Three Certainties - cases

Question 1

CI Re Schebsman [1944] (CA)

Answer 1

MP = no importing a trust into a contract through mere use of ‘unguarded’ language, unless clear CI

Situation : D’s company ag (contract) to pay D for his svc, or his widow if he died - D went bankrupt and died, creditor sought to claim payments from D’s estate, widow ag that held on trust for her

CA : held that contract didn’t create a trust in favour of widow (but estate in breach of contract if kept all the payments)

· Lord Greene MR : not legitimate to import a trust into a contract where parties gave no evidence of such intention
· Du Parcq LJ : a person using ‘unguarded language’ may say smth which could be a DOT, but won’t be considered so unless an intention to create a trust can be “clearly collected from the language used and the circumstances of the case”

Question 1

CI - Richards v Delbridge (1874) (CA)

Answer 1

MP = equity will not imply a trust to perfect an imperfect gift in the absence of ITCT

• Grandfather (G) purported to give his business (mill) to grandson (C) by adding a note/deed to the lease - G died and will gave his estate to be divided among his family, didn’t refer to the mill so G’s children claimed it
• CA held that no trust bcs no clear DOT (≠ declaration of gift)
  => no need to use the exact words “I declare myself a trustee” BUT “he must do something that is equivalent to it, and use expressions which have that meaning” (Sir Jessell MR)

Question 2

CI T Choithram International v Pagarani (2001) (CA)

Answer 2

• S, seriously ill, created foundation to which he gave his estate (the benefit of) - appointed himself and others as trustees, died intestate soon after, without having fully complied w/ formalities to transfer title to various components of his estate to all the trustees
• CA held that there was a valid trust
  => because S had gone far enough so as to be unable to revoke DOT (≠ Jones v Lock) + one of the trustees had the trust property (him) even if not yet successfully vested in the others

Question 3

CI Re Adams and the Kensington Vestry (1884) (CA)

Answer 3

• Testator (T) gave his wife (W) absolute use of his estate “in full confidence that she would do what is right as to the disposal thereof between his children”
• CA held that W not a trustee for children bcs T didn’t intend to place legally binding duty on her, only moral obligations -> transfer of property intended as a gift and will as guidance

Question 4

CI - Milroy v Lord (1862) (CA)

Answer 4

S purported to transfer shares to L, to hold on trust for M, but didn’t comply w/ formality requirement to transfer title. For the 3y, dividends received on shares were remitted to M (sometimes through L and sometimes through S)

=> CA held that not valid trust created, neither in S nor in L :
- bcs S didn’t intend to be a T, intended to transfer shares to M,
- and bcs no valid transfer to M

Question 5

CI - Jones v Lock (1865) (CA)

Answer 5

• Father (F) ‘gave’ cheque to baby son (B) by his second wife (put it in his hand + expressed intention to give him money) then put it away - had also told his solicitor he intended to invest on behalf of child + modify his will but died before appointment
• CA held that no valid gift or declaration of trust : no gift bcs F “would have been very much surprised if he had been told that he had parted with the £900 and could no longer dispose of it” and no DOT bcs dangerous to consider loose conversation in family setting a DOT

Question 6

CI - Paul v Constance [1977] (CA)

Answer 6

X married and separated from D, X lived w/ P and opened a shared bank acc in X’s name but to which P had access - X frequently repeated ‘that money is as much yours as it is mine’ - X died intestate and P claimed money in the account

=> CA held that there was a trust : X’s words and action showed intention that money be held for benefit of P (and himself) = intended a trust, repeated words = a DOT

Question 7

CI JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev (2017) (HC)

Answer 7

D purported to settle his assets in 5 DTs of which he was a discretionary B and ‘protector’ (gave him powers to refuse exercise of Ts’ powers + remove Ts) ; C’s creditor obtained substantial judgement against D and sought to enforce it ag trust assets, D claimed not to have BO of trust assets

=> HC held that the trusts were shams, D retained BI in trust assets - test for sham trusts = whether the parties subjectively intended to create rights & obligº ≠ from those which appeared to be created (and give false impression to 3P) - has to be a common intention btw S and T (can include ‘reckless indifference’)

Question 8

CSM - Re Ellenborough (1903) (HC)

Answer 8

• C tried to use deed to gift D property she expected to inherit from her brother and sister
• HC held that deed not enforceable bcs a voluntary assignment of an expectancy is not enforceable if it has not been made for value

Question 9

CSM - Re Golay’s Will Trusts (1965) (HC)

Answer 9

Summary: S’s will made provision for D to receive “a reasonable income” from some of his properties during her lifetime, C = S’s widow tried to claim that direction void for uncertainty

=> HC held that direction was not void for uncertainty bcs “the court would have no difficulty in quantifying ‘reasonable income’”

Question 10

CSM - Re London Wine Co

Answer 10

Wine merchant sold + stored wine for customers - gave them certificates saying they owned X bottles of wine but didn’t store the bottles separately, then went insolvent - customers (unsecured creditors) tried to claim wine they had paid for was held on trust for them

=> HC held that no trust created bcs didn’t know which title was held on trust for who / impossible to ascertain to which property the beneficial interest of each attached

=> Matters even for fungibles / property which is “part of a homogenous mass” in case some gets damaged

Question 11

CSM Re Goldcorp Exchange Ltd (1995) (PC)

Answer 11

Company (D) sold bullion to claimants for future delivery, said it would maintain sufficient separate stock but didn’t, and went insolvent -
=> Cs sought to claim that had proprietary interest bcs sale / bullion held on trust to keep if from other creditors

=> PC held that since Cs had contracted to buy ‘unascertained generic goods’, no property passed until known to what goods title relates + collateral promise by D not a DOT (and no CSM bcs not segregated)

Question 12

CSM - Hunter v Moss (1994) (CA)

Answer 12

• D owned 950 (out of 1000) shares in a company, declared that he held 5% (of the 1000) on trust for C = 50 of his 950 shares, then ag that trust void for uncertainty of subject matter
• CA held that trust was not void for uncertainty of SM bcs shares held by D were indistinguishable, any 50 of them would satisfy the trust, and also transfer would be fine as will so no reason not to allow it inter vivos
• distinguished London Wine bcs concerned w/ chattels, vs here chose in action (tangible vs intangible distinction)

Question 13

CSM Re Harvard Securities (1997) (HC)

Answer 13

company purchased shares on behalf of clients but didn’t allocate each share specifically to a client, then went insolvent

=> HC held that shares held on trust for clients despite not being allocated = affirmed Hunter v Moss distinction btw tangibles and intangibles

/!\ only bcs bound by precedent, Neuberger J rather critical of distinction

Question 14

CO - IRC v Broadway Cottages (1955) (CA)

Answer 14

S declared trust, T supposed to apply income of trust fund to persons employed by himself or his family during a certain period of time

=> CA held that trust void for uncertainty of object + formulated ‘complete list’ test : whole range of objects eligible for selection must be capable of being ascertained (so that trust is capable of being executed by the court)

/!\ no longer applies to DTs (McPhail v Doulton)

Question 15

CO - Re Gulbenkian’s ST (1970) (HL)

Answer 15

settlement contained power to appoint persons related to G’s son (wife and children) or “any person or persons by whom [G] may from time to time be employed and any person with whom [G] from time to time is residing”

=> HL held that power was valid : established ‘is or is not’ test for mere powers of appointment

=> Lord Upjohn: “provided there is a valid gift or trust in default of appointment, a mere or bare power of appointment among a class is valid if you can with certainty say whether any given individual is or not a member of the class; you do not have to be able to ascertain every member of the class”

Question 16

CO - McPhail v Doulton (1971) (HL)

Answer 16

S set up fund (DT) for benefit of employees of his company, their relatives and dependents, trustees given discretion to chose Bs

=> HL held that certainty of object test for DTs = is or is not ; applying it here trust was fine

=> Overruled IRC v Broadway Cottages

Question 17

CO - McPhail v Doulton (1971) (HL) - Lord BW on powers and DT

Answer 17

same test BUT ≠
- Powers : Ts under fiduciary duty to consider whether they should exercise power but court will not normally compel its exercise

• DT : T under a duty to exercise discretion, if they don’t court will do its best to give effect to S’s intention, by directing T or appointing new Ts

Question 18

CO - Re Baden nº2 (1973) (CA)

Answer 18

question whether ‘relatives’ sufficiently certain

=> 3 judges of CA each laid down a ≠ test

=>apply Sachs LJ = class needs to be conceptually certain, doesn’t matter if evidentially uncertain

Question 19

CO - Re Manisty’s ST (1974) (HC)

Answer 19

Settlement included power for Ts to appoint new Bs from anyone other than a small excepted class

=> HC held that power was valid: Powers, unlike DTs, cannot be void for admin unworkability

• ‘The mere width of a power cannot make it impossible for trustees to perform their duty nor prevent the court from determining whether the trustees are in breach.’
• but can still be void for capriciousness : eg power to benefit ‘residents of greater London’ would be void bcs impossible to ascertain settlor’s intention, ‘accidental agglomeration of ppl’

Question 20

CO - Re Hay’s Settlement Trusts (1982) (HC)

Answer 20

T’s directed to hold trust funds, w/ power to appoint any person (except S, her husband and Ts) they chose within 21y of settlement

HC held that power was valid, affirming Re Manistry: power cannot be void merely bcs of width / admin unworkability

Question 21

CO - Re Hay’s Settlement Trusts (1982) (HC) - Megarry VC on duties of mere power holder

Answer 21

Holder must
(i) Consider periodically whether or not to exercise the power
(ii) Consider the range of objects of the power
(iii) Consider the appropriateness of individual appointments

Question 22

CO - R v District Auditor ex p West Yorkshire MCC (1986) (CA)

Answer 22

local authority tried to create trust, T to chose B among ‘any or all or some of the inhabitants of the County of West Yorkshire’

CA held that trust void bcs administratively unworkable (class of Bs far to wide) ≠ Re Manistry bcs compulsory power of appointment under DT, not mere power

Question 23

CO - Re Barlow’s Will Trusts (1979) (HC)

Answer 23

In her will, S gave pictures on trust to E, directing him to allow any family members or friends to purchase at a (defined) advantageous price)

=> HC found that trust certain enough to be valid bcs possible to ascertain whether any given postulant was a friend or not, no need to be able to establish all members of the class (≠ fixed trust: bcs gift is of a fixed size for each person who meets the criteria)

Question 24

CO - *Re Coxen* (1948) (HC)

Answer 24

S left house on trust to T for his widow to live in, declaring that if 'in the opinion of T' she ceased permanently to reside there the house would become pt of residue of his estate => HC held that condition not void for uncertainty : opinion of T that event has happened = what terminates W's interest, not the happening of the event => by relying on T's opinion, S has removed difficulties over ID whether the event has happened

Question 25

CO - *Dundee Hospitals Board v Walker* (1952) (HL)

Answer 25

S gave money to hospital provided that it had not been taken over by the states, Ts in their 'sole and absolute' discretion to determine whether had been taken over by the state => HL held that **trust was valid, evidential uncertainty resolved bcs opinion of T** => Ts have to act reasonably when exercising their discretion, the court will intervene if a C shows that Ts : - considered the wrong question; - did not apply their minds to the right question; - perversely shut their eyes to the facts; or - did not act honestly or in good faith

Question 26

CO - *Re Tuck* (1978) (CA)

Answer 26

S created fund for holder of family baronetcy as long as he was jewish and married to an approved wife (of jewish blood), designated Chief Rabbi in London to decided any question abt who was an approved wife => CA held that the trust was valid : **conceptual uncertainty can be cured by ref to a 3P's opinion** (same as in contract)