Equity and Trusts - 3 certainties Flashcards
What must ever trust satisfy ?
Every trust except cpt must satisfy 3 certainties Knight v Knight
What are the 3 certainties and what must they all do
Certainty of intention- is a trust intended Certainty of subject matter- what property is to be subject to trust and who are the beneficial interests Certainty of objects- who are the beneficiaries of the trust- is or is not testThey all must be sufficient
Certainty of intention - in relation to the prop in q what must settlor testator have
Settlor or testator must have greater clear certainty of intention - needs to be clear
Why must we satisfy?
1 - trustees need to know their trust obligation under trusts - can be liable for breach of trust if fail to carry out obligations 2 - 3 cert provide trustee with degree of protection by ensuring obligations are clear 3 - satisfying ensures if neck ct itself will be able to admister that trust
What is extra for trusts?
Trusts can be declared orally or in writing 3 cert apply to all trusts but cpt Must also satisfy formality req in respect of type of property E.g 3 cert sat but no formality eg not evidence in writing = unenforceable Settlor to inform trusteee
How is intention established
Intention is established by considering all circumstances of case
What does equity look at
Equity looks at intent rather than form
In working out intention what are the indicators to look out for
Clearest way to demonstrate is to use word on trust
What if On trust isn’t used
If I’m trust isn’t used - cpt will imply a trust where other words are used which are imperative enough to show mandatory trust obligation was intended - ct - imply - imperative
Indicators to look out for no. 2
Imperative, predatory Lang and conduct
Case in regards to conduct
Staden v Jones - not neck refer to word trustee by words/acts done by settlor must have intended that meaning Also constructive test
What did court also say in staden v Jones
Ct said important to construe whole doc purporting to create trust Did he really intend trust obl to kick in here, pure words for an absolute gift?
What was said in lamb v eames
Lame v eames Distinct precatory and impl CT’s
What is precatory?
Express hope, wish, moral obligation = usually indicates gift was intended
What is meant by imperative
Express a command, duty to do something - indicates usually trust or power
Examples of this precatory words?
Lambe v eames - way she may think best Re Adams and Kensington vestry - in full confidence Re diggles- it is my desire Mussorie bank v raynor Re Hamilton- I wish Re Williams - I bequest that
But - about precatory terms?
Although CT’s guided by language - remember just as there’s no magic in word trust - kinoch v Secretary of State for individ - precatory words will not prevent CT’s from finding trust if that’s what donor intended
E.g of courts not always relying
Comiskey v browning- Hambury Testator said in full confidence - look at gift how CT’s looked rest of will = trust
What is meant by conduct
Intention can also be conferred by conduct of the donor
What case was in relation to conduct
Paul v Constance - bingo - trust extended
Similar approach to Paul in which cases
Re jay ford Ltd - customer money in diff bank account Jones v lock - did not create trust Dhingra v dhingra - trust son was held entitled to money Saunders v vautier- if you are true owner of money - each can transfer legal title t you and terminate trustee
What is the effect of lack of certainty of intention?
If no intention to create trust or power - donee will take prop as an absolute gift - lassence v tierney & not as trustee for another others
What is so part to this
So if strong imperative = precatory = won’t suffice for cert of int- but courts look at whole - can be a trust but most cases won’t be
Trust will arise when we
If strong / imperative enough that anew obligation trust obligation was intended to the property
What is certainty of intention a question of?
It’s a q of construction
Certainty of subject matter?
2 elements in regards to this
What are the 2 elements of certainty of subject matter
It must be clear what prop is held on trust e.g account / shares - so trust can bite - beneficial interests must be clear If not certain or clear trust will fail
What is meant by prop held on trust must be certain
If not clear / trust = void as trustees beneficiaries . Ct won’t be able to determine what is held on trust
What is meant of trust or part prop
This arises where attempt to create a trust over part of a bulk of tangible property
E.g of part prop
E.g furniture in a house or warehouse filled with desktop computers . Where there’s is a trust ofpart of bulk of tangible prop, trust prop will only be certain if separated from trust
Cases for uncertain prop
Palmer v simmonds- the bulk of Peck c Halsey - some of the best .. Anthony v dodges Jubber v jubber Re kolbs wt
What happened in re London wine co
Re London wine co was uncertain - wine paid for not segregated = unidentifiable
What is contrast case for re London co?
Hunter v miss - didn’t specifically say which 50 shares trust was upheld - on ground that shares were intangible assets - but could disntiguuish shares = controversial case -
What was this approach also endorsed in
Endorsed in re Harvard securities Ltd
What’s good about this distinction
Physical seg and intangible like shares which didn’t need seg, trust could arise- loads of people never liked bc said lacked logic
What’s a note to take in
Sales of gooddd ammendant act 1995 , context of sales - reverse dec in the London to allow prio sellers other creditors look back st this
What happened in Anthony v donges ?
You can have a gift of residue
What about the sales of good act specific section?
S.20 soga 1979 - offers protection to purchases of an unseg part of larger bulk of prop - ass soon as they have paid, purchasers will be considered tenants in common or the whole prop. Has the effect of protecting their purchases from creditors in the ever of liquidation / receivership mHw where there is a trust of part of some intangible prop, e.g shares = no need to identify shares to be held on trust
What is a tip you could use here?
Hunter v moss - applies to trusts part of a large whole Pg- look at facts e.g if portion of shares and diff types of them or relate to shares diff companies = hunger = not apply and trust will be void if not further identification of rel property Re Harvard securities Ltd in liquidation
How could you get extra marks
Despite fact hunter v miss followed in re Harvard securities Ltd & more recently complex finiancial securites in Pearson v Leahman brothers finance = criticisms
Who were the criticisms by?
Hayton in 1994 110 LQR 335- no of arg
What is arg number 1 -
Come back
Arg number 2?
Come back
Arg number3?
Come back
Why must the beneficiaries interests be certain?
Beneficial interest must be clear
What are cases hat illustrate probs that may arise in this context
Boyce v Boyce - father trust 1 sis.1 due 4 houses - prop clearly identified but Benedict no - trust would have worked if trustees were to choose, but neither trustees or ct could determine Ben
What other case was held uncertain?
Strange v Bernard - held uncertain
Another case?
Re golay wt - q was whether instructions given were certain enough to slow them to carry out terms of the trust - reasonable income 2 names Ben = valid as make was in maintenance cases
Another note:
Legal issues surrounding out of Ben int. Will not apply to discretionary trust- bc extent to which can benefit if not all is absolute discretionary of trustees
What is Link btw certainty of intention of subject matter ?
If lack of cert as to subject matter this will cast doubt on whether settlor truly intended to create trust - mussoriee bank Ltd v ray ore & effect if lack of mast = trust fails and pop will return to settlor / estate on r. T
Certainty of objects beneficiaries?
This is third requirement - cert of object relates to who are the beneficiaries of trust ? - is every trust not cpt must satisfy this req Different for fixed and discretionary
Beneficiary trusts - who beneficiary are?
Actual Ben of objects of trust vs purpose trusts - cert of purpose, purpose being object of trust
Fixed and discretionary?
Object of trust usually Ben
Purpose trust
Cpt, ppt look at conveyancer - .. no eq title and no benefitiancy
What about certainty of objects and fixed trusts
Beneficial int are fixed
What is meant by beneficial interests are fixed
E.g trust to Benefit razia and stanhan in equal shares
Order to satisfy the ct if obj req=
Full list of Ben must be able to be created IRC v broadway cottages trust - all Ben must be able to be indentified
For cert of obj with fixed trust to be valid what are the 3 hurdles that need to be satisfied
1 conceptual certainty 2 evidential certainty 3 administrative workability
What is meant by conceptual certainty ?
Class of Ben need to be certain e.v tall = uncertain trust fails and money then on r. T residuals legatees. - equity abhors a vacuum- can go to settlor or testator trix but they’re dead so resid lega - plug the gap - a . R . T
What is meant by evidential certianty
I.e int are fixed = equal shares _poss to list all ben form which equal div can be calculate The lIST TEST
Case in relation to evidential certainty
IRC v broadway cottages / re gulbenkian List test - trust and equal shares - don’t always need to find them but you can calculate
What is meant by administrative workability?
Class of Ben must not be to numerous as to render it impossible for trustees to properly administer the trust - r v district ex p west York shire cc Not valid trust be trus be discreet trust can distribute to whoever = too big for trustees to manage trust Trust fail r. T to settlor local auth back 2 gov- load if too wide e.g lord wilberforces e.g of trust all residents in greater loosen.
What about discretionary trusts
Type of trust trustees given power to apparent people as Ben. There’s a class of potential beneficiaries do not hold ben until trustee excercise discretion of trustees
Concept cert class of Ben?
Must be clear have to work it out and admin workability not so bit but workable - but no list test with discr
What about discretionary trusts overall
A diff approach taken in respect if discretion trust where there is key dec
What case was key decision in
Mcphail v doulton
What happened in mcphail?
Opposed list test and replaced with never flexible concept cert - some test as valid power of appointment
What is test for very of obj same as in this case
Same as fid duty - re gulbenkian settlement - where her it could be said with crt that any given unification is or is not memeber if the class
So overall
Cc- is or is not test - in mcphail not too vague
Even though test is established in that case what happened
It was challenged in re Baden no. 2
What happened in re Baden
Look whether valid dt had to consider this test in cert of objects - did relatives and dependnars conceptually certain - they embraced is or is not test - stamp oh = strict interp
What did Megan and sach lj say about test
Said test would be satisfied if certain fell within that case - real and dependent = cc Does not matter whereabouts \continued existence of a ben is not known
Cases connected to these decisions
Re shields wt Re Barlow wt Re daulton wt
So cc in depth
Described as linguistic or semantic certain A class of Ben will be cc when descriptions enable group to be clearly defined 1 st eg brithsh army - morally upstanding no cos where can line be drawn
What is meant by gifts subject to a condition precedent
Do not require same degree of cc as d t
Dead of gifts subject to a condition precedent
One to which donee will not be entitled unless he or she satisfies the condition e. G 10000 to each my children who grad uni
What was said in re Barlow case
Paintings case In a gift to class objects only entitled to share of the prop - vital is or is not - hw in this case from and friends given individual opp to purchase paintings = greater degree of uncertainty to whibsatified ndbdid affect app they really - come back
What was said in re v tip
Gift 2 friends = valid as gift to cond preced- discretiojtrusts for friends = void as imposs to define friends socould he said any India’s is or is not class
Distinguishing cc & evidential uncertainty
Important 2 disting Cc = cert of class Evidential c - whether not individ can be found or progenyIf class c uncertain- trust void - but evil link will not defeat trust Important refer re Baden although agreed cc depth all 3 judges for diff reasoning
3 different approaches
- Sachs lj liberal approach - Megaws lj middle ground - stamp lj strict approach
What is sach Ljs approach
-
What is Megaw ljs appraoch
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What is stamp ljs appraoch
-
Extra marks for this
The issue cert obj for dt= complex - own detailed notes on mcphail v doulton re Baden and then deepen understanding of this reading Emery’s discussion of this issue
Can conceptual uncertainty be cured
Debate whether concept uncertain can be cured by Reference to the definition of the trustees or a third party where trust would fail for conceptual uncertainty
How can sometimes the testator or trix resolve this
Resolve by build into terms of gift on trust the language/ machinery to resolve any conceptual uncertainty So where trust would fail for concept uncert - to said that could say tall means / we could moraine a 3 rd party trustee or someone else- 3 rd party mooned to resolve an 3rd part uncertainty
What was said in re tucks?
The third part could be an independent person
Whilst whT was said by denning lj
Argued that reference to trustees or 3 rd party opinion may be concep uncert.
What did Eveligh ljs reasoning Rest on
The narrower ground that there was no concept uncertainty bc the settlor was in effect saying that his dc of Jewish faith is sams as a concep cert class
Re tucks st ?
Address the validity of conditions precedent it remains unclear whether
What 2 things does it remain unclear whether
- Same approach would be adopted in respect of a dt with concept uncertain 2. Whether the CT’s would adopt the broad approach of denning lj or re more restrictive appraoch Evelin lj
What do both approaches remain
Problematic . Whereas denning lj appraoch would ensure the valid if many more dt, it would also seem to empower individ named by the settlor to are concept uncert in circumstances where the cr would otherwise declare the trust void.
On the other hand eveligh ljs appraoch?
Maintain the need for c.c but rests n a very fine factual district that many settlers will not appreciate 2.eg
What other cases said 3rd a party could be trustee
Re CoxenRe Jones Re leek Re Wright’s wt Re Coates
What is the effect of lack of cert of objects
Trust which lacks cert of objects will be void and return on r. T to the settlor his or her estate
Company d. T and fid powers?
As you have seen following mcphail v doulton the test for certainty of once’s for the d.t and did powers is now the same . Hw it is important to remember that there are still important differences
The duties under d.t / fid power Disc trusts
Mcphail v doulton establishes that trustees have following duties to - surge the field to identify the width of class and to To distribute income from the trust
What is to note here
Watch for no exhaustive d.t which expressly allow the trustees to accumulate income- in such the trustees may delay distributing for some time but must still ultimately distribute at some point
What in regards to fid powers
The donee of a fid power is not under a duty to distribute the property. He re Hays st fid have following duties
What were the following duties
To consider periodically whether to excericse the power To consider the range of possible objects To consider the appropriateness of appointment made ie they cannot pick at random/ without reason
What’s a revision tip here
If an arrangement refers to a gift over in default or a distinction that remaining money is to return to settlors estate this will be a fid power as the wording demonstrates that there is not a dirt to distribute
E.gs of this
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What are the rights of Members of class?
D.t Members of the class are not beneficiaries until they have been appointed to the trust until that time they merely hold a type of hope of beneficitting this means that menebers of the class may challenge the dec of the trustees but cannot claim that they are entitled to be allonfion as this at the abolsite discretion of trustees
Decisions may be challenged on the basis that the trustees have :
Appointed outside the class Failed to consider their reasons for along Acted in bad faith in making an appointment eg appojting slinky to close friends within the class
What is a notes to make
If all ben are a sui juris they may act together to wind up the trust under the rule - Saunders v vautier as there an the entire beneficial trust
What about fid powers again?
As with dt embers of a class under fid power cannot claim to be entitled to be appointed hw dec may be challenge on basis that fid have Appointed outseide class Failed to carry out their fid obligations re Hays st
What unlike dt
Unlike dt the dt will not intervene to compel the fid to excercise their power - furthermore the objects of fid power cannot take adavanrge if the rule in Saunders v vautier as the beneficial int lies with the person entitled to the gift other in default of the appointment
So in all what are the key cases?
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What are the key debates overall?
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