The Three Certainties

Re harding; Gibbs v Harding

'A private trust for such a large class as the black community in four london boroughs would be so large as to make a private trust unworkable and hence void' The concern is the ability of the trustees to carry out their duties of enquiry and ascertainment.

What words did Lambe v Eames (1871) used in his disposal of property by will?

'Absolutely...to be at her disposal in any way she thought fit for herself and her family'

What two questions must be satisfied for 'The Certainty of subject matter' to be satisfied?

1. Is the subject matter certain and identifiable? if so, 2. What is the extent of the interest that the beneficiary is to take in the property?

What is a fixed trust?

A Trust where the beneficiaries and their interests are specified or fixed - a fixed entitlement Example: to hold £20,000 on trust for my two children, Tom Jones and Sue Jones in equal shares The trustees do not have any discretion how the money is to be distributed to the beneficiaries or which of the beneficiaries are to benefit

What's a discretionary trust?

A Trust which obliges a Trustee to exercise a discretion to decide how the trust property should be distributed to the beneficiaries (share) or who should benefit from the trust (entitlement) Example: to hold £20,000 on trust for my two children, Tom Jones and Sue Jones as my trustee decides that they need or Example: to hold £20,000 on trust for such of my children as my trustee selects

What type of trust I am considering when seeking to establish certainty of objects?

A fixed trust requires both conceptual certainty in relation to the description of the objects and evidential certainty in relation to its objects to be valid. A discretionary trust probably only requires conceptual or linguistic certainty in relation to the description of the objects to be valid.

What happened in Re Coxen?

A testator left his house to his wife, W. The gift was expressed to be conditional on W continuing to reside permanently in the house. The Will provided for reference to be made to the opinion of H's trustees for the purpose of deciding whether W had ceased to reside permanently. Any evidential uncertainty was removed by making the trustees opinion decisive However Jenkins J added that if the condition had been conceptually uncertain making the trustees opinion the determinant would not have saved it

What is Capriciousness?

A trust (as opposed to a normal testamentary disposition or gift) may be void if it is capricious and precludes any proper consideration by the trustees. Trust involve obligations on the part of the trustees which may be rendered impossible if their terms are capricious. The usual example is of a trust to benefit red-haired men or a woefully small trust fund to be distributed among-st a large class of beneficiaries. No case directly on the point but some judicial and academic comment

What's an example of a power?

A trust deed provides that "the trustee may advance £1,000 to X". The trustee has the power to advance £1,000, but as evidenced by the word "may", is not required to

Re sayer - was a case of?

A trust in favour of employees and ex-employees of sayers (confectioners) Ltd. The company had not kept accurate records of it's ex-employees.

The House of Lords felt unable to apply the test stated in Baden on the evidence before them, and refered it back to the high court to determine whether the test was satisfied. The case then proceeded to the court of appeal under the alternative name of?

Baden's Deed Trusts (No 2) [1973]

What're the case law examples of conceptual certainty? If the individual/class can be objectively determined by the trustees as a matter of fact then conceptual certainty exists - But conceptual certainty in relation to the objects on its own may not be enough.

Barlows will trust [1982] - 'Old friends' Or A trust for 'such people and institutions as have helped me or my late husband' - Re Wrights Will Trust

A trust will fail if it is not possible to ascertain the beneficial interest - What's the case law?

Boyce v Boyce - where T devised his houses to trustees on trust to convey to his daughter M whichever one she might choose with the others to go to his other daughter C. M died before choosing.

What's the third certainty?

Certainty of Objects - The objects of a trust are it's beneficiary. For a trust to exist there have to be beneficiaries who are certain or capable of being rendered certain.

Beneficiary must be identified individually, or a clearly defined...

Class - E.g to hold on trust for my children.

What's a benjamin order?

Derived from the case of Re Benjamin) which allows the trustee to presume that the missing beneficiary is dead. This order does not destroy entitlement so if the missing beneficiary appear he can claim his share from the other beneficiaries - Re Green Will Trust This order will only be made if the trust is created by will and not otherwise.

A trust will fail if it is not possible to ascertain the beneficial interest unless what maxim can be employed? Case law?

Equity is Equality - Burrough v Philcox. Each beneficiary to take an equal share provided no contrary intention demonstrated.

What equitable maxim goes with the first certainty?

Equity looks for substance rather than form - Parkin v Thorold (1852) equity will look to the intention behind any words or conduct used not just words themselves - Shah v Shah

What's a power?

Fixed trusts: the Trustees are obliged to distribute property, to the fixed number of beneficiaries. Discretionary trusts: the Trustees are obliged to distribute property but have discretion over the manner of distribution A power of appointment may be given to an individual or a Trustee to exercise BUT not only does the power holder have discretion over distribution, he also has discretion over whether to exercise the power in the first place In other words the holder of the power has the ability to exercise it, but without any requirement to do so

Imprecise words are used to define the property/asset. A trust will fail...

For uncertainty where the property is defined in terms that are susceptible to variable interpretations. Palmer v simmonds - left the 'bulk' of her residuary estate on trust.

A power of appointment is a 'power of disposition given to a person over property not his own by someone who directs the mode in which the power shall be exercised by a particular instrument - Which case?

Freme v Clement

How do you find intention?

From the words in the relevant provision and document as a whole. from the surrounding circumstances including the conduct of the parties Look for imperative words or conduct that impose a mandatory legal obligation on a person to hold the asset on trust for another. Sweeny v Coghill [1999]

What happened in Re Allen?

In re Allen at p. 817, Sir Raymond Evershed M.R. took the example of a gift to X "if he is a tall man"; a man 6 ft. 6 ins. tall could be said on any reasonable basis to satisfy the test, although it might be impossible to say whether a man, say, 5 ft. 10 ins. high satisfied the requirement. So in this case, there are acquaintances of a kind so close that, on any reasonable basis, anyone would treat them as being "friends." Re Allen was followed

What's the first certainty?

Intention The intention must be a specific intention to create a trust not just a gift.

What's the consequence of lack of certainty of subject matter?

It creates a 'no valid trust' Property/asset remains in the legal ownership of the settlor It does not take effect as a gift.

Can each individual/s or member of the class be objectively identified by the trustees using proof?

It is possible to prove as a fact by evidence that a person falls within the description of the beneficiary/class of beneficiaries so that the trustees can draw up a complete list of all of the beneficiaries. Often called the complete list test.

Before distribution of the trusts funds to the beneficiaries a complete list must be complied by the trustees even though?

It is time consuming: Re Eden [1957] A large part or even the whole of the trust funds available for distribution to the beneficiaries would be used up in the inquiry and creation of the list: IRC v Broadway Cottages Trust [1954] 1 All ER 878

What're the conflicting decisions on Re Tucks?

Lord Denning could see no reason why a settlor should not provide that any dispute or doubt should be resolved by his executors or trustees, or even a third party unless the decision arrived at was wholly unreasonable Lord Denning expressed the view that the same approach should apply equally to conceptual and evidential uncertainty as well as to conditions whether subsequent or precedent

What was the case of Hunter v Moss [1944]>

M was the registered owner of 950 shares in M.E. Ltd which had an issued share capital of 1,000 shares M declared himself a trustee of 5% of the company's issued share capital in favour of H, without specifying which 50 shares were to be held on trust The CA held there was a valid trust because the shares where identical and indistinguishable and therefore any 50 shares will do Widespread criticism: D Hayton "Uncertainty of Subject-Matter of Trusts" [1994] 110 LQR 335 However Subsequently followed in Re Harvard Securities Ltd [1997] BCLC 369 BUT with the caveat this outcome only applies to shares and not other property/assets because intangible property such as shares do not lend themselves to physical separtion and division

What's the test for certainty of objects for a discretionary trust?

McPhail v Doulton House of lords applied a different test that is sometimes reffered to as the 'class ascertainability test' or the 'given postulant test' or the 'is or is not test'

There must be someone who can enforce the trust, or someone in whose favour the court can enforce the trust. - You cannot have a valid trust for a purpose unless that purpose is charitable - Case law?

Morice v Bishop

The settlor must intend to create a trust as opposed to some other arrangement (such as make a gift). Will an imperfect gift be branded as a valid declaration of trust?

No - equity cannot perfect an imperfect gift. Jones v Lock - Father gives cheque for £900 to his son. Did not endorse the cheque and die a few days later. Imperfect gift.

Do the objects of a power have any proprietary interest in the property?

No, not until such time as the donee has exercised the power in there favor.

Mr... Had a bank account in his sole name. He repeatedly said to Mrs... 'The money is yours as much as mine' He arranged with the bank that she could access the account and she paid her bingo winnings into it. Mr.. Died

Paul v Constance - there was clear intention.

The use of the word 'trust' is not essential - No need for Stilted Lawyers' language' - What case said this?

Paul v Constance.

What's the case where a discretionary trust declared by the county council in favour of 'any or all or some of the inhabitants of the county of west yourkshire' - Lloyd LJ held that a discretionary trust failed because the class apporx 2.5 million people was too large to be workable?

R v District Auditor ex p west Yorkshire metropolitan CC

Words of hope or desire - Do they result in a property/asset being received as a gift or to be held on trust for another?

Re Adams & Kensington Vestry (1884) - Testator in his will left property 'to the absolute use of my wife in full confidence that she will do what is right as to the disposal thereof between my children wether in her lifetime or by will'

in determining whether there is certainty of Objects we need to establish if we are dealing with a trust (whether fixed or discretionary) or a Gift subject to a condition precedent

Re Allen [1953] Ch 810 a gift was made to a member of the family subject to the condition that he shall be a 'member of the Church of England and an adherent to the doctrine of that Church'

Those arguing in favour of the validity of the gift, contended that the test laid down in the Gulbenkian and Baden cases was not applicable to this case; Which test is laid down by the court of appeal?

Re Allen, [1953] , namely, that the gift is valid if it is possible to say of one or more persons that he or they undoubtedly qualify even though it may be difficult to say of others whether or not they qualify.

Where the trust relates to property forming part of a larger quantity - What's the main case applicable?

Re London Wine Co. [1975] - LWC sold wine to customers on the understanding that, pending delivery, the wine would be stored in company warehouses at the customer's expense. Customers paid in advance for their orders and each was given certificate of title describing them as beneficial owner of particular consignments LWC took no steps to segregate the consignment from the rest of its stock till delivery was dueLWC become insolventNo trust: Customers merely unsecured creditors. Oliver J "It seems to me that in order to create a trust it must be possible to ascertain with certainty not only what the interest of the beneficiary is to be but also to what property it is to attach"

Where a Settlor uses uncertain terms to describe the beneficiaries the trust fails for conceptual uncertainty and the intended trust property results back to the settlor or testator's estate However the trust might still be saved as valid if the terms of the trust allow the trustee or a third party to settle any dispute as to whether a given individual is a beneficiary Which case described this?

Re Tuck's ST [1978] Ch 49A baronet created a trust for future baronets who were married to a wife 'of Jewish blood' and who 'continues to worship according to the Jewish faith'. If in doubt, 'the decision of the Chief Rabbi in London of either the Portuguese or Anglo German Community... shall be conclusive'. It was contended that the Jewish faith and blood were too uncertain.

What's the case of Bertram Baden?

She created a trust and under clause 9 (a) directed that the trustees apply certain income in in their absolute discretion to or for the benefit of any of the officers and employees of the company or ex-officers or ex-employees of the company or to any relatives of any such persons In such amounts at such times and on such conditions (if any) as they think fit

Why should the descriptions of the individual or class who are to benefit must always be expressed in a precise language - Conceptual certainty?

So it can carry out the settlors intentions by benefiting those that the settlor intended to benefit by the trust.

What's the 'whatever is left situation'?

Sprange v Barnard - Testatrix left shares to her husband 'for his sole use and at his death, the remaining part of what is left, that he does not want for his own wants and use' pass to A,B and C equally.

What was the basics of Comiskey v Bowring-Hanbury (1905)

Testator left property in his Will to his widow 'absolutely in full confidence that she will make such use of [the property] as I would have made myself and that after her death she will devise it to such one or more of my nieces as she may think fit.' The Will went on to declare that 'in default of any disposition by her therefore by her will.......I hereby direct that all my estate and property acquired by her under this my will shall at her death be equally divided among the surviving said nieces"

Where the obkects conceptually certain? Children and Remoter issue. Whats this?

The CA held that the existence of the gift over was inconsistent with the finding of a trust in favour of the children - the brother had a power and not a trust obligation In relation to certainty of objects the leading test for powers is also the Class Ascertainability Test or "any given postulant" test, laid down in Re Gulbenkian The House of Lords in Mcphail v Doulton adopted this test for discretionary trusts from this case

What's the test for gifts subject to a condition precedent?

The less strict 'is' test applies. whether it is possible to say of at least one person that he or she would satisfy the condition or description. Because the prospective beneficiaries do not take as a class but as individuals - if at least one person is able to satisfy the condition then the gift is valid

What happened in Re Leek?

The objects of the trust were expressed to be 'such other persons as the company may consider to have a moral claim' Harman J 'The trustees are made the arbiters and the objects are such persons as they may consider to have a moral claim; and I do not see why they should not be able on this footing to make up their minds and arrive at a decision"

What's Method one of the creation of an express trust?

The owner of an asset (Settlor or testator) Manifests a clear and genuine intention to hold that specific asset, on trust for a specific individual/s and complies with any necessary formalities for the creation of a trust of that specific asset.

What's method two of the creation of an express trust?

The owner of the asset transfers that asset to another individual/s, complying with formalities of transfer of the property, manifesting a clear and genuine intention that the other individual/s hold that specific property on trust for a specific individaul/s and complies with the formalities.

What happens 'If the settlor/testator has transferred property/asset to another and if certainty of intention is missing?

The property asset is normally received by that other as an absolute gift: Lassence v Tierney [1849]

Can it be said with certainty of any given individual that he is or is not a member of the class of potential beneficiaries?

This requires that the description of the beneficiaries be conceptually certain but probably not evidentially certain for the trust to be valid

If the word 'trust' is used it will normally evidence an intention to create a trust but beware it does not necessarily follow as it is a word that is capable of various meanings - What cases are there were this is the case?

Tito v Waddell (No.2) [1977] - Government documents referred to a 'trust' in the context of mining rights, but no trust was found to have been created.

What's a way of making an immediate gift?

To declare a trust - Shah v Shah [2010] Dinesh delivered a signed letter to his brother which described itself as a declaration and stated 'I am today holding 4,000 shares in the above company for you' The letter enclosed a signed share transfer form but no share certificate Dinesh then changed his mind and argued that the declaration should be interpreted as a statement of a gift which was ineffective Arden LJ held that the court should look to the "intentions of the maker as manifested by the words he has used in the context of all the relevant facts"

If the objects of a fixed trust are both conceptually evidentitally certain then the fixed trust will still be...

Valid even though it is not possible to locate a particular beneficiary whose identity as a beneficiary has been established. If this happens the trustee can either pay the share of the missing beneficiary into court - Gulbenkians settlement [1970] or take out missing beneficiary insurance to protect against personal liability - Re Evans [1999]

When can a discretionary trust have satisfied the McPhail test of conceptual certainty but the trust still fail?

When it is administratively Unworkable - MCphail v doulton Baden (No.1) Lord Wilberforce's obiter dicta that a trust might be void for uncertainty of objects, "where the meaning of the words used is clear but the definition of beneficiaries is so hopelessly wide as not to form "anything like a class", so that the trust is administratively unworkable". eg a trust for "all the residents of Greater London".

Property Assets which may be acquired in the future but it is not certain that the event will happen cannot normally be the subject matter of a trust - Which case back this up?

Williams v IRC [1947]

The test for certainty of objects for a fixed trust is found in the case of IRC v Broadway Cottages Trust - What happened here?

Wynn-Parry J held that the description of the objects must be such that a trustee is able to draw up a complete list of all the beneficiaries. This requires both conceptual and evidential certainty in relation to the objects of the trust at the time that the trust is executed (not created): Swain v Law Society. This is often referred to as the 'complete list' test or the Individual Ascertainability test'

Can a trust be made with nontechnical words given rise to intention? is the use of the word trust necessary?

Yes - Re Gulbenkian. No need for the word 'trust' but it is recommended! - Re kayford.

Will a trust fail on evidential uncertainty?

Yes - Sachs L.J - Once there is conceptual certainty the trust is valid. It then becomes a question of fact whether any given individual can be proved to be within the defined class. The potential beneficiary must establish that he falls within the class, not the trustee If he cannot , the trustees may proceed on the assumption that he is outside the class even if it could not definitely be said that he did so. He defined 'relatives' as 'descendants of a common ancestor'.

Is a trust of 'whatever remains' in a deceased's estate valid?

Yes - setting up a trust of the residue of an estate is common practice - Re lehman brothers international [2010]

Was west Yorkshire metropolitan cc an example of capriciousness?

Yes, as the class was merely 'an accidental conglomeration of person who had no discernible link with the settlo'

Will an express declaration of trust normally be conclusive evidence of an intention to create a trust?

Yes, unless the intention to create a trust is false (I.e It is a sham or pretence - Hitch v Stone [2011] If it's found to be a sham, the property remains with the settlor and does not take effect as a gift to the recipient - Minwalla v Minwalla

There are two main questions to be considered for - Gifts subject to a condition precedent. What are they?

a) whether the direction to allow members of the family and friends to purchase the pictures is void for uncertainty since the meaning of the word "friends" is too vague to be given legal effect; and (b) what persons are to be treated as being members of the testatrix's family. In the absence of any guidance from the testatrix, the question "Who were her friends?" is incapable of being answered? Is the word "conceptually uncertain" because there are many different degrees of friendship and it is impossible to say which degree the testatrix had in mind.

Stamp L.J adopted a stringent approach - insisting that the test would be satisfied only if it could be definitely.. In Badens deed trust

be said of any person that he was or was not within the designated class. There is no room for any doubt The existence of even a single 'don't know' in relation to any individual would mean that the trust would failHe defined 'relatives' as "next of kin" or "nearest blood relations".

Re mills - is the case where?

where a Testator requested his brother to appoint a property amongst his children and remoter issue who in the opinion of the brother should evidence a desire to maintain the property. There then followed a gift over of the property to the brother if the brother did not make a selection