Created by cadhla_corrigan over 5 years ago
Basic Test:Knight v Knight: Certainty of intention: it must be clear that the testator intends to create a trust Certainty of subject matter: it must be clear what property is part of the trust Certainty of objects: it must be clear whom is intended to have the benefit (who the beneficiaries are)
Certainty of Intention:Did the settlor mean to create the trust?Re Krayford: a trust can be created without using the word 'trust' or 'confidence' but rather whether in substance there is sufficient intentionPrecatory words "hope, confidence etc" do not immediately create a trust Re Adams and the Kensington Vestry: "I give, devise and bequeath all my real and personal estate...in full confidence that [my wife] will do what is right". Held, this was an absolute gift to his wife, not a trust. Precatory words not enough to make a trust, the whole will must be considered to find the testators intention. Lambe v Eames: Husband had left property to his widow for the benefit of herself and family, however the widow gave money to someone who wasn't her family. Held, there was no trust, the widow was absolutely entitled to give the property to whomever she wanted. Precatory words were less likely to be interpreted to create a trust: James LJ- "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'Re Steele's Will Trusts: the wording of a gift was the same as in Shelley v Shelley therefore a trust was established despite the use of precatory words as the draughtsman had deliberately followed old precedent. Failed gifts:Jones v Lock: father wrote a cheque for his baby son. Although there was an intention to benefit the child, there was no intention purposefully create a trust: the intention was that of an outright transfer. When creating a gift, if it is not properly completed with the required legal formalities, a trust could be found as equity would not "perfect an imperfect gift". Shah v Shah: attempted to give shares as a gift "I am holding shares immediately for you" however, the court held the wording amounted to a trust. Note: I hold the shares for youBurden of proof:Re Snowden: an elderly lady left property to her brother claiming he would 'know what to do'. No intention was found. The burden of proof [for a secret trust] rests upon the person claiming that it exists through the ordinary civil standard of proof (on the balance of probabilities).Gold v Hill: Under prison rules the prison governor must hold onto prisoner's cash. Prisoner asked for interest on top of the original sum. This was not a trust as there was no intention therefore the governor had no duty to invest in the money and so does not owe the interest. Paul v Constance: An intention to create a trust can also be inferred from the donor's conduct. Dispute over whether Constance's wife or his new partner,Paul, was entitled to money held in a bank account under his name. Constance had told Paul multiple times over a long period that the money was 'as much yours as mine'. They also paid some joint bingo winnings into the account. Held, these actions were sufficient to infer that Constance had the intention to create a trust for equal shares in the money. Sham Intentions: Midland Bank v Wyatt: Mr & Mrs Wyatt, on legal advice executed a trust over their home, the document was professionally drawn by their solicitor. Mr Wyatt later borrowed from the bank on the security of the house.and did not inform the bank of the trust. When the bank started proceedings to recover, the trust was produced. It had been signed and ignored until convenient, trust was held to be a sham as there was no intention for the trust to be used.Business: Don King Productions: a boxing promoter purported to assign to a sponsorship agreements, most of these contracts contained express prohibitions against assignment and all of them concerned personal services. A purported assignment can take effect as a declaration of trust of the contractual rights themselves. Within commercial or business situations the intention of the parties does not have to be entirely clear in order to create a trust.
Certainty of Subject Matter:To what property does the trust apply?Identity of property: Boyce v Boyce: Amount of property: Concerning a testematory gift for two daughters, the older daughter can choose which house she wants and younger must settle for the other. The older daughter dies without making a choice and so youngest was not entitled to choose one for herself. The identity of the property forming the subject-matter of the trust must be certain. Amount of property: Palmer v Simmonds: Testatrix gave her residuary estate to another claiming 'he will leave the bulk of my said residuary estate to Anne'. The phrase 'bulk of my estate' was not sufficiently certain for a trust- what is a bulk? Anthony v Donges: the testator directed that his widow receive "such minimal part of the estate as she might be entitled under English law". There is no entitlement and so the trust was void for uncertainty.Re Golay's Will Trusts: Testator directed his executors to allow the beneficiary to 'enjoy one of his flats during her lifetime and to receive a reasonable income'. Held, the trustees could select a flat and it was possible to objectively discern what a 'reasonable income' was from the beneficiary's job therefore the gift was held to be valid.Certainty of fund: Hemmens v Wilson Browne: The defendant firm of solicitors was instructed to draft a document whereby their client's mistress was to receive the present right to call for a sum of money. Unfortunately, the document as drafted failed to give the mistress any enforceable rights in law therefore there was no identifiable fund which could form the subject matter of the trust. MacJordan Construction: Brookmount was a property developer who entered into a building contract with MacJordan and when Brookmount experienced financial difficulty MacJordan sought to recover its retention money. However, there was no separate trust account and so no fund. There were therefore no identifiable assets to which the retention money would be subject. Tangible property in bulk:Re London Wine co: Claimant's had bought wine which were stored in various warehouses and had not been segregated or identified in any way, they tried to claim the wine over the company's creditors when they fell into liquidation. 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 the property. A trust of an unidentified section of tangible property will fail.Re Goldcorp Exchange: Claimants had purchased gold bars but had not had them delivery. Upon insolvency of the company they tried to claim their share of the bars. Held, there was no trust for those whom had not had their bars segregated as there was no identifiable property on which any trust could attach.Intangible property in bulk:Hunter v Moss: Hunter was entitled, under his contract with Mr Moss to claim 50 shares out of 950 shares in a company. Although this showed an intention to create a trust, Moss did not identify which shares were the subject of this arrangement (he did not segregate 50 shares for Hunter from the 950 shares he held). Held, if the property is unidentified and intangible the trust will still hold. Re Harvard Securities: there is an intelligible distinction between intangible and tangible property.Future Property: Re Ellenborough: future property, or expectancies, cannot form the subject matter of a trust because there is insufficient certainty of subject matter - the trust cannot be properly constituted since the trust property does not yet exist.
Certainty of Objects:Fixed Trusts: IRC v Broadway: 'Complete List Test' applies to certainty of objects of fixed trusts. Terms are absolutely fixed, trustee must know exactly whom the specified individuals and specified proportions are with absolute certainty. A comprehensive list can be made, which accurately includes the names of all those who are beneficially entitled, while excluding all those who fall outside the class Re Gulbenkian's Settlement: settlement said the trustees should ‘in their absolute discretion’ in providing for trust money to be paid to any person who had care or control of his son, or to any person by whom he was employed, or to any person with whom he resided. It was argued this was too uncertain to be enforced. So long as any given person could say they were in of the class of objects intended to benefit from a trust, the trust would be valid. The complete list test was affirmed for discretionary trusts as well as fixed trusts (this was abandoned in McPhail). OT Computers: claimant company sought the identity of the beneficiaries of two trust accounts set up to service the payment of customer deposits and of moneys to 'urgent suppliers'. Held, a trust intended for “urgent suppliers” was void because it was not possible to identify each member of the specified class of objects. Even if the class is conceptually certain, it is still impossible to draw up a list due to evidential uncertainty- one must be able to identify each and every beneficiary.Discretionary Trusts:McPhail v Doulton: Baden executed a deed setting up a non-charitable trust which trustees shall apply the fund for the benefit of any of the officers and employees or ex-officers or ex-employees of the company or to any relatives or dependants of any such persons in such amounts at such times and on such conditions (if any) as they think fit. The scope and definition of "relatives" was too uncertain for the trust to be valid. Held, the individual ascertainability test applied to discretionary trusts ("is or is not test"): Can it be said with certainty that any given individual is or is not a member of the class? Re Baden (no 2): Once the class of persons to be benefited is conceptually certain it then becomes a question of fact to be determined on evidence (evidential certainty) whether any postulant (candidate) falls within the class: if it is not so proved, then he is not in it. McPhail's "is or is not" test allows court to tell with certainty if a person is the beneficiary of a trust. Relatives = next of kin, the class is small enough for a trust to be valid, however, relatives cannot be based on a line of ancestral lineage as the class of beneficiaries would be too wide. Powers of Appointment: Re Gulbenkian's Settlement: A power of appointment among a class is valid if one can say with certainty whether any given individual is a member of the class. Conditional Gifts:Re Barlow's Will Trusts: Barlow bequeathed some pictures and declared the remainder to be held by her executor on trust to sell them, but that her ‘family and friends’ could buy them first. The proceeds would go to the residuary estate. Held, the gift was valid by treating it as a series of ‘one or more individual’ gifts, however, if this were a trust the term "friends" would be too conceptually uncertain to give rise to a trust. Conceptual Uncertainty- vagueness in language:Re Tuck's Settlements: A baronet created a trust for future baronets who were married to a wife of Jewish blood and who worshipped the Jewish faith two which a Rabbi would be conclusive over. Trust was valid as the Rabbi’s opinion of who was Jewish defined the class of beneficiaries.Evidential Uncertainty- a question of fact e.g. whether a claimant is a beneficiary:Re Benjamin: If a beneficiary cannot be found (whereabouts uncertainty) despite strenuous steps to find one, the trustees can apply for a Benjamin Order which authorises them to distribute the property as if the beneficiary is dead.
Administrative Unworkability:McPhail v Doulton: the meaning of words used may be clear so as not to give rise to conceptual uncertainty, but the definition of beneficiaries is so wide a class cannot be formed- the trust is administratively unworkable. R v District Auditor ex p West Yorkshire: A trust was formed in favour of all the inhabitants of west Yorkshire. The class of beneficiaries was considered to be too wide and therefore unworkable.
Public Policy Limitations:Capriciousness- the settlor's requests are unreasonable, the Court immediately doubts their intention Re Manisty's Settlement: “A power to benefit ‘residents of Greater London” was considered to irrational, perverse or irrelevant to any sensible expectation of the . The court could be persuaded to intervene where a trustee of a discretionary trust exercised his power capriciously.Re Hay's Settlement: A trust may seem capricious, however, it depends on the circumstances of the settlor (e.g. he may have been the chairman of London). When applying a power of appointment the trustee must consider: Whether or not he should exercise the power The range of objects of the power The appropriateness of individual appointments Contrary to Public Policy:A trust will not be enforced if it is contrary to public policy e.g. AlienationMarriageDiscriminationDefraudationPromoting an illegal activityThrupp v Collett: A testamentary trust was created to pay the fines of convicted poachers who had been sent to prison for non-payment of fines. Under the game laws this was not a lawful charity and although it may provide relief to prisoners it was held to be against public policy.