3 Certainties

Question 1

Simplest manifestation of intention

Answer 1

Trust in form of a deed (deed exempt from rule of consideration)

Question 2

Intention maxim

Answer 2

Equity looks at intent rather than form

Question 3

How can intention be expressed

Answer 3

Orally or in writing

→ Land must comply with s23(1)(b) LPA 1925

Question 4

Knight v Knight (1890)

Answer 4

For the creation of a private express trust, 3 certainties must be satisfied so trustees know their obligations under the trust:

1) Certainty of intention on part of settlor to create the trust
2) Certainty of subject matter (trust prop)
3) Certainty of object (beneficiaries)

Question 5

Paul v Constance (1976)

Answer 5

Mr C left wife for Mrs P. He received some money, and was advised to put in a separate bank account. Couple added joint bingo winnings and money for joint holiday. He said ‘this money is as much yours as it is mine’. C died. Wife tried to sought claim to bank account. HELD: was a trust for Mrs P - words and conduct

Question 6

Re Kayford (1975)

Answer 6

→Trust not intended to be created but party’s actions of holding bank account separate meant a trust could be based on the circumstances
→ Mail order company received pre-payments from customers, facing insolvency. Put money in separate bank account to deposit customer payments - called ‘Customer trust deposit account’. HELD: money in account held on trust for clients

Question 7

Jones v Lock (1865)

Answer 7

Expressed gave assets to the baby → court examined the surrounding circumstances and did not find a trust. Was a mere intention to make a gift/or trust towards wife than intention to make a trust for the baby

Question 8

Commercial v Private

Answer 8

→Businesses advised to take advice from lawyers
→ Courts intervene if express trust where non-commercial parties acting in private capacities
→ Re Kayford

Question 9

Re Farepak Food & Gifts Ltd (2006)

Answer 9

*Bad judgement
→ Christmas fund managed by Farepak, went insolvent. Had been attempts to create a new bank account which any further customer contribution were paid into to keep further contributions separate from other assets of Farepak. HELD: enforcing such trust would make customers preferred creditors → UNDERMINED intention to create a trust which was clearly there

Question 10

Relationship between bank and customer?

→Foley v Hill

Answer 10

Express contract → Banks are NOT trustees of their customers
→ Foley v Hill - money in a bank account is not subject to any trust arrangement. Money is repayable to customer on demand unlike general rule where debtor must seek to repay creditor

Question 11

Mussoorie Bank v Raynor (1878)

Answer 11

Precatory words do not form a trust → ‘I wish that’ and ‘I hope that’
→ Precatory words indicate a gift - trust is a duty/obligation

Question 12

Brynes v Kendall (2011)

Answer 12

D tried to deny intention to create a trust even though signed acknowledgement → terms were clear, words are given their ordinary meaning

Question 13

Distinguish between moral obligation & a trust
→ Re Adam and Kensington Vestry
→ CONTRAST to Comiskey v Bowring Hanbury

Answer 13

→ Re Adam: Testator left prop ‘in full confidence’ that she would make such use of it, do what was right for children’. Held: precatory, so passed to wife absolutely, not trust for children
→ Comiskey: Testator left wife whole estate ‘in full confidence she will make such use of it… at death will devise it to nieces… I direct that all my estate will be equally divided among surviving nieces’ Looks precatory but court CONCLUDED A TRUST for her wife for life and remainder for nieces equally - to prevent wife dealing with money absolutely

Question 14

Lassence v Tierney (1849)

Answer 14

If there is no intention to create a trust or power, the donee will take the property absolutely as a gift

Question 15

What is meant by certainty of subject matter?

Answer 15

Needs to be clear what prop is held on trust, and the beneficial interest must be clear → otherwise void
Trust asset must be segregated from all other property so its identity is sufficiently certain

Question 16

Is location a concern for certainty of subject matter?

Answer 16

No, because this can be ascertained later

Question 17

Re Osoba

Answer 17

Testator made bequest to widow for her ‘maintenance’ and to daughter for ‘training…up to uni’. Widow dead. Son claimed a share of surplus money. Held: No, was an absolute gift to wife and daughter. No RT, surplus money left belonged to daughter.

Question 18

Sprange v Barnard (1789)

Answer 18

Trust failed for lack of certainty of trust prop because wording was too vague. No identifiable prop. Money went to Sprange as an outright gift as opposed to a trust between the siblings.

Question 19

Re Last (1958)

Answer 19

‘Anything that is left’ of testator’s estate was held sufficiently clear → otherwise would have resulted to the crown
→ Pragmatism and policy?
→ Valid gift of residue - leave everything else - depends on circs

Question 20

Re Golay (1965)

Answer 20

Reasonable income to live on is objectively assessable and so trust is held sufficiently certain

Question 21

Boyce v Boyce

Answer 21

→ Where subject matter is not homogeneous and is left to B without any means of ascertaining the specific prop of each part, gift will fail.
Testator established a trust of 4 houses for his daughters M & C. M was to choose house she wanted, other held on trust for C. M died before making her choice. Trust failed as no longer poss to say which houses would be held on trust for C

Question 22

Re London Wine Co Ltd *

Answer 22

→ Orthodox approach - homogenous mass
→ Unsecured creditors of bankrupt wine trading company argued they should be able to claim the bottles of wine they had paid for. The bottles bought had not yet been individually identified. Company had not even promised to provide wine from its current stocks.
→ Held: even if company had said this was to come from current stocks, trust would have been uncertain → can’t be a trustee without identifying what for

Question 23

S20 Sale of Goods Act 1970

Answer 23

Protection to purchasers of an unsegregated part of a larger bulk of property → ‘identified bulk’

Question 24

Re Goldcorp (1995) Privy Council

Answer 24

→Affirmed London Wine
→ Gold bullion exchange went into insolvency. Exchange acted for clients in acquiring bullion for them + acted as a depository for bullion which clients asked it to buy. But, exchange slipped into practice of only taking physical delivery of as much bullion as needed to satisfy customer’s day-to-day needs.
→ Rule - not simply being logistically possible to identify the property itself has actually been segregated for purpose of subjecting it to trust arrangement.
→ No prop which could be said for certainty that it was for the trust

Question 25

Hunter v Moss (1994)

Answer 25

→Trust for intangible property - shares - no need to identify the specific shares to be held on trust - just needs to be part of a homogenous/identical larger whole → Would have been unconscionable for defendant to reside on his 'promise' to give the shares to the plaintiff

Question 26

What is meant by certainty of object?

Answer 26

Need to know whose benefit holding the trust for, need someone to enforce the trust. Without the B - return on resulting trust to settlor/estate

Question 27

Morice v The Bishop Durham (1805)

Answer 27

Should be someone (human) who can enforce performance of the trust, and be certain with regards to the identity of the person to benefit under the trust in order for courts to police trustees performance

Question 28

Re Benjamin (1902)

Answer 28

If B is missing - distribute shares due to 'practical probabilities' but does not remove equitable title. → Benjamin order

Question 29

IRC v Broadway Cottages

Answer 29

Fixed trust → need a complete list of B's → if any B's are uncertain - void and will return on RT

Question 30

Re Gulbenkian Settlement (1970)

Answer 30

``` Reversed rule which required Ts to be able to draw up a complete list of Bs for mere powers. If there is even one person in relation to whom the Ts cannot decide whether or not she falls within class of objects, then fiduciary mere power is invalid → test is still strict → Individual ascertainability test (is or is not) ```

Question 31

Re Hay's Settlement Trust (1982)

Answer 31

Held: fiduciaries have duty to: consider periodically whether to exercise the power; to consider the range of possible objects (beneficiaries) and to consider the appropriateness of the appointments made i.e. cannot be random

Question 32

McPhail v Doulton (1971)

Answer 32

``` Followed Gulbenkian → discretionary trusts also follow individual ascertainability test Payments were made in favour of 'employees, ex-officers or ex-employees of the company or any relatives and dependants'. Uncertainty over 'relatives' → Est that T's have a duty to survey field to identify width of class and distribute income from trust. Held: HoL decided term 'relative' could be rendered certain if were interpreted to mean 'descendants of common ancestor' ```

Question 33

Re Baden's Deed Trust (No2)

Answer 33

``` →McPhail v Doulton reheard → Looked at term 'relative' again - whether it could be said with certainty that any given individual was or was not a member of these classes → CoA said only if a class of B's is conceptually clear will is satisfy test. Stamp, Sachs and Megaw all had different reasoning → 4 aspects of uncertainty ```

Question 34

What were the different reasonings of judges in Re Baden's Deed Trust No(2)?

Answer 34

→ Stamp: 'Relatives' should be restricted to statutory next of kin → Sachs: Common ancestor family tree → Megaw: Certainty if a substantial no. of objects fell within class

Question 35

What were 4 aspects of uncertainty in Re Baden?

Answer 35

1) Conceptual uncertainty → linguistics 2) Evidential uncertainty → existence or whereabouts 3) Ascertain-ability → where imposs to find B, valid T must attempt to locate → court will order division of ascertained objects s27(1) TA 1925 - Benjamin order 4) Administrative unworkability → class too large, not workable

Question 36

Re Tuck's Settlement

Answer 36

Uncertainty of object can be removed by decision of a specified expert

Question 37

Re Barlow's WT (1979)

Answer 37

``` →Court attempted to mitigate full extent of 'is or is not' approach. Term 'friend' conceptually uncertain but was allowed →Testatrix provided an opportunity for any 'family or friends' to purchase paintings at especially low price (under strict application of Gulbenkian, would have failed.) B's had to prove they personally fell within the core of the beneficial class intended → Was a conditional gift but was certainty - less strict ```

Question 38

Difference between trust and power

Answer 38

``` Trust = obligation to do something Power = no obligation ```

Question 39

Types of power

Answer 39

1) Fiduciary power → power to someone already B's fiduciary. Obligation to act in good faith, cannot be irrational/capricious Have to consider using power, but no obligation to actually use 2) Non-fiduciary power → person acting in capacity but not as fiduciary e.g. family/friend