Re Andrew Trusts [1905]

Facts

• A trust was established, with money to be used "solely" for the "education" of the testator's children.

• After fulfilling the primary purpose (educating the children), there was leftover money.

• The court was tasked with determining whether the remaining funds were bound by the original educational purpose or could be distributed more broadly.

Outcome

• Kekewich J:

◦ Interpreted "education" broadly to include general provisions for the children, not just formal education.

◦ Held that the leftover money could be used for broader purposes benefiting the children, effectively treating the trust as a trust for persons rather than a purpose trust.

Impact and Analysis

• Reclassification of Purpose Trusts:

◦ The court disguised what appeared to be a purpose trust (education) as a persons trust (benefiting the children as individuals).

◦ This approach avoided the issues of enforceability associated with purpose trusts but risked moving away from the settlor’s intentions.

◦ By interpreting "education" broadly, the court allowed funds to be used for any benefit to the children, diluting the specific intent to prioritise education.

• Interpretive Challenges:

◦ Two plausible interpretations arose:

▪ Restrictive: Money should be used strictly for "education."

▪ Broad: Money could be used for general support of the children.

◦ Both approaches are valid under trust law, but they lead to vastly different results.

◦ The broader interpretation risks undermining the testator’s specific purpose, which conflicts with the foundational principle of trust law: enforcing the settlor's intentions.

• Key Takeaway:

◦ The case highlights the tension between:

▪ Upholding the settlor’s express purpose, and

▪ Ensuring the practical utility of trust administration by favouring identifiable beneficiaries.

◦ Courts tend to favour flexibility and enforceability but must balance this with respect for the settlor’s wishes to avoid straying from the fundamental principles of trust law.

This case demonstrates the difficulties in reconciling ambiguous trust language and underscores the need for precise drafting to prevent interpretive disputes.