3 Certainties

Question 1

What is the first step when considering 3 certainties?

Answer 1

Step 1: Is it a fixed or discretionary trust. A fixed trust expressly does not give any discretion to the trustee to deviate from the description.

Question 2

What is the second step?

Answer 2

The second step is whether there was a certainty of intention to create a trust.

Question 3

What is the certainty of intention looking for?

Answer 3

It’s looking for imperative words that suggest trustee is under an obligation to use the property to benefit the third party.

Question 4

What kind of words do you need?

Answer 4

Even though it’s not necessary for words “on trust “ to be used (Singha v Heer - reference to trust was contradicted by other language), words must be mandatory and a clear significant.

Question 5

What words not suffice?

Answer 5

Precatory words that express mere hope and desire are unable of imposing legal obligation to use the property for the benefit of a third party.

Question 6

What happened in Lambes v Eames

Answer 6

Widow had no binding obligation because precatory words didn’t mean imprint her with trust. Testator didn’t use words with sufficient authority.
“To be at her disposal to way she thinks best for the benefit of herself or her family”

Question 7

What happened in Adams v Kensington Vestry

Answer 7

“In full confidence” that she would do what is right is precatory, no trust created.

Question 8

What happened in Giggles?

Answer 8

In her will, daughter left property and as requested: “it is my desire” for the daughter to allow third party annus of 25 pounds year for rest of life. However precatory words insufficient to require the daughter to hold property on trust

Question 9

What happened in Lies?

Answer 9

Property was left to son with “confidence” that he would make provision for brother and sister. Yet precatory words create only a moral and not legal obligation.

Question 10

What was it held in Lassence v Tierney?

Answer 10

If no certainty of intention, it is a gift to the trustee.

Question 11

What happens if the settlor unsuccessfully declares himself as a trustee?

Answer 11

No title padded passes and the property will remain in the settlor’s estate - Re TXU Europe

Question 12

What is the third step?

Answer 12

Need a certainty of subject matter

Question 13

If the trust is fixed what needs to be shown?

Answer 13

1) There needs to be a clear subject matter
of the trust - i.e. Property
2) There needs to be means of clearly identifying the equitable interests of the beneficiaries, so that shares of the property can be allocated once the trust is established - Curtis v Rippon

Note: if no means, trust will fail because lack of certainty and inability to enforce trust. However, if named, beneficiaries will automatically get all what is left to them

Question 14

Is the trust is discretionary what needs to be shown for certainty of object?

Answer 14

Only need to show clear subject matter, as the beneficial interests are never really certain.

Question 16

What happens if the trust is for only a part of the person’s property?

Answer 16

Determine if it’s tangible or intangible

Question 17

What if it’s tangible?

Answer 17

Segregation of trust property from the remaining bulk is necessary. If there is no method of segregation, trustee will be unable to physically segregate

Question 18

What happened in Re London Wine Company

Answer 18

Wine bought by customers stored in warehouse, but was not separated. At the company’s liquidation the customers were unable to divide bottles that were held on trust for them. No certainty of subject matter meant that the trust failed and creditors could make a claim on the wine

Question 19

If property is intangible, will the subject matter still be clear?

Answer 19

If the subject matter is intangible there is no requirement for segregation because it is impossible and trust will still be valid - Hunter v Moss

Question 20

What happened in Gold Corp v Exchange Limited?

Answer 20

Customers that had bought gold coins from a company, who held coins on trust for them. At liquidation, three categories of customers (whom had beneficial interests in property).

1) Trust was successful for those whose coins had been segregated physically for each customer
2) Gold purchased but not allocated could not be physically segregated meant trust failed as no demarcation meant no certainty of subject matter
3) Individual customer who owed 1000 coins could not identify which coins were his of the 1010 held by the company.

Question 21

Where property can be described as physical mass, what happens?

Answer 21

Where physical mass (half a mass of gold or petrol) is referred to, these can be segregated providing mass is sufficiently identified and beneficiaries proportionate share of it is not uncertain. - Re Lenham Brothers International

Question 22

Where may there be issues with selection mechanism?

Answer 22

Where selection mechanism is no longer possible, beneficial interest will not be able to be determined.

Example: Boyce v Boyce - fixed trust, 2 sisters left 2 houses. One sister had the power to choose one and other sister had remaining house, but died before making the choice. Method of allocation had been prescribed but failed - impossible to say which house she should have.

Question 23

Can you save selection mechanism from failing?

Answer 23

Potentially, as seen in Kapton - beneficiary chose in order written in the will and the rest drew from lots. However, no selection mechanism here was identified.

Question 24

What is a “reasonable income?”

Answer 24

Re Golay’s Will Trusts - Reasonable income can be determined objectively by court, meaning trust not rendered as uncertain. Requires reference to income because court can take into account persons personal circumstances. Income here is constant and therefore is certain. Reference to reasonable share would be impossible for the courts to quantify.

Question 26

What is the fourth step?

Answer 26

There have to be beneficiaries who are certain or capable of being rendered certain, to enforce the trust- Re Endacott

This does not apply to charitable trusts because Attorney General can enforce such public trusts

Question 27

What is the test for fixed trusts?

Answer 27

Complete list test: Trust is void unless every beneficiary is ascertainable - Morice v Bishop of London

Question 27

What happens if beneficiaries cannot be traced?

Answer 27

The trustees can with the court’s approval distribute amongst the known beneficiaries on basis that any new claimant can recover against the other beneficiaries. - Re Benjamin

Question 28

What is the test for Discretionary tests?

Answer 28

Complete test does not apply to discretionary (Mcphail v v Doulton). Test is whether it can be said of the postulant that he is member of a given class. 
Every member has to be part of the class identified in the trust -  Baden's Deed Trust No. 2

Question 29

Where there is a fixed trust that does not expressly declare the beneficial interest to be taken by each beneficiary, what can happen?

Answer 29

Burroughs v Philcox - Where trust is set up to benefit two children but shares unspecified, court can uphold trust by invoking equitable maxim “equality is equity”. Each child would have an equal share. Only valid where there would be no contrary intention - e.g. “Unequally”

Question 30

What is conceptual uncertainty?

Answer 30

This is where the description of beneficiaries is conceptually and evidentially uncertain.

Old friends = CU - Re Barlow
Relatives, dependents = certain: Re Baden’s Deed Trust
Those who helped = held CU: Re Wright’s Will Trust
Deserving relatives = CU because mere guide - Public Trustee v Butler

Question 31

What is administrative unworkability?

Answer 31

McPhail v Doulton - where trust to benefit is too wide to sustain private trust, because objects too numerous, then trust will fail.

Question 32

What is capriciousness?

Answer 32

A trust can be void is capricious, because it reflects non sensical intention that cannot be fulfilled by the trustees.

Example - MCraig v Uni of Glasgow - requests to build monuments in memory of settlor at great cost and in absurd manner failed on other grounds, but could be void on basis of Capraciousness

Question 33

What are the consequences of lack of certainty of object?

Answer 33

If settlor is trustee then nothing will happen, it will not leave estate of settlor. If trustee is third party, property will be held upon resulting trust for settlor