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Trusts > 3 Certainties > Flashcards

3 Certainties Flashcards

1
Q

[ESSAY] Why are the 3 certainties important?

A
  • Knight v Knight (Lord Langdale MR): Needed in creating a trust because express private trust rests on what the settlor/testator intended, so must be tolerably clear what they wanted to achieve
  • Morice v Bishop of Durham (Lord Eldon, Sir William Grant MR): Trust must be sufficiently certain for trustees to be able to administer the trust and, if necessary, for the court to supervise/administer/enforce the trust
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2
Q

How do the 3 certainties affect each other?

A

THEY ARE DISTINCT but uncertainty in one area may affect the others

Mussoorie Bank v Raynor:
‘Uncertainty in the subject of the gift has a reflex action upon the previous words, and throws doubt upon the intention of the testator’

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3
Q

How should the 3 certainties be approached?

A
  • Establish certainty of intention, if possible

* When establish subject matter + object, start with assumption that intention exists

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4
Q

Certainty of Intention: Relevant maxim of Equity and source?

A

Equity looks to the intent rather than the form

Pearson v Lehman Bros Finance: S must have intention to create a trust rather than make a gift; will be judged objectively

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5
Q

CoI: Must ‘trust’ be used?

A

• No
[Re Kayford]
[Paul v Constance]
[Shah v Shah]

• ‘Trust’ may be indicative of intention but not conclusive
[Town Investments v Dept of Environment]

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6
Q

Paul v Constance [1977]

A

[ACTION + ‘AS MUCH YOURS AS MINE’ SUFFICIENT FOR COI for MONEY]

Facts:
• Mr C moved in with Ms P, started joint account with her in Mr C’s name
• Paid £950 from workplace accident into account; both paid joint bingo winnings into account and split a £150 withdrawal
• Mr C told Ms P
• Mr C died intestate; Ms P and Mrs C contested money in account

Held:
• ‘As much yours as mine’ held to be sufficiently indicative of a trust when paired with action

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7
Q

Shah v Shah [2010]

A

[ACTION + ‘I AM AS FROM TODAY HOLDING…’ SUFFICIENT FOR COI for SHARES]

Facts:
• Appellant signed letter that disposed of shares to his brother, delivered it with signed stock transfer form but w/o share certificate
•Letter stated: ‘…I am as from today holding 4,000 shares…for you’, referenced as a ‘declaration’

Held:
•App’s action of delivering stock transfer form and wording of letter indicated intent to declare trust, rather than make a gift

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8
Q

CoI: Are casual conversations sufficient?

A

No
[Jones v Lock]
[Richards v Delbridge]

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9
Q

Jones v Lock [1865]

A

[WORDS W/O ACTION INSUFFICIENT FOR COI for MONEY]

Facts:
• Father gave baby a cheque, saying ‘I give this to baby; it is for himself and I am going to put it away for him’
• Locked cheque in safe without endorsement and died 6 days later

Held:
• Words insufficient; father appeared to intend outright transfer instead of trust
• Without endorsement, no appearance of intending trust also

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10
Q

Richards v Delbridge [1874]

A

[WORDS W/O ACTION INSUFFICIENT FOR COI for PROPERTY]

Facts:
• Mr R wanted to hand business to Mr E, endorsed a short memorandum on the lease of the business premises
• ‘This deed and all thereto I give to Edward from this time forth with all stock in trade.’

Held:
• Words insufficient; assumed intent to outright gift because no expressions or actions that suggest trust declaration

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11
Q

CoI: Are precatory words sufficient?

A

Precatory:
• ‘confidence’, ‘hope’, ‘desire’, ‘belief’, etc.
• Usually insufficient to show CoI; indicate only moral obligation

[Lambe v Eames]
[Adams v Kensington Vestry: ‘in full confidence’]
[Re Diggles: ‘it is my desire that’]
[Re Hamilton: ‘I wish that’]

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12
Q

Lambe v Eames [1871]

A

[COURTS WILL BE RELUCTANT TO IMPOSE TRUST WHERE WORDS UNCLEAR (COI)]

Facts:
•Husband left property to widow ‘to be at her disposal in any way she MAY think best for the benefit of herself and her family’
• Widow gave money to non-family

Held:
• No trust

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13
Q

CoI: What will the court consider, aside from wording?

A

Court will consider whole document and circumstances surrounding it
[Adams v Kensington Vestry // Comiskey v Bowring-Hanbury]
[Burrough v Philcox: General intention to benefit nieces/nephews/their children inferred]

AND S’ competency
[Re Weekes’ Settlement: Deemed competent enough to be able to purposefully create trusts over some property and not others]

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14
Q

Adams v Kensington Vestry [1884]

A

[COI AND PRECATORY WORDING; CONSIDER WHOLE DOCUMENT]

Facts:
• ‘unto the ABSOLUTE use of my wife, IN FULL CONFIDENCE that she will do what is right as to the disposal thereof between my children either in her lifetime or by will after her decease’

Held:
• Not a trust, more absolute gift

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15
Q

Comiskey v Bowring-Hanbury [1905]

A

[COI AND PRECATORY WORDING; CONSIDER WHOLE DOCUMENT]

Facts:
• ‘IN FULL CONFIDENCE that she will make such use of it as I should have made myself and that at her death she will devise it to such one or more of my nieces as she may think fit and IN DEFAULT OF any disposition by her thereof by her will or testament, I HEREBY DIRECT that all my estate will be equally divided among the surviving nieces’

Held:
• Trust, intention to leave to nieces clarified by explicit ‘gift over’ (‘in default of’ and ‘I hereby direct’)

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16
Q

Re Steele’s Will Trust [1948]

A

[USING PRECEDENT MAY BE SUFFICIENT TO SATISFY COI, UNLESS EARLIER DECISION CLEARLY WRONG]

Facts:
• Trust written specifically using old precedent from Shelley v Shelley, where a valid trust was upheld
• Trust prepared with professional help, and Shelley had stood for 80 years

Held:
• Intention in using precedent evidenced intention to form trust

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17
Q

CoI: What happens when CoI fails?

A

• If property transferred to another, then that person will take ABSOLUTELY
[Lambe v Eames]

• Otherwise, owner STAYS absolute owner
[Jones v Lock: Part of father’s estate]

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18
Q

Certainty of Subject Matter: Basis?

A

Trust must exist over specified and identifiable property
[Pearson v Lehman Bros Finance]

So that courts can enforce/supervise the trust
[Morice v Bishop of Durham]

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19
Q

CoSM: Where are common areas of uncertainty?

A
  • The Property

* Respective entitlement of beneficiaries [Boyce v Boyce: What share of trust property should each beneficiary get?]

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20
Q

CoSM: What if there is uncertainty with subject matter?

A

Courts usually cannot uphold a trust
[Palmer v Simmonds]
[Sprange v Barnard]
[Boyce v Boyce]

But courts can uphold a trust if property can be reasonably determined
[Re Golay’s Will Trusts]

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21
Q

Palmer v Simmonds (1854)

A

[‘BULK’ TOO UNCERTAIN for PROPERTY]

Facts:
• Settlor wanted to create trust over her property and ‘LEAVE THE BULK OF my said residuary estate’ to named people

Held:
• Sir RT Kindersley: Because court could not be sure which parts of residue were meant to be on trust, trust failed
• ‘bulk’ too uncertain

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22
Q

Sprange v Barnard (1789)

A

[‘REMAINING PART OF WHAT IS LEFT’ TOO UNCERTAIN for MONEY]

Facts:
• Testator left money to Sprange ‘for his sole use and at his death, the REMAINING PART OF WHAT IS LEFT that he does not want for his own wants’ to be divided amongst her siblings

Held:
• Trust failed for lack of certainty of trust property – no ID’able property
• Sprange took money as an outright gift

23
Q

Boyce v Boyce (1849)

A

[NO CoSM WHERE SUBJECT OF GIFT IS UNCERTAIN]

Facts:
• Testator left 2 houses on trust for his daughters; Maria was to choose before Charlotte
• M died before making a choice

Held:
•Without M’s choice, no certainty about which property was the subject of the gift for C; gift failed

24
Q

Re Golay’s Will Trusts (1965)

A

[WHERE SM of BENEFICIAL INTEREST IS UNCERTAIN, COURT MAY USE OBJECTIVE YARDSTICK TO PASS GIFT]

Facts:
• Testator’s will directed executors to gift a ‘reasonable income’ from his properties to a friend

Held:
•Court could use an objective yardstick wrt testator’s standard of living to determine what ‘reasonable income’ meant; gift did not fail for uncertainty

25
Q

CoSM: What is the requirement for SM to be seen as part of a larger whole?

A

• If property is tangible, the specific part must be distinguishable from the whole
[Re London Wine]
[Re Goldcorp Exchange]

26
Q

Re London Wine [1986]

A

[TANGIBLE PROPERTY MUST BE DISTINGUISHED FROM THE BULK FOR CoSM for PROPERTY TO BE SATISFIED]

Facts:
• Wine was sold to customers before company went into receivership (placed with a 3rd party because of financial distress, like a mortgage)
• Bottles for each customer had not been separated from the bulk nor specifically allocated to customers

Held:
• Customers had no proprietary right over the wine previously sold to them

27
Q

Re Goldcorp Exchange [1994]

A

[TANGIBLE PROPERTY MUST BE DISTINGUISHED FROM THE BULK FOR CoSM for PROPERTY TO BE SATISFIED]

Facts:
• Gold bullion sold to and held for customers
• Company became insolvent before delivery

Held:
• Trust over gold bullion upheld where the gold bullion had been separated from the bulk for the customers

28
Q

CoSM: Tangible vs Intangible property?

A

Tangible property must be distinguished from the bulk stock as being held for another; no need for intangible property
[Re Harvard Securities: Tangible and intangible properties are different]
[Hunter v Moss]

29
Q

Hunter v Moss [1994]

A

[FOR CoSM for INTANGIBLE PROPERTY, NO NEED CLEAR DIVISION]

Facts:
• Settlor held 950/1000 shares in company and made declaration of trust over 5% (50/950) of it
• Did not distinguish particular shares to be held on trust

Held:
• Trust upheld as valid – shares were of single class and in one company so all the same
30
Q

CoSM: What are the 2 ways to see how intangible property satisfies CoSM?

A

A) Settlor holds 5% of shares for beneficiary
- Need to ID at some point the 10 shares in which the beneficiary had interest

B) Settlor holds 100% of shares for himself and beneficiary, with 5% of each to beneficiary
[Pearson v Lehman Bros, affirming White v Shortall: Co-ownership analysis]
- No need to ID particular assets

31
Q

CoSM: What is the co-ownership analysis?

A

PEARSON V LEHMAN BROS [2010]

If settlor holds 100% of shares for himself and beneficiary, with 5% of each to beneficiary, then beneficiary owns 1/20 of EACH SHARE

32
Q

CoSM: What happens if CoSM fails?

A

A) Trust + Uncertain ID’d property = No trust, settlor retains property as part of his estate

B) Trust over an uncertainly divided whole: Trustee holds property on RT for settlor

33
Q

Certainty of Object: 3 key aspects?

A
  • Conceptual certainty: Definition/Description of object (can only be defined by court, not third party)
  • Evidential certainty: Proving that an individual fits the definition of object
  • Ascertainability: Locating exactly where individuals who fit the object definition are
34
Q

CoO: What test is applied for fixed trusts and powers granted by such trusts?

A

‘Complete list’ test of the 3 key aspects
[IRC v Broadway Cottages]
[OT Computers v First National Trinity Finance]

For fixed trust with condition precedent, only need to show one person fits the bill
[Re Barlow’s WT]

35
Q

CoO: What test is applied for discretionary trusts and powers granted by such trusts?

A

• Initially, ‘complete list’ test applied but ‘is or is not’ test applied to powers
[Re Gulbenkian, following decision over similar clause in Re Gresham]
[Re Gresham’s Settlement]

• Changed to ‘is or is not’ test (because trustee can choose who gets what, so don’t need complete list of potential Bs)
[Re Gestetner Settlement]
[Re Baden (No 2)]

• Only really need conceptual certainty
[Re Coxen: does not necessarily invalidate the trust]
that is not too wide
[R v District Auditor]

36
Q

Re Gulbenkian [1970]

A

[CoO PASSED IF CLASSES DEFINED CAN HAVE CONTENT (Denning J)]
[Approved re gestetner]

Facts:
• G made settlement that trustees should ‘in their absolute discretion’ give trust property to his kids, any wife, and anybody employing, living with or receiving care from a named son, while the named son was still alive

Held:
• Trust too uncertain to be upheld at first instance
•CA held that trust should be valid as long as any C could fall within the defined class

37
Q

Re Baden (No 2) [1972]

A

[CoO PASSED IF TERMS USED ARE SUFFICIENTLY UNDERSTANDABLE]

Facts:
• Settlor had set up a fund for the benefit of a large class of people (any employees, dependants or relatives of his company)
• HoL had held that test for certainty ≠ 'complete list' test, remitted case to Chancery Division to determine validity of trust

Held:
• Trust valid –’is or is not’ test applied, terms used in settlement sufficiently certain, e.g. ‘relatives’, ‘dependants’

38
Q

CoO: What were the 3 differing opinions in Re Baden (No 2)?

A 
Stamp LJ (Need Concep + Evid Certainties):
• Need clear conceptual certainty + Sufficient information to distinguish who is/is not member of the class
• 'Don't know's are not tolerable
Sachs LJ (Need Concep Certainty)
• Need clear conceptual certainty but court 'never defeated by evidential certainty'
• For postulant to prove he is in the class
• 'Don't know's = 'No's

Megaw LJ
• Probably need conceptual certainty + Some evidential certainty
• Matter of common sense and degree of match with class
• Some ‘don’t know’s not fatal

39
Q

R v District Auditor, ex p West Yorkshire Metropolitan CC [1986]

A

[CLASS OF ‘ALL OR ANY OR SOME OF THE INHABITANTS OF WEST YORKSHIRE’ IS ADMINISTRATIVELY UNWORKABLE]

40
Q

Re Tuck’s ST [1977]

A

[‘OF JEWISH BLOOD’ SUFFICIENT TO PASS CoO; CHIEF RABBI AS JUDGE DEBATED]

[OBITER (LORD DENNING MR): DICHOTOMY BETWEEN CONCEP + EVID CERTAINTIES STUPID: ‘SERVE IN EVERY CASE TO DEFEAT THE INTENTION OF THE TESTATOR OR SETTLOR’]

Facts:
• Baronet created a trust for future baronets married to a wife ‘of Jewish blood’ and who ‘continues to worship according to the Jewish faith’
• Stated that in doubt, ‘the decision of the Chief Rabbi in London of either the Portuguese or Anglo-German community ‘shall be conclusive’

Held:
• Trust was valid, even without reference to the Rabbi
• Lord Denning MR: ‘Evidential uncertainty never renders the condition meaningless’; ‘applies the condition as best it can’

41
Q

Re Endacott

A

[NEED HUMAN BENEFICIARIES FOR CoO]

42
Q

CoO: What if CoO fails?

A

RT of trust property returns to S or his estate

43
Q

CoO: On what grounds can a discretionary trust still fail on?

A
  1. Administrative unworkability
    [R v District Auditor, ex p West Yorkshire Metropolitan CC]
    [Re Hay’s Settlement Trust: BUT NOT FOR POWERS OF APPT]
  2. Capriciousness
    [Re Manisty’s Settlement: Absorbable into Admin Unwork?]
    BUT ‘testator is permitted to be capricious and improvident’
    [Bird v Luckie (Wigram VC)]
44
Q

Re Manisty’s Settlement [1973]

A

[CAPRICIOUSNESS CAN VOID DISCRETIONARY TRUSTS AND POWERS OF APPOINTMENT]

Held:
• Power to benefit ‘residents of greater London’ capricious, terms of the power negative any sensible intention on S’s part and sensible consideration by trustees
(Lord Templeman)

45
Q

Re Jackson [1933]

A

[COURT CAN TRY TO FULFIL CoO IF OBJECT IS NAMED BUT STILL CONFUSING]

Facts:
• Nephew ‘Arthur Murphy’ named in will, but testatrix had three nephews with the name
• Evidence showed she had contact with only one

Held:
• She intended to benefit that one nephew

46
Q

What happens when there is excess after purpose of trust is met?

A

Excess may be held absolutely by Ts in WILLS

[Re Foord]

47
Q

CoO: What if S intends for a third party to determine Bs’ categories?

A
  1. An opinion clause (i.e., it is left to Ts’ opinions) may save evidential but not conceptual uncertainty by helping determine is or is not
    [Re Coxen; agreed by Hayton]
  2. Sometimes, though, court may allow it
    [Re Leek: Those who ‘have moral claim upon’ S]
  3. Dispute in Re Tuck’s Settlement Trusts
    [Lord Denning MR: Accepted Chief Rabbi as able to cure conceptual uncertainty]
    [Lord Russell: ‘of Jewish blood’ not uncertain anyway, don’t need Chief Rabbi]
    [Eveleigh LJ: Chief Rabbi’s view of Judaism as evidence of S’ view, not a determinant of Bs; SUPPORTED IN Re Tepper’s WT]
48
Q

[ESSAY] McKay’s argument on Administrative Unworkability?

A

[DISAGREES WITH MANISTY]

  1. Bs of a valid class have no common attributes
  2. Class is too large
  3. Ts will be unable to perform their administrative duties
  4. Court will be unable to execute S’ directions
  5. Trust is capricious
49
Q

[ESSAY] Swadling’s argument on Administrative Unworkability?

A

[NOT REALLY SUPPORTED BY CASES]

Requires a ‘core class’ of objects within the larger class to which Ts may primarily devote their survey of objects

50
Q

[ESSAY] Re Gulbenkian’s argument on Administrative Unworkability?

A
  1. Class of Bs so big that would cost quite disproportionate enquiries and expense to find them all and discover their needs
51
Q

When is a trust a sham?

A

Established in [Snook v London and West Riding Investments]

  1. Must be intention to create false/misleading appearance that trust has been created
    [Shalson v Russo]
  2. Possible factor: Not necessary for S or T to have dishonest or fraudulent motive; test to see if trust was entered into for an ulterior motive
    [Midland Bank v Wyatt]
  3. Possible factor: Artificiality of the transaction
    [Nat’l Westminster Bank v Jones]
  4. Possible factor: Extent which S has control of T’s power
    [Shalson v Russo]
  5. Possible factor: Trust made for S’ purpose is to put assets beyond the reach of creditors
    [IRC v Hashimi]
  6. Possible factor: Both T and S must intend on it being a sham
    [Shalson v Russo]
52
Q

What happens when trust is a sham?

A

Void and unenforceable

53
Q

Credit Agricole v Papadimitriou

A

In cases where the propriety of the transaction is questionable and purchaser does not inquire, they will be imputed w notice of the claimants equitable interest

54
Q

CoSM: Can residue under a will ever be uncertain?

A

No; everything to be divided is accounted for. Uncertainty involves what exactly to give to whom and how much.

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