Express Trust and Liability of Principle under Agency Law

Commercial Law 1
Commercial Law

Commercial Law 2
Answer 1
Issue:
Whether adequate certainty is there in context of the trust creation as declaration made by Basil
in whom he considered himself as trustee of the 5% shares of the issued share capital of Basil
Electrical Co Pty Ltd?
Law:
Generally, there are two types of trusts that are express trust and non-express trust. It must be
noted that, although there are two types of trust but three features are common in both type of
trust:
 Trust must have a trustee, and such trustee must hold legal title in context of trust
property. In other words, property which is used by the trustee for creating the trust and
this trust property is owned by the trustee as per the law.
 Property hold by the trustee must be hold in the beneficiary interest and only or for any
other purpose which is recognized by law. Property which is hold by the trustee must be
used for the benefit of the beneficiary only and not for himself.
 Property related to the trust must be conferred in the trustee (Insall, n.d.). In case, such
property is not owned by the trustee then beneficiary must vest such property in the
trustee.
Express trust is considered as that trust in which trust is created by the settlor and settlor declared
himself or herself as the trustee of their own property, or settlor can handover the said property to
any other trustee. Thus trust is mainly established in terms of the settlor intention, and in this
Court also possessed power to interfere in the intention of the settlor. In case court is satisfied
that the parties want to create the equitable interest in the third party.
In other words, express trust is considered as that trust which is expressly stated by the settlor
and this trust is regulated by the 3 certainties that are intention, subject matter and the object.
Equity maxim ‘certum est quod certum redid potest’ regulates this type of trust which means
‘that is certain which can be made certain’, because it gives effect to the expressed intention
(Find law, n.d.).

Commercial Law 3
Express trust is the classic core trust under which trust is created by the parties in context of all
the requirements. Following are the three necessary certainties which must be present for the
creation of the express trust (Find law, n.d.):
Certainty of intention- first and the most important requirement is the certainty of intention,
which means it must be clear that settlor is intended to create the trust, and this intention is
opposed to other entitlement. It must be noted that, while determining the intention of the parties,
the question deals with the substance and not with the form. In other words, Court considers the
conduct of the person and not the words of the person (Cambridge, n.d.). Equity only enforce the
trust in the situation when intention of the person was clear. Court further stated that words can
be sufficient for determining the intention but in case words contrary the conduct of the party
then it was considered that proof of intent may be lacking. It must be noted that, while
determining the intention of the parties, the question deals with the substance and not with the
form. In other words, Court considers the conduct of the person and not the words of the person.
Certainty of subject matter- for this purpose there must be certainty in context of the subject
matter of the trust, which means property related to the trust must be known and identified.
Certainty of objects- third and last requirement which must be satisfied is the, beneficiaries in
lieu of the trust must be known and identified (Uni study guides, n.d.).
Application:
In the present case, declaration is made by the Basil in which he declared himself as the trustee
of the 5% of the issued share capital of Basil Electrical Co Pty Ltd. Almost 1000 shares were
there in the company. Later, it is found that there is no identification of the 50 shares held on the
trust.
As stated above, express trust is considered as that trust which is expressly defined by the settlor
and this trust is governed by the three certainties that are intention, subject matter and the object.
In the present case also, it is necessary for Basil to prove that in this case all the three certainties
are present which means this trust is the express trust. All three requirements are evaluated on
the basis of present case law: