VARIATION OF TRUSTS AND SETTLEMENT

The final research proposal submitted in fulfillment of the course Private

International Law, Semester IX during the academic year 2020-21

Submitted by-

C. Monica

Roll No. - 1617

B.B.A LLB

Submitted to-

Dr. P. P. Rao

Oct., 2020

Chanakya National Law University,

Mithapur, Patna, 800001

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ACKNOWLEDGEMENT

I am feeling highly elated to work on under the guidance of my Private International

Law faculty. I am very grateful to him for the exemplary guidance. I would like to
enlighten my readers regarding this topic and I hope I have tried my best to bring more
luminosity to this topic.

I also want to thank all of my friends, without whose cooperation this project was
not possible. Apart from all these, I want to give special thanks to the librarian of my
university who made every relevant materials regarding to my topic available to me at
the time of my busy research work and gave me assistance.

OBJECTIVE OF THE STUDY

The researcher seeks to study the provisions concerning variation of trusts and settlement in
the Indian Trusts Act 1882 with reference to Variation of trusts Act, 1958 of U.K.

HYPOTHESIS

The court has unlimited inherent jurisdiction to modify or vary trusts where such
modification or variation is clearly shown to be for the benefit of all persons interested who
are not sui juris, including unborn persons.

RESEARCH METHODOLOGY

The research includes different options. They are:

• Exploratory research:

It is usually a small-scale study undertaken to define the exact nature of a problem and to
gain a better understanding of the environment within which the problem has occurred. It is
the initial research, before more conclusive research is under taken.

• Descriptive research:

It is to provide an accurate picture of some aspects of market environment. Descriptive

research is used when the objective is to provide a systematic description that is as factual
and accurate as possible. It provides the number of time something occurs, or frequency,
lends itself to satisfied calculations such as determining average number of occurrences.

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 TABLE OF CONTENTS

1. INTRODUCTION............................................................................................4

2. METHODS OF VARYING TRUSTS..............................................................5

3. VARIATION OF TRUSTS ACT 1958............................................................9

4. SCOPE IN INDIA..........................................................................................16

5. CONCLUSION...............................................................................................19

BIBLIOGRAPHY...............................................................................................20

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 1. INTRODUCTION

As a trust can operate for many years, there may be occasions where it is useful or necessary
to vary the terms of the trust. The most common reason for varying the terms of a trust is to
minimize beneficiaries’ liability to pay tax. The key issue in variation of trusts is consent
either by the beneficiaries or, where necessary, by the courts. Where this consent does not
exist, trustees who do not follow the terms of the trust will be liable for breach of trust.
However, it will often be impossible for all the beneficiaries to consent. Therefore, the
majority of this chapter will focus on the circumstances in which the courts may approve a
variation on their behalf.
Trustees are required to administer the trust in accordance with its terms. They have a
primary duty to obey the instructions as detailed by the settlor or implied by law. Any
deviation from the terms of the trust is a breach making them personally liable, irrespective of
how well intentioned the trustees may have been. But circumstances may arise, since the
setting up of the trust, which indicate that the trust might be more advantageously
administered if the terms were altered.
For example, authority may be needed to use funds from the trust to maintain an infant
beneficiary; an investment or the impact of a potential liability to taxation may have the
effect of depreciating the trust assets if no action is taken. A partitioning of the trust property
between the life tenant and remainder man may have the effect of avoiding inheritance tax if
the life tenant survives for seven years or more, whereas, if no action is taken, the entire
capital may suffer inheritance tax on the death of the life tenant and a second time on the
death of the remainder.1
In these circumstances the trustees are in need of some mechanism whereby authority may be
conferred on them to depart from or vary the terms of the trust. Such authority may be
conferred in a variety of ways.
In the UK, any variation of trust can be effected only with the approval of the Court, under
the Variation of Trusts Act, 1958, where the beneficiaries are unascertained or they include
an infant or the unborn. One of the odd features of the trust law in India, as in the UK, is that
the beneficiaries cannot control the trustees, though they can end the trust or call for the
conveyance of any of the trust assets to them.2
1
http://lawcommissionofindia.nic.in.
2
https://www.nipfp.org.in/

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 2. METHODS OF VARYING TRUSTS

A trust can be varied by:

• the terms of the trust instrument;
• the consent of benefi ciaries;
• the court’s inherent jurisdiction; or
• statutory provisions.
The trust instrument
The provisions of the trust may expressly provide trustees with the power to vary the terms of
the trust. This allows trustees to modify the terms of the trust to adjust to changing
circumstances without having to receive the consent of the beneficiaries or use trust assets in
gaining court approval for such variations. While this might appear to give trustees free rein
to remould the trust as they see fit, a measure of protection is provided by Society of Lloyd’s
v Robinson [1999]. Lord Steyn stated that a power to vary the terms of a trust must be
exercised for the purpose for which it was granted and not beyond the reasonable
contemplation of the parties. Therefore, the extent to which the trustees are free to vary the
terms of the trust will depend on the terms on which the power was granted.
Beneficiary consent: the rule in Saunders v Vautier
Collectively, the beneficiaries can use the rule in Saunders v Vautier (1841) to end the trust,
at which point they may choose to take the property absolutely or resettle it on more
favourable terms. The rule in Saunders v Vautier can only be applied where:
 all the beneficiaries are together absolutely entitled to the trust property;
 all beneficiaries agree to ending the trust; and
 all beneficiaries are sui juris – i.e adults ( over 18) with the legal capacity to give
consent.
There are two important limitations on the rule in Saunders v Vautier:
1. Beneficiaries cannot use the threat of ending the trust as a bargaining chip to force trustees
to invest the trust funds in accordance with their instructions; If this were permitted, trustees
would effectively be prevented from discharging their fiduciary obligations to the
beneficiaries by personally considering and deciding how their best interests are served.3

3
Stephenson Inspector of Taxes) v Barclays Bank Trust Co Ltd [1975].

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2. All beneficiaries must give their consent. If the beneficiaries include children, benificiaries
who cannot legally consent, or others who do not yet exist, the rule in Saunders v Vautier
will not apply.
As any change to the terms of the trust requires the collective consent of all beneficiaries,
variation will not always be possible. However, in certain circumstances the court will be
able to provide approval for those beneficiaries who cannot.
The courts’ inherent jurisdiction
The courts have an inherent jurisdiction to vary the terms of a trust where the consent of all
the beneficiaries cannot be obtained. As Romer LJ stated in Re New [1901], this is a
jurisdiction which is to be exercised ‘with great caution, and the court will take care not to
strain its powers’. The central concern of the courts is to act only when it is required and,
otherwise, to avoid interfering with the intentions of the settlor.
What sort of variations could be approved?
The court will only approve variations relating to the administration and management of the
trust. It will not generally intervene in situations relating to the reorganization of the
beneficial interests of the beneficiaries. (Note: there is one exception to this rule, in relation
to maintenance provisions, which is discussed below under the emergency jurisdiction of the
courts.)
In what circumstances will the court approve a variation?
Following the decision of the House of Lords in Chapman v Chapman [1954], the courts’
jurisdiction is restricted to two situations, ‘Emergency’ and ‘Compromise’.
‘Emergency’
‘Emergency’ can be understood in its literal context, as in Re Jackson [1882], where the
trustees needed permission to use trust money to make repairs to a trust property which was
about to collapse. However, a more accurate understanding of an ‘emergency’ is something
not anticipated by the settlor; Chapman v Chapman [1954]. This means that the court will
intervene if, by not taking action, it would frustrate or interfere with the settlor’s intention.
For example, in Re Tollemache [1903], the court refused to approve a variation merely
because it was of financial benefit to the beneficiaries. However, it is interesting to contrast
this decision with the reasoning of the Court of Appeal in Re New [1901]:
It was proposed that a company, in which the trust already had shares, be reorganized to
allow for further growth. It was undisputed that this would be of benefit to the beneficiaries.
However, the trustees did not have the power to invest in these new shares and applied for a

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variation to the terms of the trust from the court While the Court of Appeal approved the
variation, Romer LJ emphasized that it was not within the court’s inherent jurisdiction to
interfere merely because a change would be of benefit to the beneficiaries. Instead, as the
proposed variation would not alter the trust’s property but only its nature (ie the type of
holding), the court was satisfied that its intervention actually supported the settlor’s intention
of leaving shares in this company on trust.4
Maintenance provisions – The court will in general only approve variations to the
administration or management of the trust. However, the underlying idea that the court will
intervene only in matters unanticipated by the settlor has been used to justify one limited
exception.5
Where a settlor has established a trust and directs that the income should be accumulated for
a period of time, the court will approve the insertion of a term providing for the maintenance
of a beneficiary, on the basis that a settlor would not establish a trust to benefit a beneficiary
in the future but in the meantime allow the beneficiary to go short6;.

‘Compromise’
The second aspect of the court’s inherent jurisdiction is in approving compromises where
there is a conflict regarding the rights of the beneficiaries. Originally, ‘compromise’ was
defined widely to allow the court to approve variations to the rights of the beneficiaries; 7.
This allowed the court to approve of tax-saving and financially advantageous bargains
between different classes of beneficiaries.
However, such a power was difficult to reconcile with the narrower ‘emergency’ jurisdiction
of the courts, and in Chapman v Chapman [1954] the House of Lords adopted a more
restrictive approach. Lord Morton argued that the court only had the jurisdiction to intervene
in ‘genuine disputes’ over the beneficial interests. He stressed that in such circumstances, the
court could not be said to be interfering with the beneficial interests because the existence of
a dispute meant that they were not already clear. Therefore, all the court was doing was
clarifying the settlor’s intentions.
Why is the court’s inherent jurisdiction so narrowly defined?

4
Re New [1901] 2 Ch 534.
5
http://caseyandmoss.com.
6
Havelock v Havelock (1881).
7
Re Downshire Settled Estates [1953].

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Why did the House of Lords adopt such a cautious approach to their inherent jurisdiction,
especially given that an application to vary the trust is usually accepted to be in the best
financial interests of the beneficiaries? In Chapman v Chapman, Lord Simonds argued that if
the courts were to exercise a wider jurisdiction, this should be authorized by the legislature
and not claimed by the courts for themselves. This restrictive approach was criticized by the
Law Reform Committee in their 1957 Report The Court’s Power to Sanction Variation of
Trusts (Cmnd 310) which provided the impetus for the Variation of Trusts Act 1958. This
Act, together with the various other statutory provisions, has now largely replaced the court’s
inherent jurisdiction with a wider authority to approve changes to the terms of a trust.
Statutory provisions
The courts have also been given statutory authority to vary the terms of a trust in a number of
circumstances:
Section 53 Trustee Act 1925: allows the court to vary the terms of a trust ‘for the
maintenance, education, or benefit of the infant’. It both mirrors the court’s inherent
jurisdiction to provide maintenance from a trust and extends it to authorize changes which
support the education or benefit of a child.
Section 57(1) Trustee Act 1925: allows the court to approve changes to the administration
and management of trusts where it is ‘expedient’ to do so. As this section does not require an
emergency, it largely renders the court’s inherent emergency jurisdiction redundant.
However, this section does not allow the courts to interfere in the beneficial interests under a
trust; Re Downshire Settled Estates [1953].

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 3. VARIATION OF TRUST ACT 1958
The Variation of Trusts Act 1958 allows the court to provide consent for certain types of
beneficiary where they cannot do so for themselves. Thus, any variation still requires the
consent of all other existing sui juris beneficiaries. What was striking about the Act was its
scope: Evershed MR described the Act as conferring ‘a very wide and indeed revolutionary
discretion’ to the courts to vary the terms of a trust.8

The Variation of Trusts Act 1958 was passed in order to reverse the decision of the House of
Lords in Chapman v Chapman (1954) and to introduce sweeping changes in the law. The
jurisdiction of the courts was extended in order to approve variations of trusts (in respect of
both administrative matters and beneficial interests) on behalf of infants, unborn persons and
others who lacked the capacity to consent to an arrangement. The court is entitled to sanction
‘any arrangement varying or revoking all or any trusts or enlarging the powers of the trustees
of managing or administering any of the property subject to the trusts’.

The court in its discretion may make an order approving a scheme, provided that the
following four conditions are satisfied:

1. property, whether real or personal, is held on trust; and

2. the trust was created by will or inter vivos settlement or other disposition; and

3. the four categories as enumerated in s 1(1) of the 1958 Act, namely:

a) any person having directly or indirectly, an interest, whether vested or contingent under
the trusts, who, by reason of infancy or other incapacity is incapable of assenting, or

(b) any person (whether ascertained or not) who may become entitled, directly or indirectly,
to an interest at a future date or on the happening of a future event, a person of any specified
description or a member of any specified class of persons, but not including any person who
would be of that description or a member of that class if the said date had fallen or the said
event had happened at the date of the application to the court, or

8
Re Steed’s Will Trusts [1960].

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(c) any person unborn, or

(d) any person in respect of any discretionary interest of his under protective trusts where the
interest of the principal beneficiary has not failed or determined.’

and:

4. provided that, with the exception of para (d) above, the arrangement was carried out for
the benefit of that person.

The purpose of the 1958 Act is to permit the court to approve arrangements on behalf of
beneficiaries who cannot give their consent by virtue of infancy or other incapacity or
because their identity is unascertained, such as a future spouse. It follows, therefore, that the
court has no jurisdiction to approve arrangements on behalf of beneficiaries who are sui juris,
adult and ascertained. Thus, the consent of all adult, ascertained beneficiaries must be
obtained before the court may grant its approval to a scheme.

Allen v Distillers Co (Biochemicals) Ltd9

The trust funds were received pursuant to a negotiated settlement of the Thalidomide
litigation. The desire of many of the parents of children affected was to ensure that the sums
held for their children should not become their absolute property at the age of 18. Eveleigh J
decided that he had the power to achieve the objective of the parents under the court’s
inherent jurisdiction, but he had no power under the 1958 Act because that Act did not apply
to the payment out to trustees under an out-of-court settlement of litigation. This was not the
type of trust contemplated in the 1958 Act:

‘The Act contemplates a situation where a beneficial interest is created which did not
previously exist and probably one which is related to at least one other beneficial interest.
Moreover, the Act is designed to deal with a situation where the original disposition was
intended to endure according to its terms but which in the light of changed attitudes and
circumstances it is fair and reasonable to vary.’

9
[1974] QB 384.

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Generally, the court may consent on behalf of potential beneficiaries who have a contingent
interest in the trust (see s 1(1)(b)), i.e. ‘a person who may become entitled … to an interest’,
for example a future spouse of a beneficiary. But the proviso to s 1(1)(b) prevents the court
from approving on behalf of adult beneficiaries who are ascertainable and stand only one step
removed from entitlement under the trust. It was the intention of Parliament that such persons
should be allowed to consent for themselves.10

Re Suffert’s Settlement11

Under a settlement, B was granted a protected life interest with a power to appoint the capital
and income on trust for her children. The settlement provided that if B had no children the
property was to be transferred to anyone in respect of whom B may appoint (i.e. a general
power) with a gift over in default of appointment in favour of B’s statutory next of kin. B was
61 years of age, unmarried and without issue. She had three first cousins (next of kin) all of
whom had attained the age of majority. B and one of her cousins sought to vary the
settlement. The other two cousins had not consented and were not joined as parties. The court
was asked to approve the arrangement on behalf of any unborn or unascertained persons and
the two adult cousins. The court held that it had jurisdiction to approve on behalf of unborn
and unascertained persons, but could not approve on behalf of the two cousins. Their consent
was required.

‘What the subsection required was that the applicant should be treated as having died at the
date of the issue of the summons, to find out who in that event would have been her statutory
next of kin, and any persons who are within that class are persons whose interest the section
provides that the court cannot bind. It is impossible to say who are the statutory next of kin
of somebody who is alive, but it is not impossible to say who are the persons who would fill
that description on the hypothesis that the propositus is already dead.’

Variation or re-settlement?
Although the 1958 Act gives the court a wide discretion to approve a scheme varying the
terms of a trust, there appears to be a limitation on this discretion. The courts have adopted

10
Section 1(1)(b) of the 1958 Act.

11
[1961] Ch 1.

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the policy of not ‘rewriting’ the trust. Accordingly, a distinction is drawn between a
‘variation’ and a ‘re-settlement’. A ‘variation’ retains the basic fundamental purpose of the
trust but alters some important characteristic of the trust, whereas a ‘resettlement’ destroys
the foundation or substance of the original design or purpose of the trust. Whether a scheme
amounts to a variation or a re-settlement will vary with the facts of each case.

Settlor’s intention
The 1958 Act makes no mention of the settlor or testator. Rules of Court (RSC Ord 93 r 6(2))
have been made requiring the joinder of the settlor, if living, as a defendant to an application
under the Act. In exercising its discretion whether to approve an arrangement or not, the
function of the court is to determine, by reference to all the circumstances, whether the
arrangement as a whole is beneficial to the stipulated class of beneficiaries. However, in the
context of deciding whether to approve an arrangement or not, the intention of the settlor or
testator is only a factor (if relevant) to be taken into consideration by the court. But the
settlor’s or testator’s intention is certainly not an overriding factor, nor even a weighty
consideration in determining how the discretion of the court is to be exercised. The role of the
court is not to act as a representative of the settlor or testator in varying the trusts.

Variation of trusts and minors lacking mental capacity

ET v JP & Ors12  is a short but an important decision which deals with the question of the
boundaries between the Court of Protection and the High Court when considering the
variation of a trust on behalf of a minor who will never possess mental capacity.

The case concerned an application for the court’s approval to a variation of a trust pursuant to
the Variation of Trusts Act 1958. We are not told why a variation was sought. Tax planning
is one of the most common reasons for varying a trust but there are many other reasons why a
variation might be sought.

Adult beneficiaries, who possess the necessary mental capacity to take decisions of this
nature, can join together and agree to vary or break a trust, or to sanction a course of action
on the part of the trustees that is outside of their powers under the trust instrument, under the
principle in Saunders v Vautier13.

12
[2018] EWHC 685 (Ch).
13
(1841) 4 Beav 115.

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Saunders v Vautier rights cannot be exercised where the beneficiaries interested in the fund
include minors, adults lacking capacity without an attorney or deputy who can consent on
their behalf, or persons who are as yet unborn or unascertained. 

Save in very limited circumstances, most typically where there is some emergency or threat
to trust property or to approve a compromise where there is a dispute about the destination of
trust funds, the High Court has no inherent jurisdiction to approve a variation of a trust on
behalf of any parties unable to provide consent under the Saunders v Vautier rule.

The Variation of Trusts Act 1958 plugs that gap. S. 1 of the 1958 Act allows the court to
approve the variation of a trust on behalf of certain beneficiaries who lack the capacity to
consent to the variation themselves.  

The court can give consent on behalf of four categories of beneficiaries: those incapable of
consenting by reason of “infancy or other incapacity” 14 unascertained persons15 unborn
persons16 and potential discretionary beneficiaries under a protective trust where the principal
beneficiary’s interest is not yet forfeited17.

S. 1 of the 1958 Act gives the courts a very broad power to approve “any arrangement…
varying or revoking all or any of the trusts, or enlarging the powers of the trustees of
managing or administering any of the property subject to the trusts”. 

In the case of minor beneficiaries and those lacking capacity, unborn and unascertained
persons, the court must be satisfied that the variation is for their benefit.

In terms of the delegation of responsibility for approving a proposed variation, s.1 of the
1958 Act operates, as summarised by Morgan J, as follows:

1. In the case of an adult beneficiary who has capacity within section 2(1) of the 2005
Act, the adult can decide for himself whether to agree to a proposed variation of a
trust and the court has no power to give approval on his behalf;
2. In the case of an adult beneficiary who does not have capacity within section 2(1) of
the Mental Capacity 2005 Act to agree to the variation of a trust, the court has power
to give approval on his behalf but the question as to whether the variation is for his

14
Sec. (1(1)(a));
15
Sec. (1(1)(b));
16
Sec. (1(1)(c));
17
Sec. (1(1)(d)).

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 benefit is to be decided by the Court of Protection rather than by the High Court
(s.1(3));
3. In the case of a minor beneficiary, the minor does not have capacity (by reason of
being a minor) to decide for himself whether to agree a proposed variation of a trust
and the court has power to give approval on his behalf.

The facts
On the facts of the case, the adult beneficiaries all consented to the proposed variation.
However, the variation could affect the position of three beneficiaries who were minors and
also the position of unborn and unascertained beneficiaries, none of whom could consent to
the variation, and the court’s approval to the variation was sought on their behalf. One of the
minor beneficiaries, referred to in the judgment as “X”, was severely autistic and was not
expected to have the capacity to make decisions of this nature for himself as an adult.

The  court was invited to determine whether it was necessary to refer the question of whether
or not the variation was for X’s benefit to the Court of Protection, as would be the case for an
adult lacking capacity pursuant to s1(1)(3), or whether that was an issue that the High Court
could deal with.

Morgan J is actually a nominated judge of the Court of Protection in addition to being a High
Court judge and could therefore have sat in both capacities without being required to decide
this point. However, since there is no authority on the point and such applications are listed
before other judges and masters who are not also COP judges, he was invited to give
judgment on the point.

The decision
Morgan J’s analysis is as follows:

20. I can see that it might be argued that there are two reasons why X lacks capacity, the
first reason being that he is a minor and the second being that he has an impairment or
disturbance of the mind or brain. It might then be argued that because one of the
reasons X lacks capacity to assent is the impairment or disturbance of the mind or
brain the matter should be referred to the Court of Protection. However, section 1(3)
of the 1958 Act appears to apply to a person where the impairment etc is the single or
only reason for the lack of capacity to consent. That requirement is not met where
there are argued to be two reasons for the lack of capacity.

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 21. I consider that on the literal reading of section 1(3) of the 1958 Act taken together
with section 2(1) of the 2005 Act, X is not able to assent to the variation by reason of
being a minor. His inability is not by reason of another incapacity and is not because
of an impairment or disturbance of mind or brain.

Accordingly, it is clear from the decision that the question of whether or not the court should
approve a proposed variation of a trust on the part of a beneficiary who is under the age of 18
will always be a matter for the High Court. This will be the position even if that person is
nearly 18 and lacks capacity in relation to other matters within section 2(1) of the Mental
Capacity Act 2005. The involvement of the Court of Protection is only required in cases of
adults lacking capacity.

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 4. SCOPE IN INDIA
TRUSTS ACT 1882

CHAPTER III – DUTIES AND LIABILITIES OF TRUSTEES

Section 11.—The first paragraph of section 11 authorises a modification of the trust with the
consent of all the beneficiaries who are competent to contract. If all the beneficiaries are
competent to contract, the matter does not create any difficulty, for, they, being the
beneficiaries entitled to the property, have the power to modify or vary the trust in any
manner they please. The trouble arises only when some or all of the beneficiaries are not
competent to contract, in which event it is provided in the second paragraph of the section
that consent in such cases may be given by a principal civil court of original jurisdiction on
behalf of the persons who are not capable of contracting. The section, however, is silent
regarding the principles which should guide the discretion of the court in giving or refusing
such a consent. It has been suggested that we should embody the principles established by
decisions for guidance of the courts and also extend the protection to unborn beneficiaries.

It has been held in Rajagopala Gramani v. Baggiammall18, that the section is based on the
well recognised principles of English Law. There is a sharp divergence of opinion in the
English courts on the subject whether the court has unlimited inherent jurisdiction to modify
or vary trusts where such modification or variation is clearly shown to be for the benefit of all
persons interested who are not sui juris, including unborn persons.

The House of Lords had occasion recently to examine the question in Chapman v.
Chapman19, , which is an appeal against the judgment of the Court of Appeal in that case. 1 A
perusal of these two decisions would enable one to assess the extent to which the divergence
of opinion exists. One view is that the jurisdiction is not unlimited but is confined only to
exceptional cases, the exceptions having been enumerated in the judgment of the House of
Lords. The other view found favour with Denning L.J., who in his dissenting judgment in the
Court of Appeal, traced the history of the jurisdiction from the time of Lord Hardwick and
concluded that if the proposed modification or variation of trust is beneficial to the
beneficiaries who are not sui juris, the court has the power and duty to approve the

18
56 Mad 508 (510, 511).
19
(1954) 1 All ER 798.

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modification or variation, as the case may be. The rule, as stated by Denning L.J., has
simplicity in its favour while an examination of the other views expressed in the courts of
England from 1901 onwards would show that the judges were striving from time to time to
introduce exceptions which cover a wide field. We think it unnecessary to follow the majority
opinion of the English courts and embody the complicated rules recognised by them. It would
simplify the law if we adopt the principle laid down by Denning L.J., in his dissenting
judgment in the Court of Appeal vesting in the court a wider discretion. The limitation
suggested by Denning L.J., would be sufficient to safeguard the interests of the beneficiaries
who are not sui juris or are unborn.
Whenever a minor's interests are involved, the test applied is to consider whether the
proposed action of the guardian is for the benefit of the minor or not, and that test may
equally be applied here. We, therefore, suggest that in granting permission the court should
take all the circumstances into consideration and decide whether the proposed modification or
variation is beneficial to the interests of the beneficiaries concerned. This principle may be
embodied in the second paragraph of, section 11.
While extending the section to unborn persons, the word "consent" should be substituted by
"approval" which is more appropriate with reference to unborn persons (Compare the English
Act also on this point).
The decision of the House of Lords in Chapman v. Chapman, (1954) 1 All ER 798,
provoked criticism, and the Lord Chancellor invited the Law Reform Committee "to consider
whether any alteration is desirable in the powers of the court to sanction a variation in the
trust or a settlement in the interests of beneficiaries under disability and unborn persons, with
particular reference to the decision in Chapman v. Chapman, (1954) 1 All ER 798. On the
recommendation of the Committee that the view of Denning L.J. should be preferred to that
of the majority, the Act known as the Variation of Trusts Act, 1958, was passed, giving effect
to the dissenting judgment of Denning L.J. The Act of 1958 has thus set at rest the sharp
divergence of opinion which obtained in England till then. Our view accords with the existing
law in England.
1. (1953) 1 All ER 103.
It is perhaps more convenient to notice one other aspect of the matter. Section 57 of the
(English) Trustee Act, 1925, conferred upon the court jurisdiction to sanction certain powers
to the trustees which are necessitated in the course of the administration or management of a
trust and a corresponding provision is also made in the Settled Land Act, 1925. 1 The

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substance of both the sections is more or less the same. These sections, as observed by the
Court of Appeal in the decision already referred to (Chapman v. Chapman, See para. 22,
supra,) do not purport to codify the entire jurisdiction of the courts of equity to alter or
modify the terms of the trust, but are intended merely to empower the courts to give
directions to the trustee even though not found in the instrument of the trust, on the ground of
expediency and in the interests of better administration. -A similar principle may be
embodied at the appropriate place, preferably after section 34.

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 5. CONCLUSION

Trust variation applications are necessary because people cannot predict the future. Testators,
settlors and their lawyers do their best to plan for every eventuality but sometimes, a set of
circumstances arises in the course of an administration that no one expected. A settlor settles
an inter vivos trust with his two named children as capital beneficiaries and then goes on to
have an unexpected third child. A testator prepares his will at a time when interest rates are
over 20% and never foresees a world two generations later where a bank account no longer
pays any significant amount of interest. Changes to the Income Tax Act could result in
unanticipated tax consequences. The burdens and costs of administering the trust may
become disproportionate to the benefits of the structure. Often, variations are prompted by
tax planning for the 21-year deemed disposition of trust assets. A named charity may no
longer exist.

Trust variations can fix a number of problems that were not or could not have been
anticipated at the time the trust was settled. While it may seem at first blush that a variation
application is a simple matter, there are a number of important things to keep in mind before
seeking to vary a trust

The courts’ discretion to assess the ‘benefit’ of a variation is extremely wide and potentially
very subjective. This problem is accentuated when the court has to weigh financial benefits
against non-financial ones. While this discretion allows the court to consider all the
circumstances of a case, it is an unfortunate feature of variation cases that many are heard in
private and not reported. Therefore, it is difficult to establish any clear principles determining
how that discretion should be exercised.
 A trust may be varied by a power within the trust itself, the collective consent of the
beneficiaries, by the court, through its inherent jurisdiction, or by statute.
 The power of the courts to intervene will depend on whether the variation relates to
administrative or managerial matters or a reorganization of the beneficial interests.
 The Variation of Trusts Act (VTA) 1958 gives the courts a wide jurisdiction to vary a
trust for the benefit of those beneficiaries unable to consent.
 A benefit under the VTA 1958 will typically be financial but the court can also take
into account non-financial benefits.

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 BIBLIOGRAPHY

Books:

  Dr. G.P. Tripathi, Conflict of Laws (Private International Law),1 Ed 2015, Allahabad
Law Agency.
 Dr. S.R. Myneni, Private International Law (Conflict of Laws),1 Ed Reprint 2018,
Asia Law House.
 Peeyushi Diwan, Paras Diwan, Private International Law – Indian and English, 4 Ed
Rev 1998,  Deep & Deep Publications Pvt. Ltd.

Statutes:

 Variation of Trusts Act, 1958

 Indian Trusts Act, 1882

Websites:

 https://lexisnexis.in
 https://www.jstor.com
 http://www.legalservicesindia.com
 https://papers.ssrn.com
 https://jollycontrarian.com
 https://www.bclaws.ca

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