The settlor asked whether the test for validity, in point of certainty of objects, is the same for trusts and powers, or whether the test for trusts is more demanding.
Held: The test is the same. The context was a provision, held to be a trust, for trustees to distribute income ‘to or for the benefit of any of the officers and employees or ex-officers or ex-employees of [a named company] or to any relatives or dependants of any such persons’ (with a power for the trustees to hold up income which did not, prevent the trustees distributing the retentions as income). The distinction between trusts, trust powers, and powers is narrow and artificial. What is to one a power of distribution coupled with a trust to dispose of the undistributed surplus, by accumulation or otherwise, may to another appear as a trust for distribution coupled with a power to withhold a portion and accumulate or otherwise dispose of it. It is not satisfactory that the validity of a disposition should depend on such delicate shading. To say that there is no obligation to exercise a mere power whereas a trust is mandatory and its execution may be compelled does not contain an exhaustive comparison of the trustees’ duties. Any trustee would surely make it his duty to know what is the permissible area of selection and then consider responsibly, in individual cases, whether a contemplated beneficiary was within the power and whether, in relation to other possible claimants, a particular grant was appropriate. A trustee with a duty to distribute, even among a potentially very large class, would not require the preparation of a complete list of names, but consider by class and category; and then select individuals according to their needs or qualifications. Can it be said that he is not carrying out the trust? There are differences between trust (trust powers) and powers, but as regards validity, they are not so great that complete, ascertainment is needed, for one but not in the other? Any distinction may lie in the extent of the survey which the trustee is to carry out. The difference may be one of degree rather than of principle. Trusts and powers are often blended, and the mixture may vary in its ingredients.’ A private trust for a large class of individuals can be so large as to make a private trust unworkable, and hence void.
Lord Wilberforce said that in the context of private trusts: ‘the court, if called upon to execute the trust power, will do so in the manner best calculated to give effect to the settlor’s or testator’s intentions. It may do so by appointing new trustees, or by authorising or directing representative persons of the classes of beneficiaries to prepare a scheme of distribution, or even, should the proper basis for distribution appear by itself directing the trustees so to distribute. The books give many instances where this has been done …’
Judges:
Lord Reid, Lord Hodson, Lord Guest, Viscount Dilhorne, Lord Wilberforce
Citations:
[1971] AC 424, [1970] UKHL 1, [1970] 2 All ER 228
Links:
Jurisdiction:
England and Wales
Cited by:
Cited – Twinsectra Ltd v Yardley and Others HL 21-Mar-2002
Solicitors acted in a loan, giving an undertaking as to its application. In breach of that undertaking they released it to the borrower. The appellants appealed a finding of liability as contributors to the breach.
Held: ‘Money in a . .
Cited – Vadim Schmidt v Rosewood Trust Limited PC 27-Mar-2003
PC (Isle of Man) The petitioner sought disclosure of trust documents, as a beneficiary. Disclosure had been refused as he had not been a named beneficiary.
Held: Times had moved on, and trust documents had . .
Cited – Hunt and Another v McLaren and others ChD 4-Oct-2006
Land had been given to a football club under a trust for its exclusive use as such. That land was sold and a new ground acquired and a stadium built, but the land was subject to restrictive covenenats limiting its use to sports, which considerably . .
Cited – Gibbs v Harding and others ChD 12-Jan-2007
The testatrix left a will anticipating making another. The court was asked whether a clause leaving her estate to ‘be taken over by the Diocese of Westminster to hold in trust for the Black community of Hackney’ was valid.
Held: The gift was . .
Cited – Re Tuck’s Settlement Trusts CA 1-Nov-1977
By his will, Sir Adolph Tuck sought to ensure that his successors should be Jewish, and stated that the arbitrators of this must be the Chief Rabbi of his community. . .
Cited – Lehtimaki and Others v Cooper SC 29-Jul-2020
Charitable Company- Directors’ Status and Duties
A married couple set up a charitable foundation to assist children in developing countries. When the marriage failed an attempt was made to establish a second foundation with funds from the first, as part of W leaving the Trust. Court approval was . .
Cited – Tillman v Egon Zehnder Ltd SC 3-Jul-2019
The company appealed from rejection of its contention that its former employee should be restrained from employment by a competitor under a clause in her former employment contract. . .
Lists of cited by and citing cases may be incomplete.
Trusts
Updated: 10 April 2022; Ref: scu.180358