ONLINE TRUSTS
TUTORIAL
Tutorial 3:
Certainty of object
You will remember from lectures that to be validly created, a trust requires certainty of intention, object and subject matter. The aim of this tutorial is to give you some practical examples of clauses, enabling you to distinguish between mere powers, trust powers and fixed trusts. You will then be required to apply the appropriate test of certainty to each clause, to determine its validity. CERTAINTY OF OBJECT The general rule is that a trust must be in favour of particular beneficiaries, who are ascertained or capable of ascertainment, or for a recognised "charitable purpose". If the clause is a fixed trust a list of possible beneficiaries must be able to be prepared when the time comes for distribution. This requirement is called list certainty: Inland Revenue Commissioners v Broadway Cottages Trust [1950] Ch 20. If the clause is a trust power,the class of beneficiaries must be defined with sufficient precision to allow the trustee to decide whether any person is inside or outside the class. This requirement is called criterion certainty: McPhail v Doulton [1971] AC 424. The criterion certainty test also applies to mere powers of appointment. Trust powers are also subject to the requirement of administrative workability: McPhail v Doulton per Lord Wilberforce's dictum. This is because courts can be called upon to administer a trust power. Mere powers are not subject to the test of administrative workability, but may be invalid if the power given is capricious: Re Manisty. CHARITABLE TRUSTS
There is no statutory definition of charitable purposes. The Courts are guided by reference to the Preamble of the Statute of Charitable Uses 1601(The Statute of Elizabeth). There are four recognised divisions of charitable purposes derived from the Statute. These are:
Trusts for charitable purposes will not be upheld unless they ALSO benefit the community or a significant class of the community - generally trusts set up for family members, employee groups or association memberships will not be charitable because they do not benefit the public. This is so even if the class is very large: Oppenheim v Tobacco Securities Trust Co Ltd [1951] AC 297.
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The general rule is that trusts must be
in favour of definite beneficiaries instead of purposes. The major exception
to this rule concerns charitable trusts. Charitable trusts do not
require list certainty or criterion certainty. Instead, they must meet the
test of "charitable purpose". This has a special legal meaning.