Inland Revenue Commissioners v Broadway Cottages Trust

English Equity & Trusts

AN
‘Anonymity’ by Ben Will

Uncertainty as to the exact class of trust beneficiary lies central to the disposition and taxation of funds, when after establishing two virtually identical charitable trusts (the Broadway Cottages Trust and the Sunnylands Trust), the nominated trustees and now appellants were faced with claims by the Inland Revenue that any monies generated by the use of the trust were lawfully subject to taxation under the Income Tax Act 1918.

In the summer of 1950, the now deceased settlor bequeathed a sum of £80,000 for the benefit of a number of beneficiaries, while the design was such that the appellants were granted discretionary powers to invest and apply the money, so as to accrue sufficient income for his wife and numerous other parties for the duration of the trust.

However the appellees claimed that clause 8 of the trust instrument was void for uncertainty, on grounds that while it stated in relevant part that:

“[T]he trustees shall hold the income of the trust fund from the date or respective dates from which the trustees shall become entitled to such income upon trust to apply the same for the benefit of all or any one or more of the donor’s said wife and the beneficiaries….

The beneficiary schedule conversely included:

“1. All persons (other than the settlor and any wife of his and any infant child of his) who have been in the past or (as the case may be) at the date of these presents or subsequently thereto at any time during the period ending on December 31, 1980, or during the appointed period whichever shall be the shorter employed by: (a) the settlor; (b) the wife of the settlor; (c) William Timpson deceased (father of the settlor and who died on January 20, 1929); (d) Katherine Chapman Timpson deceased (mother of the settlor and who died on December 16, 1940); (e) William Timpson Limited or by any other limited company which may succeed to the business of William Timpson Limited; (/) Any other limited company of which the settlor is a director at the date of these presents.
2. The wives and widows of any such persons as is specified in cl. 1 of this schedule.
3. All persons (other than the settlor and any wife of his and any infant child of his) who are the issue however remote of the said William Timpson deceased . . . and Charles Henry Rutherford deceased (father of the wife of the settlor and who died on February 17, 1930).
4 , 5, 6, 7. [Certain named persons.]
8. Alastair John Grenville Stevenson and any spouse of his or issue of him.
9. [The trustees of the settlement and their spouses or issue].
10. Joseph Baker and any spouse of his or issue of him.
11. Godchildren of the settlor or his wife.

And so the appellees argued that there was no clear and ascertainable list of beneficiaries upon which to refer, while the appellants contended that the trust afforded them discretionary powers to assign the funds to those parties they believed to be ascertainable, and so the trust remained valid under clause 10, which read in relevant part that:

“The trustees shall also have power during the appointed period to apply the whole or any part of the capital of the trust fund in their discretion for the benefit of all or any one or more of the beneficiaries either by way of advancement on account of his or her or their share or shares or not as the trustees may in their discretion think fit….”

In the first instance, the Inland Revenue Special Commissioners reviewed the claim, and awarded for the respondents, while holding that:

“[T]he trusts of the settlement in so far as they related to the income of the trust fund were not void for uncertainty, and that the trustees under the provisions of cl. 8 of the settlement had a power of selection and that it was a valid and effective trust of the income of the trust fund, and that, accordingly, the sums of money received by the respondents from the trustees were the income of the respondents and thus entitled to the exemption claimed.”

Whereupon the appellees challenged the judgment in the Chancery Court, who allowed the appeal, while instead holding that:

“[I[n cases of an imperative trust to distribute there must be certainty as to the objects.”

Upon which the appellants challenged the judgment in the Court of Appeal, who then relied upon In re Gestetner Settlement, in which the Chancery Court had held that:

“[I]n a case where there is a duty on a trustee to select from a number of persons which of them shall be the recipients of the settlor’s bounty, there must be a certainty as to those recipients.”

Thus the court dismissed the appeal whilst reiterating to the parties that:

“[A] trust for such members of a given class of objects as the trustees shall select is void for uncertainty, unless the whole range of objects eligible for selection is ascertained or capable of ascertainment….”

Public Body Duty of Care in Tort

Insight | February 2017

Public Body Duty of Care in Tort
Image: ‘Vicarious Trauma’ by Amy Gaskin

Within the field of tort, there are a number of victims that are recognisable for damages in extenuating scenarios. These include rescuers, involuntary participants, communicators of shocking news, witnesses to self-harm and those held under an assumption of responsibility by the defendant.

There are of course exemptions from such events, in particular public bodies (despite being funded by tax payers money). One argument for such paradoxical exclusion is that making public bodies pay for their mistakes would place a strain upon public services funds, and lead to division of public resources in times of need.

This ironically raises the question of whether liability should exist when the public body has the power to act despite no duty to do so? The House of Lords determined that no duty of care was owed in respect to negligent use of power, unless that action made the claimant’s situation worse than it was before, while jurisprudence around the European Convention of Human Rights (ECHR) and the Human Rights Act 1998 (HRA) altered the previous threshold regards duty of care.

In D v East Berkshire Community NHS Trust and others, ‘defensive practices’ were seen as a consequence of liability on the part of the local authority staff, which would compromise their standard of work, therefore it was subsequently felt that a duty of care was owed to children in extraction cases, but not to all parties.

In the earlier case Osman v Ferguson, and the later Osman v UK, the police were initially offered immunity from a duty of care until the parents of a murdered pupil appealed to the European Court of Human Rights (ECtHR), under the observance that while art.6 of the Human Rights Act 1998 provided public body immunity, it denied the family from receiving a fair trial, while no attempts were made to distinguish Osman from the earlier Hill v Chief Constable of West Yorkshire, despite marked differences.

Of notable interest, is the knowledge that the fire service has no duty of care to respond to an emergency call or to turn up and attempt to fight a fire. It does however, have a positive duty not to make matters worse in the event that they do attend such events, albeit with the caveat that it does not have a duty of care to prevent the fire from spreading. On the upside, at least the ambulance service does owe a duty of care to individual claimants in specific circumstances, while also possessing a duty to respond to emergency calls, although this is only because the domestic courts view the service as an extension of the National Health Service (NHS), which itself owes a duty of care to all of its patients.

Much like the fire service before, the coastguard owes no duty of care to respond to calls from people in trouble at sea, only a duty to not make matters worse when they arrive. While in contrast, the British armed forces are only held to owe a duty of care when the defendant can be said to have assumed responsibility to the client, just as little comfort is taken in the knowledge that there is no duty of care owed to the public under battle conditions, or in times of threat.