Equity and Trust exam notes written from textbooks and lectures for the Certainty of Intention. Formatted to be memorised and contains all the necessary information to achieve a 2:1 or 1st on the exam.
*-There are three certainties to a valid declaration of trust (Knight v Knight [1840]):
1) Certainty of Intention
2) Certainty of Subject Matter
3) Certainty of Objects
**-The general rule is that the three certainties need to be present so that a trust can be
practicable, enforceable, and capable of supervision by the court.
1) Gifts, Trust, or Both?
*-An imperfect gift is not to be rebranded as a valid declaration of trust or vice versa.
--If a gift is intended, but fails then there is nothing the court can do because of the traditional
maxims “equity will not assist a volunteer” and “equity cannot perfect an imperfect gift”:
*Jones v Lock [1865]: A father held out a cheque for 900 pounds, which was payable to him,
and placed it in the hand of his child. The father said: “I give this to baby and ia m going to
put it away for him”. The father died a few days later and the issue was whether the child was
entitled to the cheque.
Held (Legal Principle): The court held that this was a failed gift (the title to the cheque did
not pass because it was not endorsed in favour of the child) and could not be construed as a
declaration of trust because no trust had been intended.
-In contrast to:
Shah v Shah [2010]: Dinesh delivered a single letter to his brother, which stated “this letter is
to confirm that out of my shareholding of current 12,500 in the above company I am as from
today holding 4,000 shares in the above company for you subject to you being responsible for
all tax consequences and liabilities [arising] from this declaration and letter.”
Held (Legal Principle): The court should not look to the subjective intentions of the maker of
a document, but “to the intentions of the maker as manifested by the words he has used in the
context of all the relevant facts”. Therefore, a trust was created in interim whilst waiting for
the shares to be registered. That is, one way to make an immediate gift is for the donor to
declare a trust.
2) Certainty of Intention
*-Certainty of intention: Where the settlor, based on the words used and/or behaviour, gave a
clear intention that the property is to be held on trust for a third party.
--That is, the unequivocal intention must be to separate legal and equitable ownership and to
impose the obligations of trusteeship on the holder of the legal title.
a) Precatory vs Imperative Words
*-The intention to create a trust is determined through the use of:
a) Precatory Words: Words of mere aspiration and hope (i.e. “in the expectation that”,
“I desire that”, “I feel confident that”).
--Such expressions are not sufficient alone to show the necessary intention to create a
trust.
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