Equity:Trusts PDF

L1 - HISTORICAL INTRODUCTION Thursday, 19 September 2024 9:51 PM Equity developed over time to supplement, aid and correct common law, as and when necessary. Equity is unique to common law systems of law as it does not feature, as a concept, in civil jurisdictions. It is based on the concept of fair...

L1 - HISTORICAL INTRODUCTION Thursday, 19 September 2024 9:51 PM Equity developed over time to supplement, aid and correct common law, as and when necessary. Equity is unique to common law systems of law as it does not feature, as a concept, in civil jurisdictions. It is based on the concept of fairness. Timeline 1066 - The conquest of William I. He confiscated all land from all landowners and declared himself the ultimate owner of all lands. Landowners were given their land back but only in return for services or money. Since then and to a certain extent today, all land is owned by the Crown. 1230 - Emergence of the device of 'use'. Henry III dispensed with baronial chancellors who held offices for life and took the office into his own hands as early as 1238. It was also around this time that common law became inflexible. 1535 - Statue of uses - This statute aimed to decrease the influence of the Court of Chancery by abolishing the main form of business, namely the 'use'. It didn’t work as ways to avoid the prohibition of 'uses' were quickly found and led to the creating of 'uses upon uses'. Powerful incentives existed for 'uses; to continue with inheritance rules and taxation. In many ways, the same principle applies in the modern form of a trust that often is used not only for convenience but also for tax avoidance. 1238-1620 - Continuing battle between Equity and Common Law. 1615 - The Earls of Oxford Case - an important case that determined Equity's existence. If the decision went the other way, Equity would probably have lost its significance and would not exist. This case determined what should happen if there was a direct conflict between Common Law and Equity. It determined that if there is a conflict the decision of the Court of Chancery prevails over the decision of the Court of Common Law. However, despite this case equity continues to struggle primarily due to delays, inconsistencies, unpredictability and some unscrupulous Chancellors.  1676 - Cook v Fountain 3 Swan 585 - Lord Nottingham expressed a more measurable and rule based version of equity ["the conscience by which I can proceed is merely Civilis et politica and tied to certain measures"]. 1689 - John Selden - Determined 1. Equity in law is the same that the spirit is in religion and 2. Equity is a roughish thing: for law we have a measure, know what to trust to; equity is according to the conscience of him that is Chancellor and as that is larger or narrower, so it equity. 17th Century onwards - This development of a settled system of law continued, created to Lord Hardwicke. It was completed in the early 19th century by Lord Eldon. In the 17th century, the reporting of cases also commenced which caused equity to lose much of its flexibility. 18th century saw the biggest grown of Equity as it was also during this time that many modern equitable principles and rules developed. 1873-1875 - Judicature Act - Introduced a fusion of the administration of the two systems. S.25(11) of the Supreme Court of Judicature Act 1873 codified the decision of Earls of Oxford case and paved the way for the creation of a common court that stopped the need for parallel proceedings or having to start the claim in the wrong court. Definitions of Equity - 1. Aristotle - "For Equity, though superior to justice, is still just… justice and equity coincide, and although both are good, equity is superior. What causes the difficulty is the fact that equity is just, but not what is legally just: it is rectification of legal justice. 2. Earl's of Oxford's Case - "The office of the Chancellor is correct men's consciences for frauds, breach of trusts, wrongs and oppression… and to soften and mollify the extremity of the law".  Equity is a set of rules and principles based on fairness to be used when common law is unjust. Common law is based on precedent. Equity is only present in common law, not civil law. When common law conflicts with equity, equity prevails An Injunction is an equitable remedy. Earls of Oxford Case (1615) 21 ER 485 Held that equity prevails. Facts: The dispute involved land in London that Henry VIII had gifted to Lord Audley for his role in Anne Boleyn’s trial. Lord Audley left the land to Magdalene College, Cambridge, which sold it to Queen Elizabeth I in 1574. The Queen sold it to Benedict Spinola in 1575, and Spinola sold it to the Earl of Oxford in 1580. The property was then significantly developed, increasing its value substantially. Dr. Barnaby Goche, Master of Magdalene College, later sought to reclaim the land, leading to legal action. Issue: The key question was whether the Court of Chancery had the jurisdiction to hear the case. Magdalene College challenged Oxford’s ownership, arguing that the sale of college lands was prohibited by statute, although the initial sale to the Queen had been intended to bypass this law. Analysis: This case triggered a confrontation between common law and equity. Sir Edward Coke, Chief Justice of the King’s Bench, opposed  the Lord Chancellor's power to grant injunctions through Chancery, which often blocked common law judgments. Coke argued that these injunctions violated statutes meant to prevent appeals from common law courts. The Earl of Oxford claimed that Coke's judgment had been fraudulently obtained, prompting the Lord Chancellor to issue an injunction in Chancery based on the unfair advantage that had emerged. This marked a key moment in the conflict between common law and equity in the English legal system. Characteristics of Common Law Characteristics of Equity Decisions are made alongside the Emphasis is laid of fairness and equity. use of precedent. The only remedy is damages Remedies are orders to do or not to do [money]. something Establishes certain rules which No precedent but is based on the determine certainty. judgment of a single chancellor. Cook v Fountain Facts: This case involved a dispute over a property settlement and the application of equity in relation to trusts. Cook had transferred property to trustees under a settlement but later claimed the property back. Fountain, representing the trustees, argued that the transfer was absolute and that Cook had no further claim to the property. Cook contended that the transfer was intended to create a trust for his benefit, despite the lack of formal documentation to support this claim. Issue: The main issue was whether a trust could be implied by equity when there was no explicit declaration of such a trust in the property transfer. The question was whether the Court of Chancery would recognize Cook’s informal claim or whether the property transfer to the trustees was absolute and irrevocable. Analysis: The case focused on the principles of equity concerning trusts and property transfers. The court had to determine whether there was an implied or resulting trust based on the circumstances of the  transfer, despite the absence of a written declaration. The ruling emphasized that equity does not favor claims based solely on verbal agreements or informal understandings. Without a clear, documented intention to create a trust, the court generally upholds the formal legal title. This decision underscored the need for explicit declarations in the creation of trusts, and it reinforced the strict approach equity takes in property disputes where informal claims are made. Equity is the modern age The importance of Equity in modern times is evident in different disciplines or subjects of the English Legal System, such as Contract law, Land Law, Tort Law, and Mortgages. In Contract law, Lord Denning sought to use equity to find solutions when dealing with contractual disputes, some of which included estoppel, undue influence, mistake, and the equitable remedies. The biggest example of Equity in both Land Law and Mortgages is Trust, and the context of undue influence. In Tort Law equity is seen through the use of injunctions to find equitable remedies to prevent tortious behavior [Guest v Guest (2022) UKSC 27]. S1 - WHAT IS EQUITY? ESSAY PLAN Monday, 23 September 2024 3:32 PM INTRODUCTION Define equity - Equity refers to a body of law developed by the Court of Chancery, designed to supplement the rigid common law and achieve fairness and justice when legal remedies were insufficient. This essay will analyse… 1. Equity as a Source of Fairness Definition in Terms of Fairness: Discuss how equity's core function is to provide fairness where legal rules may be too rigid or unjust. Role of Conscience: Explain how equity intervenes to ensure moral outcomes, based on conscience and justice, rather than strict legal rights. Equity vs. Legal Formalism: Analyse how equity stands in contrast to the formalistic application of law, which sometimes leads to unjust results. Examples:  Examine cases where equitable principles such as "clean hands" or "equitable estoppel" are invoked to prevent unfair advantage or exploitation. 2. Equity as a Corrective to Common Law Equity’s Role in Filling Legal Gaps: Explore how equity addresses situations where common law offers no remedy or an inadequate one. Development as a Parallel System: Outline how equity evolved as a correction mechanism to rigid and sometimes harsh common law rules. Common Law vs. Equity in Modern Context: Examine how equity continues to modify and enhance the law by introducing more flexible doctrines and remedies. Examples: Contrast legal and equitable remedies, e.g., damages (legal) vs. specific performance (equity). Discuss equitable doctrines like promissory estoppel, which prevent injustice where the common law might not. 3. Equity and Justice Philosophical Underpinnings: Analyse equity as an embodiment of Aristotelian notions of justice, where it aims to correct the imperfections of general laws. Balancing Individual and Social Justice: Explain how equity focuses on achieving justice on a case-by-case basis, often weighing individual circumstances. The Ideal of Substantive Justice: Consider equity's role in achieving "substantive justice" rather than merely procedural justice. Examples: Explore how equitable remedies, like injunctions and constructive trusts, aim to restore justice in specific situations where legal rights might fail to do so. 4. Equity as a Set of Principles and Maxims Equity’s Guiding Maxims: Analyse how the key maxims (e.g., "equity acts in personam," "he who comes to equity must come with clean hands") form a framework that shapes equitable jurisdiction.  Flexibility and Adaptability: Show how these maxims allow equity to remain flexible and adaptable, making it capable of evolving with changing societal norms. Interaction with Other Doctrines: Explore how equity interacts with and influences other areas of law (e.g., contract law, property law). Examples: Discuss cases where equitable maxims directly shaped outcomes, such as denying relief to parties acting in bad faith. 5. Equity as an Ethical Framework Moral Underpinnings of Equity: Examine how equity enforces ethical behaviour in the legal system, such as by imposing fiduciary duties and protecting vulnerable parties. Doctrine of Unconscionability: Analyse how equity steps in to prevent unconscionable behaviour, especially in cases involving unequal bargaining power or exploitation. Equity and Public Policy: Consider equity’s role in shaping legal principles that reflect broader societal values and public policy concerns. Examples: Discuss doctrines such as undue influence and duress, showing how equity ensures that parties act fairly and ethically in their dealings. CREATE A THEME FOR THE ESSAY AND STICK TO YOUR JUDGMENT ABOUT WHAT EQUITY IS. Judgment of ruling in Earl of Oxford What is legal or politically motivated and why? The Earl of Oxford’s case demonstrates how fragile and susceptible equity was to political upheaval during the 17th century. Equity was dependent for it’s authority upon the Kings’ prerogative during this period, it was significantly jeopardised by events such as the overthrow of Charles I. Legal vs. Political Motivation of the Judgment 1. Legal Motivation:  o Resolution of the conflict between common law and equity: The judgment can be seen as legally motivated because it sought to resolve a growing tension between two different legal systems operating in England: the common law courts (represented by Chief Justice Sir Edward Coke) and the Court of Chancery (presided over by the Lord Chancellor). In this case, the common law courts had ruled in favour of the defendant (the grantee of the disputed land), but the Chancery issued an injunction to stop the enforcement of that judgment, arguing that strict adherence to the common law would lead to an unjust outcome. o Fairness and justice: The ruling in favour of equity emphasized that when common law rules lead to unjust outcomes, the Court of Chancery could intervene to provide a remedy. This was a major development in English law, establishing that equity would prevail over common law in cases of conflict. Lord Ellesmere famously stated that equity could correct "men’s consciences" and mitigate the harshness of the common law. This can be interpreted as a legal decision aimed at ensuring justice and fairness, rather than strictly adhering to rigid legal rules. 2. Political Motivation: o Tensions between King and Judiciary: The judgment had clear political overtones due to the broader context of power struggles in 17th-century England. Chief Justice Coke, a staunch defender of the independence of the judiciary, had been in a prolonged conflict with King James I, who sought to assert royal authority over the courts. By ruling in favour of equity (which was associated with the King's prerogative through the Court of Chancery), the judgment can be seen as politically motivated, favouring royal power over the judiciary. o Royal Prerogative: The Court of Chancery was closely aligned with the Crown because the Lord Chancellor was a member of the King’s government. In siding with the Court of Chancery, the judgment supported the notion that the King's courts (i.e., the Chancery) could intervene to ensure justice, which reinforced the King's influence over the legal system. This decision can be viewed as politically motivated  to uphold the royal prerogative and weaken the independence of common law courts. L2 - KEY CONTRIBUTIONS OF EQUITY Monday, 23 September 2024 11:52 AM Trust = when one person(s) holds and controls the property for the benefit of another(s). The controller of the property is called the trustee(s) but the ‘real’ owner(s) of the property is the beneficiary(s). But it is the trustee who decides what happens and how to deal with the property – to sell or not, to invest or not etc. Reasons for creating a trust: 1. Legal requirements – real property [land] can only be held by two or more people as trust of land to a maximum of four [LPA 1925; see land law 3101]. 2. Tax avoidance – trusts may allow financial arrangements to be structured in a manner which create tax advantages. 3. Convenience – some properties are managed for large number of people – e.g., pension funds. A trust makes it easier to manage. Key Points: Once the trust is created, the settlor drops out of the picture and the relationship is between Trustees and Beneficiaries. This relationship is not recognised at common law as such but is recognised and can therefore be enforced by Equity. The trustee HOLDS the property ON TRUST for the beneficiary. A Settlor can also declare him/herself as a trustee either as a sole trustee or jointly with other trustees. If that is the case, he/she has  dual capacity. Once the trust is validly formed, their capacity as settlor ends as they are now a trustee. A Settlor may also become a beneficiary – a bare trust. A Settlor may be a trustee and a beneficiary at the same time but ONLY if there are also other beneficiaries. It is not possible for A to be a sole trustee for A as a sole beneficiary. This amounts to absolute ownership and as such there is no trust. Some trusts are imposed by courts and are not created by a settlor. Those trusts are called ‘constructive trusts.’ Some trusts are under dispute as to whether they arise because of ‘presumed intention of the settlor’, due to automatic application of the law or other reasons. Those are called ‘resulting trusts’ – more on that later during the year in term 2. Characteristics of the Trust: Trust is It is not recognized at common law but recognized and equitable enforced in equity and creates a proprietary right. It is an A legal obligation, not a mere moral one. obligation It binds the Makes them act in accordance with the trust instrument. trustee It concerns Any property that may be tangible or intangible such as land, property shares, money or a 'chose in action'. Enforceable Beneficiary in private trusts or an attorney in public trusts by by: the exceptions in purpose trusts. Remedies: Equity’s contribution is not confined to the trust. Equally important are the equitable remedies. The most common remedy at common law is DAMAGES. This usually means money or money’s worth. But there are many circumstances where damages are not really adequate. Specific performance – If one party to the contract refuses to perform it, the court may order specific performance. In other words, it may force the reluctant party to perform as originally agreed. Only available in a small number of contracts that are designated as specifically enforceable. Injunctions – there are variety of different types but the main distinction to remember is between mandatory ones (you must do) and prohibitory ones (you mustn’t do). Imposition of constructive trusts – more on that later in the course of the year. Subrogation. Equitable tracing. Rectification. Equitable compensation and accounts of profits. MAXIMS Due to the protracted nature of equity’s development and many current variations/seeming contradictions, it is difficult to give a nutshell view of how Equity operates. We will discover the nuances during our studies of Equity. However, equitable maxims give us a good starting premise to recognise the main characteristics of Equity and shows us the features that underpin existing rules, principles and decisions. Equity follows the law but it also corrects the law where it is unjust and equity will not suffer a wrong to be without a remedy. However, when the equities are equal, the law prevails. Maxims of equity are legal maxims that serve as a set of general principles or rules which are said to govern the way in which equity operates. Maxims of equity are not a rigid set of rules, but are, rather, general principles which can be derived from in specific cases. Maxims Definitions He who seeks equity must If you are asking for fairness (equity), you must do equity. also act fairly in return. He who comes to equity If you are asking for equitable relief, your must come with clean behaviour must be honest and without hands. wrongdoing. Equity assists the diligent, Equity helps those who act promptly to protect not the tardy. their rights, not those who delay. Equity is equality. Equity aims to treat everyone fairly and equally in similar circumstances. Equity will not assist a Equity does not help someone who acts volunteer. without legal obligation or consideration, like a volunteer. Equity will not perfect an If a gift is incomplete or not legally finalized, imperfect gift. equity won’t step in to make it valid. Equity looks to the intent, Equity focuses on what the parties intended to rather than to the form. achieve, not just the legal form of their actions. Equity imputes an intention Equity assumes that people will act in a way to fulfil and obligation. that fulfils their obligations. Equity looks on that as done Equity treats something as completed if it was on that which ought to be supposed to have been done, even if it hasn't done. been formally completed yet. Equity acts in personam. Equity judgments are directed at individuals personally, affecting their conduct or rights rather than property directly. Equity will not allow a Equity prevents someone from using a law statute to be used as an unfairly to deceive or harm others. instrument of fraud. S2 - WHAT ARE THE MAXIMS OF EQUITY? ESSAY PLAN Thursday, 26 September 2024 11:34 AM For what if/are questions don’t explain. State how they are used and where they have been used. Use case law to show how they are used/ adapted by different judges as they are not binding and open for interpretation. Find recent case law about where maxims have been used. What areas of law? What do they do? Where are they used? Compare judgments between judges. Maxim Definition Case Law Area of Law Equity acts This means equity typically Chellaram v Chellaram Trusts, in applies to the person (2002) - A trust was set Property. personam involved, meaning it affects up in India with shares individuals directly, rather in two companies than their property. located in Bermuda, but the trust deed was held and managed in  London. The beneficiaries claimed that they never received any distribution of the trust's income or capital. They sued the trustees, who were based in different parts of the world. The trustees argued that an English court had no authority to remove foreign trustees from a trust based abroad. However, the court referred to the Ewing v Orr Ewing case, ruling that it did have jurisdiction because equity acts in personam—meaning the court can make decisions targeting the individuals involved, regardless of where the trust is located. He who If you want fairness from the Lodge v National Union Trusts. seeks court, you must act fairly Investment (1907) - B equity must yourself. borrowed money from do equity M, an unregistered moneylender, and used certain securities as collateral. However, the contract was illegal and void under the Moneylenders Act of 1900. B then sued M to get the securities back. The judge refused to  return the securities unless B repaid the money he had borrowed. Since B was asking for equitable relief, the judge ruled that he must also act fairly by repaying the loan before recovering the securities. He who If you ask for fairness, you Palaniappa Chettiar v Trusts, comes to must not be guilty of unfair Arunaselam Chettiar Property, equity must conduct related to the case. (1962) - In this case, Divorce. come with the Privy Council ruled clean hands that equity will not assist someone who has acted deceitfully for personal gain against the public administration. The respondent had arranged the transfer of rubber land for an illegal or fraudulent purpose, which was successfully carried out. Because of this deceit, the respondent was barred from seeking the court's help or equitable relief. In other words, someone who engages in fraud cannot turn to the court for fairness or justice. Equity will If someone tries to exploit a Sia Siew Hong v Lim not permit law or legal loophole to Gim Chian (1996) - It a statute to commit fraud or achieve an was held that the be used as unfair advantage, the courts appellant is estopped an will intervene to prevent it. from relying on S 6(1) instrument of the Limitations Act of fraud 1953 because the appellants had agreed that the respondent could enforce the guarantee ‘at any time’. To rely on the Limitations Act 1953 would have been unconscionable and thus the equitable maxim was applied here. Equity is When equity is applied, Tai Kwong Goldsmiths equality fairness requires treating all & Jewellers (1995) - In parties equally. This maxim is this case, it was ruled only applied when there that the Partnership nothing agreed between the Act of 1961 does not parties. specify the order in which a partnership's debts and liabilities should be paid. As a result, the court applied the maxim "equality is equity," which means that all debts and liabilities should be shared fairly among those involved. This prevents any one creditor from being paid first just because they made a claim earlier. Instead, the partnership’s debts to non-partners should be paid equally, or pari passu (on equal  footing), ensuring fairness for all creditors. Equity Courts focus on the actual Parkin v Thorold (1852) looks to the intention or substance of an - The vendor and buyer intent action, not just the legal agreed on a date to rather than formalities. complete a land sale. the form The vendor asked to postpone, and the buyer agreed. When the new date arrived, everything was still in order. The vendor then appealed after the court refused to enforce the original completion date. The appeal was granted, ruling that in land sale contracts, the original completion date is not always crucial. Equity If a party is supposed to Walsh v Lonsdale Property, looks on complete an obligation, the (1882) - Lonsdale Rent. that as court treats it as if it has agreed in writing to done on already been fulfilled, even if give Walsh a 7-year that which it hasn’t happened yet. lease of a mill with rent ought to be paid quarterly, but with done a year's rent due in advance if requested. No formal lease was signed. Walsh moved in and paid rent on time. Later, Lonsdale asked for the year's rent in advance, but Walsh refused, claiming he was only a yearly tenant and shouldn’t  pay in advance. The court ruled against Walsh, stating that the written agreement was enough for an equitable lease, making him responsible for the year's rent in advance, and the distress (seizure of goods) was lawful. Equity will If a gift is imperfect or lacks not perfect necessary elements, equity an will not step in to correct it. imperfect gift Equity will 1. Equity will not In this case, the not assist a suffer a wrong claimant, Al-Sabah, volunteer to be without a sought to recover funds remedy - In this from World Business case, Al-Sabah that were allegedly was seeking to misappropriated. Al- recover Sabah argued that he misappropriated was entitled to the funds, and the money due to a trust court’s ruling arrangement. The court allowed him to had to decide whether remedy the a valid trust existed and wrong done to if Al-Sabah could him. reclaim the funds. The 2. He who seeks court ultimately ruled equity must do in favour of Al-Sabah, equity - it confirming that a valid implicitly trust had been suggests that Al- established. This Sabah had acted allowed him to recover appropriately in the misappropriated establishing the funds from World trust, thus Business. The case  qualifying for highlighted the the remedy he importance of clearly sought. establishing trust 3. Equity looks on relationships in that as done financial transactions. which ought to be done - The court treated the trust as valid, reinforcing the idea that equitable principles can uphold obligations that ought to have been fulfilled. Equity looks to the intent, rather than to the form. Equity is Secretary of State for Equality Business and Trade v Mercer In current day the maxims are used as a Defence but the judges do not take it seriously. Ahkter v Khan - Family law Mrs. Ahkter and Mr. Khan participated in an Islamic marriage ceremony in London in 1998, but it didn't meet the legal requirements of the Marriage Act 1949, so it wasn't a valid marriage. They had planned to have a legal civil ceremony afterward, but it never happened, even though Mrs. Ahkter wanted one. They had three children together, and in 2016, Mrs. Ahkter filed for divorce. Mr. Khan defended the case, and the Attorney General got involved. The main issue was whether the 1998 ceremony created a "non-marriage" (as argued by Mr. Khan and the Attorney General) or a void marriage, which would allow Mrs. Ahkter to seek financial support (as she argued). The court needed to decide two questions: (1) Can there be ceremonies that result in "non- marriages"? (2) If so, did the 1998 ceremony create a non-marriage or a void marriage? Trust is found a lot in Family Law and Property Law. Hudson v Hathway Maxim - Equity will not assist a volunteer and Equity will not perfect an imperfect gift. A volunteer is someone who doesn’t provide anything for consideration - Equity will not assist a volunteer. Therefore, there is no legal recourse and equity does not apply. KEY DEFINITIONS Tuesday, 24 September 2024 2:44 PM Administrator/administratrix - Where a person does not name anyone in the will an administrator/administratrix fulfills the same function as an executor/executrix. Assignment - Also a transfer of property, but usually of intangible property like a lease Attorney-General - In the equity and trusts sense, the person designated to control charitable trusts. Beneficiary (sometimes called the cestui que trust) - The beneficiary owns the actual value of the property and in most, but not all, cases can control the actions of the trustee. Bequest - Personal property left by will. Bona vacantia - Ownerless property which usually reverts to The Crown by way of the Treasury. Chose in action - Again intangible property such as the ownership of a right to sue. Common law actions - These are actions of right so that once a breach of a common law right has been established you are automatically entitled to relief from the courts. These are often called rights in personam, that is they are personal rights, usually  comprising of a right to sue. They rank in terms of priority with general creditors in cases of insolvency. Conveyance - The formal transfer of property, a term usually used in connection with land. Covenants - Common law contracts which are legally binding because, in the absence of consideration, they comply with the formalities prescribed by the Law of Property (Miscellaneous Provisions Act) 1989. Only binding at common law and not in equity. Devise - Land left by will. Disposition - A transfer of property. Donee - The recipient of a gift. Equitable maxims – see above Equitable remedies - Unlike common law actions, they are discretionary in nature. See the maxim Equity will not assist a volunteer. It means that the equitable remedy of specific performance will not generally or automatically be given for a breach of a common law contract. Equity’s darling - The bona fide purchaser for value of a legal estate without notice Estoppel - Where a person is stopped from going back on a promise or representation on which another has relied in the absence of formalities supporting the promise or representation and where it would be inequitable to be allowed to go back on the promise or representation. Executor/executrix - Male or female person named in a will in whom the legal title is vested until the property under the will is distributed either by way of trust or by way of outright gift. Fiduciary - A fiduciary relationship is one where one person has the trust and confidence in another for that other to manage his/her affairs. The classic example of a fiduciary relationship is that between a trustee and a beneficiary, but there are also other fiduciary relationships for example, between company directors and companies, between partner and partners and principal and  agents. Due to the nature of trust and confidence in the fiduciary relationship the courts control fiduciaries very strictly. Inequitable - Contrary to the established equitable jurisdiction; ‘unfair’ Insolvency / bankruptcy – An insolvent person is someone who cannot meet their obligation to pay their debts. A bankrupt person can be sued by general creditors with a priority given to secured creditors, but if somebody can establish a proprietary right that right will prevail before all other creditors. Intangible property – Non-physical property. Inter-vivos trust – Trust created by a settlor to take effect during the lifetime of the settlor. Intestate succession - Where a person does not leave a will and the disposition of their property is administered under the Inheritance (Provision for Family & Dependents) Act 1975 and subsequent legislation. Legal and beneficial ownership - A trustee is said to hold the legal ownership of property, but the beneficial/equitable/proprietary interest is held by the beneficiaries. Please note that we often use the three terms interchangeably during our lectures and discussions, but it is important to remember that beneficial and equitable are not the same. All beneficial interests will be equitable but the term equitable is wider and encompasses other interests as well. Remember; all Mars Bars are chocolate; not all chocolate is a Mars Bar! Life and remainder interests – The division between a capital asset and income derived from it. For example, A leave shares in X company to Alice for life and thereafter to Bob means that Alice gets the dividends on the shares during her lifetime then the capital value of the shares goes to Bob on her death. Nemo dat quod non habet - Latin for the fact that no man can obtain a better legal title than he already has. For example, if a thief steals a diamond bracelet and sells it on to an unsuspecting third party, the thief has not got legal title so neither can the third party; the legal title remains with the original owner.  Objects of a trust - This expression is very often used interchangeably with beneficiaries and simply means the persons who may benefit from the trust property. Pacta sunt servanda - Latin for the fact that agreements should be upheld. Perpetuity - A period of time on which for policy reasons the law will not allow property to be outside the general circulation of the economy Personal property - Anything other than land. Proceeds of sale – For example; If A leaves three houses by will on trust for two people the trustee/s will have to sell the three houses and divide the proceeds of sale between the two beneficiaries. Proprietary right - If one can establish a proprietary right, which beneficiaries under a trust can usually do, they will recover whatever is left of their property in insolvency thus having priority over all other creditors. These are rights in rem. Real property - Consists of land. Residuary Estate - Any property which remains undisposed of after a number of specific gifts on death. Specific performance - An order of the Court of Equity to compel performance of a contract where there has been consideration given and the subject matter of the contract is unique goods, i.e. cannot be replaced in the market ; for example shares in a private company. Patel v. Ali 1 All E.R. 978. Statutory formalities - There are several statutory formalities which govern the creation of trusts and dispositions of property. Subject of a trust – The property that is subject to the trust obligation. Sui juris - Of full legal age and mental capacity Tangible property - Physical property. Testamentary disposition - Property left by a will.  Testamentary trust - Trust created by a settlor to take effect upon the settlor’s death. Volunteer - Someone who has not provided consideration for a contract. Unconscionability and unconscionable conduct - Something which shocks the conscience of the Court of Equity according to the established equitable jurisdiction; also ‘unfair’ EARL OF OXFORD CASE Tuesday, 24 September 2024 2:48 PM L3 - TYPES OF TRUSTS Tuesday, 24 September 2024 9:05 PM Characteristics of a Trust: 1. Trust is equitable. a. But not recognized and enforce in equity. b. It creates a proprietary right. 2. It is an obligation. a. Legal obligation b. Not a mere moral one. 3. It binds the trustee. a. To act in accordance with the trust instrument. 4. It concerns property. a. That may be tangible or intangible such as land, shares, money or a 'chose in action'. 5. Enforceable by: a. Beneficiary in private trust. b. Attorney-General in public trusts. c. By the exceptions in purpose trust. REMEDIES - Equity’s contribution is not confined to the trust. Equally important are the equitable remedies. The most common remedy at common law is DAMAGES. This usually means money or money’s worth. But there are many circumstances where damages are not really adequate. Mere Powers A ‘mere power’ is a power given to trustees enabling them to act to the benefit of a class of beneficiaries if they choose to do so. The difference between a power and a discretionary trust is that under a power the trustees are not obliged to act, whereas under a discretionary trust they have a fiduciary duty to act for the benefit of one or beneficiaries within the class of beneficiaries. The distinction between a power and a trust Consider the two statements below. Which is a power and which is a trust?  I give 5,000 GBP to my husband to be distributed amongst my children as he may think fit - TRUST. I give 5,000 GBP to my husband to be distributed amongst my children if he may think fit - MERE POWER. I give 5,000 GBP to my husband to be distributed amongst my children if he may think fit, and if any of the money remains by the end of the year, it is to be distributed amongst my grandchildren. - TRUST. SEMINAR QUESTIONS 1. Trusts may be seen as ‘facilitative devices: in offering them to settlors as vehicles for giving effect to their wishes, the law has to ensure that they can be relied upon to do just that.’ (Gardner). To what extent do the requirements of certainty support this statement? What information do you think the trustee needs to have in order to be able to carry out the settlor’s intentions? The requirements of certainty in trust law are essential to ensure that the trustee can effectively carry out the settlor's intentions. The three key certainties—certainty of intention, subject matter, and objects—directly support the trust as a reliable facilitative device, as Gardner suggests. Certainty of Intention This certainty ensures that the settlor clearly intends to create a trust. Without a clear intent, no trust can be formed. If the settlor’s intention is ambiguous, the court will not impose a trust, as in Knight v Knight(Equity Week 2). Trustees need clear instructions to know that they are acting under a legal obligation, not merely holding property as a gift or under some other arrangement. For example, language such as “on trust” or explicit statements in a will or deed help trustees understand their role and obligations(Equity Week 2). Certainty of Subject Matter The property or assets involved in the trust must be identifiable. If the trust does not specify what property is to be held, it may fail. Trustees need to know precisely what assets they are managing to fulfill the settlor’s wishes effectively(Equity Week 2)(Equity Lecture 2 ). For example, in a case where a car is transferred into trust, it must be clear which car is involved, or if the trust involves shares, the exact number and type of shares must be clear(Equity Week 2). Certainty of Objects The trust must also specify who the beneficiaries are (certainty of objects). If the beneficiaries cannot be clearly identified, the trust will fail because the trustee will not know to whom the property is to be distributed. For discretionary trusts, the trustee must have clear guidance on the pool of beneficiaries from which they can choose(Equity Week 2). This is particularly important in trusts where the trustee has discretion over how to distribute the property among beneficiaries(Equity Week 2)(Equity Lecture 2 ). Trustee Information Requirements For trustees to carry out their duties properly, they need: Clear instructions on the trust’s purpose (certainty of intention). Specific details of the property involved (certainty of subject matter). A clear list or method of identifying the beneficiaries (certainty of objects)(Equity Week 2)(Equity Lecture 2 ). Without these certainties, trustees might be unable to fulfil the settlor’s intentions, and the trust could fail. Thus, the legal requirements of certainty ensure that trusts can be relied upon to operate as intended. 2. What is a power of appointment? How is this different from a trust? A power of appointment is the authority given to a person (often a trustee) to distribute or allocate property among a group of beneficiaries or a class of people. However, this is a discretionary power—the holder of the power (known as the donee) can choose whether or not to exercise it. The donee is not under a legal obligation to act, but if they do, they must do so in line with the terms of the power. A trust, on the other hand, imposes an obligation on the trustee to act for the benefit of the beneficiaries. In a trust, the trustee must carry out the instructions set out by the settlor, whether the trust is fixed or discretionary. Key Differences: 1. Obligation vs. Discretion:  oIn a trust, the trustee is legally obligated to manage and distribute the trust property for the beneficiaries. o With a power of appointment, the donee has the discretion to act but is not legally required to do so unless the power is exercised. 2. Control: o In a trust, the trustee holds legal title to the property and is responsible for its administration. o Under a power of appointment, the donee does not necessarily hold the property but has the authority to direct how it will be distributed. 3. Beneficiaries' Rights: o In a trust, beneficiaries have a proprietary interest in the trust property and can enforce the trust if necessary(Equity Week 2). o With a power of appointment, beneficiaries only have a potential interest—they cannot compel the donee to exercise the power(Equity Lecture 2 )(Equity Week 2). This distinction is critical because it defines the level of control and obligation placed on the trustee or donee and how beneficiaries' rights are shaped. L4 - THE PRIVATE EXPRESS TRUST AND CERTAINTY OF INTENTION Tuesday, 1 October 2024 11:19 AM S3 - TRUSTS Wednesday, 2 October 2024 11:57 PM Trusts may be seen as ‘facilitative devices: in offering them to settlors as vehicles for giving effect to their wishes, the law has to ensure that they can be relied upon to do just that.’ (Gardner). To what extent do the requirements of certainty support this statement? What information do you think the trustee needs to have in order to be able to carry out the settlor’s intentions? Gardner’s observation that trusts are “facilitative devices” highlights their primary function: to help settlors achieve their wishes for the management and distribution of their property. In creating a trust, the settlor relies on the legal framework to ensure their intentions are honoured. To fulfil this role, the law imposes requirements of certainty to ensure that the trust can be reliably enforced. These requirements of certainty — of intention, subject matter, and objects — play a crucial role in making sure that trusts are effective and dependable tools for settlors. Let’s break down how these certainties support Gardner’s statement and what information trustees need to carry out the settlor’s intentions. 1. Certainty of Intention: Ensuring the Settlor's Wishes are Clear Purpose: Certainty of intention ensures that the settlor clearly intends to create a trust rather than simply making a gift or creating another form of arrangement. Without this certainty, the trustee may not know what their role is, and the court cannot enforce the trust. Support for the Statement: This requirement is crucial in giving effect to the settlor’s wishes because it defines the legal relationship between the settlor, trustee, and beneficiaries. If intention is uncertain, the trust may fail, and the settlor’s goals will not be achieved. What the Trustee Needs to Know: Trustees need clear evidence that the settlor intended to create a trust, such as clear wording in a will or trust deed. They must understand the scope of their powers and duties. 2. Certainty of Subject Matter: Ensuring the Property is Clearly Defined Purpose: Certainty of subject matter means that the property being placed in the trust is clearly identifiable. If the assets are uncertain, the trustee cannot know what property they are supposed to manage, and beneficiaries will not know what they are entitled to.  Support for the Statement: This certainty supports the facilitative function of trusts by ensuring that the trustee can confidently identify and manage the trust property. Without it, the trust could fail, defeating the settlor’s intent. What the Trustee Needs to Know: Trustees need to know exactly which assets are part of the trust. For example, instead of “some of my shares,” a trust document should specify “50 shares in Company A.” If the assets are not clearly defined, the trustee cannot administer the trust effectively. 3. Certainty of Objects: Ensuring the Beneficiaries are Identifiable Purpose: Certainty of objects means that the beneficiaries (or the class of beneficiaries) must be identifiable. Without this, the trustee cannot fulfil their duty to distribute the trust property according to the settlor’s wishes. Support for the Statement: Certainty of objects is crucial for facilitating the settlor’s intentions because it ensures that the correct beneficiaries will receive their intended share of the trust property. If the beneficiaries are not clearly defined, the trust may fail, and the settlor’s objectives won’t be met. What the Trustee Needs to Know: Trustees need to be able to identify the specific individuals or group of people who are entitled to benefit from the trust. They must also understand the method of distribution — whether it’s equal shares, at their discretion, or another form of allocation. The Role of Certainty in Supporting Trusts as Facilitative Devices The three certainties directly support Gardner’s argument because they: Provide Clarity: Certainties ensure that all parties involved (settlor, trustee, beneficiaries) know exactly what the trust involves. This clarity makes trusts reliable instruments for carrying out the settlor’s intentions. Enable Enforcement: When certainty is present, courts can enforce the trust. If the trustee fails to act, beneficiaries can take legal action, ensuring that the settlor’s wishes are ultimately fulfilled. Reduce Disputes: By requiring certainty, the law minimizes ambiguity, reducing the risk of disputes among trustees and beneficiaries. This aligns with the trust's purpose to provide stability and predictability. What Information the Trustee Needs to Carry Out the Settlor’s Intentions To effectively manage and administer the trust, trustees need the following information:  1. Clear Trust Document: The trust deed or will must be precise and include detailed instructions about how the trust property should be managed and distributed. 2. Identification of the Property: Trustees need to know exactly what property forms part of the trust. This includes a clear description of assets such as money, shares, or real estate. 3. Knowledge of the Beneficiaries: Trustees need to have a clear understanding of who the beneficiaries are and how they should benefit (e.g., equally, discretionarily). 4. Powers and Duties: Trustees need to understand the extent of their powers (e.g., investment decisions, power of appointment) and their legal duties, such as the duty to act in the best interests of the beneficiaries. 5. Conditions or Stipulations: If the trust has conditions (e.g., age requirements, performance of duties), the trustee must have clear guidance on how to apply them. 6. Dispute Resolution Mechanism: If disputes or ambiguities arise, trustees should know how the settlor intended these to be resolved (e.g., referring to a third party, using an arbitration process, or relying on legal definitions). Conclusion The requirements of certainty play a critical role in ensuring that trusts are reliable vehicles for giving effect to a settlor's wishes, as they provide clarity, enforceability, and predictability. Without these certainties, trusts could fail or be subject to misinterpretation, undermining the settlor's intentions. Trustees, as facilitators of the trust, need precise information regarding the intention, property, and beneficiaries to ensure they can carry out their responsibilities and uphold the trust in line with the settlor's desires. This supports Gardner’s view that the law of trusts must ensure that settlors can rely on trusts to achieve their goals. S4 - POWER OF APPOINTMENT Wednesday, 2 October 2024 11:57 PM What is a power of appointment? How is this different from a trust? A power of appointment is a legal authority granted to an individual (called the "donee") "donor") to distribute property among a specified group of beneficiaries (the "objects of the donee to decide how the property is allocated, but does not impose a legal duty to d distribute some or all of the property or, in some cases, none at all. There are two main types of powers of appointment: 1. General Power of Appointment: The donee has the authority to distribute the pro themselves, their estate, or creditors. 2. Special (or Limited) Power of Appointment: The donee can only distribute the pro defined by the donor. Key Differences Between a Power of Appointment and a Trust 1. Duty vs. Discretion: o Trust: A trust imposes a legal duty on the trustees to manage and distribut of the beneficiaries. The trustees must follow the terms of the trust and ar interests of the beneficiaries. o Power of Appointment: A power of appointment gives the donee discretio does not impose a duty to do so. The donee can choose whether or not to beneficiaries cannot compel distribution. 2. Enforceability: o Trust: Beneficiaries of a trust have an enforceable right to the trust proper duties, beneficiaries can take legal action to enforce their rights. o Power of Appointment: The potential beneficiaries under a power of appo rights unless the power is exercised. If the donee decides not to distribute no legal recourse. 3. Certainty of Distribution: o Trust: There is a certainty that the trust property will be distributed to ben legally obligated to carry out the terms of the trust.  o Power of Appointment: There is no certainty that the property will be distr over whether to exercise the power. 4. Default Rules if Not Exercised: o Trust: If trustees fail to act, the court can intervene to enforce the trust. o Power of Appointment: If the power of appointment is not exercised, the p donor's estate or passes under a default clause in the will or trust instrume Example: Trust: "I leave £100,000 to my trustees to hold on trust for my children, to be distr o The trustees must divide the £100,000 equally among the children. Power of Appointment: "I leave £100,000 to my trustees, with the power to distrib they see fit." o The trustees (or donee of the power) can choose which children receive the they can decide not to distribute it at all. In summary, the key distinction is that a trust imposes obligations, whereas a power of ap discretion without creating binding duties.  Overview of Re Baden's Deed Trusts (No. 2) Ch 9 Re Baden's Deed Trusts (No. 2) is a key case in the development of the law on certainty of objects for discretionary trusts, following the decision in McPhail v Doulton (1971). This case dealt with the application test established in McPhail v Doulton) for determining the certainty of objects in a discretionary trust. Facts The case concerned a trust created by Mr. Baden for the benefit of the "relatives" and "dependants" of the employees of a company. After McPhail v Doulton, the House of Lords had ruled that the test for certainty of objects in a discretionary trust was the "is or is not" test—whether it could be said that any given individual is or is not a member of the class of beneficiaries. The issue in Re Baden (No. 2) was how this test should be applied, particularly when dealing with potentially vague terms like "relatives" and "dependants." Judgment The Court of Appeal, consisting of Stamp LJ, Sachs LJ, and Megaw LJ, grappled with how the test should be applied in practice, particularly focusing on the terms "relatives" and "dependants." While they agreed that the trust should not fail for lack of certainty, they offered different interpretations of how to handle the test in this context. Significance It reinforced the "is or is not" test for the certainty of objects in discretionary trusts, confirming that it is sufficient to determine whether a person falls within the class of beneficiaries. The case distinguished between conceptual uncertainty (which could invalidate a trust) and evidential uncertainty (which would not). It highlighted different judicial approaches to interpreting potentially vague terms like "relatives," offering flexibility in how the law can deal with uncertain classes of beneficiaries. The test established in McPhail v Doulton for determining the certainty of objects in discretionary trusts is called the "is or is not" test. The "Is or Is Not" Test: The test asks whether it can be said of any given individual that they “is or is not” a member of the class of beneficiaries. It does not require a complete list of all beneficiaries (which was required under the previous "complete list" test for fixed trusts).  Instead, it focuses on whether it is possible to determine, on a case-by-case basis, whether someone falls within the specified class (e.g., "relatives" or "dependants"). This test provides greater flexibility for discretionary trusts, where trustees are given discretion over who should benefit from a broader group. MCQ Practice Thursday, 3 October 2024 12:12 PM Vandervell 2 Facts: After the decision in Vandervell v IRC (1967), certain rights (specifically, share options) were left in limbo when the original trust's terms were unclear. The Vandervell Trustees exercised an option to buy shares using trust funds, intending for the shares to benefit Vandervell’s children. However, it was unclear whether the beneficial interest in the shares had been effectively transferred, leading to a legal dispute. Key Issue: The main issue was whether a resulting trust arose in favor of Vandervell, meaning he retained beneficial ownership of the shares, or whether the shares were validly held on trust for his children. Judgment: The Court of Appeal ruled that there was no resulting trust for Vandervell. The shares were held on trust for the children because the trustees had made a valid declaration of trust over the shares. This clarified that if trustees properly declare a new trust, there is no resulting trust to the original settlor. Significance: Vandervell (No. 2) established that where there is an intention to transfer the beneficial interest and a valid trust is declared, no resulting trust arises. It clarified how beneficial ownership can pass in trusts when there's ambiguity in the declaration or transfer of interests Which Act of Parliament in 1873 merged the courts of the common law and the courts of chancery (equity) - The Judicature Act. Equitable judge = Lord Denning S5 - CERTAINTY OF OBJECTS Wednesday, 2 October 2024 11:47 PM What are the “three certainties”? Why does equity insist on certainty in these cases? The "three certainties" are principles that equity requires for the creation of a valid trust. These are: 1. Certainty of Intention: The settlor must show a clear intention to create a trust, rather than making a gift or other form of disposition. 2. Certainty of Subject Matter: The property or assets that are to be held in the trust must be clearly identifiable. 3. Certainty of Objects: The beneficiaries (or objects) of the trust must be clearly identifiable or ascertainable. Why equity insists on certainty: Equity insists on these certainties to ensure that the trust can be properly administered. Without certainty, trustees may not know how to distribute the trust property, or who the beneficiaries are, making the trust impossible to enforce. This helps prevent vague or unenforceable obligations and protects both the trustee and the beneficiaries by ensuring the trust can operate as intended. What was the test put forward by Lord Wilberforce in McPhail v Doulton for the certainty of objects in relations to a discretionary trust)? In McPhail v Doulton (1971), Lord Wilberforce reformulated the test for certainty of objects in relation to discretionary trusts. The test is known as the "is or is not" test: The court must be able to say whether any given individual is or is not a member of the class of potential beneficiaries. This replaced the more stringent "complete list" test, which required all potential beneficiaries to be listed or identifiable. The "is or is not" test is more practical and flexible, especially for large groups of potential beneficiaries in a discretionary trust. How was this test applied in Re Baden’s Deed Trusts (No.2)?  In Re Baden’s Deed Trusts (No.2) (1973), the Court of Appeal applied the test from McPhail v Doulton. The key issue was whether the discretionary trust for the "relatives and dependants" of a company’s employees was valid, given the potential uncertainty in identifying these groups. The judges offered different views: 1. Stamp LJ: He took a stricter approach, suggesting that for the test to be satisfied, every individual should either fall clearly within or outside the class of beneficiaries. There should be no uncertainty. 2. Sachs LJ: He adopted a more flexible view, arguing that it was enough if the trustees could determine with reasonable certainty whether an individual belonged to the class, and that mere "evidential uncertainty" would not invalidate the trust. 3. Megaw LJ: He proposed a middle ground, stating that it was sufficient if a substantial number of people could be identified as falling within the class, even if it was impossible to be certain about every single individual. Despite the different views, the court upheld the trust, applying the "is or is not" test. To what extent has the litigation in Re Baden’s Deed Trusts (No.2) clarified the law relating to the question of certainty of objects of trusts, discretionary trusts and powers? Re Baden’s Deed Trusts (No.2) helped clarify the law on certainty of objects, particularly for discretionary trusts, by emphasizing the "is or is not" test from McPhail v Doulton. However, it also introduced some ambiguity through the different judicial approaches to applying the test. Stamp LJ advocated for a stricter approach (requiring no uncertainty about class membership), which would place higher demands on the trustees to identify beneficiaries. Sachs LJ allowed more flexibility by distinguishing between conceptual and evidential uncertainty—as long as the concept was clear, the trust wouldn't fail just because it was difficult to prove someone's membership. Megaw LJ suggested that identifying a "substantial number" of beneficiaries was sufficient. The case highlighted that conceptual uncertainty (where the definition of the class is unclear) will invalidate a trust, but  evidential uncertainty (difficulty proving who falls into a clearly defined class) will not necessarily cause the trust to fail. The case thus provided more flexibility in interpreting discretionary trusts but left room for different interpretations of how strictly the "is or is not" test should be applied. Is there a real distinction between mass produced tangible goods and intangible property? There is a distinction between mass-produced tangible goods (such as products or physical items) and intangible property (such as shares, intellectual property, or digital assets): Mass-produced tangible goods: These are physical, interchangeable items that are often identical to one another. They can usually be easily identified, divided, and distributed. Intangible property: This refers to non-physical assets, such as rights or interests, which exist as legal or financial instruments (e.g., shares in a company). They are often easier to define and transfer because they represent a quantified interest (such as shares representing ownership in a company), even though they don't have a physical presence. From a legal perspective, intangible property is generally more straightforward in terms of certainty of subject matter, as it tends to be precisely defined in legal terms (e.g., ownership of 50 shares in a company). In contrast, mass-produced goods may sometimes create issues of certainty if not clearly identified (e.g., "the best crates of wine"). Why are some words considered to be ‘conceptually uncertain’? Some words are considered "conceptually uncertain" because they are vague or subjective, making it difficult to determine who or what falls within their scope. This creates a problem for the certainty of objects test in trusts. Examples of conceptually uncertain terms include: "Friends" "Relatives" (if undefined) "Those with a moral claim" "Deserving persons" Such words are conceptually uncertain because they do not provide a clear, objective basis for determining who qualifies as a  beneficiary. Different people could interpret them in different ways, leading to confusion about the trust's beneficiaries. This lack of clarity can invalidate the trust unless the court or trustees can resolve the uncertainty. Conceptual uncertainty is distinct from evidential uncertainty, where the class is clear but it is difficult to prove whether someone is part of it. S6 - PRACTIVE Q'S Wednesday, 2 October 2024 11:48 PM Q1 - Consider the validity and effect of each of the following dispositions contained in the will of Autumn, an eccentric elderly lady who died earlier this year: a.Half of my collection of Roman coins to my nephew, Benedict. This clause could potentially be problematic due to uncertainty. A bequest must be sufficiently certain in order to be valid. Here are the key issues: 1. Uncertainty: The phrase "half of my collection" is unclear. It doesn’t specify which coins Benedict should receive. Without more details, such as whether the coins should be selected randomly or based on their value, there may be uncertainty about how to divide the collection. 2. Certainty of Subject Matter: For a gift in a will to be valid, the subject matter (the gift) must be certain. A court might try to interpret Autumn's intention and could either divide the collection equally by number or by value. However, if the uncertainty is too great, this might render the gift void. Courts tend to favour upholding bequests where possible, so they may apply the maxim "equity is equality" and divide the collection equally by number. In conclusion, this clause could be valid if the court can ascertain Autumn’s intention regarding how the coins should be divided. If not, it might fail due to uncertainty of subject matter. Not a trust – This is a straightforward gift (with some uncertainty about division). b. £5,000 to my best friend, Coral, in full confidence she will use it to maintain the graveyard of my beloved pets. This clause raises questions about whether it creates a valid trust or gift: 1. Precatory Words: The phrase "in full confidence" suggests Autumn is expressing a wish or hope, but not necessarily a legally enforceable obligation. Such language is typically considered precatory (expressing a desire or hope) and does not generally create a binding legal obligation. If Coral is not under a legal duty to use the money as directed, the gift is likely absolute, meaning Coral could use the £5,000 however she likes. 2. Private Purpose Trusts: If this clause were interpreted as creating a trust for the maintenance of the pet graveyard, it would likely fail. Trusts for private purposes, such as maintaining a pet’s graveyard, are usually void because they do not benefit any human beneficiaries and are therefore unenforceable (with limited exceptions, such as trusts for animals under the perpetuities rule, but these are rare and strictly limited). There may also be perpetuity issues as the trust could last indefinitely. 3. Gift with Moral Obligation: If the clause is considered a gift with a moral obligation, Coral may feel morally obliged to carry out Autumn’s wishes, but legally, she would be free to use the £5,000 as she sees fit. Therefore, this is likely a valid gift to Coral without any legal obligation to maintain the pet graveyard, as the wording is precatory and does not create an enforceable trust. Not a trust – This is an absolute gift, with precatory (non-binding) language. c. £10,000 to my trustees, Dawn and Evening, to distribute among such members of the Flowerpower fan club as they think fit. Flowerpower was a little-known folk group of the 1960s. Their fan club was run by Autumn. Unfortunately, all the membership records were destroyed in a fire six months before Autumn’s death. This clause involves a discretionary trust or a power to distribute funds, but faces practical issues: 1. Certainty of Objects: For a trust to be valid, the beneficiaries (objects) must be identifiable. The problem here is that all membership records of the Flowerpower fan club were destroyed six months before  Autumn’s death. Therefore, there is no longer a clear way to determine who the beneficiaries are. 2. Discretionary Trust or Power of Appointment: The wording suggests that the trustees, Dawn and Evening, are given discretion to distribute the £10,000. However, the trust will only be valid if the class of potential beneficiaries is certain. Since the membership records have been destroyed, the class is uncertain, which could invalidate the trust. If it’s impossible to identify the members of the fan club, the trust would likely fail due to lack of certainty of objects. 3. Gift Over: If the trust fails, the money would probably fall into the residue of Autumn's estate (since no alternative provision is made for the £10,000 if the trust fails). Thus, this clause is likely void due to uncertainty of objects, and the £10,000 would revert to the residuary estate. Attempted trust – But likely void due to uncertainty of beneficiaries. d. The residue of my estate to Dawn and Evening for such ageing hippies living in the village of Greenwood as they think deserving (any doubt as to whether a person qualifies to be resolved by Coral); subject thereto the residue to be held on trust for my nephews and nieces in equal shares. This clause creates a discretionary trust over the residue of Autumn's estate, with specific directions on how the trustees, Dawn and Evening, are to identify beneficiaries. Several legal issues arise: 1. Certainty of Objects: The trust must have identifiable beneficiaries to be valid. The term "ageing hippies" is subjective, but courts have upheld similar descriptions as long as there is a way to define the class. The clause further specifies that any doubt should be resolved by Coral, giving some guidance on how to interpret "ageing hippies." The trustees would need to decide who qualifies, and Coral’s role might provide sufficient clarity. 2. Discretionary Trust: This is a valid discretionary trust, where the trustees have the discretion to distribute funds to qualifying beneficiaries (ageing hippies in Greenwood). The fact that Coral can resolve doubts could aid in the identification of beneficiaries, so the trust might be valid despite the subjective nature of "ageing hippies." 3. Gift Over in Default: If there are no qualifying "ageing hippies" or the trustees decide not to distribute the funds, the clause provides a gift over to Autumn’s nephews and nieces. This ensures that the residue  will not be left undistributed, which strengthens the clause’s enforceability. In conclusion, this clause is likely valid as a discretionary trust with a fallback provision for the nephews and nieces. The subjective nature of the term "ageing hippies" might raise some issues, but Coral’s involvement helps mitigate this uncertainty. Yes, this is a trust – A discretionary trust with clear fallback beneficiaries. Q2 - By her will Sonia made the following dispositions, discuss the validity of the following provisions: a.£5,000 to my husband, Julian, in absolute certainty that he would use it to look after my two elderly aunts; 1. Precatory Language: The phrase "in absolute certainty" suggests precatory words, which express a hope or wish but do not create a legally enforceable obligation. This means Julian would not be legally bound to use the money to care for Sonia's aunts. 2. Effect: This is likely a valid absolute gift to Julian, with no obligation to use the money for the aunts. The phrase "in absolute certainty" does not impose a trust. Conclusion: Not a trust, it’s a valid gift to Julian. b. £100,000 to my executors on trust for distribution amongst such loyal Manchester United fans as the executors think fit. If there is a dispute regarding who a loyal fan is, it should be resolved by the manager for the time being of Manchester United; 1. Certainty of Objects: A valid trust must have clear and identifiable beneficiaries. The term "loyal Manchester United fans" is subjective and raises uncertainty. However, the provision allowing the manager of Manchester United to resolve disputes may provide enough clarity for the trust to be valid. Courts have accepted such mechanisms for resolving uncertainty in the past. 2. Discretionary Trust: This appears to create a discretionary trust, where the executors have the power to decide which fans receive the money. Conclusion: Valid discretionary trust – The uncertainty around "loyal fans" is mitigated by the reference to the manager for resolving disputes. c. £100,000 to my trustees for such of those persons as have a moral claim on me as they shall select. 1. Certainty of Objects: The phrase "such of those persons as have a moral claim on me" introduces significant uncertainty. Trusts require identifiable beneficiaries, and the term "moral claim" is vague and subjective. A trust for those with a "moral claim" is unlikely to be valid because it lacks certainty of objects. 2. Effect: This likely fails as a trust due to uncertainty. If the trust fails, the money would fall into the residuary estate, to be distributed according to the will’s general provisions or intestacy rules. Conclusion: Not a valid trust – Likely void due to uncertainty of beneficiaries. d. My best jewelry and the 10 dozen best crates of wine in my cellar [which contains an enormous quantity of fine wine] to my trustees to be divided amongst my best friends, Stephanie and Helen, with Stephanie having first choice; 1. Certainty of Subject Matter: This disposition refers to "best jewelry" and the "best crates of wine." While this introduces some subjectivity (what is "best"?), courts might allow the trustees or beneficiaries to make a reasonable selection. The gift is unlikely to fail for uncertainty as long as the trustees can make a reasonable determination of which items are the "best." 2. Certainty of Objects: The beneficiaries (Stephanie and Helen) are clearly identified, so there is no issue with uncertainty of objects. Conclusion: Valid gift – Despite the subjectivity of the phrase "best jewelry" and "best crates of wine," this is likely a valid gift, with Stephanie having the right to choose first. e.Whatever is left may be given to a charity of the trustees' choice. 1. Discretionary Power: This gives the trustees a discretionary power to distribute the remainder to a charity of their choice. It does not impose a legal obligation to do so but gives them the option. 2. Effect: This is a valid power of appointment for the trustees. The trustees have the discretion to decide whether or not to make the gift to a charity, and if they choose not to, the residuary  estate would likely pass under the intestacy rules or other provisions of the will. Conclusion: Valid discretionary power – The trustees have the power, but not an obligation, to distribute the residue to a charity.