The final element of the requirement of certainty is that the settlor shall have identified the persons who are to benefit under the trust. There must be someone in whose behalf the court can decree performance; furthermore the trustee needs to know in whose favour he is exercising his powers and duties. When looking at fixed trusts to carry out this obligation trustees must clearly state names so no problem poses, there must be class ascertainably. Therefore both Philip, Yasmin and the Uxbridge athletics club can be seen to be identifiable objects ,no problems arise in relation to that. On the other hand if it is a class of people (for example through a discretionary trust) the class must be clearly defined so the trustees know who each and every member is, there must be criterion certainty. Therefore the impressionist paintings to distribute amongst her friends creates problems. Who then constitutes as her friend? Is it friends she has known for a very long time? Or even possibly someone she has only ever met once. This problem falls within interpretation, everyone has different interpretations of what they believe a friend is. Furthermore if the court is able to find criterion certainty, if the category falls within too wide of a group it can then be argued that it is administrative unworkable.
Kerry would like to give £25,000 to Uxbridge Athletics Club; it can be argued it is an unincorporated association. A gift to such an association might be thought to be a purpose gift and subject to the general objections. Lawton Lj’s defined such a corporation as, ‘ two or more persons bound together for one or more common purposes...by mutual undertakings, each having mutual duties and obligations, in an organisation which has rules which identify in whom control of it and its funds rests and on what terms and which may be joined or left at will’. In addition these associations do not have a legal personality so it therefore cannot itself own anything nor have property. It is now evident that Uxbridge Athletics club cannot own the money given to them. The difficulty then arises as to what way the law can give these associations some form of existence. Viscount Simmonds stated, ‘[The difficulty] arises out of the artificial and anomalous conception of an unincorporated society which, though it is not a separate entity in law, is yet regarded as a continuing entity and, however inaccurately, as something other than an aggregate of its members’. If an association is not charitable than a gift cannot take effect as a purpose trust since such trusts are invalid unless they fall within a very narrow group of exceptions. In addition it is arguable that the £25,000 is a gift for the purpose to promote athletics and then therefore will fail. Viscount Simmonds stated in Leahy-v- A-G for New South Wales [1959] 2 ALL ER 300 that, ‘a gift can be made to persons but it cannot be made to a purpose or an object’. Such gifts can take effect in three different ways:
- Outright gift or assignment to present members as joint tenants.
- Trust for present members.
- Trust for present and future members.
Cross J clearly indicates which category it will fall under depends on the construction of each gift. Where the donor says the gift is to the association, then it is prima facia a gift to the present members. As the gift is to Uxbridge Athletics Club it can be said that the gift is to the present members. It must be apparent however that although this simple solution preserves the gift it could be said to defeat the intention of the donor, it is unlikely that the donor imagined the association would simply just take the money for themselves. The prima facia assumption can be rebutted by the circumstances or the terms of the gift. Moreover it could be argued that Kerry’s intention was not to give a gift to the members. Brightman J considered the different possible interpretations as to how a gift would take effect and concluded in favour of an outright gift to the members of the association subject to their contractual rights and liabilities; it is the most attractive solution which also poses the least problems. It is now arguable that this is an outright gift for the members to use for the improvement of the association through their contractual rights and liabilities. On the other hand you can only interpret the gift as being to the members if the donor intends that they are free to use it, but merely hopes that they will spend it on the purpose. Kerry is eager to promote athletics in the area, so therefore she only hopes that it will be spent to promote that purpose. Summers, J et all ( 2007) believes that several alternative approaches have been used to uphold gifts of this nature. To support this professor D. J. Haytonpoints out,“… there is scope for the courts to uphold non-charitable purpose trusts if the settlor's trust instrument provides for a person with locus standi to enforce the purpose trust, assuming it to be workable and restricted to a valid perpetuity period.”
Summers, J et all (2007) talks about a reform proposal governing private purpose trusts and that a growing number of commentators are now arguing for a change in the law. It is the writers' hope that this debate will continue by way of a formal consultation on this topic by the Law Commission in the not too distant future.
When looking at the third scenario it is important to discuss whether it is simply a power given or a discretionary trust. An power is an authority given to a person to deal with property that is not their own, they are not in a fiduciary position and are free to exercise the power in any way they wish unhampered by any obligations or duties. It could be argued that Philip has merely a power of appointment as it is a right given by a person (donor) to another (done) to appoint or distribute property to another.
In comparison the term discretionary trust implies a situation where the trustee has some form of power or discretion. A discretionary trust may be exhaustive, alternatively it may be non-exhaustive . In Re Weir’s settlement [1969] 1 Ch 657 Cross J accurately defined a discretionary trust, he stated ‘the separate interest between of each separate object is unquantifiable, and of a limited kind. What he has is a right to be considered as a potential beneficiary, a right to have his interest protected by a court of equity and a right to take and enjoy whatever part of income the trustees choose to give him. He could accordingly go to the court if the trustees refused to exercise their discretion at all or exercised it improperly. Kerry’s friends therefore only have a right to be considered.
It is important to distinguish between a trust and power, the most important distinction is a trust is obligatory whereas powers are discretionary. The hallmark of the trust is to distribute in favour of beneficiaries. In the case of an absence of obligation to distribute, the settlor would have created a mere power of appointment. Harman J stated in Re Gestetner [1953] 1 ALL ER 1150 that if it is a power ‘there is no duty to distribute, but only a duty to consider’. So if then Phillip has only a power he must only consider distributing but may decide not to. On the other hand if it is a discretionary trust he must at some point distribute due to perpetuity rules. A further difference lies in the fact that the object has no ground for complaint in a mere power if after consideration they decide not to exercise the power at all. The question whether a trust or mere power has been created is essentially one of construction of instrument.
Some important points the court will look at are firstly If the settlor has provided a gift over, an alternative gift in the event that the donee of the power fails to exercise it, then this points it towards being a mere power. This was evident in the case of Re Mills [1930] 1 Ch 654 where it was held that because there was a gift over the power did not operate as a trust.
Furthermore whether or not there is a trust power is entirely a question of construction of the words used in the instrument. This was seen in the case of Burrough-v- Philcox (1840) 5 My & Cr 72 where it was stated that, ‘when there appears a general a favour for a class and a particular intention in favour of a particular individual of class, to be selected by another person, and a particular intention fails from the selection not being made, the court will carry into effect the general intention’. However there is a limitation, this solution is only possible where the testator has indicated their intentions.
In conclusion in relation to all three dispositions, the three certainties must be met for the disposition to be valid. For the first disposition it can be said to be held to be a fixed trust if the intention is clear. In the second disposition it will depend on whether Uxbridge Athletics Club has locus standi in order for the gift to take effect. Lastly in the case of McPhail-v- Doulton [1970] 2 ALL ER 228 which set the standard for determining the object of a trust, the ‘any given postulant test’ requires that beneficiaries fall within a class therefore the issue is whether the friends are a clear class. Furthermore different obligations will be imposed depending on whether it is a power or a discretionary trust.
Word Count: 2196
Bibliography
Cases
Burrough-v- Philcox (1840) 5 My & Cr 72
Conservative and Unionist Central Office-v- Burrell [1982] 2 ALL ER 1
Jones-v- Lock (1865) LR 1 Ch App 25,
Lambe-v- Eames (1871) 6 Ch D 394
Leahy-v- A-G for New South Wales [1959] 2 ALL ER 300
Lord Parker of Waddington in Bowman-v- Secular Society [1917] AC 406
McPhail-v- Doulton [1970] 2 ALL ER 228
Morice-v- Bishop of Durham (1804) 9 Ves Jr 399
Neville Estates-v- Madden [1961] 3 ALL ER 769
Palmer-v- Simmonds (1854) 2 Drew 221
Parkin-v- Thorold (1852) 16 Beav 59
Paul-v- Constance [1977] 1 ALL ER 195
Re Gestetner [1953] 1 ALL ER 1150
Re Golay [1965] 2 All ER 660
Re Kayford [1957] 1 ALL ER 604
Re Mills [1930] 1 Ch 654
Re Recher’s Will Trust [1971] 3 ALL ER 401
Re Weir’s settlement [1969] 1 Ch 657
Wright-v- Atkyns (1823) Turn & R 143
Books
Edwards, R. Stockwell, N (2007) Trusts and Equity. 8th edition. London: Pearson Education Limited
Pettit, P.H. (2001) Equity and the Law of Trusts. 9th Edition. United Kingdom: Butler and Tanner Ltd
Statutes
Wills Act 1837
Journals
Pawlowski, M. Summers, J. (2007) Private Purpose Trusts- a reform proposal. Conveyancer and Property Lawyer. Sep/ Oct, 440-445.
Edwards, R. Stockwell, N (2007) Trusts and Equity. 8th edition. London: Pearson Education Limited
Parkin-v- Thorold (1852) 16 Beav 59
It should not be thought that this implies that formalities are never required; however, equity will not enforce or recognise equitable interests where formalities are required by statute.
Re Kayford [1957] 1 ALL ER 604
Wright-v- Atkyns (1823) Turn & R 143, in other words they must make it clear that the person holding the property is obliged to hold it for the benefit of others.
However in comparison in Jones-v- Lock (1865) LR 1 Ch App 25, it was stated that an express trust should not be based on ‘loose conversations’, therefore the decision in Paul-v- Constance can be criticised on the issue that this statement was in conversation and intent was not made clear.
An undertaking to give someting is unenforcable, being a mere gratiuitous promise. However there are exceptions to this issues.
Palmer-v- Simmonds (1854) 2 Drew 221
Morice-v- Bishop of Durham (1804) 9 Ves Jr 399
Trusts where the trustees are under an obligation to distribute to named persons or to all members of a specified group.
Certainty, the beneficiary principle, perpetuity and public policy
Conservative and Unionist Central Office-v- Burrell [1982] 2 ALL ER 1
Typical associations are sports, social clubs and cultural groups.
Leahy-v- A-G for New South Wales [1959] 2 ALL ER 300
Three basic problems arise in connection with property of unincorporated associations. Firstly, how are gifts of money to associations to be construed? Secondly, in what ways may an association hold its property? Lastly, what is to be done with the property of an association if it is wound up?
As a general rule it is only possible to create trust with human beneficiaries and trusts for non-charitable purposes are invalid. There are a number of exceptions to this general rule. It is possible to create a trust for the maintance of particular animals or for the erection or maintenance of a specified tomb.
Neville Estates-v- Madden [1961] 3 ALL ER 769
Viscount Simonds said in Leahy, ‘In law, a gift to such a society simpliciter ( i.e. where, to the words of Lord Parker of Waddington in Bowman-v-Secular Society [1917] AC 406 neither the circumstances of the gift nor the directions given nor the objects expressed impose on the done the character of a trustee) is nothing else than a gift to its members at the date of the gift as joint tenants.
Lord Parker of Waddington in Bowman-v- Secular Society [1917] AC 406 stated, ‘Greater difficulties must be felt when the gift is in such terms that, though it is clearly not contemplated that the individual members shall divide it among themselves, yet it is, prima facia, a gift to the individuals and, there being nothing in the constitution of the society to prohibit it, they can dispose of it as they think fit.’
As was stated in Leahy ,‘his intention was to create a trust not merely for the benefit of the existing members of the selected order but for its benefit as a continuing society and for the furtherance of its work’
Re Recher’s Will Trust [1971] 3 ALL ER 401
D. J. Hayton, Underhill & Hayton Law of Trusts & Trustees, 16th edn, (Butterworths, 2003), at pp.73-74.
Also sometimes called a trust power or power in the nature of a trust.
That is where the trustees are bound to distribute the whole income; but have a discretion as to how the distribution is to be made between the objects.
In which case the trustees have a discretion not only as to how the distribution is to be made, but also as to whether and to what extent it is to be made at all.
Whether exhaustive or non-exhaustive
A power was given to appoint amongst the children who the donee of the power should evidence the desire to maintain he family fortune; this was followed by a gift over in default of the appointment.
However this is to be determined by the facts of each case; due to the issue that if there was a gift over in default to a third party in the event of failure to exercise the power he is clearly not sowing that he expects the lass to get the money.
