Certainty of Subject Matter

Question 1

What is certainty of subject matter?

Answer 1

What is actually being disposed of by the settlor/testator/donor.

Question 2

Does the property forming the subject matter of the trust have to be clearly defined?

Answer 2

YES - especially for trusts by Will.
- In Wills, the residue of the estate is often left on trust in Residuary Estates.

Question 3

Palmer v Simmonds (1854)

Answer 3

For there to be a valid trust, a proportion needs to be specified

Question 4

Jubber v Jubber (1839)

Answer 4

Words need to be specific for there to be a trust

Question 5

Re Kolb’s Will Trusts [1962]

Answer 5

• Trying to ascertain what is an asset for a trust can also be an issue.
• In this case blue-chip shares from reputable companies was not held to be the subject matter of a trust as shares are unreliable.

Question 6

Which case illustrates the strict interpretation of the courts when it comes to subject matter?

Answer 6

Boyce v Boyce (1849)
- Daughters lost out on houses as the daughter that had to choose the first house died - leaving them all with nothing as the daughter couldn’t choose the first house.
- The interest each beneficiary is to receive must be certain.

Question 7

Re Golay’s WT [1965] - Reasonableness of income

Answer 7

• Held to be a trust as there was enough info available for them to objectively work out what would be “reasonable income” for her.

Question 8

What happens to unsegregated assets?

Answer 8

Whether there’s a trust or not will depend on the item that is unsegregated

Question 9

Re London Wine Company [1986]

Answer 9

Held to be no trust
- No segregation of wine bottles = no trust!

Question 10

Re Stapylton Fletcher Ltd [1994]

Answer 10

• As sold wine bottles were segregated from unsold bottles there was certainty of subject matter.
  Cf to Re London Wine Co

Question 11

Re Goldcorp Exchange Ltd [1995]

Answer 11

There is NO certainty of subject matter unless assets are segregated!!

Question 12

Hunter v Moss - Shares

Answer 12

• Court took opposite approach to Re London Wine
• Was a trust despite the shares not being segregated.

Question 13

What is the difference between wine, gold and shares?

Answer 13

Intangible (shares) vs. Tangible assets (bottles of wine).

Question 14

Lehman Brothers International (Europe) [2010] - co-ownership of shares

Answer 14

• Biggs J proposed that instead of segregating 50/950 shares (as in Hunter v Moss), why not say that ALL 950 shares are co-owned - e.g., 95% OF SHARES FOR LEGAL OWNER AND 5% ON TRUST FOR THE B?

Question 15

What is the position in commercial contracts after the Sale of Goods (Amendment) Act 1995?

Answer 15

Sale of a specified quantity of unascertained goods forming part of an identified bulk will acquire property rights as tenants in common - i.e., co-ownership.

Question 16

Can future property (“after-acquired” property) be the subject matter of a trust?

Answer 16

NO!
Re Ellenborough [1903]

Question 17

Lewis’s of Leicester Ltd [1995] - separation of money?

Answer 17

If you have money in a bank account and a trust of a smaller amount of money from that bigger balance in the account, that will work even if there isn’t separation.

Question 18

MacJordan Construction Ltd v Brookmount Erostin Ltd [1992]

Answer 18

• Contractual provision stating that when building completed, the customer would keep 3% of total price until all work had been checked.
• Builders argued trust for 3% for them.
• Held to be no trust - 3% of what? Money didn’t exist anywhere.

Question 19

Hemmens v Wilson Browne [1995]

Answer 19

A Claimant cannot point to anything that they’d like and say it is the subject matter of a trust.

Question 20

What happens if there’s no certainty of subject matter?

Answer 20

No trust at all!
- Everything remains as it originally was - everything stays with the Settlor.