The three certainties

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Express trusts

To ensure that an express trust is capable of being managed by a trustee according to the terms intended by the settlor, a test known as the three certainties must be met. Under this test the settlor must have intended a trust, made certain the property that is the subject of the trust, and identified who is to benefit from it. The three certainties are certainty of intention, subject matter and object. 

Basic test- Knight v Knight 1840- Langdale- 'If 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 also be certain.' 

Certainty of intention- otherwise no trust- must intend to create a trust. Courts look at substance not form. Just because you use the word trust doesnt mean it is one. 

Failed gift cases- 

  • Jones v Lock 1865
  • Richards v Delbridge 1874
  • Shah v Shah 2010
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Certainty of intention

Precatory words (eg hope, confidence) are insufficient alone-

  • Lambe v Eames 1871
  • Mussoorie Bank v Raynor 1882
  • Re Adams and the Kensington Vestry 1884- used the words 'full confidence that she would do what is right' creates no legal obligation. Cotton- 'Undoubtedly confidence, if the rest of the context shows that a trust is intended, may make a trust, but what we have to look at is the whole of the will which we have to construe, and if the confidence is that she will do what is right as regards the disposal of the property, I cannot say that that is, on the true constuction of the will, a trust imposed upon her.' 
  • But see Re Steeles Will Trust 1948- had used outdated form which used precatory words, but still found intention- 'and I request that my said son to do all in his power by his will or otherwise to give effect to this my wish'. Held there was a trust established, as draughtsman had deliberately followed the old precedent of Shelley v Shelley. 

The focus is on intention to create a mandatory obligation, as opposed to the precise words used- 

Re Kayford 1975- Megarry- 'it is well settled that a trust can be created without using the word...

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Certainty of intention

trust or confidence or the like: the question is whether in substance a sufficient intention to create a trust has been manifested.'

Duggan v Governor of Full Sutton Prison 2003- Control of cash by prison govenor under the Prison Rules. Held there was nothing in the language of R43(3) of the 1999 rules or more generally, in the circumstances in which cash was taken from a prisoner under that rule or dealt with under the rule pursuant to R44(2), which should lead to the imposition of a trust on the moneys when they came into the hands of the prison govenor.

Re Snowden 1979- intention to create a trust subject to ordinary civil standard of proof (balance of probability)

But see Gold v Hill 1999- Deceased to solicitor: if anything happens to me you will have to sort things out. You know what to do. Look after Carol and the kids. Carnwarth J- 'it seems to me that the most likely interpretation of Mr Gilberts intentions, as expressed in the enrolment card and elaborated by his conversation with Mr Gold, was, as pleaded in the amended statement of claim, namely that he should hold them as trustee for her to apply those moneys for the use and benefit of herself and the children.' 

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Certainty of intention

Paul v Constance 1977.

Sham intentions- Midland Bank v Wyatt 1995- David Young QC- 'I do not believe that Mr Wyatt had any intention when he executed the trust deed of endowing his children with his interest in Honer House, which at the time was his only real asset. I consider the trust deed was executed by him, not to be acted upon, but to be put in the safe for a rainy day... As such I consider the declaration of trust was not what it purported to be but a pretence or as it is sometimes referred to, a sham.... accordingly I find that the declaration of trust sought to be relied upon by Mr Wyatt is void and unenforceable.

Business common sense- 

Don King Productions v Warren 1998- Lightman J- 'the essential task in construction is to deduce, from the two agreements construed as a whole against their commercial background the commercial purpose which the businessmen and the entities who were parties to them must as a matter of business common sense have intended to achieve by entering into them, and if such intent can fairly be deduced and if this is necessary to effectuate that intent, the court may have to require what may appear to be erros or inadequacies in the choice of language to yeild to that intention and be understood as saying what that language must reasonably...

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Certainty of subject matter

be understood to have been intended to mean.' 

Certainty of subject matter- any property can be a trust. Future or later acquired property cannot be subject matter.

The general principle- i) the entire trust fund must be certain- Hemmens v Wilson Browne 1995- the defendant solicitors were instructed to draft a document giving their clients mistress the present right to call at an unspecfied time in the future for a sum of £110'000 to enable her to purchase a house for herself and her daughter. Judge Mosely-'It is common ground that the document granted Mrs Hemmens no enforceable rights. It was not a promissory note, not a contract (because there was no consideration), it was not under seal, and it did not create a trust because there was no identifiable fund which could form the subject matter of such a trust.'

MacJordan Construction v Brookmount Erostin 1991- promised to keep 3% of the price as trustee for the builder. Rentention moneys were to be retained by developer as trustee and were required to be placed in a separate bank account. In fact no account was established. Scott- 'There were no identifiable assets that had been subjected to the trusts to which the rentention fund, once appropriated and set aside, would be subject.' 

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Certainty of subject matter

ii) the amount of property form the subject matter of the trust must be certain- Palmer v Simmonds 1854- testamentary gift of 'the bulk of my residuary estate'. Kindersley- 'What is the meaning of bulk? I am bound to say she has not designated the subject as to which she expresses her confidence, and I am therefore of opinion that there is no trust created.'

Anthony v Donges 1998- Testamentary gift of 'such minimal part of my estate (to which my wife) might be entitled to under English law for maintenance purposes.' Lloyd- 'But since it seems to me that it is impossible to determine what she is entitled to under English law for maintenance purposes, or rather, what is meant by that because, I say there is no such entitlement, it seems to me that Cl 4 has no content, and therefore it is void for uncertainty.' 

But see Re Golay's Will Trust 1965- testamentary gift of a 'reasonable income from my other properties.' Ungoed Thomas- 'in this case, the yardstick indicated by the testator is not what he or some other specified person subjectively considers to be reasonable but what he identifies objectively as reasonable income. The court is constantly involved in making such objective assessment of what is reasonable.' Looked at age, and income of B so made reasonable figure. This meant the trust could be upheld.

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Certainty of subject matter

iii) each beneficiairies share forming the subject matter of the trust must be certain- Boyce v Boyce 1849- Testamentary gift of two houses to two daughters, with Maria to choose one and the other to be held on trust for Charlotte. Maria predeceased the testator without making a choice. Vice Chancellor- 'the gift in favour of Charlotte was a gift of the houses that should remain, provided Maria should choose one of them, that no choice had been or indeed, could have been made by Maria, and therefore the gift in favour of Charlotte had failed.' 

Contrast with Re Knapton 1941 and Waddington v Waddington 1999. 

Burrough v Philcox 1840- A fixed trust for the settlors nieces and nephews that did not declare expressly each of their beneficial interest. Court upheld the trust using equitable maxim 'equity is equality'- each got an equal share. 

Tangible property in bulk (generally unascertainable)- Re London Wine Co 1986- when purchasers of wine left their goods at the company's warehouse, they recieved a certificate of title but no bottles were separated from the bulk in order to satisfy their contracts. In the present case the purchasers contended that an express trust had been established. Held- the suggested trust failed for uncertainty of the subject matter, and the arrangments could not be construed as an interest in a fixed proportion of the bulk. 

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Certainty of subject matter

Re Goldcorp Exchange 1995- The customers of an insolvent gold dealership had recieved certificates and invoices signifying ownership. In most cases the customers had not taken delivery and no stock had been separated from the bulk in order to satisfy their demands, despite assurances to the contrary. Lord Mustill- 'approaching these situations a priori common sense dictates that the buyer cannot acquire title until it is known to what goods the title relates.' Didnt have enough gold to meet amounts. Doesnt matter what you intend if it is impossible. 

Intangible property in bulk (generally ascertainable)- 

Hunter v Moss 1993- oral declaration of trust in 50 of 950 shares. Didnt say which shares. Was a valid trust as all the shares were indistinguishable. Any 50 of the shares could constitute the trust as they were all the same. Dillon LJ- 'just as a person can give by will a specified number of his shares of a certain company, so equally in my judgement, can he declare himself trustee of 50 of his ordinary shares in MEL or whatever the company may be and that is effective to give a beneficial proprietary interest to the beneficiary under the trust.'

Re Havard Securities 1997- there is an intelligible distinction between intangible and tangible property- (Neuberger). 

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Certainty of subject matter

Future property- Re Ellenborough 1903- Attemped assignment of property to which the settlor might become entitled under the wills of her brother and sister. Held this was a 'contract by deed to dispose of an expectancy and would not be enforced by a court of equity in absense of consideration.'

Certainty of object-

Types of certainty- specified individuals, or defined class. Must be human beneficiaries. Conceptual (language used) vs evidential (enough facts to determine the beneficiaries as long as court can give interpretation to it it is allowed) certainty. 

Re Badens Trusts (no 2) 1973- trust for inter alia 'dependents' and 'relatives'. Sachs LJ- 'once the class of persons to be benefited is conceptually certain it then becomes a question of fact to be determined on evidence whether any postulant has on inquiry been proved to be within it: if he is not so proved then he is not in it.' Held these words were conceptually certain- you can define a relative. 

Re Barlows Will Trusts 1979- trust to benefit old friends. Would be conceptually uncertain. 

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Certainty of object

Browne Wilkinson J- 'friends has a great range of meanings, indeed its exact meaning probably varies from person to person. Some would only include those with whom theyd been on intimate terms over a long period, others would include acquaintences who they liked. Some would include people with whom their relationship was primarily business, others would not. Indeed many people, if asked to draw up a complete list of their friends, would probably have some difficulty in deciding whether certain people they knew were really friends as opposed to acquaintences. 

Fixed trusts- complete list test ie conceptual and evidential certainty- must be able to draw a complete list of all B's. IRC V Broadway.

Two ways of framing beneficial entitlement under a fixed trust-

  • independently: £100 to each of my friends
  • referentially: £100 to be divided amongst my friends equally. 

In the first example the claimant just has to satisfy the court that she falls within the class of 'friends'. Even if the trustee just finds one person who they can be certain is a friend then the trust will not fail. (the one person test.) 

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Certainty of object

In the second example a much stricter test of certainty is required. This is because each individual beneficiary's entitlement cannot be determined without identifying all the other members of the class. A trustee therefore has to compile a complete list of all the members. This is known as list certainty. The trust will fail if there is conceptual uncertainty in the definition of the class. It will also fail if there is evidential uncertainty. This means that, as a factual matter, there isnt sufficient evidence from which the trustees can make a list of all those who fall within the class. 

Re Gulbenkians Settlement 1970- Is/is not test- Lord Upjohn- 'suppose the donor directs that a fund be divided equally between 'my old friends' then unless there is some admissible evidence that the donor has given some special dictionary meaning to that phrase which enables the trustees to identify the class with sufficient certainty, it is plainly bas as being too uncertain. Suppose there appeared before the trustees (or court) two or three individuals who plainly satisfy the test of being among 'my old friends', the trustees could not consistently with the donors intentions accept them as claiming the whole or any defined part of the fund. They cannot claim the whole fund for they can show no title to it unless they prove they are the only members of the class, which they cannot do, and so, too by parity of reasoning, they cannot claim any defined part of the fund and there is no authority in the trustees or the court to make any distribution among a smaller class than that pointed to by the donor.'

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Certainty of object

OT Computers v First National Finance 2003- Pumfrey J- 'Mr Mann submits with considerable justification that the term 'urgent suppliers' is simply too vague to define any class of beneficary.' 

Powers of appointment- individual ascertainability test ie the is or is not test (also known as the any given postulant test). Could it be said of any given person if they are or are not a member of the class? 

Re Gulbenkians Settlement 1970- Lord Upjohn- 'a mere or bare power of appointment among a class is valid if you can with certainty say that any given individual is or is not a member of the class. You do not have to be able to ascertain every member of the class.' 

Discretionary trusts- discretion in selecting who they appoint property to. The objects must be conceptually certain but need not be evidentially certain. Some debate here. Is/is not test or member of a class. 

McPhail v Doulton 1971- a discretionary trust to provide benefits for the staff of Matthew Hall and Co and their relatives and dependants. If need a fixed itd fail as it would be impossible. Dont need equal shares as it is highly unlikely that this is what the settlor intended. 

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Certainty of object

Wilberforce- 'a trustee with a duty to distribute, and particularly among a potentially very large class, would surely never require the preparation of a complete list of names... The conclusion I would reach is that the wide distinction between the validity test for powers and that for discretionary trusts is unfortunate and wrong, that the rule recently fastened upon the courts in IRC v Broadway ought to be discarded, and that the test for the validity of discretionary trusts ought to be similar to that accepted in Re Gulbenkians Settlements for powers, namely that the trust is valid if it can be said with certainty that any given individual is or is not a member of the class. Assimilation of the validity test does not involve the complete assimilation of discretionary trusts with powers, as to the trustees duty of inquiry or ascertainment in each case, the trustees ought to make such a survey of the range of objects or possible beneficiaries as will enable them to carry out their fiduciary duty... a wider and more comprehensive range of inquiry is called for in the case of discretionary trusts than in the case of powers.' Basically just need to be reasonable with givings. 

Re Baden (No 2) 1973- went back to court for is/is not. CoA apply McPhail test. Different interpretations of the test, still not clear which one will be used if comes up now. Stamp LJ (settlors intention)- 'validity or invalidity is to depend upon whether you can say of any individual, and the accent must be upon that word any, for it is not simply the individual whose..

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Certainty of object

claim you are considering who is spoken of- is or is not a member of the class, for only thus can you make a survey of the range of objects or possibile beneficaries.' Should be able to say of anyone- applys the test literally. No doubt- if you dont know for even one person then the trust wont work. Problem is that it takes you back to a fixed list test- evidential certainty. 

Megaw LJ (rejects Stamps strict test. Not as liberal as Sachs, so need some evidential certainty as long as you can say about some. Cant have too much evidential uncertainty.)- 'in my judgement, much too great emphasis is placed in the executors argument on the words 'is not. To my mind the test is satisfied if, as regards at least a substantial number of objects, it can be said with certainty that they fall within the trust... what is a substantial number may well be a question of common sense and of degree in relation to the particular trust: particularly where, as here, it would be fantasy, to use a mild word, to suggest that any practical difficulty would arise in the fair, prosper and sensible administration of this trust in respect of relatives and dependents.' 

Sachs LJ- 'once the class of persons to be benefited is conceptually certain it then becomes a question of fact to be determined on evidence whether any postulant has on inquiry proved to be with in it: if he is not so proved then he is not in it. That position remains the same whether the class to be benefited happens to be small, or large. The suggestion that such trusts could be...

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Certainty of object

that such trusts could be invalid because it might be impossible to prove of a give individual that he was not in the relevant class is wholly fallacious.' Sachs doesnt want them to fail. If fail to prove youre in it, then youre just not in it. Conception. Problem- may be many people that cant prove, but if even one can the trust is valid. 

The Burrough- type test- with most discretionary trusts the settlor will not usually intend that each person within the class should benefit under the trust. Modern discretionary trusts are most often for large groups of people eg employees and their dependents and it is very unlikely that the settlor would intend that each member of the class should take an equal share (which would in most cases render the benefit negligble). It is arguable however that the complete list test ought to still be applied to small family trusts where the settlor can be taken to have intended that each member of the class should still recieve something, in the event that the trustees fail or are unable to exercise their discretion. 

Burrough v Philcox 1840- Settlor gave property to his children, directing them to allocate the property as they saw fit between his nieces and nephews. The children died without making any allocation. The court held that the property was on fixed trust for the nieces and nephews in equal shares. The settlor taken to have intended equal division of the property in the event that 

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Certainty of object

the trustees failed to exercise their discretion under the power of appointment. List certainty was required as equal division would have been impossible without it. The Burrough reasoning applies where there is an obligation on the trustee to distribute some of the trust property (however much) to each individual in the class. Then you still need a complete list even though the trust may be discretionary. 

Curing problems of 'conceptual uncertainty'- a trust deed can expressly allow the trustee or a third party to settle any evidential uncertainty as to whether a particular person is a beneficiary. It is not clear if this device can extend to conceptual uncertainty.

Re Tucks Settlement Trust 1978- uncertainty in the words Jewish blood and Jewish faith could be cured by the settlor referencing the question to the Cheif Rabbi in London in the event of dispute. Lord Denning dissented on this. 

Re Coxen 1948- Jekins thinks this cant be cured by trustee. 

Curing problems of ascertainability- cant find person, cant pay out if dont find them all as may be liable. Re Benjamin 1902- distribute anyway. Benjamin order when it is uncertain if theyre dead or alive. 

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Certainty of object

Conditional gifts- Re Barlows Will Trusts 1979- a more liberal approach is applied to conditional gifts- Browne Wilkinson.  

Administrative unworkability- even conceptually certain but may fail eg class too wide.

McPhail v Doulton 1971- Wilberforce- 'there may be a third case where the meaning of the words used is clear but the definition of beneficiaries is so hopelessly wide as not to form 'anything like a class' so that the trust is administratively unworkable. I hesitate to give examples for they may prejudice future cases but perhaps 'all the residents of Greater London' will serve.'

R v District Auditor ex p West Yorkshire MMC 1986- only one case on this. Too many people. A power of a similar nature may be workable. A trust in favour of 'any or all or some of the inhabitants of the County of West Yorkshire.' Lloyd LJ- 'A trust with as many as 2 million potential beneficiaries is, in my judgement, quite simply unworkable. It seems to me that the present trust comes within the third case to which Wilberforce refers. I hope I am not guilty of being prejudiced by the example he gave. But it could hardly be more apt, or fit the facts of the present case more precisely.' 

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Public policy limitations

Capriciousness- will void a trust if the intention of the settlor is non sensical or no good reason. Nature of trustees obligations, should be able to decide properly, refers to who the objects of the trusts are and why chosen. No cases but has been spoken about. Say 'leave all my shares to anyone with red hair in my village.' 

Re Manistys Settlement 1974- a trust for the residents of Greater London may be capricious (Templeman). 

Re Hay's Settlement Trust 1982- Megarry- 'In Re Manistys Templeman appears to be suggesting that a power to benefit residents in Greater London is void as being capricious because the terms of the power negative any sensible intention on the part of the settlor. I do not think the judge had in mind a case in which the settlor, was for instance, a former chairman of Greater London, as subsequent words on that page indicate.' 

Perpetuity- in other lectures.

Contrary to public policy- conditions restricting alienation (cant sell off property), conditions restraining marriage, conditions discriminatory on grounds of race and sex?, defrauding creditors, or promotion of an illegal activity. 

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Public policy limitations

Thrupp v Collett 1858- 'To my executors the sum of £5000, which I direct they will, within the period of 5 years form my decease, pay and apply in purchasing and procuring the discharges of persons, who, at the time of my decease or at any time during the said period of five years, shall or may be committed to prison, for non payment of fines, fees or expenses, under the game laws, now or to be hereafter in force, the cases to be selected by my executors, in their own discretion and judgement, but no payment for procuring the discharge of one person to exceed the sum of nineteen ginueas.' 

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