Is or is not

The question posed by the court in An application by Hoglie Trustees Limited as trustee of the Larry Robertson Family Trust was whether the Larry Robertson Family Trust (the Trust) was void from inception due to lack of certainty as to the Trust’s objects.

Relevantly section 15 of the Trusts Act 2019 provide that:

As noted by Johnstone J at [7] ” … Certainty as to the objects of discretionary trusts, where the trustees are to have a discretion over the property the beneficiaries are to receive, requires that it be possible to state with “conceptual certainty” that an individual is or is not a beneficiary.”

In McPhail v Doulton the House of Lords abandoned the previous “complete list” test in favour of an “is or is not” test. Lord Wilberforce setting out new test of certainty as “Can it be said with certainty that any given individual is or is not a member of the class.”

In the matter of the Larry Robertson Family Trust the “is or is not test” was not met and the Trust resulted back to the settlor. The explanation for this decision is set out at [14] to [17] as follows:

The circularity of the definition of “Beneficiaries” prevented the terms of the Trust from establishing the necessary certainty of objects.

From the purported trustee’s perspective the issue of costs remains a live matter as Johnstone J was not “persuaded” that an order indemnifying the trustee for its fees was in order at this juncture. For alternative positions in this regard see Ouch and Trustees “fortunate” to be liable for only 50%. Also see Trustees who meddle are not always meddlers.

References:

• An application by Hoglie Trustees Limited as trustee of the Larry Robertson Family Trust [2024] NZHC 2832
• McPhail v Doulton [1970] UKHL 1
• James Anson-Holland “Express trusts” in Law of Trusts (NZ) (online ed, LexisNexis) at [TRU15.01] citing Knight v Knight (1840) 3 Beav 148, 49 ER 58 (Ch).
• Inland Revenue Commissioners v Broadway Cottages [1955] Ch 20 and Re Beckbessinger [1993] 2 NZLR 362 (HC).
• R v District Auditor, ex parte West Yorkshire Metropolitan CC [1986] RVR 24 (also cited as R v District Auditor No 3 Audit District of West Yorkshire MCC, ex parte West Yorkshire MCC [2001] WTLR 785 (QB))
• Davis and McNiece v White [2017] NZCA 585
• Davis v White [2016] NZHC 1626
• Re Merona Trustees Limited [2022] NZHC 724
• Butterfield v Public Trust [2017] NZCA 367