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THREE CERTAINTIES

Knight v Knight Lord Langdale: in creating a trust, there must exist three
certainties, that is certainty of words, certainty of subject matter, and certainty of
objects.

1. Certainty of Intention/words.
- Equity looks to the intent rather than the form.
-

In general, precise technical language is usually unnecessary for the creation of an


express trust. Although phrases such as in trust for and upon trust to are
commonly employed, they are not necessary; indeed the word trust need not be
used.

Re Kayford; A trust can be created without using the word trust or confidence
or the lie; the question is whether in substance a sufficient intention to create a
trust has been manifested.

A trust can be created by any language which is clear enough to show an


intention to create it (Halsburys Laws of England)

The words used to convey the intention must be sufficiently expressive. In Quah
Eng Hock v Ang Hooi Kiam; the court referred to the need for the words used to
be clear and unequivocal and held that words indicating that the donor intended to
divest himself or herself of the beneficial interest would be sufficient for the
purpose.

In general, where an intention to create a trust is apparent, then an express trust


may arise.

There is a difference between a request which forms an INTENTION


unenforceable moral obligation and an instruction which forms a binding
equitable obligation. Only the equitable obligation will be enforced by the courts.

In the early trust cases, the court often accepted that a trust had been created even
if words like confidence, wish, belief, desire or hope were used rather than
trust. After 1858, the Court of Chancery took over cases involving wills from the
ecclesiastical courts and took a stricter approach. precatory words were not
regarded as creating a binding trust.

Re Snoden/Voice

Precatory (precari = to entreat) words are those words of prayer, entreaty, desire,
etc, which suggest, when used within the context of a transfer or bequest of
property, that the transferor or testator had in mind the creation of a trust.

Examples; I will and desire that, in full confidence (Re Adams & The
Kensington Vesry; Comiskey v Bowring-Hanbury;

Just asking someone to do something with the property is not enough to establish
a trust; the words used must tell them what they must do with the property.

TAKDE TRUST

Lambe v Eames (1871) 6 ChApp 5997, the will of the testator left his estate to
his widow to be at her disposal in any way she may think fit, for the benefit of
herself and her family. His widow tried to dispose of some of the property
outside the family. It was held the words used meant that this was just a gift, with
a request as to how she used the property. It was not a trust, so the property was
hers to do with as she liked.

Re Adams & the Kensington Vestry (1884) LR 27 ChD 394, the will of the
testator left all his property to his wife, Harriet Smith in full confidence that she
will do what is right as to the disposal thereof between my children, either in her
lifetime or by will after her decease. It was held as per Cotton LJ; the motive
of the gift is, in my opinion, not a trust imposed upon her by the gift in the will.
He leaves the property to her, he knows that she will do what is right, and carry
out the moral obligation which he thought lay on him, and on her if she survived
him, to provide for the children.

There are no special words that create a trust. The court must look at all the words
used and spell out the intention of the testator.

ADA TRUST

Comisky v Bowring-Hanbury (1905) AC 84, the will of the testator left all his
property to his wife in full confidence that she will make 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 fir and in default of any disposition by her thereof by
her willI hereby direct that all my estate and property acquired by her under this
my will shall at her death be equally divided among the surviving said nieces.
It was held that this was a trust. Although the wording seems vague at first with
the phrase in full confidence used again, the greater detail on how the property is
to be divided indicates a trust.
Malaysian Cases

In Re Chionh Ke Hu [1964] MLJ 270 the expression used was I direct my


executor to distributeamong such persons professing or practicing the Buddhist
religion, and this was held to be sufficiently imperative as to create a trust,
although it failed as there was uncertainty in relation to the object.

In Parmeshiri Devi v Pure Life Society [1971] 1 MLJ 142 the court on the
evidence concluded that the prerequisite intention to create a trust was missing.

In Hsu Yik Chai v Hsu Yam Tang [1982] 2 MLJ 227 it was held that on the
evidence no trust was created since the intention of the testator was to affect a
conditional gift.

2. Certainty of subject-matter (TRUST PROPERTY)


- The general rule is that the property upon which the trust is based and the interests
which are to be taken must be clearly defined, ie, sufficiently certain: Horwood
v West (1823)
-

Doubts as to the quantum may result in the trust failing to satisfy the requirement.

Palmer v Simmonds, a gift over of the bulk of my residuary estate was held not
sufficiently certain for the purpose, Sir Kindersly VC said:
When the testatrix uses that termI am bound to say she has not designated the
subject as to which she expresses her confidence; and I am therefore of opinion
that there is no trust created

Sprange v Barnard (1789) 2 Broc CC 585, the testatrix gave $300 to her
husband for his own use, and directed that, at his death, the remaining part of
what is left, that he does not want for his own wants and use, shall be divided
between A,B and C. It was held that there was no trust since there could be no
certainty as to what would be left at the husbands death. He was absolutely
entitled, therefore to the $300.

The gift could still be saved if discretion is in fact conferred on the trustee to
determine the subject matter of the gift, and the court could interpret the words
with certainty.

Re Golays Will Trusts [1965] 2 All ER 660, the testator directed executors to
allow X to enjoy one of his flats during her lifetime and to receive a reasonable
income from his other properties. Per Ungoed-Thomas J : in my view the testator
intended by reasonable income the yardstick which the court could and would
apply in quantifying the amount so that the direction in the will is not in my view
defeated by uncertainty.

Re Golay referred to Jackson v Hamilton (1846) 3 Jo & Lat 702, where the
court had held a reasonable sum as sufficiently certain.

Knight v Knight (1840) Beav 148, to reward very old servants and tenants
according to their desert no trust.

(Point from slide, sama macam point atas tp ayat lain)

When Subject matter is certain but beneficial interest not certain Boyce v Boyce,
the testator devised to trustees on trust two houses, one to be conveyed to X,
whichever she may think proper to choose or select, the other to go to Y. In the
event, X predeceased the testator. It was held that Y did not have a valid claim; the
trust property could not be ascertained.

Segregation where purchasers have paid for goods but have not taken delivery
prior to the sellers insolvency, the purchasers may seek priority over general
creditors by claiming that there is a trust of the goods in their favour but where the
goods have not been segregated (but form part of the bulk) these claims have
failed;

Re London Wine Co (1986) customers bought wine, but they did not take it
home. Instead, it was stored for them in a number of warehouses. London Wine
got into difficulty and receivers were appointed. Some customers claimed that
their wine was protected because it was held on trust for them. Their lawyers
argue that there was no need for a direct and express declaration of trust, because
a trust could be created by the actions of the parties involved.

Oliver J : I find it impossible to spell either out of the acknowledgements signed


by the company or out of the circumstances any such trust as is now sought to be
set up. It seems to me that in order to create a trust, it must be possible to ascertain
not only what the interest of the beneficiary is to be but to what property it is to
attach.

The objection is that the customer cannot identify specific bottles of wine that
belong to them. There might be 1000 cases of a particular wine in the warehouse
and the customer might have paid for 100 cases, but the customer cannot identify
which particular cases belong to him. Sometimes, customers would be given their
certificates of title to the wine before it was even delivered to the warehouse. The
trust property must be specific or ascertained for a trust.

Hunter v Moss [1994] 3 All ER 215, Moss told Hunter that he would hold 5 per
cent of the shares in his company for Hunter. There were 1000 shares in the
company, all the same type of shares and Moss had previously told Hunter that he
would give him 50 shares. So, there was no doubt about the number of shares to
be held on trust.

Dillon J (referring to Re London Wine) : it seems to me that that case is a long


way from the present. It is concerned with the appropriation of chattels and when
the property in chattels passes. We are concerned with a declaration of trust,
accepting that the legal title remained in Mr Moss and was not intended, at the
time the trust was declared, to pass immediately to Mr Hunter. Mr Moss was to
retain the shares as trustee for Mr Hunter.

Just as a person can give, by will, a specified number of his shares of a certain
class in a certain company, so equally, in my judgment, he can declare himself
trustee of 50 of his ordinary share in MEL or whatever the company may be and
that is effective to give a beneficial proprietary interest to the beneficiary under
the trust.

The court could see no problem with this as all the shares were the same and it did
not matter which 50 it was. Presumably, though, 100 cases of Chateau Rotgut
1994 are no different from another 100 cases.

3. Certainty of Objects.
- Object refers to the persons intended to have the benefit of the trust.
- For the present purpose refers to whether the beneficiaries who will receive the
benefit can be clearly ascertained. (Noor Inayah Yaakub dan Safinaz Mohd
Hussein)
- The general rule: a trust must be in favour of human beneficiaries or be charitable
in law.
- In respect of the former, every trust must have a definite object. There must be
somebody, in whose favour the court can decree performance, (Morice v Bishop
of Durham)
- Thus, non-charitable purpose trusts are invalid unless they fall into the limited
exceptions.
a) Discretionary trust: the trustee ought to be able to determine with certainty
whether any given claimant is or is not within the description of the relevant class.
-

Established in the House of Lords in McPhail v Doulton, where the House of


Lords held a trust is valid in this context if it can be said with certainty that a
given individual is or is not an object, ie, a member of the class of beneficiaries.

(i) conceptual uncertainty the criterion certainty test could not be used; the
uncertainty is bad since it relates to the determination as to whether the relevant
disposition is found on a criterion which is capable of application with certainty.

UNLESS CURED BY THIRD PARTY

IN THE MATTER OF EDEN

Example: Re Gulbenkians Settlement Trusts, my old friends bad because


too uncertain. Principle: the donor must make his intention sufficiently plain as to
the objects of his trust and the court cannot give effect to it by misinterpreting his
intentions by dividing the fund merely among those present.

(ii) Evidential uncertainty In McPhail v Doulton, Lord Wilberforce emphasized


that in respect of the difficulty to ascertain the existence of whereabouts of
members of the class, this is a matter with which the court can appropriately deal

on an application for directions. The uncertainty of this nature should not affect
the validity of disposition.
-

Re Gulbenkians Settlement Trusts : if the class is sufficiently define by the


donor the fact that it may be difficult to ascertain the whereabouts or continued
existence of some of its members at the relevant time matter not. The trustees can
apply to the court for directions to pay a share into court.

(b) Fixed Trust the trust will be invalid if it is impossible to draw up a complete
list of beneficiaries IRC v Broadway Cottages Trust (1955) there can be no
division in equal shares amongst a class of persons unless all the members of that
class are known.

Halsburys Laws of Malaysia : if a trust requires division between all the members
of a class, for example in equal shares, it will be void for uncertainty if it is not
possible to provide a complete list of the beneficiaries, as the size of each equal
share cannot be ascertained unless the precise number of the beneficiaries is
known.

Where the equal division is of capital and is to take place at some future date, it
will be necessary at the date of commencement of the trust to determine whether
the description of the beneficiaries (for example, old friends, business
associates, customer of my company, members of my family is void for
uncertainty.

a) Absence of the certainties


1. If there is no intention to create a trust, the only interpretation must be that an
outright gift was intended. The donee can keep the property for themselves as
they are not a trustee.
2. If it is not clear what the trust property is intended to be, there can be no trust.
The likely result is the complete failure of the attempted disposition. If the
beneficial interests are not indicated, the property is still held on trust, but as it
is not clear for whom, the trustees hold the trust property on resulting trust for
the settler or testator.
3. If there is no certainty of objects, then as above, the trustees hold the property
on resulting trust for the testator or settlor.

Case : Lee Pheck Choo v Ang Guan Yau & Anor [1975] 2 MLJ 146
citing Snells Principles of Equity :
The paramount certainty is that of subject matter in the first sense; if there is no
certainty as to the property to be held upon trust, the entire transaction is nugatory.

If that certainty is present but there is no certainty of words, the person entitled to
the trust property holds free from any trust.
If both these certainties are present but there is uncertainty of objects, there is a
resulting for the settlor for once establish that a trust (of definite property) was
intended, the legatee cannot take beneficially,
The same applies where there is uncertainty of the subject matter as regards the
beneficial interest unless one of the beneficiaries can establish a claim to the
whole.

Legatee : a person who receives a legacy


Beneficially : receiving or entitling one to receive advantage, use, or benefit

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