L4 Certainty of Intention Flashcards
1
Q
• Knight v Knight –
A
- The case embodies the ‘three certainties principle’. This is the rule that on the creation of express trusts to be valid, the trust instrument must show certainty of intention, subject matter and object.
2
Q
• Lambe v Eames –
A
To be at her disposal in any way she may think best, for the benefit of herself and her family’. = merely a moral obligation.
3
Q
• Re Adams and the Kenssington Vestry –
A
- Held: there was no trust created by the testator who gave all his property to his wife ‘in full confidence that she would do what is right…’ = Cotton LJ – The statement may make a trust, ‘but what we have to look at is the whole of the will which we have to construe’.
- A merely moral obligation.
4
Q
• Cf. Comiskey v Bowring-Hanbury –
A
- ‘In full confidence that…she will devise it to one or more of my nieces as she may think fit…’
- The words ‘in full confidence’ could create a trust as long as this was the intention.
5
Q
• Re Hamilton –
A
- ‘Take the will you have to construe and see what it means, and if you come to the conclusion that no trust was intended you say so’ per Lindley LJ.
6
Q
• **Paul v Constance –
A
- Case where the court was generous in finding the trust.
- The case sets out what will be sufficient to establish that someone has intended to create a trust, the first of the ‘three certainties’. It is necessary for the settlor to ‘…show clear intention to dispose of property…so that someone else acquires a beneficial interest’.
- Facts: Mr Constance was married to D, his wife. He left his wife and met the C, and moved in with her. Later on, he divorced his first wife. Mr Constance received some money and decided to open a bank account. Mr Constance was opened in his own name and C could draw money on the account if she had a signed note from him.
- Mr Constance had told C that the money ‘was as much hers as it was his.’
- Mr Constance died without making a will and his wife, the administratrix of his state closed the account and claimed the sums contained in the account.
- The C argued that the sums contained in the account were held on trust for the benefit of her and Mr Constance jointly.
- Held: There was an express declaration of trust and the C was entitled to the money in the account.
- The CA held that the conduct demonstrated that he wished for the money to be held on trust for Mr Constance and Ms Paul jointly.
- Lord Justice Scarman – the statement ‘this money is as much yours as mine,’ creates a trust.
7
Q
• **Re Kayford –
A
- Megarry J: ‘‘It is well settled that a trust can be created without using the word ‘trust’ or ‘confidence’ or the like: the question is whether in substance a sufficient intention to create a trust has been manifested.’’
- It is nevertheless important that the settlor uses ‘imperative’ words.
- Facts:
- The director of Kayfords Ltd, a mail order business, were concerned about insolvency. They were receiving pre-payments for goods from the customers, and were concerned about this being taken by other creditors. They received advice about opening another account and deposit money from customers into that account. Suppliers of Kayford Ltd went insolvent, and soon Kayford also found that it could not survive. It went into liquidation and the creditors claimed that the money in the accounts was part of the company’s assets. It was contended that instead the money was held on trust for Kayford’s customers.
- Megarry J held that the money was subject to a trust. It fulfilled all the requirements for creation of a trust, including certainty of intention, beneficiaries and subject matter.
- Held;
- Kayford held the money in the account on trust for its clients.
8
Q
• Twinsectra Ltd v Yardley –
A
- The case is authority for rulings in the areas of ‘Quistclose’ trust and ‘dishonest assistance.’
- Twinsectra sued Yardely and two solicitors for failing to repay a loan.
- Twincsectra said that it would only give the loan if someone guaranteed Yardley’s payment. One of Yardley’s solicitors, Mr Leach refused to give a guarantee, however the Mr Sims guaranteed Yardley’s payment.
- Mr Sims had owed some money to Mr Yardley from previous dealings. Mr Yardley and Mr Sims agreed that if Mr Sims took the loan first, the prior debts would be considered repaid.
- Mr Sims promised Twinsectra Ltd that he would not released the money until all conditions were satisfied.
- However, Mr Sims then gave the money to Mr Yardley’s solicitor, Mr Leach who passed it onto Mr Yardley. Instead of using the money for the investment, Mr Yardley in breach of contract sued to pay off his debts.
- Twinsectra sued Mr Yardley to the get the money back and also both solicitors. Mr Sims was now bankrupt. It argued the money was bound by a trust, that Mr Sims was in breach of trust, and Mr Leach dishonestly assisted the breach.
- In the CA it was held that Mr Leach was dishonest because he had deliberately shut his eyes.
- Key: The solicitor’s undertaking that the money should only be used for one purpose so that the money is not at the borrower’s disposal was sufficient intent to create a trust.
9
Q
• Don King Productions v Warren
A
- Boxing promoters entered into partnership agreements relating to promotion and management of boxing.
- The issue was whether the partnership assets including all renewal and replacement agreements obtained by any partner were held to be in trust for partnership.
- Lightman J – An obligation binding the conscience of the person with legal ownership constitutes a trust.
10
Q
• Re Farepak Food and Gifts Ltd
A
- The joined administrators applied to the court for directions as to whether they could distribute funds they held to Farepak’s customers.
- The question arose as to whether the money paid to Farepak (via agents) after it had ceased to trade (the money paid to the agents was to be held for a period of time) could be said to be held on trust for the customers and therefore could be distributed to them straight away.
- Held: a trust was created.
11
Q
• *Annabel’s (Berkley Square) Ltd v Revenue and Customs Commissioners
A
- A case regarding the treatment of tips under the National Minimum Wage Act 1998. It led to the abolition of the exception of tips from the national minimum wage.
- Facts: Workers at Annabel had a ‘troncmaster’ (senior managers given the job by the employer) in charge of tips. Tips would be distributed to all the employees based on length of service under a points system. The Inland Revenue issued the NMWA 1998 s 19 enforcing that the employer was not entitled to deduct the amounts distributed through this tronc system from the workers’ wages. Furthermore, the NMWA said that money paid to customers by tip that is not paid through the payroll is not a legitimate reduction.
- Arguments:
- The employer’s argument: the troncmaster was always contractually bound to distribute the money and would therefore always go to the employer; it never became the employee’s money.
- The revenue’s argument was that when the money was handed over to the trnocmaster, there was a trust for him to pay the money to the employees. (my words… this is the action that created the trust)
- Held: There was a trust for the truncmaster to pay the employees.
- Rimer LJ: Preferred the Revenue’s arguments, holding that the tips were not part of the pay and the restaurants were in breach of the NMWA 1998.
12
Q
• *Jones v Lock
A
- The case concerns formality for creating a gift, and the possibility that if the gift were not properly completed with the required legal form, a trust could not be found. It held that equity would not ‘perfect an imperfect gift’ by creating a trust, if the proper formality for the gift had not been completed.
- Facts: A father returned from a business trip without a gift for his son. After being told off, he put a £900 cheque in the baby’s hand and said:
- ‘I give this to baby; it is for himself and I am going to put it away for him, and will give him a great deal more along with it.’
- 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 in a safe and dies six days later. It was argued that although there was a never an outright transfer because he had not signed the cheque, there was a trust. However:
- The CA held there was no trust, because the father’s intention was not an outright transfer, due to not signing the cheque.
- The court refused to perfect an imperfect gift through a declaration of a trust.
13
Q
• Richards v Delbridge
A
- Mr Richards wished to handover the business to Edward, a family member and expressed his intention through a short memorandum. He said: ‘This deed [that is the dead of leasehold] and all thereto belonging I give to Edward from this time forth with all the stock in trade.’ However, the gift failed because it was imperfect
- Held: There was no express declaration of trust it was intended as an outright gift and not to be held on trust.
- Sir George Jessel MR – said that for a trust to exist words equivalent to a trust must be used.
14
Q
• Snook v London and West Riding Investment Ltd
A
- The court considered a claim by a hire-purchase company for the return of a vehicle.
- The person with temporary ownership said the agreement was a sham/pretence. And in fact, the court held -
- Held: The word ‘sham’ should be used to describe an act or document where the do not intend to create the legal relations and obligations.
15
Q
• Midland Bank plc v Wyatt
A
- Mr and Mrs Wyatt, executed a trust over their home. The trust was put away in their safe. Mr Wyatt later borrowed from the bank on the security of ‘his’ house. There was no disclosure of the trust to the bank. The court took the view that the trust was a sham. It had been signed, put away, ignored, not disclosed and generally not acted on.
- The court took the view that the trust was not enforceable and hence a sham.
- The court took the view that even if the transaction was entered into without fraudulent motive or on the basis of mistaken advice, it was still void and therefore an unenforceable transaction.
