Three Certainties

Question 1

Knight v Knight [1940]

Answer 1

• 3 certainties required for a valid express trust:
  
  • Intention (to create a trust)
  • Subject-Matter (the property subject to the trust)
  • Objects (beneficiaries)

Question 2

Certainty of Intention

Answer 2

• It must be clear that the settlor has shown a clear intention to create a trust.
• Usual to look at words used by settlor to ascertain their intention.

Question 3

Imperative words

Answer 3

Show an intention to create a legally binding obligation

Question 4

Precatory Words

Answer 4

Express a mere hope or a wish

Question 5

Lambe v Eames (1871)

Answer 5

• Courts lean against finding a trust when precatory words are used.

Question 6

Re Adams and the Kensington Vestry [1884]

Answer 6

• Words used did NOT indicate an intention to impose a legally binding obligation on her.

‘in full confidence that she will do what is right as to the disposal thereof between’

Question 7

Comiskey v Bowring-Hanbury [1905]

Answer 7

• Words used DID indicate an intention to impose a legally binding obligation on her.
• ‘absolutely, in full confidence that she will make such use of it…And in default of any disposition by her thereof by her will or testament I hereby direct that all my estate and property…shall be divided among the surviving said nieces.*

Question 8

Paul v Constance [1977]

Answer 8

An intention to create a trust can also be inferred from the donor’s conduct.

Dispute over whether Mr C’s wife (from whom he was separated but not divorced) or his new partner, Mrs P, was entitled to money held in a bank account in the deceased’s sole name. During their relationship Mr C had made arrangements for Mrs P to withdraw money with his permission. Only Mr C withdrew money once, which was split evenly between them and he often told Mrs P that the money was ‘as much yours as mine’. They also paid some joint bingo winnings into the account.

Decision: Held these actions were suf

Question 9

Certainty of Subject Matter

Answer 9

• It must be certain what property is subject to the trust for there to be a valid trust.
• Certainty of subject matter comprises 2 separate, though related, aspects, namely certainty of:
  
  • Property – it must be certain what property is subject to the trust
  • Beneficial entitlements – it must be certain what part of the property each beneficiary is entitled to or how their beneficial entitlements will be determined.

Question 10

Sprange v Barnard [1789]

Answer 10

“the remaining part of what is left” was too uncertain for the trust to take effect over any part of the property because the property was not sufficiently clearly identified by the expression

Question 11

Palmer v Simmonds [1854]

Answer 11

• the bulk of my estate – insufficiently certain to ascertain the trust property.

Question 12

Boyce v Boyce [1849]

Answer 12

Even if the property is clear, it must be certain how it will be divided among beneficiaries.

• Elder daughter should receive house of her choosing and other houses conveyed to younger daughter. Eldest daughter died in testator’s lifetime so could not choose a house. No trust in favour of youngest daughter as her interest could not be determined until eldest daughter had chosen. No longer possible so trust void for uncertainty of subject matter.

Question 13

Re Golay’s Will Trusts [1965]

Answer 13

Provision that a ‘reasonable income’ be provided out of a fund could be held to be valid if one could make an objective measurement of what would constitute a reasonable income in any particular case

Question 14

Re London Wine Co (shippers) Ltd [1986]

Answer 14

Tangible property subject to a trust must be segregated or separately identifiable when stored with other similar property for there to be certainty of subject matter

Buyers of wine sought to establish a trust over bottles of wine stored in the seller’s warehouses. No trust had been created as bottles had not been segregated or identified in any way. Therefore, when seller went into liquidation, couldn’t say particular bottles were held in trust for them

Question 15

Re Goldcorp Exchange [1995]

Answer 15

Tangible property subject to a trust must be segregated or separately identifiable when stored with other similar property for there to be certainty of subject matter

• Purchasers of gold bullion claimed rights to it on the insolvency of company. Claims rejected as no identifiable property, even though every piece of gold bullion was fundamentally identical.
• Compare with Hunter v Moss

Question 16

Hunter v Moss [1994]

Answer 16

It is not necessary to segregate the property comprising the trust fund if the property was intangible property, like ordinary shares, with each unit being indistinguishable from another unit

Owner of 950 of 1000 shares in a private company orally declared himself a trustee of 5% of the issued shares. Held to be sufficiently certain even though no particular 50 shares had been identified as subject to the trust, so was unclear which shares were for him.

Compare with Re Goldcorp Exchange

Question 17

Certainty of Objects

Answer 17

• A trust must be for ascertainable beneficiaries. The objects of a trust need to be certain so that the trust can be enforced in their favour by the court, if necessary.

Question 18

Morice v Bishop of Durham [1805]

Answer 18

• Usually the ‘objects’ of the trust will be the beneficiaries.
• If it is impossible to say who those beneficiaries are, it may be impossible to properly enforce the trust.

Question 19

IRC v Broadway Cottages Trust [1955]

Answer 19

Test for a fixed trust is the Complete List Test – must be possible to draw up a complete list of all the beneficiaries

• Fixed trust requires conceptual and evidential certainty.

Question 20

Conceptual Certainty

Answer 20

• Precision of language used by the settlor to define the class of persons whom they intend to benefit. If objects not clearly defined, not possible to draw a conclusive list.
• Required in Fixed Trusts

Question 21

Evidential certainty

Answer 21

Extent to which the evidence in a particular case enables the trustees to identify the objects of the trust

Required in fixed trusts

Question 22

McPhail v Doulton [1971]

Answer 22

• Test for discretionary trusts is the Is/Is Not Test
• If any person in the world entered a room, the trustee should be able to say if they are or are not a trustee

Question 23

Re Baden’s Deed Trusts (No 2) [1972]

Answer 23

‘Relative’ and ‘dependent’ can be defined with sufficient certainty, which means the trust is valid.

• ‘Relative’ could be rendered certain if interpreted to mean ‘descendants of a common ancestor’: although that sounds confusing too as we all descend from a common ancestor
• Once conceptually certain, it then becomes a question of evidence as to whether any postulant can be proved to fall within it (Sachs LJ)
• The court also said where there is a wide class of beneficiaries (e.g. ex-employees of large company) trustees cannot just wait for postulants to come forward → trustees must make a survey of the class to get a feel for who is potentially in class when exercising their discretion
• Stamp LJ said that this is NOT the same as a requirement to make a list

Question 24

R v District Auditor ex p West Yorkshire Metropolitan County Council [1986]

Answer 24

A trust can fail on the grounds of being quite simply unworkable – there were 2.5 million potential beneficiaries.

Question 25

Re Barlow’s WT [1979]

Answer 25

• Test for certainty of objects is less strict for a gift than for a trust.
• If a gift, as long as a person could show by any definition they are a part of the relevant class they would be able to receive the gift.
• In the case of Barlow, the class was ‘friends’