Three Certainties Flashcards
Any declaration of trust must satisfy the three certainties of intention, subject matter and objects
Knight v Knights
The use of the term ‘trust’ is not necessary to create a trust
Re Kayford
What is required is
- imperative wording
- an intention to create a legally binding obligation
The intention is defined by looking at
both the words and the content of the settlors
An instrument of trust cannot be used to perpetrate a fraud e.g. a Sham Trust
Hitch v Stone
Percatory words do not always create a trust
The courts look to various aspects to determine the ‘true intention of the settlor’
Intention: the relationship between the potential trustee and the beneficiary
Re Adams and Kensington Vestry
Intention: How does the intention appear in the context of the entire will?
Re Hamilton
Intention: the mandatory nature of the instruction
Comiskey v Bowring
‘she knows what she has to do’ was too vague to demonstrate intention
Kasperbauer v Griffiths
‘Knowing his wishes’ and ‘giving what is appropriate’ were too vague.
Margulies v Margulies
‘to be at her disposal, in any way that she may think best for herself and her family’ was held to be a gift rather than a trust
Lambe v Eames
‘I direct that all my estate shall be divided equally’ was sufficiently certainty, as the language was imperative.
Comiskey v Bowring-Hanbury
Conduct can be sufficient to demonstrate intention, in this case sharing lottery winnings.
Paul v Constance
If there is no intention to create a trust
It will usually be a gift to the donee
The main distinction between a trust and powers are
- Trusts are imperative and powers are discretionary
- Trusts are enforced while powers do not have to be exercised.
- Powers do not fail for administrative unworkability, while trusts may do.
Powers may be given to trustees:
- As either a fiduciary or non-fiduciary capacity
- Independently of a trust instrument or can be given as part of the trust
- If as part of the trust, typically this is a power of appointment.
The property subject to the trust and the size of the beneficiaries shares in it must be certain.
Sprange v Barnard
- Certainty of Subject
The property subject to the trust must be clearly defined
Palmer v Simmonds - ‘the bulk of my estate’ (Subjective and unclear)
Re Golay - ‘a reasonable income’ (objectively definable so certain
Sprange v Barnard - ‘whatever is left’
Where the trust property is selected from tangible property it must be possible to identify and segregate off that specific property intended
Re London Wine
If the property involved is intangible the subject matter will be sufficiently certain without the specific shares having to be segregated
Hunter v Moss
Lehman Brothers
The beneficial entitlement must be capable of determination within fixed trusts.
Boyce v Boyce
If the declaration of trust lack certainty of subject matter
The property will be treated as an absolute gift - if the property has not been properly defined
It will returned back to the estate by way of resulting trust - if the beneficial interest cannot be determined.
The Persons for whom the trust is intended must be certainly known
Morice v Bishop of Durham
Fixed Trusts
Where the proportions of property for each beneficiary are set
Fixed trusts require both conceptual and evidential certainty - the ‘complete list test’
IRC v Broadway
i.e. you need to list or be able to list ALL beneficiaries that are supposed to benefit from the trust.
Discretionary Trusts and Powers
Where the proportions are decided at the trustees’ discretion
Discretionary trusts only require conceptual certainty
- the is/ is not test
Re Gulbenkian i.e. it must be ascertainable whether any given person is or is not a member of the class of objects
‘relatives’ in the context of ‘evidential certainty’ in discretionary trusts.
Sachs LJ in Re Baden No.2
- they must prove that they are a relative
Curing conceptual uncertainty
- using the dictionary definition
- delegation
- reconstruction of the instrument
Delegation to a third Party to cure uncertainty
Re Tuck’s Settlement
Construing the instrument as something other than a trust e.g. a gift subject to a condition precedent
Re Barlow’s Will Trust
Even a conceptually and evidentially certain trust could still fail for administrative unworkability
ex p West Yorkshire - a class of 2.5. million people was too large for a trust to work.
If conceptual uncertainty cannot be cures
The trust WILL FAIL
Evidential uncertainty
The words used to describe the criteria for the beneficiaries are clear enough that we cannot prove that some of the individuals satisfy the criteria or not.
e.g. a child of the settlor who has lost his brith certificate
Effects fo Evidential uncertainty
- does not typically invalidate the trust
- Reversal of the burden fo proof: it is for the benficiary to prove who they are and not for the trustee to do so (Re Baden No.2)
Ascertain-ability of Beneficiaries
Location
- We know who they are but we cannot find them
- this does not typically invalidate the trust
Administrative unworkability and capricioussness
Re West Yorkshire MCC
Powers are vlid if it can be said with certainty whether any given individual is or is not a member of the class and does not fail simply because ti is impossible to ascertain every member of the class.
Lord Wilberforce in Re Gulbenkian
‘Deserving’ persons was held to be too uncertain in terms to define a class of persons
Public Trustee v Butler
Gifts subject to a condition precedent
e.g. each of my friends can have a piece of my furniture
The least strict test
Even friends is sufficiently certain because only reasonable evidence is required.
Re Barlow’s
Certain intention but and uncertain subject matter
Trust is void (Palmer v Simmonds)
Certain subject matter but uncertain intention
A gift to the trustee (Re Adams)
Uncertain object
A resulting trust beck to the settlor (Vandervell v IRC)
Where there is more than one certainty missing
The trust will fail
- void
‘to enjoy one of my flats during her lifetime and to receive a reasonable income from my other properties’
Re Golay’s Trust
- found to be sufficiently certain.
Trust ‘for such persons as the company may consider to have a moral claim on the settlor’.
Re Leek
- No problem with this clause, depended on who the trustees believed to have a moral claim
