Discuss the validity of the following bequests in the will of Rita who has just died:
(a)“£100,000 to my brother Hasnat in the belief (precatory) that he will provide a
reasonable income for our aunt Amira.”
AND
(b) “£200,000 to be distributed as my trustees think fit (discretionary) amongst my close
relatives (Re Baden).”
AND
(c)Mr Khan, a wealthy businessman, died recently. During his life, he fathered a daughter
Amber, for whom he wished to make provision upon his death; although he did not wish to
make specific reference to her on the face of the will (HST). To that end, he stated in his will
that he left £90,000 to his friend Tina “to be held on trust and to be disposed of by her
among such persons as may be notified by me to her during my lifetime (communication
invalid, HST = before/at the time)”.
Some weeks before executing the will, Mr Khan had a conversation with Tina in which he
told her that he had set out his wishes as far as the £90,000 was concerned in a sealed
envelope which he then handed to her and indicated that it was not to be opened until after
his death (Re Keen, valid). Tina assured Mr Khan she would abide by his wishes as set out in
the letter contained in the envelope.
After Mr Khan’s death, Tina opened the letter and found instruction that the money is to be
given to Amber.
Advise Amber on her entitlements, if any, in relation to the money.
This question involves whether Rita’s (settlor, S) bequests regarding (i) the belief for Hasnat
(trustee) to provide reasonable income for Amira (beneficiary); and (ii) object of ‘relatives’
can be valid. Lord Langdale in Knight v Knight identified three certainties of trust that have
to be satisfied to make a private express trust valid.
(a) Firstly, it must be made clear that whether there is certainty of intention to create a
trust or just a request which the trustee may choose to comply with or ignore as he
wishes. As per Wright v Atkyns, ‘the words must be imperative’ to constitute
certainty of intention, where it must be made clear that the people holding the
property are holding it for the benefit of others. This is supported by Re Adams, the
words used to create the trust must be completely clear, to avoid any confusion as
to the purpose of the trust.
As per Lindley LJ in Re Hamilton, the courts must look at all the words used by the S
to see if a trust was intended, as equity looks to the intent rather than to the form.
This maxim also means that equity should pay attention to the substance of any
, transactions and not overly focus on formalities. Simply put, precatory words are
irrelevant today, as per Re Kayford, a trust may be created without the use of the
words “trust” or “confidence”.
OTF, the wordings of ‘in the belief’ clearly constitutes precatory words. Applying Re
Hamilton and Re Kayford to the facts, precatory words will have no effect on a
trust’s validity, unless through formal disposition or imperative wordings are used
per Comiskey v Bowring.
Moreover, regarding certainty of subject matter, in Re Golay, Ungoed-Thomas J held
that the word ‘reasonable’ provided a sufficiently objective standard to enable the
court if necessary to quantify the amount, thus a trust was held to be valid. This case
contains certain direction as the word ‘reasonable’ provided an objective yardstick
which is capable of independent objective assessment. Yet, this case must be
regarded as borderline as there was no further assistance given in the will to guide
the trustees or the court.
By applying Re Golay to the facts, Rita’s bequest can most likely satisfy certainty of
subject matter due to the wording of ‘reasonable income’. However, this trust is
unlikely to be valid as certainty of intention is unlikely to be satisfied and the three
certainties are linked to each other to validate a trust per Lord Langdale in Knight v
Knight. Since the trust is most likely fail for uncertainty of intention, trustee will take
it as a gift.
(b) The main issue here concerns certainty of objects. OTF, the wordings of ‘trustees
think fit’ shows, this is most likely a discretionary trust, where trustee has the power
and duty to select who are to receive from a range of potential beneficiaries and to
decide the proportions of the trust property.
The complete test in IRC v Broadway and Re Gulbenkian is no longer applicable as
discretionary trust is usually used to benefit large groups of people. The test for
certainty of object was laid down in McPhail v Doulton, where Lord Wilberforce in
the HOL held that it was ‘can it be said with certainty that any given individual is or is
not a member of the class?’ (the any given postulant test)
There are difficulties on how the is or is not test is to be applied, thus the different
approaches in Re Baden no.2 have to be discussed. Stamp L.J. took a literal approach
that the “is or is not” test could only be satisfied if it could be said of every potential
claimant that they were or, were not, within the class. This is arguably a harsh test as
the trust will fail if there is anybody who says ‘don’t know’. Yet, Sachs LJ decided, the
class test only concerned with conceptual certainty and not evidential certainty. He
also thought that the burden of proof was on the person claiming to be within the
class. This might be disadvantageous to individuals who cannot prove their
entitlement. Megaw L.J. opined that the ‘is or is not’ test is satisfied if substantial
