Susan Mary Harvey & Anor v Pamela Van Hoorn

An object of a fiduciary mere power of appointment may have an interest in trust assets, even though the object has no vested right to possession or enjoyment of any part of them. Such an object has enforceable rights, including rights relating to disclosure, the protection of the trust and, in appropriate circumstances, the prevention or redress of breaches of trust.

For the purposes of section 1(1)(a) of the Variation of Trusts Act 1958, an interest is not confined to a fixed legal or equitable proprietary entitlement. A minor object of a fiduciary mere power therefore falls within the statutory category of a person having an interest under the trusts who is incapable of assenting.

The claimants were trustees of a settlement established in 1989. They sought approval under the Variation of Trusts Act 1958 for an arrangement altering the second claimant’s remainder interest and extending the perpetuity period, principally to address capital gains tax consequences.

The adult objects consented. The court’s consent was required for minor and unborn objects. There was no dispute that the court had jurisdiction to approve the arrangement on behalf of unborn persons under section 1(1)(c). The threshold issue was whether minor objects of a fiduciary mere power of appointment had an “interest under the trusts” within section 1(1)(a).

1. Jurisdiction and approval. The court had jurisdiction under section 1(1)(a) of the Variation of Trusts Act 1958 to approve the arrangement on behalf of the minor objects of the fiduciary mere power. The arrangement was also for the benefit of the minors and unborns, so the court approved it and made the order sought.
2. Nature of a mere power. The power in clause 5 was a mere power rather than a trust power because the trusts in default of appointment showed that the trustees had discretion whether to appoint. It was nevertheless fiduciary because it was conferred on the trustees as such.
3. Rights of objects. The distinction between a trust power and a mere power did not prevent the objects of both from having legally significant rights. The authorities showed that objects of either power could have rights relating to certainty of objects, disclosure and the blocking of a family arrangement under the rule in Saunders v Vautier. Objects of a power also had standing to seek the removal of trustees and protection from the court. The judge saw no principled reason why an object of a fiduciary mere power should be unable to seek relief to prevent a breach of trust or reconstitute the trust fund after one.
4. Meaning of “interest”. In trust-law terms, the bundle of rights held by an object of a fiduciary mere power could properly be designated an interest in the trust assets. The interest was unquantifiable and did not confer a present or future right to possession or enjoyment.
5. Statutory context. The statutory meaning of “interest” under section 1 of the 1958 Act was sufficiently broad to include that interest. The different degrees of control between objects of trust powers and mere powers were not legally significant for this purpose. The concept could extend beyond legal or equitable interests in assets.