Howell & Ors v Lees-Millais & Ors

The duration of a trustees’ power of appointment depends on the intention disclosed by the governing instrument, construed as a whole and against its factual background. There is no technical rule that a power necessarily ends when an interest becomes absolutely vested in beneficiaries who are sui juris. A power may remain exercisable after vesting where the instrument preserves it during a defined trust period and contains no express provision, or necessary implication, ending it. The word “absolutely” ordinarily indicates indefeasible ownership, but its meaning is controlled by the larger context. Other provisions and the circumstances existing when the appointment was made may displace that meaning.

The trustees of two family settlements sought declarations concerning the construction of a deed of appointment dated 29 March 1977. The deed gave the trustees an overriding power to appoint the trust fund during the trust period and made gifts in default of appointment to specified descendants attaining 25 years, expressed to be held “absolutely”.

The issue was whether the power remained exercisable after the first or only son of one beneficiary attained 25, or whether his vested and expressed absolute interest thereafter became indefeasible. The matter was brought under Part 8 because that beneficiary’s attainment of 25 was imminent.

1. Declaration. The power of appointment remained exercisable throughout the trust period, notwithstanding the attainment of age 25 by the first or only son of Lucinda. The declaration was made in the sense of paragraph 1(b) of the Claim Form, subject to the qualification that the power was exercisable “for the time being”.

2. The duration of a power is determined by the settlor’s or appointor’s intention. In an instrument, that intention is identified through the ordinary principles of construction, reading the instrument as a whole and against the factual circumstances in which it was made. There is no rule that a power ends merely because the property has become wholly vested beneficially in persons who are sui juris.

3. The authorities supported the conclusion that an interest may be vested yet liable to be divested by a later valid exercise of the power. The power should be treated as continuing during its specified duration unless ended by clear words or necessary implication.

4. The word “absolutely” could not be treated as decisive in isolation. Its ordinary meaning may indicate an indefeasible interest, as discussed in In re Sharp’s Settlement Trusts [1973] 1 Ch 331, but the meaning may be displaced by a larger context. Here, the power was expressly exercisable “from time to time during the Trust Period”, the 1977 Appointment was not expressed to be irrevocable, and the gift in default was expressly “subject to any such appointment”. Those provisions pointed against an implied termination of the power on vesting.

5. The surrounding circumstances reinforced that construction. When the 1977 Appointment was made, the future existence, circumstances and suitability of any first or only son attaining 25 could not have been known. It was therefore improbable that attainment of that age alone was intended to make the destination of the fund irrevocably fixed.

6. The court made representation orders. The issue of costs was adjourned.

First-instance decision. No appellate history was stated in the judgment.