Unit 2 Flashcards
McPhail v Doulton [1971]
Lord Wilberforce stated that ‘a trust should be upheld if there is sufficient practical certainty in its definition for it to be carried out, if necessary with the administrative assistance of the court, according to the expressed intention of the settlor.’
PTNZ v AS [2020] EWHC 3114 (Ch), [42]
Master Shuman held that the court needs ‘to sit in the settlor’s armchair and construe the objective meaning of the words in the light of the relevant factual matrix.’
Knight v Knight (1840) 3 Beav 148
Lord Langdale MR established the three certainties required to create a valid trust. These include: the intention must be expressed in imperative terms, the subject matter of the trust must be clearly defined, and the beneficiaries or persons intended to benefit must be identifiable with certainty.
Edwards v Carter [1893] AC 360
the court held that children are deemed to lack the maturity required to form a valid trust. However, such a trust is considered voidable rather than entirely void. This means that upon reaching the age of majority (18 years old), the person can choose to affirm or repudiate the trust
Re Beaney [1978] 1 WLR 770
a trust created by a mentally incapacitated person is void ab initio, meaning it is invalid from the outset. According to the Mental Capacity Act 2005, the court has the authority to settle property or execute a will on behalf of an individual who lacks mental capacity.
Paul v Constance [1977] 1 WLR 527
the court held that the settlor does not need to understand the legal technicalities of a trust. If it can be demonstrated that the settlor intended to create a trust, the court will uphold that intention based on the circumstances and conduct indicating such a wish.
Wright v Atkyns (1823)
Lord Eldon emphasised that the words used to create a trust ‘must be imperative.’ While it is preferable to use clear terms such as ‘to hold in trust,’ such specific language is not strictly required, provided the intention to create a trust is clear from the wording used.
Deslauriers v Guardian Asset Management Ltd [2017] UKPC 34
Re Kayford (1975)
the courts confirmed that the word ‘trust’ does not need to be explicitly used to create a valid trust.
North v Wilkinson [2018] EWCA Civ 161
the court held that no specific language is required to create a trust, as long as the intention is clear
Staden v Jones (2008)
The court confirmed that the term ‘trustee’ doesn’t need to be used as long as the wording shows an intention to create trust obligations.
Kinloch v Secretary of State of India (1882) 7 App Cas 619
the court held that even if the word ‘trust’ is used, it does not automatically mean a trust has been created
Twinsectra Ltd v Yardley [2002] UKHL 12, [2002] 2 AC 164
the court held that ‘the court can infer an intent to create a trust from the circumstances of the case, the conduct of the parties, and careful consideration of any relevant document.’
Lambe v Eames (1871) Ch App 597
The testator left his estate to his wife, saying it was “for the benefit of herself and her family”. The court held these were precatory words (a wish, not a legal obligation) and did not create a trust.
Sir R Malins VC ruled that to impose a trust, there must be clear intention to restrict the absolute gift, which was not present. The wife received full ownership, and other family members had no enforceable rights.
Re Hamilton [1895] 2 Ch 370
the words ‘I wish them to bequeath them equally between the families of [X] and [Y] in such mode as they shall consider right’ were considered precatory, expressing a non-binding wish rather than creating a trust obligation.
Re Diggles (1888) 39 Ch D 253
the phrase ‘it is my desire that she allow AG an annuity of £25 during her life’ was held insufficient to impose a trust.
Mussoorie Bank v Raynor (1882) 7 App Cas 321
the words ‘feeling confident that she will act justly to our children in dividing the same when no longer required by her’ also lacked imperative force, resulting in no trust being created
Re Steele’s Will Trusts [1948] Ch 603
I request that ‘my said son to do all in his power’ was deemed a precatory statement, failing to create a legally enforceable obligation
Re Adams and the Kensington Vestry (1884) 27 Ch D 394
The testator left his estate to his wife, “in full confidence” that she would distribute it between his children. The court held these were precatory words, creating no legal obligation, and the wife received an absolute interest.
Cotton LJ stressed that the court must assess the entire will, not just isolated words like “confidence”. While such terms could imply a trust in some contexts, in this case, the overall wording showed the wife was meant to inherit absolutely
Comiskey v Bowring-Hanbury [1905] AC 84
The testator left his estate to his wife “in full confidence” that she would distribute it to his nieces, and if she did not, it would be divided equally among them after her death.
The Court of Appeal initially held that the wife took the estate absolutely with no trust for the nieces. However, the House of Lords reversed this, ruling that the “gift over” clause imposed a binding obligation, creating a trust for the nieces. The court emphasized that precatory words can create a trust if the overall will shows clear intention, as seen in the default clause.
Pearson v Lehman Bros. Finance SA [2010] EWHC 2913
the court held that terms such as “trust,” “custody,” “belonging,” “ownership,” or “title” used by the parties can be persuasive but are not conclusive in determining whether a beneficiary’s proprietary interest in the property exists.
Vucicevic v Aleksic [2017] EWHC 2335 (Ch)
The court held that the key factor in creating a trust is the testator’s intention, assessed through the words used, context, and circumstances.
The word ‘trust’ doesn’t need to be explicitly used for a trust to be valid.
Steele’s Will Trusts [1948] Ch 603
Mutatis Mutandis
the testatrix, through clause 2 of her will, gave a diamond necklace to her son as an heirloom, using language identical to that in Shelley v Shelley (1868) LR 6 Eq 540. Wynn Parry J held that the precise replication of wording from a professionally drafted will considered in Shelley v Shelley strongly indicated that the testatrix intended the necklace to devolve in the same manner.
The court concluded that the deliberate use of established legal language reflected a clear intention to create a binding trust concerning the diamond necklace’s inheritance.
Wilkinson and others v North and another [2018] EWCA Civ 161, [2018] 4 WLR 41
David Richards LJ stressed that a trust has significant and irreversible consequences, as the settlor relinquishes ownership of the property.
Therefore, the law requires certainty in three key elements.
These elements must be assessed objectively from documents, words, or conduct at the time of creation.
Later statements about the settlor’s intention are irrelevant.
Re Gulbenkian [1970] AC 508
Lord Upjohn held that courts must interpret the settlor’s intentions using judicial knowledge, experience, and common sense.
If the language is unclear, the court should assign a reasonable meaning to the words, but without distorting their natural meaning.
Jones v Lock (1865-66) LR 1 Ch App 25
Robert Jones attempted to give a £900 cheque to his infant son, saying “I give this to baby”, but took it back and locked it away. He intended to amend his will but died before doing so.
Lord Cranworth LC held that there was no valid gift or trust, as the words used were too informal and lacked certainty. He warned against treating casual statements as binding trust declarations. The cheque remained part of Jones’ estate, passing to his other children.
Paul v Constance [1977] 1 WLR 527
The deceased repeatedly told the plaintiff, “The money is as much yours as mine,” regarding a bank account in his sole name. They lived together, shared bingo winnings, and used the account jointly.
After his death, his estranged wife took out letters of administration, but the plaintiff claimed an equitable interest in the account, arguing an express trust had been created.
The court upheld that the deceased’s words and conduct showed a clear intention to create a trust, despite the lack of formal legal terms. Scarman LJ stressed that the court must consider the context, recognizing the deceased and plaintiff’s shared financial arrangement. The plaintiff was awarded half the account.
Henry v Hammond [1913] 2 KB 515
Unlike the family context, there is more of a reluctance to find a trust arising from a commercial transaction/relationship
Wang v Darby [2021] EWHC 3054 (Comm)
The High Court considered whether a trust existed over cryptocurrencies exchanged between the parties. The court held that imposing a trust would frustrate the commercial objectives of the transactions, which involved mutual exchanges with obligations to return equivalent assets.
The court emphasised that a trust requires a clear separation between trustee and beneficiary interests, which was incompatible with the mutual obligations of the arrangement. In commercial contexts, a trust should only be imposed if it aligns with the parties’ intentions and the transaction’s structure.
R v Clowes (No 2) [1994]
The court considered segregation of property as an indicator of a trust, though not conclusive on its own. In this case, investors’ money was held in designated client accounts, suggesting a fiduciary responsibility and a trust relationship.
Day v Harris [2014] Ch 211
Boxes of books, paintings, and manuscripts from Sir Malcolm Arnold were delivered to his children with a note stating they were “to keep and share or sell if they liked”.
The court held that this wording indicated an absolute gift, not a trust for his carer, despite her power of attorney and entitlement under the will.
The court reinforced that a failed gift cannot be reinterpreted as a trust. The delivery and clear wording confirmed the children’s full ownership of the items.
Loring v Woodland Trust [2014] EWCA Civ 1314
judges should apply common sense when interpreting testamentary documents
Re Freud (deceased) [2014] EWHC 2577; Loring v Woodland Trust [2014].
Judges can take extrinsic evidence where Section 21 of the Administration of Justice Act 1982 applies
Lassence v Tierney (1849) 41 ER 1379
A legacy given in terms suggesting outright ownership (e.g., “I give my property to X absolutely”) will be treated as an absolute gift, even if accompanied by non-binding recommendations on its use.
In this case, the court held that the legacy was an absolute gift, as there was no clear intention to create a trust. Any moral obligations attached were not legally binding and did not affect the absolute nature of the gift.
If a binding trust is intended but fails due to uncertainty of objects or purpose, the property reverts to the testator’s estate.
Swift v Dairywise Farms Ltd
The court held that milk quotas are property under s.436 of the Insolvency Act 1986 because they have independent economic value and can form the subject matter of a trust.
AA v Persons Unknown [2020]
The court held that cryptocurrencies are property under English law, despite not fitting traditional categories, due to their economic value and assignable ownership. Bryan J confirmed they can form the subject of proprietary rights, granting an interim injunction over 109.25 bitcoins paid as ransom
Wang v Darby [2021]
The High Court examined whether cryptocurrency could be held on trust. It concluded that no trust existed, as the commercial nature of the relationship did not align with the requirements for creating a trust.
Osbourne v Persons Unknown [2022]
The court held that non-fungible tokens (NFTs), such as digital art, are considered property. They can be the subject of a trust, reinforcing the legal recognition of NFTs as assets with proprietary rights.
Tulip Trading Ltd v Bitcoin Association for BSV & Ors [2023]
The court ruled that bitcoin developers owe fiduciary duties to their users. This decision challenges the notion of cryptocurrencies being entirely “decentralised” by imposing legal obligations on developers.
In the Estate of Last, Decd. [1958]
The testatrix left her estate to her brother with instructions that “anything that is left” should go to her late husband’s grandchildren upon his death.
The Treasury Solicitor argued it was an absolute gift, but Karminski J held that the words created a trust in favor of the grandchildren. The phrase was deemed sufficiently certain, as it referred to identifiable property remaining from the estate. The grandchildren were entitled to the remaining estate.
Re Golay’s Will Trusts [1965]
the testator directed that Mrs. Bridgwater should receive “a reasonable income” from his properties. The court ruled that “reasonable income” was objectively determinable, based on what is generally considered reasonable, rather than being subjectively defined by the testator or another person. This allowed the court to effectively carry out the testator’s intention using an objective standard.
