1_1_3 Certainties

1_1_3 Certainties

1. Certainty of subject matter

   • The court must have sufficient guidance to know what the settlers intent is.
     • Two types of uncertainty of subject matter.
       • 1. The amount of property to wish the trust obligation is intended to attach– donee takes it absolutely. Palmer vsimmonds - the wife left the husband - "bulk" off my rescissory estate two for my relatives–no trust as what is the definition of bulk. It was gifted to the husband absolutely.
       • 2. As to the beneficial share of each of a number of beneficiaries. In which case the transferee holds the property on resulting trust. Sprange v Barnard - the wife gave properly to the husband "For his sole use, asked his death the remaining part of what is left, that he does not want for his own, once and uses, is to be divided between family members. Husband to get absolutely as uncertain to which property was meant.
     • Tangible property
       • Re-London Wine Company– It was in the general stock– Wine had been paid for but not separated–it was in the bulk so not the making of a trust - if it had been separated then a trust would have been created - bankruptcy case. Subject matter cannot be identified as has not been separated. Probably has to be separated.
         • Must have separation– No trust and less separated 20 bottles out of 80– But which 20 bottles
       • re goldcorp - the producers had purchased the hand not taken delivery so the creditors were insecure creditors because they have not been identified.
     • Intangible property
       • Mac Jordan construction v Brookmount - building contract -3% from each steel was to be held for builder - the fund was not actually set up - Bank account needed to be Separated to form trust.
       • Hunter v moss - employer held 50/900 shares for an employee. The court held that it was not necessary to separate out the shares
   • There may be uncertainty as to the beneficial share of each other number of beneficiaries, in which case the transferee holds the properly on resulting trust.
     • boyce v boyce - "Which ever house she may choose" –there are two faces on trust, one is to go to Maria and the other to Charlotte. Uncertainty of subject matter– Two houses. Uncertainty of beneficiaries– Maria and Charlotte. Maria died before choosing, So the trust fails and that probably went back to the testators and the estate–each beneficiary's share has to be identifiable. Just because there is a choice doesn't mean there is uncertainty, if Maria had chosen a House before death the trust would have been valid
     • re golly - to enjoy one of my flats during her lifetime and to receive a reasonable income for my own properties. Courts upheld because it can decide what a reasonable income was. It is however I'm consistent with previous decisions. It shows that the court will call the trust if it can. Usually a court will not decide what a reasonable income is. The court held that it can decide on an objective test what was reasonable, The court is constantly involved in making such subjective assessments of what is reasonable.

2. Certainty of object - people

   • What obligations need to be performed
     • Beneficiaries should be clearly identifiable or there may be a formula in the trust that allows trustees to ascertain the identity of the beneficiaries.
       • Morice v the Bishop of Durham - beneficiaries should be formally identifiable. This case establish this concept. The test for certainty of objects depends on the type of trust.
         • 1. fixed trusts
           • re Benjamin - in this case Benjamin the beneficiary could not be found. The court may decide to give the property to other beneficiaries.
           • re Evans - the daughter is the trustee and your brother are given equal shares. She advertisers to find brother. Then take out insurance And transfers all assets to herself.
         • 2. Discretionary trusts
           • Imposes an obligation on the trustee to distribute the property what gives the discretion to choose who of the beneficiaries will take a share and determine how much each will receive.
             • The trustee makes the choice– Has fulfilled his obligation. The whole point of a discretionary trust is that it doesn't want each beneficiary to benefit in the same way. This is the reason for discretion.
               • A power to do something rather than duty. The test was laid dying in the gestetner case. You may distribute or not. There is a duty to consider only, not compelled to act.
                 • re gulbenkian - here the settlement contained the power to appoint for the maintenance and personal support of the class which included the settlers son. The class was sufficient to satisfy the test. The trustees or the courts must be able to say with certainty here's within and she is without power.
                   • mcpjail v Dolton - in this case the court has adopted the test for certainty. The trustees were given discretion as to how they should distribute funds. In this case they have the power. Sometimes the classes too large e.g. a group of employees – in The individuals have to be ascertainable. the case went from the Court of Appeal to the House of Lords. They said the trustee did not have the power. Lord wilberforce said it was a difference of shading.

3. Certainty of intention

   • The trustee must know his obligations, What he has to do and to whom the obligations are owed
     • Question: did the Settlor intend to enter into a legally binding obligation?
       • RE SNOWDEN - the real question is what did he intend should be the sanction? Was it to the authority of the Court of Justice, or the conscience of the devisee?
     • KIN LOCH v secretary of State for India 1882 - "There is no magic in the word trust"
     • Precatory words e.g. Confidence, hope, desire. Rely upon the conscience of the recipient, To the exclusion of legally enforceable obligation
     • RE Adams and Kensington vestry–"Infill confidence that she would do what was right as to the disposal thereof between the children either in her lifetime or by will after her decease"
       • No certainties – and The use of conscience shows no legal obligation but only a moral obligation. no legal trust.
     • Comiskey v boring hanbury - absolutely in confidence that she will make full use of it as I would have made myself and that after death she will devise it to one or more of my nieces as she thinks fit. And in default of doing so, I hear by direct that all my estate and property acquired by her under my will shall at her death be equally divided among the surviving nieces
       • Starts precatory(absolute to wife) but the second part adds on a bound obligation

4. Certainty = I.S.M

5. EXPRESS TRUST - Settlor transfers to the trustees on trust or declares himself trustee.

   • Problem arises when the trust is created unconsciously. CASE: Paul v Constance... Regarding a bank account "money as much yours as it is mine" - court info trust. They didn't realise that they had created a trust. The court inferred that there was a trust and asked who was getting the benefit of it. Trust = separation of legal owner and a beneficial ownership. The seller has no further role once the trust is created unless he is the trustee. Someone needs to exercise the right.

6. There is no trust if the three certainties are not present. This is a long established rule.

7. knight v knight - a) the need for the trustee(Recipient of the property) to know what obligations I attached to you and to whom they are owed and b) the need for a court to have sufficient guidance as to the settlers intention to be able to determine whether any such obligations have been performed, And if they have not, to enforce performance.

   • sum - what they have to do, Who they want to, What the state needs to do.

8. The difference between a trust power and a mere power

   • Trust power– The court will require duty to be exercised.
     • Mere Power - the court cannot require exercise. There is only a duty to consider. 'the extent of the survey which the trustees require to carry out... A wider and more comprehensive range of enquiry is called for in the case of trust powers then in the case of mere powers

9. Two types of uncertainty

   • 1. Conceptual uncertainty– Semantic uncertainty– Words used. E.g. tall boys, old ladies–worthy employees. Relatives not so much as they can be ascertained. If there is conceptual uncertainty the gift fails.
     • 2. evidential uncertainty–if one of the beneficiaries cannot be found. The gift will not feel for this type of uncertainty.

10. Administrative work ability

    • mcphail v doulton - inhabitants of London. Lord Wilberforce– The meaning of the word used is clear that the definition is so hopelessly wide as naughty for anything like class so that the trust is administrativly unworkable. Must be able to be admin workable– In this case this was the third kind of uncertainty, Where definition of beneficiary is too wide
    • r our district auditor ex parte W. Yorkshire - trust in valid"For any or all or some of the inhabitants of West Yorkshire". The class of potential beneficiaries was about 2.5 million which was to large
    • re harding - similar – beneficiaries were the black community in London boroughs– This group was still too large even though it been narrowed Down
    • re hays - mere power–not unworkable. A trustee must first consider The objects of the trust, They must have an appreciation of the number within and only when he knows this can he consider and decide whether to distribute or not. Unpredictable does not mean unworkable
    • re badens deed trust - relatives, Conceptional uncertain? Chancery division said the trustee must decide. It was held that relative was conceptional uncertain. onus of proof on beneficiaries that they are relative.
    • re barlow - friend held conceptionally uncertain
    • re tucks settlement - beneficiaries had to be Jewish and living with an approved wife. Trustee alive with the chief rabbi to be consulted. Jewish and approved wife were determined by the court to be turns which are determinable so there was conceptual certainty