This essay is about the decision of Mcphail v Doulton and the problems its gave rise to in the certainty of objects field. This essay briefly explains the three certainties and focuses on the certainty of objects in discretionary trusts.
The decision of the House of Lords in McPhail v Doulton [1970] UKHL 1 and the problems have given
rise to the certainty of objects.
According to Knight v. Knight and Wright v. Atkyns, a trust must meet three conditions in order to be
legitimate. The certainty of intention, the certainty of the subject-matter, and the certainty of the
objects are thought to constitute the three certainties. The third and last certainty—the certainty of
objects—will be the subject of our attention. No theory, according to Lord Evershed M.R. in Re Endacott,
"has perhaps greater legitimacy or authority behind it than a general notion that, by English law, a trust,
other than a charity trust, must have ascertained or ascertainable beneficiaries in order to be
functional." Because there must be a person who can enforce the trust, the certainty of object is given
great importance in the cases of Morice v. Bishop of Durham and Tackaberry v. Hollis. There cannot be
a trust if there are no beneficiaries, or at least no known beneficiaries.
The first criteria for certainty of objects in Re Astor's Settlement Trust is that there must be a person
beneficiary rather than an idea (with the exception of charitable trusts). As was the case in Re TXU
Europe Group Plc, the beneficiaries must also be able to be identified (either individually or collectively).
The courts have produced case law that provides guidelines for ensuring that the certainty of objects is
unambiguous. In the case of fixed trusts, this is very obvious. However, the court's attempts to clarify
the application of the "class" test to discretionary trusts have been ineffective. Therefore, whether the
Courts have sufficiently defined the issue will depend on the type of trust you are dealing with. The
description of the beneficiaries must be conceptually fixed at the time the trust is created to be valid.
This means that in order for the trustee to carry out the instructions of the settlor during the execution
of the trust, the settlor must have provided an explanation of some clear meaning.
If there is a fixed benefit for fixed beneficiaries and the trustee has any discretion in the distribution of
the subject matter, a fixed trust can be identified by these features. The "full list" test is another name
for this strategy. A trustee must be able to compile a comprehensive list of beneficiaries in order to pass
the test. This was demonstrated in the case of Re Eden, where the court ruled that a complete list of
beneficiaries was still necessary despite being time- and money-consuming. OT Computers Ltd. v. First
National Tricity Finance Ltd. is another helpful example of the entire list approach. In this case, the
trustee, who also happened to be the settlor, was able to identify every intended beneficiary from the
schedule it had established.
As the name implies, discretionary trusts give trustees a lot of leeway in deciding to whom to allocate
the property. In McPhail v. Doulton, Lord Wilberforce provided an explanation for this by claiming that
"equal division is obviously the last thing the settlor ever intended: equal division among all may,
probably would, yield a result advantageous to no one. Why would the court allow for an arbitrary
execution?
Now would be a good moment to briefly explore the fact that Bertram Baden signed a deed in 1941
settling a non-charitable trust for the benefit of the Matthew Hall & Co. Ltd. employees and their
dependents. According to the deed's objects clause, "The trustees shall apply the net income of the fund
in making grants to or for the benefit of any officers and employees, ex-officers and employees, or any
relatives or dependents of any such persons in such amounts at such times and on such conditions as
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller lyaj. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for £4.55. You're not tied to anything after your purchase.
