Introduction
Understanding trust law requires a firm grasp of the concept of certainty of intention. At its core, certainty of intention determines whether a donor’s act of transferring property gives rise to a valid trust. The notion is critical because it distinguishes an outright gift from a trust creation. This blog post delves into the continuation of certainty of intention, examining the underlying principles, surrounding circumstances, and practical implications. We will explore how a donor’s intention may be interpreted, when a gift is considered perfect, and how uncertainty of subject matter can render a trust void. We also discuss the difference between imposing moral obligations and creating a legally binding fiduciary duty. Through real-world examples and landmark cases, this comprehensive guide will equip you with a deep understanding of the subject.
1. Intention to Make a Gift Versus Creating a Trust
When the absolute owner of a property decides to make a gift of all their rights in that property, the intention is to effect an outright transfer. In this scenario, the donee becomes the absolute owner, and there is no trust created. By contrast, when a trust is formed, the legal title is vested in the trustees, while the equitable interest remains with the beneficiaries.
An interesting exception exists: a settlor may declare herself as a trustee for the benefit of her children without transferring the legal title. In such cases, the declaration alone suffices to transfer the equitable title to the beneficiaries. Although the legal title remains with the settlor, equity treats the property as held on trust. This nuance underscores that the intention behind a transfer must be examined in its entirety—whether the words express a gift or a trust and whether the donor’s actions align with that intention.
For instance, if a parent explicitly gifts a piece of jewelry to a child, the child immediately becomes the absolute owner. However, if the same parent states, “I hold this jewelry on trust for my child,” even without transferring legal title, the equitable interest passes to the child, subject to the formalities required for a trust.
2. Certainty of Subject Matter
A fundamental requirement for the creation of a valid trust is the certainty of subject matter. This means that the trust fund must be clearly identifiable; the property to be held on trust must be segregated from the donor’s other assets. If a settlor fails to specify exactly which property is intended for the trust, the trust will be declared void due to uncertainty.
Tangible Property
Consider Mr. Kamara, a settlor who owns 34 expensive paintings. If he wishes to create a trust by holding three specific paintings for his grandchildren, he must clearly indicate which three paintings are intended for that purpose. Failing to do so would result in an inability of the trustees to identify the trust fund, thereby rendering the trust invalid. Similarly, if Mr. Kamara wishes to settle fifty thousand Leones on trust for his grandchildren but does not segregate these funds from his two million Leones, the trust is void due to uncertainty of subject matter.
The case of Re Goldcorp (1995) 1AC p74 clearly illustrates that the intended trust property must be identifiable. In another instance, the case of Re London Wine (Shippers) Ltd demonstrated that for money in a bank account—a form of intangible property—to be held on trust, it must be segregated in a separate account.
Intangible Property
The issue of intangible property, such as money, shares, or patents, requires careful analysis. These assets are often fungible, meaning they are interchangeable, and therefore cannot be individually identified unless segregated. The seminal case of Hunter v Moss (1994) 1 WLR 452 addressed this challenge, indicating that the rule on certainty of subject matter might be relaxed when dealing with intangible and homogeneous assets like shares.
Real-world example:
Imagine a company employee who is entitled to 50 shares out of 950 available under his contract, but the employer fails to designate which shares are to be transferred. If the shares are not segregated from the general pool, the employee cannot claim a proprietary right over a specific set of 50 shares. While the case of Re London Wine emphasizes the need for segregation in bank accounts, Hunter v Moss shows that, in some instances, intangible property may be treated differently if all units are identical.
Citation: oxfordreference.com; DigestibleNotes.com
3. Surrounding Circumstances and Certainty of Intention
The courts always examine the surrounding circumstances to determine the true intention of the donor. This means that even if the donor’s words appear ambiguous, the context in which they were spoken can clarify whether a trust was intended.
Case of Jones v Lock (1865) 1 CH App p 665
A classic illustration of this principle is the case of Jones v Lock. In this case, a father, returning from a business trip, was scolded by his wife for not bringing a present for their infant son. In an apparent fit of pique, he wrote a cheque in his own name, thrust it into his baby’s hand, and declared, “look here, I give this to the baby.” The court had to determine if this act created a trust for the baby or if it was merely an attempt to appease his wife. The court held that although the act might have appeared to be a gift, the cheque was not endorsed in the baby’s name; thus, there was insufficient evidence of a clear intention to create a trust. Instead, it was interpreted that the father intended merely to dissipate his wife’s anger. The authority from Richards v Delbridge (1874) LR 18 p11 supports this interpretation.
Implications
The principle that a trust must have a clear and continuous intention means that both the words used and the context are vital. If a donor’s act is inconsistent or if it appears that the donor was not fully committed to the idea of creating a trust, the court will not perfect the gift as a trust. Instead, the transaction might be deemed void or interpreted as an outright gift, which, if incomplete, remains imperfect.
Citation: oxfordreference.com; S.S. KABBA, DECEMBER 2022
4. Moral Obligations Versus Formal Fiduciary Duties
Not all expressions of intention create legal obligations. There is a subtle but important difference between imposing a moral obligation and creating a formal fiduciary duty.
Moral Obligations
A moral obligation arises when a donor’s words, such as “please take good care of my car,” are merely precatory. Although these words might influence behavior, they do not legally bind the recipient to act as a trustee. For example, if a person gives money to a child for buying a book and says, “please don’t spend it all on sweets,” this is an expression of a moral obligation. The child is expected to act responsibly, but there is no enforceable trust.
Formal Fiduciary Duties
By contrast, a formal fiduciary duty is created when the donor’s language clearly establishes a trustee relationship. When a settlor declares, “I hold this property on trust for my children,” without transferring legal title, the equitable interest passes to the beneficiaries. In such cases, the donor imposes a legally binding duty on the recipient, making them a trustee with enforceable obligations.
Case Examples
-
Re Adams v Kensington Vestry (1884) 27 Ch D 394:
In this case, the testator left property to his wife “in full confidence that she will do what is right by his children.” Although the children argued that this created a trust, the court held that it imposed only a moral obligation on the wife. -
Comiskey v Hanbury (1905) AC p84:
Here, the testator’s language was interpreted to create an executory gift with a fiduciary character. The court found that the precise wording intended to provide the beneficiaries with a proprietary interest in the property, thereby imposing a formal trust.
Citation: S.S. KABBA, DECEMBER 2022
5. Interpreting Wills: Certainty of Intention
The interpretation of wills further illustrates the importance of certainty of intention. Courts now take a holistic view when reading testamentary documents to determine whether a trust was intended.
The Changing Judicial Policy
Before 1858, ecclesiastical courts administered estates, but from then on, the Court of Chancery assumed responsibility. This shift brought a new focus on fairness. The court now assumes that a valid testamentary gift is intended to create a trust unless the words clearly indicate otherwise.
Case of Adams v Kensington Vestry
In Adams v Kensington Vestry, the court interpreted the testator’s statement as imposing only a moral obligation rather than creating a binding trust. The court looked at the overall context of the will and the surrounding circumstances to determine that the words were precatory rather than definitive.
Case of Re Hamilton
In Re Hamilton, Lord Justice Lindley urged that courts should consider the entire will rather than simply focusing on its literal wording. The idea is to avoid a narrow interpretation that would defeat the testator’s true intentions.
Citation: S.S. KABBA, DECEMBER 2022
6. Trusts as a Sham Device: Avoiding Creditors
Trusts can sometimes be misused to shield assets from creditors. A sham trust is one where the donor transfers property to avoid creditors while continuing to enjoy its benefits.
Example: Midland Bank v Wyatt (1995) 1 FLR p696
In Midland Bank v Wyatt, Mr. Wyatt attempted to protect his family home by transferring it into a trust for his wife and daughter before his business failed. When his creditors sought to reach the property, the bank challenged the trust arrangement. The court examined whether the transfer was genuine or simply a façade to evade creditors. When a trust is used as a sham device, the courts will disregard the transfer and hold the donor liable.
The key test is the genuine intention of the donor. If evidence shows that the donor did not truly relinquish control over the property, then the trust is invalid.
Citation: S.S. KABBA, DECEMBER 2022; oxfordreference.com
7. Real-World Example: The Case of Mr. Kamara
To illustrate the practical implications of these principles, consider the following example:
Scenario:
Mr. Kamara, a successful businessman, owns a collection of 34 expensive paintings and a substantial bank balance. He wishes to create a trust for the benefit of his three grandchildren. However, he only intends to include three of his 34 paintings and a sum of fifty thousand Leones from his two million Leones fortune. If Mr. Kamara fails to clearly identify which three paintings are to be held in trust or to segregate the fifty thousand Leones from his general funds, the trust will be invalid due to uncertainty of subject matter.
In such a situation, the trustees would have no way of determining which specific paintings or funds belong to the trust. This example underscores why precise identification of trust property is crucial and why the courts have held that failing to segregate the intended trust fund renders the trust void. Cases such as Re Goldcorp (1995) 1AC p74 and Re London Wine (Shippers) Ltd support this principle, although the treatment of intangible property like money may differ, as seen in Hunter v Moss (1994) 1WLR p452.
Citation: oxfordreference.com; DigestibleNotes.com
8. Summary of Key Principles
To ensure that a trust is valid, two key elements must be satisfied:
- Certainty of Intention: The donor’s intention must be clear, unequivocal, and continuous. The court examines both the explicit words and the surrounding circumstances to determine whether a trust was intended. A mere gift without any declaration of trust does not create a fiduciary relationship.
- Certainty of Subject Matter: The property intended to be held on trust must be specifically identifiable. If the trust fund is mingled with other assets and not segregated, the trust will be declared void.
Additionally, the distinction between imposing a moral obligation and creating a legal fiduciary duty is crucial. While precatory words may create a moral obligation, they do not give rise to a legally enforceable trust unless the donor clearly demonstrates an intention to transfer equitable interest.
9. Practical Implications in Modern Trust Law
Modern legal practice continues to be shaped by these historical principles. Courts now routinely look at both the words of the donor and the context in which they were made. Whether in the context of inter vivos gifts or testamentary dispositions, the determination of certainty of intention is vital.
For instance, if a testator leaves property “in full confidence that” the beneficiary will use it for a certain purpose, the court will assess the language and context to decide whether a trust was intended or if the words merely impose a moral obligation. This careful examination protects the rights of both donors and beneficiaries and ensures that equity’s flexible approach is not misapplied.
Furthermore, the requirement for segregation of trust property, especially in cases involving tangible versus intangible assets, remains a key factor in trust formation. Whether it is a physical asset like paintings or an intangible asset like money, the principle remains: unless the trust property is clearly delineated, the trust may fail.
10. Conclusion
The continuation of certainty of intention is a cornerstone of trust law. It ensures that a donor’s true and continuous intention is honored, whether in the form of an outright gift or a trust. While the maxim “equity will not perfect an imperfect gift” generally applies, various exceptions—such as the rule in Strong v Bird and the doctrine of donatio mortis causa—ensure that genuine intentions are not thwarted by technical defects.
The surrounding circumstances play a pivotal role in determining whether a trust has been created. Courts examine not only the donor’s words but also the context, ensuring that every detail aligns with the donor’s genuine wish. Moreover, the careful distinction between moral obligations and formal fiduciary duties helps prevent the unintentional creation of trusts, thereby safeguarding both the donor’s intentions and the rights of beneficiaries.
Modern trust law, with its blend of common law and equitable principles, continues to evolve. Understanding these concepts is essential for both students and practitioners. By grasping the historical context, the detailed requirements for certainty of intention and subject matter, and the practical examples drawn from case law, one gains a comprehensive insight into how trusts operate and why these legal principles remain critical today.
As we have seen, precise identification of trust property and a clear, continuous donor intention are vital for a trust to be upheld. Equitable doctrines ensure that fairness prevails even when technicalities might otherwise lead to an unjust outcome. This delicate balance between legal formalities and equitable discretion is what makes trust law both challenging and fascinating—a field where history, law, and human intentions intersect.
Sources
- oxfordreference.com
- DigestibleNotes.com
- Corax Foundation
- S.S. KABBA, DECEMBER 2022
- Snell’s Equity & Trusts
- Equity & the Law of Trust – Philip & Pettit
Essay Questions
-
Historical Evolution of Certainty of Intention:
Discuss the historical development of the concept of certainty of intention in trust law, including the influence of the Norman Conquest and Henry II’s reforms on common law and equity. How do these historical developments underpin modern trust formation? -
Perfecting Imperfect Gifts:
Analyze the maxim “equity will not perfect an imperfect gift.” Explain the exceptions to this rule, particularly focusing on the rule in Strong v Bird and the doctrine of donatio mortis causa, and how these exceptions ensure that a donor’s true intention is honored. -
The Role of Surrounding Circumstances:
Examine the significance of surrounding circumstances in determining the certainty of intention, using the case of Jones v Lock as a key example. How do these circumstances affect the interpretation of a donor’s words? -
Moral Obligation vs. Fiduciary Duty:
Compare and contrast the imposition of a moral obligation with the creation of a formal fiduciary duty in trust law. Use cases such as Re Adams v Kensington Vestry and Comiskey v Hanbury to illustrate your answer. -
Interpreting Testamentary Intentions:
Critically assess how courts interpret the language and context of wills to determine certainty of intention. Discuss the evolution in judicial policy from ecclesiastical courts to the Court of Chancery, citing relevant cases. -
The “Every Effort” Rule in Trust Formation:
Evaluate the principle that a trust is perfected if the donor has done everything in their power to transfer property, even if technical defects remain. What are the implications of this rule in modern trust law? -
Property Estoppel and Volunteer’s Rights:
Discuss the role of property estoppel as an exception to the rule that equity will not assist a volunteer. How does this principle protect the interests of a volunteer who has incurred expenses based on the donor’s promise? -
Sham Trusts and Asset Protection:
Examine the issue of using trusts as a sham device to avoid creditors, using Midland Bank v Wyatt as an example. How do the courts distinguish between genuine trusts and sham transactions? -
Intention in Inter Vivos vs. Testamentary Gifts:
Explore the differences between inter vivos gifts and testamentary gifts regarding certainty of intention. How do courts ensure that a donor’s intention is clear and continuous in both scenarios? -
Modern Impact of Equitable Principles:
Analyze how core equitable principles, such as “equity looks to the intent rather than to the form” and “equity acts in personam,” continue to influence modern trust law. Discuss the interplay between common law and equity in contemporary disputes.
Multiple-Choice Objective Questions
-
What does “certainty of intention” primarily mean in trust law?
A. The donor’s legal capacity
B. The clear, unbroken intention of the donor to create a trust
C. The beneficiary’s acceptance of the gift
D. The formality of the transfer process -
Which case is the locus classicus for determining certainty of intention based on surrounding circumstances?
A. Re Adams v Kensington Vestry
B. Jones v Lock
C. Comiskey v Hanbury
D. Midland Bank v Wyatt -
What is the main difference between a gift and a trust?
A. A gift transfers absolute ownership, while a trust splits legal and equitable titles
B. A gift creates a fiduciary duty, while a trust does not
C. A trust involves only intangible property
D. A gift requires segregation of assets, while a trust does not -
If a settlor fails to identify the trust property clearly, the trust is deemed:
A. Valid, as long as the intention is clear
B. Void for uncertainty of subject matter
C. Automatically converted into a gift
D. Enforceable only in equity -
In the case of Mr. Kamara’s paintings, what is required for the trust to be valid?
A. The paintings must be appraised by an expert
B. The specific three paintings must be clearly identified
C. The paintings must be insured
D. The trust must cover all 34 paintings -
Donatio mortis causa refers to a gift that:
A. Is made during the donor’s lifetime with immediate effect
B. Becomes absolute only upon the donor’s death
C. Requires registration with the Land Registry
D. Is subject to creditor claims -
What principle explains why a donee’s appointment as executor can perfect an imperfect gift?
A. Property estoppel
B. The “every effort” rule
C. The rule in Strong v Bird
D. Res judicata -
According to the lecture note, what must be segregated to ensure certainty of subject matter in a trust?
A. Beneficiary details
B. The trust fund from other property
C. The donor’s personal effects
D. Legal titles and equitable titles -
Which case highlights that intangible property, like shares, may not need strict segregation?
A. Re Goldcorp
B. Re London Wine (Shippers) Ltd
C. Hunter v Moss
D. Jones v Lock -
What distinguishes a moral obligation from a formal fiduciary duty in trust language?
A. A moral obligation is enforceable in court
B. A formal fiduciary duty is created by clear, definitive language that imposes legal trust obligations
C. Moral obligations involve financial compensation
D. Fiduciary duties arise only from inter vivos gifts -
In Re Adams v Kensington Vestry, what did the court decide about the testator’s statement?
A. It created a binding trust on the wife
B. It imposed only a moral obligation
C. It required equal division of the estate
D. It was invalidated due to ambiguity -
Which of the following best illustrates the need for segregation of trust property?
A. Holding a bank account in the donor’s name
B. Mixing funds intended for a trust with the donor’s general funds
C. Using a precatory statement to create a trust
D. Leaving property to a beneficiary without naming it specifically -
What is the primary purpose of examining surrounding circumstances in determining donor intention?
A. To establish the donor’s financial capacity
B. To infer the true intention when the donor’s words are ambiguous
C. To verify the identity of the beneficiaries
D. To assess the market value of the trust property -
Which Latin maxim means “where there is a right, there is a remedy”?
A. Ubi jus, ibi remedium
B. Lex loci, lex
C. Nemo dat quod non habet
D. Pacta sunt servanda -
Which recommended text is cited in the lecture note for studying equity and trusts?
A. Blackstone’s Commentaries
B. Snell’s Equity & Trusts
C. Halsbury’s Laws
D. Chitty on Contracts
Correct Answers for Objective Questions
- B
- B
- A
- B
- B
- B
- C
- B
- C
- B
- B
- B
- B
- A
- B
Essay Questions
-
Historical Evolution:
Discuss the historical evolution of certainty of intention in trust law, including the impact of the Norman Conquest and Henry II’s reforms on the development of common law and equity. How do these historical developments influence modern trust formation? -
Exceptions to Imperfect Gifts:
Analyze the maxim “equity will not perfect an imperfect gift” and explain the exceptions that allow a donor’s true intention to be honored, particularly the rule in Strong v Bird and the doctrine of donatio mortis causa. -
Role of Surrounding Circumstances:
Explain how surrounding circumstances are used to determine the certainty of intention. Use the case of Jones v Lock as a reference point and discuss its implications for trust law. -
Moral vs. Fiduciary Obligations:
Compare the creation of a moral obligation with the imposition of a formal fiduciary duty. Support your answer with examples from cases such as Re Adams v Kensington Vestry and Comiskey v Hanbury. -
Interpretation of Testamentary Documents:
Critically assess how courts interpret wills to determine certainty of intention. What role do the overall context and surrounding circumstances play in this interpretation? -
Segregation of Trust Property:
Discuss the importance of segregating trust property to ensure certainty of subject matter. What are the challenges in cases involving intangible or fungible property, and how have cases like Re London Wine (Shippers) Ltd and Hunter v Moss addressed these issues? -
Property Estoppel and Volunteer’s Rights:
Evaluate the principle of property estoppel as it relates to imperfect gifts. How does this principle protect volunteers who act based on the donor’s assurances? -
Trusts as a Sham Device:
Examine the use of trusts as a sham device to protect assets from creditors. Discuss how courts distinguish between genuine trust transfers and those designed solely to defraud creditors. -
Inter Vivos vs. Testamentary Gifts:
Analyze the differences between inter vivos and testamentary gifts concerning certainty of intention. How do courts ensure that the donor’s intention is clear in each context? -
Modern Impact of Equitable Principles:
Discuss how the core equitable principles, such as “equity looks to the intent rather than to the form” and “equity acts in personam,” continue to influence modern trust law. Provide examples to illustrate their practical impact.
Sample Answer for Essay Question 1: Historical Evolution
Essay Question 1:
Discuss the historical evolution of certainty of intention in trust law, including the impact of the Norman Conquest and Henry II’s reforms on the development of common law and equity. How do these historical developments influence modern trust formation?
Sample Answer
The concept of certainty of intention is fundamental to trust law and has evolved through centuries of legal development in England. The historical evolution begins with the Norman Conquest of 1066, which established a unified legal system commonly known as common law in England and Wales. Before the Conquest, legal practices varied widely across regions, but the arrival of William the Conqueror brought about a centralized legal framework that replaced local customs with standardized rules.
Under Norman rule, the new legal system relied heavily on established precedents and royal decrees. This uniformity was essential for maintaining order and reinforcing the authority of the crown. However, as the common law developed, it became increasingly rigid. The system focused primarily on formalities and the precise wording of legal instruments, often at the expense of fairness and justice.
The reign of Henry II further solidified this framework. Recognizing the need for consistent legal administration, Henry II established the King’s Bench a court tasked with hearing cases on behalf of the crown. The King’s Bench not only provided a forum for resolving disputes but also played a pivotal role in the development of judicial precedent. Decisions made by the King’s Bench became binding, ensuring that legal principles were uniformly applied throughout the kingdom.
Yet, despite these advancements, the inflexibility of common law often led to unjust outcomes. Litigants began to experience harsh consequences when strict legal rules were applied without regard to the underlying substance of the dispute. As a result, there arose a need for a system that could temper the rigidity of common law. This need gave birth to the doctrine of equity.
Equity emerged as a mechanism to correct the deficiencies of common law by focusing on fairness and justice. Unlike common law, which is primarily concerned with what is written in legal texts, equity considers the true intentions of the parties involved. When a donor expresses a desire to create a trust, the courts of equity examine not only the explicit words but also the surrounding circumstances to determine whether the donor intended to impose a trust relationship.
Modern trust law requires that the donor’s intention be both clear and continuous. If a donor’s intention is ambiguous or changes over time, the trust will not be upheld. This requirement is a direct legacy of historical developments where the common law’s rigid approach sometimes failed to capture the donor’s true wishes. By focusing on certainty of intention, modern courts ensure that a trust is created only when the donor has unequivocally manifested the desire to benefit a specific party.
For example, when a donor states that they “hold property on trust for” a beneficiary, the courts look to see if this declaration is supported by actions and circumstances that confirm an ongoing, deliberate intention. Historical cases demonstrate that a mere fleeting statement is insufficient to create a trust. Instead, the donor must act in a manner that unequivocally shows they wish to relinquish their rights in favor of the beneficiary.
In conclusion, the historical evolution of certainty of intention from the unified common law system established by the Normans to the flexible, fairness-oriented system of equity developed during Henry II’s reign has profoundly influenced modern trust law. By ensuring that only a clear and continuous intention gives rise to a trust, the legal system upholds the true wishes of the donor while safeguarding against technical defects. This balance between formal legal requirements and the equitable pursuit of justice remains at the heart of trust law today.
Explanation of the Sample Answer (Step-by-Step)
-
Introduction with Historical Context:
- I began by stating the importance of certainty of intention in trust law.
- I introduced the historical backdrop starting with the Norman Conquest of 1066, emphasizing its role in unifying the legal system.
-
Development of Common Law:
- I explained how the Conquest led to the formation of common law, which relied on uniform rules and precedents.
- I highlighted that while this system brought order, its rigid nature sometimes resulted in harsh outcomes.
-
Henry II’s Contributions:
- I described Henry II’s role in establishing the King’s Bench, which further standardized legal practices and created binding judicial precedents.
- I underscored the resulting inflexibility and the need for a more equitable system.
-
Emergence of Equity:
- I discussed how the shortcomings of common law led to the development of equity—a system that focuses on fairness and the true intention behind actions.
- I emphasized that equity examines both the donor’s words and the surrounding circumstances to determine whether a trust was intended.
-
Modern Trust Law:
- I connected the historical evolution to modern requirements, stressing that the donor’s intention must be clear and continuous.
- I provided a real-world-like explanation of how modern courts scrutinize donor intent.
-
Conclusion and Summary:
- I summarized the key points, reinforcing that the balance between strict legal form and equitable discretion is essential in creating valid trusts.
- I concluded by highlighting the lasting impact of historical developments on modern trust law.
-
Active Tone and Structure:
- Throughout the answer, I used active verbs (e.g., “established,” “ensured,” “upholds”) to maintain an engaging tone.
- I organized the answer into clear paragraphs, ensuring each section built logically upon the previous one.
This sample answer and its explanation offer a clear, structured approach for answering essay questions on the historical evolution of trust law. Following these steps will help you craft well-organized, thorough answers that effectively address exam questions.
Sources
- oxfordreference.com
- DigestibleNotes.com
- Corax Foundation
- S.S. KABBA, DECEMBER 2022
- Snell’s Equity & Trusts
- Equity & the Law of Trust – Philip & Pettit
1. Strong v Bird (1874) LR 18 Eq 315
Facts:
In this case, a stepmother provided a loan to her stepson under an arrangement whereby a portion of her rent would be deducted regularly until the debt was fully repaid. Initially, the stepson benefited from these reduced payments. However, after two quarters, the stepmother resumed paying the full rent amount, thereby failing to continue the agreed deduction. Later, when the stepmother passed away, she named her stepson as the executor of her estate. This appointment created a unique situation because, as executor, the stepson could not logically recover a debt from himself. The court found that this appointment perfected the gift, effectively discharging the outstanding debt based on the continuing, albeit imperfect, intention of the stepmother.
-
Issues:
The primary issue was whether the stepson, now acting as executor, was still liable for repaying the debt, or whether the appointment perfected the gift (i.e., discharged the debt). -
Ruling:
The court held that the appointment of the stepson as executor perfected the gift, thereby discharging the debt. The rationale was that it would be absurd for an executor to sue himself to recover money. -
Citation:
oxfordreference.com
Source: oxfordreference.com
2. Jones v Lock (1865) 1 CH App p 665
Facts:
In this illustrative case, a father, after returning from a business trip to Birmingham, was reproached by his wife for not having brought a gift for their infant son. In a sudden, emotionally charged reaction, the father hurried upstairs and scribbled a cheque in his own name. He then returned downstairs, shouted that he was giving the cheque to the baby, and thrust it into the baby’s hand. The dramatic nature of this act raised the issue of whether the father’s conduct genuinely reflected a clear intention to create a trust for his son or was merely an impulsive attempt to pacify his wife. The court scrutinized both the words and the context, ultimately holding that the act did not constitute the proper creation of a trust because the cheque was not endorsed in the baby’s name.
-
Issues:
The issue was whether the act of handing over the cheque, without endorsing it in the baby’s name, created a valid trust or constituted an outright gift to the child. -
Ruling:
The court ruled that no valid trust was created because the cheque was not properly endorsed in the child’s name. The father’s actions were interpreted as an attempt to mollify his wife rather than a serious intention to create a trust. -
Citation:
oxfordreference.com
Source: oxfordreference.com
3. Richards v Delbridge (1874) LR 18 p11
Expanded Facts:
This case serves as a supporting authority to Jones v Lock. In Richards v Delbridge, the focus was on whether a failed or incomplete gift could be interpreted as a declaration of trust if the formalities were not fully satisfied. The facts revolved around an attempted gift that did not meet all the legal requirements, leaving the transfer incomplete. The court clarified that if the donor’s intention was not unequivocally expressed as the creation of a trust, the failure to meet formal requirements would mean that no enforceable trust was created. The case reinforces the principle that the precise intention and accompanying formalities are critical in trust formation.
-
Issues:
Whether a failed or incomplete transfer intended as a gift could be enforced as a trust if the donor’s intention was not clearly to create a trust. -
Ruling:
The court held that if the legal formalities for an outright gift are not fulfilled, the act does not automatically create a trust. The donor’s intention must clearly be to establish a trust for the transfer to be perfected. -
Citation:
oxfordreference.com
Source: oxfordreference.com
4. Re Goldcorp (1995) 1 AC p74
Facts:
This case deals primarily with the issue of certainty of subject matter in a trust. Here, the problem was whether the trust property the specific funds or assets intended to be held on trust had been clearly identified and segregated from the donor’s other assets. In the context of Re Goldcorp, the court examined whether the failure to separate the trust fund from other property rendered the trust invalid. Although the facts primarily address the need for clear identification of the trust fund, this case underscores the principle that if the property is mixed and not distinctly allocated for trust purposes, the trust cannot be enforced.
-
Issues:
The issue was whether failure to segregate the specific trust fund renders the trust invalid because the trustees cannot identify the trust property. -
Ruling:
The court held that if the property intended to be held on trust is not clearly segregated, the trust fails due to uncertainty of subject matter. -
Citation:
oxfordreference.com; DigestibleNotes.com
Source: oxfordreference.com; DigestibleNotes.com
5. Re London Wine (Shippers) Ltd
Facts:
In Re London Wine (Shippers) Ltd, the issue was whether money held in a bank account could form a valid trust if it was not segregated from the donor’s other funds. The case involved a situation where payments for wine shipments were deposited into a single bank account. The court had to decide if the funds intended to be held on trust for a particular purpose could be distinguished from the rest of the account’s balance. It was held that for a trust over money to be valid, the funds must be segregated—typically in a separate account—so that they can be clearly identified as the trust property. This ruling established an important requirement for certainty of subject matter when dealing with intangible, fungible assets like money.
-
Issues:
Whether a trust over money can be valid if the funds are not segregated from the donor’s other assets. -
Ruling:
The court ruled that for the trust to be valid, the funds must be segregated into a separate account so that the trust property is clearly identifiable. -
Citation:
oxfordreference.com
Source: oxfordreference.com
6. Hunter v Moss (1994) 1 WLR 452
Facts:
Hunter v Moss is a seminal case regarding the certainty of subject matter for intangible and fungible assets. In this case, an employee was promised 50 shares by his employer as part of his employment contract. Although the employee was entitled to those shares, the employer did not transfer them, nor did it segregate them from the employer’s total pool of 950 shares. The key issue was whether the lack of segregation invalidated the employee’s claim to a proprietary right over 50 specific shares. The Court of Appeal held that because the shares were identical and intangible, strict segregation was not necessary to establish a trust. This decision highlights the court’s willingness to adopt a more flexible approach when dealing with homogeneous, fungible assets.
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Issues:
The issue was whether the employee could claim a proprietary right over 50 shares without the shares being segregated from the general pool. -
Ruling:
The Court of Appeal held that when dealing with intangible and fungible property, such as identical shares, strict segregation is not always necessary for a trust to be valid. -
Citation:
oxfordreference.com; DigestibleNotes.com
Source: oxfordreference.com; DigestibleNotes.com
7. Re Adams v Kensington Vestry (1884) 27 Ch D 394
Facts:
In Re Adams v Kensington Vestry, a testator left property to his wife with the wording “in full confidence that she will do what is right by his children.” The children contended that this statement created a trust obliging the wife to use the property for their benefit. However, the facts revealed that the language used by the testator was ambiguous and seemed more an expression of hope or moral obligation rather than a definitive intention to create a trust. The court concluded that the testator’s words did not impose a binding fiduciary duty on the wife; instead, they imposed only a moral obligation, meaning that the wife was not legally required to manage the property on behalf of the children.
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Issues:
Whether the testator’s statement imposed a legally binding trust on the wife for the benefit of the children. -
Ruling:
The court held that the words imposed only a moral obligation on the wife, not a formal, legally enforceable trust. -
Citation:
S.S. KABBA, DECEMBER 2022
Source: S.S. KABBA, DECEMBER 2022
8. Comiskey v Hanbury (1905) AC p84
Facts:
In Comiskey v Hanbury, the testator’s will contained language that appeared to impose a condition on the wife: she was to hold the property “in full confidence that she will devise it to one of my nieces as she thinks fit.” On its face, this might have seemed to be merely a moral request. However, upon closer examination, the court determined that the wording was sufficiently precise to create a legal obligation. The testator’s intention was not just to request but to impose a fiduciary duty on the wife, thereby creating a binding trust over the property for the benefit of the nieces. This case demonstrates the fine line between precatory words and enforceable trust obligations.
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Issues:
Whether the language used by the testator created a binding fiduciary duty (a trust) or merely a non-binding moral obligation. -
Ruling:
The court held that the language created a formal fiduciary duty, establishing an executory gift that imposed a legally binding trust on the wife for the benefit of the nieces. -
Citation:
S.S. KABBA, DECEMBER 2022
9. Re Hamilton
Facts:
Re Hamilton addresses the interpretation of wills and the determination of certainty of intention within testamentary documents. In this case, the court was faced with ambiguous language in a will, where it was unclear whether the testator intended to create a trust. Rather than rigidly applying a literal interpretation, the court took a holistic view of the will, considering all surrounding circumstances. The approach in Re Hamilton was to examine not just the words but also the overall context—ensuring that the true intention of the testator was given effect. This case is significant because it illustrates the modern trend of interpreting testamentary dispositions with a focus on fairness and the actual intent behind the language.
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Issues:
How should courts determine the testator’s intention when the wording is ambiguous or appears to impose only a moral obligation? -
Ruling:
Lord Justice Lindley emphasized that courts must take a holistic approach to the will. The overall context and surrounding circumstances should be examined to infer the testator’s true intention, rather than rejecting a trust simply because the language appears ambiguous. -
Citation:
S.S. KABBA, DECEMBER 2022
10. Midland Bank v Wyatt (1995) 1 FLR p696
Facts:
Midland Bank v Wyatt is a case that highlights the potential misuse of trusts as a means of protecting assets from creditors. In this case, Mr. Wyatt, facing financial difficulties due to business insolvency, transferred his family home into a trust purportedly for the benefit of his wife and daughter. His intention was to shield the property from creditor claims. However, the court scrutinized the transaction and determined that the trust was not a genuine attempt to transfer ownership but rather a sham designed solely to evade creditors. The court ultimately disregarded the trust, treating the property as still belonging to Mr. Wyatt, thereby holding him liable for his debts. This case reinforces the principle that genuine donor intention and proper transfer procedures are essential for a trust to be effective.
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Issues:
Whether the trust was a genuine attempt to transfer ownership or merely a sham device designed to defraud creditors. -
Ruling:
The court found that if a trust is used as a sham device solely to avoid creditor claims, it will be disregarded. The property will be treated as still belonging to the original owner, and the donor will remain liable for his obligations. -
Citation:
oxfordreference.com;
Source: oxfordreference.com; S.S. KABBA, DECEMBER 2022