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GDL Law Notes GDL Equity and Trusts Notes

Certainties, Formalities And Constitution Notes

Updated Certainties, Formalities And Constitution Notes

GDL Equity and Trusts Notes

GDL Equity and Trusts

Approximately 631 pages

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Three Certainties

- 3 certainties (1. intention; 2. subject matter; 3. object) needed to enforce trust ([Langdale MR], Knight v Knight).

1. Certainty of Intention: imperative, not precatory wording needed.

  • no technical language necessary ([Jessel MR], Richards v Delbridge; [Megarry J], Re Kayford).

    • can be by conduct (Paul v Constance).

  • NOT precatory language (Lambe v Eaves; e.g. Re Adams v Kensington Vestry: ‘in full confidence she will do what is right’; Jones v Locke: cheque ‘for baby’ insufficient).

  • imperative language (Comiskey v Bowring-Hanbury: ‘in full confidence she will leave it to such of my nieces etc’)

  • context: whole doc. considered (Re Adams; Comiskey v Bowring-Hanbury: gift over in default certainty)

  • if uncertain: absolute gift.

  • 2. Certainty of subject matter

    • a. property must be clearly defined:

      • Palmer v Simmonds: ‘bulk’ no.

      • Re Golay’s WT: ‘reasonable yes (as far as courts will go).

    • b. segregation:

      • tangible property: must be segregated – specifically identifiable (Re London Wine; Re Goldcorp).

      • intangible property: need not be segregated (Hunter v Moss, [Dillon LJ]).

        • BUT CRITICISED: all proprietary rights need to be over specific property (Re Harvard Securities: [Neuberger J] criticised, followed Goldcorp for Australian shares; MacJordan Construction v Brookmount Erostin).

    • if uncertain:

      • trust fails (RT).

      • gift with trust attached donee takes free of trust.

    3. Certainty of object

    • fixed trust: complete list test – conceptual + evidential certainty (IRC v Broadway Cottages).

    • discretionary trust: is/is not test – conceptual certainty only (Re Gulbenkian; McPhail v Doulton).

      • application: Re Baden’s DT (No 2) (3 different ratios):

        • [Sachs LJ]: conceptual certainty only – label must be clear; burden on c. to prove part of class.

        • [Megaw LJ]: class certain if ‘substantial number’ can be proved to be within (but: circular).

        • [Stamp LJ]: must be conceptually + evidentially certain (relatives = next of kin) (but: too strict).

      • BUT: subject to admin. workability: R v District Auditor for W Yorks MCC: ‘inhabitants of W. Yorks’.

    • power: is/is not test (Re Gulbenkian).

      • NOT subject to admin. workability (Re Manistry’s ST).

    • gift subject to condition precedent: some conceptual certainty allowed (Re Barlow’s WT: ‘friends’ allowed).

    Formalities

    Creating New Trust

    - Testamentary trusts: s9 Wills Act 1837: 1. writing; 2. signed by testator (or another at his direction + in presence); 3. attested by 2 or more witnesses.

    • failure: will void.

    - Inter vivos trusts:

    • most property: no formalities (Paul v Constance).

    • land: s53(1)(b) LPA 1925: 1. evidenced in writing; 2. signed by settlor.

      • failure: unenforceable (but not void: valid from date of declaration).

      • exception: fraud (express trust: Rouchefoucauld v Boustead; RT: Hodgson v Marks; CT: Bannister v Bannister).

      • exception: implied trusts (CT + RT) – s53(2) LPA 1925 (e.g. Hodgson v Marks: RT, no need to comply with s53(1)(b)).

    Disposing of Subsisting Equitable Interest

    - Prima facie: s53(1)(c) LPA 1925: 1. in writing; 2. signed by grantor (or authorised agent).

    • disposition inc. direction to ts. to hold on trust for another: Grey v IRC: [HoL].

      • but N.B.: oral instruction to ts. + later evidential writing can satisfy s53(1)(c).

        • BUT CRITICISED: transfer itself should be in writing need HC case + leapfrog appeal to SC.

    • exception: implied trusts (s53(2) LPA 1925).

    • failure: disposition void.

    - Vandervell v IRC exception: s53(1)(c) does not apply where: 1. b. absolutely entitled; 2. intention to transfer legal + equitable title (rationale: trust collapsed ts. do not need to know who bs. are).

    • (N.B. only if legal title effectively transferred: Zeitel v Kaye).

    - Contract to assign existing beneficial interest: Neville v Wilson: CT, so s53(1)(c) does not apply (s53(2)).

    - Sub-Trusts: DEBATE over whether s53(1)(c) applies.

    • [Hayton] theory: dep. on whether whole or part of property disposed.

      • whole property disposed s53(1)(c) applies (disposition in effect: original b. drops out of picture).

      • part disposed s53(1)(c) NOT apply (new trust, not disposition).

      • judicial support: Grainge v Wilberforce; Re Lashmar.

    • [Penner] theory: s53(1)(c) NEVER applies (always new trust: original b. can never drop out – must receive 1st).

      • (if land: s53(1)(b) applies; other property: no formalities: Paul v Constance).

      • judicial support: Nelson v Greening & Sykes (original b. now t. of interest for sub-b); Zeitel v Kaye (p36).

    • [Green] theory: s53(1)(c) ALWAYS applies (literal reading of statute) – but: unpopular.

    Constitution

    - Structure:

    • 1. break down q. + identify type of intended transfer – Milroy v Lord:

      • 1. absolute gift: constitution only (intention + transfer of legal title).

      • 2. self-declaration of trust: formalities only (valid declaration of trust).

      • 3. settlement of transfer: constitution + formalities (valid declaration of trust + transfer of legal title).

      • 4. Vandervell exception: constitution only (becomes absolute gift)

    • 2. requirements for effecting that method (Milroy v Lord).

    • 3. general rule: equity will not perfect imperfect transfer.

    • 4. exceptions].

    - Rules of constitution

    • land: s52(1) LPA 1925: by deed (s1 LP(MP)A 1989) + s4/s27 LRA 2002: registration.

    • chattels: deed of gift or actual delivery + intention (Re Cole).

    • shares: Stock Transfer Act 1963:

      • 1. STF signed by transferor.

      • 2. registration in co’s share register (a. send form + certificates to registrar; b. registered by registrar).

      • (private cos: directors can refuse to register transfer if power in arts.)

    • bills of exchange (cheques): Bills of Exchange Act 1882: to 3rd party by endorsement (sign on back).

    • money: delivery (cheque: only transfers when money cleared).

    • choses in action (debts): s136 LPA 1925: writing + notice to debtor/other party.

    • subsisting equitable interest: s53(1)(c) LPA 1925: in writing, signed.

    - Imperfect constitution: prima facie, equity will not assist a volunteer + perfect an imperfect transfer – court cannot...

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