Express Private Trusts

Question 1

What do express private trusts rely on?

Answer 1

They rely on what the settlor/testator intended - thus, it must be tolerably clear what he/she wanted to achieve

Question 2

What are the three certainties that an express private trust must meet to be valid?

Answer 2

Certainty of intention, subject matter and object

Question 3

What did Moffat say about certainty of intention?

Answer 3

“The hallmark of an express trust is the existence of an intention to create a binding trust obligation”

Question 4

What implies the intention to create a trust?

Answer 4

Both words and wider circumstances

Question 5

What must the words/circumstances show?

Answer 5

The settlor’s intention that the trustee is to have an enforceable obligation to carry out their wishes or instructions

Question 6

Does the word “trust” have to be used?

Answer 6

No, the settlor doesn’t even have to know what a trust is

Question 7

Paul v Constance 1977

Answer 7

F: Man in a relationship had a bank account in his own name, used the words “money is as much yours as mine”
I: Did he hold the money for himself and his partner?
H: Yes, the words sufficient

Question 8

Jones v Lock 1865

Answer 8

F: Father had a cheque that he said was for his baby, then died before he had a chance to cash it
I: Was that enough to create a trust?
H: No, loose conversations not sufficient

Question 9

Lambe v Eames 1871

Answer 9

Signified the change of attitude of courts re precatory words, now reluctant to impose obligations of trusteeship where words not clear

Question 10

Re Adams and the Kensington Vestry 1884

Answer 10

“In full confidence” not enough

Question 11

Re Diggles 1888

Answer 11

“It is my desire that” not enough

Question 12

Re Johnson 1939

Answer 12

“I request that” insufficient to create a trust

Question 13

Re Steele’s WT 1948

Answer 13

F: Trust written specifically using old precedent, even though words used not sufficient
I: Was there a trust?
H: Yes, there was, as in the old case trust upheld

Question 14

What happens where there is no certainty of intention?

Answer 14

Trust fails, and the person who was supposed to be a trustee takes absolutely if transferred, if not transferred owner remains absolute owner

Question 15

What does certainty of subject matter mean?

Answer 15

That if the property that should be subjected to the trust cannot be identified, there cannot be a trust

Question 16

Lack of certainty may be present in relation to what?

Answer 16

The property itself and the respective entitlement of different beneficiaries

Question 17

Palmer v Simmonds 1854

Answer 17

“The bulk of my said residuary estate” not certain enough

Question 18

Sprange v Barnard 1789

Answer 18

“The remaining part of what is left that he does not want” not certain enough

Question 19

Boyce v Boyce 1849

Answer 19

“All my other houses” remaining after M had chosen one, where M predeceased the testator without making a choice not certain enough

Question 20

Re Golay’s WT 1965

Answer 20

“Reasonable income” held to be able to be determined objectively by reference to B’s standard of living

Question 21

Re London Wine 1986

Answer 21

F: Wine sold to customers held in warehouses with no allocation to specific customers, co went into receivership
I: Was wine held on trust for customers?
H: No, as bottles for each customer had not been segregated from the bulk

Question 22

Re Goldcorp 1995

Answer 22

F: Gold bullion held for customers by a co which became insolvent before delivery
I: Was bullion held on trust for customers?
H: Only those customers where bullion had been segregated from bulk could establish trust, no trust where no segregation

Question 23

Hunter v Moss 1994

Answer 23

F: S had 950 shares in company, made declaration of trust over 5% of shares
I: Was there a trust if not certain which shares?
H: Yes, as all belonged to same class

Question 24

What happens if purported declaration of trust or transfer on trust, but the description is uncertain?

Answer 24

Settlor retains property

Question 25

What happens if transfer of whole with attempt to create trust over the uncertain part?

Answer 25

Recipient takes absolutely, e.g. Palmer v Simmonds

Question 26

What happens if transfer of whole on trust, but there is uncertainty as to the division?

Answer 26

Trustee holds on RT for the settlor, e.g. Boyce v Boyce

Question 27

What is certainty of object?

Answer 27

Beneficiaries must be identifiable so that trustees can administer the trust/court can supervise or administer the trust

Question 28

Fixed trust

Answer 28

A trust which defines amount/share of each beneficiary

Question 29

Discretionary trust

Answer 29

A trust in which it is left to trustees who will benefit from class, and/or the amounts/proportions each should receive

Question 30

Aspects of certainty

Answer 30

• conceptual certainty
• evidential certainty
• ascertainability
  Also might be necessary to consider administrative workability and capriciousness

Question 31

IRC v Broadway Cottages 1995

Answer 31

“There can be no division in equal shares amongst a class of persons unless all the members of the class are known”

Question 32

Conceptual certainty

Answer 32

The definition of the class must be certain - contrast friends with daughters

Question 33

Evidential certainty

Answer 33

It must be possible to show who falls within a class

Question 34

Re Barlow’s WT 1979

Answer 34

In individual gift types of trust (i.e. £100 for each of my friends) one only need to be able to say of one person that he/she satisfies the definition, up to the individual to prove

Question 35

McPhail v Doulton 1971

Answer 35

F: S settled fund for benefit of a large class (discretionary), would fail if the complete list test was applied
I: Was there certainty of object?
H: Yes, there was - test changed to that used in cases of powers

Question 36

Current test for certainty of object in discretionary trust

Answer 36

Individual ascertainability test - whether it is possible to say for any potential object that he or she is not a member of the class

Question 37

Are relatives certain?

Answer 37

Yes, Re Baden

Question 38

Are dependents certain?

Answer 38

Yes, Re Baden

Question 39

Are friends certain?

Answer 39

No, Re Barlow’s WT, but where trust with condition precedent defined as long-standing social relationship where parties meet frequently

Question 40

Are inhabitants of West Yorkshire certain?

Answer 40

Conceptually certain, R v District Auditor

Question 41

Are people under a moral obligation certain?

Answer 41

No, Re Baden

Question 42

Is there a need to check all possible beneficiaries?

Answer 42

No, Re Baden

Question 43

Can a trust provide for any uncertainty to be resolved by a third party?

Answer 43

Yes, see e.g. Re Tuck’s ST (here expert)

Question 44

Can the conceptually uncertain group be severed, so saving the trust for the remaining members of the class?

Answer 44

No, Re Wright’s WT

Question 45

Can a trust fail because it’s administratively unworkable?

Answer 45

Yes, McPhail obiter - a class so hopelessly wide as to not form anything like a class

Question 46

Can a trust fail because of capriciousness?

Answer 46

Yes, where the terms “negative any sensible intention on the part of the settlor,” Re Manisty

Question 47

What happens if declaration of trust with uncertain object?

Answer 47

No trust, settlor retains absolute ownership

Question 48

What happens if transfer on trust with uncertain object?

Answer 48

Trustee holds on RT for the settlor

Question 49

Re The Trusts of the Abbot Fund 1900

Answer 49

F: £500 for maintenance and support of two sisters, they died leaving a surplus
I: What to do with the surplus?
H: It should be held on a resulting trust for the donors to the fund in proportion to their contributions

Question 50

Re Andrew’s Trust 1905

Answer 50

F: Fund set up to finance the education of certain children, when they grew up surplus left
I: What to do with the surplus?
H: The surplus should be divided equally between the children

Question 51

Re Osoba 1979

Answer 51

F: Testator left money for widow and daughter for her training up to university, surplus claimed after by the testator’s son
I: What to do with the surplus?
H: Might be said that the words up to university grade nothing more than an attempt by the testator to give guidance to the trustees as to the timing of the final disposition of capital to mother and daughter, thus money held to be an absolute gift to mother and daughter

Question 52

S1(3) of the Sale of Goods (Amendment) Act 1995

Answer 52

Unless the parties otherwise agree, a contract for the sale of a specified quantity of unascertained goods in an identified bulk transfers property in an undivided share of the bulk to the buyer; could apply to trusts