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Equity & Trusts : the 3 Certainties; Formalities; Constitution

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Equity & Trusts : the 3 Certainties; Formalities; Constitution Equity & Trusts : The 3 Certainties; Formalities; Constitution Structure Type of property (realty/personalty) Transferor’s title: legal or equitable or absolutely entitled. Type of disposition: o Gift: constitution only o Self-declaration of trust o Transfer of trust o [[could be will/testamentary Wills Act]] 3 Certainties Any formalities? (if involves moving equitable title): o applies to self-declaration trust; transfer of trust; and wills (even if gifts). o No formalities for gift [[though if testamentary must comply with Wills Act]]. If formalities not fulfilled, any exceptions: o Vandervell, Grey etc. Constitution requirements: Re legal title (none for self-declaration of trust) if not valid constitution, any exceptions to Milroy v Lord ? o Re Rose o Mascall v Mascall o Strong v Bird Conclusion: what happens to the property Type of property realty/personalty; chattel, shares; chose in action; land etc Transferor’s title legal or equitable or absolutely entitled. (intended) Type of disposition: Gift: need constitution only Self-declaration of trust: declaration only Transfer of trust: need declaration & constitution) Power of appointment Gift subject to condition precedent [[could be will/testamentary Wills Act]] The 3 Certainties Knight v Knight , an express trust needs 3 certainties: (1) Intention; (2) Subject matter; (3) Object 1 (1) Intention Re Kayford: whether in substance there is intention Imperative v precatory, Eg ‘In full confidence’, depends on context: o Look at words in context of whole document (Re Adams; Comiskey) o Do they suggest a command (Comiskey) or merely a hope (Re Adams). o Precatory: Re Adams & Kensington Vestry: ‘in full confidence that she will do what is right’, re disposal between his children in her lifetime or by her will; precatory, an expectation, only a moral obligation no intention to create trust. o Cf Imperative: Comiskey v Bowring-Hanbury: also ‘in full confidence’ ‘that she will devise it to one or more of my nieces, imperative, certainty. Key factor: direction that if she didn’t dispose of it, estate would, on her death, go to nieces in equal shares intention/command. Use old cases re same language: o Not necessarily, depends on context (Re Hamilton) o CF, if working identical, follow older case as may have been deliberately used as precedent (Re Steel’s WT). Conduct: o Paul v Constance: didn’t use technical language; didn’t know what trust was; conduct sufficient: created essentially joint- interest bank account; told her money is ‘as much yours as mine’; held on trust for both. o Re Kayford: segregated customers’ funds = intention by conduct. (2)(a) subject matter, trust property itself Sprange v Barnard: ‘remaining part of what is left’ not certainty, uncertain what will be left. Palmer v Simmonds: ‘bulk’ of my estate—not certain. Re Golay’s WT: ‘reasonable’ = certain, objectively ascertainable Boyce v Boyce: need objective determinant. Bulk property, tangible must be segregated/identifiable: o Re London Wine: no trust, bottles not segregated. o Re Goldcorp Exchange: gold bars, not segregated (one investor has asked to set aside). Bulk property, intangible doesn’t need to be identifiable o Hunter v Moss: electronic shares; don’t need to identify [[re settlor declares hold 50 of her 950 shares on trust for B, doesn’t specify which]]. o Rationale: all shares identical (cf wine bottles) o Critique: if settlor sold 50 of his shares, how would we know whether they were his own or the 50 held on trust? 2 o Harvard Securities: explained Hunter with factional/co- ownership theory (Neuberger J): backed by Prof Goode o [also NB factual difference in reasoning: Hunter didn’t involve insolvency, so finding trust didn’t mean giving priority over other creditors, CF Goldcorp & London Wine]. o MacJordan v Brookmount: even if assets intangible, still need ascertainable fund. (2)(b) subject matter, certainty of beneficial entitlement Boyce v Boyce: houses left to 2 daughters; first got to choose, remaining to other daughter; died before choosing—no certainty re beneficial entitlement. CF Re Golay’s WT: ‘enjoy one of my flats during her lifetime’ + ‘reasonable income’: sufficiently certain (CF Boyce, shows can go either way); re ‘reasonable’ point, see above—objectively ascertainable. (3) Certainty of object (need certainty of object —Morice v Bishop of Durham --> beneficiary principle need a definite object or trust void, unless charitable) (a) Fixed Trusts —‘ Fixed/Complete List test’ ( IRC v Broadway Cottages ): can draw up complete list of class of beneficiaries (or class ascertainability for gift). Need conceptual & evidential certainty to draw up complete list. (b) Powers of appointment (‘ Is/Is Not’ test), Re Gulbenkian’s ST: if can look at anyone and say with certainty whether ‘is or is not’ member of class. (c) Discretionary trust, ‘ Is/Is not’ test, McPhail v Doulton : o [[Used to be same as for fixed trusts, Broadway Cottages ‘fixed list’ test. But then HL, McPhail: o McPhail v Doulton (AKA Baden No 1 ), HL: ‘Is/Is Not’ test (same as for powers): can it be said with certainty that any given individual ‘is or is not’ a member of the class (Lord Wilberforce). o Re Baden’s DT (No 2) , CA : o Conceptual certainty, all 3 judges say you need it to satisfy ‘Is/Is Not’ (re ‘relatives’): . Megaw & Sachs LLJ, relatives = ‘common ancestor’ . Stamp LJ,relatives = ‘next of kin’ o Evidential certainty, Megaw and Sachs say ‘don’t knows’ doesn’t void trust: . Stamp LJ: need evidential certainty for discretionary trust, any don’t knows = void. Literal/strict Is/Is not test application. Megaw LJ: not void, if can show ‘substantial number’ definitely fall within. 3.
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