Full Lecture notes for the topic of Express Private Trusts
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Course
Equity & Trusts (CL6331)
Institution
Cardiff University (CF)
• These lecture notes will:
• Outline what express private trusts are
• Explain what is meant by ‘the three certainties’
• Explore two of the three certainties – intention and subject matter (main focus)
Lecture 1 – Certainty of Intention and Subject Matter
This lecture will:
Outline what express private trusts are
Explain what is meant by ‘the three certainties’
Explore two of the three certainties – intention and subject matter
(main focus)
Express Trust
-created intentionally by a settlor (inter vivos trusts) or a
testator/testatrix (testamentary trust) for a human beneficiary
Express private trusts. So these are trusts created intentionally for the benefit of a person or
a group of people.
Rules for validity:
Settlor must have capacity
Must comply with the beneficiary principle
Must adhere to the perpetuity rules (125 years – Perpetuities and
Accumulations Act 2009)
Must comply with formalities where relevant – 1) inter vivos trust of
land to be signed and evidenced by writing; 2) the will containing any
testamentary trust must adhere with the formality requirements of s9
of the Wills Act 1937
Also, the three certainties…
Certainty of Intention
Needed because express trusts are declared intentionally and ensures that
property is held subject to trust obligations only when that was the settlor’s
express intention.
How do we find it?
Matter of construction of words in context – look to the substance
, Did the settlor intend the trustee to be under an obligation to hold the
property for the benefit of another, and does the settlor intend for someone
else to obtain the beneficial interest in the property?
Settlor does not need to understand the concept of a trust in order to create
one
---See Paul v Constance [1977] 1 WLR 527: ‘….we are dealing with simple people,
unaware of the subtleties of equity, but understanding very well indeed their own
domestic situation…’ (Scarman LJ, 530)
A trust can be created without the word ‘trust’…
“…it is well settled that a trust can be created without using the words “trust”… the
question is whether in substance a sufficient intention to create a trust has been
manifested.” Re Kayford [1975] 1 WLR 279, 282 (Megarry J)
…and the use of the word ‘trust’ does not mean that a trust has been created
“…merely by using the word trust, even though Mr Singha had a law degree, did not
mean that Mr Singha intended to use the word trust in a legal sense. In the context
of the relationship between Mr Heer and Mr Singha, all the word trust meant… was
that the properties would not be dealt with adversely to the interests of Mr Heer…”
Singha v Heer [2016] EWHC Civ 424, [28] (Arden LJ)
Interpreting intention objectively:
-Where there is ambiguity – the court will make sense of it
(see Re Gulbenkian [1970] AC 508, 522)
Courts usually interpret intention objectively – would a reasonable person
conclude that the settlor intended to create a trust?
“A settlor must, of course, possess the necessary intention to create a trust, but his
subjective intentions are irrelevant. If he enters into arrangements which have the
, effect of creating a trust, it is not necessary that he should appreciate that they do
so; it is sufficient that he intends to enter into them.” (Twinsectra v Yardley [2002]
UKHL 12, [71] (Lord Millett))
See Rowe v Prance [1999] 2 FLR 787:
‘…the regular use of ‘our’ in relation to the boat, coupled with the explanation why
the boat was not registered in joint names, establishes that the boat was held by Mr
Prance on trust for himself and Mrs Rowe equally. It is pointed out that there is no
need for writing in the case of an item of personal property such as a boat to create
an express trust.’ (Nicholas Warren QC, 794)
IMPORTANT SIDE NOTE - SHAM TRUSTS
On an objective assessment, there is an intention to create a trust, but the
‘settlor’ does not intend to depart with the beneficial interest in the property
For sham trusts subjective intention is relevant:
Is there an intention to create a false impression of a trust? (Shalson v
Russo [2003] EWHC 1637 (Ch))
Trust may be a sham even if no fraudulent intention (Midland Bank v
Wyatt [1995] 1 FLR 697)
Sham trusts are void and unenforceable
Absence of intention:
If there is no intention to create a trust, there is no trust
Person with legal title to the property keeps the property
If there’s been a self-declaration of trust – the settlor keeps the property
If the ‘trust’ was created by transfer, and the legal title has passed to the
‘trustee’, then the ‘trustee’ keeps the property
Certainty of Subject-Matter
What is it and why do we need it?
Subject-matter = reference to the property that is to be held on trust
This can be any type of property, including real property (land) and personal
property (chattels), be that tangible (property you can touch) or intangible
(property you cannot touch)
Must have certainty of subject-matter so the trustee (or the court) can
perform the trust
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