OT Computers Ltd v First National Tricity Finance Ltd [2003] EWHC 1010 (Ch) is a significant commercial case on certainty of objects, particularly the application of the “complete list test” for fixed trusts in an insolvency context.
Facts of the Case
As the directors of OT Computers Ltd realised the company was facing imminent insolvency, they sought to protect certain funds from the general pool of assets available to creditors. They instructed their bank to open two separate trust accounts:
- One for the repayment of customer deposits.
- One for money due to the company’s “urgent suppliers”.
Legal Issue
Whether these arrangements satisfied the “three certainties” for a valid express trust, specifically certainty of objects. As intended fixed trusts (shares not at the trustees’ discretion), they were subject to the complete list test, requiring the trustees to identify every beneficiary.
The Decision
- The customer account: held valid. The objects (“customers”) were sufficiently certain to identify and list.
- The “urgent suppliers” account: held void. The term “urgent” was too conceptually unclear to satisfy certainty of objects.
Judicial Reasoning
- Complete list test: for a fixed trust, the trustees must be able to draw up a comprehensive and finite list of each beneficiary.
- Conceptual uncertainty: with no precise, objective definition of an “urgent” supplier, it was impossible to determine who was included.
- Administrative failure: without a complete list, the trustees could not perform their duty to distribute, as each “urgent supplier’s” entitlement could not be calculated.
Legal Significance
The case reinforces the strict nature of the complete list test for fixed trusts. While the court will assist with ascertainability (finding a known beneficiary), it cannot save a trust where the definition of the beneficiaries is conceptually vague. The “urgent suppliers” money was therefore unprotected and became part of the general assets shared among creditors.