Trusts and Powers

A “trust” imposes an obligation, or creates a duty: a “power” confers an option.

A “trust” is imperative, whereas a “power” is discretionary.

The Court will compel the execution of a trust, but cannot compel the execution of a power {Re Gulbenkian’s Settlements [1970] AC 508 at 518,525; McPhail v Doulton [1971] AC 424 at 440-441,444,449}

The fact that a power has been conferred on a trustee distinguishes from a power that has been conferred on an ordinary individual (a non-fiduciary): it has been conferred in order to enable the trustee to better carry out the trusts or obligations imposed on him or her.

A trustee is therefore subject to certain duties in relation to such a power – in particular to consider its exercise from time to time and to make appropriate efforts to inquire into and ascertain the range and composition of the class of objects of the power – to which an ordinary individual (a non-fiduciary donee) is not subject.

All powers conferred on trustees qua trustees are fiduciary powers {Thomas on Powers (1st Edition at 1-47}.

A distinction is often made between “bare powers” which are conferred on persons in their personal and not fiduciary capacity, and “fiduciary powers” which are conferred on persons by virtue of their status or office.

The term “fiduciary power” generally denotes a power conferred on the holder of a fiduciary office.

However it is not appropriate in all contexts. First, it does not satisfactorily describe all fiduciary powers, particularly the power to appoint new trustees, which are generally acknowledged to be fiduciary powers {Re Skeats’ Settlement (1889) 42 CH D. 522, especially at 557; Re Newen [1894] 2 Ch 297; Re Sampson [1906] 1 Ch 435} , but which need not be (and often are not conferred on trustees or the holder of any office {Thomas on Powers 1st Edition at 1-47}.

A “bare power” can only be exercised by the person or persons to whom it is given. In contrast, a power conferred on persons in their capacity as holders of a particular office, such as a power conferred on trustees qua trustees, is attached to the office, and in the absence of a contrary intention, may be exercised by surviving office holders and by those who succeed to that office {Re Bacon [1907] 1 Ch 475; Re Smith [1904] 1 Ch 139; Bersel Manufacturing Co Ltd v Berry [1968] 2 All ER 552}.

 In the matter of the Bird Trust [2008 JRC 013 the Court stated at [1.77]:

“In contrast, a fiduciary power is one conferred upon someone (usually holding an office like that of trustee or protector) for the benefit of the beneficiaries, so that he must independently consciously consider from time to time whether or not to exercise it and he must exercise it responsibly according to the purpose for which it was conferred on him and not perversely to any sensible expectation of the settlor, e.g. by exercising it capriciously or arbitrarily or in bad faith; moreover, a fiduciary power cannot be released unless the trust instrument specifically authorises it.”

 

In the case of fiduciary powers (as opposed to personal powers), the Court has very wide powers to supervise and control the exercise of fiduciary powers.

 

 

 

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