Lastly, this paper will conclude that the ‘is or is not’ is an appropriate ruling to discretionary trusts whereby one must be able to tell whether an individual is or is not an object behind a trust. So as to support this stance,
we must consider Baden no.21
as to which interpretation of the test should is most efficient. Where
difficulty was placed in how to apply this test, this paper will uphold Stamp’s
interpretation of this test with regards to evidential and conceptual
objection of the is or is not test being an appropriate application for discretionary
trusts would argue that the lack of direction towards the judgements as the diversity of opinion within the court is revealing of the uncertainty of the test itself. In questioning whether relatives are
conceptually certain, potential problems may arise for trustees in the future,
as to the interpretation. What is the correct ruling to establish objects?
In regards to
conceptual certainty, which pertains to the semantic wording of a trust and is
necessary so concepts can define objects, how should
relatives be interpreted? Blood relatives? Relatives through marriage? Sachs and Megaw LJJ both agreed that ‘relatives’ were meant as descendants of a common ancestor, whereas Stamp LJ found this to be too wide and problematic for the courts to test such claim. A common ancestor in a trust would most likely fail, therefore
we must favour Stamp where he suggested ‘next of kin’. Despite this definition being restrictive in nature by restricting the scope of a class, it remains to be consistent with the approach to evidential certainty. ‘Next of
kin’ is used in wills, therefore, has the advantage of being statutorily
defined which emphasizes its clarity.
Discretionary trusts are held to
be evidentially certain. Once it is decided that a class of objects is conceptually certain, it should be possible to show whether any person is, or is not, a member of the class – a
question of evidence. The courts are never defeated by evidential uncertainty
according to Sachs; it can always be proven whether a person is/or is not a member of a class. However, Stamp
took a literal approach where both conceptual and evidential certainty is
required. It must be possible to say of any given postulant whether he or she is not a member of the class. This paper
supports Stamp’s approach as it is imperative to state whether someone is in the class or not an object in order to
ensure certainty of beneficiaries behind a trust.
Megaw, it if can be shown with certainty that a substantial number of postulants was within the class, trust would not fail or evidential certainty. This paper disagrees with substantial number idea because trustees need certainty. If there is a proportion of ‘don’t knows’, how are they to determine if those in the class represent a substantial number? This may result in a breach of trust if wrong and make a distribution.
A criticism of
Stamp would be that his approach would involve a return to the prior complete
list test as echoed by Megaw LJ however in refute of this, we must refer back
to Wilberforce’s dictum where it is not necessary to ascertain the whole of the
class but it must be possible to say of any given person that they were or were
not in the class. A trust will be void unless evidential uncertainty can be found
in another method.2
Thus the approach of Stamp LJ is most faithful to that put forward by the House of Lords, whereas the approaches of Megaw LJ and Sachs LJ perhaps shift the law back in the direction of the ‘one person’ test rejected by the House of Lords in Re Gulbenkian and McPhail.
It must be acknowledged that there is no perfect
answer or correct approach as to how the is or is not test should be applied,
nevertheless Stamp should be upheld due to its consistency with Wilberforce.
It is evident of the important of the certainty of objects since there are various interpretations to its determinations. The courts’ development in the application of the tests to establish the certainty of objects day has been deliberately flexible and accommodating, so that trusts can be enforced in favour of beneficiaries where possible. In
conclusion, this paper proposes that the complete list test should not apply to
discretionary trusts due to its unsuitability, whereby the correct test would
be of those applied to powers. The is or is not test is an appropriate ruling
which should be upheld by the court subject to Stamp LJ’s effective
interpretation where relatives are ‘next of kin’ and it must be possible to say of any given postulant whether he or she is not a member of the class with
evidence otherwise the trust will simply fail.
1 ibid 10
2 ibid 11