Three Certainties - Rev notes Flashcards
the three certainties
- certainty of intention
- certainty of subject matter
- certainty of object
The three certainties - origin case
= Lord Langdale in Knight v Knight (1840)
Certainty of intention
needs to be evidence that S intends to create a trust
=> as in create a ‘trust-like’ sitº where T doesn’t hold the right for himself by for the benefit of another
CI - elements (4)
- using word ‘trust’ not necessary: Richards v Delbridge, Paul v Constance
- intention to create a trust like situation : Paul v Constance
- intention to create a legally binding duty : Re Adams and Kensington Vestry
- intention to make a gift (which turns out to be imperfect) not enough : Milroy v Lord
Certainty of subject matter
= must be possible to ascertain which are the rights T is supposed to be holding on trust
=> “the creation of a valid trust requires the existence at that time of some assets to which the trust would apply” - David Richards LJ in North v Wilkinson at [14]
CSM - the rules (3)
- In principle, any right can be held on trust: land, chattels, choses in action…
- Even unassignable rights = Swift v Dairywise Farms Ltd (unassignable milk quotas) or Don King Productions Inc. v Warren (contractual rights subject to a non-assignment clause)
- BUT can’t declare a trust of rights to be acquired in the future = Re Ellenborough
CSM - problematic cases (3)
- vague or uncertain description
- failure to segregate
- testamentary disposition
CSM - vague or uncertain description
- Palmer v Simmonds: testatrix’s direction to hold ‘the bulk of my residuary estate” too uncertain bcs impossible to ascertain whether a given right is pt of the bulk or not (no clearly right or wrong answer)
- Contrast with North v Wilkinson: ‘the assets of a particular business’ is ok bcs there is a right answer, even if diff to find)
CSM - failure to segregate - tangibles - rule & reason
Rule: purported DOT over title to part of a collection of similar / identical (unsegregated) tangible things will fail for USM
Reason = if pt of tangible mass gets damaged, imp to know whose got damage
= Re London Wine Co and Re Goldcorp
CSM - failure to segregate - tangibles - Re London Wine Co
identical wine bottles sold to and stored for clients but not segregated / specifically assigned not held on trust bcs uncertainty subj matter (would’ve been sufficient stock)
CSM - failure to segregate - tangibles - Re Goldcorp
portions of bullion sold to customers but not specifically ID or segregated :
- title doesn’t pass on sale, only once identified
- no trust either bcs uncertainty of subject matter (wouldn’t have been sufficient stock)
CSM - failure to segregate - intangibles
Hunter v Moss : fact that 50 (out of 950) indistinguishable shares assigned to B enough for certainty of SM (any 50 would do), no need for them to be segregated
CSM - Failure to segregate - testamentary dispositions
Not so much of a pb bcs executor under fiduciary duty to segregate / ID subject matter
Certainty of object
= for whom does T hold the rights on trust ?
CO - fixed trusts
‘fixed list’ / ‘complete list’ test = IRC v Broadway Cottages
CO - fixed trusts - identifying them
2 key features
(1) Ts have no power to determine who are the beneficiaries
(2) Ts have no power to determine the size of the beneficiaries’ shares
CO - Fixed trusts - ‘complete list test’
authority = Broadway Cottages v IRC it must be possible to draw a complete list of beneficiaries
- Reason = only possible to make a distribution where the number of beneficiaries matters if you know who all the Bs are
- not a pb if can’t find B, as long as identified (pay their share into court)
CO - DTs vs MPs - common features (2)
- T has some discretion as to either ID of Bs and/or respective share of each B
- is or is not test
CO - DTs vs MPs - distinction
Obligation vs possibility
- DT: T must / has a duty to exercise his discretion and make a choice
- MP : T may exercise his discretion but doesn’t have to, settlement provides solution if doesn’t
CO- duties of holder of MP
= Megarry VC in Re Hay’s ST: duties of a mere power holder are threefold - T must:
(i) Consider periodically whether or not to exercise the power
(ii) Consider the range of objects of the power
(iii) Consider the appropriateness of individual appointments
+ obviously duty to obey trust settlement
CO - court not supposed to compel exercise of a MP
= Lord Wilberforce in McPhail v Doulton
CO - is or is not test - MPs
= *Re Gulbenkian’s ST**
CO - is or is not test - DTs
= McPhail v Doulton
=> Lord Wilberforce adopting the test in Re Gulbenkian for DTs as well as MPs
“the trust is valid if it can be said with certainty that any given individual is or is not a member of the class”
CO - is or is not test - Lord W overruling IRC v Broadway Cottages
Court in Broadway Cottages relied on assumption that only way for court to enforce a DT = equal division among all objects needs a fixed list
=> Lord W rejects that view bcs equal division “surely the last thing the settlor intended” + “produces a result beneficial to no one” in case of a wide class
=> court can exercise T’s discretion (?)
CO - is or is not - evidential vs conceptual uncertainty
conceptual U = you don’t know what you’re trying to prove
vs
evidential U = you know what you’re trying to prove but don’t have the evidence to prove it
CO - conceptual certainty
= it can be stated clearly / with precision what makes someone a member of the class
=> a conceptually uncertain term will admit multiple equally valid interpretations
=> imp to apply is or is not even in theory
=> eg. ‘friends’: conceptually uncertain bcs ≠ ppl mean ≠ things by friends, attach ≠ characteristics to the word, term admits multiple equally valid interpretation
CO - evidential certainty
= it is possible to show that a given person satisfies that definition (or doesn’t)
=> possible to apply is or is not in theory, only diff in practice
=> eg : ‘students matriculated to read law at Oxford in 1922’ = conceptually certain but could be diff to prove eg if records have been destroyed
CO - conceptual v evidential uncertainty - case abt it
= Re Baden nº2
CO - conceptual v evidential uncertainty - Re Baden nº2 - Sachs LJ
sufficient certainty for is or is not test to be satisfied if class is conceptually certain, doesn’t matter if evidentially uncertain (= diff to prove in indiv cases)
CO - conceptual v evidential uncertainty - Re Baden nº2 - Megaw LJ
necessary to ID a “substantial number of objects”, doesn’t matter if some diff borderline cases
± compatible w/ Sachs LJ : proving that a substantial number of persons fall within the class = conceptual certainty - but evidential uncertainty (unable to prove that one specific person is in) is ok
CO - conceptual v evidential uncertainty - Re Baden nº2 - Stamp LJ
seemed to be reasserting some sort of ‘complete list’ test -> “Validity or invalidity is to depend upon whether you can say of any individual […] ‘is or is not a member of the class’, for only thus can you make a survey of the range of objects or possible beneficiaries.”
/!\ incompatible w/ McPhail v Doulton : “the power […] does not fail simply because it is impossible to ascertain every member of the class” (Lord W)
CO - conceptual v evidential uncertainty - ccl
- what you need is a conceptually certain class to satisfy the test
- Evidential uncertainty does not make the trust uncertain (reconciling Sachs LJ and Megaw LJ)
CO - Cure of uncertainty - by a trustee
- Dundee Hospital Board v Walker (1952) (HL) : evidential uncertainty resolved by opinion of T
- Re Leek (1969) (CA) : ‘the persons who have a moral claim’ = uncertain but ‘the persons whom the trustees think have a moral claim’ = sufficiently certain
=> “The trustees are made the arbiters and the objects are such persons as they may consider to have a moral claim” = cure by T ok even for conceptual uncertainty
Contrast with :
- Re Coxen (1948) : determination by T doesn’t cure uncertainty
CO - Cure of uncertainty - by a 3P
Allowed in Re Tuck :
- Lord Denning MR said yes
- Everleigh LJ : seemed to reject third-party cure, but allowed it in by the backdoor : ‘‘[The settlor] is in effect saying that his definition of “Jewish faith” is the same as the Chief Rabbi’s definition. Different people may have different views or be doubtful as to what is “Jewish faith” but the Chief Rabbi knows and can say what meaning he attaches to the words.’
- Lord Russell didn’t express an opinion
CO - admin unworkability
= An otherwise certain class of objects may be void if it is so large as to be unworkable (Re Baden nº2)
Pb for DTs but not powers = Re Hay’s ST
CO - Capriciousness
An otherwise certain class of objects will be void if it is ‘capricious’ = ‘so hopelessly wide as not to form “anything like a class”’ (Lord W in Re Baden nº1)
-> eg ‘a trust for the residents of Greater London’: no common ch btw Bs aside from accidental geographical agglomeration, nothing to guide discretion of T (Templeman J in Re Manistry)
-> applies to DTs and powers
Gifts subject to condition precedent - Re Barlow’s Will Trust
- S (in will) granted option to purchase to family members and “any friends” = conceptually uncertain class of objects
=> Brown Wilkinson J held that disposition nonetheless valid - Bcs disposition being invalidated would result in the loss of property to any person who was clearly a member of S’s family or a friend of S
- No need for complete list, only for executors to be able to say of any indiv coming forwards whether they have proved they are friend or family (is or is not)
=> presumption = X is not pt of the class unless can show that (s)he is - HMM : approach creates ‘practical difficulties’ (awkward decisions to make) BUT difficulties justified bcs ensures that “the vested entitlements of any clear friends are upheld”
