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Certainty of Objects

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kazzasingh's version from 2018-04-23 17:48

Discretionary Trusts

Question Answer
Gartside v IRC [1968]A grandfather set up a discretionary trust in his will and one of the beneficiaries interests' under the trust was being assessed for tax purposes. HELD: the only right that beneficiaries had in a case like this was to require the trustees (from time to time) to consider whether or not to apply some or all of the property to them. Collectively, however, they do have a right to demand the trust property. Individually, they have nothing.
McPhail v Daulton (1971)Mr Baden executes a deed in which property is transferred to his trustees and the trustees are to apply the income in order to make grants at their discretion to the staff of his company (ex-staff, their relatives and their dependents). The word 'relatives' was problematic. HELD: the appropriate test for a discretionary trust is the individual ascertainability test from Re Gulbenkian (1970). Could you tell any given postulant whether they are inside or outside the class?
Re Baden's Deed Trusts (No 2) (1973)The conceptional (Re Gulbenkian) certainty test... (Stamp LJ --> relative or next of kin...a single 'I don't know if I would fit into this class' could invalidate the trust. This is what HoL held in mind in Re Gulkenbian --> strict test). Megaw LJ (majority) said that the trust will fail if it cannot be said with certainty to any individual that he is or is not a member of a class. Substantial number must be certain to fall within that class in order to meet that requirement.
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Trust Powers

Question Answer
Burrough v Philcox (1840)A testator gave a power to his trustee to dispose of all of his real and personal estates amongst one or more of his nieces and nephews OR their children in whatever proportions the trustee thought proper. The trustee made no such exercise of that power. HELD: the provision was a trust. Since the trustee hadn't exercised it, the nieces and nephews should just take the assets equally. REASONING: where there was a general intention in favour of a class, but a particular intention that certain individuals in the class are going to be selected, and that particular intention fails because no selection is made, then the court will carry out their intention to carry out the general intention to benefit the class as a whole.
Re Weekes ST [1897]A wife gave a husband a life interest in some property (with a power to dipose of it by will between thier children). HOWEVER, he failed to make a will. The children said that there must have been a gift over in default to them in equal shares. HELD: no gift over! No evidence that this is what the testatrix would have wanted. No presumption that if power is not carried out, that it is going to be shared amongst the objects of the power. Instead, the presumption would be a resulting trust back to the settlor.
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Fixed Trusts

Question Answer
IRC v Broadway Cottages Trust (1995)A trust for such members of a given class as the trustees shall select is void for uncertainty UNLESS the whole range of objects eligible is capable of ascertainment.
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Powers of Appointment

Question Answer
Re Gulbenkian (1970)The House of Lords specifically said that if you've got a power of appointment, rather than a fixed trust, you do not have to be able to draw up a complete list in order to be valid.
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Gifts subject to a condition precedent

Question Answer
Re Barlow's WT (1979)Concerned a will where the executors were under a duty to allow the testatrix's friends and family to purchase paintings out of her estate, at less than market value. Is the phrase 'friends and family' sufficiently certain for a gift subject to a condition precedent. HELD: yes it is! There is something very different going on if there is property held on the basis that it should be distributed between qualifying members of the class (trust) and where property is held on the basis that qualifying members can come along and each take a fixed, specified thing.
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Can an uncertain class be made certain?

Question Answer
Re Coxen (1948)Money was given to the trustees to use for the benefit of the beneficiary if she was living in a particular property. HELD: the trustees could use their opinion to determine whether or not she indeed was living in that property. If the settlor is to make the trustee's opinion determinative of who falls within the class, that could cure any conceptual uncertainty. HOWEVER, if an opinion is prima facie conceptional uncertain to the courts, then it would be prima facie conceptually uncertain for the trustees as well.
Re Wright's WT (1981)A gift for the trustees to use at their absolute discretion for such people and institutions as they think have helped her and his husband. HELD: void for uncertainty
Re Jones (1953)A trust that provided that a daughter would lose her inheritence if in the uncontrolled opinion of the trustees, she started to have a relationship with a particular gentleman. The court decided that was was meant by 'relationship' was so obscure that it was not conceptually certain and the clause was invalid.
Re Tuck's ST (1978)If there is conceptual uncertainty, it can be resolved by an expert.
Re Raven (1915)This case concerned the National Association for the Prevention of Consumption and local Leicester branch with the same name. The testator had been a member of the local Leicester branch and so that the branch argued that it was the intended beneficiary of the trust. The trustees agreed. Normally that would irrelevant as the trust spelled out who was going to get it. BUT the testator had included a trust in the clause that said "if there is any doubt arising as to the institution intended to benefit, then the question shall be decided by my trustees AND my position shall be final and binding on all parties." HELD: you cannot oust the jurisdiction of the court by purporting to give your trustees a definitive power to determine the meaning of a phrase if that meaning is clear! Therefore, it was a trust for the national organisation.
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Administrative workability

Question Answer
McPhail v Doulton (1971)Even if your class is clear, if it is too wide to enable your trustees to meaningfully use their discretion as to who gets what, then it is not administratively workable and it will fail.
R v District Auditor, ex parte West Yorkshire MCC (1986)This was a trust for the inhabitants of West Yorkshire. 2.5million potential beneficiaries. Trustees could not meaningfully survey and exercise their discretion and therefore the trust failed.
Re Hay's ST (1982)A power traditionally won't fail just because the numbers alone are huge (general power = for everyone in the world).
Mettoy Pension Trustees v Evans (1990)Concerned a power to apply surplus funds for the beneficiaries of a pension trust. The power could no longer be carried out because the pension company went bust. Normally the courts would never step in and carry out the power because it is optional. BUT in this case, because it was a pension fund and the beneficiaries will all be contributing money and they were in a more deserving position than your typical volunteer beneficiary. The Court did actually step in and carry that power out.
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Capriciousness

Question Answer
Re Manisty's ST (1974)If you pick an excessively large class at random and there is no reason why you chose the class, that might be evidence of a capricious trust.
Brown v Burdett (1882)A trust was set up to manage a piece of property. It was specifically provided that the property was to be locked up and not used by anybody for 20 years. HELD: pointless capricious trust. It failed...
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