Introduction
Express trusts are fundamental to English trust law, requiring strict compliance with the "three certainties" to be valid. These certainties—intention, subject matter, and objects—ensure that a settlor's wishes are clearly articulated and enforceable. The certainty of intention mandates that the settlor's intention to create a trust is explicitly stated. The certainty of subject matter demands a precise identification of the trust property. The certainty of objects requires that the beneficiaries are clearly ascertainable. Each of these elements is essential to the legal validity of an express trust, as established in landmark cases such as Knight v Knight (1840) 3 Beav 148. Understanding these requirements is necessary for dealing with the complexities of trust formation under English law.
The Certainty of Intention
A core aspect of an express trust is the settlor's clear intention to create a trust, rather than merely expressing a wish or making a gift. This certainty of intention ensures that trustees are legally bound to administer the trust property in accordance with the settlor's directives.
Express Declarations and Implied Intentions
While some settlors explicitly declare their intent, often the courts must discern intention from the settlor's words and actions. In the landmark case of Paul v Constance [1977] 1 WLR 527, Mr. Constance's statement, "The money is as much yours as mine," coupled with his conduct, was held sufficient to establish a trust. This case illustrates how everyday language, even absent formal legal terminology, can reveal the necessary intention when viewed in context.
The Challenge of Precatory Words
Words expressing hope or moral obligation, known as precatory words, generally do not create enforceable trusts. For instance, in Re Adams and the Kensington Vestry (1884) 27 Ch D 394, the phrase "in full confidence that she will do what is right" was deemed insufficient to impose a trust obligation. The courts require definitive language indicating that the settlor intended to create a legal duty, not merely a personal expectation.
Distinguishing Trusts from Gifts
Understanding the difference between intentions to create a trust and to make a gift is essential. In Richards v Delbridge (1874) LR 18 Eq 11, an attempted gift failed because the property was not properly transferred, and the courts did not infer an intention to create a trust. This distinction ensures that property is not unintentionally burdened with trust obligations.
Practical Considerations
Visualize a parent handing over a family heirloom to a child, saying, "I count on you to keep this safe for the family." Such a statement could be interpreted as creating a trust, imposing duties on the child as a trustee. The clarity of the parent's intention determines whether a legal trust, with its attendant obligations, has been established.
The Certainty of Subject Matter
For a trust to be valid, the property subject to the trust must be clearly identified. The certainty of subject matter ensures that both the trustees and beneficiaries know exactly what property is held in trust.
Identifying Trust Property
The trust property must be specified with precision. In Re London Wine Co (Shippers) Ltd [1986] PCC 121, customers who paid for wine stored in bulk were not considered beneficiaries because the wine bottles were not segregated or identifiable. Without clear identification, the trust fails for uncertainty.
Dealing with Fungible Assets
Fungible goods, like money or shares, present unique challenges in trust law. However, in Hunter v Moss [1994] 1 WLR 452, the court upheld a trust over an unsegregated portion of identical shares. The court reasoned that since the shares were indistinguishable from one another, specifying particular shares was unnecessary.
Certainty of Beneficial Interests
The beneficiaries' interests in the trust property must also be definite. In Boyce v Boyce (1849) 16 Sim 476, a trust failed because the beneficiaries' respective interests were not ascertainable due to the death of one beneficiary before making a required choice.
Practical Considerations
Consider a scenario where a friend promises to hold "some of my books" on trust for a library. Unless the specific books are identified, the trust lacks certainty of subject matter. Clear identification, such as "my first edition novels," would satisfy the requirement, ensuring the library receives the intended assets.
The Certainty of Objects
The certainty of objects requires that the beneficiaries of the trust are clearly defined or ascertainable. This ensures that trustees know whom they owe duties to and that the court can enforce those duties.
Fixed Trusts and the Complete List Test
In fixed trusts, where each beneficiary is entitled to a specific share, all beneficiaries must be identifiable. The "complete list test" established in IRC v Broadway Cottages Trust [1955] Ch 20 mandates that trustees can compile a comprehensive list of beneficiaries.
Discretionary Trusts and the Is or Is Not Test
Discretionary trusts allow trustees to choose beneficiaries from a class. The "is or is not" test from McPhail v Doulton [1971] AC 424 requires that it must be possible to say with certainty whether any given individual falls within the class of beneficiaries.
Conceptual and Evidential Certainty
Conceptual certainty refers to the clarity of the class description. In Re Baden's Deed Trusts (No 2) [1973] Ch 9, the term "relatives" was held to be sufficiently certain. Evidential certainty involves the ability to prove whether an individual fits the class. While conceptual clarity is essential, evidential difficulties do not necessarily invalidate a trust.
Avoiding Administrative Unworkability
A trust may fail if the class of beneficiaries is so wide that it becomes administratively unworkable. In R v District Auditor ex p West Yorkshire Metropolitan County Council [1986] RVR 24, a trust for "the inhabitants of West Yorkshire" was deemed too broad to enforce.
Practical Considerations
Visualize planning a party where you invite "everyone I know." Managing such an event would be impractical due to the large number of potential guests. Similarly, a trust must have a beneficiary class that is manageable to ensure the trustees can perform their duties effectively.
Interplay Between the Three Certainties
The three certainties are interconnected, and failure in one can affect the validity of the entire trust. In Re Golay's Will Trusts [1965] 1 WLR 969, the court had to interpret a gift of a "reasonable income," blending the certainties of subject matter and objects to uphold the trust.
Understanding how intention, subject matter, and objects interact is key. For instance, ambiguous language regarding the subject matter may cast doubt on the settlor's intention or make it impossible to identify the beneficiaries, leading to the trust failing.
Case Study: Applying the Three Certainties
Consider the hypothetical case of Alex, who writes in a letter, "I wish for my cousin Jamie to benefit from my estate." Without clear intention to create a trust, a specified subject matter, and an identifiable beneficiary, this attempt may not constitute a valid trust.
- Certainty of Intention: The word "wish" suggests a hope rather than a definitive intention to create a trust.
- Certainty of Subject Matter: "My estate" could be acceptable, but if Alex's assets are not clearly defined, this may cause issues.
- Certainty of Objects: "My cousin Jamie" is a specific individual, satisfying this certainty.
This example highlights the importance of precise language and clear definitions in trust creation.
Conclusion
Ensuring the validity of an express trust hinges on the meticulous fulfillment of the three certainties: intention, subject matter, and objects. The courts, as seen in cases like Knight v Knight (1840) and McPhail v Doulton [1971], have consistently highlighted the necessity of these elements to uphold a trust's legal enforceability. The interaction among these certainties is complex; ambiguous intention can obscure the subject matter, or unclear objects can render the trust unmanageable. For example, if a settlor ambiguously declares a trust over "some of my assets" for "my friends," the trust may fail due to uncertainty in both subject matter and objects. A thorough understanding of these principles is essential for analyzing and constructing valid trusts within English law, ensuring that the settlor's intentions are effectively realized and legally protected.
