The creation of trusts - Certainty Flashcards
What is required in order to make a valid trust? Knight v Knight (1840)
3 principles:
- Certainty of Intention
- Certainty of Subject Matter
- Certainty of Object/Beneficiaries
What is meant by certainty of intention?
This looks at whether the settlor has used such words as to clearly show that he intended to impose a trust obligation on the purpose trustees that can be enforced by the courts of equity
How do you prove certainty of intention? And what equitable maxim is this based upon?
‘Equity looks to intent rather than form’ - Maxim
You do not need to use the word trust. Words used must be imperative, ‘I direct that’, ‘I instruct that’ ‘require that’ as they clearly impose an obligation.
Can trusts also be construed from actions as opposed to just words? What cases demonstrate this?
Yes they can -
Paul v Constance [1977] - Declaring from time to time that the money in an account ‘is as much as yours as mine’ plus circumstances is sufficient
Midland Bank Plc v Wyatt [1995] - a husband and a wife entered into a deed of trust in relation to their property in order to defeat husband’s creditors
Why can problems arise when establishing certainty of intention through the use of precatory words? (what are precatory words)
Precatory words are words of hope and desire - ‘hoping that’, ‘wishing that’, ‘believing that’ ‘in full confidence that’. These words are deemed as an expression, what the settlor hopes the purported trustees will do with the property not what the trustees have to do.
What is the history related to precatory words and what is the position now?
Histroically, precatory words were accepted as demonstrated in Harding v Glyn (1739) - if executors could not dispose of all the testators property then they would keep it for themselves - court would bend over backwards to now allow this.
Now - Lambe v Eames 1871 - Where there are precatory words, there is prima facie assumption that such words DO NOT create a valid trust. Testator gave his estate to his widow to ‘be at her disposal in any way she may think best for the benefit of herself and the family’ - those words imposed no trust on the widow in favour of the family. The widow took the gift absolutely
What is the contrast between Adams & Kensington Vestry 1884 with Comiskey v Bowring-Hanbury 1905?
(Precatory words)
Adams - the words ‘in full confidence’ did not create a valid trust.
Comiskey - a gift to wife ‘in full confidence’ that she would use the gift as the testator would have done and at her death it to be devised to the testators nieces in shares as the wife saw fit was a gift held to be certain. This is because there was a gift over in default so the testator intended the property to go to the nieces and not the wife beneficially.
What is the modern test?
Re Hamilton 1895 - Consider each case on independent facts, if you think no trust was intended you say so even if previous judges have said a trust was intended on similar facts. Case by facts/scenario situation
Re Steele’s WT 1948 - Doubted Re Hamilton - Construe each disposition on its individual merits. You should look and see if that facts are similar as previous cases and go along with the previous decision unless it was clearly incorrect - case takes a mechanical approach to determining certainty and takes no account that meanings of words change over time. (Considered judicial precedent)
What if there is no certainty of intention?
There will be no trust and the gift will be taken absolutely or if no gift is construed the property will remain in the settlor/testators estate
What is meant by certainty of subject matter?
This refers to what property is being given - the gift in question.
Certainty of subject matter case examples -
Palmer v Simmonds (1854)
Sprange v Bernard (1789)
Re Golay’s Will trusts [1965]
Palmer - ‘‘the bulk of my residuary property’ failed for uncertainty as you cannot ascertain what bulk is
Sprange - ‘the remaining part of what is left’ - failed for uncertainty
Re Golay’s Will trusts - A trust to pay a ‘reasonable income’ would not fail as a reasonable income was something which the court could quantify - objective standard.
What if there is certainty of the subject matter of the trust but not the beneficial share?
Unless the trustee have a discretion to determine the amounts, the trust will fail and the property will be held on resulting trust for the settlor
What was held in Boyce v Boyce 1849?
Testator left four properties to his wife for life and then after her death one property to Marie (whichever she should choose) and then remaining three to Charlotte. Marie died before the testator, the trust failed for uncertainty as without Marie making her choice, you could not say for certain which 3 Charlotte would receive.
What is the issue with unascertained property and sale of goods?
Purchasers have paid for good but not taken delivery and seller has gone into insolvency - trusts are attempted to be established, however, where the purchasers of goods had not been segregated from the mass these claims failed. There cannot be a trust of unidentifiable chattels.
What was held in Re London Wine 1986 and Re Goldcorp Exchange [1995]?
If the trust property is chattels it must be segregated from the mass as all chattels are not identical. This case concerned whether a trust for a number of wine bottles would satisfy certainty of subject matter. This was NOT CERTAIN as the chattels were not all the same.
Re Goldcorp - Confirmed the view in Re London. Purchasers of bullion had paid but not taken delivery and attempted to ascertain rights due to insolvency of the company. These claims were rejected save for a group of customers whose bullion had been segregated
