Certainty Flashcards
What does Knight v Knight (1840) say?
Established that three certainties are required for the creation of a trust: the language used must show the settlor created a trust; and the subject matter of the trust must be certain, as well as the persons or objects intended to be benefited.
What did McPhail v Doulton (1971) establish?
That discretionary trusts do not require a complete list of beneficiaries. Instead, the test of object certainty focuses on whether any given postulant is or is not a member of the class of beneficiaries (the ‘is or is not’ test). [Attribute to Lord Wilberforce]: we must be able to say of any individual who happens to come our way whether he falls within the class or outside it.
What did Re Coxen (1948) suggest?
That dependence on a third party would not clarify any conceptual certainty.
What did Lord Denning say in Re Tuck’s Settlement Trusts (1978)?
That a provision of a third party to resolve conflict would resolve any conceptual uncertainty.
What did Eveleigh LJ assert in Re Tuck’s Settlement Trusts (1978)?
That a third party may be used to resolve conceptual uncertainty when the settlor’s definition can be read to be the same as the third party’s. This is contrasted with the viewpoint of the third party being an arbitrator of marginal cases, as opposed to actually substituting his opinion for the settlor’s.
What did Lord Wilberforce in McPhail v Doulton (1971) highlight?
That there exists a potential third class of uncertainty, administrative unworkability, that would arise where ‘the definition of beneficiaries is so hopelessly wide’. Were the size of the beneficiary class to be exceedingly large, this may prevent execution of the trust.
Hence, is there a distinction between the definition being too wide or the number of beneficiaries being too wide?
What did R v District Auditor No. 3 (1986) reinforce?
Lord Wilberforce’s idea of administrative unworkability frustrating certainty of trust.
Will the excuse of administrative unworkability work for fixed trusts?
Webb and Akkouh (2015) suggests that Lord Wilberforce’s additional requirement referred to discretionary trusts. Furthermore, in a fixed trust, if a successful claim does not need to be referenced to other claims by potential beneficiaries, this would arguably overcome administrative unworkability.
What happened in Re Barlow’s Will Trusts (1979)?
The term ‘friends’ was not found to be conceptually certain, but it did not defeat the disposition because it was a fixed trust to ‘each’ of her friends and not something to be divided equally amongst friends. So all that was needed was that one person could be found to fall within the definition.
What did Palmer v Simmonds (1854) say?
The property subject matter must either be clearly defined or be capable of ascertainment.
What was Re London Wine Co (Shippers) (1986) about?
In this case no steps were taken to segregate the contended (wine that customers had ordered and paid for) from the dealer’s general stock. It was found necessary to identify not only the beneficiary’s interest, but to which property such an interest attaches.
The trust would only succeed if customers could identify which specific bottles were held on trust for them.
What is the significance of Re Harvard Securities (1997)?
The position after this case is that identification of specific trust assets is still required for tangible property, even where a collection consists of identical assets.
What is the significance of Re Benjamin (1902)?
Concerns the need for ascertainability of all beneficiary class members. This test may be relaxed where the maximum number of people within a class is known, but not all can be reached. This is because the trustee will thus be able to apply for a Benjamin order.
So after sufficient enquiries have been made to ascertain the missing beneficiaries, trustees can distribute the trust property as if the beneficiary who cannot be traced were dead, and thus their share is divided equally amongst the established beneficiaries. If eventually found, they can pursue the other beneficiaries for their share.
What does Re Kayford tell us?
Megarry J said that: ‘it is well settled that a trust can be created without using the words “trust” or “confidence” or the like: the question is whether in substance a sufficient intention to create a trust has been manifested.’
What was said in Milroy v Lord (1862)?
There are three ways in which we can benefit others by property:
(1) Outright transfer (gifts)
(2) Self-declaration of trust
(3) Transfer to a third party on trust
What does Jones v Lock (1865) tell us?
Father put a £900 cheque in his baby’s hand and said it was his. The wife said the baby might tear it, and the father said, ‘it is his own, and he may do what he likes with it’. He locked it in the safe and died six days later. This was held not to show sufficient intent to create an express trust.
Lord Cranworth noted that it would be dangerous ‘if loose conversations of this sort’ declared a trust.
Equity would not “perfect an imperfect gift” by creating a trust.
What happened in Paul v Constance? (1977)
Mr Constance separated from his wife but never got divorced. Later met his future girlfriend. He received £950 from a injury settlement from his employer. He put it in a bank account in his name alone (due to the fact he was still married) but girlfriend could still withdraw with a signed note from him and he said the money was as much hers as his. He died intestate and wife claimed the account formed part of his estate, whilst girlfriend said the amount in the account was held on trust for hers and Mr Constance’s benefit.
It was held that there was an express declaration of trust and the claimant was entitled to the money in the account. LJ Scarman: “…the words that he did use on more than one occasion, “This money is as much yours as mine,” convey clearly a present declaration that the existing fund was as much the plaintiff’s as his own.”
What did IRC v Broadway Cottages Trust (1955) say?
In the pre-Baden era, a complete list of beneficiaries was required to validate all kinds of trusts.
What does Re Baden’s Deed Trusts (No 2) (1972) tell us about the ‘is or is not’ test?
The three judgments put forth by, Sachs LJ, Megaw LJ and Stamp LJ, offer three modes through which a discretionary trust might be confirmed.
What did Sachs LJ say in Re Baden’s Deed Trusts (No 2) (1972)?
Conceptual certainty is needed, but evidential certainty is irrelevant. Onus of proof fell on the potential beneficiaries. ‘The court is never defeated by evidential certainty.’
‘Once the class of persons to be benefited is conceptually certain it then becomes a question of fact to be determined on evidence whether any postulant has on inquiry been proved to be within it: if it is not so proved, then he is not in it.’
All those who, because of factual uncertainty, are ‘don’t knows’ are to be treated as ‘no’s’.
What did Stamp LJ say in Re Baden’s Deed Trusts (No 2) (1972)?
Was the most conservative of the three judges. He preferred complete certainty. Both conceptual and evidential certainty is needed.
What did Megaw LJ say in Re Baden’s Deed Trusts (No 2) (1972)?
Suggests that a discretionary trust could be validated if a substantial number of people can be successfully classed as beneficiaries. However, there are many problems created by this approach. For a start the test itself is uncertain: how much is a ‘substantial number’?
What happens when a trust fails for uncertainty?
If the ‘trust’ is self-declared, the settlor/trustee remains absolutely entitled to the property.
What did Re Kayford (1975) tell us?
What matters is the substance - not the language. Possible to create a trust without mentioning the word ‘trust’.
