Goodbye and good riddance to the doctrines of “fraud on a power” and “the entire substratum”—now if only we could figure out the “proper purpose” rule

Abstract

The equitable doctrine of “fraud on a power” (now sometimes called either the “improper purpose” or the “proper purpose” rule) was created almost 300 years ago with one judge’s off-the-cuff remark. Since then the doctrine has grown by leaps and bounds, to the point where entire books are written about it. Yet it is questionable whether the doctrine has any real meaning or jurisprudential basis. The same is true of the so-called substratum rule. Joel Nitikman, K.C., discusses both doctrines in the context of the Privy Council’s recent decision in Grand View Private Trust v. Wang, on appeal from the Bermuda Court of Appeal. He concludes that both concepts should be discarded, with the focus being instead on a simple question: what is the scope of the power as written?