Lord Denning is well known to lawyers and law students alike. He is perhaps the first jurist that a law student comes across who puts a smile on his/her face with his use of whimsical language and endearing turn of phrase. Lord Denning has been called the most celebrated judge of the 20th century and died in 1999 at the grand old age of 100. He held a variety of positions in the British justice system, including as Masters of the Rolls in the Court of Appeal (the second most senior judge in England and Wales, after the Lord Chief Justice). He came to be known as the people’s judge and his decisions often ran against the prevailing law in vogue at the time. Lord Denning was quick to criticize the common law reverence and adherence to precedent (the practice whereby a legal principle established in one case is followed in subsequent, similar cases).
I recently came across Lord Denning in considering a variation of trust proceeding. In Re Weston’s Settlements, [1968] 3 All E.R. 338 , [1969] 1 CH 223 (C.A.), the applicant settled two trusts in favour of his sons in 1964. In 1965 capital gains taxes were introduction in England. In reaction to the new tax, Mr. Weston moved to Jersey. The applicant sought to wind up the trusts in England so that they could be re-established in the tax-free jurisdiction of Jersey. It is difficult to tell what Lord Denning found more offensive: that the applicant was seeking to avoid taxes (“The avoidance of tax may be lawful, but it is not yet a virtue”); or that Mr. Weston was willing to leave England (“There are many things in life more worth-while than money. One of these things is to be brought up in this our England, which is still ‘the envy of less happier lands.’)
Despite the distaste felt by the court at the motivation of Mr. Weston, Lord Denning acknowledged that taxes can be a legitimate reason to vary a trust:
“[The court] can give its consent to a scheme to avoid death duties or other taxes. Nearly every variation that has come before the court has tax avoidance for its principal object: and no-one has ever suggested that this is undesirable or contrary to public policy.”
However, the court denied the application not on the grounds of the motivation for the variation, but the effect it would have on Mr. Weston’s adult and married children. Lord Denning held that:
“I do not believe it is for the benefit of children to be uprooted from England and transported to another country simply to avoid tax… Are [the children] to be wanderers over the face of the earth, moving from this country to that, according to where they can best avoid tax? I cannot believe that to be right. Children are like trees: they grow stronger with firm roots.”
Re Weston’s Settlements was a thinly veiled critique of the applicant and his motivations. However, the courts since Re Weston’s Settlements have become more comfortable with varying trusts for tax purposes and law students and lawyers no less fond of Lord Denning.
Thanks for reading,
Justin
