Certainty of Objects

Question 1

What do we mean by ‘objects’? What must they be?

Answer 1

We mean beneficiaries, the objects of the settlor’s benefactions. They must be people.

Question 2

What happened in Re Endacott?

Answer 2

A testator left a fund to provide some useful memorial for themselves.
HELD: CA- a trust must normally have human beneficiaries. No certainty of objects

Question 3

What happened in Morice v Bishop of Durham?

Answer 3

Someone had tried to set up a trust for the purpose of benevolence.
HELD: there must be somebody in whose favour the court can decree performance. Every trust must have definite objects.

Question 4

Fixed Trusts what are the 3 things they have?

Answer 4

1. Fixed Shares
2. An obligation on trustees
3. No discretion

Question 5

Discretionary Trusts what are the 4 things they have?

Answer 5

1. Obligation on trustees
2. Duty to exercise discretion
3. No pre-determined shares
4. More flexibility

Question 6

What does Gartside v IRC say?

Answer 6

An individual did not actually own something because the trustees might actually allocate capital in their favour.

Question 7

What was said in Mettoy Pension Trustees Ltd v Evans about trustees duties?

Answer 7

Warner J: the trustee is under a duty to select from among a class of beneficiaries those who are to receive the proportions in which they are to receive, income or capital of the trust property. 
This is flexible. No individual has beneficial interest in a trust property until a beneficiary's share is allocated to him. Useful for reckless beneficiaries and divorcing beneficiaries

Question 8

What are the 3 reasons a trust fails for uncertainty of objects?

Answer 8

1. Trustee- trustee cannot carry out their duty to distribute the trust fund to the right beneficiaries unless they know who the beneficiaries are.
2. Courts: if the trustees do not perform their duties or breach them, the court has power to ensure compliance with the trust. To fulfill this function, the court must be able to ascertain who the beneficiaries are.
3. Beneficiaries- they can enforce the trustees’ duties and have standing to complain to the court.

Question 9

What is the consequence of a failure of an attempted trust for uncertainty of objects?

Answer 9

Resulting trust of the property back to the settlor, or if he has died, his estate.

Question 10

What is the test for certainty of objects for a fixed trust? what are the 2 cases?

Answer 10

Complete list test, all the beneficiaries must be capable of being listed.

IRC v Broadway Cottages- fixed trust of £80k listed many family members and previous employees and 2 charities.
VOID: did not pass the test of being able to list all beneficiaries, void for uncertainty of objects.

OT Computers v First National Trinity Finance- trust for urgent suppliers, but nobody could draw up a defined list of urgent suppliers. VOID.

Question 11

What is the test for certainty of objects for a discretionary trust? McPhail v Doulton

Answer 11

The Is or Is Not Test.
Lord Wilberforce said, can it be said with certainty that any given individual is or is not a member of the class?
Conceptual certainty is required to define the class of beneficiaries. It does not matter if the whereabouts of the members cannot be ascertained. 
The trustee only has to make a survey of the class and then select the beneficiaries from within that class. If the definition of the class is conceptually uncertain the trust will fail.

Question 12

What happened in Re Gestetner Settlement?

Answer 12

Tried to set up a provision where there was a power to distribute money amongst a wide class of beneficiaries, not possible to draw up a list. 
HELD: you don't need to draw up a complete list if its a power. The correct test was whether it was possible to tell if a given individual was within or not within that named class of beneficiaries. The is or is not test or given postulant test means someone coming forward.

Question 13

What 2 grounds can a discretionary trust still fail on? McPhail v Doulton- Lord Wilberforce… , R v West Yorkshire Metropolitan County Council… Re Manisty Settlement Lord Templeman

Answer 13

1. Administrative Unworkability- Lord Wilberforce in McPhail v Doulton- if the class of beneficiaries is so hopelessly wide, such as all the residents in Greater London.

R v West Yorkshire Metropolitcan County Council- wanted to transfer remaining funds to a trust to benefit residents of the county.
HELD: administratively unworkable.

2. Capriciousness- Re Manisty’s Settlement- Lord Templeman- would not uphold a discretionary trust if the class of beneficiaries was so bizarre.

Question 14

Applying the Is or Is not Test Badens Deeds Trusts No.2 what did LJ Stamp, LJ Sachs, LJ Megaw say?

Answer 14

The case involved a trust set up to benefit employees and relatives . Passed the given postulant test.

Stamp LJ: used Harding v Ling, said relatives means next of kin. So held the trust was valid

Sachs LJ: It is up to persons coming forward to prove they are ‘is’ part of the class. A ‘don’t know’ class would not hold, it would be invalid.

Megaw LJ: substantial amount of people required to be part of the ‘is’ class.

Question 15

How to answer an exam question for certainty of objects?

Answer 15

1. Identify the disposition: discretionary or power.
2. State and explain the relevant certainty of objects test for the disposition
3. Apply it.
4. Mention administrative unworkability and capriciousness
5. Reach a conclusion
6. If the trust fails state that it goes back to the settlors estate through resulting trust.

Question 16

Can a third party cure conceptual uncertainty?

Answer 16

No. a third party can be an arbiter on questions on fact but cannot cure questions of law, as thats the courts role.

Question 17

What happened in Re Coxen?

Answer 17

A house was given on trust for someone until she had ceased to permanently reside there. The trustees were given the power to make that decision. The court thought it was essential that the testator gave the trustees a clear basis for making their objective decision.
HELD: he had. ceasing to residue somewhere permanently was a demonstrable fact.

Question 18

Can trustees be given free range power? Re Jones

Answer 18

No. Father wanted his daughter to loser her income from her trust fund if she associated with a certain named person. Father tried to give his trustees that arbiter role.
HELD: the court couldn’t work out what he meant by social or other relationship, the arbiter clause was held as too conceptually uncertain.

Question 19

Opinion of a third party, what happened in Re Tucks Settlement trusts?

Answer 19

Case about a gift subject to a condition precedent.
Tuck was a hereditary baronet and wanted this to pass down his line of descendants and for that to remain jewish. The males had to continue to be jewish and marry an approved jewish wife. He appointed a third party to act as an arbiter- his trustees should seek the approval of a chief rabbi.
HELD: VALID- Lord Denning- thought it was fine for a 3rd party to resolve the matter even though it was a case of conceptual uncertainty.
Eversley LJ- the opinion of the third party forms part of the definition of the class, they are not resolving the uncertainty in the definition of the class.

Question 20

Gifts subject to a condition precedent, what is the test under Re Barlow’s Will Trusts?

Answer 20

Less strict test for certainty of objects, its not a trust.

D died owning a collection of paintings, very valuable ones. Directed her executor in her will to apply any members of her friends and family to acquire one of her paintings. Class of beneficiaries under discretionary would cause issues with it being conceptually uncertain. However this is a gift to anyone who could establish that they fulfilled the conditions of being a friend or a family member.
HELD: one person test applies here, if one person fits that condition, the gift will work and be upheld.

Question 21

What is a power and how is it similar to a discretionary trust?

Answer 21

It is a power to a selection of beneficiaries to make a choice. The person isn’t a trustee and does not have a duty or obligation to make that selection only the power to do so.

Question 22

What is the test for certainty of power?

Answer 22

Re Gulbenkian’s Settlement Trusts- in his will he created a power. He wanted some money to be given to anyone in the houses he had resided. Hard to draw up a list.
HELD: HL- given postulant is or is not test is the test for certainty of objects in the powers.

Question 23

How do you differentiate between a power and a trust using words?

Answer 23

‘You may’ is a power which is the is or is not test for certainty of objects.

‘You must’ then this is a trust, complete list test for certainty of objects for fixed trusts.

Question 24

What happened in McPhail v Doulton?

Answer 24

Discretionary trust case, B was an employer and established a trust fund for a company. He wanted to set up a trust fund for the benefit of his staff, former staff their dependants. Over 1000 beneficaries.
HELD: HL- they changed the test for certainty of objects for discretionary trusts under this case. They took the test for powers and applied it here. You either is or is not a member of the class. This was done to have consistency between discretionary trusts and powers.