Equity Essay

‘In McPhail v Doulton, a more liberal approach was taken by the House of Lords towards the test for certainty of objects for discretionary trusts. A similarly generous approach should now be adopted towards the other certainties.’

To what extent do you agree that such an approach would be justified?

Introduction

In this essay, I am first going to identify the case of McPhail v Doulton and the liberal approach that was taken by the judges. I will then go on to discuss whether this approach should be adopted towards the other certainties of intention and subject matter. I will then need to decide to what extent an approach will be justified. I will then sum up my argument and come to an overall conclusion.

Certainty of objects

In McPhail v Doulton, Lord Wilberforce’s judgement “challenge[d] the correctness” of the decision in IRC v Broadway. The question in Baden no.1 was whether the trust Mr. Baden constructed was invalid on the grounds of certainty of objects. Lord Wilberforce departed from the strict test in Re Gestetner and Broadway Cottage which required beneficiaries to be listed in order for there to be a discretionary trust. The difficulties in the case were whether clause (9) constituted a trust or a power and if there was a trust, what was the test for certainty of object. It was decided that there was a valid trust and the test for discretionary trusts will be the ‘is or is not test’. Re Baden no.1 overruled the decision in Cottage and applied the test that was used for powers in Re Gulbenkian's Settlements; the individual ascertainable test and was then applied to Re Baden no.2. This more liberal approach “can be seen simply as completing a tidying up process in the rules concerning certainty of object”.

The question now, is whether this approach should be applied to the other certainties.

Certainty of Intention

Lord Eldon said that in order to construct a trust, words “must be imperative.” In order to determine the certainty of intention,...