The dictionary approach is based on the notion that the settlor may adopt a definition of the class or classes of objects specifically in a clause in the trust instrument. The effect is that there is likely to be little doubt as to the category of objects intended to benefit, for example, the settlor may give the trustees a discretion to distribute in favour of such of my ‘old friends’ as they may decide. He may then define the expression ‘old friends’ in any way he considers appropriate. In this way, the class of objects which would otherwise have failed may be rescued by the settlor. A variation on this theme entitles the settlor to appoint a third person (or trustee) as sole arbiter of the definition of the class of objects and perhaps all issues incidental to the exercise or non- exercise of the discretion. This approach was sanctioned by the Court of Appeal in Re Tuck’s Settlement Trusts.
Re Tuck’s Settlement Trusts [1978] Ch 49, HC
Facts
Sir Adolf Tuck, the first baronet, made a settlement in 1912 with the intention of ensuring that each baronet in succession would marry an ‘approved wife’. The settlement provided for the payment of income to the baronet for the time being so long as he should be of the Jewish faith and married and living with an ‘approved wife’. An ‘approved wife’ was identified in the settle- ment as ‘a wife of Jewish blood by one or both of her parents and who has been brought up in and has never departed from and at the date of her marriage continues to worship according to the Jewish faith’. The settlor then added an arbitration clause to the effect that ‘. . . the decision of Chief Rabbi in London . . . shall be conclusive’. Sir Adolf died in 1926. He was succeeded by his eldest son, Sir William Tuck, who married an approved wife. Sir William died 1954 and was succeeded by his eldest son, Sir Bruce Tuck. Sir Bruce first married an approved wife but was divorced in 1964. In 1968, he married a lady who was not an approved wife. The question in issue was whether the limitation was valid or void.
Held
The limitation was not void on the grounds that the restriction created a condition precedent which was not wholly uncertain, and the Chief Rabbi clause constituted a valid delegation of decision making power on the relevant questions of fact in the event of a dispute. The clause was similar to an arbitration clause in contract law:
Lord Denning MR: The dichotomy between ‘conceptual’ and ‘evidential’ uncertainty was adumbrated by Jenkins J in Re Coxen [1948] Ch 747. It is implicit in Lord Upjohn’s speech in Re Gulbenkian’s Settlement [1970] AC 508 and accepted by Lord Wilberforce in Re Baden’s Deed Trusts (McPhail v Doulton) [1971] AC 424. I must confess that I find the dichotomy most unfortunate. It has led the courts to discordant decisions. I will give some relevant instances. On the one hand, a condition that a person shall ‘not be of Jewish parentage’ has been held by the House of Lords to be void for conceptual uncertainty, at any rate in a condition subsequent: see Clayton
v Ramsden [1943] AC 320, and a condition that a person shall be ‘of the Jewish race’ was held by Danckwerts J to
be void for conceptual uncertainty, even in a condition precedent: see Re Tarnpolsk [1958] 3 All ER 479. The reason in each case being that the testator had given no information or clue as to what percentage or propor- tion of Jewish blood would satisfy the requirement.Is it to be 100%, or will 75%, or 50% be sufficient? The words do not enable any definite answer to be given.
On this reasoning the condition in the Tuck settlement that an ‘approved wife’ should be of ‘Jewish blood’ would seem to be afflicted with conceptual uncertainty.
There is another distinction to be found in the cases. It is between conditions precedent and conditions subsequent. Conceptual uncertainty may avoid a condition subsequent, but not a condition precedent. I fail to see the logic of
this distinction. Treating the problem as one of construction of words, there is no sense in it. If the words are conceptually uncertain – so as to avoid a condition subsequent – they are just as conceptually uncertain in a condition precedent – and should avoid it also. But it is a distinction authorised by this court in Re Allen [1953] Ch 810 and acknowledged by Lord Wilberforce in Blathwayt v Baron Cawley [1976] AC 397 [emphasis added].
I deplore both these dichotomies, for a simple reason and a good reason. They serve in every case to defeat the intention of the testator or settlor. The courts say: ‘We are not going to give effect to his intentions – because he has not expressed himself with sufficient distinctness or clearness.’
How is any testator or settlor to overcome these legal difficulties? Sir Adolf Tuck in this settlement said: ‘Let any dispute or doubt be decided by the Chief Rabbi.’ That seemed to him a good solution, and it seems a good solution. The Chief Rabbi should be able to decide – better than anyone else – whether a wife was ‘of Jewish blood’ and had been brought up ‘according to the Jewish faith’ . . . I see no reason why a testator or settlor should not provide that any dispute or doubt should be resolved by his executors or trustees, or even a third person. To prove this, I will first state the law in regard to contracts. Here the general principle is that whenever
persons agree together to refer a matter to a third person for decision, and further agree that his decision is to be final and binding upon them, then, so long as he arrives at his decision honestly and in good faith, the two parties are bound by it.
They cannot reopen it for mistakes or errors on his part, either in fact or law, or for any reason other than fraud or collusion . . . Such an agreement (to abide by the decision of a third person) does not oust the jurisdiction of the courts. It only offends when the parties go further and seek by their agreement to take the law out of the hands of the courts and put it into the hands of a private tribunal without recourse to the courts in case of error of law . . . If the appointed person should find difficulty in the actual wording of the will or settlement, the executors or trustees can always apply to the court for directions so as to assist in the interpretation of it. But if the appointed person is ready and willing to resolve the doubt or difficulty, I see no reason why he should not do so. So long as
he does not misconduct himself or come to a decision which is wholly unreasonable, I think his decision should stand . . .
But still the testator may even today think that the courts of law are not really the most suitable means of deciding the dispute or doubt. He would be quite right. As this very case shows, the courts may get bogged down in distinctions between conceptual uncertainty and evidential uncertainty: and between conditions subsequent and conditions precedent. The testator may want to cut out all that cackle, and let someone decide it who really will understand what the testator is talking about: and thus save an expensive journey to the lawyers and the courts. For my part, I would not blame him.I would give effect to his intentions . . . So it comes to this: if there is any conceptual uncertainty in the provisions of this settlement, it is cured by the Chief Rabbi clause [emphasis added].
Note
This approach is objectionable on the ground that the relevant clause is arbitrary in effect. There is a limit to the extent to which a settlor or testator may ‘rescue’ a class of objects. If the class of objects is incapable of definition, no arbitrator would be capable of applying a rational definition of the class. Moreover, it was declared in Re Coxen that it is not open to the testator or settlor to
adopt the trustees’ opinion as the criterion to determine the objects of the mere power or trust power without clear guidance in the first place as to the class or classes of objects.
Re Coxen, McCallum v Coxen [1948] 1 Ch 747, HC
Facts
A testator devised a dwelling house to his trustees subject to a direction to permit his widow to ‘reside therein during her life, or so long as she shall desire to reside therein’ and specified that ‘if in the opinion of the trustees she permanently ceases to reside therein’ the house would form part of the residuary estate. The question in issue was whether the limitation was valid or void. Held
The restriction was clear and valid:
Jenkins J: It seems to me that so far as definition goes the double event involved in the condition . . . is prescribed with sufficient certainty and precision. I see no reason why a judge of fact should not on any given state of facts be perfectly capable of deciding whether it has or has not happened . . . The circumstance that it may be difficult in this or that state of facts to determine whether the double event has happened or not does not, in my judgment, make the condition bad . . .
I have so far treated the condition as if it was simply in the terms ‘if she shall have ceased permanently to reside’ whereas its actual terms are ‘if in the opinion of my trustees she shall have ceased permanently to reside’. That I think makes a material difference. The opinion of the trustees that the double event has happened, and not simply the happening of the double event, is what brings about the cesser of Lady Coxen’s interest. If the testator
had insufficiently defined the state of affairs on which the trustees were to form their opinion, he would not I think have saved the condition from invalidity on the ground of uncertainty merely by making their opinion the criterion . . . but as I
have already indicated, I think the relevant double event is sufficiently defined to make it perfectly possible for the trustees (as the judges of fact for this purpose) to decide whether it has happened or not, and in my view the testator by making the trustees’ opinion the criterion has removed the difficulties which might otherwise have ensued [emphasis added].
Note
In addition, a dictionary clause has the tendency to oust the jurisdiction of the courts except in cases where the arbitrator has acted in bad faith. Generally, ‘ouster clauses’ are void on public policy grounds: see Re Raven.
Re Raven [1915] 1 Ch 673, HC
Facts
The testator by his will dated 29 September 1911 bequeathed a charitable legacy of £1,000 to the ‘National Association for the Prevention of Consumption’ and directed in his will that ‘if any doubt shall arise in any case as to the identity of the institution intended to benefit, the question shall be decided by my trustees whose decision shall be final and binding on the parties’. There was no society of that name but there was a society incorporated in 1899 whose full name was ‘The National Association for the Prevention of Consumption and other Forms of Tuberculosis’. This association had power to constitute branches, and amongst other branches there was an unincorporated branch whose full name was ‘The Leicester Branch of the National Association for the Prevention of Consumption and other Forms of Tuberculosis’. The testator had been a subscriber to the Leicester branch for some years prior to his death, but had not subscribed to the National Association itself. The legacy was claimed by each of the charities which for this purpose were independent institutions. The trustees of the will and the Leicester branch were keen to allow the trustees to decide the question of the identity of the beneficiary. The National Association, on the other hand, insisted that the court should decide the question.
Held
purported to oust the jurisdiction of the courts. In addition, the legacy was payable to the National Association for extrinsic evidence was not admissible in the circumstances:
Warrington J: In my opinion it is not competent for a testator to confer certain legal rights by giving legacies and at the same time to say that the question whether that legal right is or is not to be enjoyed is not to be determined by the ordinary tribunal – in other words, it is not competent for him to deprive the person to whom that legal right is given of one of the incidents of that legal right; and if necessary I should be prepared to rest my decision upon the ground that the attempt to do so is an attempt to do two inconsistent things. In my opinion the gift of a legacy to a legatee, even if it be of doubtful construction, is in fact a gift to the person who shall be determined to be the legatee according to legal principles, and to give effect to a provision such as the provision which the testator has inserted in his will in the present case is in fact to assert the direct contrary and to say that the gift is not to the person who shall be determined to be the legatee by the courts which administer the legal principles to which I have referred, but to the person who shall be decided to be the legatee by the trustees, who by the will are unfettered and may make their decision upon such grounds as they think fit . . . I think therefore that I can safely decide the point on that ground alone; but I also think that I may and ought to decide it on wider grounds, namely, that it is contrary to public policy to attempt to deprive persons of their right of
resorting to ordinary tribunals for the purpose of establishing their legal rights . . . In the present case, certain rights are
claimed, namely, the right to be treated as a legatee, the existence of which does not depend upon the fulfilment of any condition precedent or upon anything to be ascertained by a prescribed method. It has been attempted to say that the gift is equivalent to a gift to such institution as the trustees shall select. In my opinion that is not the effect of this gift. The gift of this legacy is to a particular institution, and that institution, if it proves its right, is entitled to the legacy and is not in the position of having to fulfil any condition precedent; nor does the right depend on ascertainment by any prescribed method; the right is ascertained by the gift itself. That being so, it seems to me impossible for the testator to qualify that gift by providing that the right to the legacy, the subject of the gift, shall be determined by some tribunal other than that of the country [emphasis added] . . .