Equity and Trusts on the Three Certainties - Essay Example

EQUITY & TRUSTS ON THE THREE CERTAINTIES Introduction The three certainties of trust emanate from the English common law whereby; a trust to be considered present, the three principles of trust must be present. Those principles are; subject, intention, and the object. Subject entails separation of the trusts property with other properties. Such separation helps to ensure that there is certainty of the trusted property and prevent trust failure1.The study focuses to provide an insight of Equity & Trusts on the three Certainties and their applicability in the Testator Thomas situations. Equity & Trusts on the three Certainties, as established in Mr. Thomas case Studies have shown that trust may be considered to have failed. This is because the property that was administered on behalf of the beneficiaries by the trustee cannot be determined with certainty. The significance of the subject matter in trust formulation may be able to be in the case of Re Goldcorp Exchange Limited. In this case, bankrupt creditors of the company involved in trading of wine asserted that they have the power to claim on the amount of wine they had paid for. It was the case despite the fact that the bottles of wine that they claim to have paid for could not be identified individually with certainty. The judge ruled that it is imperative to ascertain the subject matter with certainty for a trust to be present. Based on the case, it was challenging and, therefore, trust could be established. The rule may be exceptional only for intangible goods such as shares. The intention of the trust must be Cleary be if the trust is to be considered present. In the case of Re Hamilton of 1895, it was held that the law court must critically observe the words used by the testator to ascertain whether there was an intention to create trust. Other cases that have been utilized to substantiate the principle of intention include the case of Amber v Evan of 1870s, the case of Paul v Constance of 1977 and that of Hanbury of 1905. The four cases try to substantiate the significance of having a clear intention when creating a trust. In above connection, there must be an object certainty for the trust to be present2. However, the magnitude of object certainty may have a significant variation depending on the trust type. The two types of trust include fixed and discretionally trust. In fixed trust, the distribution of property to the beneficiary is fixed. On the contrary, discretionally trust is where the recipients may be from a given class of people. The principle of object certainty may be substantiated by the case law of Morice v Bishop of Durha. It was decided that trust cannot exist and may not be ascertained by the court if there is no object of control. If any of the three certainties is absence, then it is considered that there is no trust among the parties. Based on the Testator Thomas will that he left to his sister Rebecca, it is possible to determine whether the there was trust in each of the four settlements in the will. They have been labelled a, b, c and d by evaluating whether the elements/principles of trust exist3. a). In the first statement of Testator Thomas will leave to his sister Rebecca, it can be that Thomas left collection of antique violins to Richard, his elder brother who had to pass them to Thomas nieces. In this will, it can be seen that the three elements of trust exist. Firstly, Thomas has portrayed an intention to establish trust by writing a will and leaving it to Rebecca as his executor. The purpose can be seen in his statement when he assert that he had left his antique violins collections to his elder brother Richard who is supposed to pass them to Thomas, nieces. The language used, in this case, indicates that there was an intention to create trust. The facts may be seen in the case of Paul v Constance. In the case, Mr. Constance had just undergone through a broken marriage and decides to elope with Ms. Paul though they had not yet officially married. A few months after the elopement, Mr. Constance broke his leg. He was compensated for 950 pound and put the money in the joint account. However, before the death of Mr. Constance it was asserted by Ms. Paul that his money was their money. The court decided that the words used by Mr. Constance amount to the establishment of trust and, therefore, Ms. Paul was entitled to Mr. Constance money. The phrase money, as utilized by Mr. Constance in the case, was enough evidence to indicate the existence of the trust. In the same manner, there was as in the Mr. Constancy case the phrase complete confidences as used by Mr. Thomas implies there was an intention to create trust4. The other certainty that indicate trust was present in Mr. Thomas will be the object. The object under consideration in the first stamen of Mr. Thomas will be the Antique Violins collections that he left to his brother Richard who was supposed to pass them to his nieces. In this case, fixed trust kind of trust may be observed. The testator has chosen a certain type of people to give a certain proportion of his property to the beneficiaries, nieces. The presence of the object in Mr. Thomas case is supported by the case of IRC v Broadway cottage. In addition, there was the presence of the subject, nieces who were to inherit Thomas property as described in the will5. b). The second statement in Thomas will indicate that Thomas left a sum of 500,000 to Army and Brendan on trust to provide benefits to the employees. Among the three certainties of trust that exist in this statement include subjects, object and intention to establish a trust. The subject here is both the ex-employees and the current employees of the Music school at Kings University. The subjects of trust include dependents and relatives of the Kings University School of music. The other certainty of trust that exists in the case is the intention, to establish trust. Thomas choice of words when making the will was a clear indication of the existence of the trust. For example, he asserted that he left a sum of 500,000 to Brendan and Army in trust. Further, it can be observed that the other two certainties of trust persist the second will statement. Hence, Thomas has established a trust for his beneficiaries as discussed. The object, in this case, is the 500,000 that Thomas had stipulated in the will. The validity of the object in the second statement of Thomas will can be tested based on the case law of McPhail v Doulton. The second statement indicates that the will was discretionally and, therefore, the fact may be relevant to this situation. It was held that any case where the claims may be proved/determined to beneficiary the trust remain pertinent and valid6. C). In the third statement of Mr. Thomas, it can be observed that he left collection of record to his daughter Elizabeth. Thomas asserted that any of his old friends may decide to take one in his remembrances. It can be that there were three certainties of a trust in his will statement as discussed. The existence of all the three components’ of certainties convinces us that trust was present in the Thomas will. For example, the object in the statement is Elizabeth and Thomas old Friends. It can further be that there was the presence of discretionally trust. This type of trust arises because Thomas had chosen a particular class of person where the beneficiaries were to be. The case of Mc Phail v, Doulton of 1971 may help to substantiate the type of trust in Thomas case. Under this case, the object of trust can be determined with certainty. Thomas was very certain in leaving his record collection to his daughter Elizabeth7. On the contrary, Thomas was not sure of his friends who may want to take collection of his record for his remembrance; In such a scenario the case of Re Baden’s Deed Trust may be applicable. There was an intention to establish trust that can be witnessed from Thomas choice of words when making his third statement in the will. Finally, the object in the third statement was also available8. A Thomas collection of his records was the object that makes the trust valid as discussed. d). In the final statement of Thomas Will, it can be observed that some of the three certainty of trust were missing and hence the trust was void. For example, the object of trust was not been determined with certainty in Thomas fourth statement9. He only asserted that the remain of his estate may be to the promising young student of the United Kingdom, Kings University. It is a requirement to Cleary defines the objects for the trust to be. The only condition that has been met in Thomas final statement was the intention to create trust. However, the other two conditions of a valid trust are missing in the last statement as discussed10. Reference List Chartered Institute of Legal Executives. Level 6-Unit 5-Equity andTrust2013 Cases and materials on equity and trusts. Butterworth’s, 1982. Broadway Cottages Trust Case, 1955 Ch 20 (1955). Harris B.Norson. The Three Certainties or when Is a Trust Not a Trust. Retrieved :< http://ww w.mondaq.com/x/20355/Trusts/The+Three+Certainties+Or+When+Is+A+Trust+Not+A+Trust>2003. Hudson, Alastair. Equity and Trusts. Hoboken: Taylor and Francis, 2014. In re Badens Deed Trusts, 1971 A.C. 424 (1971). Mertens v. Hewitt Associates, 508 U.S. 248, 113 S. Ct. 2063, 124 L. Ed. 2d 161 (1993). Re Allen, Faith v. Allen, 1953 Ch 1 810, 1953 Ch. 810 (1953). Riches, Judith. Optimize Equity and Trusts. Hoboken: Taylor and Francis, 2014. Watt, Gary. Todd & Watts Cases and Materials on Equity and Trusts. Oxford University Press, 2013. Varity Corp. v. Howe, 516 U.S. 489, 116 S. Ct. 1065, 134 L. Ed. 2d 130 (1996). Read More