Summary

The appointment of a trust fund to be held for the settlor's grandson who would reach the age of 25 years during the trust period absolutely, which was made in default of other appointments, did not create an indefeasible gift to the grandson, and the trustees' power of appointment was exercisable throughout the whole of the trust period notwithstanding the grandson reaching 25 years.

Facts

The claimant trustees (H) claimed under the CPR Pt 8 for a declaration of the correct interpretation of appointments made under a trust fund. H had exercised the overriding power conferred to them under the trust to make various appointments. They provided that the fund and its income would be held on trust for any one of the settlor's three children and remoter issue as H would appoint during the trust period. H also stated that in default of any such appointment the trust fund would be held upon trust for the first son (N) of the settlor's eldest child who would reach the age of 25 years during the trust period absolutely. The issue in the case was whether the power of appointment given to H was exercisable only prior to N reaching 25 years, or whether the power of appointment was exercisable throughout the whole of the trust period notwithstanding N reaching 25 years. H submitted that the natural meaning of the word "absolutely" in the gifts in default meant that the intention was to create an indefeasible gift to N on attaining the age of 25 years. They argued that if no appointment was made before then, N would take the whole of the trust fund with no power thereafter for H to divest him and revoke his appointment.

Held

The term "absolute" could have varying meanings and there were contexts that required a meaning other than its natural meaning, in particular where it was used in a larger context, Sharp's Settlement Trusts, Re (1973) Ch 331 Ch D applied. The trust period was a defined conventional period and had many years to run, and there was no provision that H's power should not be exercisable during that period, if for example an interest under the trusts in default of appointment became vested. Most importantly, the gift to N was "in default" of other appointments to be made by H. There was no qualification of the default gift, and it was not provided for that any further appointment by H should not take effect with respect to any interest in the default gift. Accordingly, it was clear that the interpretation of the appointments under the trust fund provided a larger context for which the natural meaning of "absolute" was not appropriate, and it followed that H's power to appoint was exercisable throughout the whole of the trust period regardless.

Judgment accordingly