•    Criterion Certainty and Adminstrative Workability

Lord Wilberforce’s qualification that the description of objects of trust powers should not be so hopelessly wide as not to form ‘anything like a class’, with the result that the trust was administratively unworkable, has led to statements that there was an additional ‘loose class’ requirement to be satisfied for certainty of object in trust powers.

Administrative workability, which was the point of concern, is a matter which a court can assess. It the trust could not be practicably administered in its native form, then it might be a matter for opinion, advise or directions under the Trustee Act 1925 (NSW) s63, in which case it would be said to be unworkable; or, it might be irreparable and sufficiently serious to render the trust void.

Lord Wiberforce’s judgement was adopted in Horan v James.
That case involved a trust power to appoint to anyone other than the testator’s wife and his two sons. The power was struck down for other reasons, but was considered sufficiently certain within the terms laid down by Lord Wilberforce. This approach is followed in: Re Manistry’s Settlement.

If a trust power to appoint in favour of anyone except A, B or C is administratively workable, it is difficult to see how a power could fall foul of this requirement, unless it was also void for uncertainty.

Baden Trust was referred back to the courts for consideration of the question of certainty in the light of the new test. Re Baden’s Deed Trusts (No 2):
It was claimed that the power failed to satisfy criterion certainty, particularly in respect of the words ‘dependants’ and ‘relatives’.

Held: Sachs LJ rejected an argument that the court had to be able to say whether any given postulant was not a member of the class, provided that there was sufficient conceptual or semantic certainty to be able to say whether a given individual did fall within the description.
Megaw LJ thought the test was satisfied if, as regards a substantial number of objects, it could be said with certainty that they fell within the trust, even though for a substantial number of others, it would have to be said that they were not proven whether they were in or out.
Stamp LJ thought the test was not satisfied unless one could say affirmatively either that a given individual was within the class or that he or she was outside it, depending on the construction of the words used. In his view ‘relatives’ was not uncertain if taken to mean nearest blood relations.
In the event, the power to appoint in favour of ‘relatives’ and ‘dependants’ was upheld. Both expressions were sufficiently certain in semantic terms.

The primary task is to be able to say whether some postulant is in, it is not necessary to identify that someone is out. A power should not fail because of some doubt over some fringe candidate. 

The Baden cases concentrated on semantic or linguistic uncertainty. There are cases where a gift could be administratively unworkable.

•    Powers and Testamentary Dispositions

The power to make wills expressing their testamentary intention is a fundamental freedom available to those living in a common law system. If in exercise of that power someone elects to use a standard devise for dealing with property by way of trust, and satisfies the requirement of certainty in the process, the courts should not interfere.

In Australia, there is a distinction between powers created in wills and powers conferred inter vivos. The distinction derives from a supposed rule against delegation of will-making power, which is based on the assumption that the power to make a will is derived solely from statute and must be exercised personally by the testator: Houston v Burns.

A distinction has been drawn between general and special powers of appointment on the one hand (which are said not to infringe this rule and which can be validly created by will), and hybrid powers on the other hand (which are said to infringe the rule at least
in Australia).

Tatham v Huxtable
Facts: A testator included a provision in his will empowering his executor ‘to distribute any balance of my real and personal estate…to the beneficiaries of this my will and testament…or to others not otherwise provided for who in my opinion have rendered service meriting consideration by the trustee’. (‘In my opinion’ was taken to mean ‘in the opinion of the trustee’.)
Held: The validity of that clause was challenged and, by a majority, the HC held it to be invalid. Fullager J held that some powers of appointment would be valid if contained in a will. In the case of special power, he also said that he would recognise a special power to appoint in favour of a class designated with certainty as a valid testamentary disposition. Accordingly, he rejected the approach taken in English cases such as Re Park upholding hybrid powers in wills.
Kitto J said that there was a cardinal rule that a person may not delegate his or her testamentary power and that it was therefore necessary, except in the case of charitable trusts, for the objects to be benefited by the will to be ascertained or ascertainable. The creation of a will by general or special power did not amount to such a delegation, provided that in the case of a special power, the class or group of objects may be described with sufficient certainty.

This case has since been accepted as authority in Australia for the proposition that a hybrid power of appointment in a will is void because of the so-called non-delegation rule.

Re Manisty’s Settlement
Facts: A settlor conferred on his trustees a power to apply trust funds for a class made up of his infant children, his future children, and his brothers and their future issue born before a closing date defined as 79 years from the date of settlement. An ‘excepted class’ consisting of the settlor, his wife for the time being and any other person settling property on the trust was excluded from the benefit. The trustees were given power at their absolute discretion to declare that any person, corporation or charity other than a member of the excepted class or a trustee was to be included in the class of beneficiaries. The trustee’s then exercised that power to add the settlor’s mother and any widow of the settlor to the class of beneficiaries. A summons was taken out to determine whether the power to add beneficiaries was valid.
Held: It was held that it was, saying that the principle of non-delegation did not apply where the settlor or testator conferred an intermediate (hybrid) power on his or her trustees. Having regard to the definition of the excepted class, it could be said with certainty in this case whether any given individual is or is not a member of the class. Where the settlor gives his or her trustees a power which enables them to take into account all contingencies, the court will not strike it down unless it is capricious; that is unless the terms of the power negative any sensible consideration of the objects by the trustees. A power will not be uncertain because it is wide in ambit.

The court of appeal in Horan v James expresses approval of criterion certainty as the test for certainty of description of the objects of trust powers, and said that this power satisfied that test notwithstanding the absence of any HC authority in support of any test other than list certainty.

The decision in Horan v James has left the court in an unsatisfactory state.
•    Hybrid powers of appointment remain perfectly good dispositions if made by a settlement inter vivos but not when contained in a will.
•    A settlement in favour of a settlor for life, and thereafter for the benefit of such persons as the trustee shall select, with the exception of themselves and perhaps some other small group, will be good. But a trust in a will requiring the executors to appoint in favour of certain persons together with such others as they select, with the exception of themselves and some small group, will be bad.
NOTE: such a power will be good if created in a will in England – presumably even though it confers power over property in NSW – but not in a will made in Australia.
•    It is only necessary to be able to say whether a given individual is or is not within the range of benefit.

The creation of trusts continued on page 5