Equity: 3 certainties

HideShow resource information

The 'Trust' introduction

3 'points' to the triangle of equitable trusts:

1. Settlor: absolute owner of legal and equitable title. i.e. MUM

2. Trustee: legal title only. Obliged to hold for the beneficiary on trust. i.e. RENIE. 

3. Beneficiary: equitable title. Entitled!!! i.e. ME

Most are normally trustees, but there are also: 

a. Trustees: is obliged to hold for a 'beneficiary' on trust.Conscious is bound and effected. Courts will interfer. Beneficiary has proprietary rights in property. 

b. Donee: is authorised to hold for an 'object' and has a mere/personal power. May choose. Courts will not interfere. Objects do not own anything so not proprietary rights personal only.

c. Fiduciary/Trustee: is authorised to hold for an 'object' and has a fiduciary/trust power. Courts may interfere. Objects do not own anything so not proprietary rights personal only

1 of 28

What is a 'trust'

Sir Arthur Underhill: 'a trust is an equitable obligation binding upon a person (who is called a trustee) to deal with property over which he has control (which is called the trust property) for the benefit of persons (who are called beneficiaries) of whom he may himself be one, and any one of whom may enforce the obligation.' 

Lord Milett: 'a trust exists whenever the legal title is in one party and the equitable title in another. The legal owner is said to hold the property in trust for the equitable owner'. 

Trust: proprietary rights IN the property rather than personal rights against the person. Much stronger to have proprietary rights as follows the property. Trusts are imperative language such as certain, guaranteed and mandatory in nature. WILL distribute. MUST distribute. 

Powers: powers are different to trusts and are very complex! Powers are authorised but not mandatory. Powers are language that is discretionary i.e. SHALL, at the DISCRETION of. 

Fiduciary relationship: relationship of trust and confidence i.e. solicitor/client, doctor/patient 

Re Bowden 1936: Settlor joined convent and before joining created a trust. Decided later to leave convent and tried to claim property back. Lost control of property as valid trust created and she hadn't made herself a trustee. 

2 of 28

Types of trusts

The different trusts....

Express Trusts: expressly created trusts. Can be public i.e. charitable or private i.e. individual

Resulting Trusts: £1000k for education but money left over so results back

Constructive Trusts: Opposite of express trusts. Nothing expressed and constructed by courts. 

Charitable Trusts: For charities!!!!

3 of 28

Trusts

Must look at the LANGUAGE to see what the SETTLOR intended....

1. Donee to give £1k to students needy but if any money left over, give to RSPCA. =  PERSONAL POWER

2. Solicitor to give £1k to students needy but if any money left over, give to RSPCA. = FIDUCIARY POWER

3. Burrough v Philcox 1840: 'to dispose of all my real and personal estates among my nephews and neices, or their children, either all to one of them or to as many of them as my surviving child shall think proper'

4. Re Weekes Settlement 1897: 'I give to my husband power to dispose of such property by will amongst our children' = power only so not obliged only authorised. Husband died without exercising power and children are an OBJECT of the trust NOT beneficiary so no proprietary rights. Property went back to her side of the family and children got nothing!

4 of 28

Powers

Powers:

5. Re Hays Settlement 1981, Mcgarry VC: Held subject to a power. Wide power to who ever likes. If no power exercised, would pass to kids. How should courts supervise this 'power'. Issue was with how wide the scope of the power was. Courts would not demand trustee to exercise power (fiduciary power). Courts cannot demand trustee under fiduciary power to do anything but can stop them from just doing nothing and sitting on it. 'A mere power is very different [from an ordinary trust obligation]. Normally the trustee is not bound to exercise it, and the court will not compel him to do so. That, however, does not mean that he can simply fold his hands and ignore it, for normally he must from time to time consider whether or not to exercise the power, and the court may direct him to do this'.

Various different powers:

a. normal power i.e. £1m to anyone

b. special power i.e. £1m to needy law students

c. Intermediate/hybrid power £1m to everyone except needy law students

5 of 28

The Three Certainties of Private Express Trusts

PRIVATE EXPRESS TRUSTS:

It is important to know when you are a trustee as various liabilities and legailities arise:

Knight v Knight 1840: Lord Langdale MR: Established a trust is created if:

1. Intention: words/language give rise to certainty of intention and whether trust is created. look at actions after trust created too.

2. Subject Matter: property

3. Objects/Beneficiaries: who was the intended person

Langdale said, that a trust will be validly created if, “first, the words were so used, that upon the whole, they ought to be construed as imperative; secondly, if the subject of the recommendation or wish be certain; and thirdly, if the objects or persons intended to have the benefit of the recommendation or wish be also certain.” This is commonly understood to mean certainly of intention, certainty of subject matter and certainty of beneficiary or object.

6 of 28

1. Intention

What did the settlor intend?

Maxim of equity: look to intention- substance rather than form!!!!

SELFISHLY OR SELFLESSLY?

- The words of the settlor must create enough certainty and are scrutinised. 

- Beneficiary must be clear that they are entitled to the property

- Trustee's conscious must be bound so as to act selflessly not selfishly

  •  The maxim that equity looks to intention is relevant here. There are no set words, which must be used in order for a trust to be created. Even the use of the word ‘trust’ is not necessary. Gary Watt says the fundamental question is, whether the transferee of property allowed to use the property for himself or is the person bound to hold the property for another.
  • We must distinguish between imperative language, which will create a trust authoritative language, which will create a power and precatory language, which will create neither. 
  • The court will take an objective viewpoint and look at what is said and done
7 of 28

1. Intention

Prior to Executors Act 1830, courts minded to interpret precatory language as being imperative...

1. Paul v Constance 1977: Mr C left wife and moved in with Mrs P. Mr C received £950 for a work injury. Mrs P and Mr C held a joint bank a/c with the £950 in. Decided as not married to open Mr C his own bank a/c. Small amounts deposited to the a/c. Mr C said that despite his a/c, £ in a/c is 'as much as hers as mine'. Mr C died but never divorced Mrs C. Mrs C claimed the £ and Mrs P argued £ on trust, Mr C was a trustee and he was holding £ for benefit of him and her as beneficiaries and she was entitled to 50%. Mrs C claimed all. Court of appeal held his WORDS constituted had declared £ on trust and Mrs P entitled to 50%. Court looked at what was said and done and there WAS an intention of entitlement and an express trust was created from the words 'as much hers as mine'. Lose language and generous decision. 

However, the courts will not always be convinced in all situations where ‘loose’ language is used:

2. Jones v Lock 1865: Mr Jones came home to his wife and baby, having been away on business. He was scalded by his wife, having not brought home a present for the child. Mr Jones wrote out a cheque, payable to himself, put it in the baby’s hand and uttered several words. He died a few days later. The question arose of whether he had created a valid trust for his child. In the first instance it was held that a valid trust had been created. However, this decision was overturned in the CofA. It was held that there was no express, nor indeed a valid gift of the money. Lord Cranworth felt that it would be a very dangerous situation if loose conversation could constitute a trust. 

Look for: 1. Imperative language = 'shall give' and then will find a trust (fixed, discretionary or bare).2. Not imperative language will be a power (fiduciary or friend). 3. Gift (absolutely keep!)

8 of 28

1. Intention

3. Lambe v Eames: testator gave his estate to his widow, to be…absolute use if my dear wife...at her disposal in any way she may think best for the benefit of herself and her family…” Upon examination of these words, the court found no intention or imperative language, and as such it constituted an absolute gift and not a trust. GIFT. 

4. Re Adams & The Kensington Vestry: it was held that the words, “…in full confidence that she will do what is right…” did not contain intention or imperative obligation and thus the property constituted a gift and not an express trust. GIFT. 

5. Cominskey v Bowring Hanbury: a testator left his wife his estate and property,“…in full confidence…at her death she will devise it to…all property under my will shall at her death be equally divided…” In this case, the House of Lords found that despite the existence of some precatory language, an intention to create an express trust and imperative language was nevertheless present. TRUST.

6. Re Kayford Ltd 1975, Megarry J: 'There is no doubt about the so-called 3 certainties of a trust. The subject matter to be held on trust is clear, and so are the beneficial interests therein, as well as the beneficiaries. As for the requisite certainty of words, it is well settled that a trust can be created without using the words 'trust' or 'confidence' or the like: the question is whether in substance a sufficient intention to create a trust has been manifested.'

9 of 28

2. Certainty of Subject Matter

Language must be clear, certain and unequivocable:

UNLIKE CERTAINTY OF INTENTION , IF THE SUBJECT MATTER IS UNCERTAIN THE PROVISION WILL FAIL, AND THE PROPERTY WILL RESULT BACK TO THE SETTLOR.The subject matter of a trust may take a variety of forms including, land, money, shares, chattels, jewellery etc. Whatever, the subject matter is, it must be specified with sufficient certainty to enable the court to identify it. Gary Watt states that while mere evidential uncertainty such as the location of property will not cause a provision to fail, identification uncertainty will.

1. Palmer v Simmonds: In this case it was held that the language describing the subject matter -”bulk of my estate…” was conceptually and linguistically uncertain and as such, the trust failed.

2. Boyce v Boyce: Testator left 2 houses on trust for his two daughters, Maria and Charlotte. He directed that, Maria as his eldest daughter should first pick whichever of the two houses she wanted, and then whichever property was left would become the property of the other daughter. Unfortunately, Maria died before her father and she had not chosen which house she wanted. Did the trust remain valid with one house for Charlotte. Held that the subject matter was uncertain as it could not be said which of the two houses was Charlotte’s as Maria had to choose first. Where the subject matter is uncertain, the trust property results back to the settlor’s estate and the trust will fail. However, the courts have found ways to get around what would appear at first instance to be uncertainty of subject matter by finding if the settlor or testator have given the trustees any discretion to decide. 


10 of 28

2. Certainty of Subject Matter

3. Re Golay’s Will Trusts 1965, Ungoed-Thomas JA testator left directions that his mistress should be allowed to after his death enjoy, “one of my flats during her lifetime and to receive a reasonable income from my other properties; she is, if she so wish, to wear any of my jewellery, car, etc., until her death. Nothing to be distracted, given or loaned to any of her relations or friends, money or goods.”This was held to be sufficiently certain. In relation to “one of my flats” the court felt that one of the trustees could select a flat. The court said that it did not need to be previously identified and the words “reasonable income” were not what the judge or some other person subjectively considered to be reasonable but what could be objectively identified as a reasonable income. The court thought that this could be judged on the previous standard of living that the mistress had been used to and was therefore quantifiable and not uncertain. Courts may therefore look objectively to ascertain subject matter so as to give effect to settlors intentions to hold trusts valid. Shift in approach in the law!!!

11 of 28

2. Certainty of Subject Matter

Certainty of subject matter is exacerbated where the property in question forms part of a homogenous bulk: 

4. Re London Wine 1986: London Wine had large stocks on wine stored in a number of warehouses. Much of the wine was sold, but remained stored with the company. Customers received certificates describing the wine they had bought. London Wine went into liquidation, and the creditors tried to claim that their contracts to buy the wine should grant them not just a right to sue London Wine for their money back, but rather a proprietary right in the wine itself. It was held that such a claim might succeed if it could be shown that the wine was held on trust for their benefit. Certainty of subject matter though required that the creditors would have to show that particular identifiable bottles of wine had been segregated from the bulk of the stock and were being held separately on trust for them. If they could be identified then they could be held on trust. However there was no such segregation and as such, no proprietary rights could be found, only contractual.

However, in the case of some chattels, this rule will not apply. For example 100 tonnes of sugar – the grains do not need to be segregated. The courts have held that the chattels rule does not apply to £/or shares

12 of 28

2. Certainty of Subject Matter

5. Hunter v Moss 1994: Mr Moss owned 950 shares, which was the majority shareholding in his own company, Moss electrical. In September 1986, Mr Moss said orally to Mr Hunter that he would give him 5% of his holding. Mr Hunter was FD. However, the shares were never properly transferred from Mr Moss to Mr Hunter, but Mr Hunter did receive the dividends on the shares over the years. Eventually the two men fell out and the issue was whether Mr Moss had made a valid trust declaration to Mr Hunter for the shares, and if he had, whether there could be certainty of subject matter as no specific 50 shares had been separated from the rest for Mr Hunter. The CofA held that a valid trust had been declared and that the subject matter was sufficiently certain. The court drew a distinction between tangible and intangible property. Providing the shares were of the same class and in the same company there was no need to segregate them from the rest.

6. Re Goldcorp 1994Goldcorp Exchange Ltd had a business of holding gold reserves for customers wishing to invest in gold. Bullion levels were held for customers, but these varied from time to time. The Privy Council advised that it was impossible to say what each customer owned, and also impossible to know the customer’s fraction of the total. The total amount purchased by individual customers exceeded the total amount of gold bullion that was stored.

 

13 of 28

3. Certainty of Objects/Beneficiaries

IF THE OBJECTS/BENEFICIARIES ARE UNCERTAIN, THE PROVISION WILL FAIL AND THE PROPERTY WILL RESULT BACK TO THE SETTLOR OR THE TESTATOR’S ESTATE

No express trust may stand unless it is clear in who’s favour the trust has been created. The settlor must identify the objects/beneficiaries with sufficient certainty. A human being must be able to come to court to enforce the trust, and compel the trustee to carry out the obligation. Somebody must be able to come to court and enforce a trust. The rules for certainty of objects/beneficiaries vary, depending upon the type of trust or power that has been created.

14 of 28

3. Certainty of Objects/Beneficiaries

What type of obligation is there is there?

  • 1. Fixed trust – where there is fixed property, fixed beneficiaries, an imperative instruction to act, with no discretion for the trustees. i.e. Mum gives house to Charlotte and watch to Louisa.
  • 2. Discretionary trust – where there is an imperative instruction to act, but there is discretion with which the trustees may choose how to act. i.e. Renie must give £ to Charlotte and Louisa at her discretion
  • 3. Bare trust – where there is a fixed property held by a trustee for one beneficiary. Mum gives £100k to Charlotte.
  • 4. Fiduciary/Trust Power – A power falls short of a fully-fledged trust obligation, but gives the trustee the ability to exercise the power, but no obligation to do so. A trustee with a power cannot sit back and do nothing. As we have seen, they must consider exercising the power from time to time. A trustee with a power is under a duty to act responsibility and may have to justify under acts under a power to a court. A trustee who receives property is always in a fiduciary relationship. 
  • 5. Personal Power (friend) if property is given to a close friend/relative etc they may not be in a fiduciary relationship and as such, are not under the same obligations as stated above. In such a case the trustee is free to do as they like. The court wont intervene. Re Hayes, Magarry J stated that, “It is plain that if the power of appointment is given to a person who is not in a fiduciary position, there is nothing in the width of that power, which invalidates it per se.”
  • 6. Gift (absolutely keep)
15 of 28

In each case ask.....

In each case ask...

1) What did the settlor/testator intend:

a. imperative language: TRUST (fixed, discretionary, bare)

b. not imperative language: POWER (fiduciary/personal)

c. GIFT`? (absolutely out right!)

2) Is the subject matter certain?

3) Are the objects/beneficiaries certain?

16 of 28

3. Certainty of objects/beneficiaries POWER

3rd certainty: Certainty of objects/beneficiaries

FIDUCIARY/TRUST POWER (authoritive only 'may')

'Is or Is Not Test / Given Postulant test': To exercise a trust or fiduciary power, a trustee must comply with what is called, the “given postulant” test, that is, the trustees must be able to say with certainty that any “postulant” (person) coming before them, claiming to be an object under the power, is or is not within the class set out by the testator/settlor'. This test was established in:

1. Re Gestetner’s Settlement 1953, Harman J: Very complicated settlement. £100k was held by trustees to apply as they thought fit to members of a specified class, comprising of 4 named individuals, any person living or thereafter born who was a descendant of the settlor’s father or uncle, any spouse, widow or widower of any such person, 5 different charities, any former employee of the settlor or his wife, the widow or widower of any such employee, and any director or employee of certain named companies. Held that there was no uncertainty as it was quite certain whether individuals were objects of the power. However, it was uncertain just how many objects there were. He held that this sort of uncertainty would not invalidate the trust as the objects do not need to be identified in advance, but rather what matters is that as they come forward they can be identified as being in or out of the class. In this case it was held that the objects were identifiable. 

17 of 28

3. Certainty of objects/beneficiaries POWER

3rd certainty: Certainty of objects/beneficiaries

FIDUCIARY/TRUST POWER (authoritive only 'may')

2. Re Gulbenkian’s Settements 1970, House of Lords, Lord Luckjohn: settlement was made, with a power given to trustees to appoint in favour of Nubar Gulbenkian and any, “wife and his children or remoter issue and any person in whose house or apartment or in whose company or under whose care and control or by or with whom he may from time to time be employed or residing.” The HoL’s held that the objects were valid. They could be readily identified as being in or out of the specified class. Whilst approving Gesterner, the HoL’s importantly took the opportunity to disapprove of a slightly different and broader test that had been put forward by Lord Denning when he was MR in the CofA. (the prior hearing). Lord Denning had preferred a test, whereby if the trustee could find one person who was within the class, the power would be valid. Lord Luckjohn in the HoL’s said that trustees and the court must be able to say with certainty who is within and who is without of the power. If they cannot, the power will fail. More than 1 person must be identifiable. While a trustee with a power cannot be compelled to exercise the power as it is not mandatory but merely authoritative, the Court can order the trustee to periodically exercise his discretion in considering at least whether or not to appoint under the power, and consider the range of objects under the power. 

18 of 28

3. Certainty of objects/beneficiaries POWER

3rd certainty: Certainty of objects/beneficiaries

FIDUCIARY/TRUST POWER (authoritive only 'may')

3. Re Manisty’s Settlement, 1974, Templeman J: talked further about the duties of a trustee with a power, and also any rights of an object, or potential objects under a power may have. He said that if a person is within the ambit of a power, he or she can require the trustee to consider exercising the power in their favour. The trustee must consider such a request. If such a request is not considered or exercised capriciously, then the aggrieved object may apply to the court, who may remove the trustees and appoint others in their place. The trustees were given a power, to at their discretion, pay, appoint or settle trust funds for the benefit of any of the beneficiaries and also had the power to add any persons, corporations or charities to the class of beneficiaries, although the settlor had excluded from the list of beneficiaries his wife and certain other named persons for whom he had already provided. An intermediate or hybrid power had therefore been created. The court held that it didn’t fail for uncertain as the rule in Gulbenkian could be applied, nor did it fail for the very breadth of the power. The very fact that the class of potential objects may be huge will not render a power void. However, in relation to trusts, this may result in the trust being declared void. 

4. Re Beatty 1990: Affirmed 

19 of 28

3. Certainty of objects/beneficiaries TRUSTS

3rd Certainty of objects/beneficiaries TRUSTS

 Fixed Trusts: 

1. IRC V Broadway Cottages Trust 1955, Hodgson LJ, Court of Appeal: a trust will only be considered valid if the trustee knows how many potential beneficiaries there are and this is as there is no discretion of the trustees. The trustee must be able to identify in advance of the execution of the trust, all of the potential beneficiaries as the property must be divided between them. There must be a fixed list. This is known as the individual ascertainability test. 

20 of 28

3. Certainty of objects/beneficiaries TRUSTS

Discretionary Trusts: 'imperative lanugage' 'shall' but trustee is obliged with discretion!: 

 Historically the courts required a fixed list of beneficiaries for discretionary trusts. BUT, this is not what the settlor intended or he wouldnt have given DISCRETION that is OBLIGATORY to the trustees..so this position of 'fixed lists' was changed:

3. McPhail v Doulton (Re Baden’s Trust Deed Trusts (No 1), House of Lords, Lord Wilberforce: Mr Baden settled a trust for the benefit of certain persons connected with a company controlled by him. Clause 9(a) provided that, "The trustees shall apply the net income of the fund in making at their absolute discretion grants to or for the benefit of any of the officers and employees 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 first question was whether the deed created a power of appointment or a discretionary trust. The second was whether the deed failed for uncertainty. The HoL’s held that the language of the deed created a discretionary trust, not a power. Lord Wilberforce rejected the previous test for certainty of beneficiaries set out in IRC v Broadway Cottages Trust and by a bare majority the Lords considered that the test for certainty should be the same as the test set out for certainty of objects under fiduciary powers laid out in Re Gulbenkian’s Settements. The test is therefore, can it be said with certainty whether an individual is or is not within the given class. His Lordship stated that the assimilation of the tests, did not mean the assimilation of trusts and powers. The court will still not compel a trustee with a power to exercise it. Lord Wilberforce rejected the narrow distinction between trusts and powers, 'the rule in IRC v Broadway Cottages ought to be discarded'. 

21 of 28

3. Certainty of objects/beneficiaries TRUSTS

3. McPhail v Doulton (Re Baden’s Trust Deed Trusts (No 1), House of Lords, Lord Wilberforce: cont'd...

Lord Wilberforces 3 types of uncertainty of objects/beneficiaries:

1) Linguistic, semantic or conceptual uncertainty – will render the trust void – for example a trust whereby trustees shall distribute money to ‘tall people. How can you determine what is tall?

2) Evidential uncertainty – this refers to the practical difficulty of ascertaining the existence or whereabouts of certain objects/beneficiaries – for example a trust whereby trustees shall distribute money to all my nieces and nephews (where 9 of the nephews are in Manchester and another is hiking Mount Everest and whose exact location cannot be found - this will not render the trust void. 

3) Administrative unworkability –There may be a case where the meaning of the words used is clear but the definition of beneficiaries is so hopefully wide as to not form anything like a class – for example a trust whereby trustees shall distribute money to the inhabitants of greater London - provision will fail if it is impossible to carry out 

22 of 28

3. Certainty of objects/beneficiaries TRUSTS

3. Administrative Unworkability:

1. R v District Auditor ex parte West Yorkshire M.C.C 1986, LJ Lloyd: In this case, the West Yorkshire Council, just before its abolition purported to establish a trust for “the benefit of any or all or some of the inhabitants of the county of West Yorkshire.” This was deemed to be administratively unworkable. The class was too wide – millions of people – LJ Lloyd. The issue of administrative unworkability appears to be different depending on whether what has been created is a trust or a power. 

2. Re Manisty’s Settlement, Templeman J: was of the opinion that the mere width of a power would not make it impossible for trustees to perform their duties. They can still from time to time consider whether to exercise the power of appointment. 

LINKING BACK TO THE ABOVE – IF YOU HAD THE POWER TO DISTRIBUTE MONEY TO THE INHABITANTS OF GREATER LONDON – IT WOULD NOT FAIL FOR ADMNISTRATIVE UNWORKABILITY BECAUSE A TRUSTEE WITH A POWER DOES NOT HAVE TO DO IT – THEY MUST MERELY CONSIDER EXERCISE THE POWER FROM TIME TO TIME. 

23 of 28

3. Certainty of objects/beneficiaries TRUSTS

The term 'relatives' in regards to Certainty of beneficiaries: 

Could the term 'relatives' satisfy the 'is or is not test' approved in McPhail v Doulton (Re Baden's Trust no 1) and be conceptually certain?

1. McPhail v Doulton (Re Baden’s Trust Deed Trusts (No 2), LJ Stamp, LJ Sachs, LJ MegawThe Court of Appeal had to deal with the question of whether the term ‘relatives’ will be sufficiently conceptually certain so as to pass the is or is not test. The CoA held that the term was conceptually certain. However, the judges did not agree as to what the term meant. Sachs LJ Trace legal descent from a common ancestor…”.Stamp LJ. “Legal next of kin…”Megaw LJ. “If, as regards at least a substantial number of objects, it can be said with certainty that they fell within the trust.”

LJ Megaw's method was disapproved of in the House of Lords decision of McPhail (Re Baden no 1) of deciding as long as 1 can prove. House held that must be able to say for ALL under the is or is not test to satisfy.

House couldnt agree on the meaning of relatives BUT...LJ Sach's method of deciding the term 'relatives' is preffered and keeps McPhail entact. 'If you can prove you are a relative, you are in the class, if you can't, you are out of the class!

24 of 28

3. Certainty of objects/beneficiaries GIFTS

The term 'FRIENDS' in regards to Certainty of beneficiaries: 

1. Re Barlow’s Will Trust, Browne-Wilkinson J, 1979: A testatrix died, leaving a valuable collection of paintings, which she directed should be sold, subject to the proviso, “that any member of my family and any friends of mine may be allowed to purchase any of my paintings at the price they were valued at in 1970.” The executor’s of this will, applied for guidance as to whether the direction was void for uncertainty, and how to appropriately identify friends and family. Browne- Wilkinson LJ first acknoledged that the term friends was difficult to define, and if this direction required a list of her friends to be drawn up, it would probably fail. He said that if it was construed as a gift to a class of friends it would have to satisfy the is or is not test and again would fail for conceptual uncertainty. He therefore preferred to construe this gift as a series of individual gifts to anyone who could, on any conceivable (common sense) test, prove they are a friend. This is a lighter test as it is a GIFT.  'Whether the disposition is properly regarded as a series of individual gifts to persons answering the description 'friend' (in which case it will be valid) or a gift which requires the whole class of friends to be established (in which case it will probably fail).'

25 of 28

3. Certainty of objects/beneficiaries GIFTS

Qualifying Conditions: in regards to Certainty of beneficiaries 

 1. Re Tuck’s Settlement , Denning, Court of Appeal, 1978: Sir Adolf Tuck made a settlement that intended to ensure that successors would marry a good Jewish wife, and if they remained in the Jewish faith and married an approved wife, they would be provided with an income. This is quite conceptually uncertain as how do we know what is a 'good jewish wife' but as the Rabbi was to decide the 'good jewish wife'. The Court held that the trust was valid. It was held subject to a condition precedent just like in Re Barlow’s Will Trust. Here the trust was not uncertain, as the clause delegating the decision to the chief Rabbi added a degree of certainty and the condition for someone to decide if 1 person or more qualifies is sufficient. The Rabbi was able to decide as a 'matter of fact who was a good wife' and thus the GIFT was found valid. 

 2. Re Allen, Sir Raymond Evershed 1953: In this case a testator left his house to the eldest son of his nephew, subject to the proviso that the nephew “shall be a member of the Church of England, and an adherent to the doctrine of that Church.” Sir Raymond Evershed held that these words were quite certain and capable of a reasonable and clear meaning and of sensible definition. The condition precedent and GIFT in this case was therefore declared valid.

  CAN THE QUALIFICATION BE SENSIBLY DEFINED AND BE SATISFIED. NOTE: THESE CASES ARE TAKEN OUT OF TRUSTS/POWERS AND ARE GIFTS so it is ok if 1 or more persons can come forward and there is no requirement of absolute certainty. GIFT!!!!

26 of 28

Structure of answer...

For each provision in turn:

1. Intro

2. 3 certainties with decision at each

3. Exceptions

4. Summary/Conclusion

(look at Marys model answer for further detail too and seminar answers of non-assessed work)

27 of 28

3. Certainty of objects/beneficiaries TRUSTS

Discretionary Trusts: 'imperative lanugage' 'shall' but trustee is obliged with discretion!

2. IRC V Broadway Cottages Trust 1955, Hodgson LJ, Court of Appeal: In this case a settlor left money on trust, and that the income should be for the benefit of the donor’s wife and the beneficiaries. The trustees had absolute discretion to distribute this income from time to time as they saw fit. It wasn’t possible at any given moment to identify or ascertain all given persons who might come under the description of “the beneficiaries”, that is the trustees could not draw up a definitive fixed list of all the beneficiaries. However, it was possible to determine with certainty whether a particular individual was a member of the trust – for a fixed trust this wasn’t good enough and the trust failed. The CoA held that dictum of Lord Eldon in the case of Morice v Bishop of Durham must prevail: 'As it is a maxim, that the execution of a trust shall be under the control of the court, it must be of such a nature, that it can be under that control; so that the administration of it can be reviewed by the court; or, if the trustee dies, the court itself can execute the trust: a trust therefore, which, in case of maladministration could be reformed; and a due administration directed; and then, unless the subject and the objects can be ascertained, upon principles, familiar in other cases, it must be decided, that the court can neither reform maladministration, nor direct a due administration.'

28 of 28

Comments

No comments have yet been made

Similar All resources:

See all All resources »See all resources »