Where the trustee has the discretion as to the method but not to the amount of funds to be applied to a particular beneficiary, that beneficiary can demand the entire fund to be handed to him or direct its application
Facts
A testator had directed his trustees to hold on trust one-third of his residuary estate for his son during his lifetime: “to apply the income thereof for the benefit of himself and his wife and child or children or of any of such persons to the exclusion of the others or other of them as my trustees shall think fit.”
The only members of the class of beneficiaries, namely the son, his wife and daughter who reached the age of 21 (sui juris), assigned their interest by way of mortgage
The mortgagees now demand the income in the trust to be paid to them
It was argued for the wife and daughter that notwithstanding their mortgage, the income ought now to be withheld from the mortgagees and applied by the trustees for their benefit
Held (High Court, Chancery Division)
The mortgagees were entitled to the income of the trust
The assignment by way of mortgage is by all the beneficiaries collectively, who are of age and was thus effective under the Saunders v Vautier rule
Swinfen Eady J
“where there is what amounts to an absolute gift, that absolute gift cannot be fettered by prescribing a mode of enjoyment”: p. 921
“In this case there is what amounts to an absolute gift between the throe individuals who are of age and sui juris, and they all concur in assigning by way of mortgage their interest. Under those circumstances, I am of opinion that the income of the fund should now be paid to the assignees by way of mortgage”: p. 921