THE THREE CERTAINTIES

THE THREE CERTAINTIES

1. BENEFICIAL INTEREST MUST BE CERTAIN

   • BOYCE V BOYCE (1849)where the settlor fails to make the beneficial interest plain, the property will be held on RESULTING TRUST for the settlor.
     • the MAXIM: equity is equality will come into play to save an invalid trust- where the property is uncertain BURROUGH V PHILCOX (1840): a share to the children was not specified but by relying on the maxim, each was deemed to have an equal share
   • HOWEVER, in RE GOLAY'S WILL TRUST (1965): "reasonable income" could be valid if one could make an objective measurement of what would constitute a reasonable income in any particular case.
     • does not apply to "reasonable share, legacy, amount, sum. this is because a reasonable amount for an individual will be the same regardless of how much money is in the trust fund.
     • CONTRAST: RE KOLB'S WILL TRUSTS (1962): insufficient power given to the trustees to decide what is meant by 'blue chip' shares. held: uncertain

2. CERTAINTY OF OBJECTS (beneficiaries)

   • RE ENDACOTT (1960): there have to be beneficiaries who are certain or capable of being rendered certain. this is because there has to be someone who can enforce the trust
     • not applicable to charitable trust cus the attorney general can enforce such public trust
   • THE INSTITUTIONS
     • FIXED TRUST: property is specified to be divided amongst beneficiaries in predetermined shares (settlor determines the share himself)
       • THE COMPLETE LIST TEST:the definition of beneficiaries must be conceptually certain(precise words) and there must be evidential certainty of who is within the class (there must be evidence): IRC V BROADWAY COTTAGES (1955)
       • EVIDENTIAL UNCERTAINTY: where there is no evidence to show who was intended to benefit under the trust
         • RESOLVING CERTAINTY: However, this can be rendered certain by the trustee allowing a 3rd party to decide who will or will not fall within the class of beneficiaries: RE TUCK'S SETTLEMENT TRUST (1978)
     • DISCRETIONARY TRUST: the share of each member of a class of beneficiaries will be determined by the discretion of the trustee (T decides who gets what and how much)
       • ANY GIVEN INDIVIDUAL TEST: can it be said with certainty whether any given individual is or not a member of the class. and it does not fail simply because it is impossible to ascertain every member of the class- MCPHAIL V DOULTON (1971)
         • PROBLEMATIC: how can a trustee prove that a particular person is not, for example a relative of the deceased?
           • to analyse this test the CA drew distinction between CONCEPTUAL AND EVIDENTIAL CERTAINTY in RE BADEN
             • discretionary trust is valid if beneficiaries are defined with 'CONCEPTUAL CERTAINTY': precise words to describe the class of beneficiairies
               • RE BADEN'S DEED TRUSTS (No.2) (1973): "relatives" and "defendants" were held to be conceptually certain
               • RE BARLOW (1979): "old friends" was conceptually uncertain
               • HOWEVER, if it cannot be viewed as a precise meaning, the maxim certum est quod certum reddi potest: the court will treat as certain that which can be made certain
                 • however, ADMINISTRATIVE UNWORKABILITY: a discretionary trust will be invalid if it is administratively unworkable because of the sheer size of the class of potential beneficiaries- R V DISTRICT AUDITORS (1986)