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Three Certainties Notes

GDL Law Notes > GDL Equity and Trusts Notes

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Revision: Equity

Knight v Knight

1. Intention

2. Subject matter

3. Objects CERTAINTY OF WORDS OR INTENTION'Equity looks to the intent rather than the form' - so word 'trust' need not necessarily be used for a trust to be created and equally the word trust is not conclusiveRe Kayford: 'the question is whether in substance a sufficient intention to create a trust has been manifested'

Precatory words - how certain is certain?

1. Distinction btw IMPERATIVE words which show intention to create legally binding obligation (will create a trust) and PRECATORY words which express a hope or wish rather than obligation (generally won't create trust)

2. Whether words impose obligation or merely express a wish is a question of construction in each case

3. Attitude to interpreting precatory words - has changed - older cases leant towards finding a trust - more modern cases lean against

4. Turning point - Lambe v Eames

5. Importance of construction of particular words/circumstancesPhrases such as 'in full confidence' may or may not impose a trust o

Re Adams and the Kensington Vestry: testator left property to his wife absolutely 'in full confidence that she will do what is right as to the disposal thereof between' his children in her lifetime or by her will - it was held that she took the property free from any trust in favour of the children


In Comiskey Bowring-Hanbury : words 'in full confidence' created a trust - T left estate to his wife 'absolutely, in full confidence that she will make such use of it as I should have made myself, and that at her death she will devise it to such one or more of my nieces as she may thing fit. And in default of her disposition...I hearby direct that all my estate and

1 Revision: Equity

property...shall at her death be divided among the surviving dead nieces' - gift-over to the nieces , they will definitely get something - sets this case apart

6. As seen here, where words held not to impose a trust on the done, they take absolutely - court will look at all the circumstances - not just words

Old words from old cases

1. Words interpreted in their context rather than according to previous cases - words may not have the same effectRe Hamilton: 'you must take the will which have to construe and see what it means, and if you come to the conclusion that no trust was intended, you say so'

2. But wording may be interpreted in the same way as in previous cases where the whole gift is identically worded:Re Steele's Will Trust - suggested that earlier decision should be followed unless clearly wrong - court followed interpretation given to words in Shelley v Shelley (80 years previously)

Evidence of intention: Words and/or conduct of the parties

1. Paul v Constance: Judge found intention to create a trust where a man had told his cohabitant that the money in his bank account was as much hers as his and ordered half the money to be paid to her after his death, rather than pass to his wife. He had essentially declared himself a trustee of the moneys for himself and the cohabitant. CA upheld decision: oral declaration of trust

2. Trust cannot arise if language reveals the payer intended only a debtor-creditor relationship - payee free to mix the money with his own and deal with it as he pleases - as in Azam v Iqbal o

But ability to mix moneys with moneys is consistent with a trust of the mixed fund - segregated mixed fund is held as a pooled investment on trust for the payees in proportionate co-owned shares (Lewis's of Leicester) or where the amount in the mixed fund is not to fall below the amount of money paid in for a temporary period

3. Re Kayford

2 Revision: Equity

[THREE CERTAINTIES]Mail order company fearful of liquidation may pay customers' money into a separate bank account to protect them from merely being debtors of the company if not receiving their goods - amounts to a trust of the moneys for the customersBut if the cheque is paid into overdrawn account of the company then the money disappears and no trust is constituted (Moriarty v Various customers of BA Peters plc)

4. Sid v Shah - Court of Appeal construed the wording of a letter as showing an intention to declare a trust

CERTAINTY OF SUBJECT MATTER: Must be certain what property is subject to the trust

1. Property - what property?

2. Beneficial entitlements - what part/share each is entitled to (if fixed) CASES:

1. Sprange v BarnardTestatrix in her will : 'for my husband, to bewill him the sum of PS300 .. for his sole use; and at his death, the remaining part of what is left, that he does not want for his own want and use, to be divided between' her brothers and sisters o

Court ruled that there was no certainty as to property, so there was no trust


Trust creates rights and duties at the moment of its creation - must be certain at the moment of its creationCan leave residuary estate on trust for 'A for life, remainder to B' - this creates a valid trust, ascertainable after payment of all proper taxes, expenses, debts and legaciesAlso in In the Estate of Last - offending words of 'anything that is left'

2. Palmer v Simmonds 3

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