Summary
Summary of the Three Certainties
- Module
- Equity And Trusts Law
- Institution
- Edge Hill University (EHU)
A summary of the key points for the Three Certainties with a case list summary
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THE THREE CERTAINTIESIn order to create an express private trust, the three certainties must be met.
1. Certainty of Intention
2. Certainty of subject matter
3. Certainty of objects
Certainty of Intention
- Usually not an issue if the Trust is drafted by a solicitor
- Equity looks to the intent rather than the form:
o The courts look at the surrounding circumstances to discover the intent of the
settlor, rather than relying only the words used
o Paul v Constance – the court inferred his intention from his conduct and statements
▪ Confirmed in Rowe v Prance
o Duggan v Governor of Full Sutton Prison [2004]
o Comiskey v Bowring-Hanbury [1905] – “full confidence” the wife would leave the
property to his nieces, but if not, it was to be shared equally.
- Precatory words
o Words which express hopes or desires
o Impose a moral obligation only.
o Re Adams and Kensington Vestry: When precatory words are used, the court should
consider the whole will to determine the testators intent
- Commercial context
o Important if businesses become insolvent and there is not enough funds to pay
creditors. If the customer proves they are a beneficiary, the money will not be
company funds and the money can be returned to the customer.
o Re Kayford Ltd [1975] – “Customer Trust Deposit Account”
o Re Farepak Food and Gifts Ltd (in administration) [2006] Directors intent to create a
trust only existed 3 days before administration
- Sham Intention
o The court will not uphold a Trust created as a sham
▪ Midland Bank v Wyatt [1995] – Husband placed family home on Trust for his
wife to prevent the bank repossessing the house when he defaulted on loans.
- If there is no certainty of intention, and no trust is found, the donee takes the property
beneficially, it does not result back to the donor
, Certainty of Subject Matter
- The trust property and the beneficial interest of the beneficiaries must be certain
- Trust property must be certain
o Words such as “most of”, “bulk of”
o Palmer v Simmonds [1854] – the “bulk of my estate” was not certain enough for the
Trust to be created
o Sprange v Barnard [1789] – When a Trust is attached to a gift, it must be clear how much
is held on trust
- Unascertained property
o Re London Wine Co (Shippers) Ltd [1986] – Customers were given a certificate of title for
the wine they ordered, but the wine was not separated from the rest of the stock. As it
was not separated, it was held there was no trust.
o Re Goldcorp Exchange Ltd [1995] – 3 groups of customers claimed their order was held
on trust. Only the first group’s order had been separated from the rest of the stock and
certainty of subject matter found.
o MacJordan Construction Ltd v Brookmount Erostin Ltd [1994] – the monies supposed to
be held on Trust had not been put into a separate account and therefore there was no
certainty of subject matter.
o Hunter v Moss [1994] – As a class of shares are indistinguishable from one another the
court held there was certainty of subject matter even though the 50 shares had not
been separated from the remaining 900 shares.
▪ This decision has been criticised – see New South Wales case of White v
Shorthall [2006] for alternative solution
- Certainty of beneficial interest of beneficiaries
o Boyce v Boyce [1849] Two houses were left on trust for two daughters, and the trustee
was to pick an appropriate house for each daughter. One daughter died before the
choice was made, and the court held the trust failed as they could not be sure which
house the surviving daughter would have been given.
o Re Golay’s Will Trusts [1965] “reasonable income” was a sufficient yardstick enabling the
court to calculate an amount based on the beneficiaries previous standard of living.
- If Trust property is uncertainty the Trust itself will fail
- If the Trust was attached to an outright gift, the gift will take effect absolutely - Curtis v Rippon
(1820)
- If the beneficial interest is uncertain, the trust will fail (unless the Trustees have been given
discretion on the amount of beneficial interest), and the property held on resulting trust for
the settlor or his estate.
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