Three certainties For a valid express private trust, the three certainties of intention, subject matter and objects must be satised: Knight v Knight > These need to be present so that a trust can be practicable, enforceable and capable of supervision by the court CERTAINTY OF INTENTION > It is necessary for settlor to create a trust as opposed to gift or po!er" > Trusts Trusts can be expressly declared or inferred from conduct of parties or surrounding circumstances > #o general re$uirement for a trust to be created or evidenced in !riting, the exception being express trusts of land !hich need to be evidenced in !riting and signed on behalf of the settlor > Test: Test: is there a clear intention that property is to be held on trust for the benet of a third party from construction of !ords used and%or behaviour of the parties > Intention must be to separate legal and e$uitable o!nership and to impose obligations of trusteeship on the holder of the title: &right v 't(yns > )aul v *onstance + possible to create a trust !%o you (no!ing !hat a trust is court can infer that you intended to create a trust fact that the money is held by one person but more than one person is intended to be the benecial o!ner + this ma(es it loo( li(e a trust > -e Kayford Kayford + mail order business in di.culties and accountant decided customers pay in advance for goods company did go into insolvency and customers !anted their money bac( held that intention that accountants had demonstrated !as an intention to segregate money so that it could be attributed to the customers § Problem of precatory words > There can be no trust based on precatory !ords alone: /ussoorie 0an( 1td v -aynor > ' mere expression of desire to ma(e a gift or to confer confe r a benet is insu.cient > ' mere obligation or mere re$uest is not enough: 2!eeny v *oghill > &here there is doubt, the burden lies on the *1 to establish the necessary intention on a balance of probabilities: -e 2no!den > -e 'dams 3 Kensington Kensington 4estry: 4estry: + testator5s estate !as devised by !ill to the absolute use of his !ido! 6in fll con!dence that she !ill do what is ri"ht as to the disposal thereof bet!een my children, either in her lifetime or by !ill after her decease7 this is merely a moral obligation and did not impose a legal obligation on the !ido! it !as an absolute gift, she !as entitled to use the property other than beneting the children > 1ambe v 8ames: testator left his estate estate to his !ido! 6to be at her disposal in any way she may thin# best , for the benet of her and her family7 held this !as an precatory expression and did not connote the necessary intention to create a trust > /ussorie 0an( v -aynor: !here a husband left land to his !ido!, $feelin" con!dent that she !ill act justly to our children in dividing the same !hen no longer re$uired by her7 !ido! mortgaged the land and eventually the ban( sough to sell it to recoup the loan she argues that as she !as a trustee, the mortgage !as invalid 91 held no trust existed because the husband had used precatory !ords she !as legal and benecial o!ner of the property and the mortgagee could sell the property > *omis(ey v 0o!ring9anbury: legacy !as left to a !ido! $in fll con!dence 7 that she !ould leave the property on her death de ath to one or more of the testator5s nieces the precatory !ords !ere in themselves ineective to create a trust this !ill, ho!ever, !ent on on to declare that 6in default of any disposition disposition by here thereof thereof by her !ill, I hereby direct that all my estate and property ac$uired by her under my !ill shall at her death by e$ually divided among the surviving said nieces7 nie ces7 91 held in loo(ing for certainty of intention, it !as necessary to consider trust document as a !hole imperative !ording of the gift over imposed the mandatory obligation upon the !ido! > /ore liberal approach: ;ames 1;: I could not help feeling that the o.cious (indness of the *ourt of *hancery in interposing trusts !here in many cases the father of the family never meant to create trusts must have been a very cruel (indness indeed > 2ham" /idland 0an( v &yatt + a husband and !ife declared a trust in respect of the matrimonial home
benecial interest !as to be shared e$ually bet!een the !ife and their daughters property !as mortgaged to the /idland 0an( and the husband continued to borro! on the security of the family home he did not inform the ban( of the trust and ban( eventually sought to sell the property in order to recover the husband5s outstanding debt 9* held that husband had never had the intention to truly divest himself of his interest in the property had had declared the trust merely as a means of shielding the family home from claims of the 0an( there !as no real intention to create trust, the declaration !as a mere pretence and the trust !as void sham trust !ill fail and title to the property remains !ith the settlor § %aw or constrction& > -e 2teele5s &ill Trust + involved a solicitor drafting a trust deed for a client, but unfortunately utilising an outmoded precedent that featured precatory !ords: 6I re$uest my said son to do in all his po!er7 in the more contemporary setting, there should have been no trust because of lac( of certainty nevertheless, judge concluded that the deliberate use of the precedent demonstrated the necessary intention to declare a trust of a diamond nec(lace 1angan: describes this as a rouge decision and thoroughly unsafe disregards the actual !ording of the deed, imputes an articial intention to the settlor and departs from the general rule that extrinsic evidence is inadmissible in the construction of a trust deed § 'istclose Trst > Intention may be inferred !here the property is transferred and segregated from other funds on the shared understanding of both the payer and the recipient" that is to be held on trust: 0arclays 0an( v Intention may be inferred from a unilateral act pre payment": -e Kayford + the unilateral act of the company paying the payments into a trust account demonstrated its intention to create a trust /eggary ;" not Intention may arise !here both payer and recipient have expressly attached restrictions to the recipient5s use of funds: *arreras -othmans v Freemans /atthe!s Treasure 1td + *arreras manufacturer of cigs" employed advertising rm Freeman" to place ads in media rm incurred substantial expenses and invoiced *arreras for liabilities it incurred on their behalf rm experienced nancial di.culties and *arreras insisted they open a special ban( account into !hich payments !ere made, rm agreed rm became insolvent 9* held a trust arose as soon as money !as paid into special account (ey factor !as that *arreras intended the rm be subject to an enforceable obligation to apply the money for specied purpose § Conse(ences for lac# of certainty : alternative options as to !hat !ill become of the property •
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given or ban$ueted to a A rd party, it !ill be vie!ed as an absolute gift to that person + legal and benecial title !ill be transferred !ithout recipient being subject to any legal obligations to do anything !ith property settlor retained legal title to the property, it !ill simply remain in settlor5s estate -e TBC 8urope Droup )lc
CERTAINTY OF )*+,ECT -ATTER > 'll trust property must be identiable > 2ettlor must provide means by !hich the interests of beneciaries can be ascertained § .ith re"ard to trst property > &ords employed by settlor must be such that they identify !ith clarity the property to be held on trust or at least provide machinery through !hich such property can be ascertained > )almer v 2immonds + testatrix by !ill" left residue of her estate to her friend subject to proviso that, if he died childless, 6he !illE leave the bl# of my said residary estate unto7 four named persons reference to bul(5 !as ineective to create a trust no clear meaning and thoroughly uncertain she had failed to identify a denite, clear, certain part of her estate5 > -e Dolay + testator set up trust under !hich Tossy !as to 6enjoy one of my Gats during her lifetime and to receive a reasonable income from my other properties7 di.culty concerned calculation of 6reasonable income7 held that 6reasonable7 oered an objective determinant court could loo( at Tossy5s age, her present income and current outgoings and conjure up a gure that !as reasonable for her > -e ;ones + a trust of 6 sch parts of myE estates as she shall not ha/e sold 7 failed for uncertainty of subject matter vie!ed as being an absolute gift to the legatee > 2prange v 0ernard + $remainin" part of what is left0 + no certainty of subject matter because it !ould be uncertain !hat !ould be left on the husband5s death > In the 8state of 1ast $anythin" that is left0 + court too( a dierent approach to 2prange because brother !as given merely a life interest in property trust created on death of testatrix, and trust property !as su.ciently certain at that date > Hegree of certainty for intangible assets shares, money in ban( accounts, debts" is dierent for that re$uired of tangible assets 9ayton: describes this as an old fashioned, but surely spacious, distinction 9unter v /oss + 9 !as entitled, under his contract of employment !ith /, to claim ? shares out of @? shares in a particular company held by / although this sho!ed intention to increate trust, / did not specify !hich shares !ere subject to this arrangement / later sold @? shares and (ept proceeds for himself 9 claimed a proportion of those proceeds in orthodox approach, it !ould be impossible to identify precisely !hich ? shares !ere to be subject matter *' held there !as a valid trust + since shares !ere identical and indistinguishable, any ? !ere capable of forming subject matter commentators criticise approach of *' and see no logical distinction to justify divergent treatment of tangibles and intangibles eg ? identical boo(s" 9ayton: suggest court !as blinded by merits of donee, !ho had done a!ful lot for ungrateful donerJ > 'fterac$uired property cannot be the subject matter of a trust property that may vest in the future, but as regards !hich there is no certainty" § .ith re"ard to bene!cial interest > *urtis v -ippon: each beneciary5s share under the trust must be allocated in some !ay !hen the trust is established > 0oyce v 0oyce + property consisted of t!o houses, out of !hich one of the beneciaries !as going to chose !hich one she !antedJ ho!ever, she predeceased testator and died !ithout ma(ing a selection + entire trust had to fail for uncertainty of benecial shares testator had prescribed a method of allocation that had subse$uently become impossible > -e Knapton + no machinery provided through !hich the properties !ere to be divided bet!een beneciaries 9* held beneciaries had a right to chose !hich house they !anted +order of choice !as according to order their names appeared on !ill and others !ere !or(ed out by the dra!ing of lots court felt able to imply a right of selection in order to save be$uests
> Fixed trust + e$uity is e$uality5 can be applied !here it does not declare the benecial interest to be ta(en by each beneciary: 0urrough v )hilcox + trust set up to benet settlors son and daughter, benecial shares remained unspecied court !as able to uphold trust by invo(ing e$uity is e$uality5, each child deemed to have an e$ual share maxim can only be invo(ed !here there is no contrary intention demonstrated: /arguiles > Hiscretionary trusts + can only apply if trustees fail to exercise discretion § Conse(ences for lac# of certainty1 alternati/e possibilities •
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no certainty of trust property !hatsoever + there can be no trust and property !ill remain !ith settlor%settlor5s estate susceptible to claims of creditor" lac( of certainty as to benecial share + trust !ill fail and if property has left the settlor" trustee !ill hold property on resulting trust for settlor%settlor5s estate
CERTAINTY OF O+,ECT) 2+ENEFICIARIE)3 > There have to be beneciaries !ho are certain in order for the trust to be eective + must be someone !ho can enforce the trust or someone in !hose favour the court can enforce the trust: -e 'stor > There must be human beneciaries except for charitable trusts" > 0eneciaries must be individually identied or identied as a member of a clearly dened class: -e TBC 8urope Droup > This test varies bet!een xed trusts beneciaries and their shares have been identied" and discretionary trusts trustee selects !ho exactly is to benet from a !ider class specied by the settlor" > #o need establish this for charitable trusts because the 'D and the *harity *ommission have the legal authority to enforce charitable trusts § Fi4ed trsts > *onceptual and evidential certainty + xed trust is to confer xed benets upon xed beneciaries you need to (no! !ho are all of the beneciaries > The nite lists test + a xed trust is void unless all beneciaries are ascertainable > I-* v 0road!ay *ottages Trust + you must be able to compile a complete list of beneces in advance for there to be certainty a trust in favour of customers !as upheld because beneciaries could be identied in context of the payments made to them, but trust in favour of suppliers failed because of lac( of certainty of objects + not possible to dra! up a complete list of $r"ent0 suppliers § 5iscretionary trsts and powers of appointment > there is no division of e$ual shares, trustees have a discretion + so do not necessarily need a complete list of the beneciaries > -e Dulben(ian + !here there are duciary po!ers po!ers of appointment" the is or is not test 1ord -eed + thought is or is not test !ould be enough + slightly less strict than complete list test 1ord 9odson + !anted complete list test to apply 1ord Cpjhon + also appreaed to be in favour of complete list test but suggests !e should use is or is not test + not clear !hich test he is in favour of > /c)hail v Houlton 91 + /C2T '))1 these tests rst applies the is or is not test to discretionary trusts it must be possible to say !ith certainty !hether someone is or isn5t a member of the class of beneciaries if there is anyone about !hom they are unsure, then the trust fails 1ord &ilberforce + thought 1ord Cpjohn !as in favour of is or is not 1ord 9odson + thought !hat 1ord Cpjohn !anted complete list majority agreed !ith this '))1 T98 T82T + eg can !e say !ith certainty that B in !ithin the class of 6friends7 8xceptions%other approaches to the is or is not test: > -e 0adens Heed Trust #o *' + denition of beneciaries as 6relatives7 and 6dependants7 *' found these expressions to be conceptually certain relatives proved more problematic than dependants § Postlant6indi/idal ascertainability test )tamp %, + term is synonymous to next of (in and nearest blood relations, if the ans!er to !hether a person is part of the class is 6I don5t (no!7, then the discretionary trust is void for uncertainty
)achs %, + said is or is not test should be applied + in deciding this, if !e reverse burden of proof and place onus on the *1, if they fail to prove they fall in class, then !e !ill deem that they do not but still important to recognise some terms !ill be so vague that they !ill be uncertain"J ta(es a more lenient approach and thin(s the /c)hail test applies only to conceptual certainty and not evidential certainty + as long as it is theoretically possible for people to prove that they are objects, then that is ne a pragmatic and sensible approach thought it didn5t matter if it !as I don5t (no! as long as there !as at least one beneciary of !hom it could denitely be said yes Henning also said this in relation to a test for po!ers, but this !as overruled" /ega! 1; + a dierent approach is ta(en, all !e should need to demonstrate is that there is a substantial number of people of !hom !e are certain also thought it didn5t matter if the ans!er !as I don5t (no!, but said there should be a substantial number of beneciaries in the 6yes7 category trying to ma(e the test more Gexible, does not still !ell !ith /c)hail or Dulben(ian + retreat from is or is not test > you still have to apply 91 test, but structure ans!er to say there are alternative approaches and ho! 2achs and /ega! may lead to dierent approachesJ L -e 0arlo!5s &T + paintings can be distrusted to any $old friends07 such expressions !ould render a trust conceptually uncertain terms old and friends have so many shades of meaning, impossible to say !ho !as intended to benet 0ro!ne &il(inson 1; + M says he can validate the testamentary dispositions it because he thin(s the testator intended to ma(e a series of gift, if you can call it a gift then none of the trust rules apply unsatisfactory + people involved are executives under a !ill trust and di.cult to claim they don5t have any duciary duties that need to be satised, saying that !e are going to ma(e gifts but !hat if !e run out of paintings and more people claim to be friends + surely !e need to (no! !ho are friends in advance", + saying that trustees suggest the people !ho are beneciaries on the basis that they have !or(ed out !ho are the people are intended ie !ho the friends are suggests in particular circumstances, if you can be sure of the intended beneciaries, then there is certainty" ho!ever, if !e have circumstances !here it is not so clear !ho are the old friends%mere ac$uaintances, then there is no certainty L -e Tuc(5s 2T !here property to be left as long as she marries someone of the ;e!ish faith !hat is meant by the ;e!ish faith or !hether someone is a member of the ;e!ish faithN Henning + thought it !ould be possible to appoint an expert the chief -abbi" !ho !ould be able to determine any issues of fact particular factual circumstances !here thought an expert could be used to decide !hether someone !as part of the class O# T98 F'*T2 + is it possible to have such an expertN § Administrati/e nwor#ability and capriciosness > 8ven if the class is su.ciently certain, it may still fail due to administrative un!or(ability 2achs 1; is clear to tell us that if concept involved is too uncertain, then nothing !ill validate it > - v Histrict 'uditor ex p & /et ** + 6any or all or some of the inhabitants of the *ounty of &est or(shire7 class !as too large to be un!or(able > has rarely been applied to invalidate a trust 9ardcastle: it is unclear !hether it !as meant to refer to practical problems of surveying a !ide class, administrative futility !here a fund is deemed small in relation to the si=e of the class or undesirability of granting large numbers of people locus standi to enforce the trust > -e 9ay5s 2T + a trust to benet anyone in the !orld !ould be ineective trustees duties are imperative and more stringent than those called upon to exercise a po!er so similar terms may be valid in eg a po!er of appointment" > -e 8ndacott + 6 for the purpose of providing some sitable monument to myself7 unclear !hat the term suitable encompassed > *onse$uences for lac( of certainty: •
if settlor is the trustee, nothing at all happens
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if third party appointed as trustee + property is to be held on automatic resulting trust for the settlor%settlor5s estate
CON)TIT*TION OF TR*)T) > even !here A certainties are present, express private trust is only enforceable !hen it i s completely constituted > it is then enforceable by beneciaries, settlor drops out of picture unless expressly reserved himself po!ers" § 8ow is a trst completely constitted& > /ilroy v 1ord: there must be either M a transfer or property to the trustees or a declaration of self as trustee in both cases, this must be accompanied by intention to create a trust" if you intended to ma(e a gift, and failed to ma(e it properly, you cannot simply call it a trust instead: cannot perfect an imperfect gift § 5eclaration of self as trstee > ;ones v 1oc( + 6loo( you here, I give this to the baby7 !rites a che$ue to himself !ife argued that husband had intended to create a trust in favour of child court argues there !as no trust, no intention to transfer money to child or hold it in trust they !ere having an argument and he !rote the che$ue in the pea( of the argument declaration but no intention > -ichards v Helbridge + failure to eect transfer of the lease tenant sought to transfer business premises to son he did not execute conveyance necessary to eect a transfer of legal land grandson argued that court should discern an intention to create a trust + court rejected reasoning as they cannot regard failed transfer as amounting to a gift > )aul v *onstance + an intention to create a trust, one trustee but intended to benet t!o beneciaries § Transfer to trstee > must be in the appropriate form to the particular type of trust property > -ichards v Helbridge he did not execute conveyance necessary to eect a transfer of legal land FOR-A%ITIE) > even !hen the above are present, there may still be formalities that need to be observed § Trsts created by will > governed by s@ &ills 'ct MPAQ as amended by 'dministration of ;ustice 'ct M@P" > must be in !riting, signed by testator and !itnessed by at least people > trust contained in !ill is bound to fail if !ill is void § Inter /i/os trsts > Trusts of personality re$uire no formalities 9 Trsts of %and sAM"b" 1)' M@ a declaration of trust must be in !riting and must be signed by a person able to create that trust sanction R trust is void applies to express trusts only" e$uity !ill not permit statute to be used as an instrument of fraud: -ochefoucauld v 0ousted > #on express trusts sA" + the section does not eect the creation or operation of resulting, implied or constructive trusts § 5ispositions of e4istin" e(itable interests > sAM"c" must be in !riting and signed by the person disposing of the e$uitable interest TER-INATION OF TR*)T) L -evocation + pursuant to retention by settlor of an express po!er to revo(e L -ule in 2aunders v 4autier > collectively the beneciaries can call for legal title and put an end to the trust beneciary must be of full age MP" and sound mind
-e -ose + /r - intended to ma(e transfer of property 2hares" to !ifeJ Filled in form and posed to comp + he had don5t everything re$uired by him to ma(e the transfer of sharesJ 't that time, board of directors had to give agreementJ *' held, at appropriate time, the shares had not been transferred and gift not completedJ Time imp because if transfer had ta(en eect !hen he submitted form, no tax payableJ *' held e$uity should treat the e$uitable interest as having passed, once /r - had done everything he !as supposed to doJ )ennington v &aine + court prepared to stretch -e -ose principle as long as you have done everything necessary for you to do to transfer the property, !e can deem that property to have been transferJ" &anted to transfer shares to nephe!J 2he completed share transfer form and sent to accountantJ 9e failed to for!ard form on to the companyJ 2he signed form consenting to nephe! becoming director but failed to transfer su.cient shares for him to be controlling directorJ *' 9eld e$uitable interest in shares should be treated as passing to nephe! because it !ould have been unconscionable for her to refuse transfer of shares + form of e$uitable assignmentJ Cnconscionable for her to go bac( on !hat she had promisedJ Cnli(e -e -ose + she hadn5t done everything necessary for her to doJ )roblem + e$uitable interest has passed !%o board of directors agreeing that she should become a shareholderJ Cnsatisfactory principal in !hich trust la! is subverting a rule of company la!J
