Creation and requirements of express trusts - Administrative...

Learning Outcomes

This article explains administrative unworkability in express trusts for the SQE1 assessment, including:

• identifying the requirements for certainty of objects in both fixed and discretionary trusts and applying the correct test in each case;
• explaining how the McPhail v Doulton 'is or is not' test operates and when evidential difficulty will not invalidate a discretionary trust;
• distinguishing clearly between conceptual certainty, evidential certainty, administrative unworkability, and capriciousness, using leading authorities such as Re Baden, West Yorkshire MCC and Re Manisty’s Settlement;
• recognising when a class of potential beneficiaries is so wide, or the fund so limited, that a discretionary trust is likely to be administratively unworkable in exam-style scenarios;
• analysing borderline problem questions by weighing class size, fund size, the trustees’ mandate, and practical administration;
• predicting the usual consequences where a trust fails for certainty of objects or administrative unworkability, particularly the emergence of a resulting trust for the settlor or their estate;
• developing a structured approach to SQE1 multiple-choice and problem-style questions involving administrative unworkability, ensuring you can eliminate distractors and justify the correct option on principled grounds.

SQE1 Syllabus

For SQE1, you are required to understand administrative unworkability in express trusts and the tests for certainty of objects, with a focus on the following syllabus points:

• The requirement for certainty of objects in express trusts.
• The distinction between the tests for certainty of objects for fixed trusts and discretionary trusts.
• The concept of administrative unworkability as a ground for invalidating a discretionary trust.
• The application of the principle from R v District Auditor, ex parte West Yorkshire MCC.
• How conceptual certainty differs from evidential certainty, and the role of extrinsic evidence in resolving evidential uncertainty.
• The related concept of capriciousness (Re Manisty’s Settlement), and how it differs from administrative unworkability.
• The consequence of a failure for certainty of objects or administrative unworkability (typically a resulting trust for the settlor).

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. What is the test for certainty of objects in a discretionary trust as established in McPhail v Doulton?
2. Can a discretionary trust fail even if the class of beneficiaries is conceptually certain? If so, on what grounds?
3. Which case famously established that a trust for 'all the inhabitants of West Yorkshire' was void?
4. True or false: Administrative unworkability applies equally to fixed trusts and discretionary trusts.

Introduction

For an express trust to be valid, it must satisfy the three certainties: certainty of intention, certainty of subject matter, and certainty of objects. Certainty of objects requires that the beneficiaries of the trust must be identifiable. The test for identifying beneficiaries differs depending on whether the trust is fixed or discretionary. This article focuses specifically on a potential pitfall for discretionary trusts known as administrative unworkability, which can render a trust void even if the description of the beneficiaries is conceptually clear.

Key Term: Certainty of Objects
The requirement that the beneficiaries of a trust must be identified or identifiable with sufficient clarity for the trust to be valid.

Key Term: Conceptual Certainty
Clarity in the description of the class of beneficiaries so the trustees know the type of person who qualifies, based on objective criteria.

Key Term: Evidential Certainty
The ability to prove whether particular individuals meet the clear class description; lack of evidence may hinder identification but does not necessarily invalidate a discretionary trust.

Certainty of Objects: Fixed vs Discretionary Trusts

To understand administrative unworkability, it is first necessary to recap the tests for certainty of objects.

Fixed Trusts

In a fixed trust, the share or interest of each beneficiary is specified in the trust instrument. The trustees have no discretion about who will benefit or in what proportions. For such a trust to be valid, the trustees must be able to draw up a complete list of all the beneficiaries. This is known as the 'complete list' test (IRC v Broadway Cottages Trust). Both conceptual certainty (clarity of the class description) and evidential certainty (ability to prove who is in the class) are required.

Key Term: Complete List Test
The test for fixed trusts: the trustees must be able to compile a list of all beneficiaries to whom fixed shares are due.

Evidential problems can defeat fixed trusts because the trustees must identify every member of the class. Where records are missing or incomplete, a fixed trust may fail, not for conceptual uncertainty, but because the list cannot in practice be completed. A useful illustration is the failure of a fixed trust “for all employees and ex-employees equally” where historic employment records are unavailable; the description “employee” is conceptually clear, but evidential certainty is lacking. In contrast, difficulty in tracing a known beneficiary does not invalidate a fixed trust; trustees can seek directions and hold the share pending.

Discretionary Trusts

In a discretionary trust, the trustees have the discretion to decide which members of a defined class of potential beneficiaries will receive benefits and often in what amounts. The test for certainty of objects is less strict than for fixed trusts. The test, established in McPhail v Doulton, is whether it can be said with certainty that any given individual is or is not a member of the class described. This is often called the 'is or is not' test or the 'individual ascertainability' test. This requires conceptual certainty, but evidential difficulties in proving whether someone is or is not in the class will not necessarily invalidate the trust.

The Court of Appeal in Re Baden’s Deed Trusts (No 2) explored common class labels under this test. “Relatives” and “dependants” were treated as conceptually certain categories for discretionary trusts, provided the trustees adopt an objective understanding of those terms. By contrast, “friends” is generally conceptually uncertain unless the settlor supplies a clear definition or delegates definitional discretion to the trustees.

Key Term: Discretionary Trust
A trust where the trustees have the power (discretion) to decide how to distribute the trust property among a class of potential beneficiaries.

Key Term: Individual Ascertainability Test / 'Is or is not' test
The test for certainty of objects in a discretionary trust: can it be determined with certainty whether any given person is or is not a member of the beneficiary class?

Evidential uncertainty does not normally defeat a discretionary trust. If the class is conceptually certain, trustees may admit extrinsic evidence (e.g., contracts, payroll, family records) to decide whether particular individuals qualify. This flexibility reflects the trustees’ duty to consider potential beneficiaries (rather than to produce a complete list) and to exercise their discretion rationally among those who qualify.

Administrative Unworkability

Even if a discretionary trust satisfies the 'is or is not' test because the class of potential beneficiaries is conceptually certain, the trust may still be void if the class is so hopelessly wide that the trust is administratively unworkable.

Key Term: Administrative Unworkability
A ground for invalidating a discretionary trust where the class of potential beneficiaries, although conceptually certain, is so large or ill-defined in scope that it is practically impossible for the trustees to administer the trust effectively.

The leading authority on administrative unworkability is R v District Auditor, ex parte West Yorkshire Metropolitan County Council. A discretionary trust of £400,000 for “any of the inhabitants of West Yorkshire” (about 2.5 million people) was held invalid because the class was too wide to survey and administer sensibly. Administrative unworkability is rooted in practicality: if the trustees cannot meaningfully survey the class to compare needs and exercise discretion rationally, or if they would consume the fund in attempting to do so, the trust fails.

Courts have echoed Lord Wilberforce’s observation in McPhail v Doulton that a discretionary trust is invalid if the class is so hopelessly wide as not to form “anything like a class”. There is no fixed numeric threshold; each case turns on the nature of the class, the scope of the discretion, the purposes of the trust, and—importantly—the size of the fund relative to the size of the class. A very broad class might be workable with a very large fund and focused selection criteria, whereas the same class could be unworkable with a modest fund and an unfocused mandate.

Worked Example 1.1

A settlor attempts to create a discretionary trust for 'all the residents of Greater London'. The class 'residents of Greater London' is arguably conceptually certain. Is the trust likely to be valid?

Answer:
No. Although the class might be conceptually certain, it is likely to be void for administrative unworkability. The class is so large (millions of people) that it would be practically impossible for the trustees to survey the class and sensibly exercise their discretion. This follows the principle in R v District Auditor, ex parte West Yorkshire MCC.

The rationale behind the doctrine is that if the class is too large, the trustees cannot meaningfully survey the range of potential objects and therefore cannot properly exercise their discretion. The task becomes practically impossible.

Worked Example 1.2

A philanthropist settles £8 million on discretionary trust “for any student currently enrolled at University X, in such amounts and at such times as the trustees consider fit.”

Answer:
Likely valid. “Students currently enrolled at University X” is conceptually certain and represents a sizeable but surveyable group. With a substantial fund, trustees can adopt rational criteria (e.g., academic merit, financial need) to select beneficiaries and distribute sensibly. This is not administratively unworkable.

Worked Example 1.3

A trust of £50,000 is declared “for any resident of England” at the trustees’ absolute discretion.

Answer:
Likely invalid for administrative unworkability. The class (all residents of England) is conceptually certain but extremely large relative to a modest fund, making any rational survey or distribution impracticable. The trustees would be unable to sensibly compare competing claims across millions of potential objects.

Worked Example 1.4

A trust states: “to apply income at the trustees’ discretion for any of my relatives.”

Answer:
Generally valid. “Relatives” is conceptually certain for discretionary trusts if understood objectively (e.g., persons descended from a common ancestor). The class may be extensive, but in a typical family context it is not so large as to defeat practical administration; trustees can select among relatives based on need or other rational criteria.

Worked Example 1.5

A local business owner declares a trust of £100,000 “for any past or present employee of the company” to assist with hardship.

Answer:
Valid as a discretionary trust, provided “employee” is defined objectively. Even if historic records are sparse, evidential difficulty does not automatically invalidate a discretionary trust; trustees can seek extrinsic evidence to verify claims. The class is large but usually surveyable, and the fund can be administered with rational selection criteria (e.g., current hardship).

Exam Warning

Do not confuse conceptual uncertainty with administrative unworkability. A trust for 'my friends' fails for conceptual uncertainty because the definition is too vague. A trust for 'all residents of England' fails for administrative unworkability because, although the class is conceptually clear, it is impractically large. Equally, do not treat mere difficulty as unworkability: evidential hurdles (e.g., missing records) may be overcome; the question is whether rational, fair administration is possible given the class and the fund.

It is important to note that administrative unworkability generally only applies to discretionary trusts. It does not typically invalidate fixed trusts, provided the complete list test can be satisfied (even if identifying everyone is difficult).

In practice, trustees confronted with a broad class can adopt focused criteria, seek court directions, or appoint advisors, but if the class is “so hopelessly wide” that sensible discretion is impossible, the trust will fail. Where a discretionary trust fails for administrative unworkability (or capriciousness), the property will usually revert on a resulting trust to the settlor (or the settlor’s estate).

Capriciousness

A related but distinct concept is capriciousness. A trust might also fail if the settlor's choice of beneficiaries appears entirely irrational or capricious, meaning there is no sensible link or reason behind the selection of the class. For example, a trust for people with red hair living in Birmingham might be considered capricious if the settlor had no connection to either red-haired people or Birmingham. Administrative unworkability focuses on the size and practicality of managing the class, whereas capriciousness focuses on the rationality of the settlor's choice.

Capriciousness is often discussed in the context of powers as well as discretionary trusts. In Re Manisty’s Settlement, Brightman J described capricious powers as those requiring trustees to consider “only an accidental conglomeration of persons who have no discernible link with the settlor or any institution.” While most private discretionary trusts will not fall foul of this hurdle, you should be prepared to spot an irrational or arbitrary selection with no sensible rationale. The presence of a rational connection or purpose usually defeats a capriciousness challenge.

Key Term: Capriciousness
A potential ground for invalidating a trust where the settlor's intentions in selecting the beneficiaries appear entirely arbitrary or irrational, lacking any sensible connection or purpose.

Revision Tip

While both administrative unworkability and capriciousness can invalidate discretionary trusts, administrative unworkability is more commonly tested. Focus on identifying situations where the sheer size of the class makes administration practically impossible, as in the West Yorkshire case. Where a class looks unusual, ask whether there is any rational link or purpose before concluding capriciousness.

Additional Points of Technique

• Start by classifying the trust as fixed or discretionary. The applicable test for certainty of objects changes the analysis.
• For fixed trusts, ask: can a complete list be compiled? If the class description is clear but evidence is lacking, consider whether extrinsic evidence can remedy evidential uncertainty. If not, the trust may fail.
• For discretionary trusts, apply the “is or is not” test to the class description. If conceptually certain, consider whether the class is so wide as to be administratively unworkable given the fund size and the trustees’ mandate.
• Distinguish evidential uncertainty (often resolvable) from conceptual uncertainty (fatal). “Relatives” and “dependants” are commonly acceptable; “friends” is usually too vague unless defined.
• Remember the “one-person test” for certain series of individual gifts. In Re Barlow’s Will Trusts, gifts to any person answering a description were upheld as separate gifts rather than a trust for a class, avoiding the need for class ascertainment and sidestepping administrative unworkability.

Key Term: One-person (series of gifts) approach
Where a will or trust instrument provides independent, identical gifts to anyone answering a description, validity does not depend on compiling a class list; it suffices that at least one person qualifies.

Key Point Checklist

This article has covered the following key knowledge points:

• Express trusts require certainty of objects.
• The test for certainty of objects in discretionary trusts is the 'is or is not' test (McPhail v Doulton).
• A discretionary trust can be void for administrative unworkability even if the class is conceptually certain.
• Administrative unworkability arises when the class of potential beneficiaries is so large that the trust cannot be executed practically (R v District Auditor, ex parte West Yorkshire MCC).
• There is no fixed numerical threshold for administrative unworkability; factors include the size of the class, the nature of the discretion, and the size of the fund.
• Administrative unworkability primarily applies to discretionary trusts, not fixed trusts.
• Conceptual certainty concerns clarity of the class description; evidential certainty concerns proof that particular individuals fit the description.
• Extrinsic evidence may assist with evidential uncertainty; it does not cure conceptual uncertainty.
• Capriciousness is a separate ground relating to the irrationality of the settlor's choice of objects.
• Failure for certainty of objects or administrative unworkability typically results in a resulting trust in favour of the settlor.

Key Terms and Concepts

• Certainty of Objects
• Discretionary Trust
• Individual Ascertainability Test / 'Is or is not' test
• Administrative Unworkability
• Capriciousness
• Conceptual Certainty
• Evidential Certainty
• Complete List Test
• One-person (series of gifts) approach