3 Certainties Flashcards
(32 cards)
What is the first step when considering 3 certainties?
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.
What is the second step?
The second step is whether there was a certainty of intention to create a trust.
What is the certainty of intention looking for?
It’s looking for imperative words that suggest trustee is under an obligation to use the property to benefit the third party.
What kind of words do you need?
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.
What words not suffice?
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.
What happened in Lambes v Eames
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”
What happened in Adams v Kensington Vestry
“In full confidence” that she would do what is right is precatory, no trust created.
What happened in Giggles?
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
What happened in Lies?
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.
What was it held in Lassence v Tierney?
If no certainty of intention, it is a gift to the trustee.
What happens if the settlor unsuccessfully declares himself as a trustee?
No title padded passes and the property will remain in the settlor’s estate - Re TXU Europe
What is the third step?
Need a certainty of subject matter
If the trust is fixed what needs to be shown?
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
Is the trust is discretionary what needs to be shown for certainty of object?
Only need to show clear subject matter, as the beneficial interests are never really certain.
What happens if the trust is for only a part of the person’s property?
Determine if it’s tangible or intangible
What if it’s tangible?
Segregation of trust property from the remaining bulk is necessary. If there is no method of segregation, trustee will be unable to physically segregate
What happened in Re London Wine Company
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
If property is intangible, will the subject matter still be clear?
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
What happened in Gold Corp v Exchange Limited?
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.
Where property can be described as physical mass, what happens?
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
Where may there be issues with selection mechanism?
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.
Can you save selection mechanism from failing?
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.
What is a “reasonable income?”
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.
What is the fourth step?
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
