Re Gulbenkian's Settlement Trusts [1970] AC 508 (HL)

Facts

• The case concerned a settlement that provided a power to appoint in favour of persons described as relatives of G’s son, his wives, children, and any individuals employed by or residing with G.
• Questions arose over whether the class of objects was defined with sufficient certainty for the power to be valid, particularly due to potential evidential difficulties with terms like “residing.”
• The matter addressed the requirement for certainty of objects in the administration and judicial oversight of trusts and powers in English law.

Issues

1. Whether the description of beneficiaries in the power of appointment was sufficiently certain to enable the power to be valid.
2. What test should be applied by the court to determine certainty of objects for powers of appointment.
3. How to distinguish the certainty of object requirements between powers, fixed trusts, and discretionary trusts.

Decision

• The House of Lords approved the validity of the power, holding that the class of objects was sufficiently certain under the “is or is not” test.
• The court determined that it must be possible to say of any given individual whether they are or are not within the class described, regardless of evidential difficulties.
• The court drew a distinction between the certainty requirements for powers, which require the “is or is not” test, and fixed trusts, which require a “complete list” of beneficiaries.
• The approach later informed the test for discretionary trusts, as adopted in McPhail v Doulton.

Legal Principles

• For a power of appointment to be valid, it must be conceptually certain: the court must be able to determine for any person whether they are or are not within the class of objects (“is or is not” test).
• Fixed trusts require identification of all beneficiaries (“complete list” test), per IRC v Broadway Cottages.
• Discretionary trusts, following McPhail v Doulton, adopt the “is or is not” test for conceptual certainty, but can still fail for administrative unworkability.
• The requirement for conceptual certainty is directed at the clarity of definitions, while ascertaining all members is not essential for powers or discretionary trusts, only fixed trusts.
• Individual gifts subject to condition precedent are governed by the “single person test,” as illustrated in Re Barlow’s Will Trusts.

Conclusion

Re Gulbenkian’s Settlement Trusts [1970] AC 508 (HL) established that a power of appointment is valid if it is possible to determine whether any given individual is or is not within the class of objects, introducing the “is or is not” test for conceptual certainty and distinguishing this requirement from the stricter “complete list” approach used for fixed trusts. This decision laid a basis for later developments in the law of trusts, particularly its adoption for discretionary trusts and the refinement of certainty principles under English law.