| 26.1 |
This Chapter contains material about a number of aspects of proceedings concerning trusts, the estates of deceased persons (other than probate claims) and charities.
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| 26.2 |
The topics covered in this Chapter are (a) applications by trustees for directions and related matters; (b) the Variation of Trusts Act 1958Acts; (c) section 48 of the Administration of Justice Act 1985ActsActs; (d) vesting orders as regards property in Scotland; (e) trustees under a disability; (f) lodgment of funds; (g) the estates of deceased Lloyd's Names; and (h) judicial trustees.
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| 26.3 |
Applications to the court by trustees for directions in relation to the administration of a trust or charity, or by personal representatives in relation to a deceased person's estate, are to be brought by Part 8 claim form, and are governed by Part 64, and its PDs; rule 8.2A is also relevant.
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| 26.4 |
If confidentiality of the directions sought is important (for example, where the directions relate to actual or proposed litigation with a third party who could find out what directions the claimants are seeking through access to the claim form under rule 5.4) the statement of the remedy sought, for the purposes of rule 8.2(b), may be expressed in general terms. The trustees must, in that case, state specifically in the evidence what it is that they seek to be allowed to do.
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| 26.5 |
The proceedings will normally be listed and heard in private: rule 39.2(3)(f) and paragraph 1.5 of PD 39. Accordingly the order made, and the other documents among the court records (apart from a claim form which has been served), will not be open to inspection by third parties without the court's permission: rule 5.4(2). If the matter is disposed of without a hearing, the order made will be expressed to have been made in private.
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| 26.6 |
Part 64 deals with the joining of beneficiaries as defendants. Often, especially in the case of a private trust, it will be clear that some, and which, beneficiaries need to be joined as defendants. Sometimes, if there are only two views as to the appropriate course, and one is advocated by one beneficiary who will be joined, it may not be necessary for other beneficiaries to be joined since the trustees may be able to present the other arguments. Equally, in the case of a pension trust, it may not be necessary for a member of every possible different class of beneficiaries to be joined.
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| 26.7 |
In some cases, it may be that the court will or might be able to assess whether or not to give the directions sought, or what directions to give, without hearing from any party other than the trustees. If the trustees consider that their case is in that category they may apply to the court under rule 8.2A for permission to issue the claim form without naming any defendants. They must apply to the court before the claim form is issued, and include a copy of the claim form that they propose to issue. Practitioners should note that this procedure may enable directions to be obtained about matters concerning the administration of a trust or estate in circumstances which would fall outside the relatively narrow confines of section 48 of the Administration of Justice Act 1985ActsActs where the expense and delay associated with an application naming defendants may not be in the interests of beneficiaries.
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| 26.8 |
In other cases the trustees may know that beneficiaries need to be joined as defendants, or to be given notice, but may be in doubt as to which. Examples could include a case concerning a pension scheme with many beneficiaries and a number of different categories of interest, especially if they may be differently affected by the action for which directions are sought, or a private trust with a large class of discretionary beneficiaries. In those cases the trustees may apply for permission to issue the claim form without naming any defendants under rule 8.2A. The application may be combined with an application for directions as to which persons to join as parties or to give notice to under rule 19.8A.
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| 26.9 |
In the case of a charitable trust the Attorney-General is always the appropriate defendant, and almost always the only one.
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| 26.10 |
Applications for directions whether or not to take or defend or pursue litigation (see Re Beddoe [1893] 1 Ch 547) must be made by Part 8 claim, independently of the main litigation, to a Master not involved with the main case. They should be supported by evidence including the advice of an appropriately qualified lawyer as to the prospects of success and other matters relevant to be taken into account, including a cost estimate for the proceedings and any known facts concerning the means of the opposite party to the proceedings, and a draft of any proposed statement of case. There are cases in which it is likely to be so clear that the trustees ought to proceed as they wish that the costs of making the application, even on a simplified procedure without a hearing and perhaps without defendants, are not justified in comparison with the size of the fund or the matters at issue.
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| 26.11 |
References to an appropriately qualified lawyer mean one whose qualifications and experience are appropriate to the circumstances of the case. The qualifications should be stated. If the advice is given on formal instructions, the instructions should always be put in evidence as well, so that the court can see the basis on which the advice was given. If it is not, the advice must state fully the basis on which it is given. If a hearing is necessary the lawyer whose opinion is relied on should if possible be the advocate at the hearing.
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| 26.12 |
All applications for directions should be supported by evidence showing the value of the trust assets, the significance of the proposed litigation or other course of action for the trust, and why the court's directions are needed. In the case of a pension trust the evidence should include the latest actuarial valuation, and should describe the membership profile and, if a deficit on winding up is likely, the priority provisions and their likely effect.
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| 26.13 |
On an application for directions about actual or possible litigation, the evidence should also state (i) whether any relevant Pre-Action Protocol has been followed, and (ii) whether the trustees have proposed or undertaken, or intend to propose, ADR, and (in each case) if not why not.
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| 26.14 |
If a beneficiary of the trust is a party to the litigation about which directions are sought, with an interest opposed to that of the trustees, that beneficiary should be a defendant to the trustees' application, but any material which would be privileged as regards that beneficiary in the litigation should be put in evidence as exhibits to the trustees' witness statement, and should not be served on the beneficiary. However, if the claimant's representatives consider that no harm would be done by the disclosure of all or some part of the material then that material should be served on that defendant. That defendant may also be excluded from part of the hearing, including that which is devoted to discussion of the material withheld: see Re Moritz[1960] Ch 251; Re Eaton [1964] 1 W.L.R. 1269.
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| 26.15 |
The claim will be referred to the Master once a defendant has acknowledged service, or otherwise on expiry of the period for acknowledgment of service, (or, if no defendant is named, as soon as the claimant's evidence has been filed) to consider directions for the management of the case. Such directions may be given without a hearing in some cases; these might include directions as to parties or as to notice of proceedings, as mentioned in paragraph 26.8 above.
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| 26.16 |
Case management directions will be given where the court grants an application to issue the claim form without naming a defendant under rule 8.2A.
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| 26.17 |
The court will always consider whether it is possible to deal with the application on paper without a hearing. The trustees must always consider whether a hearing is needed for any reason. If they consider that it is they should say so and explain why in their evidence. If a defendant considers that a hearing is needed, this should be stated, and the reasons explained, in his evidence, if any, or otherwise in a letter to the court.
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| 26.18 |
If the court would be minded to refuse to give the directions asked for on a consideration of the papers alone, the parties will be notified and given the opportunity, within a stated time, to ask for a hearing.
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| 26.19 |
In charity cases, the Master may deal with the case without a hearing on the basis of a letter from or on behalf of the Attorney-General setting out his attitude to the application.
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| 26.20 |
Cases in which the directions can be given without a hearing include those where personal representatives apply to be allowed to distribute the estate of a deceased Lloyd's name, following the decision in Re Yorke (deceased) [1997] 4 All ER 907 (see paragraphs 26.50-55 below), as well as applications under section 48 of the Administration of Justice Act 1985ActsActs (see paragraphs 26.37-42 below).
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| 26.21 |
The trustees' evidence should be given by witness statement. In order to ensure that, if directions are given, the trustees are properly protected by the order, they must ensure full disclosure of relevant matters, even if the case is to proceed with the participation of beneficiaries as defendants.
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| 26.22 |
The evidence must explain what, if any, consultation there has been with beneficiaries, and with what result. In preparation for an application for directions in respect of litigation, the following guidance is to be followed.
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(1) |
If the trust is a private trust where the beneficiaries principally concerned are not numerous and are all or mainly adult, identified and traceable, the trustees will be expected to have canvassed with all the adult beneficiaries the proposed or possible courses of action before applying for directions.
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(2) |
If it is a private trust with a larger number of beneficiaries, including those not yet born or identified, or children, it is likely that there will nevertheless be some adult beneficiaries principally concerned, with whom the trustees must consult.
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(3) |
In relation to a charitable trust the trustees must have consulted the Attorney-General, through the Treasury Solicitor, as well as the Charity Commissioners, whose consent to the application will have been needed under section 33 of the Charities Act 1993Acts.
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(4) |
In relation to a pension trust, unless the members are very few in number, no particular steps by way of consultation with beneficiaries (including, where relevant, employers) or their representatives are required in preparation for the application, though the trustees' evidence should describe any consultation that has in fact taken place. If no consultation has taken place, the court could in some cases direct that meetings of one or more classes of beneficiaries be held to consider the subject-matter of the application, possibly as a preliminary to deciding whether a member of a particular class ought to be joined as a defendant, though in a case concerning actual or proposed litigation, steps would need to be considered to protect privileged material from too wide disclosure.
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| 26.23 |
If the court gives directions allowing the claimant to take, defend or pursue litigation it may do so up to a particular stage in the litigation, requiring the trustees, before they carry on beyond that point, to renew their application to the court. What stage that should be will depend on the likely management of the litigation under the CPR. If the application is to be renewed after disclosure of documents, and disclosed documents need to be shown to the court, it may be necessary to obtain permission to do this from the court in which the other litigation is proceeding. However, the implied undertaking limiting the use of documents disclosed by another party to the litigation does not preclude their use on an application by trustee parties for directions, since that is use for the purposes of the litigation: White v. Biddulph, Hart J, unreported, 22 May 1998.
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| 26.24 |
In such a case the court may sometimes direct that the case be dealt with at that stage without a hearing if the beneficiaries obtain and lodge an opinion of an appropriately qualified lawyer supporting the continuation of the directions. Any such opinion will be considered by the court and, if thought fit, the trustees will be given a direction allowing them to continue pursuing the proceedings without a hearing.
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| 26.25 |
In a case of urgency, such as where a limitation period or period for service of proceedings is about to expire, the court may give directions on a summary consideration of the evidence to cover the steps which need to be taken urgently, but limiting those directions so that the application needs to be renewed for fuller consideration at an early stage.
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| 26.26 |
On any application for directions where a child is a defendant, the court will expect to have put before it the instructions to and advice of an appropriately qualified lawyer as to the benefits and disadvantages of the proposed, and any other relevant, course of action from the point of view of the child beneficiary. Where the matters to be drawn to the attention of the court are fully covered in the instructions and written opinion, it should not be necessary for a separate skeleton argument to be lodged, but the court needs to be informed that this is the case. The opinion should be given by the lawyer who is to be the advocate at the hearing.
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| 26.27 |
The Master may give the directions sought though, if the directions relate to actual or proposed litigation, only if it is a plain case, and the Master may be prepared to proceed without a hearing: see PD 2 Allocation of Cases to Levels of Judiciary, paragraph 4.1 and paragraph 5.1(e), and see also paragraphs 26.17 to 26.20 above. Otherwise the case will be referred to the judge.
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| 26.28 |
It is not necessary to make representation orders under rule 19.7 on an application for directions, and sometimes it would not be possible, for lack of separate representatives among the parties of all relevant classes of beneficiaries, but such orders can be useful in an appropriate case and they are sometimes made.
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| 26.29 |
Normally the trustees' costs of a proper application will be allowed out of the trust fund, on an indemnity basis, as will the assessed (or agreed) costs of beneficiaries joined as defendants, subject to their conduct of the proceedings having been proper and reasonable.
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| 26.30 |
In proceedings brought by one or more beneficiaries against trustees, the
court has power to direct that the beneficiaries be indemnified out of the
trust fund in any event for any costs incurred by them and any costs which
they may be ordered to pay to any other party, known as a prospective costs
order: see McDonald v. Horn [1995] 1 All ER 961. Such an order may
provide for payments out of the trust fund from time to time on account of
the indemnity so that the beneficiaries' costs may be paid on an interim
basis. Applications for prospective costs orders should be made on notice
to the trustees. The court will require to be satisfied that there are
matters which need to be investigated. How far the court will wish to go
into that question, and in what way it should be done, will depend on the
circumstances of the particular case. The order may be expressed to cover
costs incurred only up to a particular stage in the proceedings, so that the
application has to be renewed, if necessary, in the light of what has
occurred in the proceedings in the meantime. See Practice Statement
(Trust Proceedings: Prospective Costs Orders) [2001] 1 W.L.R. 1082,
[2001] 3 All ER 574, which includes a model form of order.
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| 26.31 |
In the case of a charitable trust, if the Charity Commissioners refuse their consent to the trustees applying to the court for directions, under Charities Act 1993Acts section 33(2), and also refuse to give the trustees the directions under their own powers, under sections 26 or 29, the trustees may apply to the court under section 33(5). On such an application, which may be dealt with on paper, the judge may call for a statement from the Charity Commissioners of their reasons for refusing permission, if not already apparent from the papers. The court may require the trustees to attend before deciding whether to grant permission for the proceedings. It is possible to require notice of the hearing to be given to the Attorney-General, but this would not normally be appropriate.
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| 26.32 |
An application under the Variation of Trusts Act 1958Acts should be made by a Part 8 claim form. As to listing of such applications see paragraph 6.27. The Master will not consider the file without an application.
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| 26.33 |
Where any children or unborn beneficiaries will be affected by an arrangement under the Variation of Trusts Act 1958Acts, evidence must normally be before the court which shows that their litigation friends or the trustees support the arrangements as being in the interests of the children or unborn beneficiaries, and exhibits a written opinion to this effect. In complicated cases a written opinion is usually essential to the understanding of the litigation friends and the trustees, and to the consideration by the court of the merits and fiscal consequences of the arrangement. If the written opinion was given on formal instructions, those instructions must be exhibited. Otherwise the opinion must state fully the basis on which it was given. The opinion must be given by the advocate who will appear on the hearing of the application. A skeleton argument may not be needed where a written opinion has been put in evidence and no matters not appearing from the instructions or the opinion are to be relied on: see paragraph 26.26 above.
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| 26.34 |
Where the interests of two or more children, or two or more of the children and unborn beneficiaries, are similar, a single written opinion will suffice; and no written opinion is required in respect of those who fall within the proviso to section 1(1) of the Act (discretionary interests under protective trusts). Further, in proper cases the requirement of a written opinion may at any stage be dispensed with by the Master or the judge.
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| 26.35 |
An undertaking by solicitors with regard to stamping is not required to be included in an order under the Variation of Trusts Act 1958Acts whether made by a judge or Master.
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| 26.36 |
The Commissioners of Inland Revenue consider that the stamp duty position of duplicate orders is as follows:
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(1) |
Orders confined to the lifting of protective trusts. These orders are not liable for duty at all and should not be presented to a stamp office.
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(2) |
Orders effecting voluntary dispositions inter vivos. These orders may be certified under the Stamp Duty (Exempt Instruments) Regulations 1987 (S.I. 1987 No. 516), as within category L in the schedule to those regulations, in which case they should not be presented to a stamp office. Without such a certificate they attract 50p duty under the head "Conveyance or transfer of any kind not hereinbefore described."
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(3) |
Orders outside those described at paragraphs (1) and (2) above that contain declarations of the trust, i.e. that effect no disposition of trust property. These orders attract 50p fixed duty under the head "Declaration of trust." They may be presented for stamping at any stamp office in the usual way, or sent for adjudication if preferred.
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| 26.37 |
Applications under section 48 of the Administration of Justice Act 1985ActsActs should be made by Part 8 Claim Form without naming a defendant, under rule 8.2A. No separate application for permission under rule 8.2A need be made. The claim should be supported by a witness statement or affidavit to which are exhibited: (a) copies of all relevant documents; (b) instructions to a person with a 10-year High Court qualification within the meaning of the Courts and Legal Services Act 1990Acts ("the qualified person"); (c) the qualified person's opinion; and (d) draft terms of the desired order.
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| 26.38 |
The witness statement or affidavit (or exhibits thereto) should state: (a) the names of all persons who are, or may be, affected by the order sought; (b) all surrounding circumstances admissible and relevant in construing the document; (c) the date of qualification of the qualified person and his or her experience in the construction of trust documents; (d) the approximate value of the fund or property in question; and (e) whether it is known to the applicant that a dispute exists and, if so, details of such dispute.
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| 26.39 |
When the file is placed before the Master he will consider whether the evidence is complete and if it is send the file to the judge.
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| 26.40 |
The judge will consider the papers and, if necessary, direct service of notices under rule 19.8A or request such further information as he or she may desire. If the judge is satisfied that the order sought is appropriate, the order will be made and sent to the claimant.
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| 26.41 |
If following service of notices under rule 19.8A any acknowledgment of service is received, the claimant must apply to the Master (on notice to the parties who have so acknowledged service) for directions. If the claimant desires to pursue the application to the court, in the ordinary case the Master will direct that the case proceeds as a Part 8 claim.
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| 26.42 |
If on the hearing of the claim the judge is of the opinion that any party who entered an acknowledgment of service has no reasonably tenable argument contrary to the qualified person's opinion, in the exercise of his or her discretion he or she may order such party to pay any costs thrown away, or part thereof.
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| 26.43 |
In applications for vesting orders under the Trustee Act 1925Acts any investments or property situate in Scotland should be set out in a separate schedule to the claim form, and the claim form should ask that the trustees may have permission to apply for a vesting order in Scotland in respect thereto.
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| 26.44 |
The form of the order to be made in such cases will (with any necessary variation) be as follows:
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"It is ordered that the [ ] as Trustees have permission to take all steps that may be necessary to obtain a vesting order in Scotland relating to [the securities] specified in the schedule herein."
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| 26.45 |
There must be medical evidence showing incapacity to act as a trustee at the date of issue of the claim form and that the incapacity is continuing at the date of signing the witness statement or swearing the affidavit. The witness statement or affidavit should also show incapacity to execute transfers, where a vesting order of stocks and shares is asked for.
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| 26.46 |
The trustee under disability should be made a defendant to the claim but need not be served unless he or she is sole trustee or has a beneficial interest.
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| 26.47 |
Lodgment into the High Court of amounts of cash or securities of less than £500 under section 63 of the Trustee Act 1925Acts, and rule 14(1) of the Court Funds Rules 1987 will not be accepted by the Accountant-General unless the Chief Master so signifies in writing.
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| 26.48 |
The Accountant-General will refer the applicant to the Chief Master who will consider whether there is a more economical method of preserving the fund than lodging it in the High Court or, failing that, may suggest that the money be lodged in a county court (which has power to accept sums of up to £30,000 lodged under section 63 of the Trustee Act 1925Acts).
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| 26.49 |
If the Chief Master decides that a particular lodgment should be made in the High Court, he will so signify on the back of the request (in respect of applications under rule 14(1)(ii)(a)) or the office copy schedule to the affidavit (in respect of applications under rule 14(1)(ii)(b)).
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| 26.50 |
The procedure concerning the estates of deceased Lloyd's names is governed by a Practice Statement [2001] 3 All ER 765.
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| 26.51 |
Personal representatives who wish to apply to the court for permission to
distribute the estate of a deceased Lloyd's Name following Re Yorke
(deceased) [1997] 4 All ER 907, or trustees who wish to administer any
will trusts arising in such an estate, may, until further notice and if
appropriate in the particular estate, adopt the following procedure.
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| 26.52 |
The procedure will be appropriate where:
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(1) |
the only, or only substantial, reason for delaying distribution of the estate is the possibility of personal liability to Lloyd's creditors; and
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(2) |
all liabilities of the estate in respect of syndicates of which the Name was a member have for the years 1992 and earlier (if any) been reinsured (whether directly or indirectly) into the Equitas group; and
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(3) |
all liabilities of the estate in respect of syndicates of which the Name was a member have for the years 1993 and later (if any) arise in respect of syndicates which have closed by reinsurance in the usual way or are protected by the terms of an Estate Protection Plan issued by Centrewrite Limited or are protected by the terms of EXEAT insurance cover provided by Centrewrite Limited.
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| 26.53 |
In these circumstances personal representatives (and, if applicable, trustees) may apply by a Part 8 Claim Form headed "In the Matter of the Estate of [ ..............] deceased (a Lloyd's Estate) and In the Matter of the Practice Direction dated May 25 2001" for permission to distribute the estate (and, if applicable, to administer the will trusts) on the footing that no or no further provision need be made for Lloyd's creditors. Ordinarily, the claim form need not name any other party. It may be issued in this form without a separate application for permission under rule 8.2A.
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| 26.54 |
The claim should be supported by a witness statement or an affidavit substantially in the form set out in Appendix 11 adapted as necessary to the particular circumstances and accompanied by a draft of the desired order substantially in the form also set out in Appendix 11. If the amount of costs has been agreed with the residuary beneficiaries (or, if the costs are not to be taken from residue, with the beneficiaries affected) their signed consent to those costs should also be submitted. If the Claimants are inviting the court to make a summary assessment they should submit a statement of costs in the form specified in the Costs PDpdp-43. If in his discretion the Master (or outside London the District Judge) thinks fit, he will summarily assess the costs but with permission for the paying party to apply within 14 days of service of the order on him to vary or discharge the summary assessment. Subject to the foregoing, the order will provide for a detailed assessment unless subsequently agreed.
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| 26.55 |
The application will be considered in the first instance by the Master who, if satisfied that the order should be made, may make the order without requiring the attendance of the applicants, and the court will send it to them. If not so satisfied, the Master may give directions for the further disposal of the application.
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Judicial Trustees
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| 26.56 |
Judicial trustees are appointed by the court under the Judicial Trustees Act 1896, in accordance with the Judicial Trustee Rules 1983. An application for the appointment of a judicial trustee should be made by Part 8 claim (or, if in an existing claim, by an application notice in that claim) which must be served (subject to any directions by the court) on every existing trustee who is not an applicant and on such of the beneficiaries as the applicant thinks fit. Once appointed, a judicial trustee may obtain non-contentious directions from the assigned Master informally by letter, without the need for a Part 23 application (unless the court directs otherwise). Applications for directions can be sought from the court as to the trust or its administration by rule 8 of the Judicial Trustee Rules.
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| 26.57 |
Where it is proposed to appoint the Official Solicitor as judicial trustee, inquiries must first be made to his office for confirmation that he is prepared to act if appointed. The Official Solicitor will not be required to give security.
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| 26.58 |
A judicial trustee is entitled under rule 11 of the 1983 rules to such remuneration as is reasonable in respect of work reasonably performed. Applications for payment by the trustee must be by letter to the court, submitted with the accounts. A Practice Note issued by the Chief Chancery Master, with the authority of the Vice-Chancellor, on 1 July 2003 sets out the best practice to be followed in determining the amount of remuneration. The Practice Note mirrors the position regarding receivers' remuneration under CPR rule 69.7 and is reproduced at Appendix 12.
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