Facts
- The case considered the powers of beneficiaries collectively holding full equitable ownership of trust property.
- The court examined when and how such beneficiaries could direct the trustee to transfer legal title and terminate the trust.
- The matter addressed requirements for valid consent when beneficiaries seek to instruct trustees about disposition of trust assets.
- The case arose in the context of existing legal principles established in Saunders v Vautier, focusing on trust termination and beneficiary rights.
Issues
- Whether beneficiaries who collectively possess entire equitable interests in trust property may direct trustees to transfer legal title and terminate the trust.
- What constitutes valid and effective beneficiary consent to such directions.
- How the rule applies to trusts with multiple, contingent, or discretionary beneficiaries.
- What trustee duties arise regarding verification of beneficiary consent in the disposition of trust property.
Decision
- The court confirmed that beneficiaries with full collective ownership of the equitable interest may direct trustees regarding the trust property, including termination of the trust.
- Unanimous, informed, and voluntary consent of all beneficiaries is required for directions to be valid.
- The principle established by Saunders v Vautier extends to multiple-beneficiary trusts, provided consent is unanimous and beneficiaries are legally capable.
- In cases involving complex trust structures or potential contingent/discretionary interests, all potential beneficiaries must be identified, legally capable, and unanimous for the trust to be terminated.
- Trustees are obligated to ensure that beneficiary consent is informed, freely given, and unaffected by coercion, undue influence, or misrepresentation.
Legal Principles
- Full collective ownership of the equitable interest empowers beneficiaries to direct trustees and terminate trusts.
- Unanimity, legal capacity, and genuine, informed, and voluntary consent are essential for effective beneficiary instructions.
- Trustees must confirm the validity of beneficiary consent before acting on directions.
- The principle applies to trusts with contingent or discretionary interests if all relevant beneficiaries are capable and agree.
- The ruling refines and extends Saunders v Vautier to apply to more complex trust arrangements.
Conclusion
Re Inns [1947] Ch 576 confirms that beneficiaries with total equitable ownership may direct trustees and terminate trusts, provided all consent genuinely and voluntarily. The decision outlines stringent requirements for consent and imposes a duty on trustees to verify its validity, serving as a key authority on trust termination and beneficiary rights.