"It is with good reason that equity requires the three certainties are demonstrated and all relevant formalities completed before an express trust will be constituted. The courts have been too willing in some cases to disregard these formalities in order

“The question is whether in substance a sufficient intention to create a trust has been manifested.”        

When an individual formally disposes of property, e.g. by a will, the court endeavours to ascertain his intention ‘from the words he has used…in the light of the knowledge of relevant facts as…he must have had.’  Therefore, in circumstances where a disposition has occurred by an informal arrangement, a greater level of importance is attached to the context in which they were expressed.  In Jones v Lock Lord Cranworth LC stated ‘it would be of very dangerous example if loose conversations of this sort, in important transactions of this kind, should have the effect of declarations of trust’.  

However, the dangers to which Lord Cranworth referred did not hinder the court of appeal in Paul v Constance  from holding, on the basis of equally casual statements, that a trust had been declared of money in a bank account.  Clearly, this was a pragmatic decision, influenced to a great extent by the fact that it was designed to achieve a form of justice in favour of Mrs Paul.  Were the courts to have dismissed her claim, Mrs Paul would have been left with nothing, and instead Mr Constance’s wife from whom he was separated would have received a substantial payment at Mrs Paul’s expense.  This is a clear illustration of a situation in which the courts, despite having the requirement of certainty are in fact willing to abandon them to achieve what it considers to be a just outcome.  

Furthermore, in Gold v Hill, even less formal words were used but they were enough to create a trust.  The deceased said to his solicitor ‘if anything happens to me you will have to sort things out.  Look after Carol and the kids.’  Although there was some ambiguity as to what was intended, Carnwarth J held that the most likely interpretation was a trust to the solicitor for Carol and the children.  This is clearly demonstrates that the courts ‘will strive to uphold the trust and a common-sense approach will be taken’; as a result they may ignore the certainty requirements.

The case of Re Kayford is a further example of when the courts have to some extent disregarded the requirement for certainty of intention to create a Quistclose trust.  In this case, despite the fact that the Kayford Ltd paid the customers’ money into one of its existing accounts, although advised to pay the money into a separate account; it was held that the intention to create a trust was ‘manifestly clear’ despite the failure to use a separate trust account at the outset.  As such the customers and not the creditors were entitled to the balance of the monies in the account upon the company’s liquidation.  It is arguable that this was a pragmatic decision designed to protect the customers, as they were the innocent party to the transaction.  As Megarry J stated: ‘In cases concerning the public… it is an entirely proper and honourable thing for a company to do what this company did…’ It therefore submitted that the court in reaching their decision were influenced increasingly by the principle of loyalty to the settlor’s underlying intentions.

Certainty of subject matter

Certainty of subject matter is an equally vital element in the formation of a trust.  This certainty includes certainty of the assets and certainty as to the extent of the beneficiary’s interest in these assets.  When there is a lack of the necessary certainty of subject matter the trust will be void.  Sprange v Barnard illustrates that there must be certainty in relation to how much is left on trust and how much is an outright gift; the actual property must be clearly defined.  In Sprange v Barnard the settlor left some shares to X ‘and all that is remaining’ after X’s use in trust to A and B equally.  Clearly, the subject matter for A and B was uncertain as there was no level of certainty as what would be left after X had made his decisions.  Despite, the requirement for certainty of intention as illustrated in Sprange v Barnard, the court in Re Last  inferred a trust despite the lack of certainty.

The case of Re Last is deemed an exercise in judicial pragmatism. The testatrix had left all of her property to her brother and directed that upon his death ‘anything that is left’ should pass to her late husband’s grandchildren.  The decision of the court gave Last’s brother only a life interest and the applicants equal shares of the residue of Last’s estate.  This decision could not be reconciled with that in Sprange v Barnard however it was felt that a common-sense/pragmatic approach was adopted otherwise it was possible that the property would have passed to the Crown as bona vacantia which is not what Last would have wanted. Whilst the pragmatic decision in Re Last may appear correct, conceptually it is dubious.  Clearly, Karminski J presumed a trust despite a lack of certainty of subject matter, which goes against the orthodox approach to this issue.  

‘Where a mass of property comprises of a number of substantially distinct but apparently identical parts…a trust of the constituent parts will fail for uncertainty unless the relevant parts are specifically identified.’  If certainty of trust property is rigidly enforced, it can lead to an undesirable and unjust outcome to the trust agreement.  As a result, the courts are keen to avoid invalidating a trust on the basis of uncertainty when there is no good reason, and so have adopted a certain amount of flexibility, at least in relation to trusts of a homogenous mass.  This is clearly illustrated in the case of Hunter v Moss , where the court held that the trust was not void for certainty of subject matter because the shares had not been segregated and appropriated.  Instead they found that it was quite valid to declare a trust of 50 shares without specifying which 50 shares were intended to form the subject matter of the trust, as the shares in the company were identical.  The court appears to have overcome the issue of certainty of subject matter by treating the declaration of trust as a fractional share of Mr Moss’ holding, like a tenancy in common, as such the trust had the requisite certainty of subject matter. 

Certainty of object

The final certainty is the need for certainty of objects.  Essentially, the beneficiaries under the trust must be either named individually to be described by reference to a class description that is itself certain in scope.  Where a trust lacks the requisite certainty of objects, the property will be held on a resulting trust for the settlor or his estate.  

It is arguable that upon reaching a decision in McPhail v Doulton, the courts to some extent overlooked the requirement of certainty of objects to reach a just result.  The court’s decision in finding that ‘relatives’ was conceptually certain is questionable.  If ‘relatives’ is taken to mean descendants from a common ancestor, the class must be administratively unworkable as being ‘nothing like a class’ (it could include everyone on earth).  Furthermore, the judges could not agree upon a meaning of this concept.  As a result the trust would be expected to fail for lack of certainty of object.  However, this was not the decision reached in this case and the judges were happy to find that ‘relative’ was a conceptually certain word and had the requisite certainty.  As Gardener notes, ‘the courts have increasingly tried to uphold the facilitative aspects of the law of trusts.  This means that, wherever possible, their role is to uphold the wishes of the settlor as expressed in the trust…’ 

Conclusion

It is clear that although the requirements for certainty and formalities exist, as demonstrated in the above-mentioned cases, the courts adopt a flexible approach to their application, and in some cases disregard their importance.  ‘Indeed, even for certainty of intention and certainty of subject matter, we have seen that there is considerable flexibility in the courts approach: the former is largely a matter of construction and defects in the latter can be cured by the court taking a sympathetic view of the donor’s instructions.’  It appears that wherever possible the courts will try to uphold the creation of an express trust even if this requires departing from the orthodox principles.  

[1,985 words including footnotes]

---