Re Hay’s Settlement Trusts [1982]
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In Re Hay’s Settlement Trusts [1982] 1 WLR 202, the court affirmed the principle established in Re Manisty's Settlement Trusts that a power cannot be void for administrative unworkability. The case involved a trust deed where trustees were directed to hold trust funds for any persons (with exceptions) or purposes they appoint within 21 years of the settlement.
The trustees executed the deed of appointment, transferring the funds to another discretionary trust with themselves as the trustees. This new trust had the power to appoint beneficiaries of both the fund and income among any person in the world. Nieces and nephews sought to claim the money.
The High Court held that the power was valid, but the delegation of the power was invalid. Sir Robert Megarry V-C, in his judgment, stated that an intermediate or hybrid power of appointment, vested in a trustee to appoint to anyone in the world except specified persons, was not rendered invalid merely by the width of the power. Despite the fiduciary duties of the trustees, there was nothing in the nature of an intermediate power of appointment that prevented trustees from discharging those duties.
However, the court held that trustees have no power to delegate under a power of appointment, and such delegation is invalid. This ruling was based on the principle that, unless authorised to do so, a trustee cannot delegate their powers. Therefore, while the original power of appointment was deemed valid, the delegation of that power by the trustees to another discretionary trust was held to be invalid.
The trustees executed the deed of appointment, transferring the funds to another discretionary trust with themselves as the trustees. This new trust had the power to appoint beneficiaries of both the fund and income among any person in the world. Nieces and nephews sought to claim the money.
The High Court held that the power was valid, but the delegation of the power was invalid. Sir Robert Megarry V-C, in his judgment, stated that an intermediate or hybrid power of appointment, vested in a trustee to appoint to anyone in the world except specified persons, was not rendered invalid merely by the width of the power. Despite the fiduciary duties of the trustees, there was nothing in the nature of an intermediate power of appointment that prevented trustees from discharging those duties.
However, the court held that trustees have no power to delegate under a power of appointment, and such delegation is invalid. This ruling was based on the principle that, unless authorised to do so, a trustee cannot delegate their powers. Therefore, while the original power of appointment was deemed valid, the delegation of that power by the trustees to another discretionary trust was held to be invalid.
