three certainties Flashcards
(21 cards)
Certainty of intention
- The basic question: did the giver intend to create a trust? Or was the intention to give a power or make an outright gift?
- must be sure becasue we want to give effect to owner’s freedom of disposition, and because that justifies the risghts and obligations that comes with a trust, power or a gift.
precatory words
certainty of intention
- Re Hamilton: it is a matter of construction
- Tito v Waddell: The word trust is compelling evidence but is not conclusive. Equity looks at the substance and not form
- Lambe v Eames: words must be imperative. Precatory words prima facie taken to be words of a gift, not creating a trust
- Comiskey v Bowring-Hansbury: A trust was created because, having expressed that the property would be dealt with in full confidence (and thus looking like a moral obligation), the settlor went on to say that he directs that the property should be held on trust -> so this showed there was not just a moral obligation
‘sham’ trusts
certainty of intention
- Trusts to defeat the settlor’s creditors are void
- Midland Bank v Wyatt
- Trust document placed in safe. Continued to behave as if he was the owner. Absence of trust diary
- Absence of intention to create a genuine trust
- Voidable under s423 Insolvency Act 1986 (transactions defrauding creditors)
Construing conduct
certainty of intention
- Conduct, rather than words, can lead to an interference of a trust
- Paul v Constance
- Context and detail are importance: e.g parties’ lack of expertise is noted by the court
- Jones v Lock
- There was nothing to indicate an intention to create a trust over the cheque -> rather the father’s intention was to make a gift or simply make a point to his wife
- Mussorie Band v Raymon
- ‘uncertainty in the subject of a gift has a reflex action upon the previous words, and throws into doubt the intention of the testator’
business common sense
certainty of intention
- Don King Productions v Frank Warren
- Badly drafted arrangement, but it was what was intended approaching it from a business common sense
Segregated account
- Mills v Sportdirect.com
- Discussion revealed agreement fund would be protected in a segregated client account
Certainty of subject matter
- The property/ assets subject to a trust must be identified or capable of being ascertained
- Settlor or testator must identify the porperty or provide sufficient criteria by which the property can be ascertained
- Property subject to the trust must be certain and the interest that the beneficiary is to recieve must be certain
why is certainty of subject matter important
- Trustee needs to know to fulfil his obligations.
- Court needs to know to properly supervise
- Beneficiary needs to know what is their interest
- Others also need to know what is trust property (e.g. creditors of trustee)
Wording
certainty of subject matter
- Re Golay: yardstick indicating what is ‘reasonable’ is an effective determinant = no uncertainty
- Testator directed his executors to allow beneficiary to “enjoy one of my flats during her lifetime and to receive a reasonable income from my other properties”
- Palmer v Simmonds: ‘the bulk of my residuary estate’ -> no certainty; too vague
- Sprange v Barnard: ‘the residue’ = whatever is left over after the legacy has been disposed is the residue; will always be certain
- Re Last’s Estate: ‘anything that is left’ = certain, different bc its income and not capital…?
- Anthony v Donges: widow to recieve ‘such minimal part of the estate as she might be entitles under English law for maintenance purposes’ = void for uncertainty (but wife could make family provision application)
segregation of chattels
certainty of subject matter
- Re London Wines Co: case of wine were not segregated from bulk = uncertain
- Hunter v Moss: A portion of intangible assets does not have to be segregated from the rest to form the subject of a trust (distinguished by fungibility - all identical)
- Re Goldcorp Exchange Ltd: gold bars and coins, only those whose bullion had been segregated were successful
Certainty of interest
certainty of subject matter
Boyce v Boyce: for M ‘whichever she may choose’, then all others to C -> M dies, so uncertainty as to which one she would have chosen.
what happens if there is uncertatinty of subject matter
- If the trust property itself is uncertain: there is no trust - the disposition fails
- If the uncertain disposition is attatched to an aboslute gift which is itself sufficiently certain, that gift is valid but the purported trust fails
- If the beneficial interests are uncertain: the purported express trust fails, and the property is held on resulting trust for the settlor or testator’s estate
Certainty of objects
fixed trusts
IRC v Broadway Trusts: complete list test
- Conceptual certainty -> name, definition, description of B
- Evidential certainty -> can show evidence
- Ascertainability -> when the person disappears
If the beneficiary can’t be located
certainty of objects
fixed trusts
- apply to the court for directions
- the sum the beneficiary is entitled to, can be paid into court
- advertise, s27 Trustee Act 1925
- obtain a ‘Benjamin Order’ (Re Benjamin) - protects the trustees, but not any overpaid beneficiaries who remain vulnerable to claims within the limitation period. Sum distributed to other B’s present
- missing beneficiary insurance - protects trustees and overpaid beneficiaries. Re Evans -> premium an allowable trustee expense
the any given postulant test
certainty of object
powers
Re Gulbenkian’s Settlement:
- Is the class of beneficiaries defined sufficiently to enable the trustees (or the court) to determine (when the time comes to do so) whether any given individual is or is not a member of the class?
- Will not fail simply because it was impossible to ascertain every member of the class.
- Can it be said with certainty that any one individual is a member of the class?
McPhail v Doulton
certainty of object
discretionary trusts
- Bertram Baden set up a trust, ‘to establish a fund for providing benefits for the staff of [his] company and their relatives and dependants…’
- Trustees shall apply at their absolute discretion the net income form the trust fund to make grants, ‘to or for the benefit of any of the officers and employees or ex-officers or ex-employees of the company or to any relatives or dependants of any such persons…’
- Apply the ‘is or is not test’ to discretionary trusts: can it be said with certainty that any individual is or is not a member of the class?
- Class cannot be too wide to result in administrative unworkability
Re Barlow’s Will Trusts
concerning certainty of the words “family” and “friends” in a will… trust was valid, because both concepts of friends and family could be given a workable meaning…
R v District Auditor
A trust with a class that is so hopelessly wide as to be administratively unworkable is void = bc the class was for everyone who lives in the area of 2.5M people … too large of a group
Re Tuck’s Settlement Trusts
certainty of objects… dedicated towards those of “Jewish blood” and consult Chief Rabbi if it is uncertain → people allowed to designate third party to determine class
Re Baden’s Trust (No 2)
Is ‘relatives’ conceptually certain? Yes
Three different tests were laid down for dealing with evidential uncertainty of objects in discretionary trusts:
- Sachs LJ: evidential uncertainty is cured by presumption against being in the class
- Megaw LJ: substantial number can be proved to be in the trust
- Stamp LJ: there must be absolute evidential certainty such that any person can be determined to be in or out of the class
must apply all three tests in pq
categories of uncertainty of object
- Conceptual certainty (Lord Wilberforce, linguistic or semantic certainty).
- Evidential certainty.
- Ascertainability
- Administrative unworkability (R v District Auditor, ex p, West Yorkshire Metropolitan County Council [1986] 26 RVR 24, a trust fund for, “all or some of the inhabitants of West Yorkshire’ was deemed void for uncertainty of objects as being administratively unworkable…”.
- Capriciousness (by analogy because test for powers and discretionary trusts has been aligned has been aligned).
