Equity and Trusts Week 2

Creating the Trust

The Three Certainties

Settlor
When an individual requests that their solicitor set ups a trust for the benefit of their
children, the intention is fairly clear and unproblematic. The more difficult cases are those in
which a person deals with their property possibly in ignorance of the law of trusts, but by
performing such actions which the law of trusts would define as being a declaration of a
trust.

“I intend this money to be as much yours as mine.”

These words have been held to validly declare a trust, even though the author of the words
was unaware that this would be the effect of his declaration. This comes from the case of
Paul v Constance

So, when a transfer occurs, we must be sure exactly what the transferer (settlor) intended.

Trustee
If X has become a trustee under a valid trust, they will have particular and onerous trustee
and fiduciary obligations and responsibilities. These can vary depending on the nature of the
particular trust. The obligations of the trustee are tied in closely with the intentions of the
settlor.
Certainty is therefore crucial, as the court must be able to identify the trustee’s obligations
and be able to oversee them. This is equally important for the beneficiaries.

Beneficiary
A beneficiary’s rights exist not only as against the trustee, but also in the trust property
itself.

Interpretation of the terms

The interpretation of the key terms of a trust might change over time in the light of changing
social attitudes etc.

Re JC Druce Settlement – the term ‘children’ was interpreted to include illegitimate and
adopted chidren in line with the Human Rights Act 1998
Similarly, it has been recognised that a trust deed which referred to the beneficiaries as
including spouses in quotes should be interpreted as including civil partners, even though
the legal concept wasn’t recognised when the trust deed was created.

Express Trust – If a trust is created intentionally, and this could be by an express or inferred
declaration, it will be an express trust (like the example given under settlor). For it to be valid
express trust, it must satisfy the three certainties.
The Three Certainties
So, to create a valid express trust, the following conditions must be satisfied (this was
ascertained by Lord Langdale in the case of Knight v Knight):

- Intention (of the settlor) when the property was initially transferred
o Must be clear and certain
 Is it a trust? Mandatory, imperative language used
 E.g. shall
 Is it a power? Authoritative language used
 E.g. may
 Is it a gift? Precatory language used
 E.g. ‘in the hope that’
o Was the conscience of the receiver bound?

- Subject matter
o The property that is to be the subject of the trust must be readily and clearly
identifiable

- Objects/beneficiaries
o Recipients of the trust property must be identified with certainty and ease

Certainty of Intention: What did the settlor intend?

Equity looks to intent rather than to form.
- No particular words are required or necessary for the creation of a trust. Even the
word trust is not essential
- Instead, we need to look at the way that the property is transferred, and the way the
property is received. Is their conscience bound?
- The intention of the settlor must be made clear with sufficient certainty so as to bind
the conscience of the recipient.

Selfishly or selflessly?
- Can the beneficiary do what they like with the property (selfish)?
- Has the trustee received the property subject to a mandatory obligation (selflessly)?

Executors Act 1830 (important!)

- The courts used to interpret precatory language – e.g. “I leave £1000 to my solicitor
in the hope that…” – as being more imperative
- They did so for practical reasons, to avoid giving the property to the executor to stop
the executor inheriting rather than the family, because clearly it was intended for the
family
- This Act ended the practice of the executor receiving the property
- Parliament Act that stated that executors were to be considered trustees for those
who would inherit the estate if there was no will. This was unless the will or codicil
stated otherwise
- So in cases after 1830 we can take a much more literal interpretation of the language
(Executor – person/people legally responsible for carrying out the instructions in a will and
handling the estate of the deceased)

- Mr Constance left his wife and went to live with Mrs Paul
- Mr Constance had an accident at work and was compensated £950
- The pair decide to open a joint bank account, but the bank advise that Mr Constance
open an account solely in Mr Constance’s name
- The £950 was deposited and the money was added to from time to time with Bingo
winnings
- Mr Constance had several times reassured Mrs Paul that, despite the fact that the
account was in his name alone, “this money is as much yours as it was mine”
- When Mr Constance died, he did not leave behind a will and had never divorced Mrs
Constance
- Mrs Constance made a claim on the money in the bank account, which she was
perfectly entitled to do
- Mrs Paul argued that a trust had been created of the money in the bank account,
that Mr Constance was the trustee and held the title, and that both her and Mr
Constance were equal beneficiaries. After his death, she was therefore the sole
remaining beneficiary
- Mrs Paul argued that, if Mrs Constance was owed anything, it was only the half of the
fund that Mr Constance owned
- The Court of Appeal held that by his words and actions, Mr Constance had declared
himself a trustee of the money for himself and Mrs Paul
- The Court said that Mr Constance had declared himself a trustee for himself and Mrs
Paul of the money in the bank account, therefore, 50% of the money was held for
Mrs Paul. The remaining 50% did go to the widow as Mr Constance’s legal next of kin,
as he’d never divorced her.
- The Lord Justice was clear that this case was being pleaded as an express trust, and
that therefore the court had to be convinced that Mr Constance actually intended to
create a trust for himself and Mrs Paul
- The Court remarked that Mr Constance was of unsophisticated character, and that he
wouldn’t necessarily have known that he was creating a trust. Nevertheless, by the
repetition of the phrase, coupled with the original intention of wanting to set up a
 joint account, and the only withdrawal being for a holiday together, there was
sufficient evidence to accept an intention to create a trust.

Kayford Ltd. was a mail order catalogue company

- Customers who ordered goods from the company either paid in full in advance, or
paid a deposit in advance for their goods
- The company was having financial difficulties and was concerned that it would
become insolvent
- In order to safeguard the customers’ money, the company put all of the customers’
prepayments into a separate bank account.
- If and when the goods were sent to a customer, the money was taken from the
customer account and put into the business account
- Kayford did eventually go into liquidation
- Question arose over the status of the money in the customers’ account, and whether
or not the company had an intention to create a trust over that money in favour of
the customers, or whether the money formed part of the general assets of the
company
o This is important, because if the customers are beneficiaries under a trust,
then not only do they have a right to that money, but they have a right in that
money
o When a company goes into liquidation, the money a right to the money is not
particularly valuable, the right you have is essentially worthless since the
company is bust
o However, if you’re a beneficiary under a trust, then your right is in rem
(limited property right that is an absolute right), and you have priority over
other creditors

Being a beneficiary under a trust in this context means that, when the trustees in bankruptcy
come along and start collecting the assets that the company’s got, they cannot take money
from the customers’ account because it doesn’t belong to the company, and doesn’t count
as one of their assets. It’s a trust fund!

So, a right to property and a right in property are very different rights and can affect
outcomes heavily.

So, was the customers’ account a trust fund?

- The company specifically said, ‘we’re worried about customers losing their money if
we put it into our business account and then we go bust, we know that our
customers might not get their money back’
- So, was there an intention to create a trust for the benefit of their customers?
- Justice Megarry said that ‘it is settled, well settled that a trust can be created without
using the words trust or confidence of the like’. The question, he said, is whether in
substance a sufficient intention to create a trust has been manifested.
- He went on to say that payment into a separate bank account is a useful indication of
an intention to create a trust, and so a trust of the customers’ money here was found

We have seen two cases in which non-formal actions have been found to give sufficient
evidence of intention to create a trust. However, the courts will not easily be convicned of
such an intention and each case will be judged on its facts. We contrast these two cases
with the case of Jones v Lock.

Jones came home to his wife and baby in 1865, having been away on business.
- Jones was scolded by his wife for not having bought the baby a present
- He wrote out a check, payable to himself, and put it in the baby’s hand, saying “Look
you here, I give this to baby. It is for himself”
- Jones then took the cheque back, saying that he was going to put it away for the
baby
- Jones died days later, and the cheque was found amongst his possessions
- The question was, had there been a gift of the money to the child? Was there a trust
of the money for the child?

At first instance, the Court held that Jones had made a valid declaration of an express trust
of the cheque for the benefit of his son.
However, this was overturned by the Court of Appeal. They ruled that there was not a trust,
not even a valid gift of the money. The reason for this is because the cheque had been made
out to himself with no endorsement over to the child.

Lord Cramworth thought that, in deciding whether Jones intended to create a trust, it
would have been a very dangerous example if loose conversation of this sort, in important
transactions of this kind, should have the effect of a declaration of trust.
Distinguishing between Trusts and Powers
Re Hays ST

So, with a power, a person who has absolute ownership and who grants an authority, a
power to another person to manage their property. It gives that individual the power to act
with their money and manage it as if they were the absolute owner, but it falls short of
making them the absolute owner. Whilst there are obligations and benefits for people
involved in the creation of a power, these fall short of being the same as a trust.

It is the way that property is transferred, and the fact that the trustee’s conscience is
affected, that makes them so.
“You must look after this money for the benefit of my children”
Anybody who receives property with a mandatory imperative instruction becomes a trustee.
Equity acts ‘in personam’ on that person’s conscience to say, when you received that legal
title, you knew you were holding it for the benefit of somebody else and not yourself.

‘in personam’ – made against or affecting a specific person only; imposing a personal liability
The main distinction between a trust and power is that a trust is mandatory and imperative.
When property is given to a person on trust, they become a trustee and are bound to
discharge the trust. The person’s conscience has been affected, and failure to honour the
role of trustee will invoke the interference of the Court of Equity to ensure that the trust
obligations are fulfilled and carried out.

A power, on the other hand, is always discretionary. Ultimately, a court will not compel a
person who receives property as a power as opposed to a trust, to distribute the property. If
the settlor transfers the property to a donee under a mere/personal power, or to a
fiduciary/trustee power, then there is some extent to which a court can interfere, but a court
cannot compel either a donee or a fiduciary with a power to distribute the property.

Naturally, the beneficiary under a trust has the strongest rights, as the court will force the
rightful distribution if necessary. If you’re an object under a power, you cannot compel and
go to court to force the donee to give you that property.

Certainty of intention – precatory words

Precatory words – non-binding words that are used to express a wish, request or
recommendation, and include words such as “desire”, “hope”, “expectation”, and “trusting”.

Testator – an individual who has made a will or given a legacy

Before the Executors Act 1830, precatory words were interpreted more liberally, but the Act
ended the practice of the executor receiving the property. Language no longer needed to be
fiddled with for cases that came after 1830 because the executor would no longer benefit.

Lambe v Eames – “… at her disposal in any way she may think best for the benefit of herself
and her family”
- Did these words impress a trust upon the wife? Was that mandatory, imperative
language, such that when she received the money she knew she could only use it for
herself and her family within the legal meaning of the word family?
- In this case, the court ruled that the will had given the money to her as an outright
gift. This was not her trust, her conscience was not bound, and she could do with it
as she liked. Therefore, leaving money for an illegitimate grandson was permissible.

Re Adams and the Kensington Vestry – “…in full confidence that she will do what is right as
to the disposal thereof between my children, either in her lifetime or by will after her
decease”
- Testator gave his estate to his wife with the above quote
- Was her conscience bound such that she had the use of the property during her
lifetime, but was under a trust obligation to leave it to the children in her will
- Court of Appeal found a gift absolute to the wife
o Mention of the children may have imposed a moral duty on the mother, but
not a legal one
Cominskey v Bowring Hanbury – “the whole of my real and personal estate and property
absolutely”
‘…in full confidence that she will make use of it, such as I should have myself and that at
her death she will devise it to such one or more of my nieces as she may think fit, and in
default of any disposition by her thereof, by her will or testament, I hereby direct that all my
estate and property under this, my will, shall, at her death, be equally divided among the
surviving said nieces’
- Testator left property to his wife, with conditions on passing property to his nieces
- Are the nieces beneficiaries under a trust?
- In this case, we have a mix of precatory and mandatory language, starting vaguely
but then getting very specific at the end
- The wife gets the property, but she cannot do with it what she wants, cannot sell it
off
- She must preserve the property and leave it to the nieces in her will, and if she
doesn’t write a will, the nieces will receive it, because if we look back at his will, hes
clearly created a trust over the property in question.

So, ascertaining the intention of the original owner is key to deciding whether we have a
trust. This doesn’t have to be formal there just has to be clear, mandatory, imperative
intention to bind the conscience of another individual such that they cannot do whatever
they want with the property they receive.

Certainty of Subject Matter

Upon the creation of a will, the trust property is required to be specified with sufficient
clarity to enable the courts to clearly identify it, particularly if there is a homogenous
element to the property. E.g. what about a parent leaving a herd of livestock to their
children?

Mere evidential uncertainty as to the location of the property will not cause the trust to fail,
but uncertainty as to the identity of the property will cause it to fail.

Palmer v Simmonds
- A declaration which purported to leave, “the bulk of my residuary estate’, failed
- What is the bulk? The individual had an intention to create a trust, and satisfied the
first certainty, but since the subject matter is not certain, the trust fails.
- “the bulk” is conceptually and linguistically uncertain

Boyce vs Boyce
- Testator leaves two houses on trust for his daughters, Maria and Charlotte, and says
that Maria, as the eldest daughter, should pick whichever house she wanted first,
and that the remaining property should go to the other sister.
- However, Maria died before her father and before she had chosen one of the two
houses. The question therefore arises as to whether the trust of the remaining house
for Charlotte is still valid. It wasn’t!
 - Although the subject matter is rather clear in this instance (two clearly defined and
identifiable houses), we cannot say with certainty which house belongs to Charlotte,
since we are faced with the absence of Maria’s choice. It wasn’t possible to say with
certainty which property was the remaining property
- Hence, the trust failed for uncertainty of subject matter.

Uncertainty of subject matter can look very different in different factual scenarios.

Re Golay’s Will Trust – the Court may look objectively to ascertain subject matter
- Golay left directions in his will that his mistress should be allowed, “to enjoy one of
my flats during her lifetime, and to receive a reasonable income from my other
properties”
- “one of my flats”, “reasonable income” do not sound certain
- However, the courts ruled that the trust was certain
o In relation to income, the use of “reasonable” indicated that Golay required
the trustees to undertake an objective assessment of what was reasonable
for the mistress, so they were given the discretion to undertake this
o The court is giving a very generous interpretation here, saying that Golay
must have intended the trustees to have this discretion, therefore this is a
discretionary trust
o The court acknowledge the ruling of Boyce vs Boyce, but the key difference is
that the mistress was still alive, and was able to make a choice of which
property

So, if there is a live beneficiary who can make a choice of a particular property from a wider
range of properties, then it appears that the trust will be certain.
Re Golay’s Will Trust reflects a slightly more modern approach to interpreting these sorts of
provisions. What we see in more recent times is that if the court can within reason find
certainty and validate the trust, it will do so rather than striking it down and causing the
provisions to fail.

Re London Wine
Wine sold to individuals who bought it as an investment. They weren’t to drink it, and the
wine was stored with the company, even after purchase. Contractually, they’d paid for the
wine, and had certificates, but never took possession of it.
- London wine went into liquidation, and many creditors tried to claim that their
contracts to buy the wine should grant them not only a right to the wine, but a
proprietary right in the wine stored in the warehouses (right to VS right in)
- Can the trustee in bankruptcy take the wine that is contractually obligated to others?
No, because the wine is the property of the individuals rather than the company, and
is simply being stored in a company warehouse. It doesn’t form part of the
company’s general assets, and so your right is in it.
- The court liked this argument and held that such a claim might succeed if the
customers could show that the wine was held on trust for their benefit. Certainty of
subject matter required that the creditors would have to show that identifiable
bottles of wine had been segregated from the bulk of the stock and were being held
 separately, specifically for those people. If such bottles could be identified, then they
could be the subject of a trust for the creditors
- However, in reality, there was no such segregation in the warehouse, and so no such
proprietary rights were found, and their argument failed

The rules on the certainty of subject matter are different in relation to money and shares, as
illustrated by Hunter v Moss.

Hunter v Moss
Mr Moss owned a majority shareholding of 950 shares in his own company, Moss Electrical
Ltd.
- September 1986, Mr Moss said orally to Mr Hunter that he would give him 5% of this
holding, equivalent to about 50 shares
- The gift of the shares was never actually transferred to Mr Hunter, nor were the
shares re-registered as required in Mr Hunter’s name
- In order for a share to move from one person to another, you must fill out a form
- If I am transferring my shares, my name must be taken off of the shares register and
the individual who has received the shares must have their name put on it, so the
directors know who the shareholders are.
- However, Mr Hunter did receive the dividends on the shares over the next few years,
so the company was clearly treating Mr Hunter as though he did own the shares,
because if the shares did well, then there were dividends to be paid, and they paid
them to Mr Hunter and not Mr Moss. Some of the formalities required had been
done, but not all
- Eventually the two men had a row, and the legal issue was whether Mr Moss had,
firstly, made a valid declaration of a trust, and secondly, even if he had, could there
be any certainty over the subject matter, as no specific 50 shares had ever been
identified or segregated from the bulk of the 950 shares
- The court at first instance and the Court of Appeal were agreed that a valid trust had
been declared, and that it could be upheld, it was certain.
- One of the reasons appears to be the difference between tangible property (wine,
property) and intangible property (shares, etc)
- Courts looked at previous decisions, such as Re London Wine, and ruled that, in this
case, there was no need for the segregation of property, since every coin/share is the
same as all the others, provided that the shares were of the same class and same
company. Hence, no need to segregate them before declaring a trust.
Certainty of objects/beneficiaries
We require certainty of:
- The people who are intended to benefit from the transfer
- A beneficiary receives property under a trust
- An object receives property under a power
- The test for certainty of beneficiary/object varies with the type of provision intended

The settlor must identify the beneficiaries with a sufficient degree of precision. Somebody
must be able to come to court to enforce the trust.

Remember,
Mere/personal power VS Fiduciary/trust power
- Difference is that one authorises the holding/use of property, and the other
requires/compels the holding/use of property

There is no test for mere/personal power as the courts cannot legally get involved
- E.g. if I left money for my sister and asked her to distribute this amongst my children
after I passed, she has the power to distribute but she is not compelled to
o if she did not distribute and kept for herself, there is nothing that anybody
could do to legally challenge this

Certainty of object under a (fiduciary/trust) power:

- To exercise a trust power, a trustee must comply with what is called the given
postulant/is-or-is-not test
o Trustees must be able to say with certainty of any given postulant coming
before them, whether they are in or out of a class of potential objects
o E.g. “I leave £100,000 to my trustees who MAY distribute this amongst Sussex
Law students”
 This is a power because the trustees may distribute the money, but
they re not compelled to do so
o The given postulant test says that the trustees must be able to say with
certainty whether any student who may come for some of the money is a
Sussex law student or not
 If trustees able to answer this question, then certainty of object is
satisfied
- If I “leave £100,000 to my trustees who MAY distribute this amongst kind Sussex Law
students”, my trustees would not be able to distribute this with any certainty

Postulant test/is-or-is-not test – states that the trustees must be able to say with certainty,
when a potential beneficiary comes before them, that he either is or is not a beneficiary
- This test comes from the case of Re Gestetner’s Settlement Trust
Re Gestetner’s Settlement Trust
- £100,000 held by trustees to apply as they thought fit to members of a specified
class comprising four named individuals, any living person or thereafter born who
was the descendant of the settlors, father or uncle, any spouse, widow or widower or
any such person, etc.
- If all of those potential objects had to be identified in advance of executing the
power or trust, it would be an almost impossible task
- Justice Harman held that there was no uncertainty in so far as it was quite certain
whether particular individuals were objects of power
- What was not certain was how many objects there were
- Justice said that such uncertainty, however, would not undermine the provision.
- He argued that essentially, as postulant presented themselves or were discovered,
the trustees could easily ascertain whether or not they were
o So as people present themselves, their evidence is examined to see whether
they are in or out of the given class
o If you can’t answer yes or no, if the answer is ‘I don’t know’, then the class is
uncertain and the power will fail

Leading case on powers is now the House of Lords decision in Re Gulbenkian

Re Gulbenkian
A settlement in this case was made with the power for trustees to appoint in favour of Mr
Gulbenkian and “any wife, his children, or a motor issue, and any person in whose house or
apartment, or in whose company, or under whose care, and controlled by or with whom he
may, from time to time, be employed or residing”.
- The House of Lords held that it could be said with certainty whether any individual
was or was not a member of that class. On that basis, the power was valid.

Re Manisty’s Settlement Trust

Justice Templeman talked further about the duties of a trustee with the power, and also
about the rights that an object, or potential object, under a fiduciary or trust power may
have.
- The Justice said that, if a person is within the ambit of the power, then he or she can
require the trustee to at least consider exercising the power in their favour
o The trustee must consider such a request, and if they fail to do so, then the
aggrieved object may apply to the court, and the court may remove the
trustees and appoint other trustees in their place
o The court may also, he said, be persuaded to intervene to remove trustees if
the trustees act capriciously, that is, they act irrationally, perversely

Certainty of beneficiary in a fixed trust

A fixed trust is one where the share or particular interest of the beneficiaries is specified in
the trust deed. Who gets what, and the people who get it are already decided, so there’s no
room for the trustees to make any choices here. This sort of fixed trust requires a complete
fixed list of all the beneficiaries. The trustee must be able to draw up a list of each
beneficiary by name. If the trustee cannot do this, the trust will fail because the trustees
don’t have any discretion.
The rights of the beneficiaries in the property come into existence at the time that the trust
is validly created, the beneficiaries have a right to come to court and demand their property.
Contrast this with a discretionary trust, where potential beneficiaries don’t own any part of
the trust property unless and until the trustee has exercised their discretion in their favour.

The test for certainty of beneficiary under a fixed trust is found in the case of:
IRC v Broadway Cottages Trust
Lord Justice Jenkins held that the trustees must be able to draw up a complete list of the
beneficiaries. The potential beneficiaries need not all be known in advance, but they must
be capable of being ascertained.

E.g. I instruct trustee to distribute equally money between all members of my family living
on the 1st of January, 2035. Those people are not yet known, but by that date, it will be
possible to draw up a complete and definitive list of family members. The physical location
need not matter, just as long as the trustees know these individuals exist.
However, since there is no fixed list, a fixed trust cannot be executed.

Certainty of beneficiary under a discretionary trust

The test for certainty of beneficiaries under a discretionary trust was changed by the leading
case in this area:

McPhail v Doulton (Re Baden’s Trust (No 1))

(same case, but two decisions (first is M v D, and second Re Baden))
House of Lords held that the test for the certainty of beneficiaries in a discretionary trust
was the test that applied to certainty of objects in fiduciary powers, as per Re Gulbenkian
However, the test for certainty of beneficiary under a power and under a discretionary trust
is now the same test, which we saw under Re Gulbenkian

- Can we say with certainty whether anyone who comes forward is or is not a member
of the class of beneficiaries listed in the trust deed.

Lord Wilberforce added his thoughts to the case, and he thought that in a discretionary
trust, certainty may mean at least three different things:

- Linguistic, semantic or conceptual uncertainty

o E.g. I leave x money for trustee to distribute between people who have been
dear friends of mine
 We cannot say with certainty whether anyone who comes forward is
or is not a dear friend
 this would render a trust void

- Evidential uncertainty
o This refers to the practical difficulty of ascertaining the existence or
whereabouts of certain beneficiaries
 o This type of uncertainty would not render a trust void

- Administrative unworkability/uncertainty
o There may be cases where the meaning of the words used is absolutely clear,
but the definition of beneficiaries is so hopelessly wide that a class is not
resembled whatsoever
 This type of uncertainty would render the provision administratively
unworkable
Example of administrative unworkability
R v District Auditor ex parte West Yorkshire County Council

- The council, before its abolition, tried to establish a trust for “the benefit of any, or
all, or some of the inhabitants of the county of West Yorkshire”
- The court thought that this class could potentially be millions of people, such that it
would take an army of trustees working 24/7 to administer the trust, and then work
out how to distribute the money
o Example of an administratively unworkable class

This idea of a class of millions of people will fail a trust, but will not fail a power, because a
power does not have to be done/enforced/carried out.

This was again confirmed in Re Manisty

Re Baden (No 2)
Remember that No 1 of McPhail v Doulton was the House of Lords essentially changing the
law/test of the certainty of beneficiary under a discretionary trust (no longer derived from
IRC v Broadway Cottages Trust), removing the fixed list test. The test that’s been used for
powers was to also be the test for beneficiaries under a discretionary trust as well.
- Case was sent back down to lower courts to apply that new law and to decide
whether, under this new test, the trust of Baden was in fact valid under the certainty
of beneficiary
- The use of word ‘relatives’ raised issues
o Can we determine all the relatives of somebody if the whole world lines up at
the door?
o Each judge on the case defined ‘relative’ in slightly different ways, meaning
this case is close to what Wilberforce had described as conceptual
uncertainty

Sachs, LJ. ‘…trace legal descent from a common ancestor’

Stamp, LJ. ‘…legal next of kin…’
Megaw, LJ. ‘…if, as regards at least a substantial number of objects, it can be said with
certainty that they fell within the trust…’

The court settled on a compromise, instructing all potential ‘relatives’ to come forward with
sufficient proof of relation. Hence, in this way, the test can be satisfied, even if not
absolutely perfect in outcome.
What is being proposed by LJ Megaw is not what Lord Wilberforce said and we know that
the House of Lords itself disapproved of such reasoning. The reasoning of LJ Sachs appears
to be the preferred reasoning here, striking a middle ground between the views of the other
two judges

It is not uncommon that people who may wish to leave their property on trust for classes of
people, who the court may conclude, are conceptually uncertain as a class.
E.g. I leave £100K to trustees who shall distribute this at their discretion amongst any of my
close friends who are in need.

- With the application of the given postulant test as enunciated in McPhail, such
classes of beneficiaries would fail the test for certainty of the beneficiary under the
conceptual uncertainty rule. How would you ever be able to agree on whether a
person was a friend?
o However, the courts have found ways of making such provisions valid without
undermining the is-or-is-not test

Re Barlow’s Will Trust

A testator left a valuable collection of paintings directing her trustees that they should be
sold, but with a proviso that any member of the family or friends should be allowed to
purchase any of the paintings at the price which they were valued at in 1970 (therefore they
were able to purchase at a cheaper price than current day value)
- According to Wilberforce, this is not valid, because we cannot be certain who is or is
not a friend.
- The court got round this by saying that this was not a trust, and they interpreted
Barlow’s wishes as being a series of gifts, subject to satisfaction that a person can
satisfy the condition of proving they’re a friend.
- So, the paintings were ruled to be a conditional gift rather than a trust.
- Court ruled that the conceptual uncertainty that Wilberforce identified does not
apply to gifts

Case of Re Allen was very similar

A nephew was to inherit money under a trust, so long as he remains an adherent to the
doctrine of the Church of England. Again, this was conceptually rather uncertain
- Court explains that, were they were able to find this as a gift to the nephew, subject
to the satisfaction of the condition that he was a member of the Church of England, it
would be valid