In a November 2023 judgment the High Court dealt with the principles of interpretation applicable to a trust deed. The question centred around which beneficiaries of the trust were entitled to a capital payment. The donor had since died and her and her late son’s estates were two of the four beneficiaries so entitled according to the applicant. The question whether the two estates were beneficiaries turned on whether the beneficiaries had obtained rights to the capital before their deaths.

The relevant clauses of the trust deed were that:

  • The vesting date, being the date on which the beneficiaries obtained rights to a capital payment, was to be determined by the trustees before or after the donor’s death.
  • If the trustees failed to set a date, the vesting date would be the date on which the youngest beneficiary turned twenty-five years old.
  • “Such capital as may remain on the vesting date will be distributed to the Beneficiaries alive at that date… in such proportions as the Trustees will at that time deem fit.”

The trustees never chose a vesting date, the youngest beneficiary turned twenty-five, and the trustees did not determine the proportions in which the capital should be distributed.

The court started with the principle of interpretation that regard must be had to the language used, viewed in the light of context and purpose, to determine the intention of the parties. When interpreting a trust deed “it is not the intention of the parties to which regard should be had, but rather the intention of the settlor only at the time of execution of the trust deed.” What the donor and the trustees did after the execution of the trust deed was not relevant to that intention. Although the trust was a family trust, without any direct evidence of the donor’s intention at the execution of the trust deed, the court could not find that the donor’s intention must have been that each beneficiary would receive some capital payment, nor that each should receive equal shares, as alleged.

The court found that on the language of the deed itself, the donor “must have also intended that the trustees would, at the vesting date, make a determination about how the capital remaining at that date would be distributed.” The beneficiaries did not become entitled to a payment of capital until the trustees had determined the proportions in which the capital should be paid. The court accordingly found that no unconditional rights were capable of passing to the estates of the late beneficiaries.


This blog was authored by Michael McCarthy, Trainee Associate.