Term
| What are the 3 certainties? |
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Definition
1) Certainty of words or intention (to create a trust)
2) Certainty of subject matter
3) Certainty of objects (beneficiaries) |
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Term
| What case confirms that the three certainties are required? |
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Definition
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Term
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Definition
EXPRESS TRUSTS REQUIRE THE THREE CERTAINTIES -
CERTAINTY OF WORDS/INTENTION
CERTAINTY OF SUBJECT MATTER
CERTAINTY OF OBJECTS |
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Term
| What happens in the case where there has been failure to comply with the certainty requirements? |
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Definition
| Failure to comply with the certaintty requirements can render the disposition void - the exact consequences will depend on the circumstances. |
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Term
| What is the difference between imperative words and precatory words? |
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Definition
| Precatory words merely express a hope or a wish, rather than imposing an obligation. Imperative words show an intention to create a legally binding obligation. |
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Term
| In creating a trust, are technical words (like trust) required? |
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Definition
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Term
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Definition
IT IS WELL SETTLED THAT A TRUST CAN BE CREATED WITHOUT USING THE WORDS TRUST OR CONFIDENCE OR THE LIKE - 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 |
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Term
| What is the modern approach to interpreting precatory words? |
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Definition
| Modern cases lean against finding a trust when precatory words are used |
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Term
| Which case was the turning point w.r.t leaning against finding a trust when precatory words are used? |
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Definition
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Term
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Definition
TURNING POINTS - PRECATORY WORDS LESS LIKELY TO BE INTERPRETED TO CREATE A TRUST
'IN HEARING CASE AFTER CASE CITED, I COULD NOT HELP FEELING THAT THE OFFICIOUS KINDNESS OF THE COURT OF CHANCERY IN INTERPOSING TRUSTS WHERE IN MANY CASES THE FATHER OF THE FAMILY NEVER MEANT TO CREATE TRUSTS, MUST HAVE BEEN A VERY CRUEL KINDNESS INDEED'
Husband had left property to his widow 'to be at her disposal in any way she MAY think best for the benefit of herself and her family'
Widow gave money to someone who wasn't her family
HELD - there was no trust, widow was absolutely entitled to give the property to whomever she wanted. |
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Term
| 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. |
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Definition
Re Adams [1884]
Comiskey v Bowring-Hanbury [1905] |
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Term
| Re Adam [1884] v Comiskey [1905] - re: words have to be read in their context, words alone do not define |
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Definition
Re Adams = 'unto the absolute use of my wife, in full confidence that she will do what is right as to the disposal thereof between my children either in her lifetime or by will after her decease' = NO TRUST
Comiskey = 'in full confidence that she will make such use of it as I should have made myself and that at her death she will devise it to such one or more of my neices as she may think fit and in default of any disposition by her thereor by her will or testament, I hereby direct that all my estate will be equally divided among the surviving neices' = YES TRUST |
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Term
| 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? |
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Definition
| It is clear from Comiskey, because he made such specific provisions for the property to be shared equally among the neices. 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. |
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Term
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Definition
'YOU MUST TAKE THE WILL WHICH YOU HAVE TO CONSTRUE AND SEE WHAT IT MEANS, AND IF YOU COME TO THE CONCLUSION THAT NO TRUST WAS INTENDED, YOU SAY SO, ALTHOUGH PREVIOUS JUDGES HAVE SAID THE CONTRARY ON SOME WILLS MORE OR LESS SIMILAR TO THE ONE YOU HAVE TO CONSTRUE'
In this case, the words 'I wish them to bequeath the same equally between the families of O and P in such mode as they shall consider right' = NO TRUST
(although he appears to be directing shares, he also says 'in such a mode as they consider right', which contradicts the first bit) |
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Term
| Re Steele's Will Trust [1948] |
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Definition
SOMETIMES, SETTLORS MAY LOOK AT PREVIOUS CASES TO DETERMINE WHAT WORDS THEY SHALL DO. THEREFORE, WHERE IDENTICAL WORDS FROM AN EARLIER CASE ARE USED, THE EARLIER DECISION SHOULD BE FOLLOWED - UNLESS THE EARLIER DECISION WAS CLEARLY WRONG.
In this case, the court followed the interpretation given to the words in the earlier case of Shelley v Shelley... this was because, in Steele's, the will had been prepared with professional help, and the case of Shelley had then stood for 80 years |
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Term
| Where there is no 'document' creating a trust, what will the courts do? (where someone is claiming there is a trust) |
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Definition
| The courts will look at the words and/or conduct of the parties to see if there was an intention to create a trust. |
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Term
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Definition
COURT FOUND AN INTENTION TO CREATE A TRUST ON THE BASIS OF SPOKEN WORDS AND CONDUCT
Mrs Paul & Mr Constance were not married & did not have a joint account. Mr C got injury compensation & paid it into an account in his sole name. Mr C & Mrs P had bingo winnings, and they were paid into Mr C's account. Money was withdrawn from the account and used for joint purposes. On a number of occasions (including in front of the bank manager), Mr C said to Mrs P 'the money is as much mine as yours'.
Mr C died intestate.
HELD - there was sufficient intention to create a trust. However, bit random, because they should have been joint tenants, rather than Mr C holding the money on express trust for Mrs P. |
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Term
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Definition
CONDUCT = SUFFICIENT TO SHOW INTENTION TO CREATE A TRUST
WRITING, THOUGH DESIRABLE, WAS NOT ESSENTIAL'
Mail order company sold soft furnishings. Customers paid in advance for goods ordered. The company was having financial difficulties and wanted to protect the customer's money. Therefore, the money was paid into a dormant deposit account in the company's name. The name of the account was later changed to 'Company's Trust Deposit Account', shortly before the company went into liquidation.
HELD - there was a clear intention to create a trust. 'The whole purpose of what was done was to ensure that the moneys remained in the beneficial ownership of those who sent them, and a trust is the obvious means of achieving this' |
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Term
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Definition
| COURT CONSTRUED THE WORDING OF A LETTER AS SHOWING AN INTENTION TO DECLARE A TRUST |
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Term
| What does 'certainty of words / intention' require? |
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Definition
| It requires that there is certainty that the settlor intended to create a trust. |
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Term
| What does 'certainty of subject matter' require? |
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Definition
| It must be certain what property is subject to the trust, and it must be certain what part or share of the property each beneficiary is entitled to. |
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Term
| What are the two aspects of 'certainty of subject matter'? |
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Definition
PROPERTY - it must be certain what property is subject to the trusts
BENEFICIAL ENTITLEMENTS - it must be certain what part or share of the property each beneficiary is entitled to |
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Term
| In order for there to be certainty of subject matter, w.r.t the property that is subject to the trust, what must the testator do? |
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Definition
| Settlor must describe the property in objective terms, so that the court can understand what is meant to be in the trust. If the settlor is too vague in his description, the court/trustee wont know what is in the trust, and the trust will probably fail lack of certainty of subject matter. |
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Term
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Definition
THERE MUST BE CERTAINTY AS TO WHAT PROPERTY IS SUBJECT TO THE TRUST
CANNOT SAY 'ANY THING THAT REMAINS' TO GO TO THE REMAINDERMAN
Testatrix provided in her will 'for my husband, to bewill him the sum of £300 for his sole use; and at his death, the remaining part of what is left, that he does not want for his own want and use, to be divided between my brothers and sister.'
HELD - it was not certain that any property would be left at the husband's death, let alone what it would be. One could not say what propert the trust was to cover, so the subject matter was uncertain, there was no trust and the husband took the money absolutely.
NOTE - it was not sufficient to say that at the husband's death, the remaining part of the money would be certain. A trust creates rights and duties at the moment of its creation, and must be certain at the moment of its creation. |
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Term
| Could you say in your will - £50 to Bob for life, and anything that's left over to Sam? |
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Definition
| NO - there will be no certainty of subject matter, and the trust will fail - absolute gift to Bob. |
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Term
| In the Estate of Last [1958] |
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Definition
| the words 'anything that is left' were held to = no certainty of subject matter, and therefore = no trust. Instead = absolute gift. |
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Term
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Definition
MUST BE CERTAINTY OF SUBJECT MATTER
'BULK OF MY SAID RESIDUARY ESTATE' = NO CERTAINTY OF SUBJECT MATTER
Testatrix gave her residuary estate to Thomas 'for his own use and benefit, as I have full confidence in him that if I die without lawful issue he will leave the bulk of my said residuary estate to Anne'
HELD - the phrase 'bulk of my estate' was not sufficiently certain for a trust. Therefore, Thomas took the property absolutely. |
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Term
| What will happen to a trust of unidentified tangible property? |
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Definition
| It will fail - because even w.r.t gold coins, each coin could be slightly different. |
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Term
| What will happen to a trust of unidentified intangible property? |
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Definition
| It will be valid - as it is all essentially the same |
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Term
| What is tangible property? |
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Definition
| Property that has a physical substance and can be touched |
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Term
| What is intangible property? |
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Definition
| items such as stock in a company which represent value but are not actual, tangible objects. |
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Term
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Definition
UNIDENTIFIED TANGIBLE PROPERTY = TRUST WILL FAIL FOR UNCERTAINTY OF SUBJECT MATTER
Buyers of wine stored in various warehouses could not establish a trust of particular bottles in their favour as the bottles had not been segregated or identified in any way. So when the wine supplier went into liquidation, the customers could not claim priority over other creditors by saying that particular bottles of wine were held on trust for them
WINE = TANGIBLE PROPERTY... E.G. SOME OF THE WINE COULD HAVE STARTED TO DETERIORATE... WHO WOULD GET THE LOWER QUALITY WINE, AND WHO THE BETTER? WHO CAN CLAIM EACH WINE. |
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Term
| Re Goldcorp Exchange Ltd [1995] |
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Definition
UNIDENTIFIED TANGIBLE PROPERTY = TRUST WILL FAIL FOR UNCERTAINTY OF SUBJECT MATTER
Purchasers of bullion, who had paid for it but not taken delivery, claimed rights to it on the insolvency of the company. Their claims were rejected, apart from a group whose buillion had been segregated. There was no trust for the others as there was no identifiable property on which any trust could attach, as no particular buillion had been segregated for them. |
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Term
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Definition
UNIDENTIFIED INTANGIBLE PROPERTY = OK, THE TRUST WILL BE VALID
There was an oral declaration of a trust of 5% of the issued shares of a particular company. 1000 shares had been issued, so 5% was 50 shares. This was held to be sufficiently certain even though no particular 50 shares had been identified as subject to the trust.
Tangible assets, although apparently similar may have distinguising characteristics e.g. some bottles of wine might have deteriorated. Whereas intangible property is all the same, provided the shares are of the same class. So there was no need to identify which 50 shares were being held on trust. |
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Term
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Definition
UNIDENTIFIED TANGIBLE PROPERTY = TRUST WILL FAIL... THEREFORE = RESULTING TRUST, BACK TO FATHER'S ESTATE
Testator devised his houses to trustees on trust for his widow for life and after her death in trust to convey to his daughter Maria one of the houses 'whichever she should choose' and to convey all his other houses to his daughter Charlotted.
Unfortunately, Maria died in the testator's lifetime and so could not choose a particular house.
Consequently, the trust in favour of Charlotte was void as it was uncertain what property the trust applied to (because no one knew what property Maria would have chosen, so couldn't say which properties were left for Charlotte) |
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Term
| Re Golay's Will Trusts [1965] |
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Definition
EXCEPTION TO THE RULE THE UNIDENTIFIED TANGIBLE PROPERTY = TRUST WILL FAIL
IF THE UNIDENTIFIED PROPERTY CAN BE OBJECTIVELY ASCERTAINED, THE TRUST/GIFT WILL BE VALID
Testator directed his executors to allow the beneficiary (his housekeeper) to 'enjoy one of his flats during her lifetime and to receive a reasonable income from his other properties'.
It was held that the trustees could select a flat. However, the question arose as to whether the direction for a 'reasonable income' ought to be void for uncertainty.
HELD - it was possible to objectively discern what a 'reasonable income' was for a housekeeper. Therefore, the gift was held to be valid. |
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Term
| What happens if the property which is due to be subject to a trust is left uncertain? |
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Definition
| The trust will fail, no trust is created. (as in Re London Wine & Goldcorp Exchange) |
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Term
| What happens if the purported trust is grafted onto a gift (e.g. kind of like a gift and a pathetic attempt to direct where the gift will go after the beneficiaries lie) |
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Definition
| The beneficiary/donee takes the gift absolutely. (as in Sprange & Palmer) |
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Term
| What happens if the beneficial interests are uncertain (as in... there is certainty of subject matter, but it is unclear who is to receive what) |
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Definition
| There is a resulting trust (back to testator's estate) as in Boyce & Re London Wine. |
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Term
| What are the three ways in which there will be no uncertainty of subject matter, where the testator/settlor has failed to provide certainty of subject matter? |
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Definition
1) Where trustees are given a discretion to determine the beneficial interest
2) It is possible to apply the maxim 'equality is equity'
3) Settlor lays down an effective determinant as in Re Golay (reasonable income for a housekeeper) |
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Term
| Which case shows that there must be certainty of object in order for there to be a valid trust, and that if there isn't there will be a resulting trust? (introduced THE BENEFICIARY PRINCIPLE) |
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Definition
| Morice v Bishop of Durham [1804] |
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Term
| Morice v Bishop of Durham [1804] |
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Definition
THE BENEFICIARY PRINCIPLE
THERE MUST BE CERTAINTY OF OBJECTS IN ORDER FOR THERE TO BE A VALID TRUST
IF A TRUST FAILS FOR UNCERTAINTY OF OBJECTS, THERE WILL BE A RESULTING TRUST
'if there be a clear tryst, but for uncertain objects, the property that is the subject of the trust is undisposed of, and the benefit of such tust must result to those, to whom the law the law gives the ownership in default of disposition by the former owner' |
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Term
| Why is it necessary for there to be certainty of objects? |
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Definition
| Because if it is impossible to saw who is entitled to benefit, it may be impossible to prevent payments of trust income to persons outside the class of objects. |
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Term
| The settlor must make it clear to the trustee who the beneficiaries of the trust are. However, must the beneficiaries of the trust need to know? |
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Definition
| No - the beneficiaries of the trust do not need to know that they are to be benefitted by the trust. |
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Term
| What determined what the test for 'certainty of objects' will be? |
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Definition
| Whether the trust is a fixed trust or a discretionary trust. A greater degree is certainty is required for a fixed interest trust than for a discretionary trust. |
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Term
| What is the 'certainty of objects' test for a discretionary trust? |
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Definition
| It is the same test as used in determining objects of powers. Laid out in Re Gulbenkian's Settlement Trusts. |
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Term
| Re Gulbenkian's Settlement Trusts [1970] |
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Definition
TEST FOR CERTAINTY OF OBJECTS IN A DISCRETIONARY TRUST (THIS TEST IS ACTUALLY FOR POWERS, BUT IN MSPHAIL V DOULTON, IT WAS HELD THAT THE SAME TEST APPLIES FOR DISCRETIONARY TRUSTS)
TEST = 'valid if it can be said with certainty whether any given individual is or is not a member of the class. It does not fail because it is impossible to ascertain every member of the class' |
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Term
| The test for establishing 'certainty of objects' in a discretionary trust... Discuss.... |
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Definition
1) McPhail v Doulton [1971] - the HoL held that the test for discretionary trusts is to be the less strict test which is used w.r.t powers
2) The test for powers comes from Re Gulbenkian's Settlement Trusts [1970]...
'valid if it can be said with certainty whether any given individual is or is not a member of the class, and does not fail because it is impossible to ascertain every member of the class' |
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Term
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Definition
HOUSDE OF LORDS HELD THAT THE TEST FOR OBJECTS UNDER A DISCRETIONARY TRUST IS TO BE THE LESS STRICT TEST WHICH IS USED W.R.T POWERS.
As, in executing the trust, the court should try to give effect to the settlor's intentions: equal division would often NOT be the most appropriate method for a discretionary trust, as, if the settlor wanted everyone to have equal shares, he would have made a fixed trust, not a discretionary trust. |
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Term
| What is the 'colloquiol' name given to the test for determining objects of a discretionary trust? |
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Definition
a) The in/out test
b) The is/is not test |
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Term
| What are the two different tests for determining certainty of objectss, and what kind of trusts are they used with? |
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Definition
1) Complete list test - fixed trusts
2) In/out test - discretionary trusts |
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Term
| From what case does the 'complete list' test come? |
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Definition
| IRC v Broadway Cottages [1955] |
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Term
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Definition
| You must be able to draw up a complete list of all the beneficiaries in the class (as the size and share each person gets will depend on the number of beneficiries) |
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Term
| Why is there a more flexible test for discretionary trusts? |
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Definition
| Because the trustee has discretion as to who get what... therefore, don't need to be able to draw up a complete list of potential beneficiaries |
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Term
| What are the two types of certainty that you can have (w.r.t certainty of objects)? |
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Definition
1) Conceptual certainty
2) Evidential certainty |
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Term
| What is conceptual certainty? |
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Definition
| Relates to the definition of the class of potential beneficiaries. Is it conceptually certain? Does the class have clearly defined parameters, so you can identify who is and who isn't in the class. |
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Term
| What is evidential certainty? |
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Definition
| Evidential certainty is more specific than conceptual certainty. For evidential certainty, you need to be able to come up with some evidence to categorically prove that the particular individual comes within the class. |
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Term
| For a fixed trust, what type of certainty do you need? |
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Definition
| You need both conceptual and evidential certainty. |
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Term
| For a discretionary trust, what type of certainty do you need? |
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Definition
| You only need conceptual certainty. |
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Term
| What do McPhail v Doulton & Re Baden (No.2) have to do with each other? |
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Definition
| Both different hearings of the same case. In McPhail v Doulton, the HoL were deciding what test should be used for object certainty in a discretionary trust. And Re Baden (No.2) = after the McPhail ruling, the was was sent back to CA for judgement, however, CA were confused & couldn't work it out, so they sent it back to the HoL. |
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Term
| Re Baden's Trust No.2 - controversy |
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Definition
After the ruling in McPhail (discretionary on need in/out test), the case then went to the high court for determination. HELD - there was a valid trust, as there was valid certainty. HOWEVER, each judge's reasons for this finding were different e.g. each interpreted the is/is not test in different ways...
for an exam answer, apply all three ways... e.g. might find 3 different outcomes. |
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Term
| Sachs LJ - Re Baden's Trust No.2 |
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Definition
Is / is not test =
In order to determine whether someone is in / out, the burden is on that person to use evidence to prove that he is within the class. Therefore, any class which ppl could prove they are in with evidence = conceptually certain. |
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Term
| Magew LJ - Re Baden's Trust No.2 |
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Definition
Is / is not test =
Provided that you can prove that there are a substantial number of people who will fall into the class, you have a conceptually certain class, and therefore, it = valid |
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Term
| Stamp LJ - Re Baden's Trust No.2 |
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Definition
Is / is not test =
The class is conceptually certain if you can say with certainty that any individual is either in or out. If anyone is on the periphery (e.g. maybe in or maybe out), then there is no certainty and the trust fails.
STRICTEST INTERPRETATION, A LOT LIKE THE LIST TEST USED FOR FIXED TRUSTS. |
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Term
| What happens where a discretionary trust is conceptually certain, but rediculously wide? |
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Definition
| It will fail - R v District Auditor [1986] |
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Term
| R V DISTRICT AUDITOR [1986] |
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Definition
ADMINISTRATIVE UNWORKABILITY, WHICH CAN BE USED TO STRIKE DOWN A TRUST
A DISCRETIONARY TRUST MAY BE CONCEPTUALLY CERTAIN, HOWEVER IF IT IS REDICULOUSLY WIDE / ADMINISTRATIVELY IMPOSSIBLE, THE TRUST WILL FAIL
Testator left his property on trust for the 'inhabitants of west Yorkshire' = impossibly wide... impossible because West Yorkshire = 2.5 million people. |
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Term
| How can you distinguish between a discretionary trust and a 'gift subject to a condition precedent'? |
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Definition
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