Formative Assessment

Equity and Trusts Answer and Feedback

STUDENT ANSWER
According to Peter Creighton, the case of McPhail v Doulton restored much needed clarity with
regards to the level of conceptual and evidential certainty necessary in determining objects of
discretionary trusts. However, it also introduced another aspect of certainty for objects in the
form of administrative workability. This essay explores the development of this concept, the
wide misunderstanding surrounding its purpose and juxtaposes it against the necessity for the
concept.
In its initial iteration by Lord Wilberforce in the case of McPhail v Doulton, administrative
unworkability is described to be a situation where the definition of beneficiaries is “hopelessly
wide”. Determining what was meant by the term “hopelessly wide” in this context sparked quite
some academic debate due to its ambiguous nature. The phrase “all residents of Greater
London”, which Lord Wilberforce used to demonstrate his point, is conceptually and evidentially
certain. At first blush, therefore, it would seem that Lord Wilberforce is referring to the
hopelessly large size of the class as it is likely the resident count would be in the millions.
The only reported case where a trust failed for administrative unworkability, that of R v District
Auditor, ex p West Yorkshire Metropolitan County Council seems to reinforce this conception of
administrative unworkability. In this case, a trust to benefit “any or all or some of the inhabitants
of the County of West Yorkshire” was deemed to be administratively unworkable because, as
elaborated by Lloyd LJ, “a trust with as a many as two and a half million potential beneficiaries
is,... quite simply unworkable. The class is far too large...”.
However, it must be considered at this point that both the case of R v District Auditor, ex p West
Yorkshire Metropolitan County Council and McPhail v Doulton concerned discretionary trusts.
Drawing an analogy from the writings of Matthew Heresy, although it may be a logical
proposition that where trust assets are to be distributed in equal shares, all the beneficiaries
must be identified, this proposition is not supported by authority. The case of Re Baden (No.2)
returned the requirement of evidential certainty in discretionary trusts of the McPhail-type to
satisfying the is-or-is not test. Simply put, a discretionary trust will not fail solely because there
can be no complete list of beneficiaries drawn. In such a situation, why is it detrimental to
discretionary trusts that a “hopelessly wide” class where a complete list of potential beneficiaries
is conceptually difficult to conjure should fail?
As is clear from Lord Wilberforce’s comparison in the case of McPhail between the class of
residents of Greater London (which would be administratively unworkable), and relatives of a
living person (which would not fall within this category), the problematic width of the class is
not attributable to the number of potential beneficiaries. This is because numerically speaking,
as pointed out by Penner, the number of individuals who could be deemed as a relative of a
living person may well exceed the potential beneficiaries in the class of residents of Greater
London. More importantly, as McKay points out, acceptance of the size of the class as reason for
administrative unworkability would have “disruptive effects on previously decided cases and the
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spirit and intention of the case from which the principle was created”. Therefore, it is clear that
Lord Wilberforce did not refer to the size of the class alone and the misconception that
administrative unworkability pertains solely to numerically large class must be abandoned.
What then is the reason for this concept of administrative workability? In answering this
question, it is worth considering Stamp LJ’s judgement in the case of Re Baden (No.2). Here, he
made clear that even where a complete list of beneficiaries did not need to be prepared for
discretionary trusts, there remained a rights and corresponding duty relationship between the
class of beneficiaries and the trustee. Therefore, although it can be conceptually and evidentially
possible to determine a class of individuals as being residents of Greater London, the onus
cannot be solely on the class of beneficiaries to present themselves as being part, or conversely
not part of, the class. The trustee has a duty to survey the class of beneficiaries to determine who
the settlor intended to benefit through the trust mechanism. Returning to the Lord Wilberforce’s
example, should a discretionary trust be created for residents of the Greater London area, all said
residents are as a result entitled to the right to be surveyed by the trustee.
Against this background, the merit of the concept can be appreciated as ensuring trustees to
discretionary trusts are able to effectively survey the class of beneficiaries and discharge their
trust obligations without unfairly enriching or withholding trust assets from beneficiaries. David
Wilde suggests that based on the writings of CT Emery and Swadling, administrative workability
serves to ensure that where there is a larger class of beneficiaries, the settlor’s classification
provides a smaller, core class that the trustee can manageably distribute the trust assets to.
However, as observed by Penner, this justification of the concept has not been supported by any
judicial decision. Alternatively, a more practical explanation behind the requirement of
administrative workability is provided by Lord Reid in Re Gulbekian. He proposes that a trust is
administratively workable where the class of beneficiaries is at a size that would result in the
trustee expensing reasonable enquiries and cost in carrying out their duties.
Although the situation is relatively clear as it pertains to discretionary trusts and the issue of
administrative unworkability does not arise in fixed trusts, what must be considered is the
impact of this concept on powers of appointment. Megarry VC in Hay’s Settlement Trust rejected
the view in Blausten v IRC that intermediate trusts should be subject to the concept of
administrative workability and that the initial iteration of the concept was aimed at discretionary
trusts and not powers. However, as pointed out by Nigel P Gravells, the developments in the
exercise of fiduciary powers brought about by the case of Mettoy Pension Trustees v Evan may
mean that the sufficient certainty of objects required here also includes the test of
administrative workability.
In said case, a new category of powers, called fiduciary powers in the full sense, required the
donee to exercise his discretion. Where he failed, the courts were allowed to intervene in the
exercise of the of the power; either by appointing new trustee-donees, authorising the
beneficiaries to prepare a scheme of distribution or the courts itself were entitled to order a
distribution. By ostensibly removing the distinction between this category of powers and
discretionary trusts, it would only be fair and reasonable if fiduciary powers are also subject to
the requirement of administrative workability. However, it must be noted that as Megarry VC
points out in Hay’s, even donees of mere powers have the responsibility to consider the range of
objects of the power. If the justification behind administrative workability is ensuring that the
decision maker, in exercising his discretion, is able to adequately survey the class of potential
beneficiaries and make an informed decision, shouldn’t donees of mere powers be subject to
the same requirement; should they choose to exercise their power?
Perhaps in considering the erosion of the trust/power distinction, it would be helpful to examine
a completely different justification to the requirement of administrative workability as proposed

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by Harpum. He interprets this test as means to ensure that trusts intended to benefit a purpose
cannot masquerade as a trust for private persons, further cementing the adherence to the
beneficiary principle. Templeman J in Blausten V IRC drew the connection between the concept
of administrative unworkability and capriciousness as where the power conferred is one
“negative of any sensible intention on the part of the settlor”. Using the case of Brown v Burdett,
we can extend this further as not merely being a case where there is no sensible intention on the
part of the settlor, but where the intention was not one meant to benefit any individual. Even in
said case, there was a clear, sensible intention on the part of the testatrix that her property
should be bricked up to be kept empty. The issue was merely that this was a trust for a purpose,
and not for any persons.
In the same vein, where individuals decide to benefit an entire county or neighbourhood, it
seems more that the power or trust is intended for the benefit of the locality and not the
individuals inhibiting it. As such, it should be subject to the requirements and scrutiny of
charitable trusts. Here, the test of administrative workability, if applied to powers, assists in
preventing powers of appointment as being a conduit for individuals to avoid the beneficiary
principle that trusts are subject to.
Therefore, whilst a test born of ambiguity and a seemingly additional requirement to an already
complex process, the importance of the concept of administrative unworkability in ensuring the
effective execution of trusts and preserving central doctrines to the law of trusts must be
appreciated.

EXAMINER FEEDBACK
Student mark: 72

Strengths
You have researched the area very well and this is a well planned, well argued essay - which is
strengthened by excellent use of both case material and secondary sources. Well written -
succinct and to the point. You have reached our own conclusion, and it is a good one, based on
good argument and sound use of material. Well done! You can really be proud of this work...

Areas for improvement

I would just like you to be a little more careful with detail - it will strengthen your profile as not
merely a (just got there) first class student, but a good (solid) first class:
eg
1. According to Peter Creighton, the case of McPhail v Doulton restored much needed
clarity with regards to the level of conceptual and evidential certainty necessary in
determining objects of discretionary trusts
Restored? given that this is the first case which changes the certainties rule for discretionary
trusts..is this really the right way to express the legacy of McPhail? It's a poorly constructed
introduction and, frankly, it did not lead me to expect the level of work you went on to produce
in the rest of the essay. With secondary commentaries it is always useful to note the date of
publication: it gives you a timeline and often explains why writers take a particular approach
(what case authority are they working with?).
2. juxtaposes it against the necessity for the concept.
Poor expression - rewrite the sentence with better clarity.

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3.“all residents of Greater London”, which Lord Wilberforce used to demonstrate his point,
is conceptually and evidentially certain
I find it difficult to accept that 'residents' are conceptually and eventually certain... just think
about it. Try and write a simple definition of resident that we could all agree to - it is much more
difficult than you imply/assert. Just as I find this argument very moot (despite the authority of
Penner!):
as pointed out by Penner, the number of individuals who could be deemed as a relative of
a living person may well exceed the potential beneficiaries in the class of residents of
Greater London
Really?? did you think about this or just accept his assertion?

Other Comments
A small thing but it looks good, follows convention and helps you learn/remember and cite
authority: always put case names in italics and always add the date as well. This helps you to
remember and use a timeline in case development. For the same reason remember to write the
date of a publication, it usually comes in brackets after the name of the author eg Jones (2002) ...
I wonder whether it occurred to you that, rather than being a concept, admin.work. is more like a
'guideline'? A way of doing something - which is actually about reaching a decision, rather than
what the decision is. In this framing, what is interesting about it is that it draws on administrative
law - bringing in ideas initially developed in public law thinking into private law. And then note
how admin. work. has helped the courts to begin to trace a limit...when object trusts slip over
the line into purpose trusts. It is really a fascinating area - especially when you begin to link it in
to the beneficiary principle and re Denley etc
So - tidy up the lose edges and go for it...good luck!!!!

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