The Three Certainties- Intention

Question 1

Knight v Knight (1840)

Answer 1

In the express private trust there is a need for certainty. 1. Certainty of Words 2. Certainty of Subject Matter 3. Certainty of Object

Question 2

Modern tendency of the courts?

Answer 2

For the court to seek to uphold the trust wherever possible, in recognition of the fact that ordinary persons may not understand the formalities in the same way as lawyers might.

Question 3

Grbich

Answer 3

‘The court will bend over backwards to construe sense into instruments’ (but this can only go as far as is reasonable)

Question 4

Certainty of INTENTION- intro

Answer 4

Moffat- ‘The hallmark of an express trust is the existence of an intention to create a binding trust obligation.’ The parties would ideally have drawn up a detailed trust instrument, but this is not always done.

Question 5

Capacity?

Answer 5

The intention to create a trust is only valid if the settlor had capacity to create it. Mental incapacity. Under 18.

Question 6

Test for certainty of intention

Answer 6

Objective test based on the language used in the trust document and the circumstances in which it was created. TEST- The court should consider whether a reasonable person would think, based on the language used and the objective knowledge available to the settlor at the time, whether he intended for someone to hold property for the benefit of another so that he is under a duty to do so.

Question 7

The court’s approach when the word ‘trust’ is used in the document?

Answer 7

This may be an indication of intention, but it is not conclusive. Trust could be used in a number of ways i.e. in the moral sense.

Question 8

The court’s approach when the word ‘trust’ is omitted?

Answer 8

Maxim: Equity looks to intent not form.

Question 9

Re Kayford (1995)

Answer 9

Meagry- ‘it is well settled that a trust can be created without the words ‘trust’ or ‘confidence’. The question is whether in substance a sufficient intention to create a trust has been manifested.’

Question 10

The effect of precatory words?

Answer 10

Usually insufficient to demonstrate intention to create a trust because they do place the trustee under an obligation to do something. Indicative of a moral obligation. e.g. desire, wish, confidence, hope, belief, require

Question 11

Re Adams and Kensington Vestry (1884)

Answer 11

CONFIDENCE ‘I give all my estate and effects unto the absolute use of my wife in full CONFIDENCE that she will do with it what is right to the disposal thereof between my children, either in her lifetime or in her will on her decease.’ No trust for the children- created an absolute gift to wife. Cotton- ‘Confidence, if the rest of the context shows the trust is intended, may make a trust, but we must look at the whole will, and if the confidence is that she will do WHAT IS RIGHT as regards disposal, there is not on true construction a trust imposed on her.’

Question 12

Comiskey v Bowring-Hanbury (1905) HOL

Answer 12

CONFIDENCE- contrast with Adams. T left estate to his wife ‘in full CONFIDENCE that she will make such use of it as I should have made myself and that at her death she will divide it to one of more of my nieces as she thinks fit and in default of any such disposition by her will, it will be divided equally among my surviving nieces.’ Trust for niece was valid because the will gave a MANDATORY DIRECTION. Bequest to wife was the same as in Adams but due to language used here it was subject to a trust for niece on wife’s death, and directions given as to how it should be administered.

Question 13

Re Steel’s Will Trust (1948)

Answer 13

Where the language used is the same/very similar to language used in another case where an intention to create a trust was found is strong evidence of certainty of intention, even though precatory words are used. Especially true if the document was drafted by a lawyer. ‘I will give my necklace to my son to be held as hierloom by him and his eldest son o his decease and to descend to the eldest son of such eldest son and so on to the eldest son of his descendants as far as rules of law and equity will permit (and I REQUEST my son to do all in his power by his will or otherwise to give effect to my wish.’ Exact wording was used in Shelley (1868). HELD that nothing in later authorities requiring the court to find that Shelley is no longer binding, though the trend of modern decision-making is to treat precatory words as non-binding. However, if not for the precedent, these words would have been insufficient.

Question 14

Jones v Lock (1865)

Answer 14

Circumstances- purported self-declaration of trust. Loose conversations are insufficient intention to declare oneself trustee of property. Father returned from trip without a gift for his infant son. Produced £900 cheque payable to himself and placed it in the baby’s hand- ‘I am going to put this away for him.’ Died 6 days later. 1. No Trust- ‘It would be dangerous if loose words of this sort were sufficient intention to create a trust. F meant that he intended to prove for the child, not that he intended to create a property interest in the cheque. 2. No Gift- Cheque payable to himself.

Question 15

Paul v Constance (1977)

Answer 15

Circumstances- Family- Verbal statements and conduct. Deceased had left his wife for C but they remained married. After suffering an injury at work he was awarded damages. To avoid embarrassment of having a joint account with C he had his own account and damages were credited here. Money he and C won playing bingo and money drawn to pay for their holiday were also in this account. He had frequently assured C that the money was hers just as much as his own. On his death held that the money in the account was held on trust for C. Deceased had clearly intended this through his conduct and verbal statements. Scarman- ‘We are dealing with simple people who are unaware of the subtitles of equity but very well understanding their own domestic situation. When one considers the unsophisticated character of the deceased, the words he used on more than one occasion clearly present a declaration that the fund is as much C’s as his own.’

Question 16

Rowe v Prance (1999)

Answer 16

Circumstances- Family- verbal statements and conduct. D had been having an extra marital affair with C with 14 years. Said he would leave his wife and sell the mat home and use the proceeds to buy a yatch where he and C would live and sail the world. He did not seek divorce or sell the home. He did buy the yatch. He registered it in his sole name because he said C didn’t have an Ocean Master’s Licence (neither did he). BUT he would often describe it as ‘ours’. Relationship broke down. C granted declaration that he held the match on trust for she and he in equal shares. His words (‘ours’) were the crucial finding from which intention to create the trust was inferred.

Question 17

Henry v Hammond (1913)

Answer 17

There is a general reluctance to find an intention to create a trust in a commercial relationship (but if clear evidence of the relevant intention is adduced then a trust will be found).

Question 18

Re Clowes (No 2) (1994)

Answer 18

Commercial

Case: D falsely advertised in their brochure that monies invested would be kept in a separate client account. Also said that the payees would retain the beneficial interest in the monies. In fact, mingled the money with the main accounts and used for personal purposes.

Decision:

1. There was a trust over the monies because objectively a reasonable person would think that the obligation to separate the monies and that the payees held the beneficial interest would be a certain intention to create a trust.
2. An obligation to separate is indicative of this intention, but not decisive alone.
3. The difference here was the promise that BI remained with the payees.
4. A right to mingle the property would show that there was no intention to create a trust.

Question 19

Re Lewis’ of Leicester (1995)

Answer 19

Commercial. Department store licensed concessionaires to trade in its store. Some paid the money they made into tills controlled by the department store who would pay the money back to the concessionaires, less a commission. On the department store’s administration the department co still had money belonging to the concessionaires. HELD: the money was held on trust for the concessionaires, because the department co had kept this money in a separate account, indicating that it intended to hold it on trust (but the store did have a BI in the commission).

Question 20

s.21 Administration of Justice Act 1982

Answer 20

NB: Extrinsic evidence is external, outside evidence or evidence that is inadmissable or not properly before the court, jury, or other determining body. Extrinsic evidence is often referred to in the context of interpretating a will that is vague. Cannot have evidence of testator’s intent for a will unless s.21 applies.

The judge cannot consider extrinsic or other subjective evidence on construing a testamentary trust unless s.21 applies.

(1) Applies to a will if-
(a) part of it is meaningless;
(b) language used is ambiguous;
(c) evidence, other than evidence of the T’s intent, shows that the language used in any part of it is ambiguous in light of the circumstances
(2) Extrinsic evidence, including evidence of T’s intention, may then be admitted to assist in interpretation.

Question 21

Re Fraud (deceased) (2014)

Answer 21

Testamentary Trust- certainty of intention. Where s.21 does not apply an objective test is adopted to the determination of intention (i.e. reasonable person would think T intended based on language used and non-extrinsic background circumstances). Will said F’s residuary estate was left to his solicitor and his daughter. Objectively there was no intention to create a trust held by them for the rest of his children since other clauses did refer to S and D as trustees, but not the one pertaining to the residuary estate AND he had revoked an earlier will in which he had referred to them as trustees in this clause, The clause was not meaningless or ambiguous, meaning the fact that T had told the solicitor and daughter that they should hold the property on a secret trust for the other children.

Question 22

What is a sham trust?

Answer 22

Where a settlor appears objectively to have intended to create a trust but on closer inspection the settlor has an ulterior motive to create a different set of rights and obligations. An intention to create a false or misleading appearance that a trust has been created. Both the trustee and settlor must intend it to be a sham.

Question 23

Midland Bank v Wyatt (1997)

Answer 23

There may be a sham trust even where the trust is not declared with dishonest/fraudulent intent.

The test is simply whether the trust was entered for some ulterior motive other than to create a trust.

• Mr Wyatt settled his family home on trust for the benefit of his wife and daughter, so as toimmunise it from any business failure he might suffer.
• When his business did fail, he sought to protect his house from creditors by relying on the settlement earlier executed, of which his wife was a trustee.
• It emerged that Mr Wyatt’s wife had had no knowledge of the effect or nature ofthe declaration she signed as ‘trustee’

Judgement: There was a sham, and the declaration of trust was void and could not be enforced. Where a trustee goes along with a settlor neither knowing nor caring what he or she is signing, this constitutes sufficient intention to create a sham.

Question 24

A v A (2007)

Answer 24

A trust cannot be a sham if either the original or subsequently appointed trustee had not been a party to the sham at the time of appointment, irrespective of what the settlor intended. Why? possibly because a high threshold should be met to ensure trusts are not too readily upset.

Question 25

A non-sham trust cannot…

Answer 25

Cannot become a sham trust, if not a sham trust at its inception. A trustee who treats a non-sham trust as a sham may be liable for breach of trust.

Question 26

Shalson v Russo [2003]

Answer 26

Rimer: “When a settlor creates a settlement he purports to divest himself of assets in favour of the trustee, and the trustee accepts them on the basis of the trusts of the settlement. The settlor may have an unspokenintention that the assets are in fact to be treated as his own and that the trustee will accede to his everyrequest on demand. But unless that intention is from the outset shared by the trustee (or later becomesso shared), I fail to see how the settlement can be regarded as a sham.