Ludlow Trust Company v Homfray: cross-accruer clause and the meaning of "subsisting" trusts

The High Court has handed down an important judgement on the construction of a 1945 family settlement, resolving a dispute over approximately £3.1 million held in a trust fund. The case, Ludlow Trust Company Limited v John Homfray [2026] EWHC 1107 (Ch), was decided by HHJ Paul Matthews sitting as a Judge of the High Court in Bristol on 13 May 2026.

The settlement, created by George Cock Gibson, divided the trust fund into three equal shares for his biological children, David, Simon and Angela, and their respective issue. A "cross-accruer" clause provided that if the trusts of any fund should "fail or determine", those assets would pass to the funds in respect of which trusts were still "subsisting". Simon died in 2021 without ever having had children, triggering the central question: did his fund accrue equally to both David's and Angela's Funds, or solely to Angela's Fund, given that David had died in 1998 and his fund had since been substantially distributed to beneficiaries?

The claimant trustee, Ludlow Trust Company, argued that once the assets of David's Fund had been distributed to those absolutely entitled, the trusts of that fund had "determined" for the purposes of the cross-accruer clause. With nothing left to hold and nothing left to do, the trusts could not realistically be described as subsisting.

The defendant, John Homfray, a grandson of the settlor and beneficiary of the Homfray funds, took the contrary view. The cross-accruer clause was concerned with the failure of trusts for want of beneficiaries, not for want of assets. The trusts of David's Fund had not failed in any meaningful sense; the fund had simply run its course as intended.

HHJ Matthews accepted the defendant's construction. The scheme of the settlement was to treat the three biological children equally, with assets cascading to surviving lines of descent when a particular fund exhausted its beneficiaries. The trusts of a fund remained "subsisting" so long as there were still assets, held anywhere within the settlement structure, to which those trusts could attach. Even if every asset originally within David's Fund had been distributed, the trusts themselves persisted as a framework capable of receiving and administering Simon's Fund assets. The claimant's construction would, in effect, reward early distribution with the extinction of a fund's claim under the cross-accruer, an outcome inconsistent with the settlor's evident intention of equal treatment across the three bloodlines.

The judgement contains a careful analysis of when a trust begins and ends under English law, affirming that a trust subsists from the moment the obligation engages the conscience of the asset's owner until it ceases in relation to any surviving derived asset. The decision also addressed the Supreme Court's Scottish ruling in Dooneen Ltd v Mond [2019], finding it of no assistance, since that case turned on the particular terms of an insolvency trust deed and Scottish law rather than the general English law of trusts.

On interpretation more broadly, the judgement reaffirms the primacy of textual analysis in construing wills and settlements, endorsing the approach articulated in Barnardo's v Buckinghamshire [2019] ICR 495. Because wills and trusts operate over the long term, often conferring rights on parties with no knowledge of the circumstances in which the instrument was drafted, the words chosen by the draftsman carry greater weight than background factual context might in an ordinary commercial contract.

A subsidiary application, seeking permission for the trustee to administer Angela's Fund on the footing that Angela, now aged 95, would have no further children, was granted without opposition. HHJ Matthews observed that no medical evidence was required and that seeking court sanction for so obvious a matter would ordinarily be an unnecessary use of trust resources.

The court declared that since Simon's death, his fund has been held equally on the trusts of Angela's and David's Funds.