Equity and trust

Equity and trust

Sample Question One:
A) In an inter vivos settlement made in March 2017 Peter did the following:
He transferred £20,000 to Simon with the instructions that he was fairly confident that Simon would use the money to pay for Adam’s education.
Is this a valid trust?
• Knight v Knight
• 3 Certainties
• Certainty of intention
• No need to use technical language
• Equity look to substance not form
• Precatory Words
Lambe v Eames (1871)
B) He transferred £30,000 to his trustee John with the instructions that the money be distributed equally amongst Peter’s seven nieces.

John has ascertained the whereabouts of 6 nieces but cannot find Lydia the 7th niece who left England in 1998 and moved to Australia. Advise John.

• Fixed trust
• Certainty of objects
• IRC v Broadway Cottages (1954)
• Complete list test
• Conceptual certainty, evidential certainty, ascertainability and administrative workability
• This one is ascertainability
• Pay into court the share of missing beneficiary
C) In April 2017 Peter made a will in which he left his residuary estate to his trustees to be sold and the proceeds to be distributed to his loyal relatives as the trustees may think fit. Can the trustees distribute?

• Discretionary Trust
• Certainty of Objects
• McPhail v Doulton (1971)
• “Is or is not” test
• Conceptual Uncertainty
• Re Gulbenkians ST (1970)
• Void/results back
D) In the same will he left his valuable painting to be sold and the proceeds to be distributed amongst the inhabitants of Manchester. Is this a valid trust?

• Administrative Workability
• West Yorkshire Decision
• Capricious Trust?

E) In May 2017, Peter was very ill and the doctors told him that his chances of surviving his medical condition were remote. Peter had been cared for by Jasmine for several months. The night before he died, he gave Jasmine a key to a steel box and said to her “you have been very kind to me- please keep the box and its contents”. The box contained several bank account details, a share certificate and the title deeds to a cottage in Wales.

• Imperfect gift
• Equity will not assist a volunteer
• Equity will not perfect and imperfect gift
• Milroy v Lord (1862)
• Pennington v Waine (2002
• Unconscionability
• But there are exceptions
• Donatio Mortis Causa
• Sen v Hedley (1991)
• Vallee v Birchwood (2013)
• Gift must be made in contemplation of death
• Subject matter must be transferred
• Conditional in that if donor survives- gift results back
Sample Question 2

A) In April 2017 Lynn promised John that she would transfer £30,000 on trust for his benefit. She told John that the trustee would be Rebecca.
John was grateful but wanted something further in writing as he was completely shocked when Sukhninder told him that he was deleting European Union Law from the LLB syllabus and had made his mind to leave England.
Lynn went to her solicitor with Rebecca and the solicitor executed a deed in which Lynn promised that she would transfer the money to Rebecca for John’s benefit and that the deed would be held on trust for John.
Advise John as to his rights?
• Constitution of Trusts
• Normal rules as above in slide 10
• The trust of the money is incomplete
• But is there a trust of a promise
• See Fletcher v Fletcher (1844)
• Confined to the facts
• How does it work
• 2 trusts
• Trust of the money- incomplete
• Trust of the promise as the promise is held on trust
• Can decree specific performance
B) In the same month Lynn, having published her new book on Criminal Law, agreed that any money she would make from the book she would give to Kelley to hold on trust for Michelle in recognition of the fact that Micelle had written 4 chapters in the book. All this was put into a deed which was signed by all three parties. The book has been very successful but Lynn refuses to give any money to Michelle.

Advise Michelle?

• Constitution of Trusts
• All the normal rules as per slide 10
• Trust is incomplete/gift is incomplete
• Other remedies
• Consideration- she wrote 4 chapters
• Was a party to the deed
• Cannon v Hartley (1949)- Damages
• S.1 Contract Rights of Third Parties Act 1999
C) In January 2017, Peter executed a share transfer form purporting to transfer £30,000 shares in a private company to Louise to be held upon trust for Rosemary. The share form was sent to the company in February but the shares were not registered until April 2017. Unfortunately, Peter had died in April. Rosemary has been sent a tax request from the tax office saying that she is liable to inheritance tax. Does she have to pay?

• Settlor/Donor must do everything in his power to transfer the property to the trustee or donee of the gift
• Act of a third party to effect transfer
• Re Rose (1952)
• Does not have to pay tax

D) Before Peter had died, he told Samantha that he wanted her to have his classic sports car. Both Peter and Samantha would enjoy driving the car on sunny weekends and Peter always said that the car was as much his as it was Samantha’s. The car has now been taken by his son Donald but Samantha, who is also Peter’s executor, claims to be entitled to the car. Can she claim

• Constitution of Trusts- normal rules apply
• Did Peter Declare himself trustee of the car
• Loose conversation or words repeated over time
• Jones v Lock
• Paul v Constance
• Samantha is Peter’s executrix – Rule in Strong v Bird Will apply.

E) In February 2017, Nigel transferred 5 of his houses to his trustee to be held on trust. One of the terms of the trust was that his niece Sally should get the occupation of one of the houses and also to receive a reasonable income from the other houses.

Is there a valid trust for Sally?

• Certainty of subject matter
• Must be certain what is the subject matter
• Must be clear what B’s interest is
• Re Golays’ WT (1965)
• Which house?
• What is reasonable income?
Sample Question 3

A) Fred is a very successful businessman and the owner of a private company which employs over 100 employees. In his will Fred left the following property:
£200,000 to be distributed equally by his trustees amongst all the present and ex- employees of his company. The trustees are starting to distribute the money despite the fact that there are many discrepancies in the Company’s records as to who are the ex-employees.

• Fixed Trust
• Certainty of Objects
• Complete list test
• Evidential certainty needed- must draw a complete list
• Inaccurate records- evidential uncertainty
• Re Sayer (1957)
• Trust fails and results back.
B) In a covenant made in December 2016 Patrick agreed with Roger that he would convey 30,000 shares in his private company to Roger who was to hold the shares for Amy. Amy has recently become aware of this covenant and wants to know whether she can ask for a decree of specific performance?
• Constitution of trusts- normal rules will apply
• Consideration?
• No suggestion that Amy is party to deed
• No attempted trust of a promise
• Could argue s.1 of the Contract Rights of Third Parties Act 1999
• Made for her benefit
C) In her will Vicky left £10,000 on trust for her son Mathew. Since Vicky’s separation from her husband, Mathew had ceased to have anything to do with his father. One of the terms in the will was that should Mathew return to live with his father, then the £10,000 would be forfeited and given to a local charity.
Is this condition valid?

• Trusts and Public Policy
• A condition interfering with parental duties
• See Re Sandbrook
• Condition Subsequent
• Void
• Son keeps irrespective of the condition