Introduction
The concept of certainty of objects is a fundamental principle in the law of trusts, ensuring that a trust is valid and enforceable by identifying the beneficiaries or purposes for which the trust property is held. For a trust to be legally constituted under English law, it must satisfy the three certainties: certainty of intention, certainty of subject matter, and certainty of objects. This essay focuses specifically on the certainty of objects, exploring its legal significance, the tests applied to establish it, and the challenges that arise in its application. By examining key case law and academic perspectives, the essay aims to provide a sound understanding of how certainty of objects operates within trust law, while highlighting its practical implications and limitations. The discussion will proceed by first defining the concept, then exploring the different tests for certainty in fixed and discretionary trusts, before addressing contemporary issues and debates surrounding its interpretation.
Defining Certainty of Objects
Certainty of objects refers to the requirement that the beneficiaries of a trust, or the purposes for which the trust is created, must be clearly identifiable. Without this certainty, a trust risks being declared void, as the courts cannot enforce obligations on trustees if it is unclear who is entitled to benefit from the trust property. As Lord Langdale MR famously stated in Knight v Knight (1840), a trust must demonstrate all three certainties to be valid (Hudson, 2016). The requirement of certainty of objects ensures that trustees can fulfil their duties and that the trust operates in line with the settlor’s intentions. However, the application of this principle varies depending on whether the trust is fixed (where beneficiaries and their shares are predetermined) or discretionary (where trustees have discretion over distribution).
Tests for Certainty in Fixed Trusts
In fixed trusts, the certainty of objects is assessed through what is known as the ‘complete list test’. This test, established in IRC v Broadway Cottages Trust (1955), requires that a complete list of all beneficiaries must be ascertainable at the time the trust is created. If even one beneficiary cannot be identified, the trust fails for lack of certainty. The rationale behind this strict approach is to ensure that the trustees can distribute the trust property exactly as intended without ambiguity. For instance, a trust created for “my children” would typically satisfy this test if the settlor’s children are identifiable and the list is complete. However, if the class of beneficiaries includes vague terms like “my friends”, the trust might fail unless the term can be clearly defined. While this test provides a clear standard, it has been criticised for its rigidity, as it does not account for practical difficulties in identifying beneficiaries in larger or more complex classes (Hudson, 2016). Nevertheless, it remains a cornerstone of certainty in fixed trusts, prioritising clarity over flexibility.
Tests for Certainty in Discretionary Trusts
In contrast, discretionary trusts adopt a more flexible approach to certainty of objects, reflecting the trustees’ discretion in selecting beneficiaries from a defined class. The leading authority here is McPhail v Doulton (1971), where the House of Lords replaced the complete list test with the ‘is or is not’ test for discretionary trusts. Under this test, it must be possible to say with certainty whether any given individual is or is not a member of the class of beneficiaries. For example, a trust for “employees of a company” might satisfy this test if the term “employee” can be clearly defined, even if the exact list of beneficiaries is not drawn up. Lord Wilberforce in McPhail v Doulton argued that this test aligns better with the nature of discretionary trusts, where trustees are not required to distribute to all potential beneficiaries but must still operate within a defined group (Penner, 2019). However, challenges arise when the class is overly broad or conceptually uncertain, such as “all residents of Greater London”, which raises issues of administrative unworkability—a concept also introduced in McPhail v Doulton. Therefore, while the ‘is or is not’ test offers greater flexibility, it introduces complexities in balancing certainty with practicality.
Challenges and Limitations in Applying Certainty of Objects
Despite the established tests, applying the principle of certainty of objects often presents significant challenges. One key issue is the interpretation of vague or subjective terms used by settlors. For instance, in Re Gulbenkian’s Settlements (1970), the court grappled with the term “dependants”, ultimately finding it sufficiently certain by reference to objective criteria. However, not all cases are resolved so neatly, and terms like “friends” or “deserving persons” often lead to disputes over whether they meet the required threshold of certainty (Hayton et al., 2017). Furthermore, the distinction between conceptual uncertainty (where the meaning of terms is unclear) and evidential uncertainty (where facts cannot be ascertained) adds another layer of complexity. Courts have generally been more lenient with evidential uncertainty, as seen in Re Tuck’s Settlement Trusts (1978), where extrinsic evidence was permitted to clarify ambiguous terms.
Another limitation lies in the practical implications of overly broad classes in discretionary trusts. Even if a class satisfies the ‘is or is not’ test, administrative unworkability may still render the trust void. This issue, though, is inconsistently applied, with courts sometimes prioritising the settlor’s intention over strict adherence to workability, as arguably seen in subsequent interpretations of McPhail v Doulton (Penner, 2019). Indeed, this inconsistency highlights a broader limitation in the law: the balance between upholding a settlor’s wishes and ensuring enforceable trusts remains difficult to strike. While the tests provide a framework, they do not always account for the nuanced realities of trust creation, particularly in modern contexts where settlors may wish to benefit diverse or evolving groups.
Conclusion
In summary, certainty of objects is a critical requirement in trust law, ensuring that beneficiaries or purposes are clearly defined and that trusts remain enforceable. The complete list test for fixed trusts and the ‘is or is not’ test for discretionary trusts provide structured approaches to achieving this certainty, as demonstrated in landmark cases like IRC v Broadway Cottages Trust and McPhail v Doulton. However, challenges persist in interpreting vague terms, addressing administrative unworkability, and balancing settlor intentions with legal rigour. These issues underscore the limitations of the current framework, suggesting a need for ongoing judicial or legislative refinement to address modern complexities. Ultimately, while the principle of certainty of objects safeguards the integrity of trusts, its application reveals the inherent tension between precision and flexibility in trust law, a tension that continues to shape legal debates and practice. As students and practitioners of law, engaging with these nuances is essential to understanding both the theoretical underpinnings and practical implications of trusts in English law.
References
- Hayton, D. J., Matthews, P., & Mitchell, C. (2017) Underhill and Hayton: Law of Trusts and Trustees. 19th ed. LexisNexis.
- Hudson, A. (2016) Equity and Trusts. 9th ed. Routledge.
- Penner, J. E. (2019) The Law of Trusts. 11th ed. Oxford University Press.
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