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Tutorial 3: Certainty of Objects
Reading:
Textbooks
Virgo (2012): Chapter 4 (pp
...
206-246)
Journal Article
Emery (1982) 98 LQR 551 (posted on QM Plus)
Cases
McPhail v Doulton [1971] AC 424
Re Baden (no 2) [1973] Ch 9
The effects of absence of the three certainties
1
...
the donee can keep the property for themselves, as
they care not a trustee
2
...

The likely result is the complete failure of the attempted disposition
...
If there is no certainty of objects, then , as above, the trustees hold the propert
on resulting trust for the testator/settlor

Certainty of objects
 Morice v Bishop of Durham (1804) [1803-13] All ER Rep 451
o “There can be no trust over the exercise of which this court [cannot]
assume a control, for an uncontrollable power of disposition would be
ownership and not trust… Every …trust must have a definite object
...
”
Sir William Grant MR
o "to dispose of
...
" = VOID as no
identifiable beneficiaries, objects uncertain
o The trust did not fall into any of the Four Heads of Charity so it failed
the certainty test and the property returned on resulting trust to the
estate of Cracherode
...
The court needs to know who the
beneficiaries are, because they need to know who has the right to sue
the trustees
...
It is possible
to make a list of all the beneficiaries
 OT Computers Ltd v First National Tricity Finance Ltd [2003] EWHC 1010
o OT traded as Tiny Computers and was making large losses
...
The company went into
receivership , so if these were valid trusts the money there would be
protected from other creditors and held on trust for the customers and
urgent suppliers, respectively
o Held : no difficulty about the customer's trust
...
The company had actually created a list of customers
o The urgent suppliers was not valid - urgent = too vague ; list of suppliers
but urgent cannot define any class of beneficiaries
 Gold v Hill
o Trust for 'Carol and the kids'
...
The judge quoted Lord Upjohn in Re
Gulbenkian that the task of the courts was to use their common sense to
try to make sense of what the settlor/testator really meant and not just
strike it down for lack of certainty
...


Certainty of objects in Discretionary Trusts
Traditional approach : old ; FT certainty rule of exhaustive enumeration
 IRC v Broadway :
o Alan Timpson gave money to his trustees, of which he was one, for the
trustees to apply income for the benefit of all or any of a class of
beneficiaries
...
Trust void for uncertainty
MODERN certainty of objects for DT
Mc Phail - the list certainty test did not need to be used for DT, because there would
never be a need to divide the property equally
...

Now test same with FP
The certainty of objects test requires the words used to define the class clearly or
the trust is void
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Re Baden (no2) - CA recognised that both 'relatives' and 'dependants' were conceptually
certain
...
'Relatives' were defined by Sachs and Megaw LJJ as descendants from
a common ancestor
...
Sachs LJ accepts that the test is about conceptual certainty
...
Stamp LJ agrees
...

Sachs LJ has a wide definition of descent from a common ancestor but Stamp LJ
uses a phrase 'next of kin' that is often used in will and trusts and has the advantage
of a statutorily defined meaning ;ie near, blood relative
...

3
...
He thinks that usually one can tell whether someone is a
relative or not, but that there would be some, doubtful borderline cases
...
They differed, however, in what 'relative' actually meant
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Different people l even judges , define words in
different ways and therefore come to different conclusions upon whether the words
used clearly define a class
...
Or of any company
which had one or more directors who were also directors or Gestetner Ltd
A new test : 'in fact there is no difficulty, as has been admitted, in ascertaining any given
postulant is a member of a specified class' : the court reads the definition of the category
or class of beneficiary and decides whether the class of objects is defined with sufficient
precision
...
All the trustees need to know is whether someone is qualified or
not
3

What does the test mean:
 Re Coates 1955
o the will included the term that 'if my wife feels that I have forgotten any
friend I direct my executors to pay such friend or friends as noinated by my
wife a sum not exceeding £25 per friend with a maximum aggregate
payment of £250, so that such friends may buy a small memento of our
friendship'
o Held:
o it was not essential to the validity of the power of selection conferred on the
wife that the whole class of beneficiaries could be ascertained from the
start
...
so that the power did not fail
for uncertainty
...
any of our old friends'
...
It was
clear that at least some people could be identified as friends, although
there might be many doubtful cases
...
you do not have to be able to ascertain every member of
the class
...
e there are simply too many beneficiaries in the
class
...
5M potential beneficiaries,
is, in my judgment , quite simply unworkable
Fiduciary Powers
may pass the certainty of objects test but may fail for CAPRICIOUSNESS
4

Re Manisty

Certainty of objects in conditional gifts
At least 1 person meets the condition- individual gifts are satisfied when
someone can claim the gift
...

The independent expert - uncertainty about the meaning of the condition is
resolved where a person who is named in the will /trust can decide what the
condition means
Re Tuck : Chief Rabbi on approved wife

Questions
1
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What do you understand by the expression "trust power"?
2
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Consider the validity of the following provisions in a trust instrument:
(a) £500,000 to be divided equally amongst the red-haired children of Bow -Fixed trust conceptual uncertainty
(b) £500,000 to be available for distribution by the trustees amongst all those-fiduciary power
households represented by an entry in any telephone directory in the United
Kingdom under the name "Smith"- administrative unworkability
(c) £1000 to Joe if he is a very good footballer in the opinion of the chief football
correspondent of The Times Newspaper
(d) £10,000 to be available to the trustees for the payment of sums to any
person who has given up his or her place for the settlor on a bus- evidential uncertainty

C
...
essential test of certainty- complete list test
2
...
evidential certainty-proving that somebody is an object- if merely a question of any
individual claimant being unable to prove as a matter of evidence that she was, eg
one of the settlor's 1st cousins then that would not invalidate the entire trust ,
although it would mean that the particular claimant would not be able to demonstrate
an entitlement
...
ascertainability- where an object is located
5
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administrative workability or capriciousness- how sensible the settlor's/testator's
intent was
(3) Distinguish between fixed trusts, discretionary trusts, and powers of appointment

BARE TRUSTS
That is a trust in which the trustee holds on trust for one beneficiary absolutely
...


FIXED TRUSTS:
The trustees are required to distribute the trust property to the beneficiaries in the
proportions identified by the trust document
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If a complete list cannot be drawn up, the trust fails: IRC v Broadway Cottages 1955
1
...
It does not matter that a complete list
cannot be drawn up when the trust is created eg Angela's grandchildren , including those
born susbequently, will be valid
...
Conceptual Certainty- The need to satisfy the complete list test means that if the
definition of the object is unclear, it will not be possible to determine who the objects are and
so it will not be possible to compile the complete list, so the trust will be void eg
...
Evidential certainty
Even if the definition of the objects is certain, if it not possible to prove who the objects are,
the complete list test will not be satisfied
...
g if Adam creates a trust for £1000 to divided
equally among his football society team , this is conceptually certain
...

4
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The
share of anybody who cannot be ascertained can be paid into the court
5
...
For fixed trusts, if it's
possible to list all of the objects , there should be no concerns about the size of the class
being such that cannot be administered
...
Capricousness
Significant when considering the validity of fiduciary powers of appointment but no evidence
to suggest this is of any relevance to a fixed trust
...
The essential test of certainty
A fixed trust can also arise where the trustees are obliged to distribute trust property to
beneficiaries subject to whether or not a particular condition has been satisfied
...
The test of certainty varies depending on whether the
condition is precedent , which needs to be satisfied before the property can be distributed, or
a condition subsequent ,in which case , if the condition is satisfied, a beneficiary will no
longer be entitled to the trust property
...

A condition subsequent will be valid only if it can be known with certainty from the start the
exact event that will result in the defeat of the beneficiary's interest
...

Re Jones - half of the money held on trust for the testator's daughter was to be forfeited if
she had a social or other relationship with a named person
...
This was characterized as a condition subsequent and it was to be valid only if it could
be determined with certainty what was meant by the 'Jewish faith'
Scott J recognized that this could be considered to be conceptually uncertain, as had been
concluded in Clayton v Ramsden, but he was willing to have regard to extrinsic evidence to
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resolve the uncertainty, which involved him asking what the 'testator sitting in his armchair'
might have meant by the Jewish faith
...

---> respecting the wishes of the settlor by upholding the conditions subsequent if they can
Condition Precedent
A condition precedent, which must be satisfied before property can be distributed, will be
valid if it can be said of just one person that he or she satisfies the condition
...
Key question 'who were the friends'
...
Although it
was accepted that 'friends' was not conceptually certain for discretionary trusts or fiduciary
powers, because there are many degrees of friendship, it was held that this was not the
relevant test to be applied when determining whether the condition precedent was valid
...
anyone wishing to exercise the option bore
the burden of proving that he or she was a friend and so satisfied the condition
...
Conceptual Certainty
Lord Denning in Re Tuck's Settlement Trust recognizes that conceptual uncertainty would
not render a condition precedent void where is would invalidate a condition subsequent
3
...
Ascertainability
If no object can be ascertained, the condition will lapse and the property will pass to those
entitled to the residue
5
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Capriciousness
if condition is capricious, it may be disregarded
DISCRETIONARY TRUSTS
# Mere Powers of appointment - The trustees have a power to transfer given amounts to the
trust income to an identified class of beneficiaries
...
The essential test of certainty
The trustees are given discretion as to which objects are to be benefited by distribution of
the trust property and in what proportion
...
It is essential that the trustees know from the outset who the potential
beneficiaries might be
...

The trustees therefore have a discretion as to how they exercise their power, but they have
an obligation to exercise that discretion in favour of one of the objects of that trust
...

Mc Phail v Doulton 1971
is or is not test
The test requires that, for a discretionary trust to be valid, it must be possible to say of any
given claimant to the trust that that person either is or is not within the class of beneficiaries
...

The strict test will tend to invalidate many trusts where vague expressions as 'good friends'
are used to define the class of the beneficiaries
...
It was recognised that the settlor had
purported to create a discretionary trust, but the validity of this trust turned on whether
relatives and dependants were sufficiently certain objects
"apply the net income of the fund in making at their absolute discretion grants to or for the
benefit of any of the officers and employees or ex-officers or ex-employees of the company
or to any relatives or dependants of any such persons"

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Lord Wilberforce : held that it was sufficient that it could be said with certainty what any given
individual was or was not a member of the relevant class and it was not necessary to
ascertain everybody who was in the class
...

The HL rejected the fixed list test of certainty of objects for discretionary trusts
...
The general significance of
this maxim was doubted by Lord Wilberforce in Mc Phail v Doulton especially because it
would rarely accord with the intention of the settlor
...

The is or is not test is satisfied “if it can be said with certainty whether any given individual
is or is not a member of the class and does not fail simply because it is impossible to
ascertain every member of the class” (Lord Wilberforce in McPhail v Doulton)

The complete list test is not totally irrelevant to discretionary trusts, but will apply only where
it appears that the settlors' intent is that if the trustee does not make a selection from the
objects, there will be division among them all, whether equally or in different proportions
...

Re Baden's Deed Trusts(no2)1979 - CA concluded that the discretionary trust was valid by
applying Lord Wilberforce's test
2
...

Re Baden (no2) - CA recognised that both 'relatives' and 'dependants' were conceptually
certain
...
'Relatives' were defined by Sachs and Megaw LJJ as descendants from
a common ancestor
...
Blood relation creates a much potential class than defining them by
reference to a common ancestor
...
Evidential Certainty
Re Baden (No2) -the discretionary trust was evidentially certain, but different tests to reach
this conclusion
'relatives' -purely literal application of the test of Mc Phail may have led to the invalidity of
the trust so the lorships added their own gloss
...
So
Sachs changed who it was who would be required to prove whether or not she fell
within the class of objects and many trusts would thus be validated
...

He concluded that the courts would never be defeated by evidential uncertainty
...
Therefore, even though a few claimants may not be categorisable
within the terms of the trust, if there would be a sufficient number of claimants about
whom one could be certain , then that would be enough to render the trust valid
...
Rather, he suggested that it
was enough that it could be shown of a substantial number of objects that they were
within the class
...
This, however, does not
require a complete list of objects to be drawn up
...
Ascertainability - does not invalidate the trust but simply means that the person missing
cannot receive a distribution from the trust
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Size of the class
The trust will be administratively unworkable and will be void, in cases where the class of
objects is too wide
...
5M objects
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However, the size of the class was so wide that it was incapable of forming anything like a
class and so was administratively unworkable
Re Harding- A trust for the black community of four London boroughs would have been
treated as void for being administratively unworkable had it not been a charitable trust
Re Hay's Settlement Trust - Sir Robert Megarry V-C recognised that a discretionary trust
for anyone other than a few specified people would be administratively unworkable
Why should a discretionary trust be void because the class is too wide??
 The trustees will not be able to perform their duty to ascertain the range of objects if
the size is so large
...
A small size of the class makes it
easier for the trustee to weigh up the claims of all the objects
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 Overall the settlor's intention is not respected and this class size rule should
be rejected and the issues instead should be examined when considering the
test of evidential certainty
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This may constitute millions of people but most of
them would not be able to prove that they are related to the settlor and the exercise of the
trustees' discretion would be workable
Lord Wilberforce - if impossible for the trustees to carry out the task set by the settlor , then
the trust will be declared void for uncertainty
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Capriciousness
A discretionary trust may also be treated as void on the ground that the settlor had no
sensible intent in establishing the trust
R v District Auditor ex p West Metropolitan County Council -recognized that the council
did have a sensible reason for wishing to benefit the inhabitants if West Yorkshire si that the
discretionary trust was not capricious
12

#
Re Manisty's Settlement - Templeman J albeit in the context of a case concerning
fiduciary powers rather than discretionary - suggested that a power given to trustees to
benefit the residents of Greater London be capricious because the terms of the power
negatives any sensible intention on the part of the settlor
...

differences between the 2 cases: numbers, connection between settlor and objects
FIDUCIARY POWERS

1
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Unlike discretionary trusts or
trust powers, there is no obligation on the trustee to distribute among the objects, although
because the trustee is a fiduciary, he or she must consider the exercise of the power
...
A settlement contained a power to appoint in favour
of Gulbenkian, his wife, children , remote issue or anybody who employed him or with whom
he resided
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In reaching this
conclusion, the HL rejected the approach of the CA that it was sufficient that it could be
shown that just one person fell within the class
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Consequently, it is vital that both trustees and the court are able to determine who are and
who are not objects of the power

2
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it was held that it was not conceptually uncertain
because the court could determine whether a particular person matched the description
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This may be because this case
involved a discretionary trust
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3
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Ascertainability
Not even an obligation to exercise the power by trustee
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Size of the class
A fiduciary power cannot be struck down for being administratively unworkable simply
because of the breadth of the class
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Capriciousness
A fiduciary power may be invalidated by virtue of being capricious in the sense that there
was no sensible intention for the settlor to benefit the objects
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Resolving uncertainty
a
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i
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In this case it was held that the condition was not void for
uncertainty because the decision as to whether the wife had ceased to live
in the house permanently was legitimately for the trustees to determine and
because the meaning of 'ceasing to live somewhere permanently' was
considered as conceptually certain
...
Similarly, in Dundee General Hospitals Board of Management v Walker,
the HL, in an appeal from Scotland, recognised that it was valid for a trust to
state that whether or not a hospital had been taken over by the State could
be determined by the trustees in their sole and absolute discretion
iii
...

iv
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'Social
or other relationship' was considered to be conceptually uncertain and the
condition subsequent was void
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A distinction
needs to be drawn between a trust for those who have a moral claim on the
settlor , with those having 'a moral claim' being determined by the trustees,
and a trust for those whom the trustees thin have a moral claim on the
settlor
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The 2nd involves the objects being those whom the
trustees think have a moral claim o the settlor, in which case the trustees
are not the arbiters of whether the power applies, but rather form an
essential part of the definition of the power
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Third party as abiter- in Re Tuck's Settlement Trusts , any uncertainty about
whether a person was married to an 'approved wife of the Jewish blood' could be
legitimately resolved by referring the matter to chief rabbi , as the settlement had
authorized
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Eveleigh LJ said that the 3rd party is not being
used to resolve uncertainty in the definition of the class, but forms part of the
definition of the class
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Severance - Re Wright's Will Trusts - the class consisted of identifiable named
charities and other bodies that could not be identified
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d
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The main obstacle to this
would be one of administrative unworkability in exercising the discretion to
appoint to objects within the class
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Letter of wishes - the letters can be used to avoid the dangers of having
uncertain objects in trusts by referring to descriptions that are conceptually
uncertain

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