Vol 18 (2021) - Issue 6

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Re Instant Cash Loans Limited (in members' voluntary liquidation)[2021] EWHC 1164 (Ch)

Synopsis
The English High Court considered the extent of (i) its jurisdiction under section 57 of the Trustee Act 1925 to authorise departures from the terms of a trust in relation to the mechanism for payments to beneficiaries; and (ii) its inherent jurisdiction to give directions to trustees to distribute trust property on particular bases or footings when the Court is satisfied that it is just and expedient to do so.
Instant Cash Loans Limited (the 'Company') sought the Court's assistance in relation to the distribution of funds held on trust for certain of its creditors pursuant to the terms of a scheme of arrangement (the 'Scheme'). Although the terms of the Scheme required payments to be made to the beneficiaries via bank transfer, a significant number of beneficiaries had not supplied the Company with the necessary bank account details which prevented it from doing so.
Michael Green J held that:– The Company could pay the beneficiaries in question via cheque rather than by bank transfer as envisaged by the Scheme. This would not have any effect on the beneficial interests in the trust property. Instead, it simply changed the mechanism of payment under the Scheme and this fell within the scope of what the Court could order pursuant to section 57 of the Trustee Act 1925.
– The question of how to deal with any balance remaining in the trust fund as a result of cheques not being cashed was more complicated as a result of beneficiaries' continuing beneficial interest in the trust property. However, the Company had taken all possible steps to encourage the beneficiaries to claim their entitlements and those who did not cash their cheques would have taken no action in respect of their claims for a period of 18 months.
– The Court therefore permitted the Company to distribute any balance remaining in the trust fund pro rata to those beneficiaries who had supplied their bank account details on the footing that beneficiaries who had not done so had abandoned their claim. The Court was able to make such an order pursuant to its inherent jurisdiction, which is broad in scope and allows the Court to enable practical difficulties to be overcome in the administration of a trust. Such a course of action was preferable to requiring the balance to be paid into Court.