Re Grant’s Wills Trusts [1980]

• Facts:

◦ The case involved a trust where land was to be maintained as a recreational or sports ground for the benefit of employees, as set out in the terms of the trust.

◦ The key issue was whether the trust could be considered a discretionary trust or something else, following the principles established in Re Denley.

• Outcome:

◦ Vinelott J in Re Grant’s Wills Trusts considered the Re Denley trust to be no different from a discretionary trust, where the beneficiaries (employees) could benefit from the property, but the trustees would determine how it was to be used.

• Impact and Analysis:

◦ Misunderstanding the Nature of the Arrangement:

▪ Some commentators argue that Vinelott J’s comparison of the Re Denley trust to a discretionary trust was flawed.

▪ In a discretionary trust, trustees typically have discretion over who benefits and how. However, in Re Denley, the use of the property was determined by the employees who paid the weekly subscription.

▪ This means the employees were not merely "discretionary beneficiaries" but had an established, somewhat automatic right to benefit based on their participation.

▪ This distinction challenges the idea that Re Denley functions like a traditional discretionary trust, where trustees have the power to choose who benefits from the trust.

◦ Goff J’s Choice of Words:

▪ Another critique is that Goff J described the employees as “individuals” rather than using the traditional legal terms of "beneficiaries" or "objects" of a trust.

▪ By avoiding these terms, Goff J may have been trying to distance the trust from the classical beneficiary trust model, which requires an enforceable right for beneficiaries.

▪ Some see this as problematic, as it potentially obscures the true nature of the trust and how it should be treated legally.

◦ Discretionary vs. Purpose Trust:

▪ The Re Denley trust and the one in Re Grant's Wills Trusts seem to combine aspects of both discretionary and purpose trusts.

▪ However, treating them as discretionary trusts may overlook the crucial aspect that these trusts are not about trustees having absolute discretion but rather about employees benefiting based on a clear, structured system.

• Key Takeaway:

◦ Re Grant's Wills Trusts highlights ongoing debates about the classification of trusts that blend elements of purpose and discretionary trusts.

◦ The case critiques Re Denley's treatment of employees as "individuals" rather than traditional beneficiaries and questions whether treating such trusts as discretionary is an accurate interpretation of their nature.

◦ It shows that clearer definitions of beneficiary rights and trustee powers are necessary for trusts that blend elements of both purpose-driven and beneficiary-focused trusts.

This case underscores the complexities of distinguishing between different types of trusts, particularly when a trust intended for a specific purpose also benefits identifiable individuals in a structured manner.