3 certainties - Add The Cases For Uncertainties Flashcards

Question

Shah v Shah

Answer 1

Lonndon Wine and Goldcorp involved a fluctuating mass, so the court could notidentify the assets beneficially owned by each customer by reference to a proportion of the whole bulk — i.e. could not say that each customer in London Wine owned 5% of the winecompany’s total stock of wine because the total stock was constantly fluctuating — therefore,the customer’s beneficial interest in the wine stock, at any time, might not be the same as hercontractual entitlement to wine, whereas property in Hunter could be identified as a proportionof the bulk of shares (e.g. 1/20 — the Lehman Bros. approach

Answer 2

Rule =shares are identical, chattels are not Facts: Stockbroker went bankrupt — question was whether thepurchasers of shares have beneficial interests. Practice was to buy blocks of shares and sell themin parcels, though not registering them in the names of clients. Neuberger J: Clients had abeneficial interest under the trust, despite the shares not being segregated. As long as the totaland proportions were clear, that was enough. Distinction between London Wine and Hunterapproved

Answer 3

argues Hunter is flawed. If the trustee sells 50 shares and reinvests the profits, did hesell his shares, or the beneficiary’s shares? He rejects a Lehman Bros tenants in commonanalysis because this involves substituting the employer’s intention to give the employee 50shares for a different intention to create a tenancy in common. oMy thoughts: This substitution of intention is better than the law rejecting the trustaltogether and completely defeating employer’s intention. If employer gave away all 950 shares to different people it would be impossible tosay which donee held employee’s shares. Rules for tracing in a mixed fund cannot applybecause shares, unlike money, have an earmark, individual identity. Employee could not claimagainst donees to recover his 50 shares so his proprietary interest in those shares is illusory. Even in cases where tracing doesn’t work, inability to trace does not always mean thereis no valid trust. Hunter is fair, sensible and workable, did not involve an insolvent debtorunlike London Wine and Goldcorp so does not involve courts rewriting insolvency rules. It is awelcome extension of “court’s policy of preventing a clearly intended trust from failing foruncertainty”

Answer 4

Certainty of objects, defines the fixed trust complete test Facts: Settlor directed £80,000 to be held on trust, with the incometo be applied for the benefit of all or any members of a wide class of beneficiaries includingBroadway Cottages (a charity). CA: trust is void for uncertainty. The same rule applied to fixedand discretionary trusts — all possible beneficiaries must be identified. Reasoned that, iftrustees did not make selection, the court would have to step in. If so, the method of distributionwould be an equal division of shares (only possible if the court knows all the parties). The HL abandoned the complete list approach and adopted the given postulant test: Only need acomplete list where the trust property is to be divided equally (total is needed to work out quantum

Answer 5

Certainty of objects, established the uncertainties Facts: settlor set up a fund for the benefit of employees and relatives at the ‘absolute discretion’of trustees. Questions: (i) whether this was a trust or power; (ii) the appropriate test for certaintyof objects requirement. HL (Lord Wilberforce): All agreed it was a trust, split 3:2 on the test for uncertainty. Test forcertainty of objects in discretionary trusts is the same as the test for fiduciary powers: whether itcould be said with certainty that any given individual is / is not a member of the class. oLord Wilberforce: “the rule recently fastened upon the courts by IRC v BroadwayCottages Trust ought to be discarded, and the test for the validity of trust powers ought tobe similar to that accepted by this House in Re Gulbenkian’s Settlements for powers,namely that the trust is valid if it can be said with certainty that any given individual is oris not a member of the class.” Wilberforce: ‘given postulant’ test includes conceptual/evidential certainty and administrativeworkability. Trust will fail where “the definition of beneficiaries is so hopelessly wide as not to form ‘anything like a class’.” Case was remitted the court of first instance to apply the test, made into CA which was number 2

Answer 6

Rule = certainty of objects, application of uncertainties established no.1 Issue on appeal was whether the groups ‘relatives and ‘dependents’ satisfied the new test —could it be said with certainty that any given individual was a member of the class. CA: held the terms satisfied the test, but were uneven in their application of the McPhail test.All agree that the language used must be conceptually certain, but differed as to the level ofevidential certainty required.

Answer 7

1. Conceptual = concept of beneficiaries different meaning for different people Rule - Re Tucks and Re Baden 2.Evidential = how do you evidence that you a beneficiary Rule - Re Baden 3.Unascertainbaility = Rule - Benjamins Order 4.Adminstrably unworkable = cannot be done in practice Rule - re hay’s settlement trust, re Baden

Answer 8

Rule A trust was established to benefit future baronets on theconditions that they were of the Jewish faith and married to a wife of ‘Jewish blood’, as determinedby the Chief Rabbi. Outcome: condition was sufficiently certain — any conceptual uncertainty regardingthe condition was cured by the power given to the chief Rabbi. Denning: “I see no reason why a testator or settlor should not provide that any dispute ordoubt should be resolved by his executors or trustees.” This does not oust the jurisdiction of thecourt because the court can ensure the trustee “does not misconduct himself or come to a decision that is wholly unreasonable.” Notes this approach fulfills “the intention of the testatoror settlor.” NB: the court can intervene to correct the trustees’/third party’s decision but only if it is “whollyunreasonable”: Tuck, Dundee Hospital. Should conceptual uncertainty be determined by trustees? Denning’s analysis allows the courtto give effect to seriously intended trusts in more circumstances, but it is contrary to a previous lineof authority (Re Coxen) and seems to be based on a misunderstanding of Dundee Hospitals — thatcase only supports evidentiary uncertainty being resolved, not conceptual uncertainty

3 certainties - Add The Cases For Uncertainties Flashcards

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