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Trust Law Express Trusts The Three Certainties Notes

BCL Law Notes > Equity/ Trust Law: (creation and administration of trusts) Notes

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EXPRESS TRUSTS
WHAT IS A TRUST
Underhill'an equitable obligation, binding on a person to deal with property over which he has control for the benefit of persons of whom he may himself be one, and any of whom may enforce the obligation'

Keeton & Sheridan, the law of trustsThe relationship which arises whenever a person called the trustee is compelled to hold property whether real or personal and whether by legal or equitable title for the benefit of some persons (of whom he may be one) or for some object permitted by law, in such a way that the real benefit of the property accrues not to the trustee but to the beneficiaries or other objects of the trust.'

CREATION OF EXPRESS TRUSTS: THE THREE CERTAINTIES
Chambers v Fahy 1931 IR 17In order that a trust may be created, the subject matter must be certain, the objects of the trust must be certain and the words relied on creating the trust must have been used in an imperative sense so as to show that the testator intends to create an obligation.'

1. •

CERTAINTY OF INTENTION

Must be clear and imperative - shouldn't leave any discretion to the trustees as to the nature of what the relationship is
Who is to take legal title and who is to take beneficial title? If the courts cannot distinguish between the two, that means that it Is an absolute gift and the court will not perfect and imperfect gift.

Watkin1-

'Must manifest an intention…must make it clear that the person or persons in whom the subject-matter is to vest are only to take the legal title, and that the beneficial title is to vest in others.'
Must be clear to third parties, i.e. the courts
'the test is whether such an intention is manifested by this particular settlor in these particular circumstances; no formula or mode…is generally required'
In reality there are 5 certainties - intention, beneficial interest, purpose of the trust, subjectmatter and beneficiaries who are to take the interest.

Lambe v Eames 1871

1 1 Watkin, Doubts and Certainties, (1979) Anglo-American Law Review. 123

Courts totally unwilling to deem precatory language (hope, desire, wish) as sufficient for creating a trust

Re Adams & Kensington Vestry 1884 27 Ch 394
Testator left property to his wife by will:
'in full confidence that she would do what was right' for his childrenPrecatory and does not indicate intention

Comiskey v Bowring Hanbury 1905In full confidence - sufficient declaration of trust

Difference:Later said that he directs that the property should be held on trust - goes from a moral obligation not legally binding to certainty of intention sufficient to declare trust.

Re Humphrey's Estate (1916) 1 IR 21
Testator left all his property to his wife and expressed a wish that she should leave a house to his son and the remainder to his daughter (by her will or be transfer at some stage during lifetime)Not legally bound - mere wish - word usedIntention not certain enough to amount to a trust - precatory languageLook at will as a whole - no subsequent or other provision solidifying intentionTook property absolutely

Re Blackwood 1953 NI 32
Testatrix appointed her brother-in-law executor and left to him her entire estate subject to the payment of just debts and funeral and testamentary expenses, the words were:
'absolutely in full trust and confidence that he will pay, apply and divide my said estate amongst my friends and relatives (including himself) in accordance with my wishes.'
She did not make any further provision as to what those 'wishes' were.
On true construction of the will, trust created:'in accordance with my wishes' implied a division of the trust property which the testatrix could control with supplementary directionsHowever, those terms had not been declared - the executor held the estate on resulting trust for next-of-kin.

Precatory words = trust

Not a clear intention, to me
Re Coulson (1953) 87 ILT 93;
Testator left farm to cousin and said in the will:
'it is my wish that the farm should not be sold or divided but it shall be kept by her for such one of her children as she thinks suitable'Capable of being imperative, but the decisive factor is, 'what could be gathered from the will as a whole'

Via such analysis:Mere expression of hope to act in a certain manner.Received the interest absolutely

Re Sweeney (1976-77) ILRM 88In determining whether a trust is created, the courts will examine the substance and effect of the word used in the context in which the settlor has used them - doesn't require the use of the word trust itselfAffirmed Re Coulson & Re Humphreys - constructed as a whole.'After a devise and bequest in clear and explicit terms, if a trust is intended to be created one would expect that this would be done in terms equally clear and explicit.'If the document is clear on other matters, lack of clarity as to intention to create a trust negates the certainty of that intention

INCOMPLETE CONSTITUTION
Jones v Lock (1865) LR 1 Ch App 25
Father placed cheque into his sons hands and said 'I give this to baby; it is for himself and I am going to put it away for him, and will give him a great deal more along with it.' Then took it back, and put it away.
Died w the cheque in a safe. The expression of an intention to GIVE it to his son was evidenced by the cheque itself, but whether the intention was to create a trust was less clear.Invalid declaration

Failed to sign the cheque, the father's intention was an outright transfer.Equity will not perfect an imperfect/ incomplete gift through declaring a trust.'no doubt this testator intended to provide for his son either by settling this money or leaving it to him by will, but his intention was never carried into effect.'

'can anyone believe on such evidence, that he intended then and there to deprive himself of all control over this money.'The question in each case is one of fact, has there been a gift or not, or has there been a declaration of trust or not?Dangerous if loose conversation of this sort in important transactions…should have the effect of declaring a trust.'

Richards v Dellbridge 1874 LR 18 Eq 11
Mr Richards employed his grandson Edward. He wrote on the back of a memorandum for a leasehold - 'this deed and all thereto belonging, I give to Edward.' The title was not formally transferred though... This was an imperfect gift therefore. Claimant Gson was trying to argue that the leasehold was held on trust for him, but there was no mention of the lease in the will either.Equity won't assist a volunteer by perfecting an imperfect gift'it is true he need not use the words 'I declare myself a trustee' but he must do something which is equivalent to it and use expressions which have that meaning.'But court 'not at liberty to construe words otherwise than according to their proper meaning.'

Floodgate argument: if the court construed this as a trust devoid of anything that indicates such an intention,'any imperfect instrument would be 'made effectual by being converted' into a trust.

Wont construe intention from potentiality
Paul v Constance 1977 1 WLR 527
The deceased, Mr. C, had a bank account left in his sole name. there was a dispute over who would receive the money in it - his wife v his new partner.
The only withdrawal ever made, was by mr.c himself, the money of which was divide equally between him and the partner. He allowed his new partner to withdraw money with his permission
(Although she never did so) and had told her repeatedly that the money 'is as much yours as mine'.
he also paid joint bingo winnings into it.'it is necessary that a settlor's 'words and actions…show a clear intention to dispose of property…so that someone else acquires a beneficial interest.'Actions were enough to infer the declaration of a trust of the money in the accountParties entitled to half each - found that the words and conduct demonstrated an intention for the money to be hold on trust for them jointly.Quoted Richards v Dellbridge 'it is true he need not use the words I declare myself a trustee…' McArdle v O'Donohoe unrep HC, 8th June 1999
Courts particularly concerned where there is a self-declaration but incomplete constitution unsupported by consideration - the q here becomes very important because equity wont enforce incomplete trust at the instance of volunteerTrust created by deed of settlement was not completely constituted because the settlor never transferred any money or property which might be included in the trust fund defined by the deed.I do not consider that the trust…was completely constituted and…a court of equity may not compel the completion of an incompletely constituted trust in the absence of valuable consideration.'The mere fact one of the trustees retained possession of a bond which was trust property,
doesn't have the effect of transferring title to the trustees.

Failure to transfer?Settlor 'surrendered no rights and had not fettered his ability to deal with his property.'Even if there was a clear intention to create a trust, failure to properly transfer the title
'negatives the existence of a trust fund whereby the trust thereby created was incompletely constituted and there was no consideration.'

The settlor must describe the property which is to form the corpus of the trust

Both the:
a. Nature b. Amount of the property

The beneficial interest as distinct from the legal titles should be sufficiently certain, so that the trustee knows who gets what.
The extent of the subject matter - portions - as well as the subject matter itself need to be ascertainable

2. CERTAINTY OF SUBJECT MATTER

Basic principle:
Lehman Brothers International v CRC Credit fund ltd 2010 EWHC 2914 (Ch)Where there is no property which is sufficiently identified to form the subject matter of a trust, no trust is created

INSUFFICIENT CERTAINTY
Palmer v Simmonds [1854] 2 Drew 221, 227

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