b.    Certainty of subject matter

The subject matter of a trust, trust property, must also be described with sufficient certainty. If the subject matter of the trust is not certain, then the trust will fail.

In Mussoorie Bank v Raynor, a testator left property to his wife ‘feeling confident that she will act justly to our children in dividing the same when no longer required by her’.
Held: That there was no trust in favour of the children created. Apart from precatory words, it is not clear what property is intended to be the subject of such a trust.

c.    Certainty of object

The objects of a fixed private trust must be identified with sufficient clarity to satisfy the list certainty rule, which requires that the beneficiaries are ‘ascertainable’ in the sense that they could be listed when the trust comes into operation.

The objects of a discretionary trust must be described with sufficient certainty to satisfy the criterion certainty test  whether it can be said that a given individual is or is not a member of the range of objects: Re Baden’s Deed Trusts.

Charitable trusts are treated more leniently, and will be upheld, if need be, by the application of some scheme, provided that a general intention to benefit charity is shown.

Morice v Bishop of Durham stands as authority for what is known as the ‘beneficiary principle’; that is, that for every non-charitable trust, there must be an identifiable beneficiary, or identifiable beneficiaries, in whose favour the court can decree performance.

Morice was cited as authority for the proposition that a trust ‘to be valid must be for the benefit of the individuals’ in Bowman v Secular Society. The underlying principle is that, in the event it become necessary for the court to take over administration of the trust, the court will distribute the trust assets in favour of the beneficiaries, in equal shares applying the maxim equity is equality.

Re Astor’s Settlement Trusts [1952]
Principle:
-    The beneficiary principle meant the trust failed because there was no person in whose favour the court could decree performance;
-    Equity does not recognize as valid a trust which it cannot both enforce and control

Re Baden’s Deed Trusts; McPhail v Doulton [1971]
Principles:
-    If the court is called upon to administer a trust or execute a power of appointment the court does not have to divide the proceeds equally;
-    The court will attempt to match the settlor’s intentions even if this means an apportionment in unequal shares;
-    The court can appoint new trustees if must to match the settlor’s intentions,
-    The court can order or propose a scheme of arrangement

The beneficiary principle is restricted to trusts in favour of beneficiaries whose shares in the beneficial interest of the trust are fixed.

In discretionary trusts, or other trusts where it is clear that the party creating the trust did not necessarily intend that the objects should share the benefits equally, the requirement of certainty will be satisfied if it can be said with certainty whether a given individual is, or is not, a member of the range of objects.  

•    Certainty of Description of objects

‘List Certainty’ in Fixed Trusts

IRC v Broadway Cottages Trust [1955]
When the beneficiary principle is applied to fixed trusts the beneficiaries must be identifiable in such a way as to allow a court to draw up a complete list of the beneficiaries at the time their interests come into effect;

Re Gulbenkian’s Settlement Trusts [1970]
difficulty in finding the beneficiaries does not destroy the certainty of the disposition;
In such events the trustees can always apply to the courts for directions;
‘Criterion Certainty’ in Discretionary Trusts

Re Baden’s Deed Trusts; McPhail v Doulton
Trust where trustees
given discretionary power to use net income of trust to benefit the staff of a company, their relatives, and dependents
Executors said – void – beneficiaries could not be ascertained with ‘list certainty’ and wanted funds to be part of the estate.
Trustees said – ok – disposition was mere  power and so not under trust problem of ‘list certainty’.

Issue mere power vs. trust power
-    Mere power – holder is authorised but not obliged to exercise power, and there is usually a gift over.
-    Trust power – holder of powers in the nature of a trust are obliged to exercise the power and there is not usually a gift-over.

Thus the matter swung on the wording of the declaration in the will. House of Lord unanimously found a trust power.
The majority  - Reid, Dilhorne, and Wilberforce advocated a test based on criterion certainty for beneficiaries;
-    Criterion test – test of certainty is whether or not it was possible to say with certainty any given individual is or is not a member of the class.
Lord Wilberforce at 457:
‘the court, if called upon to execute the trust power, will do so in the manner best calculated to give effect to the settlor's or testator's intentions. It may do so by appointing new trustees, or by authorizing or directing representative persons of the classes of beneficiaries to prepare a scheme of distribution, or even, should the proper basis for distribution appear by itself directing the trustees so to distribute….
Two final points: first, as to the question of certainty. I desire to emphasize the distinction clearly made and explained by Lord Upjohn between linguistic or semantic uncertainty which, if unresolved by the court, renders the gift void, and the difficulty of ascertaining the existence or whereabouts of members of the class, a matter with which the court can appropriately deal on an application for directions. There may be a third case where the meaning of the words used is clear but the definition of beneficiaries is so hopelessly wide as not to form 'anything like a class' so that the trust is administratively unworkable or in Lord Eldon's words one that cannot be executed.

6.5 Trusts for unincorporated Associations

Under a beneficiary principle, a trust, to be validly created, must be for the benefit of individuals and not for some purpose, unless for a valid charitable purpose. A gift in favour of a corporation satisfies the test as it is a gift to an individual, and not a trust for the purposes of a corporation: Bowman v Secular Society Ltd [1917].

For unincorporated associations it is different because they have no legal personality separate from their members.

Leahy v A-G(NSW) [1959]
The judicial committee advised that a gift on trust for an unincorporated association would, prima facie, be valid as a gift for the individual members. The presumption would be overturned, and the trust would fail, if on proper construction the gift was for present and future members, in which case it failed as a gift in perpetuity, or if it was a gift for the non-charitable purposes of the association, in which case it would fail under the beneficiary principle.

The rule in Leahy’s case was adopted and applied in the HC in Bacon v Pianta (1966) to strike down a gift by the testator of the whole of his estate ‘to the Communist party of Australia for its sole use and benefit’, on the grounds that it was both a bequest to present and future members of the party and that it was for the non-charitable purposes of the party.

The beneficiary principle was enhanced in Neville Estates Ltd v Madden [1962].
Held: a gift to an unincorporated association could be upheld, not only where it was a gift to the individual members as joint tenants, so that nay member could sever his or her share and claim it, but also where it could be construed to the members and tenants in common, subject to their contractual rights and liabilities to one another as members of the association.
Such a gift would not fail for uncertainty or perpetuity unless there was something in the rules of the association which prevented the members from dividing the subject matter of the gift between themselves at any time. - ‘the Constitutional principle’.

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