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Equity law > trusts > Flashcards

trusts Flashcards

1
Q

Lambe v Eames

A

‘in any way she may think best’

The words are precatory so did not impose a legal obligation of a trust

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2
Q

Three Certainties

A

Certainty of:
Intention - settlor’s acts or words to make a trust
Subject Matter - identifiable property
Object - beneficial interests

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3
Q

Why did Comisky succeed whilst Re Adams failed to create an express trust?

A

Comisky although precatory was on the whole imperative. Re Adams ‘do what is right’ was too vague to infer a trust. (Failure of intention).

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4
Q

Paul v Constance and Intention

A

Look at the “substance” not the “form” - reads the text as a whole
“as much as hers as is mine” - oral declaration of trust

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5
Q

Certainty of Intention

A

Intention is assessed objectively (Staden v Jones)
Through words or actions
Trust and confidence not needed (Re Krayford)

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6
Q

Certainty of Subject Matter

A

Property specified Objectively (Moore)

and how shares are to be divided

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7
Q

Certainty of Object

A

Class of individuals identifiable with degrees of discretion

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8
Q

Emery’s points for certainty of object

A

Conceptual Certainty - precision of language
Evidential Certainty - allows specific persons to be identified
Ascertainability - extent of “whereabouts or continued existence”
Administrative Unworkability - extent of practicability for trustees to discharge duties

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9
Q

Duty to Survey the Field

A

Hawkesley v May -
trustee must inform beneficiaries of their rights (except fixed trusts)
Discretionary Trusts:
Re Baden - ‘diligent and careful’ enquiries must be made
Fiduciary Powers (lesser):
merits of each person - do they fit?
Re Hay’s - appreciation of the WIDTH

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10
Q

IRC v Broadway Cottages

A

Complete list needed:

“Siblings” and “Employees” was too vague to identify

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11
Q

Constitution of Trust

A
  1. A makes an outright gift to B
  2. A declares himself a trustee, to hold property on trust for B
  3. A transfers the property to C as a trustee to hold on trust for B
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12
Q

Re Kolb’s WT

A

‘residue’ was a legal term thus subject matter that could be identified

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13
Q

Palmer v Simmons

A

‘bulk of my estate’ was insufficient in certainty of subject matter

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14
Q

Hunter v Moss

A

Bulk

Certainty of subject matter - although 50 shares were not identified as all 950 were the same this did not matter

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15
Q

Re Sayer

A

Failed on ‘in or out’ test for employees as needed records to apply it

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16
Q

Re Baden

Administrative Unworkability

A 
Administrative Unworkability
definition of beneficiaries:
"hopelessly wide" to form a class 
e.g. all the residents in Greater London 
Apply: ex p Yorkshire
'any...inhabitants in West Yorkshire'
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17
Q

Re Krayford

A

no need for “magic” words of “trust” or “confidence”

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18
Q

Re London Wine Shippers

A

Failure of certainty of subject matter
Ascertainability
Type of wine was not specified

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19
Q

Re Gulbenkian

A

Facts:
Nubar Sarkis Gulbenkian wives and his children or…for the time being in existence under whose care or control or…be employed or residing“.
- Too uncertain to make a trust = gift over

Administrative Unworkability
‘Does cost outweigh the benefits’

“any given postulant” test - needs to be able to identify whether they “fit” the category

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20
Q

Tito v Waddell

A

“trust” can mean different things

21
Q

Jones v Lock

A

Whereby no provisions have been made it is difficult/not possible to construe a trust on words

22
Q

McPhail v Doulton

Facts:

A 
The trustees shall apply the net income of the fund in making ‘at their absolute discretion’ to or for the benefit of any of the officers... ex-employees of the company.
Clause 9(a) - "shall" + power of selection = discretionary trust
23
Q

Re Coxen

A

‘in the opinion of my trustees’

24
Q

McPhail ‘in or out’ test

A
25
Q

Goodman v Gallant

A

The TR1 conveyancing form was changed from 1 April 1998 - purchasers to declare their interests in writing. Declarations in writing that comply with the formalities, absent duress, fraud, undue influence, misrepresentation = conclusive

26
Q

Re Steele

A

Precatory words but old precedent

27
Q

Umpire

A

Re Wynn - trustee cannot decide
Re Coxen - opinions of my trustees she shall…
Re Tuck’s ST - ‘an approved wife’

28
Q

Knight v Knight

A
  1. if the words are so used, that upon the whole, they ought to be construed as imperative;
  2. if the subject of the recommendation or wish be certain; and,
  3. if the objects or persons intended to have the benefit of the recommendation or wish be also certain.
29
Q

Trust Definition

A

legal and equitable title separated

30
Q

McPhail v Doulton Purpose

A

powers separate from trusts (fixed list)
Attempt to fudge the law to encourage a discretionary trust to a fiduciary power in order for no need of complete list/certainty of object

31
Q

Mere Power

A

capacity to do legal things but no compulsion (gift over)
e.g. “the trustee MAY advance £1,000 to X”

Re Hay’s ST, Megarry VC:
A mere power is very different [from an ordinary trust obligation]. Normally the trustee is not bound to exercise it, and the court will not compel him to do so. That, however, does not mean that he can simply fold his hands and ignore it, for normally he must from time to time consider whether or not to exercise the power, and the court may direct him to do this.

32
Q

All trusts need certainty of beneficiaries and no discretion

A

IRC v Broadway Cottages

33
Q

Burrough v Philcox

A

Beneficial shares - divided equally

34
Q

McPhail:

Changes to Discretionary Trust

A

After McPhail, in a discretionary trust, the trustee has the discretion to appoint within a class of potential objects and the trust will fail only if the definition of the class is “conceptually uncertain”. Providing the meaning of the words in the trust are sufficiently clear, so it can be said of any given person whether they would be or not a member of the class, it does not matter if every potential member cannot be identified by evidence

35
Q

Emery: McPhail Conceptual certainty

A

Settlor to define the class; the words he employ can either be very precise and ‘admit of little or no argument’ or can be highly imprecise,

The crucial point:
Conceptual certainty is different from evidential certainty; the former refers to the fact that the class defined by the settlor has a precise boundary of meaning, in the sense that it is possible to state the necessary criteria for a person to be a member of that class
36
Q

McPhail v Doulton

Lord Wilberforce

A

It is striking how narrow and in a sense artificial is the distinction, in cases such as the
present, between trusts or as the particular type of trust is called, trust powers, and powers
…
Equal division is surely the last thing the settlor ever intended: equal division among all may,
probably would, produce a result beneficial to none

Maxim equity is equality

37
Q

Gissing v Gissing 1971

A

Husband paid mortgage and gave wife an allowance. Wife paid for furniture and clothing etc. Did not constitute as a financial contribution. No beneficial interest, despite her and her son living there until the divorce.

38
Q

Sarah Worthington

A
39
Q

Lord Diplock

A
40
Q

Midland Bank v Wyatt

Sham

A

[T]he trust deed was executed by him, not to be acted upon but to be put in the safe for a rainy day … as a safeguard to protect his family from long-term commercial risk should he set up his own company.

41
Q

Sarah Worthington

A 
Bulk
Re London Wine + Re Goldcorp 
(no identifiable property as chattels)
- must be fungible 
e.g. shares which can be objectively assessed
42
Q

Re Baden (No 2): In or out

A

Re Baden’s Deed Trusts (No 2) [1973] Ch 9 (CA):

Sachs LJ: Enough to be able to prove X is in the class. No need to positively prove X is not in the class. (Treat don’t knows as out)

Megaw LJ: And a substantial number of objects required (not good enough to have a few relatives, need a ‘substantial number’)

Stamp LJ; Must be able to positively prove whether X is in or out of the class. (need to prove both – almost complete list test?)
3 possibilities: In, out, don’t know

43
Q

Discretionary Trust

A

They have to exercise the trust but has the discretion in how this is determined (which beneficiaries to share it to)
In or out Test
Alastair Hudson gives the example of a trust “that [the trustee] shall divide the £1,000 between any of my sons who become unemployed, with the power to retain the whole of that £1,000 for the remainder beneficiary”. This is a discretionary trust; the word “shall” means the trustee is forced to exercise his power, while the “power to retain the whole of that £1,000” gives him discretion over whether to retain the money.

44
Q

Mere and Trust Power Difference

A

In practice = little substantive difference

Between trustee is exercising a permissive mere power and the trustee is exercising a discretionary trust power, therefore can use the same is or is not test.

In both:
T cannot act capriciously and is obliged to consider the exercise of her power in accordance with scope of power.

Each potential B of a discretionary trust has the right to be considered as a potential recipient of the benefit and can ask the court to enforce this right

45
Q

Re Gestetner’s Settlement

A 
[T]here is no obligation on the trustees to do more than consider – from time to time, I suppose
– the merits of such persons of the specified class as are known to them and, if they think fit, 
to give them something
46
Q

Re Golay ST

A

one of my flats in her lifetime

47
Q

Series of Gifts Subject to a Condition Precedent

A

Most lenient test
donee does not acquire an interest in the property until he satisfies the relevant condition
e.g. a gift of £500 to A provided that he passes his year one LLB examinations
Re Allen - member of the CofE
Re Barlow ‘family and friends’ - uncertain but valid

48
Q

McPhail v Doulton (1971); Re Baden No1 (HL)

A

The trustees shall apply the net income of the fund in making at their absolute discretion grants to or for the benefit of any of the officers and employees or ex-officers or ex-employees of the company or to any relatives or dependants of any such persons in such amounts at such times and on such conditions (if any) as they think fit.

49
Q

McPhail: Goff J

A

Power not a trust (apply test for certainty in CoA Re Gulbenkian)

Equity law (6 decks)

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