Sem 1 - Certainties 1 Flashcards
Re London Wine Co [1986] PCC 121
📌 Principle: Unsegregated assets cannot form a valid trust—certainty of subject matter requires specific identification of trust property.
💡 Key Point: If a trust is meant to apply to a portion of an unsegregated bulk, it fails for uncertainty unless the portion is earmarked.
🔑 Memory Aid: “Lost in the Wine Cellar” – If a trustee doesn’t set aside the exact bottles of wine meant for the beneficiaries, the trust is too vague to be valid.
📝 Facts: Customers paid for wine, but the company did not separate or identify specific bottles for them. When the company went bankrupt, customers claimed a trust over the wine. The court rejected this claim, ruling the uncertainty of subject matter made the trust invalid
Hunter v Moss [1994] 1 WLR 452
📌 Principle: A trust over intangible, identical assets (such as shares) does not need specific segregation—certainty of subject matter can still exist.
💡 Key Point: Unlike physical goods, shares in the same class are fungible, so no need for specific earmarking.
🔑 Memory Aid: “Moss and the Magic Shares” – Unlike bottles of wine, shares are interchangeable—so Moss could hold a trust over 50 shares even without separating them.
📝 Facts: Moss promised Hunter 50 shares out of 950 but didn’t specify which ones. Unlike in Re London Wine, the court upheld the trust, reasoning that all the shares were identical and interchangeable.
Re Goldcorp Exchange Ltd [1995] 1 AC 74
📌 Principle: For tangible goods (like gold), certainty of subject matter requires specific allocation—otherwise, a trust fails.
💡 Key Point: If you don’t set aside the trust property, there is no trust—certainty is crucial for tangible assets.
🔑 Memory Aid: “Goldcorp’s Missing Gold” – Customers paid for gold but never got their specific bars—so the trust melted away.
📝 Facts: Goldcorp customers paid for gold bullion, but the company did not allocate specific bars to them. When the company went bankrupt, they tried to claim a trust, but the court ruled no trust existed due to uncertainty of subject matter.
- Re Harvard Securities Ltd [1997] EWHC Comm 371
📌 Principle: Hunter v Moss applies to shares—a trust over an unallocated portion of a homogeneous class of shares is valid.
💡 Key Point: Shares don’t need to be identified individually—they are all equal units in a pool.
🔑 Memory Aid: “Harvard’s Share Shuffle” – Just like in Hunter v Moss, all identical shares are valid trust property, even if not specifically allocated.
📝 Facts: Harvard Securities held shares in bulk for investors. The court ruled that because the shares were fungible, the lack of specific allocation did not make the trust fail.
Patrick Parkinson, ‘Reconceptualising the Express Trust’ (2002) 61(3) CLJ 657
📌 Main Argument:
Parkinson argues that traditional trust law focuses too much on intention, while modern commercial trusts operate differently.
He suggests a shift from intention-based analysis to functional analysis, where courts look at practical outcomes rather than rigid rules.
🔑 Key Quote: “Trusts in the commercial context function as risk-allocation devices, rather than as strict expressions of settlor intention.”
👀 Why It’s Important: Challenges the traditional focus on intention and supports a more flexible, pragmatic approach to trusts.
David Wilde, ‘The Three Certainties Required to Declare a Trust – or Is It Four? “Distributional Certainty”’ (2020) 79(2) CLJ 349
📌 Main Argument:
Wilde suggests that there may be a fourth certainty in trust law: distributional certainty.
This refers to whether a trustee can actually distribute the property fairly and effectively.
🔑 Key Quote: “A trust should not only be certain in intention, subject matter, and objects—but also in its practical enforceability.”
👀 Why It’s Important: Proposes a new framework that could influence future judicial reasoning on certainty of subject matter and administrative feasibility.
How do the courts decide whether a settlor/testator intends to create a trust?
📌 Answer:
Courts look at the words and conduct of the settlor to determine if they intended to impose binding obligations on the trustee.
The precatory words test (e.g., “I wish” vs. “I direct”) helps distinguish between a trust and a mere gift.
🔑 Key Case: Knight v Knight (1840) – Set out the three certainties required for a valid trust:
Certainty of intention
Certainty of subject matter
Certainty of objects
What is the relationship between certainty of intention and certainty of subject matter?
📌 Answer:
Certainty of intention ensures that the settlor actually wanted to create a trust.
Certainty of subject matter ensures that there is clearly identifiable trust property.
Without certainty of subject matter, a trust cannot function, even if intention is present.
Also, must be certainty of intention as to how much subject matter was intended to be given to object.
🔑 Key Case: Re London Wine (uncertain subject matter = no trust).
