The Express Trust and the 3 Certainties Flashcards
(104 cards)
1
Q
Which case confirmed the need for the 3 certainties?
A
Knight v Knight 1849
2
Q
Who said “first … the word must be imperative …; secondly … the subject must be certain …; and thirdly … the object must be as certain as the subject.”?
A
Lord Eldon in Wright v Atkins 1823
3
Q
What are the three certainties?
A
Certainty of intention, certainty of subject matter, and certainty of objects
4
Q
Do trustees have a legal duty?
A
yes, trustees must know their obligations under the trust
5
Q
What is the requirement for there to be a certainty of intention?
A
If a trust was intended
6
Q
In which case courts determined the certainty of intention test?
A
Paul v Constance 1977
7
Q
Explain the requirements of the essential test in the certainty of intention
A
- Did the settlor wish for someone to hold the property on behalf of someone else, and be under legal duty to do so?
- The settlor does not need to know that they were in effect creating a trust
8
Q
What did the courts held in Paul v Constance?
A
A trust was intended to be created even though he didnt know what one was: “money is as much yours as mine”
9
Q
What happened in Paul v Constance?
A
Money paid into a bank account held only in one party’s name was found to contribute to an intention to create an express trust of the account over which the individuals were equitable tenants in common
10
Q
How courts infer the intention of the parties?
A
From the circumstances of the case
11
Q
What did Scarman LJ stated in explaining how to find intention in Paul v Constance?
A
‘underlying intention was that the money was jointly joined’
12
Q
Is it obligatory to use the word trust?
A
No, as confirmed in Re Kayford 1975
13
Q
If use of the word trust, does that mean that there is automatically a trust?
A
No, as confirmed in Re Kayford 1975.
- The Question is whether in substance a sufficient intention to create a trust has been manifested.
- The use of the word trust suggests a trust but is not conclusive
14
Q
How does the settlor need to intend to create a trust?
A
Settlor must have intended to impose a legal obligation on the trustee, not a mere moral obligation -> intended to create a trust rather than a gift/loan etc.
15
Q
If precatory language is used, is there a trust intended?
A
Moral obligation does not create a trust. Typically it will be a gift
16
Q
Do words involving a request such as desire, wishes, requests, is confident, that the party receiving the property will hold it for someone else, constitute a trust?
A
No, it lacks necessary intent
17
Q
Which case do the courts talk about the substance of intention?
A
Lambe v Eames 1871
18
Q
What was held in Lambe v Eames 1871?
A
“To be at her disposal in any way she may think best, for the benefit of herself and family”
=Widow is free to give property to who ever she wishes -> merely a gift.
- not a trust obligation
- Lack of certainty of intention
19
Q
Is there a trust created if the expression is just a hope or an expression of confidence?
A
no
20
Q
Is the assessment objective or subjective?
A
Objective
21
Q
Which cases did the courts determine the objective assessment?
A
Pearson v Lehman Brothers Finance 2013 and Re Adams and Kensington Vestry 1884
22
Q
In which case it was held that the trust is to be decided objectively rather than subjectively?
A
Pearson v Lehman Brothers Finance 2013
23
Q
What was held in Re Adams and Kensington Vestry 1884?
A
No imposition of a legal obligation -> absolute gift.
- “In full confidence that she would do what is right…disposal thereof between my children.”= a statement of desire and wish. ”In confidence” didn’t impose an obligation
- Imposing moral obligations are not legally enforceable.
- Court said previous authorities went too far and the aim is to determine the intention of the testator
- intention of the testator was not to impose a trust
24
Q
Which two cases can be used to show that the crucial factor in determining whether words impose a trust, is the words in the context of the will?
A
Re Adams [1884]
Comiskey v Bowring-Hanbury [1905]
25
What was held in Comiskey v Bowring Hanbury 1905?
- “In full confidence that…she will devise it to one or more of my nieces as she may think fit…in default of any disposition by her thereof by her will or testament I hereby direct that all my estate…shall at her death be equally divided among the surviving said nieces.”= THERE IS A TRUST
26
Despite use of the words 'in full confidence' and 'absolutely' in Adams and Comiskey, Adams was held to = no trust, and Comiskey was held to = yes trust. Why?
In Comiskey, he made such specific provisions for the property to be shared equally among the nieces. Whereas in Adams it is a bit more like he is trusting his wife in what she decides to do with the money, so it is more like an absolute gift.
27
What was held in Re Steele's Will Trust 1948?
where particular words used are the same as those previously recognised to be sufficient to create a trust. (Shelley v Shelley case)
- especially when drafted by lawyers
28
In which case did these facts: Wife to her husband with "power to dispose of all such property by will amongst our children" come from?
Re Weekes' Settlement 1897.
Court said the intention of the testatrix was similar to a gift. He could do with the property whatever he wishes.
NO TRUST because no obligation imposed on husband
29
What was held in Commissioners v Richmond 1995?
No trust, merely a contractual position because the terms indicated it
30
in which case it was held that there was a failure of gift?
Jones v Lock 1865
31
Jones v Lock 1865
“…look you here, I give this to the baby” -> a joke will not create a trust
- Father attempts to gift a £900 cheque to his son that is payable to himself.
- Held: not an effective gift -> his own signature was needed to endorse to son.
- Neither was it intended to be held on trust for his son -> remained part of father’s estate.
32
What is the difference between the case of Jones v Lock and Paul v Constance?
That in Paul, there was a joint bank account held on trsut for himself and Mrs Paul unlike in Jones v Lock
33
When it is an absolute gift and when it is a trust?
Absolute gift= lack of certainty of intention
| Trust= there is a certainty of intention
34
Explain the concept of certainty of subject matter
Is the subject (property) of the trust certain?
| -Trusts can be declared over tangible and intangible properties
35
What are tangible and intangible properties?
Tangible: land, money, shares
Intangible: covenants, debts
36
In Palmer v Simmonds 1854, why the courts held that "the bulk" of the estate to be held on trust was insufficiently certain?
because "the bulk" statement was not sufficiently clear what it meant. It could have meant 10% or 30%
37
What was held in Boyce v Boyce 1869?
"All my other houses" to be held on trust was insufficiently clear.
-housing went back to estate since trust not executed= resulting trust
38
Why Boyce v Boyce was not equitably good in what was decided?
- Harsh decision
- Possible solution (courts didnt adopt) (lack of common sense by courts)
- Court would assume that Maria would have picked the more valuable one and the lesser one would be given to Charlotte
39
In which case it was decided that the words "a reasonable income from my other properties" was sufficiently certain?
Re Golay 1965
| - Reasonable income ca be objectively decided by the courts based on context and history
40
How can we identify the identity of the subject matter?
subject matter can be clearly defined, but the property must be identifiable
41
List the cases that deal with intangible property
Hunter v Moss 1994, Pearson v Lehman Brothers 2010 and Re Harvard Securities 1997
42
List the cases that deal with tangible property
Re London Wine 1986 and Re Goldcorp 1995
43
What was held in Hunter v Moss 1994?
less certainty needed for identifying intangible property -> shares
o Shares don’t need segregation like bottles of wine/gold bullion -> all precisely identical
o Distinguish from Re London Wine & Re Goldcorp Exchange.
44
What are the several principles established in Hunter v Moss?
- clarifying identity on death, type of share and chattels in a bulk
45
Explain what does "clarifying identity on death" mean
-5% of shares declared to be held on trust in a will = valid -> executor of will picks shares.
46
Explain what does type of share mean?
o If the settlor owned two companies and had declared a trust of % of shares without specifying which company the shares relate to = void -> no trust.
o Similarly, if the settlor held different classes of shares that would void the trust.
47
Chattels in a bulk cases
Re London Wine 1986, Re Stapylton Fletcher 1994, Re Goldcorp 1995
48
What was held in Re London Wine 1986?
Insufficient certainty on subject matter -> precise bottle of wine held on trust could not be identified -> no trust created.
49
Why in Re Stapylton Fletcher 1994 a trust was created unlike in Re London Wine?
Because the wine was segregated and identifiable
50
What was held in Re Goldcorp 1995?
-> was gold bullion held on trust for creditors in insolvency?
o Gold bullion that had been segregated from the bulk could be identified -> held on trust.
o Rest of the bulk could not be identified and so was not held on trust for creditors.
51
However, which Act provides that a purchaser of an unascertained part of a bulk of good acquires property rights in that bulk.?
Sale of Goods (Amendment) Act 1995
52
What was held in Re Harvard Securities 1997?
intangible property requires less certainty of subject matter.
o Distinguished from Re London Wine -> all shares are precisely identical, all wine is not.
53
What was held in Pearson v Lehman Brothers 2010?
future identification of subject matter possible -> valid trust
o ‘A trust will not fail for want of certainty merely because its subject matter is at present not certain, if the terms of the trust are sufficient to identify its subject matter in the future.’
54
What if the certainty of subject matter is absent?
o Property transferred to B from A with part of it to be held on trust for A, but that part unclear -> B will take all the property -> no resulting trust as the part for A is uncertain.
o Trust fails through uncertainty in the division of beneficial shares -> B will hold on resulting trust for A -> B was not intended to have any of that property beneficially.
55
Explain the concept of certainty of objects
- Objects will usually refer to the beneficiaries in an express trust.
- Purpose trusts (charitable/non-charitable) -> the relevant object will be the purpose.
- Express trust for persons -> the objects of the trust must be defined with sufficient certainty to allow the trustees/court to execute the trust according to the settlor’s/testator’s intentions.
56
What are the 6 possible matters to be considered for each type of trust?
```
o Essential test of certainty?
o Conceptual certainty -> Define with sufficient certainty the description of the class?
o Evidential certainty -> Proving somebody is an object?
o Ascertaining where the object of the class is located?
o Size of the class?
o Capriciousness test -> how sensible are the settlor’s/testator’s intentions?
```
57
What is a fixed trust?
- Trustees must distribute the property to the beneficiaries in the identified proportions.
o They have no discretion -> the objects of the trust are fixed.
58
What is the essential test of certainty in fixed trusts?
Must be possible to identify all the beneficiaries.
59
Which is the leading case that created the 'Complete List' test?
IRC v Broadway Cottages Trust 1955
60
What did the courts held in IRC v Broadway Cottages Trust 1955?
o At the time when the trust property is to be distributed, it must be possible to draw a complete and exhaustive list of all the beneficiaries.
61
Which type of certainty is 'to satisfy the complete list test the definition of objects must be clear'?
Conceptual
62
Give an example of a conceptual certainty
A fixed trust for the settlor’s friends will be void for conceptual uncertainty.
63
What is evidential certainty?
Must be able to evidence who satisfies the complete list test
64
Give an example of evidential certainty
£1,000 to be divided equally between the football players of my school team -> if the school no longer has the records then a complete list cannot be compiled.
65
Explain the concept of ascertainability
-> Location/existence of all beneficiaries is not necessary -> trust still valid.
o Re Gulbenkian 1970 -> property distributed between the beneficiaries that can be located.
66
What are the two types of conditions for certainty on fixed trusts?
Condition subsequent and condition precedent
67
What is condition subsequent?
stricter test -> only necessary to consider if conceptually certain
o The exact event that will negate the beneficiaries interest must be known with certainty.
Clavering v Ellison 1859
o If it cannot be established the condition is void -> Clayton v Ramsden 1943
o Re Tepper’s Will Trusts 1987 -> entitled to estate at age 25 if didn’t marry non-Jew.
Use of an expert to decide what is meant of Jewish faith -> Re Tuck’s Settlement Trusts 1978
68
What is condition precedent?
more relaxed test
o Re Barlow’s Will Trusts 1979 -> valid if just one person can be said to satisfy the condition
- Painting left in will by testator to be offered for sale to friends and family.
-Friends is sufficiently clear in cases of a condition precedent.
-Friends is not conceptually certain for discretionary trusts of fiduciary powers.
69
Which is the leading case for conceptual certainty in fixed trusts?
Re Tuck's Settlement Trusts 1987
70
What did Lord Denning held in Re Tuck's Settlement Trusts 1987?
- Conceptual certainty will not render a condition precedent void,
o But will render a condition subsequent void -> stricter test with condition subsequent.
- Conceptual certainty may be resolved by referring matter to an expert 3rd party.
71
Will evidential certainty render the condition void?
No
72
Will ascertainability render the condition void?
No, condition must be satisfied before object is certain.
| - If object cannot be ascertained condition will lapse -> property passes to those entitled to residue.
73
Explain the concept of size of class
Unlikely a fixed trust subject to a condition will ever be unworkable from size of class.
74
Explain the concept of capriciousness
no precedent -> likely that if the condition was found to be made without sensible intent then it should be disregarded.
75
What are discretionary trusts?
- Trustees are granted a discretionary power that they must exercise appointing beneficiaries.
o Deciding who will receive what in and in what proportions -> the objects.
o Failure by the trustee to exercise the power will result in the court exercising it.
- The trustees must know for certain who the potential beneficiaries are to choose from.
o Otherwise the trust will be void for uncertainty.
76
What is the essential test for certainty in discretionary trusts?
‘Any given postulant test’ -> McPhail v Doulton 1971
77
Which case decision did McPhail v Doulton overturn?
- HL overturned the ‘complete list test’ from IRC v Broadway Cottages Trust 1955.
78
Is complete list still applicable?
yes but if it is the settlor’s intention, that if a trustee doesn’t exercise their power and select beneficiaries, then the property is to be divided amongst all the objects.
o In which case trust will be void for uncertainty if complete list test cannot be completed.
Will occur only if the trustee fails to make appointments in a reasonable time.
79
What was held in McPhail v Doulton 1971?
```
Validity turned on whether relatives/dependants were sufficiently certain objects.
o Lord Wilberforce: Sufficient that it could be said with certainty that any given individual was or was not a member of the relevant class and it was not necessary to ascertain an exhaustive list.
```
80
Is it sufficient to show that ONE person will satisfy the test?
No, as in Re Barlow.
But for ‘any given person’ that comes forward -> it must be able to be decided that they either do or do not satisfy the test.
81
Conceptual certainty in discretionary trusts
Description of the class must have sufficient clarity for certainty of objects
82
which are the cases for conceptual certainty in discretionary trusts?
Re Baden's Deed Trust (No 2) 1973, R v District Auditor ex p West Yorkshire MCC 1986, Re Tuck's Settlement Trusts 1979, Re Barlow's Will Trusts 1979
83
What was held in Re Baden's Deed Trust (No 2) 1973?
following decision of HOL in McPhail v Doulton
- ‘Relatives’ & ‘dependants’ held to be conceptually certain.
o Dependants -> ‘wholly or partly financially dependent on someone else’
o Relatives -> ‘descendant from a common ancestor’ / ‘next of kin or nearest blood relation’
Re Barlow later defined family as ‘those related by blood’ -> smaller class
84
R v District Auditor, ex p West Yorkshire MCC 1986
inhabitant of West Yorkshire’
| Considered conceptual certain.
85
Re Tuck’s Settlement Trusts 1979
‘being of Jewish Blood’ -> conceptually certain.
86
What was held in Re Barlow’s Will Trusts 1979?
my friends’ = conceptually UNCERTAIN
o Too many classes/degrees of friendship.
o Browne-Wilkinson J Obiter: considered that the reasonable characteristics of friendship was sufficiently certain for a discretionary trust -> ISSUE NOT RESOLVED BY COURTS
87
Evidential certainty in Re Baden's Deed Trust (No 2)
-> Three different tests used by judges
- Sachs LJ -> Concluded: courts would never be defeated by evidential certainty.
o ‘Given postulant test’ concerned itself only with conceptual certainty.
o Once the meaning of the class was clear -> simply a question of fact on the evidence whether a person fell within the class.
```
- Megaw LJ -> Concluded: not necessary to show a particular person was or was not a member of the class -> not necessary to ascertain all members of a class for a discretionary trust to be valid.
o Sufficient if a substantial number of objects could be shown to fall within the class
o ‘Substantial number’ = use of common sense + degree in respect of the particular trust.
```
```
- Stamp LJ -> Concluded: insufficient to show one person fell or did not fall within the class
o Necessary to show ‘any given person’ would either fall or not fall within the class.
Does not require a complete list to be drawn.
Relatives defined as ‘descendants’ would void the trust -> hard relationship to prove. However, he defined them as ‘next of kin’ = evidentially certain.
```
88
What is the preferred test? (evidential certainty)
Sachs LJ as it removes evidentially certain as a means of invalidating a trust.
o Even though Stamp LJ’s is most consistent with Lord Wilberforce’s ‘given postulant’ test from McPhail v Doulton.
o Fundamental principle that the testator’s/settlor’s intent will be respected if at all possible by upholding the trust.
o Evidential burden placed on the potential object to prove he is/isn’t a member of the class.
89
Why the use of an expert is useful?
- Grant the trustees a power to appoint a third person to the role of arbitrator in the event of some uncertainty
90
Leading case on the use of an expert
Re Tuck’s Settlement Trusts (1918)
91
What did Lord Denning held in Re Tuck's Settlement Trusts 1918?
that a trust, which provided the money was left on trust for the benefit of such of the testator’s issue who married the Jewish faith, would be valid because the court was able to ask the Chief Rabbi for advice as to the extent that there was uncertainty about any postulant
92
Ascertainability in discretionary trusts. Necessary or not?
not necessary to ascertain where a particular object is/alive -> trust valid.
-McPhail v Doulton 1971
93
Size of class in discretionary trusts
trust can be voided on grounds of administrative unworkability if the class is too large
94
What did Lord Wilberforce suggested in McPhail v Doulton?
a trust for ‘all the residents of Greater London’ would be administratively unworkable and void.
95
Re Hay's Settlement Trust 1982
```
Sir Robert Megarry V-C recognised that a discretionary trust for anyone other than a few specified people would be administratively unworkable + void.
o Unfair just to void it based on having a large class of people.
```
96
Judicial and academic commentary on administrative unworkability
Lord Wilberforce in McPhail v Doulton, Sachs LJ in Re Baden (No 2), Morice v Bishop of Durham, Hardcastle 1990
97
What did Lord Wilberforce stated in McPhail v Doulton on administrative unworkabiltiy?
trustee cannot perform duty and ascertain range of objects if class too wide.
98
However, what was said in Re Baden (No 2) on administrative unworkability?
```
However:
Sachs LJ Re Baden (No2) -> size of class can be infinitely variable -> trustee only needs to know the width of the to then exercise their discretion
```
99
What was said in Morice v Bishop of Durham on administrative unworkability?
Trustee fails to exercise their discretion -> court would struggle to execute the trust.
100
What did Hardcastle 1990 commented on administrative unworkability?
postulated that the issue should be examined when considering evidential certainty and rejected the idea of denying a discretionary trust on the grounds of administrative unworkability.
101
What is capriciousness?
Settlor must have had a sensible intent to create the trust -> otherwise will be void
102
What was held in - R v District Auditor ex p West Yorkshire Metro CC 1986 ?
settlor has sensible intentions
103
What was held in Re Manisty’s Settlement 1974?
‘greater London’ -> not sensible -> looks to the connection between the beneficiary and the settlor -> was a fiduciary power not discretionary trust though
104
Have discretionary trusts been invalidated for capriciousness?
no
