2004 ZA Q1

(a) This is a discretionary trust because Fred, the settlor, specifically instructs the
executor to hold the trust assets on trust for him and secondly, the trustee (i.e.
the executor) was granted absolute discretion as to whom those assets are to be
distributed. There is no problem with certainty of intention (on trust for such …)
and subject matter (£250,000) but the objects seem to be uncertain. The test for
certainty of objects is whether any given postulant is or is not a member of the
class of objects. This test was originally a test for power of appointment (Re
Gestetner Settlement). Later, in McPhail v Doulton, the test for certainty of
objects in discretionary trust and power of appointment became assimilated. The
application of this test is controversial because three judges in the Court of
Appeal had their own interpretation of the application of the test (see Re Baden
No. 2). Sach LJ drew a distinction between conceptual uncertainty and evidential
uncertainty. He said only the former will be fatal to the validity of the trust. So
under his approach, we need to determine whether the objects of this particular
bequest are conceptually or evidentially certain or not. Here, although “law
students of TCL” are conceptually certain enough, the term “hard-working” is not
because different persons may gauge “hard-working” differently. Fred provided
that the Dean of the TCL Law Faulty may decide who is hard-working. The
problem is whether a settlor may subject any dispute as to the meaning of a
particular term to the decision of the trustee or a third party. In Re Coxen and Re
Wright’s Will Trusts, the court held that opinion clause cannot cure conceptual
uncertainty. But in Re Leek, Harman LJ construed the opinion of the company in
that case as part of the definition of the object concerned. Therefore, the trust is
valid. In Re Tuck’s Settlement Trust, Lord Denning MR said conceptual
uncertainty can be cured by opinion clauses. But according to Professor Penner,
this view does not represent the law because the other judges in that case
upheld the trust on a different basis. Eveleigh LJ’s reason was the Chief Rabbi’s
opinion was just evidence of the settlor’s opinion. Applying this reasoning to our
present case, we may also say that the Dean’s opinion is just evidence of Fred’s
opinion of “such hard-working law students’ of TCL” because Fred delegated this
task to the Dean and, in my opinion, such interpretation does not seem to be
rewriting the settlement for Fred. Therefore, this discretionary trust is likely to be
held valid by the court.
(b) This is either a private purpose trust or a charitable trust, depending on the
status of the TCL student union.
(c) This is a gift subject to condition precedent. The intention of the settlor is to
provide a gift to those who can satisfy the condition precedent. The gift is the
option to purchase Fred’s law library for £100,000 and the condition precedent is
“outstanding legal academic”, which identifies the donee. But such identification
is not certain enough because different persons may have different interpretation
of what is “outstanding”. We do not know which degree of outstanding that Fred
had in mind when he made the bequest. In some cases, the courts have shown
their willingness to stipulate a meaning for a vague term like the present one but
in some cases the courts refused to do so. Per Lord Hailsham in IRC v McMullen,
courts try not to invalidate trusts if a reasonable construction can be placed on
the words that will make them valid. In Re Barlow’s will Trust which is also
concerned with a gift subject to condition precedent like our present case,
Browne-Wilkinson J denied that the word “friends” was too vague to be given
legal effect. In that case, two kinds of tests were contended to be the correct test
by each side of the litigants. Those argued that the gift in that case should be void
for conceptual uncertainty based their argument on the test laid down in Re
Gulbenkian and McPhail v Doulton, namely that it must be possible to say
whether one is or is not within the class. But those in favour of the validity of
the gift argued that the test should be the one in Re Allen, namely that the gift is
valid if it is possible to say of one or more persons that he or they undoubtedly
qualify even though it may be difficult to say of others whether they qualify or
not. He said which tests apply depends on whether the NATURE of the gift makes
it LEGALLY necessary to establish all members of the class or not, and an example
is where the quantum of each member’s share depends on how many members
there are in total, which is also the basis on which Lord Upjohn laid down the
test in Re Gulbenkian. He also relied on the CA decision in the case of Re Tuck’s
Settlement Trust where it was held that in considering such a gift the test in Re
Allen was appropriate. So in our present case, we should follow the Re Allen test
because it is not legally necessary to establish all members of the class. The
word “any” suggests to us that there is no legal necessity to establish all
members of the class as any outstanding legal academic will do. Therefore, under
the test, if it is possible for the court to say that one or more legal academic
undoubtedly qualify, then it is likely that the gift will be held valid.