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1914 Supreme(SC) 80
Privy Council
Sir Joshua Williams, Sumner , Parker of Waddington, Justice Lords Shaw of Dunfermline, JJ.
Eliza F.T. Higgs Vatcher and others -Appellant
Versus
Henry Paull and others -Resopndent
On Appeal from the Royal Court of the Island of Jersey
Decided On : 17-12-1914
Kemm and Co., Cameron, M. Alavoine, Grimwood Mears , Jenkins, C.T. le Quesne, Dighton Pollock, H.E. le V. dit Durrell , Skues, Powell , Younger
Important Points
Subject
Equity and Trusts - Powers of Appointment
Act Referred
Headnote
(B) Validity of Conditional Appointments - An appointment is not void simply because it is subject to a condition subsequent. Where a condition is to be performed by third parties over whom the appointees have no control, and the performance of said condition results in the funds reverting to the trusts limited by the settlement in default of appointment, such an appointment does not constitute a fraud on the power. The primary intention of the donor is embodied in the limitations in default of appointment; thus, a condition leading to the fund going in default cannot defeat that primary intention.
(C) Fraudulent Inducement - In considering charges of fraud regarding transactions that have long stood unchallenged, the law presumes good faith and validity. To establish fraud, it must be proved that: (i) a representation was made; (ii) the representation was untrue; (iii) it was untrue to the knowledge of the person making it; and (iv) it induced the contract.
Facts of the case:
Settlements were created for the benefit of children from two marriages. The appointers exercised a power of appointment to benefit the children of the second marriage, provided that the children of the first marriage renounced their claims to certain real estate. If the renunciation occurred, the appointment would become void, and the funds would be distributed according to the default trust. The children of the first marriage subsequently renounced their inheritance. It was later alleged that the appointment was a fraud on the power and that the renunciation was induced by fraudulent misrepresentations regarding the value and encumbrances of the real estate.
Findings of Court:
The appointment was valid as it was within the scope and intention of the power. The condition imposed did not constitute a fraud on the power because it was to be performed by third parties and did not seek to benefit a stranger. Regarding the renunciation, no fraud was established as the evidence failed to prove the necessary elements of misrepresentation and inducement, particularly given the twenty-four-year delay in instituting proceedings.
Issues: Whether an appointment made subject to a condition of renunciation by third parties constitutes a fraud on the power, and whether a contract of renunciation induced by alleged misrepresentations of property value should be set aside for fraud.
Ratio Decidendi: A power of appointment is not fraudulently exercised if the condition for its defeasance is performed by third parties and results in the funds reverting to the default trust. Furthermore, long-standing transactions are presumed valid, and charges of fraud must be proven with specific evidence of untrue representations made with knowledge and acting as an inducement.
Result: Appeal allowed.
Legal Category Hierarchy
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equity
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trusts
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power of appointment
- fraud on the power
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power of appointment
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trusts
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contract
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fraud
- misrepresentation
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fraud
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practice and procedure
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evidence
- concurrent findings
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evidence
Lord Parker of Waddington:—
Two points arise for decision in the present case. The first is whether the appointment of 22nd March, 1882, is a valid appointment, a question which is for the most part a question of law. The second is whether the contract of 18th August, 1886, was induced by fraud and ought therefore to be set aside, a question which is for the most part a question of fact.
The late Henry Vatcher, senior, who was born in England, was twice married, first to Margaret Way, who died in 1843, and secondly to Eliza Frances Tonkin Higgs. There was issue of the first marriage two children, namely, Margaret, who married a Mr. Torkington, and Henry who married Maria George Andrew, spinster, and died in 1863, leaving issue the respondents Maria Florence Paull and Ellen Vatcher. There was issue of the second marriage of Henry Vatcher, senior, six children namely, the appellant John Sidney Adolphus Vatcher, the appellant Edith Mary Atkinson, Bessie Gertrude, who died in 1885, without issue the respondent Charless Gardner Vatcher, the appellant James Raynold Morley Vatcher, and the appellant Rose Ethel Monckton.
By an indenture of settlement dated 6th April, 1846, (being a settlement made in contemplation of the second marriage of Henry Vatcher, senior), certain funds of the value of £8000, or thereabouts were settled upon trusts for the payment of the income thereof during the joint lives of Henry Vatcher, senior, and his second wife in manner therein provided, and after the death of Henry Vatcher, senior, in case his second wife should survive him, to the second wife during her life or until remarriage. And, subject as aforesaid, in trust for the children of Henry Vatcher, senior, whether by his first or second marriage, or the issue of such children born in the life-time of Henry Vatcher, senior, and the second wife or of the survivor of them in such shares, upon such conditions, and in such manner as Henry Vatcher, senior, and his second wife should by writing appoint, and in default of such appointment as the survivor of them should by writing or by will appoint, and in default of any such appointment in trust for the children of the said Henry Vatcher, senior, by either marriage who being males should attain twenty-one years or being females should attain that age or marry and the issue of any male child who should die under twenty-one years of age leaving issue who should be living at the period of distribution, to be divided between them if more than one in equal shares, the issue of any deceased male taking per stirpes and not per capita.
By virtue of certain further indentures dated respectively 19th October, 1847, and 19th May, 1855, certain further funds were settled upon trusts similar in all respects to those declared by the settlement of 6th April, 1845, except that there was no power of appointment conferred on the survivor of Henry Vatcher, senior and his second wife. The aggregate value of the settled property at the death of Henry Vatcher, senior, was about (1) £ 27,000.
In the year 1857, Henry Vatcher, senior, with his wife and family took up their abode in the island of Jersey.
In the year 1863 he and his second wife purchased jointly with benefit of survivorship a residential property in the island known as "Rosemount," and made their home there. Between the year 1865, and the time of his death Henry Vatcher, senior, made several further purchases of real property in the island. Some of the properties purchased were conveyed to Henry Vatcher, senior some to Henry Vatcher, senior and the appellant John Sidney Adolphus Vatcher jointly with benefit of survivorship, and some to Henry Vatcher, senior and the appellant John Sidney Adolphus Vatcher jointly for themselves and their heirs. In every case the greater part of the purchase price was satisfied by the creation of "rentes" or incurnbrances on the property then or previously purchased.
By a deed of appointment dated 22nd March, 1882, Henry Vatcher senior, and h
