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GAZETTE
SEPTEMBER 1987
tory disposition, on intestacy or in
relation to a legal right under
ss.111 and 117 Succession Act
1965 to a share of a deceased per-
son's estate is to be the deceased.
Para (d) provides that if A makes
a "reciprocal arrangement" with B
to provide property for the pur-
poses of a disposition by B, A and
not B is to be treated as the
"disponer" in relation to the
disposition.
"Reciprocal arrangement"
Whereas there appears to be no
expression of judicial opinion in
regard
to
the
expression
"reciprocal arrangement", author-
ity is not hard to find regarding the
word "arrangement". The mean-
ing attributed to the word by
judicial definitions is so wide that
one wonders whether the word
"reciprocal" serves any useful pur-
pose whatever.
The word "arrangement" is said
to be "apt to describe something
less than a binding contract or
agreement, something in the
nature of an understanding be-
tween two or more persons — a
plan arranged between them which
may not be enforceable at l aw":
Newton-v- C of T\
1958] AC 450,
465 per Lord Denning. The word
comprehends "not only the initial
plan but all transactions by which
it is carried out . . . be they con-
veyances, transfers or anything
else": 465 Lord Denning.
Nor need the plan be carried out
as originally conceived. "Merely
because the final step . . . is left
unresolved at the outset and decid-
ed upon later does not seem to me
to rob the scheme of the necessary
unity to justify it being called an
'arrangement'":
Cross/and -v-
Hawkins
39 TC 493, 505 per
Donovan LJ.
Nevertheless, " in order that
something can be described as an
'arrangement' it must have a cer-
tain unity in its composition":
C/R
-v- Morton
24 TC 259, 271 per
Lord Normand. If the requisite
"unity of composition" is absent,
there can be no "arrangement"
within the meaning of para, (d),
"reciprocal" or otherwise.
Example (5)
Blackacre is settled to the use of
A for life with remainder to the use
of his nephew B in tail. A and B
disentail and convey Blackacre to
such uses as they shall jointly ap-
point. A wishes to appoint
£20,000 to his three daughters C,
D and E. In exercise of their joint
power of appointment A and B
charge Blackacre with the payment
on A's death of £20,000 to the use
of C, D and E on discretionary
trusts, A covenanting to pay an an-
nuity of £2,250 p.a. to B during the
remainder of his (A's) lifetime.
In the normal course of events,
B and not A would be the
"disponer" in relation to the discre-
tionary trusts created by the exer-
cise of the joint power of
appointment:
Braybrooke -v- A. G.
9 HLC 1 50,
A. G. -v- Floyer
9 HLC
477,
A. G. -v- Smythe
9 HLC 197.
In the present instance, however,
A and not B would be treated as
the disponer:
in re Jenkinson
24
Beav. 64. " . . .it must be taken to
be clear that the proceedings
emanated from (A) who was
desirous of settling a sum of money
on his daughters, and that he is the
settlor of that sum of money, and
that (B) consented and agreed to
join with him to enable him to make
that settlement, and that (B)
received a pecuniary consideration
for enabling (A) to make that
settlement": 72 per Romilly MR.
It is open to question whether
para, (d) serves any useful pur-
pose. A "reciprocal arrangement"
within the meaning of para, (d) of
the definition in s.2( 1) CATA 1976
of the word "disponer" will also be
an "arrangement" within the
meaning of para, (b) of the definit-
ion in the same section of the word
"disposition". The "disponer" in
relation to such an "arrangement"
as that instanced in Example (5)
above would be A, quite inde-
pendently of any such specific pro-
vision as para, (d) of the definition
of "disponer" in s.2(1) CATA
1975:
Cross!and -v- Hawkins
39
TC 493,
Mills -v- CIR
49 TC 367.
Para (C)
After the complexities of para,
(d) it is a relief to turn to the com-
parative simplicity of para, (c) of
s. 106(1) FA 1984. S.104 defines
the expression "principal object"
to include the disponer's "spouse"
and "children" but riot his grand-
children, unless by a child
predeceasing the disponer.
The apparent simplicity of the
definition turns out to be illusory
when one realises that it refers one
back to the vexed question of who,
in relation to the trust, is the
"disponer"? In Example (4) above,
for instance, the question whether
there are any "principal objects" at
all depends on whether A or B can
bé said to be the "disponer" in rela-
tion to the trust holding the 100
shares of £1 in the company hiring
out A's services. If the "disponer"
is B, Mrs. B and A will both be
"principal objects" as defined and
"the date of the inheritance" will
be the date upon which A ceases
to be under the age of 25 years:
s. 106(1) (c) FA 1984. If the
disponer is A, there will be no
"principal objects" and "the date
of the inheritance" will be the date
of A's death: s. 106(1) (b) FA
1984.
Part 2 of this article will be publish-
ed in the January/February issue.
COLIN G. GOGGIN
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