An absolute owner of property can settle his affairs in such a way and on such terms as would relieve his trustees from the responsibility to exercise the degrees of care and prudence which would otherwise be inferred. When a power has been exercised in good faith and within its terms, the court will not interfere. If trustees with the necessary discretion decide to give some or all of the income to a particular beneficiary the Court will not review their decision, even if it might be thought unwise. Where a discretion is expressed to be absolute it may be that bad faith needs to be shown before it can be challengeable.
Lord Cairns said: ‘My Lords, in a case like this, where the Court of Chancery recognises that the trustees, and not the court, are to be the judges of the quantum to be allowed, where the trustees are willing to exercise the discretion which they claim to exercise, and where the court allows and declares their right to exercise that discretion, I do not understand it to be the habit of the court to go on and express any opinion as to whether the exercise of the discretion by the trustees is a wise or an unwise exercise of that discretion. I understand that in such a case the Court of Chancery steps aside and recognises the trustees as the persons to exercise the discretion, and in its decree does nothing more than, with regard to payments which may be necessary, act upon the exercise of the discretion of the trustees so made.’
Judges:
Lord Cairns LC
Citations:
[1877] 2 AC 300, [1874-80] All ER Rep Ext 1698
Jurisdiction:
England and Wales
Cited by:
Cited – Whishaw v Stephens (on appeal from In re Gulbenkian’s Settlement) (No 1) HL 31-Oct-1968
Parties disputed the effect of clauses describing the beneficiaries of a trust.
Held: The clause did not make sense as it stood. In a fixed non-charitable trust (as opposed to a discretionary trust) the court must be able to draw up a list of . .
Lists of cited by and citing cases may be incomplete.
Trusts
Updated: 04 May 2022; Ref: scu.245021