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  • Topic: McPhail v Doulton, Trust law, Fiduciary
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  • Published : May 4, 2012
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TRUSTS AND POWERS

Further Reading:
Harris‘Trust, Power and Duty’ 87 L.Q.R. 310
Donovan, ‘The Protector: New Wine in Old Bottles?’ 63, in Trends in Contemporary Trust Law (Oakley, ed) (Clarendon Press, 1996). Thomas, Powers (1999, Sweet & Maxwell Ltd)

A.Difficulties Inherent In Making The Distinction

1.Overlapping Definitions
Hanbury & Maudsley (13th edition) p.163:
‘Essentially a trust is imperative and a power discretionary. But the dividing line is not as clear as one would hope; for many trusts contain discretionary elements; and many powers are given to trustees who are governed by fiduciary duties in the exercise of their powers.’ McPhail v. Doulton [1971] AC 242 at 448G per Lord Wilberforce: ‘It is striking how narrow and in a sense artificial is the distinction...between trusts, or as the particular type of trust is called, trust powers and powers...A layman and, I suspect, a logician would find it hard to understand what the difference is.’

2.Confusion Of Terminology
Mettoy Pension Trustees Ltd v. Evans [1990] 1 W.L.R. 1587

3.Power Or Discretionary Trust May Be Contained Within An Existing Trust 4.Question Is Linked With Requirement Of Certainty Of Intention (see III. infra.) 5.Exhaustive and Non-exhaustive Discretionary Trusts

Re Gourju’s Will Trusts [1943] Ch 24

B.Making The Distinction

1.Asking The Correct Questions
Two distinct but allied questions when interpreting a disposition: a. Does the disposition create a power of appointment or a discretionary trust?* b. What obligations - if any - are there on the person vested with the discretion to exercise it? * considered infra. under certainty of intention

2.The Four Possible Ways In Which A Disposition May Be Interpreted a.personal power
b.mere power
c.fiduciary power
d.discretionary trust

3.Need For Consistent Terminology
a.Discretionary Trust
b.Power of Appointment - mere and fiduciary
c.Dispositions/Discretions To Appoint

C....
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