Three Certainties

Three Certainties

1. Valid Express trust = Intention, Subject matter, objects = certain (Knight v Knight)

   • Certainty of Intention
     • Substance over form
       • 'trust' or benefit only indicative of trust, NOT CONCLUSIVE
         • Could be laymans terms (Re Williams)
         • If Self-declaration = Court reluctant INTER VIVOS
           • Lord Cranworth in Scales v Maude - Prevent trusts arising on mere whim
             • Even if say 'I am going to put this money away from him' Jones v Lock, was just regarded as loose conversation
               • Paul v Constance 'this money is as much mine as it is yours' - Seems like loose convo
                 • But were REPEATED MANY TIMES = INTENTION TO HOLD MONEY UNDER TRUST
                   • This probably reflects the idea of protecting existing property right i.e. not on a mere whim
           • Compared to sending property to someone to hold on trust as more is involved = intention
             • Don't need to name trustee, court would imply the executor is trustee.
               • If nobody is named trustee/wants to be trustee, court can step in an be a trustee themselves
                 • Re Robinson
                 • Thus it is different to self-declarations 'I want to be trustee myself' = Court careful from imposing a trust on a mere whim
           • Written Document of Self Declaration
             • More likely to accept (Shah v Shah)
               • Unless there is a sham intention (Midland Bank v Wyatt)
                 • i.e. evade tax or defraud creditors - use written doc to show trust to pretend money is not with them
         • Depends on context e.g. flippant remark = no intention
     • Mandatory Obligation rather than mere hopes/desires
       • 'Shall distribute' - McPhail v Doulton
       • 'To be distributed'
         • 'you will'
           • 'The money is to be used for'
       • Precludes 'precatory words' from being sufficient on their own = Express desire for action in non-binding way
         • I hope, wish, pray, desire (Deslauriers v Guaridan Asset Management) = Future
           • 'am confident'
             • Palmer v Simmonds - Just a moral obligation, not strict obligation
           • = Expressions of hope rather than mandatory obligation
           • 'Trust' in the sense of laymans terms (Re Williams)
         • 'I want' = Precatory - Paynter v Hitch = Expression
         • 'My desire' = RE Diggles
         • But real issue is to determine overriding intention, not precatory words - Courts look at whole context
           • Comiskey v Bowring-Hanbury
             • 'in full confidence' LOOKS like precatory words, moral obligation BUT said 'if you don't do this, I want my property to be distributed equally among my nieces'
               • Despite precatory phrases, UNERLINING INTENTION IS THAT NO MATTER WHAT HAPPENS PROPERTY WILL GO TO NIECES EVENTUALLY
           • Re Steels Trust
             • 'Request my said son'
               • Precatory phrase but client tells solicitor they want a trust so solicitor uses old case Shelly v Shelley to carry out this intention!
           • Vucicevic v Aleksic
             • loose language, but clear that proeprty can only go to Kosovo only, and cannot be sold until 2040 = no choice, can only be used for specified purposes
   • Certainty of Subject Matter
     • During One's life time
       • General rule = Must be SPECIFIC TRUST PROPERTY, i.e. not party of larger bulk, needs to be segregated
         • MacJordan v Brook Mount
         • But NOT ALWAYS - Can declare proportionate interest over property i.e. applies to ALL of your property thus no need to segregate
         • 'one of four houses' = Fail
       • INTER VIVOS. SEE HOW TESTAMENTARY CONTRADICTS INTERVIVOS TRUST
         • Physical goods need to be segregated (apart from each other) unless proportionate interest
           • Re London Wine Co
             • Wine bottles not segregated and might be mixed with company's own stock
               • People that worked for company thought bottles were belonging to customers in equity
                 • But when goes to court said wine bottles belong to company alone, their bottles absolutely until they segregate each individ bottle of certain vintage to each customer purchase. Doesn't matter if on Mon a customer buys a bottle of wine of a certain vintage and company then has to buy that bottle - It still belongs to company not customer
                   • Company sold bottles as secured investments, but as there is no trust customers can only recover contractual payments, but company is insolvent and doesn't have enough assets to meet creditors
                     • If this was testamentary - customers would be able to select which bottles of wine they want as long as matches description of contracts they agreed
             • If had proportionate interest e.g. sell 10% of wine bottles to customers = valid trust as over warehouse it would apple to every bottle of wine thus no need to segregate
               • Lord Justice Oliver
           • Re Goldcorp
             • Customer purchases of gold bullion did not give rise to trust as gold bullion not segregated from company stock
               • Elements of fraud because company knew it was not creating secured investments and carried out business in way where knew there was not sufficient gold to meet customer purchases
                 • Company insolvent, claimants want to recover in form of trust to get priority ahead of creditors but no trust
                   • Privy Council - No segregation of any gold bullion for any customer so no trust - subject matter too uncertain.
                     • Recognition that proportionate interests would be sufficient e.g. if customer had purchased 5% of gold stock = gives rise to trust
           • Hunter v Moss
             • Not sale of goods (GoldCorp) but instead it is shareholdings
               • Trust declared of 50 the company's 1000 shares was held to create valid trust from settlor#s allotment of 950 shaers despite lack of segregation
                 • Question is whether need to determine which SHARE NUMBERS are going to be held under trust? Coa = NO - sufficient to make declaration of trust. No requirement of segregation or which share goes to beneficiary or which shares trustees keep
                   • Why should Hunter v Moss be distinguised? Simple answer might be that either Hunter or London Wine/GoldCorp were wrongly decided
                     • ATTEMPTS TO EXPLAIN HUNTER V MOSSS
                       • Re Harvard
                         • tangible/intangible property
                           • London Wine + ReGold Corp = Tangible
                           • Hunter v Moss (shares) = Intangible
                           • Weak - Why does it make any difference when looking at the nature of property involved
                       • Shah v Shah
                         • Assumed Hunter v Moss was correct without any discussion
                       • North v Wilkinson
                         • Practical difficulties with proportionate interests when you don't segregate property
                           • Different from London Wine as company stores WINE BOTTLES only i.e. interest doesn't attach to every and single piece of property belonging to company, any interest would just relate to the bottles of wine alone
                             • In Wilkinson, sole trader made a declaration over every single asset he owns as a sole trader, every type of asset whether vehicle, computer etc... Judge says that's too difficult
                               • It would case practical difficulties if in this situation we don't segregate property... Support London Wine and ReGoldCorp?
                                 • Even with proportionate interests some degree of segregation should be required - Supports LondonWine and ReGoldcorp proportionate interests
                                   • Interest shouldn't just attach to every single piece of property that you have - We accept a proportionate interest over a bulk, but the bulk must be of some type of property rather than everything you own
                       • R Goode 'Are Intangible Assets Fungible'
                         • Is Property INTERCHANGEABLE
                           • E.G. Shareholdings = No need for segregation (Supports Hunter)
                             • But if not, for example variances of different types of wine or gold = Segregation is required
                               • This supports Wine and Goldcorp that requires segregation and Hunter that did not requires segregation
                                 • E.g. Waterbottles = water bottles = interchangeable = no segregation v Winebottles = not interchangeable as can vary = segregation required
                           • Problem?
                             • Live in age of mass produced goods if mass produce 1000 ipads
                               • Would we presum each ipad is pretty much the same? If 10 ipads held under trust is segregation required?
                                 • Arguably ReGoldCorp should have been reconsidered cos was there really much difference in gold bars?
                                   • if they weren't that different then following fungibility we shouldn't have needed to segregate
                       • White v Shortall
                         • Substance over form - idea from certainty of intention
                           • 50 out of 950 is no different from making declaration of proportionate interest
                           • £1000 and say £50 held under trust for you = no different to saying 5% is held for you.
                           • Problem?
                             • Moving away from liberal approach in protecting interests - maybe too readily creating a trust
                               • Intsead perhaps we should make sure to take extra steps and segregate property
                                 • This was the approach taken in Re Lehman
                                   • Key point is that for money and shares, no individual segregation is required cos court will try to interpret it as proportioante interest declaration
                   • Court also said it was nothing to do with proportionate interests
     • Testamentary Gifts
       • Subject matter is closely linked to overall intent
         • Palmer v Simmonds
           • 'bulk of my residuary estate' = 'my residuary estate' or anything precise and definite'
             • if mean as part of larger whole - need to define extent of bulk. But could be loose language where actually mean entirety of estate
               • In this case, bulk of estate = part of larger sum and so not sufficient certainty of subject matter as not segregated
           • Looks at context
       • Parsons v Baker
         • 'part or parts' i.e. like Palmer, something small than a whole but not told how much = not enough certainty
           • Giving choice to determine how much property is held under trust and how much to keep for themselves = valid gift, but not enough certainty to create legal obligation of trust
       • where value is uncertain
         • Courts managed to find value
           • Seale v Seale - upper limit of £400 - unlikely in inter vivos
           • Interpreted 'sum not exceeding £2,000' as gift of £2k (Gough v Bult)
           • Re Golays 'reasonable' can define with some certainty roughly how much someone should have
         • Peck v Halsey - gift of 'my best linen' = no objective indication as to how much someone should have
           • Compare to Re Goalys
         • Jubber v Jubber 'handsome gratuity' - loose language
       • As long as intention to make a gift from a bulk = sufficient. Doesn't matter if gift is specific property or whether the bulk has been segregated
     • TESTAMENTARY GIFTS: Specific property intended from unsegregated bulk - Know what supopsed to get but has it been seperated from bulk?
       • Specific - If court think you haven't intended for specific property to go to a beneficiary = interpret gift of bulk or prop for number of individuals as a series of elections/selections
         • could be up to trustee to decide which property (select) goes to beneficiary or courts might say beneficiary can (elect) themselves.
           • Asten v Asten
             • Houses left for number of beneficaries 1 for each person
           • Inter vivos trust = opposite. If got 5 houses and wnt to give each house on trust - Would have to specify who gets trust property - no election/selection
           • but if know testator wants specific property to go to specific beneficiary and fails to tell us arrangement
             • = Problem (Boyce v Boyce)
               • Where can't make choice because arrangement cannot work
                 • e.g. first daughter can't make choice because DEAD so can't make her choice - 2ND DAUGHTER CAN'T GET PROPERTY as can only get what 1st has not chosen - but that daughter dies
                   • Reflects what testator intended to happen... Don't want to give rise to intention which contradicts what testator wanted
     • Testamentary Gift - no specific gift intended i.e. if got just bulk
       • e.g. if just say 1 of hourses is to go to you = right of selection
         • Duckmanton v Duckmanton
   • Certainty of Objects
     • = beneficiaries are objects of trust
       • If purpose trust, purpose is the object of trust
     • Conceptional Certainty
       • Words used to define object/objects of trust is sufficiently clear e.g. best performing law students = difficulty
         • e.g. Phill to hold on trust for his son = no difficulty
         • Must determine whether series of independent gits or gift to class of beneficiaries
           • Needs to be distinguished from evidential certainty which is required only in fixed trusts
           • Re Barlow's Wills Trust - INDIVIDUAL GIFT CASE
             • condition of 'friends' in series of individual gifts
               • Defining friend didn't depend on defining class - as just had to prove they were friend to administrator
                 • Usually friends = conceptually uncertain but this case was one off
                   • Court said it was conceptually certain
                     • But if had been a trust for paintings to be DISTRIBUTED AMONGST my friends = failed as each person's interest would depend on how many other friends could be established
                 • Hence it was a 1 off case
                   • Also hence they were considered as individual gifts
           • Re Baden's Trust - CLASS OF BENEFICIARIES
             • Relatives and dependents were regarded as sufficiently clear
               • Do conceptual terms allow you to broadly identify range of beneficiares
                 • Key is to look at range - might question relative whether blood relative, adopted children, through marriage etc
                   • E.g. Jewish blood and jewish faith = certain Re Tuck's Settlement
                   • R v District West Yorkshire
                     • Inhabitants of WestYorkshire - Although not that certain e.g. boundaries, there is a degree of ELASTICITY - Key is have idea about RANGE
                   • But can uncertainty be resolved?
                     • Re Tucks Settlement
                       • If uncertainty, named person can clarify e.g. if som1 is of jewish faith
                         • 3rd person not a trustee? If it were a trustee then they might have too much discretion so wouldn't be a trust
                           • Could potentially save 'leave 20 pants to be held on trust distributed among my friends as trustees see fit in absolute discretion' with Re Tucks
                             • although 'friends' and 'deserving' don't seem certain, might be able to rescue by naming specific person as having final say to define terms and provide clarity (Re Tucks)
                           • Denning reckons executors or trustees could resolve uncertainty
                 • Assess in a businesslike way 'the size of the problem'
             • The Public Trustee v Andrew Hugh Butler
               • 'promising relative'
                 • Relatives = Certain = Re Baden's Trust
                   • 'promising' ? Implication is academic potential but could had difficulties defining
                     • Objective Guidance
               • 'Material Hardship'
                 • Would be able to tell if someone is struggling financially = Certain
                   • Objective Guidance
               • 'deserving from those who are not'
                 • No objective guidance = Not certain - could mean nicest person or those in financial need
                   • 'DESERVING' = SUBJECTIVE
               • THE MORE OBJECTIVE THE SAFER. THE MORE SUBJECTIVE - MORE VAUGE
       • Applies to all All trusts
         • Fixed Trusts
           • Pre-determined share/conditions of interest already set out, trustee just has to administer trust
             • 2 types
               • Each interest is independent of each other
                 • E.g. 1k under trust for Joe.. Only 1 beneficiary, nobody else can be beneficiary = interest independent from anybody elses
               • Those where each interest is part of a larger whole
                 • e.g. if 1k be held for Joe and Mary or equally between Joe and Mary - Joe's interest is dependent on Mary's interest and Mary's = dependent on Joes
               • (Re Barlow's Wills Trusts)
         • Discretionary Trusts
           • Class of beneficiaries but TRUSTEE HAS CHOICE ABOUT ALLOCATING INTERESTS TO EACH BENEF
             • E.g. here's 1k for Phill. Joe + Mary = benef. Say to Phill 'in your absolute discretion as you see fit, YOU SHALL distribute between these two people
               • I.e. has a choice who gets what
         • Powers of Appointment
           • similar to discretionary trust but lacks mandatory obligation
             • e.g. 'you may decide to give some money to Joe and mary'
       • CAN BE FIXED OR DISCRETIONARY
     • Evidential Certainty
       • Identifying who actual beneficiaries are
         • E.g. trust for £1000 for Phill's children but Phill might not know all of this children
           • Issue is determining who does and does not fit into that class
             • e.g. 1 house held for Peter = Fixed Trust = Evidential Certainty = Determine who Peter is
               • E.g. 50% of estate held on trust for Letisha/50% for Letisha = Fixed trust as no discretion to give anything other than that = eviden certainty = detetermine who John+Letisha are
                 • Remember conceptional = fixed OR discretionary
       • FIXED TRUSTS TO BE HELD AMONGST CLASS OF BENEFICIARIES
         • If C's interest depends on establish interest of others = Must be possible to draw up complete list
           • IRC v Broadway Cottages
           • e.g. 1982 winning football team =valid if can draw up list of players
             • But could be eviidential difficulties e.g. players moved abroad, lost track, no record of them etc
               • UNLESS BENJAMIN ORDER WHERE TRUSTEE CAN IGNORE MISSING PEOPLE AND PRESUME THEY'RE DEAD
           • But discretionary trust = loose
             • McPhail v Doulton - IS OR NOT TEST
               • just need to come before trustee and say are or not in class of beneficaries
                 • just need to be able to identify class using the terms
     • Administrative Unworkability
       • R v West Yorkshire CC
         • 2.5m potential beneficaries
       • Re Harding
         • black community for 4 london boroughs
       • unclear if test is concerned with preventing settlor from delegating 2 much or about difficulties in execution
       • McPhail v Doughton - 'hopelessly wide' - perspective of trustee
       • Charitable Trusts - anyone in world can be beneficiary... Yet that is valid?!
       • 4 exam think - when does it become administratively unworksable
         • When class too large or is it just about numbers? London Boroughs v 2.5m number?
     • Capriciousness
       • Motivation of trust is bizzare = defeats trust
         • Virgo no case has ever failed on capriciousness
         • Re Manisty's - Trust for residents of greater london
       • Know of capriciousnes for problem Q

2. Protects interests rather than facilitate the creation of new trusts where people may regret doing so