PreExam Update:

In von Westenholtz v Gregson [2022] EWHC 3374 (Ch), the court noted
that failure to segregate alleged trust property from property of a similar
type (e.g. an alleged trust of 10 shares from a block of 100 shares) does
not of itself mean there is no intention to create a trust. See in this
connection the discussion in Hunter v Moss concerning identification of
trust property (Section 5.2.2).

….
……………………………………………………………………………………..Cer
tainty of Subject Matter:
(( To Conclude, the statement is partially true. English law development
on equity and trusts states that the subject matter of a trust should be
separated from a larger bulk to be valid. This applies to tangible property.
A trust would still be valid if the subject matter is not separated from a
larger bulk of property that is intangible. The validity of a trust is
therefore based on whether the subject matter is tangible or intangible.
The case of Hunter v Moss supports this view. The decision in Hunter v
Moss received mixed responses. Some professionals welcomed the
decision as being fair and leading to certainty while some academics,
including Hudson criticised the decision. ))

Conceptual Uncertainty:
Conceptual uncertainty arises from the settler's use of imprecise or vague
language to express his intentions.
For example, the word 'tall' appears to have very uncertain boundaries:
'tall' is not a synonym for '5 foot 10 inches or over'; it is not that precise.
People may disagree whether Jim is tall, and an individual may be in a
quandary himself as to whether Jim is tall or not. Jim may be 'on the
borderline' for 'tall'.

Powers v Duties:
Powers are different from duties. Powers may be used and duties have to
be carried out.
Duties are usually found laid out in the trust instrument, powers similarly,
but they are probably not as imperative and therefore are only powers.
It’s sometimes up to the courts to decide if the written word, as it’s
usually the written word that we argue about, as to whether these are
powers or a duty. Does it make the person who is taking that power or
duty, carry out the work or just suggest that they can do it if they wish.
Sometimes the courts find it very difficult to decide and they have to look
at the whole scope of the trust instrument before they make a judgement.
Some of the most important duties are to ensure that the trust is upheld in
the best manner for the benefit of the beneficiary or beneficiaries
….…………………………………….

+Testamentary Gift:
Testamentary gift is a gift made by will. Such gifts do not become effective
until the death of the donor. The ownership of the gift is transferred to the
donee only after the testator’s death.

+fungible: (especially of goods) that can easily be exchanged for others of the same value and
type

+ Residuary Estate: A residuary estate, in the law of wills, is any portion

of the testator's estate that is not specifically devised to someone in the
will / all assets that remain in a probate estate after all specific gifts are
distributed to named beneficiaries / The rest of a deceased person's
estate which is left after the payment of specific gifts, debts, funeral
expenses and inheritance tax.

+one-off: done, made or happening only once

+ sham: bogus; false
+
….………………..
McCormick v Grogan (1867):
Craig (C) told Grogan (G) that he had made a will leaving all his property with G. G
later received a letter containing a list of beneficiaries, but also had statements
such as ‘I leave it entirely to your own good judgment to do as you think I would if
living’. One of the beneficiaries did not receive payment and sued G

Held:

C had not intended a trust but an absolute gift to G; there was no fraud involved.
the intention of the testator was that his instructions were simply to act as a guide
to G and not to impose a trust

Paul v Constance (1977):

Mr Constance was married to the defendant. He left his wife in 1965
and later met the claimant and moved in with her in 1967. He never
divorced his first wife.
In 1973 Mr Constance received £950 in relation to a personal injury
claim from his employer. He discussed what to do with the money
with the claimant and decided to open a bank account. As they were
not married the bank advised him to open the account in his own
name but assured him that the claimant would be able to draw on
the account if she had a signed note from him.
Mr Constance had told the claimant that the money was as much
hers as it was his. There were three further deposits into the
account which came from the couple's bingo winnings which they
played as a joint venture. The was one withdrawal from the account
of £150 which was used to buy Christmas presents and food. Mr
Constance died intestate in 1974 and his wife as administratrix of
his estate closed the account and claimed the sums contained in the
account formed part of his estate. The claimant argued that the
sums contained in the account were held on trust for the benefit of
her and Mr Constance jointly.

Held:

There is no need for explicit words or even knowledge of the trust being
created for there to be common intention to create a trust . the parties' words
and conduct demonstrated that he wished for the money to be held on
trust for Mr Constance and Ms Paul jointly .Lord Justice Scarman: "When
one bears in mind the unsophisticated character of the deceased and his
relationship with the plaintiff during the last few years or his life, the words
that he did use on more than one occasion, "This money is as much yours
as mine," convey clearly a present declaration that the existing fund was
as much the plaintiff's as his own." There must be clear declaration of trust
and that means there must be clear evidence from what is said or done of an
intention to create a trust. A trust may be created without using the word
‘trust’, for what the court regards is the substance and effect of the words
used.Though T never used explicit words to create a trust, it should be
remembered that they are simple people unaware of the subtleties of equity
but are well aware of their own domestic situation.On the evidence, T viewed
the money as much C’s as his, based on what he told C.Furthermore, the one
withdrawal from the account was shared by both C and T

Two notable facts are worth mentioning at this stage. Mr Constance assured
Ms Paul on a number of occasions that the ‘money in the bank account’ was
as much her money as his. Further, they deposited joint bingo winnings into
the account, and made certain withdrawals for joint purchases.
Matters became complicated on Mr Constance’s death. Since he had never
divorced, and he died without having made a will, his wife (Mrs Constance)
stood to inherit the whole of his estate, including the bank account deposit,
via the statutory scheme under the Administration of Estates Act 1925.
The matter went to the Court of Appeal which held (endorsing the first
instance) that a trust had been created which split the contents of the bank
account 50-50 between Mr Constance and Ms Paul. This meant that Ms Paul
received half the contents of the bank account, while Mrs Constance was
entitled to her late husband’s half. As well as the moral tale that one should
sort out one’s affairs rather than leave them to the technical statutory rules of
intestacy, this case raises many other interesting legal questions.
The court indicated that the absence of the word ‘trust’ was not fatal to
finding a trust exists. The deceased was an,“unsophisticated character” and
together they were, “simple people” to whom the law should exercise some
benevolence. Additionally, Scarman LJ drew attention to other matters which
permitted the court to conclude that a trust existed:

Richards v Delbridge (1874):

Mr Richards employed a member of his family, Edward, in his business. He
wished to hand over the business to Edward and evidenced his intention to
make this gift by endorsing on the lease of the business premises a short
memorandum: "This deed" -- that is the deed of leasehold -- "and all thereto
belonging I give to Edward from this time forth with all the stock in trade."
However, the gift failed because it was imperfect.

Held:
There was no express declaration of trust it was intended as an outright gift
and not to be held on trust.
Sir George Jessel MR: "If it is intended to take effect by transfer, the court will
not hold the intended transfer to operate as a declaration of trust, for then
every imperfect instrument would be made effectual by being converted into
a perfect trust.…’.

Equity will not perfect imperfect gifts by imposing trusts where there is no intention to create a
trust.

Sir Jessel MR: Words evidencing an intention to make a gift do not impose a trust.Previous cases
in which imperfect gifts were perfected by trust should not be followed as otherwise, the court
would be enforcing voluntary agreements without consideration.“For a man to make himself a
trustee there must be an expression of intention to become a trustee, whereas words of present
gift shew an intention to give over property to another, and not retain it in the donor’s own hands
for any purpose, fiduciary or otherwise.”

Ong v Ping (2017):

Madam Lim evinced her intention to create a trust for her property in favour of Cs
(her children) through a letter to her solicitors as well as a signed trust deed that
did not specify the house. Madam Lim wrote a letter to the solicitors indicating
that she wanted to cancel the trust (which was not carried out); the letter
specifically linked the trust to the house. The house was later sold and Cs sought
to claim the money from the sale.

Held: A trust of the property had been created in favour of Cs. The house was
indeed held on trust for the children as the reasonable person would infer from the
correspondence with the solicitors. Trust deed was not enough to prove an
intention to create a trust on its own. However the intention can be proven by the
circumstances. The revocation letter expressly linked the house with the trust
qualified as writing under s53(1)(b) LPA 1925 and provided sufficient proof and
manifestation of intention.

Comiskey v Bowring-Hanbury (1905):

This time, the House of Lords was asked to determine the following:
“the whole of my real and personal estate [to my wife] in full
confidence that she will make such use of it as I should have made
myself and that at her death she will devise it to such one or more
of my nieces as she may think fit and in default of any disposition by
her thereof by her will I hereby direct that all my estate and
property acquired by her under this my will shall at her death be
divided equally among the surviving said nieces”.
The House held that the wording created a trust; the wife was to
have a life interest with the remainder to pass to the nieces either
by her will or to them equally if she did not so bequeath it .
It is to be noted that both the clause in Re Adams and the clause in
Comiskey contained the same phrase, in full confidence. However,
the prominence to be given to such phrases, even though followed
in previous cases, was to be lessened. The most important thing is
to determine the context of words used, not to give inflated
importance to particular phrases. As Lindley LJ commented in the
case of Re Hamilton [1895] 2 Ch 370:“You must take the
[document] which you have to construe and see what it means, and
if you come to the conclusion that no trust was intended, you say
so, although previous judges have said the contrary on some wills
more or less similar to the one which you have to construe.”
+devise:leave (something, especially real estate) to someone by the terms of a will

Midland v Wyatt:
Mr Wyatt settled his family home on trust for the benefit of his wife and
daughter, so as to immunise it from any business failure he might suffer. When
his business did fail, he sought to protect his house from creditors by relying on
the settlement earlier executed, of which his wife was a trustee. It emerged that
Mr Wyatt’s wife had had no knowledge of the effect or nature of the declaration
she signed as ‘trustee’.
Held: There was a sham, and the declaration of trust was void and could not be
enforced.
Where a trustee goes along with a settlor neither knowing nor caring what he or
she is signing, this constitutes sufficient intention to create a sham.

Sprange v Barnard (1789):

In that case, a testatrix made the following provision in her will: “…

for my husband Thomas Sprange, to be will to him the sum of £300
… for his sole use;and at his death, the remaining part of what is
left, that he does not want for his own want and use, to be divided
between [other named legatees].”(my emphasis).
The issue turned on whether the clause created a trust and, if so,
whether it was certain.
In finding that the husband was absolutely entitled, and therefore
that there was no trust, the court said that the trust needed to be
certain from the outset, and that the remaining part of what is left
would not become certain when the husband died. Indeed, it could
not be said that there would be any property left after the
husband’s death.
→ impossible to quantify ‘the remaining part of what is left’ → no
trust.
Sprange v Barnard :
Property was not sufficiently certain. ‘The remaining part of what is left
that C does not want for his own wants’.
Re Last 1958:
Property was sufficiently certain. ‘Anything that is left’ of the T’s estate. T
had left her estate to her brother absolutely, but then added that anything
left was to be left for specific other people. Interpreted as giving brother a
life interest in the estate and its residue passing to the others on his
death.

Boyce v Boyce (1849):

concerned a gift from a father to his daughters. One daughter was to
choose one of his three houses, which the other daughter was to have the
remaining two. Rather simple, unless, of course, the first daughter pre-
deceases the father without choosing. This is precisely what happened.
The court held the whole gift was invalid on the basis that it was
impossible to determine which house the first daughter would have
chosen.
Palmer v Simmonds:
Henrietta Rosco, the settlor, said she wanted to create a trust for various
people over her property, and then to ‘leave the bulk of my said residuary
estate unto the said William Fountain Simmonds, James Simmonds,
Thomas Elrington Simmonds and Henrietta Rosco Markham equally.’
Held; Sir RT Kindersley held that because the court could not be sure
which parts of the residue were meant to be held on trust, the trust failed.
The term "bulk" was too uncertain for the court to determine what was
meant.

Re Golay’s Will Trusts (1965):

Facts:In Re Golay [1965] 1 W.L.R. 969, a testator wrote in his will
that he wanted Mrs. Bridgewater to enjoy one of his flats during her
lifetime. Furthermore, he wanted her to receive a ‘reasonable
income’ from his other properties.
Issue: Whether ‘reasonable income’ was sufficient certainty of
subject matter or whether it was uncertain.
Held: it was held that the trustees could select a flat but the
question arose as to whether the direction for a reasonable income
was void for uncertainty.
A ‘reasonable income’ to be provided out of a fund was held to be valid if
it was possible to make an objective measurement of what would
constitute a reasonable income in any particular case. Thomas J said that
“the court is constantly involved in making such objective assessments of
what is reasonable and is not to be deterred from doing so…the testator
intended by reasonable amount, the yardstick which the court could and
would apply in quantifying the amount so that the direction in the will is not
defeated by uncertainty.”

Milroy v Lord (1862):

The settlor executed a deed to transfer 50 shares in the Bank of Louisiana for L to hold on trust
for M.The settlor handed the share certificates to L, but the shares were never registered in L’s
name.Registration is required under company law for legal title in shares to be transferred.

Did the settlor hold the shares on trust for L?

Held:

No, the legal and beneficial title remained with the settlor. Equity will not perfect an imperfect
gift. To perfect a gift, the transferor must do everything necessary according to the nature of
the property
There are two reasons for finding that a trust has not been created in this
context: An ineffective transfer does not constitute a declaration of trust in
itself, and

Lambe v Eames (1871):

the will read: “to be at her disposal in any way she may think best, for the benefit of herself
and her family” . Whether there was sufficient certainty of intention or whether the wording
was precatory.

The wording did not impose a legal obligation, they merely imposed a moral obligation.

Re Adams and Kensington Vestry (1884):

A testator left property to his wife (W) by will “in full confidence that she would do what
was right by his children”.

Held: It was held that the property passed to W absolutely and no trust had been
created. The court interpreted the statement to have added only a moral obligation on the
wife to use the money in a way which would benefit the children and not to place her
under an obligation to hold that money as trustee for the children

Twinsectra v Yardley (2002):

 T intended to lend money to Y for the purchase of property without specifying which property
 S, a solicitor acting for Y, had given an undertaking to T in the following terms: “The loan
moneys will be retained by us until such time as they are applied in the acquisition of
property on behalf of our client. The loan moneys will be utilised solely for the acquisition of
property on behalf of our client and for no other purposes”
 T paid over the loan amount to S who then paid it over to L, another solicitor acting for Y
 Y used the loan for purposes other than the purchase of property
 T claimed that the payment from S to L amounted to a breach of the undertaking and thus a
breach of trust which L had assisted.

Held:

The money was held by S on Quistclose trust for T. S had acted in breach of trust. L had acted
reasonably and not in assistance of the breach of trust.

Lord Millett argued that the Quistclose trust is merely an orthodox resulting trust that arises
whenever there is an ‘absence of intention to benefit’ the transferee of money.

The loan from Twinsectra Ltd was held on trust by the solicitors of Yardley. The fact that the
undertaking was unusual does not mean that it was void for uncertainty. However, the
money was provided in the client account of the solicitors which should have remained
Twinsectra’s money until the planned acquisition of property took place in accordance with
their agreement. Lord Slynn, Lord Steyn, Lord Hoffmann and Lord Hutton held that the
money was held on express trust, created through the terms of the agreement between T
and S.

Ali v Dinc (2020):

The purported donor was dying of cancer and executed a trust deed establishing a
charity foundation with himself as one of the trustees. However, he had neglected
to sign documents for the transfer of his assets to the trust before he passed. He
stated orally that he gave (word of gift) whole of his estate to this foundation.

Issue:

Whether the transfer was properly constituted.

Held:

The assets were successfully vested in the trustees . An imperfect transfer to

trustees is perfected if the settlor is also one of the trustees .This is an exception
to the rule that equity cannot perfect an imperfect trust

Re London Wine (1986):

A wine dealer (D) sold wine to customers (Cs).After the contracts of sale were
executed, the wine was kept in D’s warehouses.D gave Cs certificates of title to
the wine and Cs were charged for storage and insurance, but specific cases were
not segregated or identified for each customer.D later went into liquidation. Cs
sought to establish that wines were held on trust and thus unavailable to creditors.

Held:

Cs’ claim failed; no trust was created as there was uncertain subject matter.
Segregation of chattels from a bulk is required for the subject matter of a trust to
be certain. there is a more tangible argument in that no two bottles of wine
are alike,especially where closed with a natural cork. Such a form of storage
also raises the prospect that the wine could be corked, ie, oxidised by the
ingress of air reacting with the wine and turning it bad. Consequently,wine
from the same vineyard, with grapes of the same vintage, from the same
appellation could not necessarily be said to be the same as any other bottle.
Oliver J: “It seems to me that in order to create a trust it must be possible to
ascertain with certainty not only what the interest of the beneficiary is to be but
also to what property it is to attach”; “I cannot see how for instance a farmer who
declares himself a trustee of 2 sheep without identifying them can be said to have
created a perfect trust”.

Re Stapylton Fletcher (1994):

the wine merchants brought and sold wine. They sold it on

the basis that they would store it for customers until it was
fit to drink. The wine merchant kept the boxes of wine
which they were holding for customers in a separate unit.
The wine stored for customers was separated but it was
not marked with the individual customer’s name.

In January 1991 it was noticed that while the basic

administration, stock control and bookkeeping were
particularly good, the wine merchants clearly became
insolvent. Although, the bank temporarily increased the
overdraft limit to the company to allow trading to
continue. The company sought further finance.
Whether the wine could be regarded as being the property of the
customers who paid for the goods?

The court held that the wine stocks were the property of the customers
who brought the goods and paid the storage price. Three particular issues
were considered by the court. Namely, (I) the bottles of wine which were
stored separately, or separated from the company’s trading stock, were
considered “ascertained goods” for the purposes of section 16 Sale of
Goods Act 1979. And, therefore, property passed to the customers. (II) the
wine, which the customers ordered and paid in full and which had not left
the vineyards in France or had not even bottled, remained the part of the
company’s wine stock. Thus, there was no passing of proprietary interest.
(III) The court did not accept the submissions based on specific
performance, creating some kind of equitable interest binding on the bank.

Re Goldcorp Exchange (1994):

Sellers of gold bullion handed certificates of sale to their customers, but their gold
stock was never segregated.The seller later went insolvent, the customers sought
to claim beneficial ownership of the gold bullion against creditors

+bullion: refers to physical gold and silver of high purity that is often kept in the form of bars, ingots, or coins

Held:

No trust was created due to lack of certainty of subject matter. Even among
homogenous chattels, segregation is required for there to be certainty of subject
matter. Lord Mustill: “A right in the property whether legal or equitable cannot
exist in the air, it can only exist in specific property”. Although a vendor of goods
sold ex bulk can declare themselves trustee of the bulk, there was no intention to
create a general trust of the entire stock of gold as the gold to be sold to the
customers was not limited to the gold in the inventory but also future inventory.

Hunter v Moss (1994):

an employee was given 50 out of 950 shares in a company. However, the
employer did not transfer the shares, nor was the shares subject to the
agreement identified. As a result, a dispute arose regarding whether the
employee could assert that he had proprietary rights over the 50.
Whether there was sufficient certainty of subject matter. Or whether the
shares would have to be identified.

A valid trust was created for 50 shares. A portion of intangible assets does not have to be
segregated from the rest to form the subject of a trust. The trust was valid. It was not
necessary to segregate the shares as it made no practical difference as to
which 50 shares were subject to the trust given that there is no qualitative
difference between one ordinary share and another ordinary share.
 Furthermore, they are intangible and each share is indistinguishable from
each other because they are shares in the same company. since the shares
were of such a nature as to be indistinguishable one from another and were
therefore all equally capable of satisfying the trust, it was unnecessary to identify
any particular 50 shares.
Colin Rimer, QC, sitting as a Deputy High Court Judge placed
significant emphasis on the tangible / intangible distintinction. He
stated :‘Even tangible assets which are regarded as forming part of
a homogeneous mass are physically separate, and so
distinguishable, from other assets comprised within the same mass.
Further, certain of the assets in a group of ostensibly similar or
identical assets may in fact have characteristics which distinguish
them from other assets in the class. Consignments of wine provide a
good example. Some of the cases in it may contain wine that is
corked, or may have been stored badly and have deteriorated or
may have other inherent defects. Oliver J. [in Re London Wine] held
that, before any trust could be said to attach to any tangible assets
comprised within a class of assets, the particular assets have to be
identified. I do not, however, consider that the principle which he
applied with regard to the certainties requisite for the purposes of a
trust relating to tangible assets is one which is necessarily also
applicable by analogy to trusts of intangible assets, for example, to
a purported trust of a specific sum of money forming part of a larger
credit balance in a particular bank account. The latter trust will of
course only be valid if its subject matter is certain. But the
determination of whether the requisite degree of certainty has been
achieved is, in my judgment, not necessarily governed by principles
analogous to those which apply in the case of tangible assets.”(at
page 940)’.

Jones v Lock (1865):

Facts- father returned from a business trip without a gift for his son. He
put a £900 cheque in the baby’s hand and said ‘I give this to baby, it is for
himself and I am going to put it away for him and I will give him a great
deal more along with it’. Unfortunately, He died 6 days later.
Judgement- Trial judge found that the father did constitute a trust, despite
him failing to sign the cheque.
This was overruled by the court of appeal, who recognised that the fathers
intention was an outright transfer and refused to ‘perfect an imperfect
gift’. Intention to create a trust is required and the words in this case did
not suffice.
 The evidence showed an intention to make a gift of the cheque to the infant, not to declare
a trust. Equity will not perfect an imperfect gift.
 Voluntary settlements are only valid when the settlor has done everything which, according
to the nature of the property, is necessary to be done to transfer the property and render
the settlement binding upon him. Intention not carried into effect.
 If one intends to use one method and fails, equity will not save the failed gift and treat it as
some other type of gift.
 There had been no declaration of trust, only a loose conversation. The testator did not
intend to deprive himself of all property, or to declare himself a trustee of the money for
the child.

Re Gulbenkian’s Settlements Trusts (1968):

Gulbenkian, a wealthy Armenian oil businessman and co-founder of the Iraq
Petroleum Company, made a settlement in 1929 that said the trustees should ‘in
their absolute discretion’ and while his son Nubar Gulbenkian was still alive, give
trust property to 'Nubar Sarkis Gulbenkian and any wife and his children or
remoter issue for the time being in existence whether minors or adults and any
person or persons in whose house or apartments or in whose company or under
whose care or control or by or with whom the said Nubar Sarkis Gulbenkian may
from time to time be employed or residing'. It was argued this was too uncertain
to be enforced.

At first instance, Goff J declared the settlement invalid, following Re Gresham's

Settlement[3] where Harman J held a similar clause invalid.
The Court of Appeal held that the trust should be declared valid, [4] so long as any
claimant could be said to fall within the class at hand. Lord Denning MR said the
action was a challenge to Gresham’s case, and continued: ‘In all these cases if
there is some particular person at hand, of whom you can say that he is fairly and
squarely within the class intended to be benefited, then the clause is good. You
should not hold it to be bad simply because you can envisage borderline cases in
which it would be difficult to say whether or not a person was within the class’.

IRC V Broadway Cottages Trust(1955):

The settlor settled a sum of £80,000 upon trust. The trust directed the trustees to
apply the income of the trust fund to persons who were employed by himself or
his family during a certain period of time. The trustees had free discretion to
select which members of this class of beneficiaries to distribute to.

Was a valid trust created?

The trust was void for uncertainty. Jenkins LJ:

The principle stated by Lord Eldon in Morice v Bishop of Durham (1804) is

that ‘in order to be valid a trust must be one which the Court can control and
execute’. ‘if the class of beneficiaries was an ascertainable class, it would or
might be possible to imply a trust in default of distribution by the Trustees for all
the members of the class in equal shares, and that would be a trust which the
Court could control and execute. But as the class is un-ascertainable, no such
trust can be implied.’ In the present case, since the class of beneficiaries was not
ascertainable, no such trust can be implied and the trust cannot be executed by
the court.

This case formulated a ‘complete list test’ which states that discretionary trusts
are valid only if it is possible to ascertain the identity of every single member of
the class (i.e. to make a complete list) of potential beneficiaries. Note that the
application of the ‘complete list test’ to discretionary trusts was overruled
in McPhail v Doulton (Re Baden (No. 1)) [1971] AC 424

Re Gulbenkian’s (1968):
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”.

The trust was not void for uncertainty. Holders must be

able to decide if any hypothetical beneficiary is or is not
within the class of objects.
Re Coxen 1948:
If it is a question of fact then the trustees opinion can resolve the
problem, in this case money given to trustee for benefit for
beneficiary living in a certain property, if trustee perceived that the
beneficiary had ceased to permanently to reside in property then
the trustee could give it to someone else.

Re Barlow’s WT(1979):
A testatrix died in 1975, owning a large collection of pictures. She gave some of the to her
executor upon trust for sale, directing him ‘to allow any member of my family and any friends of
mine who may wish to do so to purchase any of such pictures’ at a valuation made in 1970. At
the time of her death, the unmarried testatrix’s closest family were various nephews and
nieces. This included great and great-great nephews and nieces. As a result, her executors
sought directions from the court. / She specifically bequeathed some. For the
remainder, she declared them to be held by her executor on trust to sell them, but
that her ‘family and friends’ could buy them first at 1970 valuations or at the
probate value, whichever was lower. The proceeds would go to the residuary
estate.

The executors asked the court whether the direction about family and friends was
void, given its uncertainty, and if it was valid, who the family and friends were.

Issue: is the trust certain enough to be valid.

The uncertainty as to the persons who might be

Held:
“friends” did not affect the quantum of the gift.Therefore,
the direction was valid. Browne-Wilkinson J held that the trust
was valid, because both concepts of friends and family could be
given a workable meaning :

Although ‘friend’ could have a wide variety of meaning, the

minimum requirements were that (a) the relationship had to be long
standing (b) be a social and not a business or professional
relationship, and (c) although they may not have met for some time,
when circumstances allowed, they would meet frequently. The word
‘family’ could be construed as any ‘blood relation’, and the only
reason in other cases to restrict the concept to statutory next of kin
had been to save gifts from failing for uncertainty. the reference
to “family” would include all those related by blood to the
testatrix and not solely the next of kin.
Consequently, the court was encouraged in that
connection by the bequest to a particular great-niece
described as such in the will and clearly regarded by the
testatrix as “family.”
Applied : The correct test is that established in Re Allen (No.1) (1953) : the gift is valid if it is
possible to say of one or more persons that he or they undoubtedly qualify even though it may
be difficult to say of other whether or not they qualify / Laid down the single person test for the
certainty of individual gift on condition precedent.

Distinguished: The rule in Re Gulbenkian is only application to cases where it was necessary to
establish all member of the class (due to distribution of equal shares), it is not applicable to
cases where there is condition or description attached to one or more individual gifts as
uncertainty relating to whether another postulant qualifies does not affect the quantum of the
gift

MchPail v Doulton (Re Baden No.1)(1971):

Settlor set up a fund for the benefit of employees of his company, their relatives and
dependants. The trustees ‘shall apply the net income of the fund…in such amounts, at such
times, and subject to such conditions as they think fit’

*(net income: property certain ) (‘in such amounts…’: discretionary trust )

Held:

The deed created a discretionary trust and not a power. The test for certainty of objects for
discretionary trusts is the ‘is or is not’ test and it is met in the current case. This case laid down
the ‘is or is not’ test for the conceptual certainty of objects in discretionary trusts.

IRC v Broadway Cottages overruled. In IRC v Broadway Cottages the principle is stated to be
that a trust cannot be valid unless it can be executed by the court and that the court can only
execute it by ordering an equal distribution in which every beneficiary shares. The test of
validity is whether the trust can be executed by the court, it does not follow that execution is
impossible unless there can be equal division. Equal division is the last thing the settlor ever
intended, the maxim ‘equality is equity’ may only apply where there is a limited class. The test
for validity of discretionary trusts ought to be similar to the test for powers adopted in re
Gulbenkian: whether it can be determined if any individual is inside or outside of a class).

Re Baden’s Deed Trusts (No 2):

Mr Bertram Baden settled a trust for the employees, relatives and
dependants of his company, Matthew Hall & Co Ltd. It said the net income
of the trust fund should be applied by the trustees ‘in their absolute
discretion’ and as they thought fit for the employees, relatives and
dependants in grants. The House of Lords in McPhail v Doulton[2] held that
the trust would in principle be valid if it could be said with certainty that a
hypothetical claimant "is or is not" within the class of beneficiaries. The
case returned to the lower courts to determine if the trust was in fact
enforceable.
Brightman J held the House of Lords decision had overruled previous IRC v
Broadway Cottages so that the rule in Re Gulbenkian applied equally to
trusts as to powers: a trust was valid if it could be said with certainty that
any given individual was or was not a member of a class of beneficiaries,
and accordingly the clause was valid as a trust. The executors appealed.
The problem is whether ‘relatives’ is certain.

Held:

The trust is conceptually certain. Definition of relatives: Relatives means

anyone who can trace legal descent from a common ancestor
The Court of Appeal held, dismissing the appeal, that to apply the Re
Gulbenkian[3] test for a discretionary trust, "conceptual" and "evidential" were
distinct. If a claimant could not bring evidence he was a beneficiary, he would
not be. But there was no inherent conceptual uncertainty in the words
"dependants" or "relatives", and the clause was valid.
The three judges gave different views on why the trust was valid. Stamp
LJ held that the trust was valid because the court could always determine who
was a dependant and a relative could be restricted to a workable definition of
the next of kin.
Sachs LJ held the test required only clarity in the concept. He put it as follows:
‘The court is never defeated by evidential uncertainty... Once the class of
persons to be benefited is conceptually certain it then becomes a question of
fact to be determined on evidence whether any postulant has on inquiry been
proved to be within it: if it is not so proved, then he is not in it’.

Re Manisty’s ST(1974):
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.

Held: The power was valid. Powers cannot be invalid for administrative unworkability, but
capricious powers are invalid.

Templeman J:

A power cannot be uncertain merely because it is wide in ambit: ‘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.’ Lord Wilberforce spoke of a third class of trusts
that are invalid as they are so hopelessly wide as not to form ‘anything like a class’ so that the
trust is administratively unworkable, but this does not apply to powers where the court has a
more limited function and does not need to execute and administer. An immediate power is not
too wide

But a capricious power is invalid: A power to benefit ‘residents of greater London’ is invalid, it is
an ‘accidental conglomeration of persons who have no discernible link with the settlor or with
any institution’.

Re Hay’s Settlement Trusts (1982):

In a trust deed trustees were directed to hold trust funds for any persons (with the
exception of the settlor, her husband and Ts) or purposes they appoint with 21
years of settlement. Trustees executed the deed of appointment, transferring the
funds to another discretionary trust with themselves as the trustees, with 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.

Held:
The power was valid, the delegation was invalid. Affirmed Re Manisty – a power
cannot be void for administrative unworkability.

Sir Robber Meggary V-C:

An ‘intermediate’ or ‘hybrid’ power of appointment vested in a trustee to appoint

to anyone in the world except specified persons was not, despite the fiduciary
duties of the trustees, rendered invalid merely by the width of the power. Nothing
in the nature of an intermediate power of appointment prevented trustees from
discharging those duties. Trustees have no power to delegate under a power of
appointment and is thus invalid – this offended the principle that that unless
authorised to do so a trustee could not delegate his po wers.