The Gazette 1987

SEPTEMBER 1987

GAZETTE

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.

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

Part 2 of this article will be publish- ed in the January/February issue.

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