Re Andrew [1905] 2 Ch 48

Facts

  • The case concerned a trust established by a settlor for the benefit of a specific class of beneficiaries.
  • The trust deed provided for the distribution of income and capital to the beneficiaries but did not explicitly state if the funds could be used for purposes beyond those specified.
  • The trustees sought the court’s guidance on whether funds could be applied more broadly for the general benefit of beneficiaries, including for purposes not expressly stated in the trust deed.
  • The court examined both the language of the trust deed and the apparent intent of the settlor.

Issues

  1. Whether trustees could apply trust funds for purposes not expressly specified in the trust deed if such use aligned with the settlor’s broader intent.
  2. Whether the court could interpret trust instruments flexibly to permit wider discretionary application of funds for beneficiaries’ general benefit.
  3. How the settlor’s intent should be ascertained and applied where the trust deed language is ambiguous or silent on certain purposes.

Decision

  • The court held that the settlor intended the trust to benefit the beneficiaries in a general sense, not limited strictly to the enumerated purposes in the deed.
  • Trustees were given discretion to apply the funds for the general benefit of the beneficiaries, provided such application was consistent with the settlor’s overall objectives.
  • The judgment affirmed the need for judicial flexibility in interpreting trust deeds to ensure the trust’s effectiveness and alignment with the settlor’s intention, particularly when circumstances change over time.

Legal Principles

  • The settlor’s intent is the primary guide in the interpretation of trust instruments, in line with the equitable maxim that "equity looks to the intent rather than the form."
  • Courts may adopt a flexible approach to trust interpretation to prevent the strict wording of a trust deed from undermining its effectiveness or purpose.
  • Trustees may have discretion in the application of funds for beneficiaries’ general benefit if such discretion is consistent with the settlor’s intent and the trust’s objectives.
  • The judgment illustrates the equitable doctrine permitting adjustment or modification of trust terms (including doctrines such as cy-près) when the strict terms do not serve the trust’s intended purpose.

Conclusion

Re Andrew [1905] 2 Ch 48 demonstrates the court’s willingness to interpret trust instruments flexibly to fulfill the settlor’s broader intent, allowing trustees discretion to use trust funds for the general benefit of beneficiaries when the trust deed is silent or ambiguous, thereby maintaining both the effectiveness of the trust and the primacy of the settlor’s objectives.

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