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Module 5 · Express trusts II: certainty of objects

What this module covers and why it matters. Every express trust must have certain objects, meaning the people or class the trust is for must be defined clearly enough for a court to enforce it. This module supplies the third of the three certainties and completes the validity audit begun in Module 4, which dealt with intention and subject matter. It matters because the whole big will clause question turns on it. A testator leaves property through a string of clauses and your task is to say, clause by clause, whether each is valid. Certainty of objects is where most of those clauses live or die. The test you apply is not fixed. It depends on the kind of disposition the clause makes, so the first move is always to characterise the disposition and only then to choose the test.

How to use this guide. The numbered scaffold below is the order to work any objects problem, and every later section fills in one step of it. Read the guide once to learn the map, then revise from the scaffold and the summary table. The worked example boxes show the rule walked to a conclusion on invented facts.

Cases at a glance

The analytical scaffold

Work a certainty of objects problem in this fixed order.

1. Characterise the disposition. Using the Module 3 taxonomy, decide whether the clause is a fixed trust, a trust power (a discretionary trust), or a bare or mere power. This choice selects the test, so it governs everything after it.
2. Fixed trust: apply list certainty. Ask whether a complete list of the beneficiaries can be drawn.
3. Trust power: apply criterion certainty. Ask whether it can be said of any given person that they are in or out of the class (McPhail v Doulton).
4. Mere power: apply criterion certainty as well (Re Gulbenkian's Settlement Trusts), with capriciousness as an extra control.
5. For a trust power, consider the loose class requirement. Whether the class must also not be hopelessly wide is unresolved, so present both views.
6. Check administrative unworkability. A trust power over a class too wide to administer fails even where criterion certainty is met (R v District Auditor).
7. Trace the consequence of failure. A clause that fails results back to the settlor or estate, falls into residue, or produces a partial intestacy. Follow the property to the end taker.

Having set out the order we take each step in turn.

Characterise the disposition first

What this section covers and why it matters. The test for objects is chosen by the character of the disposition, so this step controls the whole analysis. Get it wrong and you apply the wrong test to the whole clause.

A fixed trust fixes each beneficiary's share and the trustee must distribute accordingly. A trust power obliges the trustee to distribute but leaves discretion over who takes and how much. A mere power merely permits an appointment and imposes no duty to distribute at all. The same words can look like more than one of these, so read the clause for whether distribution is compulsory and whether the shares are fixed.

Consolidation. Settle the label before you reach for a test. The wrong label selects the wrong test and sinks the clause.

Fixed trusts: list certainty

What this section covers and why it matters. A fixed trust is the strict case because the trustee has no discretion over who takes. This section states the test it must satisfy and shows when it fails.

The reason is mechanical. If each beneficiary takes a fixed share the trustee cannot divide the fund without knowing every member of the class. A class the court can resolve from a record stays certain. "The students in my Equity class" is list certain because the class roll settles it.

Young J in West v Weston offered a modified test that would uphold a fixed trust where within a reasonable time the court is satisfied that a substantial majority of the beneficiaries has been ascertained and no reasonable inquiry would improve the position. Treat this as unlikely to be good law. Raise it to show you know it and then decline to rely on it.

Consolidation. A fixed trust needs a complete list. Where a record supplies one the clause holds, and where the class is woolly it fails.

Trust powers and mere powers: criterion certainty

What this section covers and why it matters. Discretionary dispositions are tested more leniently than fixed trusts because the trustee chooses among the class. This section states the criterion test and the term that most often defeats it.

The point of the looser test is that a discretionary trustee never has to survey the whole class, only to decide whether a candidate is inside it. So the trust does not need a full list, only a criterion sharp enough to answer the in or out question for anyone who presents.

What defeats criterion certainty is conceptual uncertainty. A class defined by a word too subjective to apply gives no workable criterion. Terms such as "befriended", "assisted" or "worthy" leave the trustee unable to say who is in or out, so a clause resting on them fails.

Consolidation. Both trust powers and mere powers ask only whether any given person can be sorted in or out. Conceptual uncertainty in the defining word is what breaks the test.

The loose class requirement is unresolved

What this section covers and why it matters. Even a clause that passes criterion certainty may face a further objection that the class is simply too wide. Australian law has not settled whether that objection exists, so this section shows how to present it without false confidence.

The safe technique is to conclude that criterion certainty is met and then flag the loose class point as open. A clause such as "anyone in the world except Harry" invites a confident valid or invalid answer and both are traps. State that the criterion is satisfied and then say the loose class question would need to be resolved by the courts before a definitive answer could be given.

Where the wide clause sits in a will a second objection surfaces. Horan v James proceeded on the argument that so wide a testamentary power delegates the testator's own will-making power. Section 48 of the Wills Act 1997 (Vic) appears to meet that objection by validating a testamentary power or trust that would be valid if made inter vivos. Raise the point in one line where the disposition is by will.

Consolidation. Decide criterion certainty, then treat the loose class point as unsettled and the delegation point as answered in one line where the clause is testamentary.

Administrative unworkability and capriciousness

What this section covers and why it matters. A trust power can meet criterion certainty and still fail on width. This section states that separate control and the related idea of capriciousness.

The leading illustration is a trust for the inhabitants of West Yorkshire, a class certain in criterion but far too large for a trustee to survey and administer. Administrative unworkability bites on trust powers because the trustee must actually distribute. It does not defeat a bare power, which need never be exercised, although a capricious power can still fail for having no rational basis for selection.

Consolidation. Width is a separate hurdle from certainty. A workable criterion over an unmanageable class still fails where the disposition is a trust power.

The consequence of failure

What this section covers and why it matters. A void clause does not simply disappear. The property has to go somewhere and tracing it to the end taker is part of the answer.

Follow the chain to the end. A failed residue clause can carry the property to next of kin the testator meant to exclude, which is often the sting the examiner is testing.

Disposition, test, authority and failure

This table is the spine of the module. Read each disposition across to its test, its authority and where the property goes on failure.

How the examiners test this

What this section covers and why it matters. This section reads the module the way the examiner sets it, drawn from the marked papers.

This module powers the big will clause audit and it has run five years in a row. Expect six to eight lettered clauses mixing valid, void and voidable dispositions. Marks are won by characterising each clause before testing it and lost by applying list certainty to a discretionary trust or criterion certainty to a fixed trust. The structure of a question is only a device to bundle issues, so read the specific words of each clause rather than answering by pattern.

Two planted errors recur. The first is treating the loose class point as settled. The model answer is deliberate that this issue would need to be resolved by the courts before a definitive answer could be given, so refuse the confident conclusion. The second is leaning on Young J's substantial majority test in West v Weston as though it were good law. Name it and set it aside.

Every invalid clause then feeds a later story. A distribution to the wrong person is a breach of trust, and the recipient is chased through Barnes v Addy and tracing in Modules 11 and 12. Conclude each clause firmly so the downstream analysis has something to run on.

Consolidation. Characterise, then test, then trace the property home. The examiner rewards the clause by clause discipline and punishes the pattern match.

Take it to the practice bank

This module is drilled in the Equity and Trusts practice bank. Every problem there carries a realistic Pass answer, an H1 model answer, and an examiner's comment explaining the decisive fact and where the marks are lost.