In a recent landmark ruling of the High Court in the case of Cotterell v Allendale, the High Court granted the trustees of the Allendale 1949 Settlement, extra powers in the interests of general expediency, under the provisions of Section 57 of the Trustee Act 1925.
The ruling is particularly significant, since this is the first time that extra powers have been granted by the court to trustees for general purposes in this way. Prior to this ruling, doubts and conflicting opinions had long persisted as to whether Section 57 could be used to bestow additional powers for reasons of general expediency, with one school of thought positing that the scope of Section 57 was strictly limited and could only be used in order to facilitate a specific transaction which the trustees had in mind. This ruling however, has now put that debate to rest and has provided much needed clarification for trustees and beneficiaries alike.
The ruling is likely to be of particular interest to trustees of other longstanding settlements, who find themselves boxed in by cumbersome and anachronistic administrative provisions. The Allendale Trustees were not contemplating any specific transactions at the time of their application to the court, but were instead motivated by the fact that the original trust had been created over 70 years previously and consequently was lacking in the modern administrative powers which are nowadays often included as standard in new settlements, in order to facilitate the smooth and convenient administration of the trust. As a result of their application, the trustees were granted a whole suite of new powers, including the power to re-appropriate assets in the interests of maximising tax efficiency, the power to delegate the management of investments to professionals such as stockbrokers and the power to appoint financial advisors. Additional powers included the power to pay out trust assets to minor beneficiaries and a limited authorisation to permit self-dealing.
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Case Citation: Cotterell v Allendale, 2020 EWHC 2234 Ch