Trusts: Excessive Execution of a Power (challenging Trustee Decisions)

Excessive execution of a power occurs where a trustee or fiduciary makes a decision that goes beyond the extent or scope of their power.  This concept can be a powerful mechanism for challenging decisions.  The purpose of this brief note is only to describe the concept.  However, where it applies, it can be powerfully deployed to challenge decisions.  The concept has variously been described as follows:

• Laws of New Zealand: “Excessive execution refers to the situation in which the exercise of a power exceeds the terms set out in the creating instrument”.[1]  To the extent of the excessive execution, the exercise of the power is void.

• Garrow & Kelly:[2]  “The concepts of “fraud on a power” and “excessive appointment” (that is, attempting to appoint outside the class of objects) appear to be distinct but are allied”.

• Futter v HMRC:[3]  Here it was remarked that there is a “very important distinction between an error by trustees in going beyond the scope of a power (for which I shall use the traditional term “excessive execution”) and an error in failing to give proper consideration to relevant matters in making a decision which is within the scope of the relevant power (which I shall term “inadequate deliberation”)”.

• Lewin on Trusts:  “There is an excessive execution of the power if an exercise is expressed so as to exceed the scope of the power or if it is in breach of some rule of law. Common ways in which an exercise may exceed the scope of the power are the purported grant of an excessive interest, the attempt to appoint in favour of persons who are not objects of the power, the annexation of a condition not authorised by the trust instrument and the unauthorised delegation of the power; miscellaneous cases also occur”.[4]

If you need advice in relation to the exercise of powers as a trustee or by a trustee, please reach out and we can assist.

[1]             Laws of New Zealand Powers at [96], citing

[2]             C Kelly, G Kelly, C MacKnezie and K Lawrence Garrow & Kelly Law of Trusts and Trustees (8th ed, LexisNexis, online ed, 2022) at [19.57].

[3]             Futter v HMRC; Pitt v HMRC [2013] UKSC 26 at [60].

[4]             Lewin on Trusts  2022 at [30-016].