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Express Trusts Assignment

LLB EQUITY AND TRUSTS LAW COURSEWORK
‘The three certainties are essential to justify the validity of an express trust
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’
Discuss critically this statement
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In all
cases, the trustee is under a fiduciary duty to use the property/assets according to the terms of the trust and is
personally liable to a beneficiary for any breach of trust conditions
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To create a trust any requisite formalities for vesting property in the trustees
must be complied with and in Knight v Knight1, Langdale LJ laid down the rule that all the ‘three certainties
must be present - certainty of intention to create a trust of property, certainty of subject matter of the trust and
certainty of objects, thereby making the trust administratively workable and capable of being policed by the
court’2
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These will indicate whether the Settlor intended to create a trust or some other form of
relationship such as a gift
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When a trust is set up a Settlor must intend that the property is to be transferred to the Trustee, to hold for a
Beneficiary
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It is also important to know what exactly the asset is and what
the Beneficiary has propriety rights to, so the trust can be ring fenced ie protected if the Trustee goes insolvent
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If one of these certainties is not present, an express
private trust will not be created
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We
will see however that the courts have had many difficulties in identifying and applying each of the three
certainties and although this may appear to effect their efficacy, this has been the courts way of addressing
initial teething problems
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Equity looks to the intent rather than to the form and although desirable, the use of
the term 'trust' is not essential
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As Parker and Mellows4 state, ‘beneficiaries were no
longer being made into trustees unless this was clearly intended by the testator
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Even if the term is employed there is no guarantee that a trust will be discerned, as seen in Re Jolliffe: Tito v
1

(1840) 3 Beav 148
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3
[1975] 1 All ER 604
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2

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Express Trusts Assignment

Waddell (No 2)5
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It was held that although the legal document was signed, there
was no real intention to create a trust
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As Trustees are under mandatory duties to follow the terms of the trust, if a trust exists there needs to be
sufficient words of imperative command as stated by Eldon LJ in Wright v Atkyns7
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Precatory words such as 'have confidence', 'feeling
confident', 'request', and 'specially desire', are merely words of hope and desire, and are no longer sufficient to
impose a legal obligation to use the property for the benefit of a third party
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However, in the later cases, especially Lambe v Eames10 and Re Hutchinson
and Tennat11, the courts showed a desire to consider the document as a whole, the testator's intention and the
meaning of the words he used
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In
Cominsky v Bowring-Hanbury12 despite the use of the words ‘in full confidence’ it was held not to be indicative
of a trust coming into existence
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However, the degree of the intention required differs whether this is a family trust or commercial trust
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This is because as Scarman LJ14 stated:
‘We are dealing with simple people, unaware of the subtleties of equity…one should consider the various
things that were said and done by the plaintiff and the deceased during their time together against their own
background and in their own circumstances
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For a company to
protect their assets they can do this through a trust, a retention of title clause or by use of a company charge

5

[1977] 3 All ER 129
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(1823) Turn
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143, 157 as per Lord Eldon
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9
(1884) 27 Ch D 394
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11
(1878) 8 Ch D 540
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13
[1979] 1 WLR 527
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6
7

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Express Trusts Assignment

under section 874 Companies Act 2006
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There needs to be words held in the contract stating that property is held on trust, if
there is going to be intention on trust in a commercial setting
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It appears that for domestic trusts, there is no requirement for technical words and the courts may imply a trust
despite the implications of the individual’s actions, which had not been considered
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The traditional justification for
imposing a higher standard on commercial trusts is that there is a higher risk of insolvency for companies than
an individual
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The second criterion, certainty of subject matter, is required so that the property held on trust is certain, for
otherwise there will be nothing to which the trust can attach
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This raises two issues
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In Palmer v Simmonds19 the use of the expression ‘bulk of my residuary estate’ was said to be too vague and
the courts were incapable of providing an appropriate meaning, so it did not pass the certainty test
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In Sprange v Barnard20 a wife left stock to her husband for his own use on terms that the remaining part of
what is left that he does not want for his own, be donated by him in certain ways
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However, in Re Last21 the property was left
to her brother on terms that ‘at his death anything that is left, that came from me was to pass on to specified
persons’, was held to be a trust as the brother only had a life interest
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If there is a lack of this certainty, nothing happens because nothing
has left the Settlor's estate
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In Re Golay’s WT23 the Beneficiary was to enjoy one of the
Settlor’s flats during her lifetime and to receive a reasonable income from his properties
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[2000] 74 AJLR 862 3
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Available from http://www
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com/vle [Accessed 18/02/2013]
18
Mitchell and Hayton, Commentary and Cases on the Law of Trusts and Equitable Remedies (n 2) 163
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20
(1789) 2 Bro CC 585
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22
Parker and Mellows, The Modern Law of Trusts (n 4) 88
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Express Trusts Assignment

'reasonable' was an objective yardstick and could be ascertained by the court, which had a definite meaning
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If we are going to decide the property at all, this should be done
only by reference to a test, which the courts are well versed in using, such as ‘reasonableness’
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Nevertheless, the court’s discretion is essential in
applying a common sense approach to situations were it would simply be unjust and vague
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In Re London
Wine Co (Shippers) Ltd24 it was held that without clear words pointing towards a segregation of the mass wine
sales and an individual customer’s sales, there could not be certainty of subject matter
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Similarly, in Re Goldcorp Exchange Ltd25 it
was uncertain what gold had been purchased because this was not allocated from a particular source or stock
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It is essential for the Beneficiary to have a proprietary interest in a

specified piece of property, if they are going to have certainty of subject matter ie to justify the validity of an
express trust
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It seems that the only way there would be certainty of subject matter is by declaring a specific
proportion to be on trust for Hunter
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Indeed, we can see judicial reluctance to follow
Hunter in Re Harvard Securities Ltd28, were ‘Neuberger J had to follow the Hunter decision as binding
precedent for the American shares which were held to come under English law, but for the Australian shares he
held that the trusts failed for lack of certainty of subject matter, as per the reasoning in London Wine and
Goldcorp’29
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Finally, we need to consider certainty as to the persons or ‘objects’ that are to benefit
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The test to be applied
depends upon the nature of the trust, but the rule does not apply to charitable trusts
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Consequences followed from this: if the certainty
24

[1986] PCC 121
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26
[1994] 1 WLR 452
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28
[1997] 2 BCLC 369
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Available from http://www
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com/vle [Accessed 18/02/2013]
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31
[1955] Ch 20
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Furthermore, there were a significant number of pension schemes that provide a death in

service benefit under a discretionary trust, which proves to be void for want of a completely ascertainable
object because it includes ‘dependants’ among the possible beneficiaries without adequately or at all defining
them
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Since McPhail v Doulton33 the complete list test does
not apply to discretionary trusts
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The implication of Gulbenkian’s judgment is that a court could not execute a ‘trust power’
where all the beneficiaries were not ascertainable
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In a discretionary trust, the trustees have certain discretion, but this gives rise to some difficulty
as demonstrated in Re Baden (No 2)35
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Stamp LJ said that the test could be satisfied only if it could be said for certain whether a person is or
is not within a class
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In contrast, Megaw LJ saw the test as
being satisfied where it could be shown that a ‘substantial number’ of people fell within the class
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This approach however was rejected in Re
Gulbenkian
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In R v District Auditor ex parte West Yorkshire
Metropolitan CC36 it was decided that 'inhabitant' was conceptually certain, however, in Baden 'relatives' and
'dependants' was held not to be certain
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In District Auditor although the
meaning of the words used was clear, the class was too large, so the trust was simply unworkable
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However, in Re Hay’s ST38, where it was
admitted that a trust to benefit anyone in the world would be void, Megarry VC expressed concerns that a
32

(1968) 3 All ER 785
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Mitchell and Hayton, Commentary and Cases on the Law of Trusts and Equitable Remedies (n 2) 164
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36
[1986] RVR 24
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38
[1981] 3 All ER 786
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‘This is justifiable because of the

difference between duties for trusts and powers’39 ie powers are optional and not subject to mandatory duties
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In Re Allen40, if a gift were dependant
upon the person fulfilling a condition, then the condition would be valid if a person undoubtedly qualifies
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This was a power, so
it should have failed the ‘is/is not test’
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This uncertainty may be remedied by a provision, which refers to the opinion of a third party
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Where difficulty might arise, is as Moffat47 writes: ‘if any doubt shall arise the decision of the chief
rabbi shall be final’
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It is essential to realise that all three of these certainties have to be proved to establish whether or not there is a
valid trust
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For certainty of intention, the system has been viewed unfairly in cases of a commercial
setting and there are no hard and fast rules in relation to technical wording that need to be applied
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This is perhaps the best way that
courts can deal with certainty of intention, as it stops cases such as Midland Bank v Wyatt being found to be a
trust
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There appears to be some inconsistencies were in one hand judges are swayed between
providing a ‘just’ solution to a scenario such as in Hunter or interpreting a more strict approach in Re London
Wine Co
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Finally, there has to be beneficiaries who are ‘conceptually certain’
that they were a member of that class and this has to be workable
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39

BPP Equity law lecture (2013), Certainty of Subject Matter and Object (n 20)
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41
BPP Constitutional law lecture (2013), Certainty of Subject Matter and Object (n 20)
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43
BPP Equity law lecture (2013), Certainty of Subject Matter and Object (n 20)
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45
[1978] 1 All ER 1047
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47
Graham Moffat, Trusts Law: Text and Materials (4th edn, Cavendish University Press 2005)
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I have read and fully
understood the provisions relating to unfair practices (including plagiarism) as cited on the VLE
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& R
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http://www
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com/vle [Accessed 18/02/2013]

Available from

BPP Equity law lecture (2013), Certainty of Subject Matter and Object
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bpp
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http://www
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gov
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htm [Accessed 04/03/2013]

Available

from

LexisNexis

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