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P. 1
“No principle perhaps has greater sanction of authority behind it than the general proposition that a trust...not being a charitable trust, in order to be effective, must have ascertained or ascertainable beneficiaries.” Discuss this statement by Lord Evershed M.R. in Re Endacott [1960] Ch. 232, in relation to certainty of objects of discretionary trusts and the beneficiary principle.

“No principle perhaps has greater sanction of authority behind it than the general proposition that a trust...not being a charitable trust, in order to be effective, must have ascertained or ascertainable beneficiaries.” Discuss this statement by Lord Evershed M.R. in Re Endacott [1960] Ch. 232, in relation to certainty of objects of discretionary trusts and the beneficiary principle.

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An essay for the 2011 Undergraduate Awards (Ireland) Competition by Marie-Claire Campbell.
An essay for the 2011 Undergraduate Awards (Ireland) Competition by Marie-Claire Campbell.

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Published by: Undergraduate Awards on Aug 31, 2012
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10/27/2013

 
1
“No principle perhaps has greater sanction of authority behind it than the general proposition
that a trust...not being a charitable trust, in order to be effective, must have ascertained or 
ascertainable beneficiaries.” Discuss this statement by Lord Ever 
shed M.R. in Re Endacott [1960]Ch. 232, in relation to certainty of objects of discretionary trusts and 
 
the beneficiary principle.
The nature of the trust has been depicted as the “the greatest and most distinctive achievement
performed by Englishmen in the field of jurisprudence
.”
1
The role of the trust is to allow
“division in the ownership of the trust property between a trustee and a beneficiary so that the
trustee is compelled to act entirely in the best interests of the beneficiary,
2
therefore the needfor an ascertainable beneficiary is evident from the outset. The beneficiary principle and theclaim that all objects of a trust must be certain originated from the same root, namely
Morice v Bishop of Durham
3
 
where the requirement for someone to enforce the trust highlighted theimportance of beneficial interest. Development has occurred in the context of objects of certainty of a discretionary trust with a more relaxed approach favoured and although there are
still narrow exceptions where the “ordinary rule is suspended”
4
in relation to non-charitablepurpose trusts, the beneficiary principle remains a relatively stringent ideal. The issue ariseswhether in light of 
McPhail v Doulton
5
, the beneficiary principle should be approached withleniency and its concept extended or whether the idea of an ascertainable beneficiary is too
fundamental to the concept of a trust when considering it as “the last of the essentialingredients for the effective creation of a trust.”
6
 Pearce and Stevens note that there i
s a “very close relationship between the beneficiaryprinciple and the requirement that the objects of a trust must be certain.”
7
Under the case of 
Morice v Bishop of Durham
Grant M.R. recognized the beneficiary principle as requiring that...
“Every *non
-charitable] trust must have a definite object, there must be someone in whose
favour the courts can decree performance.”
This strict approach to beneficial requirement isrei
nforced through claims that “a court of equity does not recognise as valid a trust which itcannot both enforce and control.”
8
Taking this into account, the rigid approach to thebeneficiary principle is arguably in need of modification with inspiration for such amendments
1
Cam (1957) 23&129
2
Hudson (2009) pg.41
3
(1805) 9 Ves 399,405
4
 
O’ Hagan and Stein
(2000) s.2
5
[1971] A.C.424
6
Oakley (2008) pg.74
7
Pearce and Stevens (2006) pg.386
8
 
Re Astor’s ST 
[1952] Ch.534,549
 
2
coming from the revolutionary decision in
McPhail v Doulton
concerned with the certainty of 
objects of a discretionary trust. The court has, under this decision come to give “legitimacy to a
much wider and more flexible concept of a trust
9
when it decided that the trust would not faileven though it was not possible to draw up a complete list of beneficiaries and that a gift torelatives was held to be ascertainable. The judgement of Lord Wilberforce relaxes the test forthe certainty of objects for a discretionary trust criticizing the complete list approach for fixedtrusts also applying to discretionary trusts, noting that equal division
would “produce a resultbeneficial to no one.”
10
 
Lord Wilberforce’s s
peech must be read against the narrow distinction
between trust powers and powers making it seemingly unreasonable that “the entire validity of a disposition should depend on such delicate shading.”
11
Harman LJ encouraged the decision in
McPhail v Doulton
c
alling the division between a trust and a power the “most unfortunatedoctrine” and “embarrassing and absurd.”
12
Lord Wilberforce and the majority view can beconcluded as a triumph of pragmatism over principle and the force of this decision has beendescri
bed as creating a “new look trust.”
13
 
Lord Hodson’s dissenting speech
 
adopts a “non
-
possumus” attitude to the
test for discretionarytrusts and he refers to the
“gulf that yawns” between his and Lord Wilberforce’s view. He bases
his
outlook on Lord Eldon’s
judgement in
Morice v Bishop of Durham
that there could be notrust
over which a court could not assume control. He also draws attention to Lord Upjohn’s
postulation in the
Gulbenkian
case
14
that if the complete list approach was not adopted thiswould res
ult in “a narrower class and the donor has given them no power to do this.” Howeverthis is debatable as seemingly “the very fact that the settlor uses a modern exhaustivediscretionary trust...might show that he wants to avoid that sort of rigidity.”
15
In
Re Baden’s
Deed Trusts (no. 2)
16
 
the class test was put into operation and the process, “proved moredifficult than...might be expected”
17
although Stamp L.J. approached the class test factuallyattempting to reinstate the complete list test, what prevailed was a liberal approach to
9
Grbich (1974),pg.643
10
[1971]A.C. 424,451
11
Ibid,449
12
 
Re Baden’s Deed Trusts (no.1)
[1969] 2 Ch 388,397
13
Grbich (1974) pg.643
14
[1970]A.C. 508,524
15
Grbich (1974) pg.648
16
[1973]Ch.9
17
Haley and McMurtry (2009) pg.63
 
3
beneficial interest under the judgements of Sachs L.J. and Megaw L.J. when they concurred thata claimant would have to state positively if he fell within the class.Lord Hodson
’s opinion has been described as “the orthodox view”
 
with Lord Wilberforce’s judgement “breaking new ground.”
18
 
McPhail v Doulton
holds innovative significance and hasyet to be challenged, and thus should be the starting point on which to shake the foundations of 
Morice v Bishop of Durham
and its undeniably rigid approach to beneficial interest. In the Irishcase of 
O’Byrne
 ,
19
Murphy J. depicts
McPhail v Doulton
 
as “admittedly a conscious effort at lawreform” but doubts its value. Similarly, Maudsley and Burns have noted that when applied in
ReBaden
, “The
wide differences in [the judges] application of the test demonstrates how difficult it
may prove to be in practice.”
20
The application of this decision should provide a basis on whichto question the austere approach to the beneficiary principle however elimination of thisprinciple altogether is not supported by current authority.Nevertheless, judicial creativity in relation to non-charitable purpose trusts has resulted in thebeneficiary principle being relaxed on narrow occasions. The rule against purpose trusts is longestablished and the application of the beneficiary principle highlights issues with the validity of purpose trusts and the problems that arise from adoption of them. However English law hasrecognised a number of exceptions from the prin
ciple which have “no logic rationale”
21
andshow deviation from the fixed requirement of a beneficiary.This is firstly evidenced through trusts of imperfect obligation where the trustee is notcompelled nor prohibited to enforce the trust which exists for specific purposes with anapparent lack of a beneficiary and as
“enforceable obligations of the trustee are at the heart of the trust,”
22
the beneficiary principle is evidently undermined. Such irregular exceptions have
been described as “troublesome, anomalous and aberrant”
23
but have yet to be overruled andare applied for monuments and graves, the saying of masses, the care of specific animals and
miscellaneous cases and have traditionally been “
held valid as concessions to human
18
Moffat (2007) pg.214
19
[1994]3 IR 373
20
Maudsley and Burns (2008
)
pg.97
 
21
Pearce and Stevens (2006),pg.380
22
Hayton and Mitchell (2005) pg.201
23
 
Re Endacott 
[1960] Ch.232,251

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