Re Manisty’s Settlement Trusts [1974]
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Re Manisty’s Settlement Trusts [1974] Ch 17 concerns the validity of a power conferred upon trustees in a settlement. The main issue in this case was whether the power granted to the trustees, specifically the discretion to add new beneficiaries, was too wide to be valid.
Clause 4 of a settlement gave trustees the discretion to add new beneficiaries, except for a small class of individuals. It conferred on the trustees to appoint the property to the children of the settlor, the brother of the settlor, or any person, corporation, charity or object other than the settlor, his wife or anyone settling property on trust. It was contended that this power, being an immediate power that excepts a class of people rather than including a class, was too wide to be considered valid.
The High Court held that the power was indeed valid. Justice Templeman, in his judgment, emphasised that the mere width of a power does not render it uncertain or impossible for trustees to perform their duty. He stated that the court can still determine whether the trustees are in breach of their duty despite the breadth of the power.
Lord Wilberforce, in his remarks, mentioned a third class of trusts that could be considered invalid. These trusts are so hopelessly wide that they do not form anything like a class, resulting in administrative unworkability. However, he clarified that this concept does not apply to powers where the court's function is more limited and does not involve executing and administering the trust.
The distinction was drawn between an immediate power, which was considered valid even if wide, and a capricious power, which would be invalid. An example was provided where a power to benefit residents of greater London was deemed invalid because it created an accidental conglomeration of persons with no discernible link to the settlor or any institution.
It is worth noting that powers limiting beneficiaries to a specific class are referred to as special powers. In summary, the case establishes that the mere width of a power, as long as it is not capricious or administratively unworkable, does not render it invalid.
Clause 4 of a settlement gave trustees the discretion to add new beneficiaries, except for a small class of individuals. It conferred on the trustees to appoint the property to the children of the settlor, the brother of the settlor, or any person, corporation, charity or object other than the settlor, his wife or anyone settling property on trust. It was contended that this power, being an immediate power that excepts a class of people rather than including a class, was too wide to be considered valid.
The High Court held that the power was indeed valid. Justice Templeman, in his judgment, emphasised that the mere width of a power does not render it uncertain or impossible for trustees to perform their duty. He stated that the court can still determine whether the trustees are in breach of their duty despite the breadth of the power.
Lord Wilberforce, in his remarks, mentioned a third class of trusts that could be considered invalid. These trusts are so hopelessly wide that they do not form anything like a class, resulting in administrative unworkability. However, he clarified that this concept does not apply to powers where the court's function is more limited and does not involve executing and administering the trust.
The distinction was drawn between an immediate power, which was considered valid even if wide, and a capricious power, which would be invalid. An example was provided where a power to benefit residents of greater London was deemed invalid because it created an accidental conglomeration of persons with no discernible link to the settlor or any institution.
It is worth noting that powers limiting beneficiaries to a specific class are referred to as special powers. In summary, the case establishes that the mere width of a power, as long as it is not capricious or administratively unworkable, does not render it invalid.