The Gazette 1976

GAZETTE January-February 1976

granting a lease which was objected to by all those

entitled to in remainder, I should regard the case

with considerable suspicion. It is clear from the

correspondence that the real object of the lady in

granting the lease is that she may herself continue

in occupation of the premises. That, in my opinion,

is not a bona fide exercise of her powers as tenant

for life.

Also amongst those decisions which have emphasised

the fiduciary character of the tenant for life's powers

Re Earl of Radnor's Will Trusts

'"'

which deals with

the power to sell settled chattels conferred on the tenant

for life by s.37 of the Act of 1882. This power to sell

"heirlooms" does not differ in principle from,

e.g.,

the

power to sell the settled land. It, also, is subject to the

statutory trust imposed by s.53 but, unlike the power to

sell or lease the settled land, it cannot be exercised

without an order of the Court.

In the present case, Chitty J. observed

that the Act

appeared to treat the tenant for life as the head of the

family whose state of mind, as he exercised his statutory

powers, was not as irrelevant as other judges had

suggested

: —

When a tenant for life, in proposing to sell heir-

looms, is attempting to use his power maliciously,

or to spite his successor . . ., or where he is acting

wantonly or capriciously, the Court would un-

doubtedly decline to sanction the sale.

On appeal against Chitty's order authorizing the sale,

Lord Esher, M.R., stated the duties of the tenant for

life in terms which have been adopted, subject to qual-

ifications, by Cheshire

' as of general application to the

exercise by the tenant for life of his statutory powers: —

He must take all the circumstances of the family,

and of each member of the family who may be

affected by what he is about to do; he must con-

sider them all carefully, and must consider them

in the way that an honest outside trustee would

consider them; then he must come to what, in his

judgment, is the right thing to do under the cir-

cumstances — not the best thing, but the right

thing to do.

Lord Esher went on to explain that by distinguishing

the "right" from the "best" thing, he meant to convey

that the Court would not lightly differ from the tenant

for life exercising his honest discretion as "head of the

family". But this discretion is not entirely untrammelled

since, Lord Esher suggests, there should be a bias

against the exercise of the power: —

1 should think that a fair and honest trustee would

lean against selling the heirlooms; for I agree . .

that

prima facie,

unless something in the circum-

stances justifies it, an honest trustee would be in-

clined to keep the heirlooms where the person who

has settled them desired that they should be kept;

therefore the leaning would be against a sale.'

Is it possible to reconcile these paradoxical judicial

pronouncements on the duty of the tenant for life in

exercising his statutory powers? Can any consistency be

established between those decisions which require only

pecuniary accountability and those others which re-

quire the tenant for life to consider all the interests of

the parties entitled under the settlement "in the widest

sense — not merely pecuniary interests, but wishes and

sentimental feelings, and so on"?

It is submitted that whether the fiduciary character

of the power is expanded or not depends, in general,

on the kind of settled property involved and what is

thought to be the policy of the Settled Land Acts in

respect of such property. It has been said that the Act

of 1882 "incorporated a new idea, of complete equality

in value between land and money"

and that the

object of the Act was "to render land a marketable

article, notwithstanding the settlement".

Hence, if a

beneficiary's interest in the settled land is converted

into cash, without his consent or, perhaps, even know-

ledge, he is unlikely to have any redress. Of course,

the tenant for life must obtain the best price or rent

but that does not mean that the Court will interfere,

on this score, unless the price or rent is "infinitely

below"

the real value of the property, or at least the

inadequacy is substantial

" (presumably because market-

ability would be impeded if the adequacy of the price

or rent could be questioned too freely).

The judges have clearly recognized that the object

of the Act of 1882 was

to enable the tenant for life of real estate comprised

in a settlement to take it out of the settlement,

and to substitute for it,

ex mero motu,

the value of

it in pounds, shillings, and pence.

But they have not accepted that the convertibility of

the settled property

other than land

was intended by

the legislation and this explains, it is suggested, their

conservative interpretation of s.55 in relation to,

.g.,

sales of the settled chattels. And when the power, the

exercise of which is being questioned, is a power not

directly connected with the marketability of the settled

land, such as the power to direct investments,

then

the exercise of that power is also closely supervised.

Since it can be explained as a fraud on a power, the

difficulties (if any) of squaring

Middlemas

Stevens

with this

rationale

of the various decisions are theor-

etical (even on the supposition that the proposed rent

was adequate

"). Despite previous comments.

" a dis-

tinction

can

be drawn between the conduct of the selfish,

or even malicious, tenant for life who "sells land that

will obviously be of far greater value in a few years'

time"

and that of the widow who attempts to frustrate

her husband's will. The former is a commercial trans-

action whilst the latter is not, because it lacks,

inter

alia,

that element essential to commerce which, in a

somewhat similar case,

Romer, J. described as "real

bargaining". Morally, the widow's conduct does not

compare unfavourably with that of the other tenant for

life, but the latter enjoys the blessing of the Settled

Land Acts.

1. (The Act of 1882) "is much more revolutionary in its

principles than any of the Acts of 1925": Hanbury's

Modern

Equity

. 9th ed., p. 513.

2. Cheshire's

Modern

Law of Real Property,

11th ed

p. 163.

3. S.53 of the Act of 1882, re-enacted almost verbatim for

England and Wales by s. 107(1) of the Settled Land Act, 1925.

Per

Younger, J. in Re

Earl of Stamford

and

Warrington

(1916). 1 Ch. 404, 420.

5. See,

e.g.,

Cheshire,

op. cit.,

pp. 162-163.

6. (1883) 23 Ch.D. 752.

7. at pp. 758. 759.

Thomas

Williams

(1883) 24 Ch.D. 558.

9. at p. 566.

10. (1885) 30 Ch.D. 531 at p. 539.

11.

Supra.

12. (1905) 2 Ch. 418; (1904-7) All E.R. Rep. 736

13. (1883) 31 W.R. 912. See also

Chandler

Bradley

(1897) 1 Ch. 315. where the tenant for life was restrained from

granting a lease at a reduced rent for a bribe and

Re Earl

Somers

(1895) 11 T.L.R. 567 where a teetotal tenant for life

was restrained from letting a public house on terms that no

intoxicating liquor be sold.

14. (1901) 1 Ch. 574.

15. at p. 577.

16. (1890) 45 Ch.D. 402.

17. at p. 413.

18. See

supra.