Transcript (Ingredients)

Express trusts

Two types

1. Private express trust

2. Purpose trust
a. Charitable purpose trust
b. Non-charitable purpose trust

Settlor: Legal title + Equitable title

Trustee: Legal tile (He has personal and proprietary obligations)

Beneficiary: Equitable title

Resulting trust arises due to failure of express trust

Constructive trust responded due to events.

Might come as one question as these going together: 3 certainties + beneficiary principle +
formalities/constitution of trust (Particularly private purpose trust).

Similarly, Dishonest + tracing come together

All trusts must satisfy three certainties [Knight v Knight].

Certainties deals with validity of the trust, whether it can be carried out. Certainty of intention is
imposing an obligation.

RE Hamilton’s

Milroy v Lord

Comiskey v Bowring

Pennington v Waine

Re Golay

London Wine Company case and Goldcorp case: Specific tangible property must be isolated so
anyone can know which property is held for trust.

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 Hunter v Moss and Holland V Newbury: It says that any intangible property fixed proportion
is enough to segregate intangible property.

Fixed trust: Where it is clear about beneficiary and test of certainty is list test.

IRC v Broadway Cottages: Complete list test, in complete list test, how many people are
enough in case of group or class rather than who. For example, a million dollar on trust to my
trustee distributed equally among student of trust law class of UoL. It means only require number
of students “which” is not required.

Discretionary trust: Must distribute but have choice to whom. It is an obligation on trustee to
choose.

McPhail v Doulton or Re Gulbenkian (1968)): “Is or is not test” or “given postulant test” Same
test used for powers (Fiduciary power).

Is or is not test: Three variations explained in Re Baden (No. 2), three judges Lord Sachs,
Stamp and Megaw

Lord Sach: Certain + clear meaning (Most popular version)

Lord Stamp: conceptually certain + evidentially certain

Lord Megaw: substantial number of people (Seems inaccurate)

Is or is not test is subjective.

Bare trust: In this type trust, trustee hold trust for one beneficiary only. Bernice, to hold
property

on trust for Adam absolutely. In that situation, Adam would not be trustee. Because Adam would
be the only beneficiary in this example, we would refer to the trust as a ‘bare trust’ and we would
refer to Bernice as being a ‘bare trustee’ or, more usually, as a ‘nominee’.

Fixed trust: A million pounds on trust to my trustees to be divided equally amongst my children.

Discretionary trust: A million pounds on trust to my trustees to distribute in such shares as my

trustees thinks fit. He must distribute but with choice to whom. Discretionary trust has obligation
but fiduciary power has not.

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 Fiduciary power: A million pounds on trust to my trustees, my trustees who may decide to
distribute amongst my children. Fiduciary power does not have obligation.

It means settlor empower him to decide himself he decides to distribute or not and money will be
kept on trust if not distributed amongst children. In this power lies with trustee. There is double
discretion.

Power: A million pounds on trust to my trustees, my trustees may distribute amongst my

children failing which to Battersea Dogs home.

In this statement settlor tell what will happen if he does not give to children.

Or

One million pound to my trustees, there’s the trust gain, my wife having the power to distribute
amongst my children.

Here power is given to other than trustees. Power must exist behind trust. So, trust will be there
in all above cases. In power, power is given to third person.

The trustees are able to act on their own decisions but they must be able to justify those decisions
and cannot act capriciously in the decisions they make (Re Hay’s ST (1981)).

One-person test: Re Barlow (Only one person need to satisfy that he is friend or among class)
and Re Allen.

Dundee Hospital Case:

Re Tuck:

Transcript (Certainties)

Certainty of subject matter means, it must be certain that trust holds which property and trustee
must know what is property and how he will distribute.

Certainty of object refers to beneficiaries of trust property. Beneficiaries must be humans

except in few cases and charitable trust. Beneficiaries are the person to whom trustee owes the
obligations. They can enforce the trust if trustee fails in his/her duties.

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 Certainty of intention refers to words used in creation of trust must be imperative. Intention
needs to look from statement. Equity looks to intent rather than form. Re Hamilton

Lambe v Eames: (Precatory words are words that express wish or hope rather than obligation).
Comiskey v Bowring: (The search is one for intention not particular forms of words and
precatory words do not always mean that there is no trust.

Re Harrision: the court reached that the word trust in that case did not mean a trust in law
because taking the document as whole it was clear that an absolute gift was intended.

Paul v Constance [1977]: The court inferred an intention to create trust from circumstances
despite the fact that both Constance and Paul did not know what they were creating. The
statement spoke by the Constance was “Constance assured Paul that ‘this money is as much
yours as mine’. It does not require contract between the parties. We are dealing with simple
people, unaware of the subtleties of equity.
Ong v Ping [2017]: The CA was willing to infer from correspondence between a woman in
Singapore and her Solicitor in England that she intended to create trust of her house in London
despite the fact that she had never made an oral or written declaration of trust.
Jones v Lock: No effective declaration.
Re Adams & Kensington Vestry (1884): The CA held there was no declaration of trust as
testator had not intended to impose obligation on her. He had left the matter to her conscience.
Milroy v Lord (1862):
Richards v Delbridge (1874):
Re Schebsman [1944]:
Certainty of subject matter has two parts, first, what is actual property and second is which
part of property. So, if there is trust of 10 bottles and there are 100 bottles total, we need to know
how many and which one are subject to trust. In Palmer V Simmonds, the settlor quote “the
bulk of my estate”, which is not clear. Here subject matter is uncertain. Similarly, in Sprange v
Barnard, quote was “the remaining part”, it was not clear here too. In Re Golay’s WT, the
setter made a reference to “reasonable income” the court held that objective meaning nee to use
and it is certain here.

London Wine Company case and Goldcorp case: Specific tangible property must be isolated
so anyone can know which property is held for trust. So in London Wine, it was uncertain which

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 10 bottles of wine was hold for trust. Similarly, in Re Goldcorp, there was no idea which
particular bars were subject to trust even though we knew how many should have been.

Hunter v Moss and Holland V Newbury: The trust was intended for over 5% of total amount
of shares, if we follow London Wine and Re Goldcorp case it is uncertain. However, in Hunter v
Moss court decided it is clear which shares were subject to the trust. It says that any intangible
property fixed proportion is enough to segregate intangible property. As per Holland v Newbury
(also known as Re Harvard Securities), if percentage is clear to the trust with intangible
property that would be enough), but if property is tangible it would not be enough like wine or
gold.

If certainty of subject matter is not clear then there is not trust at all exists and it is in the
ownership of the setter.

Title Description if failed

Certainty of intention
Certainty of subject matter
If intention not clear or uncertain trust does
not exist at all.
If intention not clear or uncertain trust does
not exist at all, however if property is
identifiable but fail to identify precise share
then resulting trust will arise for the settlor.
Like 10 bottles on trust out of 100, now
subject matter is certain but which 10 is not
clear so resulting trust will arise and property
will be held on resulting trust for the settlor.

As per Hancock v Watson, where there is

absolute gift to a person that there is some
trust added to it. If trust parts fail from the
lack of certainty of subject matter then the
absolute gift takes effect.
Certainty of object

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 Unworkability:

It is used in discretionary trust. Discretionary trust can be void or invalid if it is administratively

unworkable

R v District Auditor; In given case it was administratively unworkable because prospective

class was nearly all the inhabitants of the local authority in West Yorkshire. Class was too big.
Here trustee was not able to survey whole range of objects.

Capriousness:

It used in power and fiduciary powers.

Re Mainsty: It says power is invalid if it is capriousness. If there is no sensible reason behind

the class.

Gift with condition:

Re Barlows: It says condition is certain if it is clear that one person would satisfy it. It came
from Re Allen and applies only where beneficiaries can be identified that takes gift subject to
condition. Condition is valid it is certain we would know that one person would satisfy. If power
is given to third party than uncertainty is curable (Re Tuck). For example, $ 1 million on trust to
the members of London University, membership to be decided by the Chancellor. As per Dundee
Hospital Board v Walker, it says the ability to cure uncertainty if it is evidence not a matter of
concept.

Beneficiary principle: There must be someone in whose favor the court can decree performance
of the trust or else the trust will be invalid (Morice v Bishop of Durham (1805)).
Constitution and formalities (Transcript):
Three methods of giving are outright transfer, a transfer on trust, or a self-declaration of trust.

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 Three types of rules related to creation of trust. First title transfer rule and second statutory
formalities rules and thirdly disposition or equitable transfer. Third rule is apply in subsisting
trust.
Title transfer rules are not related to self-declaration trust.
General rule related to legal title transfer:
Milroy v Lord: There is no equity to perfect an imperfect gift. Or equity will not assist
volunteer to perfect an imperfect gift. Furthermore, if failed attempt to create trust in way will
not make effective in other way. It means if settlor tried to assign trustee but no effectively
constituted then it will not constitute as self-declaration of trust.
 If title related to land need to be transferred then it need to be complied with LRA 2002.
As S. 27 of LRA 2002 title of land is not transferred until registration is complete.
 Title related to shares (Chose in action) required registration of the new ownership in the
company shares register. This applies to both public and private companies.
 Likewise, personal chattels (that is goods) and money transfer take place if actual
delivery place. Like if I (settlor) current owner of laptop wish to pass to T (Trustee) to
hold it for A, then when I deliver the laptop, transfer of legal ownership is completed.
 Failure to comply with the transfer rule means that trustee has no ownership and the trust
is not constituted.
Exceptions to the general rule:
Detrimental reliance:
Detrimental reliance may lead the court to order the perfection of the imperfect gift or trust:
Dillwyn v Llewelyn (1862); Pascoe v Turner [1978]; Thorner v Major [2009]. If so, the
purported transferor will hold the promised right on constructive trust for the intended donee.
Re Rose: The CA held that if owner did everything in his power to effective transfer title to the
property then legal transfer is effectively transferred. Transfer was effective when share form
was completed. This is because owner had last time to control the process.
Mascall v Mascall: In that case that involve lands and the relevant forms were completed to
transfer from father to son. The son, however did not register the transfer at the land registry and
the father changed his mind. The court held that father did last act that was completion of form
so therefore transfer took effective in equity. The registration of title was merely an
administrative act to confirm the transfer from father to son.

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 Strong v Bird [1874]:
It states that if debtor is an executor named by the testator of the estate then chose of action is
discharged. The assumption is that debtor is made executor because deceased intended to free
him from debt. There was continuing intention of testator until death.
Richards v. Delbridge (1874): Ineffective transfer not to be treated as declaration of trust.
Re Ralli: It is an extension of Strong v Bird, here testator does not assign debtor as executor but
fortuitously he become executor. It is irrelevant that executor came by fortuitously.
Donatio mortis causa: It is made on the death bed. As per Vallee v Birchwood, three
requirements were confirmed related to Donatio Mortis Causa, 1. The gift must be made on death
bed, 2. It must be conditional means given on the death of the donor if not died than gift does not
take affect, 3. Some step has been taken to grant ownership like these are keys and take land
certificates it is yours.
Proprietary estoppel: Representation is made to the claimant in reliance on which she acts to
her detriment, the court will estop the defendant from going back on that representation. Pascoe
v Turner and Baker v Baker.
Unconscionability (Pennington v Waine): This is extension of Re Rose, here donor did
everything in his power to finalize the transfer. It was said to be ‘unconscionable’ for the donor
to resile as she had told the donee that the gift was perfect.
Statutory formalities rules:
These rules must be completed along with title transfer rules. Title transfer rules are not require
in self-declaration of trust, these rules might vary according to the property. These are statutory
rules concerning creation of the trust. They can be found in LPA 1925 designer to ensured
certainty.

Trust of personalty not require no statutory formalities but trust of land or realty require to
comply with statutory rules.

So if I orally say to T hold that laptop for A thay does lot require to be in writing. As far as land
is concerned it requires to comply with statutory formalities. Two things need to fulfil, first
transfer legal title and second show it is held for A (equitable interest).

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 There are some exceptions to that rule, first is old rule that statute may not used as instrument of
fraud, as in Rochefocauld v Broustead, if T is intended Trustee and he knows about it that he is
intended trustee, despite that he never says that it is transferred to them as absolute gift for
themselves because there is no writing and in absence of writing will not excuse for T to keep
land for themselves, instead it will be held for original owner. Logically Richefocauld v
Broustead type cases must be express trust.

NCA v Dong 2017, Stack v Dowden, Jones v Kernott, in those cases writing is not required even
though these are related to land this because resulting unconstructive trust are exempt from that
requirement.

S. 9 of Wills Act 1837 states that will must be in writing, signed and attested by two witnesses.
This is applied where property is land. Exception to that is secret trust.

Disposition of equitable interest:

S. 51C of LPA 1825 deals with disposition of equitable interest. Rules related to land or
personalty are similar to S. 9 is Wills Act 1837 (writing, signed and attested by two witness).

T trustee hold trust for A and now A wish to transfer his equitable interest to B. Issue is not
writing but tax payable. Tax is payable on written documents. For subsequent transfer tax might
be required to pay. If written equitable interest is not required then no tax is payable. So people
try to escape from tax.

1. Direct assignment required writing. If T trustee hold trust for A and now A wish to transfer his
equitable interest to B. A simple assign or transfer his equitable interest to B. Trustee will be
same but beneficiary will change (Re Danish Bacon Company).
2. Declaration of sub-trust of entire trust. Here A make a sub-trust for B. So T is trustee for A and
A is trustee for B. This require disposition of equitable interest and required writing (Grainge v
Wilberforce). This is some time called passive sub-trust because A is dropped out of the picture.

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 If A role is active instead of passive then writing is not required if create active sub-trust, this is
because A did not give everything he own.
3. If equitable title is surrender then writing is required. It is where A hold trust for B and B
surrenders, surrender of already acquire equitable interest requires writing.
4. Gray v IRC, here T hold trust for A and A instruct to T (trustee) that now hold trust for B. It is
different than direct assignment. Now original equitable owner instruct to legal owner to hold
trust for B or new equitable owner. The HL considered this as disposition.

Exception where writing is not required.

1. Re Paradise Motor Company case: A (an intended equitable owner) never receive equitable
interest or before receive indicates they don’t want it. They are disclaiming the interest. So here
A don’t have equitable interest how can he/they dispose off which they don’t have.
2. Vandervell v IRC: In this situation A (equitable owner) tells T (trustee) that transfer legal title
which T hold to X and it was intended by A that he will transfer equitable interest to X too. Now
after getting both interest X is absolute owner and no trust exists. In this case the HL said no
writing is required to transfer equitable interest that is from A to X however as far as legal title is
concerned that is transfer of T interest to X it must follow rules of land and shares that is writing,
but this is legal title only.
3. Oughtred v IRC: In this case T (trustee) holds trust for A and A sells his interest to B if it is
enforceable Contract that is sales from A to B then constructive trust does not require writing as
interest must pass on to B. This is because constructive trust support the contract and passes the
interest. This applies in shares of private companies. As per Neville v Wilson, contract must be
genuine as if not performed breach of contract will happened because people may contract to
avoid writing and ultimately tax.
4. No writing required if disposition of equitable interest is by law of the court (Re Holt). The
court can vary the terms of the trust under the statutory jurisdiction, such as variations of the
Trust Act 1958.
5. Re Vandervell No. 2: S (Settlor) transferred shares to T (Trustee) to hold it for A after
sometime S change his mind and wish to transferred equitable interest to B instead of A. The CA
held here no writing require because that declared whole new trust in favour of B with consent of

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 A. There was no disposition of equitable interest but while new equitable interest was created for
B.

Lastly what happen to trust if not constituted either because of failure of title transfer rule or
failure of statutory formalities. In both cases there is no trust and beneficiary cannot claim his
interest from trustee to perform his trust obligations. This is because equity will not assist
volunteer in an unconstituted trust.

If S promise to transfer property to T to hold on trust for A and later on he did not fulfil his
promise and not transfer the title to trustee then no trust exist but as per Fletcher v Fletcher and
Burton v FX Music, they can enforce as promise here is property. Here A can rely on promise
and compel the S to transfer property to T. As per Burton v FX music it must be based on the
clear intention of the parties.

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