BPP GDL Study Notes: Chapter 3 - 3 Certainties

Question 1

Who do the three certainties protect and how?

Answer 1

• protect the trustee

- if there are any doubts about the 3 certainties the trustee risks breaching the trust

Question 2

What names the three certainties?

Answer 2

Knight v Knight (1840)

Question 3

What are the three certainties?

Answer 3

certainty of:

1. words or intention (to create a trust)
2. subject matter (the property subject to the trust)
3. objects (beneficiaries)

Question 4

What does a court look for to determine the certainty of words or intention?

Answer 4

• examine the words used in the document
• use of the word ‘trust’ suggests a trust but is not necessary or conclusive
• looks to see whether there was sufficient intention to create a trust manifested in the document.

Question 5

What authority justifies what a court looks for to determine the certainty of words or intention?

Answer 5

Re Kayford

Question 6

What are imperative words?

Answer 6

words that show an intention to create a legally binding trust

Question 7

What are precaratory words?

Answer 7

words that express a hope or wish, rather than imposing an obligation.

Question 8

How have attitudes to precaratory words changed? In what case did they change?

Answer 8

• older cases generally leant towards creating a trust from precaratory words; modern cases lean away from this.
• change was from Lambe v Eames

Question 9

how does ‘old words from old cases’ work? Give an authority.

Answer 9

• words in each document are interpreted in their context, so the same words may not have the same effect.
• Re Hamilton

Question 10

What happens when cases use words that had been held to create a trust in the past when precaratory words were seen more constructively? What case sets this out?

Answer 10

• in such a situation, the earlier decisions should always be followed unless it is clearly wrong.
• Re Steele’s Will Trust

Question 11

What happens if there is no ‘document’ to create a trust?

Answer 11

the court must look to the words and/or conduct of the parties to determine their intention.

Question 12

Give a case where a trust was created through interpretation of the party’s intentions.

Answer 12

• Re Vandervell’s trusts (1974)
• the court found an intention to create a trust of shares from various acts of the trustees which were done with the full assent of the settlor.

Question 13

What does certainty of subject matter entail?

Answer 13

1) Property: it must be certain what property is subject to the trusts
2) Benefecial entitlements: it must be certain what part or share of the property each beneficiary is entitled to.

Question 14

How important is context to certainty of subject matter?

Answer 14

very - each case depends on the precise words in question and on its own facts.

Question 15

What happened in Sprange v Barnard? What was the result? What is the case called?

Answer 15

• testatrix passed a sum of money to her husband and wanted what was left on his death passed to her brothers and sisters.
• the subject matter (ie money to be disbursed by the trust to the beneficiaries) was uncertain at the point it was created - ie when the testatrix died. Therefore no trust and Sprange took absolutely.
• Sprange v Barnard

Question 16

What rule developed relating to unidentified sections of property? In what case?

Answer 16

• a trust of an unidentified section of chattels (tangible property) will fail, but a trust of an unidentified section of intangible property, like shares, is valid.
• Palmer v Simmonds

Question 17

What happened with the case about a wine warehouse? What was the case called?

Answer 17

• Re London Wine Co (Shippers)
• buyers of wine stored in various warehouses couldn’t establish a trust of particular bottles in their favour when the wine supplier went into liquidation
• because the bottles had not been identified or segregated in any way. No certainty of subject matter.

Question 18

What cas set out the rules for unclear division of intangible goods? What are they?

Answer 18

• Hunter v Moss
• a trust of 5% of the shares of a particular company was held to be valid because all shares are absolutely identical, whereas all tangible property has tiny differences between it.

Question 19

Where a trust fails for lack of certainty of subject matter, what happens if the property itself is uncertain?

Answer 19

no trust is created

Question 20

Where a trust fails for lack of certainty of subject matter, what happens if a purported ‘trust’ is attached to a gift? give an example

Answer 20

donee takes the gift absolutely

• Sprange v Barnard
• Palmer v Simmonds

Question 21

Where a trust fails for lack of certainty of subject matter, what happens if the beneficial interests are uncertain?

Answer 21

there will be a resulting trust.

Question 22

What happens if the only reason a trust fails is because the objects are uncertain?

Answer 22

trustees hold the property on trust for the settlor or his estate.

Question 23

For what is the test for the certainty of ojects more relaxed? Under what authority?

Answer 23

• greater degree of certainty required for fixed interest trusts than for discretionary trusts
• McPhail v Doulton HoL relaxed test for discretionary trusts.

Question 24

What is the test for certainty of objects for fixed interest trusts?

Answer 24

• list test

- IRC v Broadway Cottages Trust: “it must be possible to draw up a list of all the beneficiaries”

Question 25

What is the test for certainty of objects of powers? Where was it set out?

Answer 25

- Re Gulbenkian's Settlement Trusts - in/out test - a power is valid if it can be said with certainty whether any given individual is or is not a member of the class, and does not fail because it is impossible to know every member of the class.

Question 26

How are objects determined with certainty in a discretionary trust?

Answer 26

using the in/out test from McPhail v Doulton

Question 27

What is 'conceptual certainty'?

Answer 27

the precision of language used by the settlor to define the class of persons whom he intends to benefit

Question 28

What is 'evidential certainty'? Give an example

Answer 28

``` the extent to which evidence enables specific persons to be identified as members of the class. Can you come up with evidence to categorically prove that the particular individual comes within the class? eg a birth certificate that proves X is Y's son and therefore in the class of Y's children. ```

Question 29

What is the test for certainty of members of a class in relation to gifts subject to a condition precedent? From where?

Answer 29

- Re Barlow's Will Trust - such a gift is valid if it is possible to say of one or more people that they qualify, even if it is difficult to say whether other people qualify or not.