Certainties and Requirements of Express Trust Flashcards
Re Adams v Kensington vestry
No trust was held because widow could ignore needs of children if she wanted too and there are no explicit directions
The three certainties (knight v knight)
Certainty of object
Certainty of intention
Certainty if subject matter
Comiskey v Bowring Hanbury
Explicit directions = trust
- extra provision to ensure that the widow will follow his directions and imposed a legal trust instead of a moral one
- trust to be left to surviving nieces
Jones v Lock
No valid gift of funds was made in favor of child
No trust had been declared in favour of child - jones did not make himself a trustee for his child
“Loose conversation”
Re Hamilton
Testatrix gave legacies to two nieces for their separate use and said “ wish to bequeath the same equally between the families of O and P in much mode as they shall consider right”
-one niece died having made no reference to her will to the legacy - children of O and P brought and action for a share of the legacy – NO TRUST! (construed as an absolute gift to niece)
Clauses that do not establish a trust:
Feeling confident – Mussorie Bank
My desire – Re Diggles
In the fullest trust and confidence – Re Williams / use of word trust is a good indicator but not in itself decisive ( Tito v Waddell)
I request – Re Johnson
Four forms of certainty of subject matter:
1) must be clear how much is left on trust and how much is an outright gift - if not clear donee B will take the property absolutely as a gift
2) must be certainty to the actual property left on trust
3) must be certainty of beneficial interest in the property subject to the trust
4) must be certainty if which specific things can be identified out of a larger class of things
1) must be clear how much is left on trust and how much is an outright gift - if not clear donee B will take the property absolutely as a gift
Sprange v Barnard – remainder of what is left to be divided by family members - gift not a trust
Palmer v Simmonds – bulk of residuary estate (too uncertain) - executors will have determined exactly what should be given to whom under the terms of the will before calculating the “residue” to be passed to residuary legatee
2) must be certainty to the actual property left on trust
Anthony v Donges – minimal part of estate for maintenance purposes - NO TRUST - no such minimal entitlement exists under probate
Re Golay– to “receive a reasonable income” was held to be a Trust because could provide court with yardstick as to quantify the amount based on the personal circumstances of the beneficiary
Third party opinion - (Re Tucks settlement) - Jewish wife approved by Rabbi
3) must be certainty of beneficial interest in the property subject to the trust
Boyce v Boyce – Need to get trustees to choose; if not and one of them were to die before choosing there is no trust for the other beneficiary who is the remainder and the property will fall into residue
4) must be certainty if which specific things can be identified out of a larger class of things
Usually an attempt to protect a claimant in the event of insolvency
Re London Wine Corp – no wine was specifically identifiable as subject of trust therefore no certainty
Re Goldcorp Exchange – same issue as in LWC
Hunter v Moss – C of A declined to apply principle in LWC - trust was upheld as valid on the basis that the shares were intangible assets of of identical value and so specific appropriation was not needed to make the subject matter of the trust certain
Results for failure to establish certainty of subject matter
1) if settlor A has failed to specify any trust property with certainty there can be no trust
2) if there is certain trust property but who gets which part of the beneficial interest is uncertain (Boyce v Boyce) then there is NO TRUST as the specific subject matter of the beneficial interests cannot be determined
- resulting trust for settlor or for his estate which is treated as remaining to him despite attempt to pass it to beneficiary in trust
3) if settlor has given all the beneficial interest to one beneficiary but the gift is subject to an attempted “trust” or gift over of an uncertain amount, then the first beneficiary receives the full amount without obligations (Sprange v Barnard)
Morice v Bishop
There can be no trust where this court will not assume control; for uncontrollable power of disposition would be ownership and not trust
Certainty of object varies on the type of trust being considered…
Power of appointment – under no obligation to exercise trust in favor of beneficiary; special and general power; no problem arises if donee does not exercise the power; given postulant test used to determine validity of power
Fixed trust – beneficiaries interest is fixed and unchanged from the start; list test used to determine who is beneficially entitled (IRC v Broadway)
Discretionary trust – trust of property where settlor has designated a class of people from whom he beneficiaries may be chosen but actual selection is made by the trustees
Exhaustive - all income must be distributed
Non exhaustive – trustees have the discretion whether to pay a part or indeed any of the income
“Given postulant test” - McPhail v Doulton
Saunders v Vautier
Rights of a beneficiary under a will - Case states that each object should be treated as having some sort of proprietary interest in the trust property
Green v Spicer
Interpreted Saunders v Vautier decision as groups of beneficiaries potentially under a discretionary trust are entitled to call for the property or to require that the trustees deal with the property in a manner which may appear equivalent to a variation of the existing trust
Re Smith
Makes principle concept of a discretionary trust seem direct as it outlines that beneficiaries if gathered in a definable class are entitled to the trust held by the trustees
Two circumstances that can disapply this: A) class of objects cannot be defined because could be future unknown members added to the class within the trust's perpetuity period
B) if the trustees are not obliged to exhaust the whole of the trust property then this limits the rights of the beneficiaries and can also apply to individual beneficiaries (Gartside v IRC)
Gartside v IRC
Lord Reid – “ the individual interests of the objects of a discretionary trust are actually in competition with each other until such times as the each object has his own individual right to retain whatever income is appointed to him”
McPhail v Doulton
Lord Wilberforce’s criticisms of the rule set out in IRC v Broadway - given postulant test – “trust is valid if it can be said with certainty that any given individual is or is not a member of the class”
3 limitations on the “given postulant test” – L Wilberforce
1) semantic uncertainty – conceptual - vagueness in defining class/es of individuals in respect of whom trustees are entitled/ required to exercise their discretion (Brown v Gould)
2) evidential uncertainty (Benjamin Order) – uncertainty of ascertaining the existence or whereabouts of objects
3) administrative unworkability – where testator expressed the class of objects so broadly that it is difficult for the court to ascertain any sensible exercise of the discretion (R v District Auditors)
Re Kayford
The word trust does not need to be used to create a trust
Twinsectra v Yardley
Rather than being concerned with what the creator of the trust intended we are concerned with what the reasonable person would conclude that the creator of the trust intended
Re Gulbenkian
Lord Upjohn held – duty of the court through the exercise of its judicial knowledge and experience will have to make common sense from from the settlers expressed intentions however obscure and ambiguous the language.
Paul v Constance
Verbal statements were decisive as evidence for the claimant to seek a declaration that the money be held on trust for her (claimant and not to defendant)
Midland bank v Wyatt
Sham trust as unenforceable and void - testator seems to be making a trust but has ulterior motives for a different set of rights and obligations
Hancock v Watson
Where there is uncertainty of intention to create a trust no valid trust will have been declared and if the uncertain trust was transferred property to someone else then that person takes the property beneficially and can do whatever they want with it
Palmer v Simmonds
A testator’s declaration that the bulk of her estate should be held for certain people was not sufficiently certain
Sprange v Barnard
“The remaining part of what is left” not held to be sufficiently certain
Re Golays will trust
Reasonable income was held to be sufficiently certain - court able to interpret what is reasonable by looking at the beneficiary’s previous standard of living
Westdeutche landesbank and Re Goldcorp
Westdeutche– even if subject matter not clearly defined the property must be identifiable
Re Goldcorp– if not identifiable the trust will be void for uncertainty
Hunter v moss
held that there was a valid declaration of trust over fifty shares even though it couldn’t be specified exactly which fifty they were - pointed out some important principles:
A) clarifying identity on death – executors would choose any of the fifty shares and transfer them to the beneficiary
B) types of share– if there were shares in two companies too confusing and therefore would be uncertainty of subject matter
C) chattels in bulk – changed after enactment of sales of goods act 1995 where now if you buy unascertained part of bulk of goods acquires property rights in that bulk (contrary in Re London wine co)
D)intangible and tangible property – trust of a part of fungible mass such as a shareholding will not fail for uncertainty where there had not been an appropriation of any specific part of the mass for the beneficiary as long as the mass itself is sufficiently identified and as long as the beneficiary’s proportionate share of the mass is not uncertain
E) intention to create a trust from a particular fund – settlor in H v M intended that some of the shares that he owned to be held on trust for the claimant and therefore sufficiently identified because of what the settlor intended
F) practical implication – some difficulties in H v M because not clear how trust works in practice
Goode - analysis of Hunter v Moss
Defended co ownership analysis of the case and says that once a trust is declared the beneficiary becomes co owner of single indivisible legal asset.
- although co ownership analysis is attractive it cannot be applied to H v M because of the structure itself does not seem to be consistent with it - testator didn’t actually declare a transfer of fifty shares but of 5% of the issued share capital which works out to 50 so the courts saw this as any 50 shares but it could have been treated as 5% or 1/19th of the shared capital
Burrough v Philcox
Equality is equity - court can divide property equally between beneficiaries
