PNPF Trust Co Case

Legal Principles

An instrument that purports to amend the terms of a trust must not alter the whole “substratum” of the trust or its basic purpose (ie the “authorised purpose” of the trust).

Geriant Thomas in Thomas on Power {2nd Edition} at 2.35 states:

“It is the case that a discretion of a pension scheme trustee which is expressed to be ‘absolute’ or ‘uncontrolled’ will actually be held not to be any such thing because, otherwise, the ‘business efficacy’ of the arrangement will be defeated or seriously impaired. There is no logical reason to ‘read down’ powers of amendment – whether by way of construction or implication – and not adopt a similar approach to other provisions in pension scheme documentation.”

Thomas cites PNPF Trust Co Ltd v Tayor [2010] EWCH 1573 (Ch) in support of this proposition.


The Case

This was a pension scheme case involving the trustee of a pension scheme, the Pilots’ National Pension Fund (PNPF).

Mr Justice Warren stated at [144]:

“That is consistent with descriptions of the restriction on the scope of a power to alter the objects or purposes of the trust; the amendment must not change the whole substratum of the trust (see in an analogous situation Re Ball’s Settlement Trusts [1968] 1 WLR 899; and also Kearns v Hill [1991] PLR 161) or its basic purpose (see Bank of New Zealand v Board of Management of New Zealand Officers’ Provident Association [2003] UKPC 58).