Re Gulbenkian’s ST [1970] AC 508

Key point

  • The ‘is or is not’ test is applicable to the certainty of objects of powers

Facts

  • A settlement contained a power to appoint in favour of any person relating to G’s son, including his wives, children, or “any persons or persons by whom [G] may from time to time be employed and any person with whom [G] from time to time is residing”
  • It was argued that the power was void for conceptual uncertainty and the main focus of the attack was on the concept of “residence”

Held (House of Lords)

  • The power was valid

Lord Upjohn

Test for certainty of objects in fixed trusts

  • The complete list of beneficiaries must be known
  • A trust directing a fund to be divided equally between “my old friends” is too uncertain
  • Rationale
    • The principle is that the court must know with sufficient certainty objects of the trust to execute it
    • Trustees cannot distribute merely to known claimants which are within the class for that is constituting a narrower class
  • Ascertainability is not required
    • If the class is sufficiently defined by the donor the fact that it may be difficult to ascertain the whereabouts or continued existence of some of its members at the relevant time matters not
    • The trustees can apply to the court for directions or pay a share into court

Test for certainty of objects in powers

  • A power is valid if it could be said whether any individual is or is not a member of the class
  • Rationale
    • The trustees have no duty to exercise the power and the court cannot compel the trustees to exercise their powers
    • But those entitled to the fund are entitled to restrain the trustees from exercising it save among those within the power
    • Thus the trustees or the court must be able to determine who is within and who is without the power

Commentary

  • In this case an indication that a power rather than a trust was created is that there was a “gift-over” clause
  • A gift over clause specifies what is to be done with the assets when the power is not exercised