John Michael Wythe & Ors v Andrea Zavos
[2024] EWHC 2784 (Ch)
Folds Farm Trustees Limited & Anor v Oliver Alister Sydney Cutts & Ors
15 January 2024
[2024] EWHC 12 (Ch)
High Court
A family trust owned a farm. The trustees wanted to sell it to one family member for a lower price than it was worth, to pay off debts and give money to other family members. Other family members didn't agree. The judge decided the trustees were fair and the sale could go ahead, because the main goal was to keep the farm in the family and also make sure other family members got money.
Key Facts
- •Trustees sought court approval for a decision to appoint a farm (the primary asset of two trusts) to Alister Cutts, one of the beneficiaries, for £4.2 million.
- •The decision was challenged by other beneficiaries (Alister's sisters and niece) who argued for a higher price and a more equal distribution.
- •The farm's valuation varied significantly between different valuers, ranging from £5.05 million to £10.125 million.
- •The trustees considered various factors beyond valuation, including the beneficiaries' relationships, the farm's financial situation, and Susan Cutts' (the testator) wishes.
- •The trustees argued that the proposed sale was the best way to balance the various interests, satisfy Susan Cutts’ wish for the farm to remain in the family and to provide funds for the other beneficiaries.
Legal Principles
In cases where trustees seek court approval for a momentous decision within their powers, the court checks for legality, reasonableness, and absence of conflict of interest.
Public Trustee v. Cooper [2001] WTLR 901; Cotton & Moore v Brudenell-Bruce [2014] EWCA Civ 1312
The court's role is limited to assessing the rationality and honesty of the trustees' decision; it doesn't substitute its own judgment.
Lewin on Trusts
Trustees must demonstrate they considered relevant factors, excluded irrelevant ones, and followed a proper decision-making process.
Lewin on Trusts
The burden of proof lies with the trustees to justify their decision.
Lewin on Trusts
Outcomes
The court approved the trustees' decision to appoint the farm to Alister Cutts.
The court found that the trustees had considered relevant factors, acted reasonably, and there was no evidence of conflict of interest. The trustees' decision balanced Susan Cutts' wishes with the needs of the other beneficiaries and was within the scope of their discretionary powers.