The Express Trust and the 3 Certainties

Question 1

Which case confirmed the need for the 3 certainties?

Answer 1

Knight v Knight 1849

Question 2

Who said “first … the word must be imperative …; secondly … the subject must be certain …; and thirdly … the object must be as certain as the subject.”?

Answer 2

Lord Eldon in Wright v Atkins 1823

Question 3

What are the three certainties?

Answer 3

Certainty of intention, certainty of subject matter, and certainty of objects

Question 4

Do trustees have a legal duty?

Answer 4

yes, trustees must know their obligations under the trust

Question 5

What is the requirement for there to be a certainty of intention?

Answer 5

If a trust was intended

Question 6

In which case courts determined the certainty of intention test?

Answer 6

Paul v Constance 1977

Question 7

Explain the requirements of the essential test in the certainty of intention

Answer 7

• Did the settlor wish for someone to hold the property on behalf of someone else, and be under legal duty to do so?
• The settlor does not need to know that they were in effect creating a trust

Question 8

What did the courts held in Paul v Constance?

Answer 8

A trust was intended to be created even though he didnt know what one was: “money is as much yours as mine”

Question 9

What happened in Paul v Constance?

Answer 9

Money paid into a bank account held only in one party’s name was found to contribute to an intention to create an express trust of the account over which the individuals were equitable tenants in common

Question 10

How courts infer the intention of the parties?

Answer 10

From the circumstances of the case

Question 11

What did Scarman LJ stated in explaining how to find intention in Paul v Constance?

Answer 11

‘underlying intention was that the money was jointly joined’

Question 12

Is it obligatory to use the word trust?

Answer 12

No, as confirmed in Re Kayford 1975

Question 13

If use of the word trust, does that mean that there is automatically a trust?

Answer 13

No, as confirmed in Re Kayford 1975.

• The Question is whether in substance a sufficient intention to create a trust has been manifested.
• The use of the word trust suggests a trust but is not conclusive

Question 14

How does the settlor need to intend to create a trust?

Answer 14

Settlor must have intended to impose a legal obligation on the trustee, not a mere moral obligation -> intended to create a trust rather than a gift/loan etc.

Question 15

If precatory language is used, is there a trust intended?

Answer 15

Moral obligation does not create a trust. Typically it will be a gift

Question 16

Do words involving a request such as desire, wishes, requests, is confident, that the party receiving the property will hold it for someone else, constitute a trust?

Answer 16

No, it lacks necessary intent

Question 17

Which case do the courts talk about the substance of intention?

Answer 17

Lambe v Eames 1871

Question 18

What was held in Lambe v Eames 1871?

Answer 18

“To be at her disposal in any way she may think best, for the benefit of herself and family”
=Widow is free to give property to who ever she wishes -> merely a gift.
- not a trust obligation
- Lack of certainty of intention

Question 19

Is there a trust created if the expression is just a hope or an expression of confidence?

Answer 19

no

Question 20

Is the assessment objective or subjective?

Answer 20

Objective

Question 21

Which cases did the courts determine the objective assessment?

Answer 21

Pearson v Lehman Brothers Finance 2013 and Re Adams and Kensington Vestry 1884

Question 22

In which case it was held that the trust is to be decided objectively rather than subjectively?

Answer 22

Pearson v Lehman Brothers Finance 2013

Question 23

What was held in Re Adams and Kensington Vestry 1884?

Answer 23

No imposition of a legal obligation -> absolute gift.

• “In full confidence that she would do what is right…disposal thereof between my children.”= a statement of desire and wish. ”In confidence” didn’t impose an obligation
• Imposing moral obligations are not legally enforceable.
• Court said previous authorities went too far and the aim is to determine the intention of the testator
• intention of the testator was not to impose a trust

Question 24

Which two cases can be used to show that the crucial factor in determining whether words impose a trust, is the words in the context of the will?

Answer 24

Re Adams [1884]

Comiskey v Bowring-Hanbury [1905]

Question 25

What was held in Comiskey v Bowring Hanbury 1905?

Answer 25

• “In full confidence that…she will devise it to one or more of my nieces as she may think fit…in default of any disposition by her thereof by her will or testament I hereby direct that all my estate…shall at her death be equally divided among the surviving said nieces.”= THERE IS A TRUST

Question 26

Despite use of the words ‘in full confidence’ and ‘absolutely’ in Adams and Comiskey, Adams was held to = no trust, and Comiskey was held to = yes trust. Why?

Answer 26

In Comiskey, he made such specific provisions for the property to be shared equally among the nieces. Whereas in Adams it is a bit more like he is trusting his wife in what she decides to do with the money, so it is more like an absolute gift.

Question 27

What was held in Re Steele’s Will Trust 1948?

Answer 27

where particular words used are the same as those previously recognised to be sufficient to create a trust. (Shelley v Shelley case)
- especially when drafted by lawyers

Question 28

In which case did these facts: Wife to her husband with “power to dispose of all such property by will amongst our children” come from?

Answer 28

Re Weekes’ Settlement 1897.
Court said the intention of the testatrix was similar to a gift. He could do with the property whatever he wishes.
NO TRUST because no obligation imposed on husband

Question 29

What was held in Commissioners v Richmond 1995?

Answer 29

No trust, merely a contractual position because the terms indicated it

Question 30

in which case it was held that there was a failure of gift?

Answer 30

Jones v Lock 1865

Question 31

Jones v Lock 1865

Answer 31

“…look you here, I give this to the baby” -> a joke will not create a trust
- Father attempts to gift a £900 cheque to his son that is payable to himself.

• Held: not an effective gift -> his own signature was needed to endorse to son.
• Neither was it intended to be held on trust for his son -> remained part of father’s estate.

Question 32

What is the difference between the case of Jones v Lock and Paul v Constance?

Answer 32

That in Paul, there was a joint bank account held on trsut for himself and Mrs Paul unlike in Jones v Lock

Question 33

When it is an absolute gift and when it is a trust?

Answer 33

Absolute gift= lack of certainty of intention

Trust= there is a certainty of intention

Question 34

Explain the concept of certainty of subject matter

Answer 34

Is the subject (property) of the trust certain?

-Trusts can be declared over tangible and intangible properties

Question 35

What are tangible and intangible properties?

Answer 35

Tangible: land, money, shares
Intangible: covenants, debts

Question 36

In Palmer v Simmonds 1854, why the courts held that “the bulk” of the estate to be held on trust was insufficiently certain?

Answer 36

because “the bulk” statement was not sufficiently clear what it meant. It could have meant 10% or 30%

Question 37

What was held in Boyce v Boyce 1869?

Answer 37

“All my other houses” to be held on trust was insufficiently clear.
-housing went back to estate since trust not executed= resulting trust

Question 38

Why Boyce v Boyce was not equitably good in what was decided?

Answer 38

• Harsh decision
• Possible solution (courts didnt adopt) (lack of common sense by courts)
• Court would assume that Maria would have picked the more valuable one and the lesser one would be given to Charlotte

Question 39

In which case it was decided that the words “a reasonable income from my other properties” was sufficiently certain?

Answer 39

Re Golay 1965

- Reasonable income ca be objectively decided by the courts based on context and history

Question 40

How can we identify the identity of the subject matter?

Answer 40

subject matter can be clearly defined, but the property must be identifiable

Question 41

List the cases that deal with intangible property

Answer 41

Hunter v Moss 1994, Pearson v Lehman Brothers 2010 and Re Harvard Securities 1997

Question 42

List the cases that deal with tangible property

Answer 42

Re London Wine 1986 and Re Goldcorp 1995

Question 43

What was held in Hunter v Moss 1994?

Answer 43

less certainty needed for identifying intangible property -> shares
o Shares don’t need segregation like bottles of wine/gold bullion -> all precisely identical
o Distinguish from Re London Wine & Re Goldcorp Exchange.

Question 44

What are the several principles established in Hunter v Moss?

Answer 44

• clarifying identity on death, type of share and chattels in a bulk

Question 45

Explain what does “clarifying identity on death” mean

Answer 45

-5% of shares declared to be held on trust in a will = valid -> executor of will picks shares.

Question 46

Explain what does type of share mean?

Answer 46

o If the settlor owned two companies and had declared a trust of % of shares without specifying which company the shares relate to = void -> no trust.
o Similarly, if the settlor held different classes of shares that would void the trust.

Question 47

Chattels in a bulk cases

Answer 47

Re London Wine 1986, Re Stapylton Fletcher 1994, Re Goldcorp 1995

Question 48

What was held in Re London Wine 1986?

Answer 48

Insufficient certainty on subject matter -> precise bottle of wine held on trust could not be identified -> no trust created.

Question 49

Why in Re Stapylton Fletcher 1994 a trust was created unlike in Re London Wine?

Answer 49

Because the wine was segregated and identifiable

Question 50

What was held in Re Goldcorp 1995?

Answer 50

-> was gold bullion held on trust for creditors in insolvency?
o Gold bullion that had been segregated from the bulk could be identified -> held on trust.
o Rest of the bulk could not be identified and so was not held on trust for creditors.

Question 51

However, which Act provides that a purchaser of an unascertained part of a bulk of good acquires property rights in that bulk.?

Answer 51

Sale of Goods (Amendment) Act 1995

Question 52

What was held in Re Harvard Securities 1997?

Answer 52

intangible property requires less certainty of subject matter.
o Distinguished from Re London Wine -> all shares are precisely identical, all wine is not.

Question 53

What was held in Pearson v Lehman Brothers 2010?

Answer 53

future identification of subject matter possible -> valid trust
o ‘A trust will not fail for want of certainty merely because its subject matter is at present not certain, if the terms of the trust are sufficient to identify its subject matter in the future.’

Question 54

What if the certainty of subject matter is absent?

Answer 54

o Property transferred to B from A with part of it to be held on trust for A, but that part unclear -> B will take all the property -> no resulting trust as the part for A is uncertain.
o Trust fails through uncertainty in the division of beneficial shares -> B will hold on resulting trust for A -> B was not intended to have any of that property beneficially.

Question 55

Explain the concept of certainty of objects

Answer 55

• Objects will usually refer to the beneficiaries in an express trust.
• Purpose trusts (charitable/non-charitable) -> the relevant object will be the purpose.
• Express trust for persons -> the objects of the trust must be defined with sufficient certainty to allow the trustees/court to execute the trust according to the settlor’s/testator’s intentions.

Question 56

What are the 6 possible matters to be considered for each type of trust?

Answer 56

o	Essential test of certainty?
o	Conceptual certainty -> Define with sufficient certainty the description of the class?
o	Evidential certainty -> Proving somebody is an object?
o	Ascertaining where the object of the class is located?
o	Size of the class?
o	Capriciousness test -> how sensible are the settlor’s/testator’s intentions?

Question 57

What is a fixed trust?

Answer 57

• Trustees must distribute the property to the beneficiaries in the identified proportions.
  o They have no discretion -> the objects of the trust are fixed.

Question 58

What is the essential test of certainty in fixed trusts?

Answer 58

Must be possible to identify all the beneficiaries.

Question 59

Which is the leading case that created the ‘Complete List’ test?

Answer 59

IRC v Broadway Cottages Trust 1955

Question 60

What did the courts held in IRC v Broadway Cottages Trust 1955?

Answer 60

o At the time when the trust property is to be distributed, it must be possible to draw a complete and exhaustive list of all the beneficiaries.

Question 61

Which type of certainty is ‘to satisfy the complete list test the definition of objects must be clear’?

Answer 61

Conceptual

Question 62

Give an example of a conceptual certainty

Answer 62

A fixed trust for the settlor’s friends will be void for conceptual uncertainty.

Question 63

What is evidential certainty?

Answer 63

Must be able to evidence who satisfies the complete list test

Question 64

Give an example of evidential certainty

Answer 64

£1,000 to be divided equally between the football players of my school team -> if the school no longer has the records then a complete list cannot be compiled.

Question 65

Explain the concept of ascertainability

Answer 65

-> Location/existence of all beneficiaries is not necessary -> trust still valid.
o Re Gulbenkian 1970 -> property distributed between the beneficiaries that can be located.

Question 66

What are the two types of conditions for certainty on fixed trusts?

Answer 66

Condition subsequent and condition precedent

Question 67

What is condition subsequent?

Answer 67

stricter test -> only necessary to consider if conceptually certain
o The exact event that will negate the beneficiaries interest must be known with certainty.
 Clavering v Ellison 1859
o If it cannot be established the condition is void -> Clayton v Ramsden 1943
o Re Tepper’s Will Trusts 1987 -> entitled to estate at age 25 if didn’t marry non-Jew.
 Use of an expert to decide what is meant of Jewish faith -> Re Tuck’s Settlement Trusts 1978

Question 68

What is condition precedent?

Answer 68

more relaxed test
o Re Barlow’s Will Trusts 1979 -> valid if just one person can be said to satisfy the condition
- Painting left in will by testator to be offered for sale to friends and family.
-Friends is sufficiently clear in cases of a condition precedent.
-Friends is not conceptually certain for discretionary trusts of fiduciary powers.



Question 69

Which is the leading case for conceptual certainty in fixed trusts?

Answer 69

Re Tuck’s Settlement Trusts 1987

Question 70

What did Lord Denning held in Re Tuck’s Settlement Trusts 1987?

Answer 70

• Conceptual certainty will not render a condition precedent void,
  o But will render a condition subsequent void -> stricter test with condition subsequent.
• Conceptual certainty may be resolved by referring matter to an expert 3rd party.

Question 71

Will evidential certainty render the condition void?

Answer 71

No

Question 72

Will ascertainability render the condition void?

Answer 72

No, condition must be satisfied before object is certain.

- If object cannot be ascertained condition will lapse -> property passes to those entitled to residue.

Question 73

Explain the concept of size of class

Answer 73

Unlikely a fixed trust subject to a condition will ever be unworkable from size of class.

Question 74

Explain the concept of capriciousness

Answer 74

no precedent -> likely that if the condition was found to be made without sensible intent then it should be disregarded.

Question 75

What are discretionary trusts?

Answer 75

• Trustees are granted a discretionary power that they must exercise appointing beneficiaries.
  o Deciding who will receive what in and in what proportions -> the objects.
  o Failure by the trustee to exercise the power will result in the court exercising it.
• The trustees must know for certain who the potential beneficiaries are to choose from.
  o Otherwise the trust will be void for uncertainty.

Question 76

What is the essential test for certainty in discretionary trusts?

Answer 76

‘Any given postulant test’ -> McPhail v Doulton 1971

Question 77

Which case decision did McPhail v Doulton overturn?

Answer 77

• HL overturned the ‘complete list test’ from IRC v Broadway Cottages Trust 1955.

Question 78

Is complete list still applicable?

Answer 78

yes but if it is the settlor’s intention, that if a trustee doesn’t exercise their power and select beneficiaries, then the property is to be divided amongst all the objects.
o In which case trust will be void for uncertainty if complete list test cannot be completed.
 Will occur only if the trustee fails to make appointments in a reasonable time.

Question 79

What was held in McPhail v Doulton 1971?

Answer 79

Validity turned on whether relatives/dependants were sufficiently certain objects.
o	Lord Wilberforce: Sufficient that it could be said with certainty that any given individual was or was not a member of the relevant class and it was not necessary to ascertain an exhaustive list.

Question 80

Is it sufficient to show that ONE person will satisfy the test?

Answer 80

No, as in Re Barlow.
 But for ‘any given person’ that comes forward -> it must be able to be decided that they either do or do not satisfy the test.

Question 81

Conceptual certainty in discretionary trusts

Answer 81

Description of the class must have sufficient clarity for certainty of objects

Question 82

which are the cases for conceptual certainty in discretionary trusts?

Answer 82

Re Baden’s Deed Trust (No 2) 1973, R v District Auditor ex p West Yorkshire MCC 1986, Re Tuck’s Settlement Trusts 1979, Re Barlow’s Will Trusts 1979

Question 83

What was held in Re Baden’s Deed Trust (No 2) 1973?

Answer 83

following decision of HOL in McPhail v Doulton
- ‘Relatives’ & ‘dependants’ held to be conceptually certain.
o Dependants -> ‘wholly or partly financially dependent on someone else’
o Relatives -> ‘descendant from a common ancestor’ / ‘next of kin or nearest blood relation’
 Re Barlow later defined family as ‘those related by blood’ -> smaller class

Question 84

R v District Auditor, ex p West Yorkshire MCC 1986

Answer 84

inhabitant of West Yorkshire’

Considered conceptual certain.

Question 85

Re Tuck’s Settlement Trusts 1979

Answer 85

‘being of Jewish Blood’ -> conceptually certain.

Question 86

What was held in Re Barlow’s Will Trusts 1979?

Answer 86

my friends’ = conceptually UNCERTAIN
o Too many classes/degrees of friendship.
o Browne-Wilkinson J Obiter: considered that the reasonable characteristics of friendship was sufficiently certain for a discretionary trust -> ISSUE NOT RESOLVED BY COURTS

Question 87

Evidential certainty in Re Baden’s Deed Trust (No 2)

Answer 87

-> Three different tests used by judges
- Sachs LJ -> Concluded: courts would never be defeated by evidential certainty.
o ‘Given postulant test’ concerned itself only with conceptual certainty.
o Once the meaning of the class was clear -> simply a question of fact on the evidence whether a person fell within the class.

-	Megaw LJ -> Concluded: not necessary to show a particular person was or was not a member of the class -> not necessary to ascertain all members of a class for a discretionary trust to be valid.
o	Sufficient if a substantial number of objects could be shown to fall within the class
o	‘Substantial number’ = use of common sense + degree in respect of the particular trust.

-	Stamp LJ -> Concluded: insufficient to show one person fell or did not fall within the class
o	Necessary to show ‘any given person’ would either fall or not fall within the class.
	Does not require a complete list to be drawn.
	Relatives defined as ‘descendants’ would void the trust -> hard relationship to prove. However, he defined them as ‘next of kin’ = evidentially certain.

Question 88

What is the preferred test? (evidential certainty)

Answer 88

Sachs LJ as it removes evidentially certain as a means of invalidating a trust.
o Even though Stamp LJ’s is most consistent with Lord Wilberforce’s ‘given postulant’ test from McPhail v Doulton.

o Fundamental principle that the testator’s/settlor’s intent will be respected if at all possible by upholding the trust.

o Evidential burden placed on the potential object to prove he is/isn’t a member of the class.

Question 89

Why the use of an expert is useful?

Answer 89

• Grant the trustees a power to appoint a third person to the role of arbitrator in the event of some uncertainty

Question 90

Leading case on the use of an expert

Answer 90

Re Tuck’s Settlement Trusts (1918)

Question 91

What did Lord Denning held in Re Tuck’s Settlement Trusts 1918?

Answer 91

that a trust, which provided the money was left on trust for the benefit of such of the testator’s issue who married the Jewish faith, would be valid because the court was able to ask the Chief Rabbi for advice as to the extent that there was uncertainty about any postulant

Question 92

Ascertainability in discretionary trusts. Necessary or not?

Answer 92

not necessary to ascertain where a particular object is/alive -> trust valid.
-McPhail v Doulton 1971

Question 93

Size of class in discretionary trusts

Answer 93

trust can be voided on grounds of administrative unworkability if the class is too large

Question 94

What did Lord Wilberforce suggested in McPhail v Doulton?

Answer 94

a trust for ‘all the residents of Greater London’ would be administratively unworkable and void.

Question 95

Re Hay’s Settlement Trust 1982

Answer 95

Sir Robert Megarry V-C recognised that a discretionary trust for anyone other than a few specified people would be administratively unworkable + void.
o	Unfair just to void it based on having a large class of people.

Question 96

Judicial and academic commentary on administrative unworkability

Answer 96

Lord Wilberforce in McPhail v Doulton, Sachs LJ in Re Baden (No 2), Morice v Bishop of Durham, Hardcastle 1990

Question 97

What did Lord Wilberforce stated in McPhail v Doulton on administrative unworkabiltiy?

Answer 97

trustee cannot perform duty and ascertain range of objects if class too wide.

Question 98

However, what was said in Re Baden (No 2) on administrative unworkability?

Answer 98

However:
Sachs LJ Re Baden (No2) -> size of class can be infinitely variable -> trustee only needs to know the width of the to then exercise their discretion

Question 99

What was said in Morice v Bishop of Durham on administrative unworkability?

Answer 99

Trustee fails to exercise their discretion -> court would struggle to execute the trust.

Question 100

What did Hardcastle 1990 commented on administrative unworkability?

Answer 100

postulated that the issue should be examined when considering evidential certainty and rejected the idea of denying a discretionary trust on the grounds of administrative unworkability.

Question 101

What is capriciousness?

Answer 101

Settlor must have had a sensible intent to create the trust -> otherwise will be void

Question 102

What was held in - R v District Auditor ex p West Yorkshire Metro CC 1986 ?

Answer 102

settlor has sensible intentions

Question 103

What was held in Re Manisty’s Settlement 1974?

Answer 103

‘greater London’ -> not sensible -> looks to the connection between the beneficiary and the settlor -> was a fiduciary power not discretionary trust though

Question 104

Have discretionary trusts been invalidated for capriciousness?

Answer 104

no