Case: Gartside v Inland Revenue Commissioners [1967] UKHL 6 ; [1968] AC 553
Outcome: cited
Gartside v Inland Revenue Commissioners [1967] UKHL 6 ; [1968] AC 553 concerned a trust under which the trustees had a discretion to apply the income of a fund for the maintenance or benefit of all or any of the testator's son, daughter-in-law or children (if any) and to accumulate surplus income. A principal issue in the case was whether the potential beneficiaries of the trust had 'interests in possession' in the trust fund for estate duty purposes. The House of Lords rejected that contention. Lord Wilberforce said (at 617): 'No doubt in a certain sense a beneficiary under a discretionary trust has an "interest": the nature of it may, sufficiently for the purpose, be spelt out by saying that he has a right to be considered as a potential recipient of benefit by the trustees and a right to have his interest protected by a court of equity.' Lord Wilberforce also made the point that the term 'interest' may have different meanings according to the context in which it is used (at 618): '... it may be a right, with some degree of concreteness or solidity, one which attracts the protection of a court of equity, yet it may still lack the necessary quality of definable extent which must exist before it can be taxed.' 28 The Full Court of the Supreme Court of Western Australia considered these questions in R &amp; I Bank of Western Australia Ltd v Anchorage Investments Pty Ltd (1992) 10 WAR 59. The case involved contempt proceedings for alleged breach of a mareva injunction. One of the persons bound by the injunction exercised his powers as appointor under a trust deed to make his son guardian of the trust and removed himself as appointor. His son then removed the other trustee, Anchorage, and appointed a company with which he was associated as trustee. The new trustee, with his consent and that of his wife, declared that they be excluded as general beneficiaries. The question was whether these transactions amounted to a breach of the terms of the injunction. The Full Court held that a beneficiary of a trust of the type then in question did not have a proprietary interest in any particular 'assets' of the trust fund or in the trust fund as a whole. The expectancy which a beneficiary has that the trustee might appoint capital of the trust fund in his or her favour lacked the requisite aspect of 'value' to enable it to be regarded as an asset. In his judgment in that case Owen J said (at 79): 'A beneficiary of a trust of this type does not have a proprietary interest in any particular asset of the trust fund or in the Trust Fund as a whole: see Gartside v Inland Revenue Commissioner [1967] UKHL 6 ; [1968] AC 553 . The Trust Deed confers on a trustee a mere power. It is a power of very wide import. The trustee can determine whether an individual beneficiary is to benefit at all, and if so, in what way, from the exercise of the power in his or her favour. In this sense, the beneficiary has nothing more than an expectancy. The trustee has a duty to administer the trust bona fide having regard to the purpose for which it was established.' ASIC sought to distinguish that case on the basis that the question with which it was concerned was whether the interest of a general beneficiary under a discretionary trust could be characterised as an 'asset'. In my opinion, however, the observations of Owen J have a more general application.