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Summary Certainty
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Summary notes on the property law topic of certainty
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Voorbeeld van de inhoud
Introducing “certainty” requirementsEssentially having the intention to create a trust is known as having “certainty of
intention” to create a trust. This is one of the so-called ‘certainty’ validity requirements
for creating a trust, normally studied as one of the so-called “three certainties” required
for creating a valid trust drawn from Lord Langdale’s judgment in Knight v Knight (1840).
And whenever reference is made to “certainty requirements”, this is to making it clear
that creating a trust of property is being sought. So what has to be clear or certain is:
“As a general rule, it has been laid down that when property is given absolutely to any
person and the same person is … to dispose of that property in favour of another … it
will be considered a trust … First, if the words so used, that upon the whole they ought
to be considered as imperative, secondly, if the subject (of the arrangement) be
certain, and thirdly, if the objects or persons intended to have the benefit of the
recommendation or wish also be certain”.
Certainty of intention
Here we learn more about how an owner of property makes it clear (or “certain”) that he
wants to create a trust of his property rather than do something different with it. In
Knight v Knight Lord Langdale spoke about conveying an ‘imperative’, which will become
clearer shortly. For now, it shouldn’t be too surprising to learn that an owner of property
can make it certain, or clear that he intends to create a trust by saying that the property
is to be “given to B, on trust for C”. This would make things very clear, but successfully
settling property on trusts commonly arises without making things this clear.
From your reading you will discover that a valid express trust can arise even if the word
“trust” isn’t actually used in what is said. This is clear from Paul v Constance (1977), and
also from the Re Kayford (1975) and Re Farepak (2006) decisions which clarify that
certainty of intention can arise from conduct alone.
In many cases there will be written documentation of a settlor’s intention to create a
trust (a will or written declaration of trust) because many trusts are used instrumentally
for ‘tax planning’. More is said about this when we look at formality, but here Harrison v
Gibson (2006) tells us that in any such written document meeting the certainty of
intention (to create a trust) requirement demands construing the whole document giving
words their natural meaning according to the context in which they appear.
Key issues in the approach of the courts in establishing certainty of intention
However, finding evidence of intention is not always an easy task, and so we need to think
about what these cases suggest the courts will actually look for in deeming that intention
to create a trust is present in what an owner of property says or does. Think about this as
you look through the following exercise based on Paul v Constance. We’ll look at it again
as a ‘self-declaration of trust’ case, but for now use it to deepen your understanding of
how the courts approach establishing “certainty of intention”.
Read the decisions in Paul v Constance and Rowe v Prance (1999), and also be aware of
the Re Kayford cases and consider:
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, * What do these cases suggest that the courts are looking for when deeming that certainty
of intention has been satisfied?
* Why as a matter of trust law theory it was right that Scarman LJ considered Paul v
Constance a borderline case?
* Why was intention to create a trust found in Re Kayford and Chelsea Cloisters (1980) but
not in Re Multi Guarantee (1987)?
* On this reasoning, should intention to create a trust have been found in Re Farepak?
As suggested above, several cases provide authority that an owner of property can
undertake trusteeship himself when making it clear that he is seeking to create a trust,
and we look at this later. For now, try to put this to one side, and when completing this
exercise be sure that you understand the significance of a “permanent and irrevocable
arrangement” for the courts in determining that a trust is clearly intended, or concluding
that it isn’t clear or “certain” that a trust is intended. We’ll see that this is important
when we find out what happens when it isn’t clear that a trust is intended.
Once you have grasped this we need to link this benchmark of a “permanent and
irrevocable” arrangement with what Lord Langdale said about ‘imperative’ in Knight.
These materials show us that, whatever words or conduct are used, they must be of a
particular character. Here Lord Langdale’s insistence upon (words and/or conduct)
conveying imperative translates into words/conduct which convey obligation or duty to
use the property in a particular way- namely to provide benefit for another – not just a
mere “hope” that this will be done. This is very important because several cases tell us
that words denoting anything different are not capable of evidencing intention to create a
trust.
The intention which must be found must seek to impose on the holder of legal title the
obligation to act in a particular way in relation to another, rather than to appeal to him to
use the property in a particular way. This can be shown by judicial responses to donors of
property who use words which express hope wish or desire. These are known as “precatory
words”, and judicial approaches to them can be understood from appreciating the
complex history between precatory words and certainty of intention requirements. Do
some reading in any of the textbooks and ensure you look at key cases of Adams v
Kensington Vestry (1884) and Lambe v Eames (1871) and that you understand why 1830
was a key date in changing approaches. From this ensure you also look at Comiskey v
Bowring Hanbury (1905); and the approaches to interpretation embodied in Re Hamilton
(1895) and Harrison v Gibson (2006); and also Re Steele (1948). As perhaps confirmed by
Lewison J in Wallbank v Price (2007), the courts do take a realistic and pragmatic
approach to whether precatory words are sufficient or not to form a trust.
Where it is held that there is no certainty of intention there can be no trust, and any
transfer of property from an owner to another is treated as an outright gift in his favour.
Certainty of Subject Matter
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