Trust law - lecture 3

Trust law - lecture 3

1. certainty of intention - this imposes a trust and obligation that if you dont carry out you can be sued and taken to court, if its a trust you will be obligated to do so, if not taken to court.must be obvious that you want to create a trust as opposed to a gift.- the settlor must have intended to impose a legal obligation on the trustee as opposed to a mere obligation . it must also be clear that he intended to create a trust and not anything else such as a loan or a gift

   • Lambe v Eames (1871) - a disposition was made to a mans widow 'to be at her disposal in any way she may think best, for herself and her family' this was held to be an absolute gift to the widow, rather than a trust, as there was not sufficient intention to create a trust .
   • Re Adams & Kensington vestry (1884) - here the testator gave all his real and personal property for use to his wife Harriet ' in full confidence that she would do what is right as to the disposal where of between my children either in her lifetime or by will.it did not impose a binding obligation no legal obligation but moral obligation.whether she wanted to make a gift or use money for own use.did not impose trust and it said to do what is right in moral sense.this aims to determine the intention of the testator (certainty of testator) , intention of testator as not to impose a trust, - there is a maxim of equity which looks at the intention - look at the intention you look at the wording e.g. will or trust - in 1822 marriage property act - where women could hold property herself, made It easier that she can have property and decide whether to administer it as a gift

2. law or construction

   • Re Steele will trust (1948) - ' I give my diamond necklace to my son to go and be held as an airline by him and by his older son through generation and then to his son' held that this created a trust due to wording. hence shows true intention to testator which was to create a trust. you dont have to use the word trust , if you are to use the word trust, indicated that you are intending a trust such as an obligation - word of trust does not need to be used, does not guarantee creation of trust , the key is the true intention of the settlor.
   • Re Snowden (1979) - the testator was worried about how to leave her estate, she was going to leave estate but was undecided, had a brother which she trusted, wasn't certain what to do so left her residue to her brother in faith that he would then make such distribution as was appropriate at that point, was there necessary intention to create a trust, court held that she trusted brother in general sense e, didn't wish to sign him by enforceable intention so no legal obligation, no legally enforceable obligation on brother, she left him to decide and gave him rights hence he was the recipient of the gift
   • Paul v constance (1977) - the cash in a bank account used for bingo winnings, which had previously been shared between the claimant and her deceased partner, was deemed to be held on trust, held that conduct was demonstrated intention.in this case, chairing a bank account and using it to deposit joint winning demonstrated sufficient intention to create trust
   • Comiskey v bowring hanbury (1905) - a disposition was made absolutely in full confidence that she will make use of it as I should have ,and to be divided equally among the serving nieces , held as an examle of language which was sufficiently certain to show certainty of intention.Language is to be viewed as a whole. the existence of precatory language (in full confidence) will not prevent certainty of intention.
   • Re weekes settlement (1897) - testator gave interest of property to her husband with a ' power to dispose of all such property by will amongst our children' court said that what was it that the testator intended, intentionally we have an interest in this property with power to dispose of it , power of life interest but In terms of what has been created this was similar to a gift, he has power and can do whatever he wanted with property - he had no trust obligation, choice of husband therefore no trust
   • Re kayford (1975) - kayford was holding money from his customers and sought to protect it against his creditors on the insolvency of his business it was held that it is not required that something be labelled a trust for a trust to be found
   • Re Challoner club Ltd (1997) - concerned a club where donation to a club was paid into a desperate account, idea was that they would not be available to the creditors of tthe club, there was intention to create a trust, court said it was not certain who the beneficiaries would be - not worked out , no trust as they failed to comply with certainty of objects - LACK of certainty of intention equals absolute gift
   • customs and excise commissioners v richmond theatre management Ltd (1995) - here ig you went to a theatre and reserved ticket , terms merely a contract no trust obligations - theatre was not accountable for the interest or the ticket money - need to show intention for the court to identify there is a creation o trust due to intention

3. certainty of subject matter - regarded the property that will belong to the trust, the traditional principle requires the trust property to be segregated from any other property and identified or identifiable.

   • palmer v Simmonds (1854) - a settlor left 'the bulk' of her estate on trust, held an example of an unclear subject matter that could not be the basis of a trust
   • Re golays will trust (1965) - a settlor left a reasonable income for his housekeeper.a reasonable income was held to be a sufficiently objective yardstick certain enough to form the basis of a trust
   • Boyce v Boyce (1869) - A testator left two houses on trust for his daughters.one daughter was to choose one, and the other would take the remainder, however the first daughter died before choosing - held the beneficial entitlement must be capable of determination on the trust will fail for uncertainty .solution if you have two properties one worth 10 million and other 2 millions - couldn't court assume that Maria would choose the higher one with better value - thus the court lack the sense of being reasonable
   • intangible property - one share is regarded the same as another share - you done need to identify
     • hunter v moss (1994) - A company director states that a finance director could have a set number of shares, but did not state which.the shares were interchangeable with others in their class held where property is intangible and interchangeable the subject matter will be sufficiently certain witht the specific shares having to be segregated . moss owned 950 shares in private company and made oral declaration of trust of 5% of the issued share capital to hunter.there has been no separation of these shares from the rest of the shares owned by moss and moss had not specified which of the shares were being held on trust.here that are intangible assets where they are identical and therefore entirely interchangeable
     • harvard securities (1997) - one shares is identified as one share to another. any 50 is sufficient to the 950 shares. law takes a different approach that is clear and well established - position is clear
     • Re Lehman brothers (2012) -
   • tangible property - physical property
     • Re London wine - when a wine company became insolvent, customers sought to claim the wine they had paid in advance for arguing that it was held on trust for them , held where the trust property is selected from property that is tangible but not interchangeable i.e each of the items is unique, it must be possible to identify and segregate the specific property intended.otherwise the trust will fail as it did here.
     • Re Goldcorp exchange Ltd (1995) - balloon case

4. for a valid express trust the three certainties of intention, subject matter and objects myst be satisfied , these are expressly created by the settlor and are created intentionally rather then implied by courts

   • wright v Atkins (1823) - per lord Eldon " first the word must be imperative , secondary the subject must be certain, and thirdly the object t must be as certain as the subject
   • knight v knight (1840) - the testator left his estate to his brother who in turn left them to his son.the will stated that the testators intention was for the estates to be settled on the next descendant in the direct male line of the testators grandfather.when the son died, he was childless, his brother settled the estate on persons who where not the next descendants in the direct male line to of the testators grandfather.did the testator impose a binding trust on his brother ? the court held that the words of the testator were not imperative enough to create a trust that was binding