Three Certainties - Rev notes

Question 1

the three certainties

Answer 1

• certainty of intention
• certainty of subject matter
• certainty of object

Question 2

The three certainties - origin case

Answer 2

= Lord Langdale in Knight v Knight (1840)

Question 3

Certainty of intention

Answer 3

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

Question 4

CI - elements (4)

Answer 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

Question 5

Certainty of subject matter

Answer 5

= 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]

Question 6

CSM - the rules (3)

Answer 6

• 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

Question 7

CSM - problematic cases (3)

Answer 7

• vague or uncertain description
• failure to segregate
• testamentary disposition

Question 8

CSM - vague or uncertain description

Answer 8

• 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)

Question 9

CSM - failure to segregate - tangibles - rule & reason

Answer 9

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

Question 10

CSM - failure to segregate - tangibles - Re London Wine Co

Answer 10

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)

Question 11

CSM - failure to segregate - tangibles - Re Goldcorp

Answer 11

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)

Question 12

CSM - failure to segregate - intangibles

Answer 12

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

Question 13

CSM - Failure to segregate - testamentary dispositions

Answer 13

Not so much of a pb bcs executor under fiduciary duty to segregate / ID subject matter

Question 14

Certainty of object

Answer 14

= for whom does T hold the rights on trust ?

Question 15

CO - fixed trusts

Answer 15

‘fixed list’ / ‘complete list’ test = IRC v Broadway Cottages

Question 16

CO - fixed trusts - identifying them

Answer 16

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

Question 17

CO - Fixed trusts - ‘complete list test’

Answer 17

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)

Question 18

CO - DTs vs MPs - common features (2)

Answer 18

• T has some discretion as to either ID of Bs and/or respective share of each B
• is or is not test

Question 19

CO - DTs vs MPs - distinction

Answer 19

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

Question 20

CO- duties of holder of MP

Answer 20

= 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

Question 21

CO - court not supposed to compel exercise of a MP

Answer 21

= Lord Wilberforce in McPhail v Doulton

Question 22

CO - is or is not test - MPs

Answer 22

= *Re Gulbenkian’s ST**

Question 23

CO - is or is not test - DTs

Answer 23

= 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”

Question 24

CO - is or is not test - Lord W overruling IRC v Broadway Cottages

Answer 24

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 (?)

Question 25

CO - is or is not - evidential vs conceptual uncertainty

Answer 25

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

Question 26

CO - conceptual certainty

Answer 26

= 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

Question 27

CO - evidential certainty

Answer 27

= 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

Question 28

CO - conceptual v evidential uncertainty - case abt it

Answer 28

= *Re Baden nº2*

Question 29

CO - conceptual v evidential uncertainty - *Re Baden nº2* - Sachs LJ

Answer 29

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)

Question 30

CO - conceptual v evidential uncertainty - *Re Baden nº2* - Megaw LJ

Answer 30

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

Question 31

CO - conceptual v evidential uncertainty - *Re Baden nº2* - Stamp LJ

Answer 31

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)

Question 32

CO - conceptual v evidential uncertainty - ccl

Answer 32

- 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)

Question 33

CO - Cure of uncertainty - by a trustee

Answer 33

- *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

Question 34

CO - Cure of uncertainty - by a 3P

Answer 34

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

Question 35

CO - admin unworkability

Answer 35

= 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*

Question 36

CO - Capriciousness

Answer 36

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**

Question 37

Gifts subject to condition precedent - *Re Barlow's Will Trust*

Answer 37

- 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"