![]() Negligence is the breach of an owed duty by means of an act or omission in the prevention of harm that results in damages. This essay seeks to discuss the objective standard of care imposed at the breach stage in general negligence and why the court generally imposes such. It will clearly analyse circumstances where the court was influenced to adopt the subjective standard; ultimately concluding that the approach taken by the court should be amended since it is often based on policy and principle for the benefit of the claimant; it can be said that as opposed to achieving corrective justice the court occasionally elevates the function of tort as a compensation mechanism. Breach occurs if the defendant does something or omits to do something a reasonable man would have done[1]. The court asks two questions when considering whether a breach occurred: theoretically in law, what should the standard of care be, and whether the defendant has fallen below that standard. As seen in Donoghue v Stevenson [1932][2], the standard of care is not a standard of perfection; per Lord Atkin’s statement, the key requirement is that of reasonableness. The reasonable man test was emphasised by Baron Anderson in Blyth v Birmingham Waterworks Co. [1856][3]. Many cases have sought to define the reasonable man over the years, they are ‘the man on the Clapham omnibus’[4], ‘the anthropomorphic conception of justice’[5] and ‘a traveller on the London underground’[6] After many definitions (and debates by feminists), it is agreed that the reasonable man is the hypothetical average person, this person is not all knowing, they occasionally take risks and make mistakes. Realistically, the objective standard is not one of perfection[7]. The test of objectivity begs the question of what the reasonable man would do in such circumstances. This ultimately means that the standard of care is not dependent on the defendant’s personal idiosyncrasies, characteristics, or capabilities[8]; the courts will rarely impose a lower standard. This is illustrated in Nettleship v Weston [1971][9] where a learner driver accompanied by a driving instructor brake too slowing causing the vehicle to collide with a lamp-post. The claimant, consequently suffered a broken knee and sued for damages. It was held that the learner driver owed the standard of a reasonably competent driver. It would be opined that the approach taken by the court is claimant-centred, Lord Justice Salmon stated that any driver normally owes the same standard to a passenger in their car as they do to the public, i.e. the public views anyone driving as a ‘reasonably competent driver’ regardless of their experience, thus, any person should be held at such. Behind the rulings of this case, policy decisions, such as insurance, was also considered. The courts typically impose the reasonable man test because Per Cane (p 49), the ‘objective standard of care is understood as the law’s attempt to strike a fair balance between the competing interests in freedom of action and personal security that we all share’. This approach moved away from the concept that there should be no liability without fault and adopted the question of whom the risk should fall on. This concept was taken to the extreme in Roberts v Ramsbottom [1980][10] regarding the defendant under disability due to suffering a stroke while driving and consequently knocked down a pedestrian. The defendant was liable because he had some degree of control. However, in Mansfield v Weetabix Ltd [1998][11] the defendant was not liable because despite him suffering a hypoglycaemic attack causing him to black out while driving and crashing into the claimant’s shop, he was not aware of his disability. This case is a prime example of the courts ‘modifying’ the objective standard to include certain subjective characteristics of the defendant. Considering this, circumstances the court would apply subjective elements to breach in general negligence are to be examined. Individuals’ expertise may be considered based on facts of each specific case. Occasionally, a person may not be judged as a ‘reasonable average person’ but rather that of a ‘reasonably competent hypnotist-entertainer’[12], a ‘reasonably competent jeweller’[13], a ‘reasonably competent amateur home do-it-yourself’[14] or even an expert. As seen previously[15] trainees are not held at a lower standard by the courts for their actions, it was emphasised in Wilsher v Essex AHA [1988][16] that the act not the actor would be judged. Whereas, professionals assume a test with a combination of objectivity and subjectivity, this is regarded as the ‘Bolam test’[17], it asks what the reasonable man would do as compared to a professional. This test does not necessarily a majority who would’ve acted in that manner but rather if the defendant can find at least one professional in their same field of expertise who would’ve also acted as such. This application of subjectivity is necessary because the courts need to establish whether the act was reasonable and logical.[18] It was decided that concerning the expert opinions a balance was necessary to prove undue deference. Subjectivity regarding children is resoundingly blatant as the courts are aware that children may not have the required capacity to acknowledge the dangers of certain actions or omissions. In the recent case of Orchard v Lee [2009][19], a young boy ran into a dinner lady and managed to injure her. The court compared the action of the child with other children of similar age and experience, concluding that his actions met the standard of a reasonably competent 13-year-old, instead of a reasonably competent ‘adult’. Mullins and Richards [1998] [20]also had a similar ruling, it was held that teenage girls sword fighting with a ruler is usual behaviour of a 15 year-old child. One of the cutting-edge defences used by defendants is that they did not know of the risk at the time of the incident. In Roe v Minister of Health [1954][21] claimants from 1947 became permanently paralysed after being given contaminated anaesthetic with a sterilising fluid for a minor operation. The hospital was unaware that the storage procedure of the anaesthetic had contaminated them and they continued storing it in that manner. In the case Lord Denning said that the doctor was unaware there could be undetectable cracks, … it was not negligent for him not to know it at that time, and that the court should not look at the 1947 accident with 1954 spectacles. Similarly, in Maguire v Harland & Wolff [2005], in the time of cancer when the defendants did not know much about mesothelioma, the same judgement was applied. The court recognised that it would be unfair to hold a defendant liable for something they were not aware of. These cases show a clear example that the objective standard was not achieved; it can be considered that the attempt of the court to distance themselves from the idea that no fault results in no liability was fatal, as this precedent took a spin and is now ‘no knowledge at time of fault equals no liability’. While the defendant would be relieved of liability for being unaware of certain factors at time of incident, a higher standard would be imposed if the claimant is known to have certain disabilities. Both Paris v Stephney BC [1951] [22]and Haley v LEB [1964] [23]the claims were in relation to blindness and they succeeded since defendants should have done something to prevent further injury, or injury towards them. As previously established mentally or physically disabled defendants would only be liable if they were aware of their condition and took the risk anyways. That is, a reasonably competent individual would not have acted in a certain way given their disabilities.[24] A defendant may or may not be liable for the claimant’s injuries due to intoxication. In Griffiths v Brown [1998] [25]a taxi driver was found to be not liable when he ran over a drunk passenger after they got out of the vehicle. Whereas in Brannan v Airtours plc [1999][26] the court decided that if the defendant is responsible for the claimant’s state or if there are elements of contributory negligence then they are liable. In this case Reps. Encouraged the claimant, who was on a package vacation in Greece, to consume a large quantity of alcohol. The claimant got up in a drunken state and walked on a table subsequently seriously injuring himself on a ceiling fan. One of the things the court look for is a link either geographically or relationship wise to determine whether the defendant could have influenced the claimant to consume so much alcohol as to impair their mental stability which results in damage or injury. The courts there examine the actions of the defendant to impose liability. In Watt v Herts County Council [1954] [27]a fireman was injured by equipment packed loosely in a fire truck during an emergency call. It was held that the standard of care expected is much lower if the defendant is responding to an emergency. During emergencies it is understood that the mental capacity of an individual may not be the most sound, the court takes these factors into consideration In sports, the standard is not just of a reasonably competent player but a player who is in compliance with the rules and regulations of the specific sport. In Condon v Basi [1985] [28]a foul during a game of football resulted in a broken leg. The claimant was able to sue because the defendant needed to exercise a degree of care towards other players. Regarding sports, the courts examine the actions of the defendant; this is because liability can not be imposed unless the player acted out of their bound. It can be opined that modern lawyers fail to comprehend what a principled account of the law would be like since the reliance on policies in tort has become ubiquitous. One of the major downfalls of the objective standard is the exclusion of the principled corrective justice. The purpose of corrective justice is to have a defendant compensate the claimant for the damages they caused due to their fault, it does not necessarily dictate that an individual should compensate another for all damages, even those not caused by them. In cases such as Nettleship v Weston where there is no genuine culpability on the part of the defendant, liability should not be imposed. This opens the door to arguments of unequitable outcomes in the law of tort. Considering the morality of the case, the learner driver was not at fault, however since this was a case regarding a car accident, the court identified that she would be liable due her being insured. One of the defences attempted to be introduced by the defendant was ‘volenti non fit injuria’ which means that injury is not done to a willing person. The court also shut down this argument since it was stated that an expressed or written contract was not implemented to support it. Despite these observations above, it can be noted that the approach taken by the court is pragmatic and comprehensive. In cases such as Nettleship which include roadside accidents, the courts ruled where the financial burden fell neither on the defendant nor the claimant, but rather the insurance company. Thus, introducing the implementation of policy as a measure of compensation, has ultimately achieved distributive justice, economic efficiency and social morality. In Griffiths v Brown the court also came to a policy decision as it would not have been reasonable for a taxi driver to determine how drunk each passenger was; this case prevented the metaphorical floodgates. However, Burrough J in Richardson v Mellish[29] had a much different opinion with regards to this, he stated that public policy is a very unruly horse, and when once you get astride it you never know where it will carry you. It is unclear why a specific test (Bolam test) inclusive of subjectivity was applied to professionals but not to trainees. It is upon the defendant (a professional) at fault to prove that if another professional was in the same situation, they would do the same; while there is no discount for a trainee. The question also arises as to why a trainee doctor or trainee driver is held to the standard of a reasonably competent driver or a reasonably competent doctor when they clearly lack the experience. While the introduction of subjectivity to the law of negligence has been beneficial to individuals in special circumstances such as children, those mentally or physically disabled and emergencies it is opined that the law should stretch as far to include trainees. It is believed that the law is incoherent with regards to the statement of the ‘act not the actor’[30] especially since the court moved away from the objectivity and introduced subjective elements of the actor, e.g age and mental or physical capacity. The approach taken by the courts is almost completely claimant-centred with dashes of morality, it uses subjectivity with strict limitations in hopes of achieving a means of compensation; this should be changed. [1] Hazell v British Transport Commission [1958] at 171. [2] Donoghue v Stevenson [1932] Lord Atkin at 580, “You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour”. [3] Anderson B, Blyth v Birmingham Waterworks [1856] at 784. [4] Greer LJ, Hall v Brooklands Auto-Racing Club [1933] at 224 [5] Lord Radcliffe, Davis Contractors v Fareham Urban District Council [1956] at 728 [6] Lord Steyn, McFarlane v Tayside Health Board [1999] at 82 [7] Birch v Paulson [2012] [8] Glasgow Corporation v Muir [1943] at 457; Bradford-Smart v West Sussex County Council [2002] [9] Nettleship v Weston [1971] 2 QB 691 [10] Roberts v Ramsbottom [1980] [11] Mansfield v Weetabix Ltd [1998] [12] Gates v McKenna [1998] [13] Philips v Whiteley [1938] [14] Wells v Cooper [1958] [15] Ibid 9 [16] Wilsher v Essex AHA [1988] [17] Bolam v Friern Hospital Management Committee [1957] [18] Mulheron 2010, p613 [19] Orchard v Lee [2009] [20] Mullins v Richards [1998] [21] Roe v Minister of Health [1954] 2 WLR 915 Court of Appeal [22] Paris v Stephney BC [1951] [23] Haley v LEB [1964] [24] Ibid 10 & 11 [25] Griffiths v Brown [1998] [26] Brannan v Airtours plc [1999] [27] Watt v Herts County Council [1954] [28] Condon v Basi [1985] [29] Richardson v Mellish [1824] 2 Bing 229, 130 ER 294, 303. [30] Ibid 13
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![]() Proprietary estoppel is an equitable doctrine which essentially allows an informal arrangement to be enforced and proprietary rights to be acquired without complying with the formalities. Courts have an equitable jurisdiction to interfere with an owner’s strict legal rights in relation to land when it would be deemed ‘unconscionable’ for that individual to assert their strict legal rights. This essay seeks to critically discuss Lord Scott’s statement in Cobbe v Yeoman’s Row Management Ltd [2008] which states, “… proprietary estoppel cannot be prayed in aid in order to render enforceable an agreement that statute has declared to be void.”[1] It will clearly analyse proprietary estoppel with regards to Lord Scott’s statement, ultimately concluding to what extent the statement is true and the extent to which it is agreed. Proprietary estoppel can be categorised into three broad types of cases, mistake cases[2], expectation cases[3], and imperfect gift cases[4]. Taylor’s Fashions Ltd v Liverpool Victoria Trustees Ltd[5] established the modern approach to proprietary estoppel, this was approved in Habib Bank v Habib Bank AG Zurich [1981][6]and was applied in Lim Teng Huan v Ang Swee Chuan [1992][7]; for an individual to succeed in a proprietary estoppel claim there must be assurance by the owner, reliance by the claimant and a detriment to the claimant, which all leading to the question of whether it would be unconscionable for the defendant to take advantage of the mistake. Assurance can be active or passive, active assurance is expressed or displayed by the owner which leads to the claimant believing they have an interest in the property. Expressly ‘active’ agreements are applied in numerous cases, in Gillet v Holt [2000][8] where Gillet left school before completing college to work on Holt’s farm for over 40 years due to Holt assuring him that he would inherit the farm upon his death, due to faults in their relationship, Holt changed his will. The court estopped Holt from denying Gillet’s rights to the farm. Other cases which display this are Pascoe v Turner [1979][9], Griffiths v Williams (1977)[10], and Re Basham [1986][11]. Active assurance is seen in the late case of Inwards v Baker [1965][12] where a father encouraged his son to build a bungalow on the land. Passive assurance however is where the claimant is mistaken in their belief of gaining interest in land while the owner does nothing, this will amount to an estoppel as seen in Scottish and Newcastle Plc v Lancashire Mortgage Corp Ltd [2007] [13].One of the major issues which lead to failure of proprietary estoppel in Cobbe was that of passive assurance by the owner. In this case the claimant and a landowner had an informal agreement to which Cobbe obtained planning permission for the development of the owner’s land. Under the informal deal, the owner would later sell the land to Cobbe at a calculated amount so that he would profit on the increased value of the land as result of the planning permission being granted. The agreement was not binding, it was more of an ‘informal gentleman’s agreement’. After Cobbe obtained the planning permission, the landowner refused to proceed with the ‘promised’ transfer. The claimant then claimed the land by proprietary estoppel but the court refused to allow it. Lord Scott said that the claimant acted on a hope or a gamble, instead of an expectation or mistake to his rights; that assurance should be clear and unambiguous. His reasoning behind this is because it was a commercial agreement, both parties would have known that the proper formalities to enforce such was not sufficed by their negotiations. The assurance that the owner would act in a certain way would not necessarily be enough in a commercial context. However, where there is a genuine expectation in a commercial case, the claim would succeed. In Crabb v Arun DC [1976][14] claimant was assured that their council would build an easement to their land, so that the land can be divided and sold separately without leaving one part of the land landlocked. The council erected a fence with an opening for the assured easement to confirm their intentions. No formalities were met. The claimant relied to his detriment, leaving his land landlocked on the assurance to sell part of his land. The council later filled the gap and demanded £3000 for the easement to be erected. In this case the council was estopped from refusing to build easement because any sum that could have reasonably been demanded for the cost of construction was set-off against the detriment suffered by the claimant; the net cost being £0, with the Council being required to construct the easement. Consequently, where a proprietary estoppel claim is recognised, the court will evaluate the extent of the equity created and how best to satisfy it, even if it means enforcing an agreement declared void by statute. The judgement of Crabb was confirmed in Yaxley v Gotts & Anor [1999].[15]The difference between these two cases is the establishment of a definite assurance, whereas in Cobbe it was a hope or an expectation. Moving away from commercial examples of the success of assurance in proprietary estoppel, the courts are keener to permit agreements statutes declared void if it is by means of family or informal agreements. This is because the claimants who suffered loss may not have had the sufficient capacity to understand that certain formalities should have been put into place for their benefit. There is a predominance of agriculture related cases surrounding this topic. In Thorner v Major [2009] [16]the claimant worked without pay on their cousin’s farm for 40 years on the understanding that they would inherit the farm eventually. This case established that there was no need to have a mistake on the claimant, only that of a belief on the existence of the right. Essentially, the claimant should’ve believed that there is an interest in the land that the owner was committed to creating. Judgements in Thorner was then followed by Clarke v Corless [2010][17] and Gill v Woodall [2010][18] Comparing Thorner and Cobbe, one may notice that there is considerable contradiction between the two since Thorner appears to signify a departure from the restrictive approach to proprietary estoppel established by Cobbe. Nevertheless, in Thorner, Lord Scott didn’t clearly abandon the views he voiced in Cobbe and, indeed, made certain observations on the relationship between proprietary estoppel and 'the remedial constructive trust'. One of the major issues arisen is that of certainty. Lord Walker, Rodger and Neuberger all described the facts of the case as unusual due to the oblique nature of the representation. The issues relating to certainty raised was by Lloyd LJ was whether there was a promise by defendant or a mere statement of current testamentary intention, whether the promise was necessary and should the claimant believed the promise to be legally binding on the defendant. One of the main difficulties arising is that while one may feel sympathy for a trusting claimant in the family context, it would not be acceptable to provide the same remedy to an experienced property developer such as Cobbe. He simply would have known that it was not a legally binding commitment. After considering the cases of Cobbe and Thorner, one would raise the question as to why Cobbe failed but Thorner succeeded. While the temptations exist to rely on the labels of ‘commercial and ‘domestic’, they are not sufficient explanations. The factual limit between 'commercial' and 'domestic' cases is far from secure and requires an explanation, by reference to principle, of the precise features of the two sets of cases which are to be regarded as justifying differential treatment. The decision in Cobbe itself can be reconciled with Thorner on the basis that the promise in Cobbe was insufficiently certain in a different way, in that it was to enter into an agreement in relation to the sale of the disputed land on terms which remained to be agreed fully (and which could not be settled by the courts by reference to any past pattern of dealings between the parties). Cases which followed Thorner show that the strict approach in Cobbe is not always enforced.[19] Other factors of assurance are that it must relate to an interest in land or property[20], it must not be achieved by dishonesty[21] and that innocent misrepresentation is still assurance, however the innocence of the owner would be examined to assess equity[22]. In hopes that detrimental reliance is established by the court to render the owner’s conduct as unconscionable, the detriment must essentially result from reliance on the mistake or assumption[23] or expectation (informal and domestic only), however, assurance does not need to be the sole reason they act to their detriment.[24] To drastically change their position, a claimant should act to their detriment.[25] Cases such as Dillwyn v Llwelyn [26]and Voyce v Voyce [1991] [27]show detrimental reliance due to expenditure of money on building or to improve land. However, in Coombes v Smith [1986] [28]there was no proprietary estoppel because there was no real assurance, she was expected to live there till the child became 18, due to a non-financial detriment, it was more problematic to establish equity, while obiter in Maraj v Chand[29], a woman giving up her home to live with a man who promised her a home is detrimental reliance, thus her receiving proprietary rights. However, it depends on individual circumstances. For detrimental reliance to succeed the owner should have directly encouraged or acquiesced in what the claimant had done, however the owner does not necessarily have to know exactly what the claimant is doing in reliance general knowledge suffices. The last question asked before awarding proprietary rights due to all the factors being satisfied is that of unconscionability. The following seeks to settle the issues arising out of Lord Scott’s statement, whether proprietary estoppel can enforce an agreement that statute declares void. As seen in the cases analysed, the courts often use their discretion in the decision of awarding proprietary rights as remedies. This does not necessarily mean that they will all the time, they may also award licences, cash and sometimes even nothing. An often misconception is that proprietary rights are estoppels; proprietary estoppel gives rise to an equity[30], for this equity to be binding it would need to be protected by law using the accurate formalities. Under Registered land a s.32 Notice LRA 2002 would be applied or if the claimant is in actual occupation, an overriding interest under Schedule 3 paragraph 2 LRA 2002 would be applied. As seen in Baker v Baker [31]the claimant cannot be awarded more than what is expected, although sometimes it does.[32] The courts often use two approaches in deciding remedies, the expectation approach and the detriment approach. The expectation approach is more seen in business cases[33] and should have been seen in Cobbe if judgement was different, whereas, detriment approach is utilized in family cases. In Crabb it was noted that the claimant would not necessarily get what they expect. As established in Jennings v Rice[34], one of the leading cases on remedies, the expectation and detriment should be proportionate, thus, assuming the expectation is present, spending £10,000 on someone else’s property isn’t detrimental, while spending £10,000 of life savings on property is detrimental. Although the judgement in Cobbe is still currently followed in recent cases such as Micheal v Phillips [2017][35] and Achom and others v Lalic and others - [2014][36] there is a clear line which is drawn to separate where equity does not step in to enforce an agreement void by statute. The mere definition of proprietary estoppel, is it “allows an informal arrangement to be enforced and proprietary rights to be acquired without complying with the formalities”. It can be agreed that contrasting Cobbe and Thorner clearly displays this, where a commercial party (which is aware that the agreement is void at law due to experience and knowledge) act on an expectation or hope instead of direct assurance, equity does not favour them. Few may prejudice the unfairness for commercial parties who would have suffered detriment or financial loss however as seen in the case of Cobbe, while they did not get what they expected, they were awarded £150,000 due to quantum meruit. Concluding, Lord Scott’s judgement with regards to Cobbe is that of pragmatism. He acknowledged that holding individuals commercially experienced to the same standard as that in family disputes was not equitable. His statement is only agreed however only with regards to commercial parties attempting to abuse proprietary estoppel for agreements they knew void. [1] (Cobbe v Yeoman’s Row Management Ltd [2008] UKHL 55, [2008] 1 WLR 1752, para 29, per Lord Scott of Foscote.) [2] Dillwyn v Llwelyn [1862]- father offered son a farm in which he can build because he wanted the con close by, the land was not transferred to the son, regardless the son built a home which was encouraged by the father. Father died and relatives challenged the will, however due to the son’s expenditure and the father’s acquiescence, estoppel was established rewarding the son with equitable right to the land. [3] Where the claimant and owner acted in a way that the claimant had a reasonable right to suppose that he had acquired a right in the owner’s land [4] Owner assured claimant that a gift would be made but then tried to rely on lack of formalities to deny gift. [5] Taylor’s Fashions Ltd v Liverpool Victoria Trustees Ltd [1982] QB 133 [6] Habib Bank v Habib Bank AG Zurich [1981] 1 WLR 1265 [7] Lim Teng Huan v Ang Swee Chuan [1992] 1 WLR 1306 [8] Gillet v Holt [2000] 2 All ER 289 [9] Pascoe v Turner [1979] 1 WLR 431 [10] Griffiths v Williams (1977) 248 EG 947 [11] Re Basham [1986] 1 WLR 498 [12] Inwards v Baker [1965] 2 QB 29 [13] Scottish and Newcastle Plc v Lancashire Mortgage Corp Ltd [2007] EWCA Civ 684 [14] Crabb v Arun [1976] [15] Yaxley v Gotts & Anor [1999] EWCA Civ 3006 Court of Appeal [16] Thorner v Major [2009] [17] Clarke v Corless [2010] EWCA Civ 338 [18] Gill v Woodall [2010] EWCA Civ 1430 [19] Clarke v Corless [2010] EWCA Civ 338; Gill v Woodall [2010] EWCA Civ 1430 [20] Layton v Martin [1986] 2 FLR 227 [21] Murphy v Rayner [2011] EWHC 1 [22] Qayyum v Hameed [2009] EWCA Civ 352 [23] Attorney General of Hong Kong v Humphrey's Estate [1987] AC 114 [24] Evans v HSBC Trust [2005] WTLR 1289 [25] Suggitt v Suggitt [2012] EWCA Civ 1140 [26] Dillwyn v Llwelyn [27] Voyce v Voyce (1991) 62 P & CR 290 [28] Coombes v Smith [1986] [29] Maraj v Chand [30] Registered Land: s116 LRA 2002; Unregistered land and pre-LRA 2002 registered land, cases are applied. [31] Baker v Baker [32] Ibid. 14 [33] Ibid 10, 26 [34] Jennings v Rice [35] Micheal v Phillips [2017] EWHC 614 (QB) [36] Achom and others v Lalic and others - [2014] All ER (D) 73 ![]() “The conclusion which I would reach…..is that the wide distinction between the validity test for powers and that for trust powers is unfortunate and wrong, that the rule recently fastened upon the courts by Inland Revenue Commissioners v. Broadway Cottages Trust ought to be discarded, and that the test for the validity of trust powers ought to be similar to that accepted by this House in In re Gulbenkian's Settlements [1970] A.C. 508 for powers, namely, that the trust is valid if it can be said with certainty that any given individual is or is not a member of the class.” Lord Wilberforce in McPhail v Doulton [1971] A.C. 424 at 451 Express trust necessitates the coincidence of the three certainties listed in Knight v Knight[1], lack of such results in the trust being void ab initio. This essay seeks to critically discuss the statement made by Lord Wilberforce in McPhail v Doulton[2], clearly analysing the certainty of objects test for fixed trusts, discretionary (power) trusts and fiduciary trusts (powers of appointment); ultimately concluding that the any given postulant test which states that any given being ‘is or is not’ part of a class isn’t a sensible and pragmatic approach, thus as discussed, isn’t appropriate for power trusts. Per Knight v Knight[3], it was established that there must be a certainty of intention, a certainty of subject matter, and a certainty of objects. Certainty of objects is the most intricate and has undeniably caused the most legal wrangling and debates. At its core is the perception that the court should be able to ascertain the beneficiary(/ies) of the trust, thus, the beneficiary principle operates alongside the certainty of objects. Emphasising this, Lord Denning in Re Vandervell’s Trusts (No. 2) stated, “It is clear law that a trust (other than a charitable trust) must be for ascertainable beneficiaries.” Fixed trusts are constituted by a settlor for a pre-determined class of individuals where each is entitled to a set share, and executed by a trustee for benefit of the beneficiary(/ies). It is imperative that the court can ascertain who the beneficiaries of the trust are at the time of property distribution for there to be a valid fixed trust, this is known as a ‘complete list test’. Conceptual and evidential certainty as to beneficiaries was emphasised in IRC v Broadway Cottages[4]. Conceptual certainty is the ability to define the description of the class with certitude, if it is impossible to compile the ‘complete list test’ then the trust is void. Evidential certainty is the ability to prove that someone is a beneficiary, thus, even if the classification of the object is certain, once there is difficulty proving exactly who the beneficiaries should be, the trust would be void. The courts however have taken both a wide and narrow accommodating approach regarding this. In Re Tuck Settlement Trust[5], the court permitted a third party (Chief Rabbi) to arbitrate the will to ensure that Sir Adolph Tuck’s successors were of Jewish fate. While in Re Wynn[6] the court was reluctant to permit a clause allowing trustees to determine all uncertain elements of the trust. It was established that it was not a requirement for the beneficiaries to be ascertained (location of beneficiary or continued existence); a ‘Benjamin Order’ would permit the trustee to distribute property to the ascertainable beneficiaries while the trustee, however, must provide constructive notice, that is, publishing an advertisement in the London Gazette or another appropriate forum in hopes of locating the unascertainable beneficiaries; if that also fails, the money would go to the crown. There is no evidence that the size of the class is relevant for fixed trusts due to the application of the complete list test. The capriciousness of the settlor has never been questioned with regards to fixed trusts, nor has it ever invalidated a trust. The precedent set in IRC v Broadway Cottages [7]has operated well, allowing the court to endorse more equitable outcomes,[8] discretionary trusts however, have proven to be more contentious. In a discretionary trust, the settlor defines the class, while the trustee must choose who the beneficiaries are and how much property they would be entitled to. Originally the court echoed the approach of the ‘complete list test’ set out in IRC v Broadway Cottages[9] for discretionary trusts, where it was believed that ‘equity was equality’ authorizing the distribution of property equally; however, this was redeveloped under Lord Wilberforce in McPhail v Doulton[10]. In this case, a trust was created via deed for the benefit of employees and ex-employees of a corporation including their relatives and dependants. Applying the ‘complete list test’, it would not have been possible to list all the members of the class, thus, Lord Wilberforce ruled that the operative question was whether the court could’ve said with certainty that a person is or is not a member of the class, on that ground, it was satisfied. This was known as the ‘any given postulant test’ and refers to anyone who may be considered object. Consequently, the validity of the trust relied on whether ‘relatives’ and ‘dependants’ were certain objects. This case was appealed to the House of Lords where it was concluded that the trust was valid[11]. If the trust was not conceptually certain, it would be rendered void. In Re Baden Deed Trusts (No 2)[12] the court recognised that ‘relatives’ and ‘dependants’ were conceptually certain. The semantics of relatives was established as a ‘next of kin’ by Stamp LJ and ‘descendants from a common ancestor’ by Sachs and Megaw LJJ, subsequently, the normal meaning of ‘family’ as seen in Re Barlow Will Trusts[13] was considered as those related by blood; while a dependant is ‘anyone wholly or partly dependant on the means of another’ by Sachs LJ and ‘financially dependent’ by Stamp LJ. Sachs LJ also took into consideration that ‘someone under a moral obligation’ wouldn’t be conceptually certain, while first cousins’ would be. Additionally, Browne-Wilkinson J concluded in Re Barlow Will Trusts[14] that ‘friends’ was not sufficiently certain. While evidential certainty was satisfied by all three judges in Re Baden (No 2)[15], they utilised diverse tests to establish the conclusion. Sachs LJ’s reasoning was preferred, he concluded that the courts would never be defeated by evidential certainty and that the claimant must prove that they are in the class, if they couldn’t prove it, they weren’t in. He said that it was simply a question of fact based on the evidence as to whether a person fell within the class. Megaw LJ stated that it was only necessary to prove that a substantial number of objects fell within the class, and that the trust would be valid even though it could be proved if they were or were not in the class. Lastly, Stamp LJ concluded that evidential uncertainty would defeat the trust. Ascertainability of objects do not invalidate a discretionary trust, inability to ascertain an object simply means that they would not benefit from the trust. Unlike fixed trusts which apply to a smaller class of individuals, discretionary trusts apply to a much larger class, however, where the class is too large, it can be considered administratively unworkable and would thus render the trust void. In R v District Auditor, ex p West Yorkshire MCC[16], it was concluded that ‘the inhabitants of West Yorkshire’ which amounted to about 2.5million persons, invalidated the trust. Subsequently in Re Harding[17], the trust would have been void due to administrative unworkability, if it wasn’t for charitable purposes. Case law sets out multiple examples displaying administrative unworkability, as Lord Wilberforce suggested in McPhail v Doulton that ‘all the residents of Greater London’ is administratively unworkable. Additionally, in Re Hay’s Settlement Trust[18], it was established that a discretionary trust for anyone other than a few specified people would be administratively unworkable. While administrative unworkability exists, it is inconsistent with the intention of the settlor and should be rejected. There is no definite answer as to whether the size of the class would render the trust void. Capriciousness may render a trust void if the settler did not possess sensible intent in establishing the trust. Re Manisty’s Settlement[19] established that if the settlor creates a trust for residents in an area where he has no connection and no reason to benefit then it would be capricious, while in R v District Auditor, ex p West Yorkshire MCC[20], the trust was found to not be capricious because the council had a sensible reason for benefitting West Yorkshire. While it does play a role, no power trust has been made void due to capriciousness. Fiduciary powers or powers of appointment are held by trustees and other fiduciaries. Where powers are appointed, the donor defines the class, but there is no obligation on the donee to distribute to the objects. Re Gulbenkian’s Settlements[21] established that the test for fiduciary powers was the ‘any given postulant test’ as in discretionary trusts, where any given person was or was not part of the class. Conceptual certainty is relevant as applied to fiduciary powers, however there are strict and lenient approaches. In Re Gulbenkian’s Settlements[22], the object included those with whom a person had been residing, this was conceptually certain. While in Re Baden (No 2)[23], it needed a clear definition to be valid. Discretionary trusts and fiduciary powers uses the same test for evidential certainty. Ascertainability of objects do not invalidate a power, this is clearer for powers because there is no obligation on the donor to exercise power. A fiduciary power cannot be struck down for administrative unworkability due to the size of the class. Capriciousness can invalidate a fiduciary power, it would be considered capricious if there is no distinct connection with the donor. Essentially, fixed trusts and discretionary trusts should not have to apply the same test for certainty of objects. The ‘any given postulant test’ which states that any given person is or is not part of a class allows flexibility for the existence of a discretionary trust. Initially, it was believed that ‘equity was equality’, thus all the property on a discretionary trust was to be divided to all the members of the class in equal shares; principally, this may not always be equitable. The current test for a discretionary trust allows trustees to exercise their prudent discretion as to who benefits from the trust and how much they can receive. In some cases, allowing those who were closest to the settlor to benefit the most. It can be argued that true equity exists in a discretionary trust. Contrary, a fixed trust therefore has a more rigorous test for certainty of objects. While in a discretionary trust, the trust may be found void on the grounds of administrative unworkability, a fixed trust with the same objects as the discretionary trust may not be found administratively unworkable because a complete list of all the objects would be drawn up by the time of property distribution. This ultimately prevents the failure of a trust, due to lack of ascertainability and conceptual or evidential certainty of the beneficiaries. Due to resounding similarity between discretionary (power) trusts and fiduciary powers (powers of appointment) one can argue that the same test should be applied for both. Lord Wilberforce, regarded as ‘broken new ground’, stating that even him, a layman and a logician, would find it difficult to understand the difference between trust powers and powers. The essential test for these is already the same, ‘any given postulant test’, the only difference is the administrative unworkability of discretionary trusts. Ability to exercise powers to the world at a whole, other than the limited class would not make the powers void. Powers can be exercised by the donors to anyone they seem fit. Whether the class is large would not prevent the trustee from performing their duty, especially since there is no compulsory responsibility to even perform any duty. However, since a power of appointment is viewed as a gift rather than a trust, it is more flexible at law; it is opined that it should remain that way. Due to the distinction between a trust and a power, the same test for both cannot be applied. A trust is obligatory while a power is discretionary, trusts would require more rigid regulations and tests. To apply the same test for both strips the flexibility of powers, essentially putting regulations on a ‘gift’ that should not be there. One of the fundamental distinctions between a power and a power trust is the capriciousness of the settlor or donor. Similar with a gift, there must be an intention, in this case, for powers, there must be a sensible intent for the donor to benefit the objects. Trust powers and fiduciary powers should therefore have different tests. Lord Wilberforce’s view for power trusts is that it ought to be more like powers and he sought to discard the applicable test that was being used as discussed in IRC v Broadway Cottages. Many have followed the “is or is not’ test over the years for discretionary trusts and it has been applied or mentioned in multiple rulings; Twinsectra Ltd v Yardley (2002)[24] and more recently, Trustees of the Christian Brothers in Western Australia Inc v Attorney General of Western Australia (2007)[25]. It can be disputed that McPhail v Doulton[26], for discretionary trusts has resulted in more heat than light. It has developed nothing more than convoluted reasonings and can be viewed as the unnecessary result of over-explication and the expectation of potential theoretical complications that are more real than supposed; while the reasoning behind the complete list test for fixed trusts is easy to ascertain and defend. The drawn-out, high-level litigation that was generated by Mr Baden’s Deed Trusts[27] could be said to be the outcome of the rapidly increasing size of the fund which fuelled the enthusiasm of the executors to pursue the claim than the product of genuine jurisprudential difficulty arising from the issues in question. After a thorough examination of fixed trusts, discretionary trusts and power trust, it should be concluded that while equality is not equity, something is better than nothing; discretionary trusts and fixed trusts should have the same test applied. A settlor’s intent for choosing a class means that he would’ve wished to benefit everyone in the class. Allowing a trustee to now choose who to benefit, excluding some, may not have been the settlor’s intent. Additionally, applying the same test for power trusts and powers gives the trustee too much flexibility; permitting this allows a trustee to refuse to give the property to anyone in the class, or may open the door to perhaps give the property to themselves, given that the donor included them in the class. Of all the tests, the complete list test is the most certain, it allows the beneficiaries to know exactly what they are to benefit and should be re-applied to discretionary tests. [1] Knight v Knight [1840] Court of Chancery, 49 ER 58 3 Beav 148 (Court of Chancery). [2] McPhail v Doulton [1971] House of Lords, UKHL 1, AC 424 (House of Lords). [3] Knight v Knight [1840] Court of Chancery, 49 ER 58 3 Beav 148 (Court of Chancery). [4] Inland Revenue v Broadway Cottages: CA 26 Jul 1954 [5] Re Tuck’s Settlement Trusts: CA 1 Nov 1977 [6] Re Wynn [1952] [7] Ibid (4) [8] Ibid (5) [9] Ibid (4) [10] Ibid (2) [11] Re Baden’s Deed Trusts (No 2) [1972] [12] Ibid (11) [13] Re Barlow Will Trusts [1979] [14] Ibid (13) [15] Ibid (11) [16] R v District Auditor, ex p West Yorkshire MCC [1986] [17] Re Harding [18] Re Hay’s Settlement Trust [19] Re Manisty’s Settlement [20] Ibid (16) [21] Re Gulbenkian’s Settlements Trust [1970] AC 508 [22] Ibid (21) [23] Ibid (11) [24] Twinsectra Ltd v Yardley (2002) [25] Trustees of the Christian Brothers in Western Australia Inc v Attorney General of Western Australia (2007) [26] Ibid (2) [27] Ibid (11) |
AuthorKarina Samaroo Archives
September 2019
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