duty in this matter originated in the fact that the Crown as parens patriae had “the superintending power over all charities”; and in a modern case—Attorney-General v. London County Council, [1902] A. C. 165—it was decided by the House of Lords that the jurisdiction of the Attorney-General to decide in what cases it is proper for him to sue on behalf of relators is absolute, Lord Halsbury saying:—“The initiation of the litigation and the determination of the question whether it is a proper case for the Attorney-General to proceed in, is a matter entirely beyond the jurisdiction of this or any other Court. It is a question which the law of this country has made to reside exclusively in the Attorney-General.”
As a matter of fact, however, the claim which the plaintiffs have put forward is in all its essentials a claim to establish a private trust in which they and the other cestuis que trustent are interested. The proceedings have not been brought by the Attorney-General, and the plaintiffs do not sue on behalf of the public generally or any class or portion of the public. The action has been brought on behalf of the plaintiffs themselves “and all other the ex-servicemen holding cottages under the trusts of the Land Trust Powers Act, 1923, and the Irish Free State (Consequential Provisions) Act, 1922,” and their dependents. This is a definite body of persons—every whit as definite as “the inhabitants of Tawleaven Row” who in Rogers v. Thomas 2 Keen 8 were held to be entitled beneficially to a residue under the will of a testator. The allegations as to what the trust property is, in respect of which the plaintiffs claim beneficial rights, are equally definite; it consists of the cottages themselves with the plots attached thereto which were built, some by the Local Government Board for Ireland, and some by the Irish Sailors and Soldiers Land Trust, *36 by means of money supplied by Parliament and which are now occupied by an ascertained body of cestuis que trustent under contracts of tenancy executed by them (as is alleged in the statement of claim) under duress and coercion. I must assume, I suppose, that that duress and coercion were exercised by the Local Government Board when that body had control, equally with the Land Trust. The beneficial rights to which the cestuis que trustent claim to be entitled are set out in a series of alternative paragraphs, ranging from a claim of each occupier to be given an out-and-out freehold estate in the cottage and plot of which he is in occupation down the scale to a claim to the right to occupy the cottage in each case at a rent which, when par. 23 is closely scrutinised, would amount to a merely nominal one, being based upon an assessment of the amount that ought to be attributed to each cottage in respect of the mere administrative expenses of the Trust without regard to any contract of tenancy between the parties. That paragraph claims also that the plaintiffs are entitled under, and by virtue of, the alleged trust to be accorded “every facility compatible with sound finance … to buy out the interest of the defendants in such cottages by periodical payments.” When the complicated nature of the provisions are considered by which a purpose of that kind was rendered possible in legislation such as the Small Dwellings Acquisition Act, 1899, it becomes a matter of great interest to discover where such a purpose is to be found in the brief provisions of s. 3 of the Act of 1922 and the Treasury Regulations thereunder. In putting forward their various alternative claims, the plaintiffs make no distinction between the cottages built by the Local Government Board under, and by virtue of, the provisions of the Labourers (Ireland) Acts and those built by the Land Trust under (to quote the words of s. 3 of the Act of 1922) “the powers which are conferred upon the Local Government Board for Ireland by s. 4” of the Act of 1919.
I have considered the provisions of the Acts of 1919, 1922 and 1923, by which the trust of “endowment,” as it is called in the statement of claim, is alleged to have been set up, and I can find nothing therein which suggests any possible basis for any of the claims made by the plaintiffs in the present action. The object of that legislation was the provision of cottages, with or without plots or gardens, for the accommodation of ex-servicemen. A large sum of money was provided by the Treasury for that very praiseworthy and necessary object, and that fund still exists, but in the form now mainly of land and bricks and mortar. A large number of ex-servicemen and their families are now in the enjoyment of that capital fund by reason of their occupation of the cottages in which the capital has been sunk; but there is no hint in the alleged documents of trust, namely, these Acts of Parliament, that any tenant of a cottage is entitled to claim, as his own, the portion of the capital of which he happens to be in the enjoyment, or even to claim the use of it except to the extent that is indicated in the legislation and the regulations of the Treasury, in accordance with which the fund, in whatever form it happens to be, must be administered. It was decided in Grenville Murray v. Earl of Clarendon 9 Eq. 11 that, in an action for the administration of a trust, a general allegation that a trust existed was not enough. Romilly, M.R., said:—“In all these cases general allegation will not do for the purpose of supporting a bill against demurrer. It is quite true that the defendant when he demurs to a bill admits all the statements in the bill to be correct for the purpose of the demurrer, and says: ‘Admitting all those to be true, on your own showing you have not made out a case for relief.’ But that is to be treated with this qualification: that it will not do to allege a thing which does not appear to be the fact upon the circumstances stated in the bill in order to entitle you to that relief. Frietas v. Dos Santos 1 Y. & J. 574 is a case of that description. … To apply the principle of that case to the present, it will not do for a plaintiff to say that A.B. has got a trust fund in trust for me, and that, accordingly, this Court has jurisdiction in the case, unless the allegations in the bill show that the facts are such as to create the relation of trustee and cestui que trust between the parties.”
The key-word in the Act of 1919 and s. 3 of the Act of 1922 is the word “accommodation.” That word means what it says, and it does not call for any interpretation or paraphrase of its meaning or content; it is the word that runs through all the housing legislation of the last sixty or seventy years. The Artisans Dwellings Act, 1875, contains an enactment as to the “accommodation in suitable dwellings” of the working classes. The Labourers Act, 1883, enabled boards of guardians to initiate “improvement schemes” in respect of “house accommodation” for agricultural labourers. The Housing of the Working Classes Act, 1890, and the amending Acts, enabled municipal authorities to make provision for “dwelling accommodation” for the working classes in towns. The *37 Labourers Act, 1906, gives further facilities, including a large grant of money, for the provision of “house accommodation” for agricultural labourers, and the Housing Act, 1931, purports to make further “provision for housing accommodation” both in town and country. But never throughout the whole history of this maze of legislation has it ever occurred to any occupier of a cottage in the country or a house in a town to turn round and say that the local authority, who was supposed to have been his statutory landlord, was really a trustee for him, and that the contract of tenancy which he entered into with the local authority before he had gained any rights at all and while he was still a mere person who might be accorded housing accommodation by the local authority, in the course of an honest administration of the legislation, could, and should be, set aside for fraud and duress on the part of the local authority, and declarations of ownership, or limited ownership, substituted therefor. A local authority has a duty towards the appropriate governmental authority to administer the legislation and use the funds under its control in a proper and legal way, and in this sense there may be said to be a trust imposed upon the local authority, but it is a trust in favour of the governmental authority, which confers the powers and supplies the funds, and is enforceable, not by a private individual, but by the governmental authority itself. Thus, in the case of Attorney-General (Schofield) v. Dunmanway Rural District Council 47 Ir. L. T. R. 11—a case of very great importance, reported only in the Irish Law Times Reports—it was held that the Court, on the application of the Attorney-General, could restrain a rural council from giving cottages built under the Labourers Acts to persons who were not agricultural labourers. The relator, one, Schofield, was a ratepayer in the district, and Meredith, M.R., said (at p. 13):—“There is nothing in the Labourers Acts, or the Acts incorporated therewith, which can preclude persons in the position of Mr. Schofield from obtaining the sanction of the Attorney-General and appealing to this Court—whatever the action of the Local Government Board may be—to prevent the guardians, now the rural district council, from misapplying the property and money of the ratepayers. And once a ratepayer has got the sanction of the Attorney-General and has satisfied the Court that any board of guardians or rural district council is utilising rates that are properly applicable to housing agricultural labourers, for other and outside purposes … this Court has jurisdiction to interfere.” That case was decided in 1912. In 1914, O’Connor, M.R., held in O’Shea v. Cork Rural District Council [1914] 1 I. R. 16 that the plaintiff, who was an agricultural labourer, could not take proceedings merely as such to restrain the defendants from committing an alleged breach of their statutory duty under the Labourers Acts. The Master of the Rolls said (p. 22):—“The plaintiff has no interest in the subject-matter merely as an agricultural labourer. He had nothing more than a mere chance of being selected by the district council, who might equally have selected any other agricultural labourer in the district.”
Now, I am not suggesting that the Irish Sailors and Soldiers Land Trust is exactly in the same position as a local authority under the Labourers Acts. The Land Trust is not an elected body having administrative powers of local government in a particular and defined area; but it is, in regard to its powers as to the housing of ex-servicemen, in a position which is closely analogous. It is a statutory corporation recognised by an Act of the Irish Free State, entrusted with the duty of expending a large sum of money for the amelioration of the lot of a defined class of the community, and it has by agreement power to delegate its duties to a government department of the Irish Free State, and that department has power to accept the delegation. The Land Trust owes a duty to the persons who have supplied it with the means of carying on its work, to see that the money is properly and legally expended. By s. 1 of the Land Trust Powers Act of 1923—an Act which represents a sensible and fair-minded arrangement between Great Britain and the Irish Free State—the Trust has been given power to acquire and hold land in Saorstát Éireann “and such other powers as may be necessary to enable the Trust to carry out in Saorstát Éireann the purposes of s. 3 of the Irish Free State (Consequential Provisions) Act, 1922” (13 Geo. 5 c. 2 Sess. 2) and amongst the powers referred to in that section are “all the powers which are conferred upon the Local Government Board for Ireland by s. 4 of the Irish Land (Provision for Sailors and Soldiers) Act, 1919, including power to carry out the schemes made under that section by that Board prior to the passing of this Act, and such powers of management, sale, disposal and otherwise as may be conferred on them by regulations made by the Treasury.” All these powers are sanctioned and confirmed by Free State legislation and they include by reference the power to utilise the procedure and provisions of the Labourers Acts for the carrying out of this great and noble work of providing decent and *38 comfortable housing accommodation for the men who had fought and suffered in the Great War.
But whilst I express my strong approval of the paramount purpose of this great housing scheme for the benefit of those unfortunate ex-servicemen, and whilst I take leave to say that I entertain a lively hope and expectation that the scope of that excellent work will be extended and enlarged, I cannot say that I have any sympathy whatever with the far-reaching claims that the men have put forward in this case—claims which in my opinion cannot be substantiated by any of the allegations of law or fact set out in the statement of claim, and which certainly have no basis in the traditions of the housing legislation to which I have briefly referred. And I think it is only right to add that I can well understand the refusal of the Attorney-General to countenance the claims that are made in the action as at present constituted. There are certain matters set out in the prayer of the statement of claim which might well be taken into consideration by the Court in an action of a different character from the present—matters such as the question of repair and the like; but they cannot arise in this action in which the existence of a contractual relationship between the parties is repudiated by the plaintiffs, who base their claims entirely upon the existence of a fiduciary relationship between themselves and the defendants. If this action went to trial, the plaintiffs would in the first instance have to establish the fact that the defendants held the cottages and exercised their powers as trustees for the plaintiffs, and that they, in their capacity as occupiers of the cottages, had equitable rights as cestuis que trustent which this Court was bound to enforce. The moment they failed in regard to that matter, as in my opinion they must, all the evidence that might be adduced in support of the particulars in the statement of claim would necessarily be ruled out as irrelevant or immaterial.
There are other lines of authority and law relied upon by the defendants to which I have not referred; but it must not be assumed that because I have not thought it necessary to discuss them in detail, I do not appreciate their force. I think that the defendants have taken a very proper course in bringing this litigation to a head in the present application. In my opinion, the litigation is hopeless from whatever point of view it is regarded, and I am very glad that, as a result of my decision, the plaintiffs will be saved from the ruinous burden of the cost of an expensive trial.
There will, therefore, be declarations in the terms of sub-pars. A. and D. of par. 1 of the notice of motion. In my opinion the decision of the matters involved in those two declarations disposes of all the questions that arise in the action, and I shall therefore dismiss the action as against both defendants.
The plaintiffs appealed.
Murnaghan, J. (with whom FitzGibbon, J. agreed):—
This appeal has been brought by the plaintiffs, who seek to set aside two declarations made by Mr. Justice Johnston contained in an order, dated 10th March, 1932, as also an order made by him dismissing the action.
The plaintiffs are ex-servicemen who took part in the Great War, and who have since been provided with cottages in the manner about to be mentioned. The three first named plaintiffs were provided with cottages by the defendants, the Irish Sailors and Soldiers Land Trust, while the remaining six plaintiffs were, at a somewhat earlier date, provided with cottages by the Local Government Board under the Irish Land (Provision for Sailors and Soldiers) Act, 1919.
All these plaintiffs join in claiming to sue on behalf of themselves and all other the ex-servicemen holding cottages stated to be held under variously alleged trusts, and on behalf of their own dependants and the dependants of all other, the said ex-servicemen. In addition six of the plaintiffs seek an injunction restraining the Irish Sailors and Soldiers Land Trust from evicting them from the cottages which they occupy.
The statement of claim contains twenty-nine lengthy paragraphs, and, based on the allegations in these paragraphs, eight declarations are sought, many of them alternatives—indeed, it will be observed that there is much inconsistency in the claims put forward.
While the whole structure of the action is based on the ground laid to support the first declaration sought, viz., that the endowment creates a valid charitable trust, it will suffice to say that the claims put forward vary from a demand that the cottages are the absolute property of the occupiers, or that the cottages are held in trust for the *39 occupiers and their dependants, to claims that the occupiers are entitled to enjoy the cottages at much lower rents than are now charged.
The plaintiffs also seek to examine into the administration of the alleged trust, they allege that the organisation by which it is managed is too costly, and they also attack the accumulation of funds to form a reserve fund—the underlying idea being that if any rent may be charged at all, the amount should be greatly reduced.
The Attorney-General is added as a defendant and par. 29 of the statement of claim states:—“The Attorney-General is sued as representing the State and the public interest and the interest of all such (if any) potential beneficiaries of the endowment as ought to be represented separately from the plaintiffs. The Attorney-General is also named as a defendant by reason of the endowment constituting in law a charitable trust because he has refused to allow this action to be brought in his name at the relation of the persons above named as plaintiffs.”
The absence of the Attorney-General is, in my opinion, sufficient to dispose of this action so far as concerns most of the matters dealt with in the statement of claim. It is a firmly established rule that individuals have no right to bring actions dealing with the administration of charitable trusts—the Attorney-General is the only competent plaintiff. The Attorney-General may, however, set the law in motion on the relation of private individuals, but it is properly a matter for the discretion of the Attorney-General whether he will consent to allow proceedings to be instituted. This rule was recognised by the plaintiffs, who applied to the Attorney-General to join in the proceedings, but he, in his discretion, has refused. Such a refusal cannot be got over by the easy expedient of naming the Attorney-General as a defendant.
Inasmuch, however, as Mr. Gavan Duffy has argued that an object of a charity can bring proceedings apart from the Attorney-General, it is necessary to refer to this argument. He relies upon the case of Braund v. Earl of Devon, L. R. 3 Ch. App. 800. In that case the plaintiff sought to establish an alleged individual private right, but the Court held that the plaintiff could claim only as an object of the charity. What the case actually decided was that the plaintiff could not sue without the sanction and direction of the Charity Commissioners in England under the statute, 16 & 17 Vict. c. 137 (Charitable Trusts Act). At p. 806 of the report, Sir W. Page Wood, after stating that the plaintiffs, who claimed preferential rights as relatives of the founder, must come in as part of the objects of the school, used the following words:—“That being so, I do not say that they would not have a right individually as plaintiffs; that is the part of the case upon which it is not necessary for me to express any further opinion, although I am rather inclined to think that they would.” Mr. Gavan Duffy seeks to construe these words as stating a general rule that the objects of a charity can bring a suit. But s. 17 of the Act in question authorised the Charity Commissioners upon the application of any person to direct a suit to be commenced, and s. 18 pointedly adds:—“nothing in this Act contained shall be construed as dispensing with the fiat or allowance of Her Majesty’s Attorney-General with respect to any proceeding not being an application under the jurisdiction created by this Act where such fiat or allowance was necessary before the passing of this Act.” The case of Braund v. Earl of Devon (supra) when regarded in the light of this statute (which did not apply to Ireland) confirms rather than weakens the existence of the general rule stated. The case of Prestney v. Colchester Corporation, 21 Ch. D. 111, was decided upon the special provisions of the Municipal Corporations Act, 1835, (5 & 6 Wm. 4, c. 76), s. 2, and the judgment recognises the general principle. The observations of Lord Kingsdown in Lang v. Purves, 15 Moore P. C. Cas. 389, do not run counter to the general rule that the Attorney-General must be a party to any claim for administration of the property of a charitable trust. In fact, the consideration of that case leads to the conclusion that the plaintiffs are not persons having an interest to bring a suit. With reference to one principle stated by Lord Kingsdown upon which Mr. Gavan Duffy relied—viz., that when cestuis que trustent differ among themselves, some of the cestuis que trustent can bring a suit naming the other cestuis que trustent and the Attorney-General defendants, I am of opinion that the mere objects of a charity are not cestuis que trustent in the legal sense, and that this proposition does not help the plaintiffs.
The order of Mr. Justice Johnston which was made on a hearing of points of law raised by the defence of the Irish Sailors and Soldiers Land Trust declares:—“(1) that s. 1 of the Land Trust Powers Act, 1923, s. 3 of the Irish Free State (Consequential Provisions) Act, 1922, the Certificate of the British Treasury, dated on, or about, the 31st December, 1923, in pursuance of s. 3, sub-s. 7, of the said last-mentioned Act, and the Statutory Regulations from time to time made under s. 3, sub.-s. 5, of the same Act *40 do not, nor does any of them, create any trust or statutory obligation enforceable by the Courts in Saorstát Éireann or cognisable therein at the suit of the plaintiffs as alleged by the plaintiffs in their statement of claim or at all; and (2), that the said defendants, the Irish Sailors and Soldiers Land Trust (being incorporated under s. 3 of the said Irish Free State (Consequential Provisions) Act, 1922, to carry out the statutory provisions contained in the Irish Land (Provision for Sailors and Soldiers) Act, 1919, s. 3 of the said Irish Free State (Consequential Provisions) Act, 1923, and the Land Trust Powers Act, 1923,) in the carrying out, performance and discharge of the said statutory provisions are subject only to the directions and control of the Commissioners of His Majesty’s Treasury in the United Kingdom and/or a Secretary of State of the United Kingdom to whom the said defendants are alone responsible for the due discharge of their statutory duties and obligations pursuant to the said statutes and the statutory regulations in that behalf.”
So far as the first declaration can be understood as refusing to entertain the plaintiffs’ claim for administration of the charitable trust in the absence of the Attorney-General, it is well founded. But the defendants, the Irish Sailors and Soldiers Land Trust, are the registered owners of land in the Irish Free State, and the Courts of the Irish Free State are the proper forum to entertain any suit in respect of this land: British South Africa Co. v. Campanhia de Mocambique [1893] A. C. 602. The plaintiffs are, in my opinion, entitled to put forward in these Courts either the claim to a beneficial interest in the cottages which they occupy, or the claim to establish a right to occupy these cottages rent free: whether either of these claims is sustainable must, however, depend upon the construction of the various statutes and documents referred to in the declaration.
When, in 1919, an attempt was made by the Irish Land (Provision for Sailors and Soldiers) Act, 1919, to provide homes for ex-servicemen, two existing statutory procedures were availed of. One was that of the Irish Land Purchase Acts, by which ex-servicemen were put into possession of holdings and enabled to purchase these holdings by means of advances under these Acts— under this system the provision of the holdings necessitated a capital expenditure which was borne out of the public revenue, and the vested holding became the property of the ex-serviceman.
The other statutory procedure availed of was that of the Labourers Acts, 1883 to 1919, which were, however, modified so that a plot of two statute acres as a maximum together with a cottage might be provided. It is made abundantly clear that the cottage and plot so provided were not intended to become the property of the ex-serviceman, for s. 4, sub-s. 5, (of the 1919 Act) enacts:— “Any cottage, plot, or garden provided under this section which ceases to be required for the accommodation of any such man as aforesaid may be let or otherwise disposed of in such manner as the Board ( i.e., the Local Government Board) may, with the approval of the Treasury, determine.” It will be necessary to refer subsequently to the provisions of this Act, but it suffices at the moment to say that no question of trust arises upon its provisions. Under it the Local Government Board was in the position of a Government Department subject to certain specified statutory powers or obligations.
In order to carry on the objects of this Act after the Constitution came into operation, a new machinery was set up by s. 3 of the Irish Free State (Consequential Provisions) Act, 1922. (13 Geo. 5, c. 2, Sess. 2) This section enacted as follows:—
“3.—
(1) For the purpose of providing in Ireland cottages, with or without plots or gardens, for the accommodation of men who served in any of His Majesty’s naval, military, or air forces in the late war, and for other purposes incidental thereto, a body shall be established consisting of five members, of whom three shall be appointed by a Secretary of State, one by the President of the Executive Council of the Irish Free State, and one by the Prime Minister of Northern Ireland.
“(2) The body so established shall be a body corporate by the name of the Irish Sailors and Soldiers Land Trust, with perpetual succession and a common seal, and is in this section referred to as ‘the Trust.’
“(3) For the purposes aforesaid, the Trust shall have all the powers which are conferred upon the Local Government Board for Ireland by section four of the Irish Land (Provision for Sailors and Soldiers) Act, 1919, including power to carry out the schemes made under that section by that Board prior to the passing of this Act, and such powers of management, sale, disposal and otherwise as may be conferred on them by regulations made by the Treasury, and all property, assets, rights and liabilities held, enjoyed or borne by the Local Government Board for Ireland in connection with any schemes so made by them shall be transferred to the Trust:
“Provided that the provisions of the said section relating to the compulsory acquisition *41 of land, limiting the time within which the power to acquire land may be exercised by the Board, and regulating the expenses and receipts and audit of accounts of the Board shall not apply to the Trust.
“(4) There shall be paid to the Trust out of moneys provided by Parliament, at such times and in such instalments as the Treasury may direct, a sum not exceeding one million five hundred thousand pounds, and the sum so received and all other receipts of the Trust shall be applied by the Trust to the purposes for which the Trust is created.
“(5) The Treasury may make regulations as to the procedure of the Trust and as to the application of the proceeds of sale, and as to the audit of the accounts of the Trust, and generally as to the manner in which the Trust shall carry out their powers and duties, and the Trust shall act in accordance with those regulations.
“(6) The term of office of a member of the Trust shall be such as may be determined by the authority by whom he is appointed, but the Trust may act notwithstanding any vacancy in their number.
“(7) This section shall not come into operation until the Treasury certify that such legislation has been passed by the Parliament of the Irish Free State and the Parliament of Northern Ireland as is necessary to enable the Trust to acquire and to hold land, to vest in the Trust any land and other property which is under this section to be transferred to the Trust, and otherwise to enable the Trust to carry out the purposes of this section.”
By s. 1 of the Land Trust Powers Act, 1923 (No. 25 of 1923), it is provided:— “(1) The Irish Sailors and Soldiers Land Trust (in this Act refered to as ‘the Trust’), shall have power to acquire and hold land in Saorstát Éireann and such other powers as may be necessary to enable the Trust to carry out in Saorstát Éireann the purposes of s. 3 of the Irish Free State (Consequential Provisions) Act, 1922: Provided that nothing in the foregoing provision shall be taken as empowering the Trust to acquire land compulsorily in Saorstát Éireann.” By sub-s. 2, power was given to the Minister for Local Government to acquire land at the request of the Trust, and by sub-s. 3, land, property, or rights acquired by the Local Government Board under s. 4 of the Act of 1919 were to be transferred to the Trust on such dates as might be specified in Orders to be made by the Minister. Such an Order was, we are informed, made and published in Iris Oifigiúil of the 12th February, 1924, p. 114, fixing the 1st March, 1924, as the date of such transfer. A sum exceeding £800,000 was paid to the Trust for the provision of cottages in the Irish Free State and the number of cottages now vested in the Trust exceeds 2,000.
The defendants have strenuously contended that this case is analogous to that dealt with in Kinloch v. Secretary of State for India, 7 A. C. 619, and that, although the word “trust” is employed, there is in reality no trust for the ex-servicemen referred to. It is argued that the Trust are merely agents of the British Treasury, and that they owe no duty to any other person or body whatsoever. There is, in my opinion, no analogy whatever between the case referred to and the facts of the present case. It is obvious that in place of the Local Government Board, which was a Department of State, an incorporated Trust was set up to carry out the objects stated in the Act, and the Land Trust Powers Act, 1923, in my opinion, recognised the incorporated body as trustees for the purposes referred to. The land acquired by the Trust is clearly held in trust for the provision of accommodation for ex-servicemen, but the only question which the plaintiffs are entitled to raise is whether or not they are liable to pay rent in respect of the cottages which they respectively occupy.
The defendants, as their authority for the charge of rents, rely upon two distinct powers. First, it is said s. 3 of the Irish Free State (Consequential Provisions) Act, 1922, enacts that the Trust shall have “such powers of management, sale, disposal, and otherwise as may be conferred on them by regulations made by the Treasury.” Regulations made on the 31st March, 1923 (Stat. R. & Or. 1923, No. 303) contain a Regulation (Rule 16):—“The Trust shall be empowered to fix rents at their discretion in each case.” In order to support this Regulation it is argued that the word “accommodation” in s. 3 above referred to must mean provision of cottages at a rent. Mr. Justice Johnston accepted this view because in the Artisans Dwellings Act, 1875, and in the Labourers (Ireland) Acts, 1883-1919, where the word “accommodation” is used, the provision of housing accommodation was not given rent free. But this consequence did not follow from any interpretation of the word “accommodation” but from specific provision, e.g., s. 13 of the Labourers Act, 1883, that a rent should be charged. The provision of housing for labourers is not governed by the same considerations as the provision of houses for ex-servicemen. Labourers who were earning wages were able to pay for their housing and the local authority which borrowed money *42 could scarcely be expected to provide cottages rent free—while it was universally recognised that the debt to the ex-servicemen was one that should be recognised by the Parliament of Great Britain.
Coming to the Act of 1922, a very large sum was provided to house ex-servicemen— an amount which enabled several thousand cottages to be built at once—and the object of the Act seems better attained by giving free accommodation to a selected number of deserving ex-servicemen, rather than by charging rents which many must have found it difficult to pay. These rents, it is said, will be devoted to the building of a greater number of cottages—but as the ex-servicemen must pass away, such a course of procedure would result in the provision of a great number of cottages with ultimately no one to occupy them. I think it is a more reasonable construction to say that the money available should be employed in building cottages to be used rent-free, unless there is some express provision in the Act which shows that it was intended that a rent should be charged. In my opinion the regulation deals with more than a power of management, and it is invalid unless it can be founded upon some statutory power to charge rents.
An express power to charge rents is conferred by s. 13 of the Labourers Act, 1883, and, as an alternative authority, the Irish Sailors and Soldiers Land Trust sought to justify their action in charging rents in the manner following:—sub-sect. 3 of s. 3 of the Act of 1922 enacts that “for the purposes aforesaid, the Trust shall have all the powers which are conferred upon the Local Government Board for Ireland by s. 4 of the Irish Land (Provision for Sailors and Soldiers) Act, 1919.”Sect. 4, sub-s. 4 of this Act enacts as follows:—
“For the purpose of carrying out any scheme when so confirmed the Local Government Board, in addition to their other powers, shall have and may exercise all the powers except powers of borrowing or causing a rate to be levied that may be exercised by a rural district council under the Labourers (Ireland) Acts, 1883 to 1919, for the purpose of carrying out an improvement scheme when confirmed by a final order under s. 6 of the Labourers (Ireland) Act, 1906, including powers of acquiring land by agreement or compulsorily, and, subject to such adaptations as may be made under this section, those Acts and the Acts incorporated therein shall apply accordingly with the following modifications, namely:—
“ (c) expenses incurred in making and carrying out schemes under this section shall be defrayed in manner provided by this section.”
Rural district councils were enabled to borrow money required for the making and carrying out of schemes. This borrowing was repayable by instalments and had to be made good out of the rates in so far as the rents charged were deficient. Sect. 29 of the Labourers Act, 1906, directed that in the fixing of rents for cottages the amount charged should, so far as the conditions of the locality permitted, provide a reasonable return on the amount expended. Under the Act of 1919, however, the power of borrowing and causing a rate to be levied was expressly excepted, and s. 4, sub-s. 7, enacted:—“The expenses incurred by the Local Government Board in making and carrying out schemes under this section shall to such extent as may be sanctioned by the Treasury, be defrayed out of moneys provided by Parliament.” The acquisition of the plots and the building of the cottages obviously required a capital outlay to be defrayed by a Parliamentary grant. I think that while in the case of a district council the expenses incurred were in part at least to be defrayed by the charge of rents, the modification was made by the Act of 1919 that the expenses were to be defrayed by moneys voted by Parliament. The financial scheme of the Act of 1919 necessarily involved a capital outlay in the case of the ex-servicemen provided for by holdings to be acquired under the Land Purchase Acts, and if, as was the fact, plots were acquired and cottages built under the Labourers Acts, this also involved a capital outlay to be met by money voted by Parliament and not by the methods applicable in the case of rural district councils. Rents were in fact charged by the Local Government Board, but I do not see how this practice can be relied upon in interpreting the Act of 1919. It was argued that the latter portion of s. 4, sub-s. 7, which reads:—“and the receipts of the Local Government Board in respect of cottages, plots, and gardens provided under such schemes shall be paid into the Exchequer at such times and in such manner as may be directed by the Treasury” shows that it was intended to charge rents. But this provision equally, and perhaps more naturally, refers to the receipts from lettings or rates which the Board are authorised to make in the case of any cottage no longer required for the accommodation of ex-servicemen.
However doubtful the power to charge rents under the Act of 1919 may have been, and I am inclined to the opinion that there was none, the scope and object of the Act *43 of 1922, the grant of the large sum of money thereby provided, and the considerations above referred to, make it reasonably clear to my mind that it was not the intention of the Legislature to authorise the charge of any rent in the case of any cottages under the control of the Irish Sailors and Soldiers Land Trust.
One further matter remains to be mentioned. The defendants object that the several plaintiffs entered into occupation under a signed contract of tenancy and that they are not entitled to dispute the validity of the contract while they remain in possession. For the plaintiffs, on the other hand, it is objected that no such point was taken in the pleadings, and that this point is not open. Strictly speaking, this point does not arise on any matter of law stated in the pleadings: if it had been pleaded it would have been necessary to decide whether a void lease by a corporate body can be relied upon to create any such estoppel.
In my opinion, the declarations made by Mr. Justice Johnston should be reversed, and in lieu it should be declared that the several plaintiffs are not bound to pay any rent in respect of the several cottages and plots occupied by them respectively. The order dismissing the action must also be set aside. The claim for an injunction is not now before us and must be determined at the hearing of the action.
O’Reilly v Walsh
Rolls Court.
25 March 1872
[1872] 6 I.L.T.R 107
Master of the Rolls
Jan. 13, 15, March 25, 1872
The bill in this case (filed by Thomas O’Reilly, of Kilkenny, apothecary), stated that the will of James Downey, of Kilkenny, dated 11th June, 1833, contained the following clauses:—“I give, devise, and bequeath unto my much esteemed friend and relative, the Rev. John Gormon, of the parish of St. Canice, in said City of Kilkenny, and to his heirs, executors, and administrators, all my real and freehold property, together with my whole furniture, money, &c., and all other my personal estate and effects upon trust, that he, the said John Gormon, his heirs, &c., shall and do raise and levy out of all such ready money, &c., the interest and full sum of £1,500, and invest the same to and for the use of my dear children, in the shares and proportions, and to be payable and paid to them respectively at the times hereinafter mentioned, that is to say, the sum of £1,000 part thereof, to and for the use of my son, James Downey, and to be paid and payable to him, with the interest, &c., on his attaining his full age of 21 years, and the sum of £500 to and for the use of my daughter, Catherine Downey, and to be paid and payable to her with the interest, &c., on her attaining her full age of 21 years, or on her marriage with the consent of my said trustee. Provided always, and my will is, that if my said son shall die without leaving lawful issue before he shall attain the said age of 21 years, or my said daughter shall die before she shall attain her age of 21 years without being married, with the consent aforesaid, then the share of him or her so dying shall go to the survivor; and also upon this further trust, that the said John Gormon, his executors, &c., shall raise the sum of £1,000 out of the residue of all such ready money, &c., and pay the same to my wife, Catherine Downey, whenever she may be minded to retire from business, or in the event of her hereafter intermarrying; then upon this further trust, that from and immediately after either of said events happening, he, the said John Gor *107 mon, his heirs, &c., shall and do immediately after sell and convert into ready money all such parts of my said real and freehold property, furniture, &c., not heretofore disposed of in raising the said two several sums of £1,500 and £1,000, and invest the same either in the Public Stocks or Government Funds, &c., to and for the use of my said son, James Downey, and to be paid and payable to him on his attaining his said age of 21 years; and upon this further trust, that in the event of the death of my said son before he attains his said age of 21 years, and without leaving lawful issue, then upon trust to and for the use of my said daughter, Catherine Downey, and to be paid and payable to her on attaining her said age of 21 years, or on her marriage, with the consent of my said trustee; and upon this further trust, that in the event of the death of both my said children before they shall respectively attain their said ages of 21 years, or that my said daughter shall not marry with the consent aforesaid, that he, the said John Gormon, his heirs, &c., shall pay to my said dearly beloved wife the further sum of £500 sterling; and then upon this further trust, and my will and desire is, upon such events and contingencies arising, that the said John Gormon shall and do retain to his own use and benefit all the rest, residue, and remainder of my said real and freehold property, goods, chattels, stock-in-trade, securities for money, and all other my personal estate and effects, and the moneys and proceeds arising therefrom, and to apply and dispose of the same as he may deem and consider necessary. I give, devise, and bequeath unto my said son, James Downey, all the rest, residue, and remainder of my goods, chattels, personal estate and effects of what nature or kind soever, for his own sole use and benefit; and I hereby nominate, constitute, and appoint the said John Gormon sole executor of this my last will and testament.”
The said James Downey, the testator, died some short time after the date of the said will, which was proved by the Rev. John Gormon; the said Rev. John Gormon possessed himself of all the property of the said James Downey, which was much more than sufficient to pay all his debts, legacies, and funeral expenses.
Catherine Downey, the testator’s widow, in July, 1836, intermarried with the plaintiff, the said Rev. John Gormon having previously paid her the £1,500 to which she was entitled under the said will.
Catherine Downey, the testator’s daughter, died in 1834, aged about four years, and James Downey, his son, died about the latter end of the same year, aged about five years. The said Rev. John Gormon had not, previously to their deaths, paid any part of the sums to which the said James Downey and Catherine Downey were entitled under the said will.
The said Rev. John Gormon accepted the trusts of the will of the said James Downey, and assented to all the bequests therein contained, and in his residuary account and otherwise he acknowledged the existence of the legacies of £1,000 and £500. He did not in his lifetime, nor did his representatives since his death, pay any part of the said sums of £1,000 and £500 bequeathed to the testator’s children. In a draft residuary account, dated 1st August, 1834, he thus referred to the residue of the testator’s estate—“Which I intend to retain to and for the use of the widow and child of the said testator, as directed by his will.”
The said Catherine Downey, otherwise O’Reilly, died in November, 1865. In January, 1871, the plaintiff obtained administration to his wife, and also to the said James Downey, the testator’s son. The Rev. John Gormon died in 1869, having made his will, with codicils thereto, and thereby appointed defendants his executors.
The bill stated that the plaintiff was not aware of the terms of the said will of the said James Downey until very recently, and prayed that the trusts of it might be declared and carried into execution, and the testator’s estate administered under the direction of the Court, and that it might be declared that the plaintiff was entitled to the sums of £1,000 and £500 bequeathed to the said James Downey, the younger, and his sister, and also the residue of the testator’s estate, and that it might be declared that the said John Gormon, at the time of his death, was a trustee for the plaintiff, in respect of the sums to which the plaintiff might be declared entitled, and that the defendants, or such of them as the Court should direct, in their representative character, might be decreed to pay to the plaintiff the amount to which he might be declared entitled out of the assets of the said John Gormon, and if they should not admit assets sufficient to pay said amount, that an account might be taken of the personal estate &c., debts, legacies, &c. of the said John Gormon.
The answer of the defendants (the Right Rev. Edward Walsh and the Rev. Edward M’Donnell), stated that they charged and believed that some time in the month of December, 1870, was the first occasion upon which, after a lapse of 34 years from his marriage with Catherine Downey, the plaintiff ever made this claim, and that they submitted whether—after such a lapse of time, and after such laches upon the part of the plaintiff, and the acquiescence upon his part in permitting the Rev. John Gormon to deal with the property which he had derived from the said James Downey—he could be permitted to seek the intervention of the Court in aid of his alleged rights, under the will of the said James Downey; and that they relied also upon the statutes for the limitation of actions and suits, and craved the same benefit thereof as if they had put forward the same by way of plea.
The answer further submitted to the Court the question whether, upon the construction of the will of James Downey, the said Catherine Downey became entitled to any pecuniary legacy, other than the said sum of £1,500, in the events which happened, and stated that upon the payment of the said sum she executed to the said Rev. John Gormon a deed of general release. The answer contained, amongst others, the two following clauses, which are material:—“We admit that the Rev. John Gormon fully accepted and acted in the trusts of the will of the said James Downey, and assented to all the bequests therein contained.”“We are advised, and submit that the plaintiff has no right, in respect of the residuary estate of the said James Downey, but that same, in the events which happened, became the absolute property of the said Rev. John Gormon.” The answer further submitted that if the plaintiff should be declared entitled to said legacies of £1,000 and £500 no interest could, in any event, be recovered by the plaintiff beyond interest for six years.
Representation
Law, Q.C., P. White, Q.C., and E. Gibson, for the plaintiff.
O’Hagan, Q.C., and F. L. Dames, for the defendants
March 25.—The Master of the Rolls—The testator having given to his son and daughter the legacies of £1,000 and £500, there is no language in the will divesting them of these gifts ; the residuary clause does not do so, the words of which lead to a contrary conclusion. *108
I have also arrived at the conclusion that, subject to the gift of £500 to the testator’s wife, the Rev. Mr. Gormon takes the beneficial interest in the residue. The language of the will appears to me perfectly plain; it is this—(His Lordship repeated the clause beginning with the words— “And upon this further trust, that in the event of the death of both my said children before they shall respectively attain their said ages of 21 years,” &c.)
These words must get their force and effect, and the event having happened upon which this devise turns, Mr. Gormon takes the whole residue. It was attempted to be argued that the residuary devise was inconsistent with the gift to Mr. Gormon. I see no inconsistency. There are several contingences in which he could not take; one I suggested myself during the course of the argument, viz., the death of Mr. Gormon in the lifetime of the testator. Every word used by the testator is to get its natural, plain meaning, and I do so by giving the residue to Mr. Gormon.
The question is by this means reduced within rather narrow limits, but it embraces some important ones. What is the effect upon this suit ? I have held that this sum of £1,500 did belong to James Downey, even though he died. The sixth section of the Statute of Limitations, 3 & 4 Wm. IV., c. 27, has been relied on. In the view I take of the case it is unnecessary to give an opinion on the question, which is an important one, viz., whether the 6th section applies to suits for legacies under the 40th section.
The executors of Mr. Gormon in the sixth paragraph of their answer admit “that the Rev. John Gormon fully accepted and acted in the trusts of the will of the said James Downey, and assented to all the bequests therein contained.” That sustains the plaintiff’s bill; Mr. Gormon having assented to the bequests in the will is an express trustee, and this not being a suit to recover a legacy, the case is brought within the long line of authorities, establishing that when an executor clothes himself with the character of a trustee, the Statute of Limitations does not apply. It is admitted that Mr. Gormon not only proved the will, but assented to all the legacies. What is the effect of that assent ? To raise £1,500, which is to be for the use of the son and daughter of the testator and the survivor of them, and subject to this in the events which happened—to hold the residue for himself. If Mr. Gormon had not assented, I could understand the argument for the defendants, even though the will contained trusts within it.
The case is ruled by Byrchall v. Bradford, 6 Mad. 235. [His Lordship stated the facts of that case]. The language of the Vice Chancellor, at p 240, is, “When an executor who happens also to be named a trustee of a legacy to be laid out in stock has fully administered the estate, and assented to the legacy, and retains the legacy in his hands” that is exactly applicable to this case, “not as assets of the testator, but as trustee of the legacy, then the principles which would apply to another trustee must apply to him. He is no longer clothed with the character of executor, but is as to the legacy a mere trustee.” Mr Gormon is a trustee of the sums directed to be invested, and takes the rest for his personal property, and he assents to that legacy ; i.e., he assents to it coming to him as a trustee, for that is the meaning of the will.
I rest my judgment with regard to the assent of Mr. Gormon on the passage I have read from the judgment in Byrchall v. Bradford. In Dix v. Burford, 19 Beav. 412, the Master of the Rolls says:—“The distinction between the liability of executors and that of trustees is distinct and clear,” and further on—“The moment the executors assented to the bequest, they became trustees for their cestuis que trust, the £400 then ceased to be part of the testator’s assets, and it became a trust fund for the benefit of the plaintiff for life and afterwards for his children.”
I am of opinion that James Downey was entitled to that sum of £1,500, and that the executors are answerable for it. I am by no means certain that if Mr. Gormon were alive, he would make the case which has been made. His executors are in a different position. By admitting that he assented to the bequest they have done justice to his memory.
It is said that there has been acquiescence and laches in this case. There has not. This is an express trust. I will make a decree for the payment of the £1,500, with interest at five per cent.
The decree will be that the plaintiff, as administrator of James Downey, is entitled to the two legacies of £1,000 and £500 directed by the will to be invested for the benefit of the testator’s son and daughter, that the Rev. John Gormon having assented to the bequest is an express trustee of these sums, and the executors having admitted assets must pay them with interest at five per cent., from the end of the year succeeding the testator’s death.
There will be an inquiry whether the Rev. Mr. Gormon did at any time, and if so, at what time after the testator’s death, invest any, and if so, what sum of the assets in Government Stock, and how long such investment continued. The plaintiff will be entitled to the costs of the suit, save those occasioned by the claim to be declared entitled to the residue, as to which the bill must be dismissed with costs.
Chaine-Nickson v. Bank of Ireland
[1976] IR 394
Kenny J.
Kenny J.
24th April, 1975
By a settlement made on the 2nd March, 1956, between Augustus Alexander Chaine-Nickson (the settlor) of the one part and Rachel Chaine-Nickson, Charles Anthony Brett and Robert Cornwall Lewis-Crosby (therein called the Trustees) of the other part the settlor, who had paid £40,000 to the trustees, declared that they were to hold that sum upon trust to invest it in their unrestrained discretion as if they were the beneficial owners of it and “upon trust to pay, divide or apply the whole or such part (if any) of the income and capital respectively thereof as they shall from time to time in their absolute and uncontrolled discretion think fit between or for the support, benefit, maintenance or education or otherwise of all or any one or more to the exclusion of the other or others of the members of the Family and any future husband and any other child or children of Denys Sophia Pain [a daughter of the settlor] and any wife and child or children of Augustus Terence Chaine-Nickson [the plaintiff].”The members of the Family were defined as the settlor’s wife, Rachel Halley Chaine-Nickson, his daughter, Denys Sophia Pain, his son, the plaintiff, his son-in-law, Horace Pain, and his grand-daughters, Audrey Kate Pain and Jennifer Jaye Pain.
Clause 8 of the settlement read: “8. The Settlor expressly declares that the Trustees of this settlement shall, in addition to and not in substitution for any monies hereinbefore declared to be payable to the trustees or any one or more of them, be entitled to pay to and to receive for themselves as annual remuneration to be divided equally between them the sum of £300 or 10% of the gross annual income of the trust fund whichever shall be the greater provided always that any fees paid to the Trustees or any of them as directors or as a director of any company in which the trust fund or any part thereof is invested shall be given credit for against the aforesaid annual remuneration.”
Clause 10 declared that the settlement was to be an Irish settlement and to be interpreted in accordance with the law in the Republic of Ireland.
The draftsman of the settlement had overlooked the application of the rule against perpetuities to it and so, by a supplemental deed made on the 25th April, 1961, between the settlor and the trustees, it was declared that the trusts created by the settlement were to be exercisable only during the life or lives of the members of the Family, as defined in the settlement, and the settlor and a period of 21 years after the death of the survivor of them.
In 1963 Mrs. Rachel Chaine-Nickson retired as a trustee and the Bank of Ireland were appointed trustees of the settlement. The defendants have made payments under the settlement to the plaintiff, to Mrs. Denys Pain and to other members of the Family.
In March, 1973, the plaintiff’s solicitor asked the bank for copies of the accounts of the trust for three years. The reply was that it was not the bank’s practice to submit a copy of the trust accounts to all or any of the persons or institutions named as being entitled to benefit under a discretionary settlement. They subsequently provided details of the disbursements made by the trustees from 1959 to the 5th of April, 1973, but refused to give any further information. The correspondence shows that the trust fund is invested in a private unlimited company called Muckmore Investments, which does not distribute any of its surplus income by way of dividends, and that the defendants get the money to make distributions to the persons they decide to benefit by the redemption of shares in the private company. The company has also purchased a house and lands worth about £81,000 and now holds marketable securities with an approximate value of £176,000. The trustees have certainly managed the trust fund with considerable acumen.
The plaintiff’s solicitors persisted in their demand for trust accounts since 1959 and, when this was refused, they issued these proceedings in which they claim accounts of the real and personal property now vested in the defendants as trustees, of the dealings of the defendants with the capital and income of the property and of the payments of capital and income made by the defendants to the beneficiaries. The parties do not want accounts taken by the Court but have sought a decision as to what documents and information the plaintiff as a potential beneficiary under the settlement should be given.
Counsel for the plaintiff contended that his client, as one of the class entitled to benefit under the discretionary trust, was entitled to information as to what investments were held by Muckmore Investments, as to the persons who were living in the landed property which had been purchased with part of the trust funds, and as to the amounts which had been paid as remuneration to the trustees. For the trustees it was said that the plaintiff was not a person who is entitled to enforce any obligation under the settlement as the trustees had a complete discretion as to the persons to whom they would make payments of capital and income and that, unless there was an allegation of misconduct, the plaintiff had no right to any information or accounts.
When a beneficiary has a vested interest in a trust fund so that he has a right to payment of the income, the trustees must at all reasonable times at his request give him full and accurate information as to the amount and state of the trust property and permit him, or his solicitor, to inspect the accounts and vouchers and other documents relating to the trust: see Underhill on the Law relating to Trusts and Trustees11th ed. (1959) at p. 401. When a beneficiary asks for copies of accounts or trust documents, he is bound to pay the copying charges for these. However, in the case of a discretionary trust, none of the potential beneficiaries have any right to be paid capital or income. All the trust fund is held by the trustees in this case on discretionary trusts and, if the plaintiff is not entitled to the trust accounts and particulars of the investments, it follows that none of the potential beneficiaries have a valid claim to any information from the trustees. The result is that the trustees are not under an obligation to account to anyone in connection with their management of the trust fund. This logical conclusion from the defendants’ argument leads to remarkable consequences.
The amount of remuneration to which the trustees are entitled is specified in the settlement and the potential beneficiaries have an interest in seeing that the amount is not exceeded, for they are the persons who will ultimately benefit by payments of capital and income. The defendants’ contention, however, has the result that they do not have to account for or disclose the amount of their remuneration. This seems to me to be contrary to the basic concept of a trustee being accountable for his management of the trust fund. In a case where the investment powers of trustees under a discretionary trust are limited, the beneficiaries have a clear interest in getting information as to how the trust fund has been invested but again, if the defendants’ contention is correct, the potential beneficiaries can never get the details to ascertain whether the trust fund has been invested in accordance with the terms of the settlement. Indeed, the trustees might make loans out of the trust fund to themselves, and the potential beneficiaries would have no means of ascertaining this. These remarkable results of the defendants’ argument convince me that the proposition advanced by their counsel is not the law and that a potential beneficiary under a discretionary trust is entitled to copies of the trust accounts and to information as to the investments which represent the trust fund. The obligation of the trustees is not satisfied by giving particulars of the payments made by them.
This conclusion in principle gets some support from one of the cases which were cited. In Moore v. McGlynn 5 the testator left all his property to his brother and his son to be held by them in trust and to be managed by them for the benefit of his wife and children and he gave them power”to arrange for the settlement of my children as they may determine; and in cage they disagree, I will that the parish priest, Reverend M. Gaffney, have full and absolute power to determine both as to amount payable and times of payment.” The trustees managed the business owned by the testator for some years, then made a valuation of the property available for distribution and divided the sum at which it was valued in 10 equal shares. The testator had been survived by a widow and nine children. When they offered this sum to one of the children, she declined to accept it and brought proceedings for the administration of the estate. The trustees had refused to give any account of the property which was subject to the trust or of their administration of it.
Vice-Chancellor Chatterton said that while the division of the estate into equal shares was free from objection it was going too far to contend that the ascertainment of the assets to be divided was not subject to investigation by the Court. At p. 86 of the report he said:
“The trustees may have had full and absolute authority to arrange and settle the shares to be given to each child of the sum to be divided; but it would be dangerous to hold that there is no control over their ascertainment of the total amount. They would in such case be judges in their own cause. They had from the death of the testator the entire administration of the assets entrusted to them, including the management of the trading carried on by them. The amount distributable among the children of course depended on the due discharge of those duties, so that if their decision on that amount was to be conclusive, it would be in their power to protect themselves against liability for any default. It is not necessary for the cestuis que trust to prove any breach of duty by the trustees for the purpose of having accounts taken of the trust property, as their right to this results from the mere relation between them . . . There must, therefore, be the usual accounts of the real and personal estate.”
Counsel for the plaintiff has argued that the trust in Moore v. McGlynn 6was a discretionary one only and that if one of the potential beneficiaries was entitled to an account of the estate subject to the trust, it must follow that each potential beneficiary under a discretionary trust is entitled to information as to the way in which the trust fund has been invested and of the dealings by the trustees with it. I think that this conclusion is correct and is in accordance with principle.
The other case, Londonderry’s Settlement; Peat v. Walsh 7, seems to me to have no relevance to the matters in issue in this case. The Seventh Marquess of Londonderry had made a settlement under which the trustees could divide the capital among the members of a specified class in such shares and proportions as they thought fit. Until the capital had been distributed, the trustees were to hold the income of the trust fund upon trust for such member or members of the specified class as the trustees might determine and, in default of any such determination, upon trust to pay an annuity to the wife of the Seventh Marquess and, subject thereto, to pay the income to his eldest son during his life and, after his death, to the child or children of the Seventh Marquess for the time being living and, if more than one, in equal shares until the death of the last survivor of them. The widow of the Seventh Marquess and the Eighth Marquess had died and a daughter of the Seventh Marquess sought details of the administration of the trust fund. Before the proceedings were brought, she had been given copies of the trust accounts and so her right to these was not discussed. The trustees had decided on a division of the capital, and the information sought by the daughter related to the reasons which the trustees had for their decision. The trustees then brought proceedings for a decision as to what information they were bound to disclose to the daughter. She had a vested interest in the income which had not been distributed under the discretionary trust and was, therefore, not a potential beneficiary but one who had an enforceable right against the trustees.
In Peat’s Case 7 the High Court (Plowman J.), misled by a grossly inaccurate report of an earlier decision, ordered the trustees to furnish information as to their meetings and as to the correspondence which they had received from the beneficiaries. The Court of Appeal decided that the trustees were not bound to disclose the agenda of the meetings of the trustees, correspondence passing between the individuals who were trustees and the persons whose consent to the exercise of the trustees’ powers had to be obtained, correspondence between the trustees and beneficiaries, and minutes of meetings of the trustees. The case is not a decision that a potential beneficiary is entitled to copies of the trust accounts or as to the information to which he is entitled. It decides only what trustees under a discretionary trust are not obliged to disclose.
It seems to me that legal principle and the one relevant authority establish that a potential beneficiary under a discretionary trust is entitled to copies of the trust accounts and to details of the investments representing the trust fund. I do not propose to order any accounts to be taken by the Court, but I will declare that the plaintiff, as a potential beneficiary under the settlement of the 2nd March, 1956, is entitled at his expense to be furnished by the defendant with copies of the trust accounts relating to that settlement since 1956 and to the balance sheet and profit and loss accounts of Muckmore Investments since the incorporation of that company. I shall also declare that the plaintiff is entitled to be informed by the defendants of the names of the persons residing in any landed property purchased by the trustees and of the outgoings in connection with it paid out of the trust funds.
As there was no decision by the Courts on this matter, and as the trustees were acting on the advice of counsel, the plaintiff and the defendants will be awarded their costs of these proceedings to be paid out of the capital of the funds settled by the settlement of 1956.
O’Brien v Condon
High Court of Justice.
Chancery Division.
11 November 1904
[1904] 38 I.L.T.R 252
Sir Andrew M. Porter, Bart. M.R.
Nov. 7, 11, 1904
The will gives rise to two points of some nicety. First, what estate did Rev. W. O’Brien take under the terms of the document? There is no mention of executors. Had he been named as an executor, no doubt the gift to him as such would not carry any beneficial interest in the property, but he is not so described. Did he then take an absolute beneficial interest, or did he take merely as trustee by reason of the word “distribute”? I can find no decision on the meaning of “distribute” standing alone, but there is nothing in the word to imply an absence of beneficial interest in the property. “Distribute” is equivalent to “dispose of,” and is properly used in reference to the essence and nature of the property given, and it is well settled that the words “to dispose of” do not interfere with the beneficial nature of an absolute gift, and I think it is unarguable that any trust appears on the document, if it stands alone. If the matter ended with the document as it stands, it is clear he might distribute the property by paying his *252 own debts or in any other way. The gift would make him complete dominus over the property. But we are at liberty to look at matters outside the will. As Father O’Brien does not claim to have a beneficial interest, the question is whether, the property being given on a trust not disclosed in the will, is he to hand it over to the next-of-kin or is the secret trust to be enforced? The doctrine of secret trusts is opposed to the policy of the Legislature, who have said that the testator ought to commit to writing his testamentary dispositions. If a legatee, even after the will has been executed, has given a testator to understand that he will carry out the trust, he will be bound, for the testator might alter his will. I hold that the legatee takes subject to the trust, which has fastened on his conscience and will be enforced. It has been further argued that Bridget Condon, as a witness to the will, must lose all benefit qua cunque via , whether as next-of-kin or whether as beneficiary under a declaration of trust. This involves a consideration of s. 15 of the Wills Act, and the force that is to be given to the word “thereby.” Is her legacy given by the will? She is not, on the face of the will, a legatee, and she would take nothing if there were no secret trust. I think it plain that the section was intended to prevent a witness taking any benefit conferred by the instrument itself, and if there were no authority I would hold that she did not take anything under or by the will, and was outside the mischief aimed at in s. 15. She knew nothing of anything outside the document. If she takes under the trust it is not by the will, but by the trust, just as the charity designated by the secret trust was held not to take by virtue of the will in Cullen v. Attorney-General. The gift is not a legacy, but a benefit derived aliunde. I would have no difficulty at all were it not for the decision of Hail, V.C., in Re Fleetwood. The decision in that case was apparently arrived at without argument. The present case has been most fully dealt with, and I have been referred to the important case of Cullen v. Attorney-General. My own inclination was intimated in Sullivan v. Sullivan, at p. 202. Where there is no conflict with Irish cases, we always treat English decisions as governing us here, although technically we are not bound by them. In case of a conflict I follow the Irish cases. I think, however, that Re Fleetwood is contrary to principle. It strains the meaning of s. 15. The benefit is given not by the will, but by some transaction contrary to the meaning of the will. Holding a strong and clear opinion, as I did in Sullivan v. Sullivan, I think it would be a hardship to send the parties to the Court of Appeal, and I decide that Bridget Condon does not lose her interest under the trust by reason of having signed as a witness to the will.
In re Browne; Ward v. Lawler
[1944] IR 90
Overend J. 94
This is a summary summons brought by the plaintiff, Mr. George Joseph Leo Ward, as sole executor of the will of the late Mr. Maurice Browne, of 21 Elgin Road, Dublin, for the determination of certain questions arising in the administration of the deceased’s estate.
The major portion of the assets has already been realised and the plaintiff estimates that the entire proceeds will not exceed £2,000.
The defendants are Mrs. Madeline Lawler, who claims to be one of the next-of-kin of the deceased, and Miss Nora Josephine Cummings, who claims as a beneficiary.
The deceased made his will on the 17th of October, 1935, some time after he had become acquainted with the plaintiff, with whom he had become intimate, and whom he had asked to act as executor to carry out his wishes, and the plaintiff had agreed. So far as appears, the testator had not at that time expressed his wishes with regard to any of his property except, perhaps, furniture.
The will is as follows:[Reads the will.]
On the forenoon of the 25th February, 1942, the plaintiff received a message that the testator, who had been ailing for some months, was seriously ill, and he at once went out to see him. He found the testator sitting up in bed, he had been anointed that morning and knew that he was dying, but his mind was quite clear and his speech articulate. The testator asked the plaintiff to bring him a bundle of papers from a tin box in the front room. The plaintiff got the papers and handed them to the testator who himself untied the bundle, took out his will and handed it to the plaintiff saying, “This is my will.” The testator then asked the plaintiff to get his fountain pen as he wanted to alter his “Instructions”with regard to the plaintiff. The document referred to as his “Instructions” is the document in the testator’s writing headed:”The wishes of Maurice Browne, of 21 Elgin Road, Dublin, which Mr. George J. L. Ward has kindly agreed to carry out.” It bears in pencil at its head the date “Nov. 23rd, 1939.”
The plaintiff got the pen for the testator who said he wished to give the plaintiff £100, and he struck out the word “fifty” and interlined the words “one hundred”in the Instructions. The testator appeared to read and consider them and finally handed them to plaintiff and also handed back the other documents. He told the plaintiff that Miss Cummings was to have the income of £2,000 for life and that on her marrying or dying the £2,000 was to be divided equally between the Dominican Nuns at Cabra and the Committee of the Deaf and Dumb Institute, North Great George’s Street, Dublin.
The plaintiff says the testator explained to him the essentials of the Instructions, but did not go into all the details. The plaintiff read the will after it was handed to him, but did not read the Instructions at that time and did not know exactly all they contained till after the testator’s death, which took place that afternoon. The testator had said his house and shares ought to produce £2,000.
The plaintiff’s interview with the testator lasted about an hour, during which the testator, amongst other things, discussed his share holdings in the Commonwealth Mining and Finance Ltd., and Great Boulder Mining and Finance Ltd., and their realisation.
When the testator handed back the other documents to the plaintiff the latter did not retain the will and instructions, but put all in the bundle and replaced it in the tin box. He took possession of the bundle later the same day some fifteen minutes or so after the testator’s death had taken place.
The plaintiff says that on the 25th February, 1942, the testator clearly understood that he, the plaintiff, would act as executor and would carry out his wishes. He had first promised to do so in 1935, before the execution of the will. The Instructions are as follows:[Reads the relevant portions of the Instructions.]
The plaintiff makes no claim beneficially to anything beyond the £100 and, I think, the roll-top desk, but he wants to have it decided whether he can lawfully carry out the testator’s wishes as expressed to him verbally, or as contained in the “Instructions,” or whether the next-of-kin are entitled.
Mrs. Lawler claims to be one of the next-of-kin, and as the class is apparently numerous and unascertained, I appointed her to represent the next-of-kin.
Counsel for Miss Cummings argued that an enforceable trust has been created, that plaintiff is bound to give effect to the testator’s wishes (a) as expressed in the “Instructions,”or (b) as verbally told to the plaintiff by the testator; while counsel for Mrs. Lawler contend that the entire transaction is in contravention of s. 9 of the Wills Act and that the testator’s next-of-kin are entitled.
Now, the first matter to be considered is the will itself. It contains a clear bequest of the testator’s property of every kind to the plaintiff in terms which would pass the absolute ownership. This is followed by the words “I relying on his carrying out the wishes that I have expressed to him and/or may do so hereafter.”
For the next-of-kin it is contended that these words make it clear that the plaintiff took the property merely as a trustee, and that the testator was thereby reserving to himself the right to make future dispositions of his property.
I do not accept this view. We know from the plaintiff’s testimony that prior to the date of the will he had consented to act as testator’s executor and had agreed to carry out his wishes. There is nothing in the will to connect the wishes with the testator’s property, the wish might be to have certain masses said, to upkeep a grave, to pay an annuity, or one hundred and one other things having no relation to the subject-matter of the gift to the plaintiff. The wishes might be of a kind, such as the rendering of some personal service, quite incapable of being enforced. So far as the will is concerned I find a universal gift to the plaintiff absolutely, and I see nothing to indicate that he is merely a trustee of the property so bequeathed, and nothing to subject him to any legal obligation or condition, though, of course, apart from the will he would be bound by the secret trust which has been established by the evidence in this case.
But assuming that the will in this case did indicate in some way that the gift, though absolute in form, was not intended to be enjoyed by the legatee beneficially, in my opinion, this would make no difference. This view of the law was long since accepted in this country and in the year 1888 the law as to secret trusts was summarised in a most succinct and accurate manner by Mr. Justice Monroe, a well-known Common Law lawyer, in King’s Estate (1).[His Lordship quoted the passage from the judgment in which these rules are stated.]
In England all doubts have been finally disposed of by the House of Lords in Blackwell v. Blackwell (2).
It is also immaterial that the trusts were communicated after the execution of the will, so long as they were communicated to the legatee, and accepted by him, in the lifetime of the testator.
All the essentials are proved in the present case. On 25th February, 1942, the testator gave the plaintiff his will and the plaintiff read it. That made it clear that the testator was parting absolutely with his property and with all power of disposition over it and relying solely on the plaintiff’s good faith, as legal owner, to give effect to his wishes. He then produced the so-called “Instructions,” which are expressed to contain his wishes, and told the plaintiff all the essentials, though without going into every detail. The plaintiff made it clear to the testator that he accepted the trusts. I hold that this was sufficient communication of the trusts: In re Keen (3); McCormick v. Grogan (4).This case is not affected by the Wills Act as is clear from the speeches in Blackwell’s Case (2). I have so far refrained from quoting passages from the judgments in that case because every line is worthy of the closest consideration, but in this connection I may refer to Lord Warrington’s speech at p. 342. He says:”I think the solution is to be found by bearing in mind that what is enforced is not a trust imposed by the will, but one arising from the acceptance by the legatee of a trust, communicated to him to the testator, on the faith of which acceptance the will was made or left unrevoked, as the case might be. If the evidence had merely established who were the persons and what were the purposes indicated it would in my opinion have been inadmissible, as to admit it would be to allow the making of a will by parol. It is the fact of the acceptance of the personal obligation which is the essential feature, and the rest of the evidence is merely for the purpose of ascertaining the nature of that obligation.” Great Judges as far back as Lord Cairns and Lord Hatherley have had no difficulty in saying that Equity will circumvent the Wills Act in order to prevent a breach of undertaking given to a testator. In Jones v. Badley (1) Lord Cairns says:”Where a person knowing that a testator, in making a disposition in his favour, intends it to be applied for purposes other than for his own benefit, either expressly promises, or by silence implies, that he will carry the testator’s intention into effect, and the property is left to him upon the faith of that promise or undertaking, it is in effect a case of trust, and in such case the Court will not allow the devisee to set up the Statute of Frauds, or, rather, the Statute of Wills, by which the Statute of Frauds is now in this respect superseded, and for this reason:The devisee, by his conduct, has induced the testator to leave him the property, and, as the Lord Justice Turner says in Russell v.Jackson (2), no one can doubt that if the devisee had stated that he would not carry into effect the intentions of the testator, the disposition in his favour would not have been found in the will. But in this the Court does not violate the spirit of the statutes; but for the same end, namely, prevention of fraud, it engrafts the trusts on the devise by admitting evidence which the statute would in terms exclude, in order to prevent a devisee from applying property to a purpose foreign to that for which he undertook to hold it.”In McCormick v. Grogan (3), Lord Hatherley says that this doctrine “is in itself a doctrine which involves a wide departure from the policy which induced the Legislature to pass the Statute of Frauds.” In the same case Lord Westbury says:”It is a jurisdiction by which a Court of Equity, proceeding on the ground of fraud, converts the party who has committed it into a trustee for the party who is injured by that fraud. . . . The Court of Equity has, from a very early period, decided that even an Act of Parliament shall not be used as an instrument of fraud; and if in the machinery of perpetrating a fraud an Act of Parliament intervenes, the Court of Equity, it is true, does not set aside the Act of Parliament, but it fastens on the individual who gets a title under that Act, and imposes upon him a personal obligation, because he applies the Act as an instrument for accomplishing a fraud.”
It is clear from Lord Warrington’s judgment that there is an enforceable trust in this case. The plaintiff wishes to perform the trust, if he can lawfully do so. I am of opinion that he can, and, accordingly, I shall answer question 1 (a)in the affirmative.
O’Byrne v Davoren
[1994] 3 IR 373
Murphy J: This is a claim by the above named plaintiff as executor of the will dated the 13th May 1967 of Mary Davoren, deceased, who died a spinster on the 8th December 1990 for the determination of certain questions arising on the construction of the deceased’s will.
The residuary bequest contained in the said will is expressed in the following terms:
“I give, devise and bequeath all the rest, residue and remainder of my estate both real and personal unto my TRUSTEES UPON TRUST to sell, call in and convert the same into money (with power in their discretion to postpone such sale, calling in and conversion as hereinafter set out) and after payment thereout of my debts, funeral and testamentary expenses to hold the residue UPON TRUST for the post-primary education of such of the under mentioned as my trustees as in their discretion shall decide will be likely to benefit most namely:
The grandchildren and direct descendants of James Nagle of Castletown, Carron.
The children and direct descendants of Patrick (Burke) Davoren of Kilcorney and of his brother Austin Davoren, Whitemount, Corofin and also the children and direct descendants of Michael Davoren of Ballyaliban, Ballyvaughan and of his brother Martin Davoren of Cahirconnell and also the children and direct descendants of John Davoren of Ennistymon (born at Ballyconnoe) and of his brother who married Miss Rynne and who resides at Ballyconnoe in the County of Clare.
AND I DECLARE that my said trustees may in their absolute discretion decide which of the aforesaid children may benefit and also decide on the secondary, technological or university colleges or professional institutions where the aforesaid children take their courses AND l DECLARE that it is my intention that the income of the trust should be applied in the first instance for payment of fees and provision of textbooks and secondly for the maintenance while attending such schools, colleges or courses AND I DECLARE that my executors may postpone the sale, calling in or conversion of any part of my real and personal estate for such period as they in their absolute discretion may deem fit notwithstanding that it may be of a wasting, speculative or reversionary nature.”
The first named defendant, Michael Davoren, is sued as representing those persons who are potential beneficiaries under the residuary clause and the second named defendant, Anne Coughlan, who is a niece of the deceased, was joined as a defendant to represent those persons who would be entitled to benefit in the event of the residuary estate passing as on an intestacy.
In these circumstances three questions were canvassed, namely:
(1)Whether the residuary bequest aforesaid constituted a valid charitable gift.
(2)Whether the bequest offended the rule against perpetuities.
(3)Whether the bequest failed for uncertainty.
Having regard to the decisions in In re McEnery [1941] IR 323; In re Compton [1945] Ch 123 and Oppenheim v Tobacco Securities Trust Co Ltd [1951] AC 297 it was conceded by all parties that the gift could not be sustained as a valid charitable bequest as it did not possess the requisite public character.
The first question to be addressed is the extent of the class from which the particular beneficiaries may be chosen. Is the class confined to the particular categories of relations of the identified persons living at the date of death of the deceased or could relations of the particular kinship born after that date benefit from the trust? If the class did not close as at the date of death of the deceased then the class would be susceptible of enormous variations either by expansion or contraction and this would raise questions as to whether the gift possessed the requisite degree of certainty either on the basis that it was a beneficial trust or what is described as “a purpose” trust. However, the answer to that question is even more important in the context of the rule against perpetuities. If the class did not close as of the date of death then there could be no doubt at all but that the rule was breached and the gift void ab initio.
The widest and remotest of the degrees of kinship referred to in the bequest are the “descendants”. That word was defined in Halsbury’s Laws of England (4th ed) Volume 50 at paragraph 521 in the following terms:
“Whatever may have been its meaning in earlier times, ‘descendants’ now ordinarily refers to children, grandchildren and other issue of every degree of remoteness in descent. Although the word may be confined to mean children by a sufficiently strong context, the court does not restrict the word to that sense merely because the testator speaks of the descendants taking their parents’ share.”
It would appear from the same textbook that such misgivings as may have existed about the meaning of the word “descendants” in earlier times concerned whether or not collaterals were included within its meaning. It does not ever appear to have been doubted that descendants included issue of every degree of remoteness in descent. That being so a gift to descendants if not otherwise qualified expressly or by implication would appear to include all children of children indefinitely and without limit. It was argued by counsel representing the potential beneficiaries under the will that the class should be treated as having closed at the date of death of the deceased on the basis of the rule in Andrews v Partington (1791) 3 Bro CC 401. It cannot be doubted that the law favours an early as opposed to a later vesting of interests in property. Whilst this rule has been criticised many times it has endured for over two hundred years. Under the rule it is presumed that where there is an immediate gift to a class without any provision as to the time of this vesting then if any members of the class are born at the time of the testator’s death they take to the exclusion of after born members. It is, however, accepted by counsel on behalf of the potential beneficiaries under the trust that this rule could not be applied directly to the facts of the present case as there is no gift to the members of the class but merely an obligation on the trustees to employ the trust funds for a purpose which would be of benefit to some members of that class. In the circumstances the argument under this heading can be put no further than saying that the rule in Andrews v Partington might be applied by analogy.
In any event the identification of the class or more correctly the date as of which it is to be ascertained is essentially a matter for the construction of the will itself with the aid of the appropriate principles governing such construction. Unlike the wills in In re Compton (above) and Kilroy v Parker [1966] IR 309, the residuary bequest in the present case gives no specific guidance as to when the relevant class is to be ascertained. In the Compton case there was a trust for education of descendants of three named persons and it was expressly provided that the trust was to be “forever”. In Kilroy v Parker where income from a fund was to be paid amongst the testator’s necessitous nieces and nephews and their children, it was expressly provided that the nephews and nieces who might benefit were those “alive at the date of my death”.
The researches carried out by the executors have established that the number of persons who would constitute the class of potential beneficiaries if it were to be established as of the date of death of the deceased would be in the order of sixty. Moreover, it would be possible to estimate with reasonable accuracy the capital and likely income of the trust fund. However, these are not factors which are of much assistance in ascertaining the wishes of the deceased. It seems to me that the only guidance to be obtained from the will of the late Mary Davoren is the express trust for the sale and conversion of her residuary estate and the payment thereout of her debts, funeral and testamentary expenses and the additional and express declaration that the trustees might “postpone the sale, calling in or conversion of any part of my real and personal estate for such period as they in their absolute discretion may deem fit, notwithstanding that it may be of a wasting, speculative or reversionary nature”. Whilst those provisions have some significance it is obvious that they represent standard machinery to facilitate the administration of the estate and the trust fund to be created thereout. In particular the express power to postpone the realisation of the estate – even estate of “a wasting, speculative or reversionary nature” – is clearly a protection for the trustees who might otherwise be liable for a breach of their duty rather than an indication of some particular policy or intention on the part of the deceased. Apart from the purpose of the trust and the selection of the beneficiaries the only special if somewhat ambiguous provision of the residuary bequest is expressed in the following terms:
“And I declare that it is my intention that the income of the trust should be applied in the first instance for payment of fees and provision of textbooks and secondly for maintenance while attending such schools, colleges or courses.”
As it is clear that both the capital and income of the residuary estate are subject to the trusts declared by the deceased the question must be asked, why did the deceased focus attention in this very specific way upon the manner and order in which the income of the trust fund should be applied. It seems to me that at the very least the deceased intended that the capital of the fund should be conserved if not actually preserved. It would be meaningless to prescribe an order in which resort was to be had to income if the trustees had an unfettered discretion to resort to capital for any of the purposes identified in the foregoing declaration. Such an action would appear to frustrate the wishes of the testatrix without expressly defying them. By this special declaration it seems to me that the testatrix revealed an expectation and intention that recourse would be had primarily to the income of the fund with a view to conserving the capital as a fund for indefinite duration. Moreover, this has a certain logic. The testatrix would not wish her trustees to deplete excessively the trust fund at any one time when their task would involve a review of their duties and an exercise of their discretions over a long period of time. When one accepts the concept of preserving the capital of the trust fund over a lifetime or even the infancy of the youngest members of the class living at the date of death of the deceased, the question would then arise as to how or why the trust should be wound up and the balance of the capital and income distributed amongst a diminishing class. It seems to me that the logic of the situation as best it may be inferred from the very limited evidence available, is that the testatrix intended to create a fund which would be available indefinitely for the children, grandchildren and descendants whenever born of the persons named in her will, and such a gift is unfortunately invalid as contravening the ancient but still respected rule against perpetuities.
Whilst that conclusion disposes of the issue as to the validity of the bequest I think it may be helpful having regard to the arguments which were addressed to the court (and to the state of the law on the topic) to express my views on the other issues raised.
Prior to the decision of the House of Lords in McPhail v Doulton [1971] AC 424, it was generally accepted that the objects of a trust must be certain, that is to say, that the language employed must be certain and that the trustees must at any time be able to ascertain definitely the persons who would have a vested interest in the capital and income of the trust property. On the other hand where the trustees were not bound by a trust but merely a power or discretion whether to confer or withhold a benefit then the requirement of certainty was recognised as being far less stringent. These rules appeared clearly from the decisions in IRC v Broadway Cottages Trust [1955] Ch 20 and In re Gulbenkian’s Settlement Trusts [1970] AC 508. As Lord Upjohn pointed out in the Gulbenkian Settlement case (at p 521) the then recent authorities were to the effect that:
“… the rule is that, provided there is a valid gift over or trust in default of appointment … a mere or bare power of appointment among a class is valid if you can with certainty say whether any given individual is or is not a member of the class; you do not have to be able to ascertain every member of the class.”
In the comprehensive judgment of Budd J in Kilroy v Parker [1966] IR 309 he accepted and applied that principle (at p 318) in the following terms:
“From a perusal of this case and those referred to therein, I am satisfied they establish in cases of the type under review, on the one hand, that in cases where the trustees have a duty to distribute the income in question it is essential that they should know, before they perform their duty, who are the potential beneficiaries among whom they have the right of selection, and, on the other hand, in the case of a power with a gift over that there is no reason why trustees, before exercising their power, should have to be able to survey the whole field of objects. The practical result is that a mere power to apply income for the benefit of the members of a class, all of whom cannot be ascertained, with a gift over in default, is valid, and an appointment can validly be made to a person who can properly be said to be a member of the class. But an imperative trust for the division of income between such members of the class as the trustees may select is invalid unless the whole class of potential beneficiaries can be ascertained. It is not suggested, nor do 1 think it could be, that there is any distinction in principle between English and Irish law on these matters.”
The statement contained in the final sentence quoted above ceased to be true as and from the decision of the House of Lords in McPhail v Doulton (above). In that case the House of Lords by a majority of three to two overruled the decision in the Broadway Cottages case and held that the test to be applied in determining the validity of imperative trusts was substantially the same as that applicable to discretionary trusts. That is to say, the trust was valid if it could be said with certainty that any given individual was or was not a member of the class designated as potential beneficiaries.
Not only is the judgment of the late Budd J a precedent of greater authority for me than a judgment (particularly a majority judgment) of the House of Lords but I confess that I find the reasoning of the Irish judgment (and indeed the earlier English judgments) more convincing than that contained in what was admittedly a conscious effort at law reform made in the McPhail case.
In the Kilroy case the court had to consider a trust to distribute the income of a fund amongst the necessitous nieces and nephews of the deceased and such of their children as the executors might think fit. As I have already remarked the category of nieces and nephews were expressly identified in the will as those being alive at the date of the death of the testatrix. It was, however, an imperative trust though confined to the income of the fund accruing over a period of ten years from the date of death of the testator. In those circumstances no question arose with regard to the rule against perpetuities nor in the identification of the class of potential beneficiaries insofar as it consisted of nephews and nieces of the testator, living at his death and their children. The major problem related to identifying and perhaps re-identifying the “inner” class of necessitous nephews and nieces. What degree of poverty or hardship is involved in that adjective? Was the standard to be an objective one or in some way related to the standard of living of the testator? What was to happen if during the ten years during which the income of the trust fund was to be distributed the financial circumstances of particular nephews or nieces altered significantly? To my mind a significant feature of the judgment is the dedication and determination with which Budd J addressed and resolved those and other difficult problems.
Having accepted the need for certainty in the creation of the trust Budd J considered the principles upon which a court approaches the problem of having to decide whether or not a gift is to be held void for uncertainty. He pointed out (at p 320) that:
“The difficulties in interpreting a disposition which is ambiguously expressed are not enough to render the disposition void for uncertainty. To be void for this reason it must be utterly impossible to put a meaning on it.”
He went on (at p 321) to quote a passage previously cited with approval by Murnaghan J in the following terms:
“Another principle is equally clear: we ought not, without absolute necessity, to let ourselves embrace the alternative of holding a devise void for uncertainty. Where it is possible to give a meaning, we should give it, that the will of the testator may be operative; and where two or more meanings are presented for consideration, we must be well assured that there is no sort of argument in favour of one view rather than another, before we reject the whole.”
He accepted, as all of the parties would, that the presumption is that “when a man makes his will he does not intend to die intestate as to any part of his property”.
It was those principles which imposed on the learned judge the duty to seek a construction of the will and an approach to the problems canvassed in relation to the administration of the trust which would resolve ambiguities and uncertainties where this was compatible with the expressed or implied wishes of the testator. Whilst the particular facts of the Kilroy case are unique, the significance of the judgment of Budd J thereon, as I see it, is the determination with which he sought to salvage the validity of the particular testamentary trust notwithstanding the difficulties created by the manner in which the testatrix had expressed her intentions. Again I would respectfully agree that the learned judge was entirely correct in that course and as far as possible I believe that a similar approach should be taken in the present matter. It is noticeable that Budd J recognised that the class of potential beneficiaries might fluctuate from year to year as would happen in the present case depending upon the educational requirements of the relatives of the persons designated by the testatrix. It was of that problem that the learned judge said (at p 334):
“The fact that the class in the present case may fluctuate does undoubtedly increase the difficulty of ascertaining the class, but difficulties and impracticalities should not be allowed to stand in the way if by any possibility the trust can be executed.”
It seems to me that the helpful decision of Budd J in Kilroy v Parker would be of decisive importance in upholding the validity of the residuary bequest in the present case if but only if, the class of relatives out of whom the beneficiaries were to be selected was limited to those living at the date of death of the deceased and as I have held that the contrary is – regretfully – the true construction of the will, my conclusion in this regard can be of no comfort to the designated class of beneficiaries.
In the circumstances it seems to me that the questions raised in the statement of claim herein should be answered as follows:
(a)The trust purported to be created by the residuary clause does not constitute a trust of a charitable nature.
(b)The words creating the trust are sufficiently certain for that purpose.
(c)The terms of the trust do offend against the rule against trusts of perpetual duration.
However, I will hear the parties in relation to any matter of detail as to how the questions raised should be dealt with.