Certainty Of Subject Matter Flashcards
What is the rule in Re Gold Corp [1995]?
Affirmed the principle that property must be separately identified before it can be held on a valid trust.
Re Gold Corp [1995] Facts
Concerned a gold bullion exchange which went into insolvency.
1st category of claimants - Held proprietary rights in specifically identifiable holding of bullion which the exchange had actually acquired physically to match its customers’ orders. Trust.
2nd category of claimants - Did not have their bullion’s segregated from the bulk. No trust.
3rd category of claimants - Highlights the rigid nature of the rule. Placed an order for very rare coins which the exchange would not have otherwise stocked. These coins were mixed with other coins. The claimant could demonstrated that the exchange would not have ordinarily bought the coins, unless it was for his custom. BUT the coins had not been held separately by the exchange. No trust.
Is Re Gold Corp [1995] a persuasive authority?
Yes. It is a decision of the Privy Council.
Is the rule fair?
Arguably it is overly formalistic. However, it is trying to protect all parties involved. Including creditors in an insolvency.
Did Hunter v Moss [1994] reach the same conclusion?
Hunter reached a different conclusion in relation to the formation of a trust over fungible, intangible property.
Hunter v Moss [1994] Facts:
An employee of a company was entitled to 50 shares out of 950 shares held by the employer under the employee’s contract of employment.
Employer did not transfer the shares to the employee, nor were any attempts made to identify those shares which were to be subject to the arrangement.
Issue: Whether or not the employee could assert that he had proprietary rights over 50 shares.
If applying Re Gold Corp, there would be no valid trust over the shares as it would be impossible to know which shares were to be held on trust.
Dillon LJ took a different approach, justifying his reasons by stating that
(1) The company was a private company
(2) Shares were of the same class.
What did Hunter v Moss [1994] establish?
The rule in Re Gold Corp was not an absolute rule.
What is Hudson’s critique of Dillon LJ’s judgement in Hunter v Moss [1994]?
With reference to Dillon LJ’s comment that his judgement reflects the law of wills Hudson states that the difference between the two is that the executor acquires legal title in all of the deceased’s property, with a power to make division of property in accordance with the terms of the will as the personal representative of the deceased, whereas the inter vivos trustee acquires nothing more than legal title in those assets which the settlor makes subject to the trust.
The executor has all of the property, so knows which property they need to deal with - all of it.
States that this doctrine should not be relied upon as it lacks principle.
What are the problems with the decision in Hunter v Moss [1994]
- Ignores the manner in which the logic of English property law requires that there be a specific and identifiable property which is the subject of the property right.
- If there is a distinction to be made between cases it would be where the legal owner of that property is solvent or insolvent, and not between tangible and intangible property.
- Difficult to see why there ought to be specific rules for intangible property.
What is certainty of subject matter?
Requirement that the property which is intended to constitute a trust fund is segregated from all other property so that its identity is sufficiently certain.
What is the rule of certainty of subject-matter?
If the trust fund is not sufficiently segregated with the results that there is no certainty of subject matter, then the trust will fail.
Paul v Simmonds [1854]
A testatrix left ‘the bulk of her estate’ on certain trusts.
It was held that the subject matter of this trust was too uncertain by dint of the vagueness of the expression ‘the bulk’.
Sprange v Barnard (1789)
A testatrix provided that property would be left to her husband to use absolutely but that ‘the remaining part of what is left, that he does not want for his own wants and use’ was to be held on defined trusts.
Held: This statement was too uncertain for the trust to take effect over any part of the property because the property was not sufficiently clearly identified by the expression ‘the remaining part of what is left’ .
Re Kolbs [1962]
The testator had directed trustees in his will to invest in ‘blue chip’ stocks. On these facts, Cross J held that insufficient power had been given to the trustees to decide what was meant by ‘blue chip’.
Re London Wine [1986]
Important Case.
Creditors of a vintner’s business sought to claim that their contracts for the purchase of wine ought to grant them proprietary rights in wine held in the vintner’s cellars. Oliver J held that the creditors would only be entitled to assert proprietary claims as beneficiaries under a trust over any wine held in the cellar if each creditor could demonstrate that particular, identifiable bottles of wine had been segregated from the general stock held in the cellar and held separately to their account.
However, the wine had not been segregated and there would not be any proprietary rights over any wine held in the cellar. No Trust.
The Orthodox Approach.
