Trusts and Powers Flashcards
*Re Gulbenkian’s Settlement [1970] AC 508 (HL)
- Class of Beneficiaries
Case: On a summons to determine whether powers to appoint under settlements to “all or any one or more to the exclusion of the other or others of the following persons, namely, [G.] and any wife and his children or remoter issue for the time being in existence whether minors or adults and any person or persons in whose house or apartments or in whose company or under whose care or control or by or with whom [G.] may from time to time be employed or residing … was valid or void for uncertainty.”
Decision: The clause was not void for uncertainty and was therefore valid. This is because for a mere power the class is certain if it could be said with certainty whether any given individual was or was not a member of the class; it did not fail simply because it was impossible to ascertain every member of the class.
Rule:
Powers - the “any given individual” principal (explaining the any given postulant test).
It is sufficient in the case of a power collateral that provided one individual alone is certainly within the class the power remains good albeit the identity of the remainder of the class is uncertain. (Lord Donovan) Where language is ambiguous it is for the court to ascertain, “without doing complete violence to its language”, the settlor’s express intentions.
Quotes:
If a donor directs to pay to ‘John Smith’, in order to give legal effect it must be possible to identify ‘John Smith’. If he knows three John Smith’s then cannot per Lord Upjohn
*McPhail v Doulton [1971] AC 424 (HL)
- Class of Beneficiaries
Case: Deed to transfer shares in a company to form trust for the benefit of the staff of the company, their relatives and dependants. Trustees had discretion as to how funds applied.
Decision: The provision “(a) The trustees shall apply the net income of the fund in making at their absolute discretion grants … in such amounts at such times and on such conditions (if any) as they think fit” constituted a trust (not power). It was not void for uncertainty as assimilation of the validity test does not involve the complete assimilation of trust powers with powers. As to powers, although the trustees may, and normally will, be under a fiduciary duty to consider whether or in what way they should exercise their power, the court will not normally compel its exercise. It will intervene if the trustees exceed their power and possibly if they are proved to have exercised it capriciously. But in the case of a trust power, if the trustees do not exercise it, the court will do so in the manner best calculated to give effect to the settlor’s or testator’s intentions.
Rule:
Discretionary trusts - “The any given individual” test applies.
Quote:
Lord Wilberforce explains the difference between conceptual uncertainty (language used to describe) and evidential uncertainty (availability if evidence to identify particular people)
“There may be a third case where the meaning of the words used is clear but the definition of beneficiaries is so hopelessly wide as not to form ‘anything like a class’ so that the trust is administratively unworkable or […] one that cannot be executed. I hesitate to give examples […] but perhaps ‘all the residents of Greater London’ will serve.” per Lord Wilberforce
N.B. Ascertainability is distinct from evidence (this is about actually finding a defined member)
*Re Baden’s (No 2) [1973] Ch 9 (CA)
- Class of Beneficiaries
Case: ‘Relatives’ and ‘dependeants’
Decision: Even though difficulty in some respects finding evidential certainty, using common sense and degree they determined that this was a valid DT even though it could not be proved that a significant number of objects were in or outside class; it is not necessary to show that a particular person was or was not a member of the class or to ascertain every member of the class
Rule: ‘Relatives’ (descendants from common ancestor vs. next of kin or nearest blood relations) and ‘Dependants’ (wholly or partly financially dependent on someone else) recognised as conceptually certain
*Re Manisty’s [1974] Ch 17
- Class of Beneficiaries
Case: A power given to trustees to benefit the ‘residents of Greater London’
Decision: “The terms of the power negative any sensible intention on the part of the settlor” per Templeman J
Rule: Powers may be void for capriciousness (suggestion that if the provision is made for residents of the particular area there needs to be a connection between the person giving the objects and the reason for giving this objects; note that in Re Hays Templeman J notes that “In saying that, I do not think that the judge had in mind a case in which the settlor was, for instance, a former Chairman of the Greater London Council […] “)
N.B. Virgo: no evidence to suggest that capriciousness is relevant to the validity of a fixed trust
Ex parte West Yorkshire suggests that capriciousness does apply to discretionary trusts as the mention the council having a sensible reason for wishing to benefit the inhabitants of WY
*Re Tuck’s [1978] Ch 49 (CA)
Case: “Approved wife of Jewish blood” and “Jewish faith”, provision made for Rabbi third party to make decision
Decision: Denning’s view that even if possible, would not prevent court from exercising supervisory duty if application to court
Rule: Third party arbiter may cure evidential and conceptual uncertainty subject to court’s supervisory jurisdiction
*Re Barlow’s [1979] 1 WLR 278
Case: T left pictures in will on trust for sale; she also added direction that the executor should allow any members of family/friends to buy first at a lower price; it was a condition that someone constituted a ‘friend’ of T
Decision: Although would fail conceptual certainty test, ‘friend’ held sufficiently clear for condition precedent
Rules:
- A trust subject to a condition precedent (T obliged to distribute property subject to B satisfying a certain condition) is valid if it can be said of just one person that s/he satisfied the condition (verify in some way)
- B bears the burden of proof
*Re Hay’s [1982] 1 WLR 202
- Class of Beneficiaries
Rule:
- No reason for administrative unworkability to apply to powers
- Capriciousness may invalidate special powers but not intermediate powers
Quote:
“Apart from the obvious duty of obeying the trust instrument, and in particular of making no appointment that is not authorised by it, the trustee must, first, consider periodically whether or not he should exercise the power; second, consider the range of objects of the power; and third, consider the appropriateness of individual appointments…” per Megarry VC
*Re Goldcorp Exchange Ltd [1995] 1 AC 74
q
*R v District Auditor, ex p West Yorkshire County Council [2001] WTLR 785
- Class of Beneficiaries
Case: DT for benefit of any, some, or all of the inhabitants of West Yorkshire
Decision: Conceptually certain but size of class so wide that it is incapable of forming anything like a class
Rule:
Administrative unworkability applies to discretionary trusts (in addition to evidentiary and conceptual certainty)
N.B. Virgo notes that no evidence that administrative unworkability as complete list test means there can be no concern about the size of the class
Trustee Act 1925, s.33
If the trust does not specify consequences of forfeiture, property held on discretionary trust for original beneficiary, spouse, civil partner or more remote use
Burrough v Philcox (1840) 5 My & Cr 72
Case: Testator gave life interest of property to two children with remainder to their issue; if children died without issue, surviving child had a power to distribute property amongst testator’s nephews and nieces in such shares as survivor though proper’ surviving children never made such a selection
Decision: Testator had created a trust in favour of nieces and nephews, subject to a power of selection by surviving child; surviving child never exercised selection but general intention to benefit whole class through imposition of a trust for nieces and nephews; trust did not laps following death of surviving child
Rule: ‘Power coupled with a trust’ i.e. if power is not exercised before T dies, power will lapse and replaced by trust in favour of the objects of the power
Knight v Knight (1840) 3 Beav 148
Rule: Lord Langdale MR outlines the three certainties -
- If the words are so used, that upon the whole, they ought to be construed as imperative
- If the subject of the recommendation or wish be certain; and
- If the objects or persons intended to have the benefit of the recommendation or wish be also certain
Re Adams and Kensington Vestry (1884) 27 Ch D 394
- Certainty of Intention
Rule: Although historically, use of types of word impose trusteeship ‘belief’; ‘confidence’; ‘desire’; ‘hope’; ‘wish’ i.e. precatory words, shown to indicate power
Clause: “I give, devise, and bequeath all my real and personal estate and effects […] unto and to the absolute use of my dear wife […] in full confidence that she will do what is right as to the disposal thereof between my children, either in her lifetime or by will after her decease.”
Not a trust
Comiskey v Bowring-Hanbury [1905] AC 84
- Certainty of Intention
Clause: “in full confidence that she will make such use of it as I should have made myself” and at her death “devise it to such one or more of my nieces as she may think fit”
Would have failed on modern construction… but looking at words in surrounding context and additional mandatory terms saved it
Richards v Delbridge (1874) LR 18
- Certainty of Intention
Rule: S ‘need not use the words “I declare myself a trustee’, but he must do something which is equivalent to it, and use expressions which have that meaning […]”
