Requirements of Express Trusts

Question 1

Requirements for express trusts

Answer 1

certainty of intention
certainty of subject
certainty of objects
beneficiary principle
perpetuity rules

properly constituted (title vested)
formalities

Question 2

3 certainties requirement

Answer 2

Knight v Knight

Question 3

Certainty of intention

Answer 3

Objective intention (Challioner v Juliet Bellis)
from the view of an objective, reasonable person (Byrnes v Kendle)

Question 4

Nature of intention

Answer 4

Not general, equity will not help a volunteer (Richards v Delbridge)

Question 5

How to determine

Answer 5

Look at the whole document if any (Re Adams and Kensington Vestry)
Words and conduct (Paul v Constance)

Question 6

Freedom to mix up trust property with own property

Answer 6

No intention (Henry v Hammond)

Question 7

Requirement for intended trustee

Answer 7

Consent needed (Robinson v Pett) but won’t fail for want of trustee (Harris v Sharp)

Question 8

Trustee vs settlor

Answer 8

Trustee’s intention < settlor’s intention (Hallows v Lloyd)

Question 9

Duties

Answer 9

Must take on everything, not just pick and choose (Re Lysaght)

Question 10

Self-assuming trustee

Answer 10

Not possible (Jasmine Trustees v Wells & Hind)

Question 11

Consent from beneficiaries

Answer 11

Required (Standing v Bowring, Hardoon v Belilios)

Question 12

Certainty of subject for tangible property

Answer 12

Objective construction (Palmer v Simmonds - ‘bulk’ X, Re Golay’s - ‘reasonable outcome’ Yes)

Question 13

Issues of identification for tangible property

Answer 13

2 of my 10 (no certainty) versus 20% of my 10 (certainty, whole pool included)

Re London Wine Co
Re Goldcorp Exchange

Question 14

Certainty of subject for intangible trust property

Answer 14

Indistinguishable and fully capable of satisfying the trust, no issue of identification (Hunter v Moss, Pearson v Lehman Brothers)

Question 15

How to reconcile rules for tangible vs intangible trust property

Answer 15

Segregation always necessary
Segregation unnecessary, based on circumstances
Different rules for different types
No certainty of subject mater problem for intangible assets

Question 16

Certainty of object

Answer 16

Different rules for different types of trusts

Question 17

Certainty of object for fixed trusts

Answer 17

Complete list (IRC v Broadway Cottages Trust), unless the trust is subject to a condition precedent (Re Barlow’s Will Trusts)

Question 18

Certainty of object for discretionary trusts

Answer 18

“Is or is not” test (Re Baden’s No.1), with conceptual and evidential certainty elements
Application varied in Re Baden’s No.2
Stamp - strict
Sachs and Megaw - less strict

Question 19

Varied approaches in Re Baden’s No.1

Answer 19

Stamp: ‘relatives’ and ‘dependents’ too wide, no degree of evidential uncertainty possible (complete survey)

Sachs: conceptual certainty ok, evidential certainty is a ‘question of fact’ with burden on the claimant

Megaw: conceptual certainty ok, evidential certainty fulfilled once ‘substantial number of objects’ identified

Question 20

Resolution of uncertainty (Curing uncertainty)

Answer 20

Conceptual uncertainty: question of law (Re Wynn), cannot be cured by the trustee, but later can be delegated (Re Tuck’s), again rejected (Re Wright’s)

Evidential uncertainty: question of fact (Re Coxen) where trustees’ decision can be sufficient

Question 21

Uncertainty in terms of administrative unworkability

Answer 21

R v District Auditor ex p West Yorkshire Metropolitan CC

Criticism: why large size is relevant factor (see Re Baden’s No.2)
McKay: Re Baden’s = flexibility

Question 22

Beneficiary principle

Answer 22

The court must be able to enforce a trust, and there must be ascertainable persons in whose favour the court can decree performance

Question 23

Exception to beneficiary principle

Answer 23

Charitable purpose trusts

Question 24

Status of non-charitable purpose trusts

Answer 24

Void (Leahy v AG for NSW)

Question 25

Beneficiary principle vs enforcer principle

Answer 25

Beneficiary with equitable proprietary interests vs party with a right to hold trustees accountable and bring case to court

Question 26

Arguments for beneficiary principle

Answer 26

No beneficiary principle = trustee duties are an illusion

Easy to shield assets (tax fraud)

Question 27

Arguments for enforcer principle

Answer 27

Follow off shore jurisdictions, make UK appealing to settlors

Question 28

Essence of the trust

Answer 28

Beneficiaries’ rights (Matthews) vs holding of property subject to equitable duties (Hayton)

Question 29

Exceptions to rule for non-charitable purpose trusts

Answer 29

Anomalous testamentary private purpose trusts (e.g for foxhunting)
Absolute gift of property with a motive (Re Sanderson’s, Re Abbott’s, Re Osoba)
Rule in Re Denley’s (class of individuals with strong interest)

Question 30

Saunders v Vautier rule

Answer 30

A beneficiary of full capacity that has a vested interest in the trust propety can call for a transfer of legal title from the trustees, irrespective of settlor’s intention

Question 31

Application of Saunders v Vautier

Answer 31

Cannot be used by fluctuating class

Applies to several beneficiaries separately as long as share can be severed (Stephenson v Barclays Bank)

Question 32

Soundness of the rule (Langbein vs Matthews)

Answer 32

a) protective purpose
b) ease of evasion
c) ‘dead hand’ of the settlor
d) role of trusteeship to mediate between settlor and beneficiary interests
e) donor’s intention > donee
f) contract element of the trust

Question 33

Difference between varying and ending the trust

Answer 33

Liew and Mitchell: yes there is a difference

• unfair to rewrite the deal between settlor and trustee
• rule only to end the trust, not to vary it
• if there is cooperating T, can collaborate and change
• if no cooperating T, S.19-21 of TOLATA can require trustee to retire
• law is very pro-beneficiary

Nitikman: yes
Waters: no

Question 34

Perpetuity rules

Answer 34

a) rule against remoteness of vesting (for persons)

b) rule against inalienability (for non-charitable trusts)

Question 35

Rule against remoteness of vesting

Answer 35

Common law: ‘relevant life + 21 years’, to be determined definitely when the trust is created

Perpetuities and Accumulation Act 2009: perpetuity period no more than 125 years, s.7 wait and see rule

Question 36

Rule against inalienability

Answer 36

Void trust if possible that by end of perpetuity period there will not be someone with vested interest (Re Hooper)