Certainty as to Objects
Foundations of the “trust law” were made during the 13th century in the form of selling and purchasing of properties. Initially, the main reason for the formation of “trusts” was to deal with issues concerned with property and land but later on while keeping in view the business of current age, its scope extended to add “investments such as stocks and bonds”. The main aim for using “trusts” was for storing assets”.
However, the most prevailing form of trusts that are being made by the settlor with intent is none other than the “explicit trust” which can exist as “fixed or discretionary”. While all these trusts share fundamental requirements for their establishment, however, their principles regarding inheritance show significant variation. On the other hand, a “fiduciary power” entails an authority to make appointments that the trustee is not compelled to exercise; instead, the trustee is only obliged to periodically consider utilizing this power.
It should be noted that for the above to be considered valid, “clarity of intent, subject matter, and objectives” is essential. As per Lord Landale’s viewpoint “the trustees and the court can only carry out the settlor's clear purpose in founding the trust if these three circumstances are in place” and what’s interesting is that he is the only person recognizing them. Given the unique nature of each case, courts have relied on a diverse range of factors to ascertain the beneficiaries definitively. However, it is contended in this article that instead of broadening the array of tests, they symbolize the multifaceted functions that different forms of trust and authority fulfill.
Before delving into the discussion regarding the various tests that are being used for determining certainty, it is highly crucial that we examine the four key characteristics common to all such tests. First of all, it is to be noted that “conceptual certainty is concerned with the settlor's explicit intention of providing benefits to a specific group or groups and the language that is being used to define these groups”. Following this, we have the “Evidential certainty” which is related solely with “the degree of evidence that is need to verify positively that a person belongs to a specific class”. The ascertainability of beneficiaries refers to their location or continued existence after a legal action has occurred. Administrative impractibility addresses the feasibility of managing a particular class size effectively. Among these characteristics, conceptual certainty and administrative impracticability are deemed most significant. This is because while evidentiary doubt can render a fixed trust revocable, the absence of specific class members does not invalidate any trust or authority. However, it is worth noting that when concerned with fixed trusts, trustees are mandated to distribute assets among beneficiaries according to predetermined percentages, necessitating the meticulous identification of every class member before property distribution. Furthermore, to make sure that precise object definition, the complete list condition must be satisfied, underscoring the importance of understanding the criteria for inclusion in a class. There are two in which conceptual clarity
might manifest: a construction dispute arises when a term has multiple meanings, requiring the court to determine the most appropriate interpretation aligning with the settlor's intentions; conversely, a meaning dispute occurs when different interpretations of a term exist among individuals. But we can't deny that in both scenarios, the role played by the court is to ascertain the settlor's intentions accurately. As we all are aware of the challenge of defining phrases like "friends" to compile a satisfactory list as per the trust deed's criteria, the latter type of clarity assumes greater significance. Thus, evidentiary ambiguity poses a risk of nullifying a fixed trust, emphasizing the necessity of proving object membership through evidence to fulfill the complete list requirement.
It’s considered highly crucial to differentiate between among the two categories of conditions which might be associated with a “fixed trust”: the ones which are required to be taken care of prior to the division of property, referred to as “condition precedent”, after that comes the one that are to be taken care of upon fulfillment, it results in the beneficiary giving up on their entitlement towards the concerned property i.e. condition subsequent.
A substitute and a less rigorous form of the complete list test is applicable when dealing with “conditionally fixed trusts”. In this context, a trust would be treated as conceptually certain in case a person has declared that demands have been satisfied. Browne-Wilkinson J further elaborated that the requirement to understand the settlor's concept of "friends," and the broader implications of this term from a particular viewpoint, differs significantly from ensuring equal opportunities for potential beneficiaries to demonstrate their friendship with the settlor. The notion of "friends" facilitated this approach, allowing “Browne-Wilkinson J.” to illustrate his point effectively. The legitimacy of the trust is not contingent upon the degree of empirical certainty, as verification of the entire class is not mandatory. If one object fails to establish membership in the class, they are considered a non-member. Consequently, there is no imperative to establish proof of the entire class, rendering the task optional. However, permanent trusts with a condition subsequently undergo a more rigorous analysis of certainty standards. Regardless of the fact that the subject is a beneficiary, it is imperative to comprehend factors that could render their interest null and void from the outset, as failure to do so may result in the equitable right being overturned upon meeting the criterion.
Distinctions within “discretionary trusts and fiduciary powers” are usually established by the explanation of pivotal language phrases like "must" or "may," concerning the necessity to nominate”. It is worth noting that the “discretionary trusts” grant trustees the power to determine the allocation of assets “within the system of object class”, deciding who receives what and how much from the trust. Conversely, trustees having the fiduciary duties possess the power to designate beneficiaries but are not obligated to do so. However, there exists three forms of these powers which are “general powers, special powers, intermediate powers”. The first one means that the trustees have complete discretion over appointments; while the second one
means the trustees to “select from a limited pool of candidates”; and finally the last one it awards trustees some discretion over appointments but within restricted parameters.
While stating his viewpoint, Lord Wilberforce pointed out that similar standards are used while ascertaining the lucidity of discretionary trusts and powers. This assessment is made easier by applying the "given postulant test" for discretionary trusts, which originates from the criteria established in Re Gulbenkian's Settlements for powers. Before this, the criteria used was akin to that of fixed trusts. In situations where the trustees have failed to act appropriately, there was often an assumption that “assets would be equitably distributed among all beneficiaries, following the principle of "Equity is Equality." Consequently, it was more than necessary to meticulously identify and compile an exhaustive list of potential recipients. In this regard, we can not ignore the viewpoint shared by a prominent legal scholar “Lord Wilberforce”, he stated that not every time a settlor’s intention is fulfilled by distribution of the assets equally among all the objects and in some of the situations it isn’t beneficial for anybody due to the fact that the shares are almost negligible”. It’s just a single point of the several points addressed by “Lord Wilberforce”. Consequently, the ruling establishes that merely determining if an individual is a member of the relevant class suffices to ascertain their membership. It is insufficient to identify only one individual who meets the criteria; instead, all qualifying individuals, regardless of enrollment, must be identifiable. This test notably differs from that applied to permanent trusts with a condition antecedent.
When concerned with the notion of certainty, comparison between the two criteria reveals both similarities and differences. Failure to provide a detailed explanation of the class description poses a risk of including too many objects, making it indistinguishable from the rest of the classes. Therefore, decisive action becomes very necessary e.g. the phrase "relatives" was subject to debate in “Re Baden (No 2)29" due to the fact that it could refer to either "next of kin or descendants from a common ancestor". There have been several instances where the court struggled to determine whether an individual was considered to be "residing" in a specific place, especially concerning rights that take priority in land law. However, it should be noted that the phrase "residing" was established to be theoretically certain during “Re Gulbenkian” regarding "fiduciary authority". Even though fiduciary power was granted, this term was upheld as conceptually certain. Ambiguity in evidence has no impact upon discretionary trusts and powers due to the fact that if an individual can't prove their membership in the concerned class, they are not considered a “beneficiary”. Consequently, doubts about the evidence's accuracy do not impact the functioning of “discretionary trusts or powers”.