Equity and Trust PDF

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Equity and TrustThe Three CertaintiesGifts v Trusts gift is the simplest, if I intend to give you some property, I simply hand it over to you with the intention, then you will have the legal title Gift is transferred outright to it, no strings obligation attached at all A trust is diferent Property ...

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Equity and Trust The Three Certainties Gifts v Trusts • gift is the simplest, if I intend to give you some property, I simply hand it over to you with the intention, then you will have the legal title • Gift is transferred outright to it, no strings obligation attached at all • A trust is different • Property is generally transferred to a trust by the trustee, onerous, obligation, they received it not to their own benefit, but look at it in the other people’s interest • A transfer by way of trust, the transferor intend that an obligation upon the recipient of the, the subject matter of the transfer need to be transfer in the correct manner in order to be valid • The settlor or donor constitute as a trust Express trust and their requirements • separation of legal and equitable ownership • Transfer to the third party/ independent trustee • Or declare yourself as a trustee • Express trust is declared by the settlor, to clear identifiable beneficiaries • Settlor is intended his or her intended action, the court will still find it is a deliberate act, you can create an express trust without knowing that you are creating an express trust • Equity is looking into the intention • Lord Langdale - intention - certainty of intention, clear intention of the settlor, subject matter - refer to the trust property, beneficial interest in that, clear in allocating beneficial interest, certainty of object - identify the beneficiaries, actual people • They are interrelated, they do speak to each other Certainty of intention • a trust only comes into existence with the original owner intention, did he intend to create trustee’s duties

• Wright v Atkins - words must be imperative in nature • No particular need any form of words, because looks to the intent • Re Kayford - doesn’t need to use the word of “trust” to create a trust • If the language in the document is clear • Paul v Constance - unmarried cohabiting couple, left his wife didn’t divorce her, received a court award of a sum of money, he and his new lover set up a joint account, went to bank, they were advise different surname cannot have joint account, should be set up under Mr. Constance, he had the legal title of the account, majority of the money of the account come from the injury sum, and also put the bingo lottery money, Mr. Constance told his lover that the money is as much as yours, she sought to claim the money in the bank account is solely belongs to her husband, and Mr. Constance died, Mrs. Constance inherit it, Mr. Constance, Ms. Paul is entitled not his wife. • The court held it is express trust, even though Mr. Constance without knowing the substance of the express trust, even though you don’t there is such thing of a trust • Rowe v Prance - claim a equal share of the trust, clear intent of the trust • Jones v Lock - father away for business, return home for business trip for his wife and young baby son, wife is saying he didn’t come back with a present for his baby son, he write a a cheque, and throw the cheque into the baby’s hand and says “look, I give this money to your son”, he died short while later, but was found no trust is established, “a gift to the baby” , a failed gift, the intention is here, but he write the cheque under his name not the baby’s name • Kayford - open a separate account, into any future sum of money for customer for goods are not deliver, once the good delivered the money will go back to the company account, the company financial difficulty, liquidation, will the fund in the bank account is part of the company asset? If it is a trust, then it is separate, even though it is not put in the bank account, the intention is still here, even though the bank misinterpreted, but still has intention, there is a trust • Don King v Warren - partnership equally, intention can arise informally, even in commercial context Precatory words

• needs to decide where subtle difference impose moral duties or formal obligations • Gift to someone and impose moral obligations • Lambe v Eames - language that was used in the will, “to her disposal for the benefits of herself and family” no clear wording to create a trust • Re Adams and Kesington Vestry - gift to the widow “either in her lifetime or by her will after decease” no trust in this case, doesn’t impose the necessary obligation or imperative, “in full confidence” • Re Hamilton - it seems to me perfectly clear the regards of precatory trust is now changed • Comiskey v Bowring-Hanbury - “in full confidence”, compare to Re Adams, “in default any disposition, I hereby direct all the property divided …” the court said there is a trust established, direct positive words • Precatory can be created a trust, but need to look at the whole wording • Trustee need to act with proper professionalism and dedication to the duty, act in favour of the beneficiary • If you don’t convey the necessary intention, you lose important link of the triangle, the intention is to subject the trustee obligation, you still have a transfer for a gift, gift no obligation, a trust has obligation, if you don’t specify the obligation, the trustee doesn’t subject any obligation, the beneficiaries drops out of the picture, the trustee will has the legal title and also the equitable title • Donor (absolute owner ——- outright transfer —-> Donee (new absolute owner) - treated as a gift not a trust Certainty of subject matter • settlor needs to identify the property as a whole, • Beneficial interests - must be clear what type of interest each beneficiary has and enjoy, are they going to share equally? • Trustee need to clearly know what the property is • If the first bit is uncertain, there is no trust at all, the property just stays where it is • Palmer v Simmonds - intend to create a pure trust, intend to create a bulk of the residual estates, the bulk of residue, the bulk is the majority,

anything more than half, unable to identify the property at the first place, how can there is a trust,this is void, the trust is void • Sprange v Barnard - the gift is uncertain, testatrixes, for her husband, the subject matter of the trust is what he not wants, it’s ill defined of the subject matter of the trust, the gift of the money can still stands • Hancock v Watson - as a gift subject to uncertain trust stands, the gift is still valid, but the trust is void, although this is the intention to give the whole property to the beneficiary, but the amount, didn’t specify the amount how can you know there is a trust. Only a gift that is allow to stand • If you left with the case in Palmer, you didn’t specify the property in the first place, how much property is to pass, you failed to do, how can you identify what you are transferring, everything remains the same, yu didn’t specify the proper as a whole, stay with the settlor, the transaction stay what it is, a void transaction, you can’t have a trust of the property, you didn’t how much it was • The rule is Hancock v Watson • We do have a possible purported trustee, with the attempted trust, anything left that she doesn’t want, over an unspecified amount of property, the beneficiary is not there, the equitable title goes exactly where the legal title goes, this is an outright transfer, under this rule this is a gift not a trust, a gift is a transfer of the property without obligation, this is a gift here because you didn’t specify what property, unclear amount of property specify here, what left of the trustee doesn’t want, but unclear amount, the trustee bit is not clear, the gift bit is clear Inter vivos trusts v testamentary trusts - inter vivos trusts require segregation • Re London Wine - tangible property • Re Goldcorp - tangible property • Hunter v Moss - intangible property • Inter vivid trust won’t be examined • Testamentary trusts, as long as the portion has been identified, they can be performed the to distinguished, created by death on will The beneficial interests

• settlor need to be specific in a fixed trust, where the settlor need to stipulate each beneficiary what they will get • You need to make the beneficial interest clear, held by the trustee on the resulting trust if the settlor is not clear • Boyce v Boyce - give a choice of one daughter to choose which property she wants and the remaining give the other daughter, Marie died before her father, her gift lapsed, the choice remain part of the estate, the gift on trust for Charlotte, Marie did before her father, we will never know what is the remaining, so Charlotte is unable to get the property because it is not clear, so it will end up to be resulting trust going back to her father • Re Golay’s Will Trusts - let her mistress enjoy one of his flat in her lifetime and reasonable income from his property, the court said it wouldn’t be any difficulty for the word “reasonable”, as long as it clear what is wanted and intended in the outset, very clear intent, so the reasonable word, may be unclear but still can be cure • In contrast Re Kolb’s will trusts - “blue chip” is not clear With regard to the beneficial interests (Boyce v Boyce) • Marie made her choice and we know what Charlotte wants • Marie died, leaving a gap in ownership, no one own the choice, it will render Charlotte is uncertain, equity adheres the vacuum of ownership • Charlotte is uncertain, so the whole lot is reverted • So the settlor holds in resulting trust • Resulting trust only occurs, when the beneficial trusts are uncertain, or on the object Certainty in objects • with a fixed trust, the settlor determine who get what’s, clear obligation to the trustee and how they do it • Discretionary trust - up to trustee, the trustee has to do something, they decide how to do it • Power - doesn’t require legal title, a permission to do something in respect to someone else’s property, i.e. power of attorney, permission to make decision for someone else, permission to do something and also up to them how they are going to do it

The tests Fixed trusts • strict test • IRC v Broadway Cottages - need to draw a complete list fo the beneficiary, need to name the single beneficiary and finite beneficiary Powers • Re Gulbenkian - concern power of, impossible to draw a complete list, the court thinks it’s not necessary, power is the mission to make, no obligation, relax test is appropriate Discretionary trusts • they are under a duty the responsibility that under their hand • McPhail v Doultan - concerns a discretionary trusts, impossible to draw a complete list, similar to the test for power, the court emphasis the trustee should approach their duties in a narrow way, they are undertaken a survey to carry out their fiduciary duty, has to be practical to make it possible, because they come with this specific obligation, conceptual certainty, the word used by the testator, is it something that is objectively understood, the label that you give to the class of beneficiary, all should be agreed upon, in this case “employee” is fine, someone that fit in this description, if you use a word “friend”, this is problematic, because we don’t have a concept of friend, some things I have lots of friends, some people define I have few friends, friends is too subjective, the word “fans” is also vague, what constitute of fans, what makes you qualify as “fan”, conceptual certainty is crucial, evidential certainty is not important, the word “ex-employee” it might apply to the employee who works 20 years ago, no one can prove that person is an ex-employee, that wouldn’t be fatal to the trust, as long as the meaning is clear, doesn’t matter some people can’t be identify, substantial people can be identify is ok • R v District Author ex - half million people, not practical for the court to police the performance, the aspect of certainty of object • The trustee needs to hold a resulting trust for the settlor Resolving uncertainty • Blathwayt v Baron Cawley - what was meant by jewish blood or jewish faith, you can resolve evidence difficulties by the expert

• Re Coxen - cannot allow the trustee resolve the definition of an “old friend”, expert cannot resolve subjective things, the court doesn’t like the power is in place in the hands of the trustee • Re Wright’s - too uncertain, it is possible to resolve some certainty by hiring the expert, but cannot in the hand of trustee Contrast with a different situation - a series of gifts • Re Barlow - lower standard can allow, “friends” make an individual assessment who comes along, some standard can be lower, individual assessments = “a queue" of people wanting to benefit”, the court didn’t deal with the first come first serve status, if they given a series of painting, what happen if too many people come along, Barlow is good law Question: Problem Questions 1 a) no precise word is require, “knowing that he will look after” not the same as saying it is on trust, precatory language, it is like on hope, refer to Re Adams case. If we looking everything there is a trust, then we can negate the precatory wording. Ian will take free, absolutely a gift. A pure trust that fail in its intention, so it’s a gift. b) 15,000 is not the subject matter of the trust, only a subject matter of a gift, the subject matter of the trust is the remaining part, it is not a requested demand, intention looks at the face look to be ok, clear object and possibly intention. What do we know what he is left over, or he doesn’t want. Nothing compels in “Mosorri Bank v Rader” if uncertainty of the subject matter of the gift, if you didn’t specify how much gift give in the first place, how come there is a trust created. The interplay between 2 certainties created a problem. Rule in Hancock v Rotson, the gift is certain, but the trust is uncertain, you allow the gift is certain, but not the trust. If a gift of a trust attached this is a Hancock v Rotson situation. The amount go directly all to John. Failure to subject matter casting doubt of intention. c) Word, subject matter and intention are clear. “to distribute” a clear mandate an instruction, they have to do this. Object is the issues here, the choice of what can get the money, here is a discretionary trust. Mcclare v Dolton, class of the beneficiaries, the test is refine and reclaim in Re Bethan, conceptual certainty, is it subjective or objective? If it is objective, that you have conceptual certainty. “inhabitant of Manchester”, what do you mean by inhabitant? Permanent living in

Manchester, what if they study there, do you have to live in the city centre? Or mean people who has a Manchester postal code? The court can capable give an objective meaning, the court can give meaning. But the number of beneficiaries are probelmatic, this is too many beneficiaries for private trust, impractical to take survey for the two trustee, and the court is unable to ascertain. It becomes administratively unworkable under the District case. Fail of the subject because too many beneficiaries, the money should be held as resulting trust, fall into residue. This is a discretionary trust intended, but failed the class of subject is too large. Not practical for the court to give effect of it. d) Intention is enough, clear instruction, clear intention. “substancially all” is not all, most all, how much it’s translated to, Palmer case, we don’t know what that means, this clause will failed in the outset. Clear object of the benefit from the income of the share, it doesn’t seem clear or necessarily in the subject matter, “reaonsable income” is problematic, but in the Re Golay case is ok, the mistress can receive a reasonable money. Intention is clear of objective determination, of that by means of “reasonable”, void as a whole because of the word “substantial” e) Re London and Wine deals with life time trust. This is still a testamentary trust, more relax than intervivos trust. The intention is certain, the residue is fine, trusting, the old and trust friend, in Re Cockson, too vague, problem with the object, and problem with the intention, “trusting someone will doing something”, it is a hope or wish, “trusting” is a precatory language, the whole residue should go to Claire, this is an absolute gift. Claire take all absolutely including the wine cellar. Problem Question 2 c) friends are problematic you may think. “should” closer to an imperative. Re Coxson, is problematic, but it is not really what intended her, “one each”, Re Barlow, lower standard of certainity, no need to take a survey of the beneficiares, each claimant of beneficiaries come along, any friends who may wish to purchase, a define of friends is no need. Potentially conceptually certain, can Lynette take the enjoyment of the dress? Separate item, so that why this is a trust. e) subject to requirement of share to hold freinds, residue is a certain terms, Palmer case, the share is clearly define, requiring seems imperative, the object is problematic, friends is uncertain, attempt by Bree

to consider what would happen if uncertain, and gives Danielle to resolve conceptual difficulties, in Re Tot, no problem with the definition of “Jewish faith”, you can have an independent expert to define, but you can’t have a definition, you can hire an expert to define a “dearest close friend”, to subjective, trying to place a power in the hands of trustee, fail the certainty of object. Danielle can’t take the residue, resulting trust is established to go to the next of kin....