Express Trusts: Requirements and Creation I - Lecture 3 - Property II

What is the context and outcome of Re Gulbenkian?

Context of the case → A settlement contained a power to appoint in favour of any person relating to G’s son, including his wives, children, or “any persons or persons by whom [G] may from time to time be employed and any person with whom [G] from time to time is residing.” It was argued that the power was void for conceptual uncertainty and the main focus of the attack was on the concept of “residence.”

Outcome of the case → The ‘is or is not’ test is applicable to the certainty of objects of powers and the powers were valid.

What is the context and outcome of McPhail v Doulton, Re Baden, and what did Lord Wilberforce outline?

Context of the case → This case concerns the test for certainty of objects (i.e. beneficiaries), one of the ‘three certainties’ required for an express trust to be valid. The particular type of trust concerned was a discretionary trust (sometimes called a trust power). The chairman and managing director of a company of some 4,300 employees, Bertram Baden, attempted to create one such trust. The deed provided that ‘[t]he trustees shall apply [income] … as they see fit’ to provide for ‘the staff of the Company and their relatives or dependants’.

Outcome of the case → The House of Lords unanimously rejected the conclusion that this was a mere power. The particular imperative words chosen, which did not include a gift over, indicated a duty to distribute the whole of the relevant property. This was consistent only with a discretionary trust and not a mere power. By a bare majority, the House held that the relevant test was whether any given postulant could be said to be in the class or not (the ‘individual ascertainability’ or ‘in-or-out test’), as for a mere power.

What Lord Wilberforce outlined? → Lord Wilberforce, with whom Lord Reid and Viscount Dilhorne agreed, gave the leading speech for the majority. Unlike Lord Hodson, he considered the distinction between discretionary trusts and mere powers ‘artificial’. There was still a duty to at least consider applying the property in the case of a mere power.

• Moreover, in administering a discretionary trust with a large class of objects, there is little help to be gained from having a complete list, just as with a mere power. The basis for requiring a complete list for fixed (i.e. non-discretionary) trusts, that it is necessary for the court to control the trust in the event of a trustee default, was also the right basis for discretionary trusts. This explains why a complete list is required for fixed trusts where everyone receives something.

• But equal division, for a discretionary trust, while perhaps sensible for a small trust (perhaps benefiting a limited number of family relations), is the last thing the settlor intends where the class of objects is large.

What is the context, outcome and importance of Re Manisty’s Settlement Trusts, and what were Templemen J’s words?

Context of the case → Clause 4 of a settlement conferring power gave trustees the discretion to add new beneficiaries, other than a small excepted class. It was argued that the power, as an ‘immediate power’ which excepts a class of people rather than including a class of people, was too wide to be valid.

Outcome of the case → The power was valid.

Importance of the case → Powers cannot be invalid for administrative unworkability, but capricious powers are invalid

Templeman J’s words → He argued that a power cannot be uncertain merely because it is wide in ambit. He stated that ‘the mere width of a power cannot make it impossible for trustees to perform their duty nor prevent the court from determining whether the trustees are in breach.’

What is the context, outcome and importance of Re Hay’s Settlement Trust?

Context of the case → The case involved a trust deed where trustees were directed to hold trust funds for any persons (with exceptions) or purposes they appoint within 21 years of the settlement. The trustees executed the deed of appointment, transferring the funds to another discretionary trust with themselves as the trustees. This new trust had the power to appoint beneficiaries of both the fund and income among any person in the world. Nieces and nephews sought to claim the money.

Outcome of the case → The court held that trustees have no power to delegate under a power of appointment, and such delegation is invalid. This ruling was based on the principle that, unless authorised to do so, a trustee cannot delegate their powers. Therefore, while the original power of appointment was deemed valid, the delegation of that power by the trustees to another discretionary trust was held to be invalid.

Importance of the case → This case affirmed the principle established in Re Manisty's Settlement Trusts that a power cannot be void for administrative unworkability.

What is the context, issue and outcome of Mettoy Pension Trustees and Evans?

Context of the case → An employer operated a final salary pension scheme. The scheme provided that employees’ contributions and employer contributions would be paid into a trust fund. The trust deed stated that, if the scheme were ever wound up, the employer could direct how any remaining assets should be used. The scheme was wound up, and employer wished to apply the surplus towards the cost of new benefits under a replacement scheme. Some members challenged this, arguing that the surplus should be applied for their benefit or distributed among them. The trustees asked the court whether they were bound to follow the employer’s direction or whether they had a discretion as to how to apply the funds.

Issues in the case →

1. Did the surplus revert to the employer as beneficial owner?

2. Were the trustees obliged to follow the employer’s direction under the winding-up clause?

3. Could the employer use the surplus to fund benefits under a new scheme?

Outcome of the case → The High Court held that the trustees were not the employer’s agents and were not bound to follow their direction. They retained a discretion under the winding-up clause and had to exercise that discretion in accordance with their fiduciary duties.

• Although the trust deed gave the employer power to direct the use of surplus on winding up, this did not displace the trustees’ fiduciary duties under the occupational pension scheme rules. The trustees had to consider whether the direction was consistent with their duties and the scheme’s purpose.

• The employer was not the beneficial owner of the surplus, so it could not unilaterally redirect the funds. This was not a situation where the trust had failed or reverted to the employer under a resulting trust. Even though the scheme was wound up, the trust remained operative: its terms governed how the surplus should be used.

In order to establish an express trust, what is required to be established and what does it entail>

In order to establish an Express Trust, the three certainities are required in order to ensure this, these three certainities contain -

1. certainty of intention to create a trust

2. certainty of subject matter

3. certainty of object

What must the Settlor (S) intend to satisfy the ‘Certainty of Intention to Create a Trust’?

S must intend one of the two components -

1. to confer on someone else (B) the benefit of rights which she holds; by

   • imposing a legally binding obligation on someone (T) to hold those rights for B’s benefit?

2. In regards to self-declaration, S must intend that she herself will be subject to the legally binding obligations of a trustee

Re Snowden is the relevant case law regarding the certainty of intention to create a trust (one of the three certainties required to establish an express trust), what is the context, outcome and importance?

Context of the case → There was no imperative words on the will, but the statement said 'to my brother split up the estate as he thinks best'.

Outcome of the case → there is no imperative to enforce a legally enforceable duty onto them and there was LITTLE evidence to hold a trust besides the words at hand, instead the person never intended to enforce a trust on him, but to impose a burden of deciding where the money was allocated and it lacked the necessary imperative to class it as a trust.

Importance of the case → It outlines that the use of imperative language will be indicative to the intention to create a trust, imperative language imposes a duty

Re Weekes’ Settlement is the relevant case law regarding the certainty of intention to create a trust (one of the three certainties required to establish an express trust), what is the context, outcome and importance?

Context of the case → It stated 'to my husband for life, with power to dispose of all such property by will amongst our children.'

Outcome of the case → The court outlined that this wasnt enough to create a trust, there was no mandatory language imposing and it was MERELY providing hik powers to dispose of the powers and the wife never intended the following and the husband does not have the duty of the trust, the wife merely outlines the husbands powers to decide how the money is disposed of amongst the children.

Importance of the case → Whether a trust or power is intended, this depends on the compulsion and language used.

Hilton v Cosnier is the relevant case law regarding the certainty of intention to create a trust (one of the three certainties required to establish an express trust), what is the context, issue, outcome and importance?

Context of the case → They moved in together, then seperated on good terms since H bought C a house after their seperation and he intended to buy the house for her to live in for the rest of her life, but he wanted the grandchildren would have it, the question whether it was held on trust for C and then for his children.

Issue in the case → Whether an oral statement could create a trust?

Outcome of the case → The Court found H often acted inconsistently with his words, such as transfering his property to his sister and H never intended to create a trust to place himself under a legal trust with C.

Importance of the case → We must focus on whether the person acted consistently with their words, and if that was the case then it would amount to a trust

Twinsectra Ltd v Yarley outlines how do we construe the Settlor’s (S) intentions as the Certainty of Intention to Create a Trust? What is said?

Twinsectra Ltd v Yardley outlines how we should construe S’s intentions

“A settlor must, of course, possess the necessary intention to create a trust, but his subjective intentions are irrelevant […] it is not necessary that he should appreciate that they do so; it is sufficient that he intends to enter into them.”

What does Twinsectra Ltd v Yardley mean? →The court focuses on the objective interpretation of the language at hand to see if a trust has been formed. Therefore, what the parties intended to mean at the time subjectively becomes irrelevant.

How did Challinor v Juliet Bellis, and Byrnes v Kendle expand how the court construes settlors’ intention in relation to ‘certainty of intention to create a trust (one of the three certainties required to establish an express trust)?

Challinor v Juliet Bellis - There must be an intention to create a trust on the part of the transferor. This is an obhective question

Byrnes v Kendle (australian common law case) - The expressed intention of the parties is to be found in the answer of the question 'what is the meaning of what the parties have said?' not the question 'what did the parties mean to say?'

• It is NOT open to say that the other party intended the following if it was clearly the creation of a trust and the contrary intention is not a valid reason to justify the termination/argument contrary to the trusts.

How do we search for intention for a ‘trust’ - where sometimes its difficult to find? How to find when a ‘trust’ IS and is NOT intended? There are 5 ways of doing this in summary?

1. No need to explicitly state the word ‘trust’

2. the effect of precatory words

3. the effect of a general donative intention as per Jones v Locke

4. the importance of context and conduct as per Paul v Constance

5. inferred intention and the relevance of segregating assets to establish the intention of a ‘trust’

‘No need to explicitly state the word trust’ is one way we search for intention for a ‘trust’ even where sometimes its difficult to find, what does Charity Commissioners for England and Wales v Framjee state?

As per Charity Commissioners for England & Wales v Framjee, it can be implemented even if the parties is unaware of what a trust is, or dont use that set vocabulary in their daily language. They can form a trust even without naming it as such.

‘The effect of precatory words’ is one way we search for intention for a ‘trust’ even where sometimes its difficult to find, what are precatory words?

Precatory words are words of desire, wish, confidence and pleading - but they are NOT sufficient alone to indicate intention to create a trust.

Lambe v Eames is a case law that discusses the effect of precatory words, what is the context, the words used within that will and the outcome?

Words within the will → ‘to be at her disposal in any way she may think best for the benefit of herself and her family’

Context and Outcome of the case → T gave his land to his widow, the question is whether the widow was intended to hold the property on trust for her family, but the Court held there was no intention by T to place his widow under a legally enforceable duty that she would be sued for not upholding it.

Re Adams and the Kensington Vestry is a case law that discusses the effect of precatory words, what is the context, the words used within that will and the outcome?

Words within the will →‘in full confidence that she would do what was right’ regarding the children

Context and Outcome of the case → T gave his land to his wife, but the court outlined that it was an absolute gift to his wife, and it was NOT his intention to make her have a legal obligation to hold a trust for their children - it was merely a moral obligation to support their children (there is a distinction between a gift and trust - gift is where there ia a hope for someone to use the item as specified, but the words lacked an imperative quality to enforce a trust, so the use of precatory words were insufficient to create a trust)

‘the effect of a general donative intention as per Jones v Locke’ is one way we search for intention for a ‘trust’ even where sometimes its difficult to find, what is the context and outcome of Jones v Locke?

The intention to create a trust is distinctive from a general intention to benefit another person via a donation/gift as per Jones v Locke.

Context of Jones v Locke → A father placed a cheque in his infant sons hand and told him that he'd put it away from him, locked it away, put it in a safe and died subsequently.

Outcome of Jones v Locke → The court outlined that loose conventions of these sort would be dangerous to declare as a 'trust', as the fathers words indicated that he had the intention to benefit and prove for his son, it wasn’t the fatehr intending to be under a legally enforceable duty to his son and not hold under a trust for his son. The father's words dont invite legal summons or evidence that the father intended to come under a legally enforceable duty under his son.

‘The importance of context and conduct as per Paul v Constance’ is one way we search for intention for a ‘trust’ even where sometimes its difficult to find, what is the context and outcome of Paul v Constance?

Context of Paul v Constance → The couple seperated but didnt divorce. In 1967, the husband began to date another woman, when the husband obtained money for a personal injury claim, they wanted to get a bank account under his name with the new wife, but they couldnt have a bank account since it had be between the husband and wife - so the wife was the joint owner of the bank account, with the husband's injury claim and bingo claims was there but the other woman could be able to take money out too. the husband told the other woman that the money was as much as his and hers. The estranged wife after the death with the husband's no will, the wife tried to claim the money in the account and the other woman claimed that the husband held it under an express trust for her and her husband.

Outcome of Paul v Constance → The court found evidence that the bank account was actually held on trust and the verbal statements was enough to amount to an express trust, even if the other parties' had no idea of what a trust was, so a trust could arise in the woman's favour - so context in construing the settlor's words can give rise to a valid trust

‘Inferred intention and the relevance of segregating assets to establish the intention of a ‘trust’ is one way we search for intention for a ‘trust’ even where sometimes its difficult to find, what is meant by this? And what happens if this is proven successfully, and when can you claim this?

Generally within insolency contexts where the creditor wishes to satisfy the debt in question may seek to claim some entitlement to the trust.

If this is proven successfully that there has been intention of forming the trust and the trust is protected through means of segregating the finances/property in question, the creditors claim a proprietary interest which gives them priority above everyone else, as long as it is held on trust for them, then they WILL be entitled to the share.

This opportunity to claim by creditors only arises when the trust money is seperate from everyone else’s shares and this seperation of trust money/property forms the trust in question (the debtor holding the money/property on trust for the creditor as the beneficiary), where the trustee has a duty to keep the money seperate from their own seperate dealings.

Henry v Hammond focuses on ‘Inferred intention and the relevance of segregating assets to establish the intention of a ‘trust’ as one way we search for intention for a ‘trust’ even where sometimes its difficult to find, what is the context, outcome and importance of Henry v Hammond?

Context of the case → D owed the person money, but only sued a few years later after - but instead of admitting defeat, the person claimed D held it on trust for them and hence was exempt for time rules.

Outcome of the case → The court concluded no trust existed, and there was no entitlement for D to seperate the money in the trust, can mix it with his own and could use it however he wished.

Importance of the case → If the terms are that he must keep it seperately, then he is a trustee and can hand it over to a beneficiary, and had a legally enforceable duty to keep it seperate, the person's interest will take priority. BUT if D is able to mix it with his other money and use it for his other purposes, he is only owed that said amount but not have priority

Re Kayford Ltd (In liquidation) focuses on ‘Inferred intention and the relevance of segregating assets to establish the intention of a ‘trust’ as one way we search for intention for a ‘trust’ even where sometimes its difficult to find, what is the context and outcome of Re Kayford Ltd (in liquidation)?

Context of the case → The company advertised that they can set up a seperate account into which its customers could pay money for goods ordered. the idea was that if the company went into liquidation, any customers whose orders werent fulfilled could get their money back from this account - This is in order to encourage people to continue doing business with them in spite of financial hardship.

Outcome of the case → This was a trust, since the asset was segregated from the business, with the money of the other customers being seperate in case of insolvency.

Barclays Bank v Quistclose Investments Ltd focuses on ‘Inferred intention and the relevance of segregating assets to establish the intention of a ‘trust’ as one way we search for intention for a ‘trust’ even where sometimes its difficult to find, what is the context, issue and outcome of Barclays Bank v Quistclose Investments Ltd?

Context of the case → Q lent money to Rolls Razor Ltd money to pay its debts in order to allow rolls razor to continue trading and address the immediate debt to pay it off in the future. R failed before all the borrowed money being used.

Issue of the case →The question was whether Q could claim the remianing money as beneficiary under a trust?

Outcome of the case → The court condluded that this arrangement was a trust and it was the parties' common intention that the money would not be used generally but exclusively to pay R's creditors and the remaining money unspent would go towards the business, the money had been paid for a particular purpose, which purpose had failed, the money should not be available to the borrower's general creditors

Importance of the case → we're looking for an obligation to be imposed and an intention to specifically keep the money intention - and if you fail before paying the money to the creditors, you have to return it back to the creditor

What happens if there is an absence of certainty of intention?

The alleged trust is void for uncertainty.

What is meant by the nature of the subject matter (in relation to ‘certainty of subject-matter - one of the three certainties required to establish an express trust)?

The subject must be clearly defined and identifiable, or otherwise the trust will be VOID for uncertainty.

What can consist of trust property consists of land, money, shares, covenants, debts, personal contractual rights.

What does Swift v Dairywise Farms state in relation to the meaning of ‘nature of subject-matter’ (in relation to ‘certainty of subject-matter - one of the three certainties required to establish an express trust)?

Swift v Dairywise Farms expands on this notion, explaining that ‘property’ includes “money, goods, things in action, land and every description of property […] whether present or future or vested or contingent, arising out of, or incidental to property.”

What does Fortex Group v Mactonish (NZ case law) state in relation to the meaning of ‘nature of subject-matter’ (in relation to ‘certainty of subject-matter - one of the three certainties required to establish an express trust)?

Fortex Group v Mactonish (NZ case law) outlined that a trustee cannot be trustee of property that has ceased to exist – e.g. money paid into an overdrawn bank account.

This means that the money CANNOT be held on trust for someone else in regards to a overdrawn bank account.

How does timing influence certainty of subject-matter nature of the subject matter ( one of the three certainties required to establish an express trust)?

Certainty of subject-matter is required at the time when the gift or trust is intended to take effect.

How does timing influence certainty of subject-matter nature of the subject matter ( one of the three certainties required to establish an express trust) as per Re Ellenborough?

You cannot have a trust property of something that does NOT YET exist and if the settlor doesnt have the property, they cannot hold it on trust for a beneficiary, nor can it be transfered to a trustee to hold it on trust for a beneficiary as per Re Ellenborough.

What are the 3 exceptions to the Timing rule within Certainty of Subject Matter in summary?

1. Trusts over after-acquired property as per Pearson v Lehman Brothers

2. Testamentary trusts over the ‘residue’ of a testator’s estate

3. ‘Whatever is left’ trusts B as per Ottoway v Norman

Trusts over after-acquired property as per Pearson v Lehman Brothers is one of the three exceptions to the Timing rule within Certainty of Subject Matter, what did Pearson v Lehman Brothers state?

When there is an agreement to transfer future property, BUT only when it is done with valuable consideration.

Valuable consideration such as money is necessary/required to enforce, so a constructive trust will be enforced and you will be compelled to transfer the property on the basis of the other party providing you valuable consideration for it - holding the property on trust for the beneficiary once they have acquired the future property UPON the basis of receiving valuable consideration.

Testamentary trusts over the ‘residue’ of a testator’s estate is one of the three exceptions to the Timing rule within Certainty of Subject Matter, what did this state?

In the process of executing the will, the parties have to pay out the money or complete the tasks as specified in the will - residue means we arent aware of what of the trust is left but the parties resume to complete the task and what is left over AFTER the task completion of the will becomes the residue (remainder of what is left after executing the wishes in the will).

‘Whatever is left’ trusts B as per Ottoway v Norman is one of the exceptions to the Timing rule within Certainty of Subject Matter, what is the context, issue, outcome and criticism of Ottoway v Norman?

Context of the case → T agreed with his housekeeper that she should have a house and 15,000 after his death, then the housekeeper promised to keep the remainder after she dies to T's son, giving him the remaining of the money and house to him.

Issue of the case → But the housekeeper dies not living the property to the son, the question was whether a trust arised?

Outcome of the case → The court concluded that there was no valid trust found based on the facts, there was no instruction to keep the money seperate, so there is no intention to create a trust (the court recognises a trust of whatever is LEFT could be possible, but on the facts of the case in regards to the money, it was NOT the intention of the parties that the housekeeper should be compelled to keep all the money on trust for the son and if the obligation is confined to the money she received under the will, and if there is a requirement she kept it seperate, then it would give rise to a trust but the FACT it was not spoken about and addressed, he couldnt get the money. BUT there was no issue with the son getting the property, the issue arose with the money and the money not being held seperately and it was not according to the facts that she would use some of the money and then leave it for the son, instead the housekeeper mixed the money with her own with no instruction to keep the money seperate)

Criticism → whatever is left trust is only discussed in the obiter of the ottway case, therefore there is question on the validity of it

How are vague descriptions of subject-matters addressed in Certainty of Subject-Matter? (Conceptual Uncertainty) What is the two relevant case laws clarifying this in summary?

1. Palmer v Simmonds

2. Re Golay’s Will Trust

Palmer v Simmonds on conceptual uncertainty/vague descriptions of subject-matters in certainty of subject-matters, what is the context and outcome?

Context → The words within the will were ‘the bulk of my residuary estate’

Outcome of the case → The residuary estate to remain to others - which is contrary to the residue after the will - there is no CERTAINTY of subject matter, so there was no trust obligation, so the individual could take the estate free of trust obligations - the word of 'bulk' is vague, with no understanding or indication of what portion of the residue bulges out (such as whether it was 25% or more or less). She has no designated the subject or identified the subject matter of the trust to give effect to it, so it wasnt clear, definite or certain - so it was TOO vague to satisfy the wording

Re Golay’s Will Trust on conceptual uncertainty/vague descriptions of subject-matters in certainty of subject-matters, what is the context and outcome?

Context → The words within the will were ‘to receive a reasonable income from my other properties’

Outcome → it was suffiicently certain as it was possible to objectively ascertain what a reasonable income was based on standard of living and income in the case by looking objectively at her general standard of living - so it wasnt vague - this case was an exception to the conceptual uncertainty - the court was able to determine the criteria to satisfy the requirement (even if there is concerns about undermining the certainty of subject matter rule)

Re London Wine discusses ‘uncertainty of application’ (when the subject-matter is part of a bulk or group of similar assets) relating to GOODS, what is the context and outcome? How was ‘uncertainty of application’ addressed in Re London Wine?

Context → people bought wine as investment, had letters specified their wine but issues arose when their wine wasnt seperated from the rest of the company's wine and the question was whether the wine belonged to the bankruot company for the creditors or held on trust for the customers who bought it as an investment - it wasnt clear which bottles of wine belonged to which customers.

Outcome → the court concluded that it was a trust, since the investment wine was not seperated from the rest of the bulk

Re Goldcorp Exchange Ltd discusses ‘uncertainty of application’ (when the subject-matter is part of a bulk or group of similar assets) relating to GOODS, what is the context and outcome? How was ‘uncertainty of application’ addressed in Re Goldcorp Exchange Ltd?

Context → Sellers of gold bullion handed certificates of sale to their customers which purportedly stated that they had title over their gold bullion, but their gold bullion was never segregated from the rest of the stock. The seller later went insolvent, the customers sought to that either title over the gold had passed to them or that they had beneficial ownership of the gold bullion against creditors.

Outcome → Even among homogenous chattels, segregation is required for there to be certainty of subject matter for a trust to arise.

MacJordan Construction Ltd v Brookmount Erostin Ltd discusses ‘uncertainty of application’ (when the subject-matter is part of a bulk or group of similar assets) relating to MONEY, what is the context, issue and outcome? How was ‘uncertainty of application’ addressed in MacJordan Construction Ltd v Brookmount Erostin Ltd?

Context → Brookmount was a property developer which became insolvent. They had entered into a building contract with P which provided for interim payments to P and for Brookmount to retain as retention moneys 3% of the amount due as interim payments. The interest in the retention money was fiduciary as a trustee for P. No fund was set aside in respect of the retention money.

Issue → In 1991, there was a priority dispute between P and the bank as to the retention moneys and the P claiming that the retention money was held on trust.

Outcome → Although the contract required Mac Jordan to set up a retention fund, this had not been done and there was no fund with a trust of the retention moneys. As such, there was no equitable interest created in the moneys in favour of P that could amount to priority. Upon the insolvency of the employer it was held that no trust was created as it was impossible to identify any part of the employer's assets that formed the specific subject of the trust.

Hunter v Moss discusses ‘uncertainty of application’ (when the subject-matter is part of a bulk or group of similar assets) relating to COMPANY SHARES, what is the context, outcome and importance? How was ‘uncertainty of application’ addressed in Hunter v Moss?

Context → S owed 950 of the 1000 shares, D claimed he held 50 of his 950 shares on trust for B (uncertain of what 50 shares were held on trust).

Outcome → BUT irrespective, the trust was valid despite undermining the certainty of subject matter - the reason was because London Wine case was regarding legal title to chattel and this case was regarding a self-declaration of trust and it didnt require a legal title to pass to a particular individual and it was the passing of equitable title. IN attempt to distinguish it, similar to a will to declare specific number of shares, you can do the same for shares with no reason to distinguish or see why it

Importance → Where the subject matter is intangible there need be no certainty over the particular goods which are subject to the trust. Since the shares held by the defendant were of such a nature as to be indistinguishable from each other and were all therefore capable of satisfying the trust without identifying any particular 50 shares; and that, accordingly, the trust was not void for uncertainty of subject matter.

Re Harvard Securities discusses ‘uncertainty of application’ (when the subject-matter is part of a bulk or group of similar assets) relating to COMPANY SHARES, what is the outcome? How was ‘uncertainty of application’ addressed in Re Harvard Securities?

Outcome → Harvard securities accepted the reading of Hunter v Moss, but he said it depends on whether youre dealing with tangible property (such as cattle and gold) or intangible property (such as share).

Pearson v Lehman Brothers discusses ‘uncertainty of application’ (when the subject-matter is part of a bulk or group of similar assets) relating to COMPANY SHARES, what is the importance and outcome? How was ‘uncertainty of application’ addressed in Pearson v Lehman Brothers?

Importance → Court suggested an alternative reading of Hunter v Moss, agreeing with the outcome in Harvard Securities, Hunter v Moss cases.

Outcome → Instead the court outlined what Hayton proposed and a trust of 950 shares to be construed as a trust of all 950 shares with the settlor and beneficary sharing the equitable/beneifciary interest proportionally (1/19th of the equitable interest being in B's benefit, whilst S had 18/19th of the share for his own) , so if the settlor creates a bulk in a trust, the settlor holds the legal title to the bulk and the settlor holds on trust for the beneficiary and himself as equitable tenants in common

North v Wilkinson discusses ‘uncertainty of application’ (when the subject-matter is part of a bulk or group of similar assets) relating to A SHARE IN A BUSINESS, what is the outcome? How was ‘uncertainty of application’ addressed in North v Wilkinson?

Outcome → As long as the bulk and percentage held by the beneficiary is certain and the chattels are specifically identitifed, it is a valid trust

D Hayton criticises Hunter v Moss outcome, what does he argue in summary? And how should we interpret Hunter v Moss in two ways as per Hayton? (academic discussion)

He criticised the outcome of hunter v moss - arguing a testamentary bequest is NOT the same as an inter vivos declaration of trust.

According to Hayton, we can either interpret Hunter v Moss in TWO ways -

1. declare the settlor to have delcared a trust in all 950 shares where B and S share as tenants in common, so 1/19th S's 950 shares in favour of B, or

2. we can read this case as saying that S intended B to exclusively entitled to 50 of S's 950 shares - this 2nd interpretation was the valid interpretation of the case according to the judge in Hunter v Moss

What happens if certainty of subject-matter is absent?

The alleged trust is void for uncertainty,

If the subject of the trust is no adqeuetely described, it will fail as a trust and the trust is ab initio - fails immediately, so the trustee never receives the interest as in london wine case, there is no segregation of trust property or money, so property could not pass, nor does the settlor have the right to transfer it to the trustee.