Trust and Equity: Analyzing Validity of Trust Clauses in Law

This essay delves into the principles of trust and equity, examining the validity of specific trust clauses within a given scenario. The analysis begins by addressing the 'certainty of intention,' 'certainty of subject-matter,' and 'certainty of objects' as established in Knight v Knight (1840) 49 ER 58. T...Read More

Running head: TRUST AND EQUITY
TRUST AND EQUITY
Name of the Student
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Author Note

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Clause a
In the given scenario, the first issue is in relation to the validity and the impact regarding
the clause where Trevor gave half of his shares to Loretta, and hoped that she would sell the
shares and distribute the proceeds of the sale to his employees in an equal manner.
The case of Knight v Knight (1840) 49 ER 581 shall be considered to be a significant case
in this regard. In this case, it was notably stated that a personal express trust should establish and
show the supposed ‘three certainties’ in order for the trust to be considered as valid. Only when
the ‘three certainties’ is has been fulfilled, the court shall identify and acknowledge the trust to
be binding and obligatory in relation to equity, and so enforce its terms in order to provide for a
beneficiary. Firstly, there should exist the ‘certainty of intention’. It means it must have been
made clear by the settlor that it was his intention (instead of any expectation, belief or hope) that
the utilization regarding the trust property shall be done in a specific manner. Secondly, there
should exist the ‘certainty of subject-matter’. It means that the court shall be able to recognize
and classify the specific property, which creates the subject-matter in relation to the trust.
Thirdly, there should exist the ‘certainty of objects’. The ‘certainty of objects’ is multifaceted,
complex and has undeniably instigated various discussions and debates in relation to the topic.
According to this certainty, court should have the ability to recognize the exact individual or
individuals who shall be considered to be the beneficiary or the beneficiaries in relation to the
trust. This certainty is considered to be very vital and decisive, because the purpose of any
particular trust arrangement is to convene benefit on demarcated and defined persons. However,
the substance is frequently made complex by uncertain, vague or extensive and varied classes of
beneficiaries.
1 Knight v Knight (1840) 49 ER 58.

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In the case of Re Denley's Trust Deed [1969] 1 Ch 3732, it was stated that a particular
trust established for the purpose of benefit in relation to a particular category of employees, shall
be considered to be a progressive approach by the judiciary.
The case of Knight v Knight (1840) 49 ER 583 shall be applied in the given scenario. It
must be demonstrated that whether the ‘three certainties’ is fulfilled in the given scenario.
Firstly, applying the ‘certainty of intention’ test, it may be said that there was no clear intention
by Trevor as he only believed that Loretta will sell half of his shares and distribute the proceeds
of sale among the employees of Spick+Span in an equal manner. Secondly, applying the
‘certainty of subject-matter’, it may be said that the property, which creates the subject-matter in
relation to the trust, has been specified by Trevor. Thirdly, the ‘certainty of objects’ should be
applied in the given scenario. Applying this certainty, it may be said that Trevor has identified
the exact class of individuals (employees working for more than ten years) who shall be
considered to be the beneficiaries in relation to the trust. In Re Denley's Trust Deed [1969] 1 Ch
373, it was stated that a particular trust established for the purpose of benefit in relation to a
particular category of employees, shall be considered to be a progressive approach by the
judiciary4.
To conclude, it may be said that in the given scenario, the impact regarding the first
clause shall not be valid, because even though this clause fulfils two certainties (subject-matter
and object), it does not fulfil one certainty (intention).
2 Re Denley's Trust Deed [1969] 1 Ch 373.
3 Knight v Knight (1840) 49 ER 58.
4 Re Denley's Trust Deed [1969] 1 Ch 373.

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Clause b
The second issue in the given scenario is in relation to the validity and the impact
regarding the clause where Trevor gave six treasured paintings to Kasey, Daisy and Maisie.
As per the principle of ‘certainty of objects’, the beneficiaries in relation to a trust should
be certain and definite. If such is not the case, then that particular trust shall be considered to be
void. The question regarding ‘certainty of objects’ might befall either in connection to a fixed
trust or in connection to a discretionary trust. The distinction between discretionary or fixed trust
shall be considered to be critical. The fixed trusts are established for the purpose of the profit of
individuals who are pre-determined, and each individual shall be entitled in relation to a
particular fixed share. However, regarding a discretionary trust the trustees may allocate or
assign the distribution in relation to the trust property, among a specified category of
beneficiaries
The case of IRC v Broadway Cottages [1955] Ch 205 shall be considered to be a relevant
case in this regard. In this particular case, it had been confirmed by the ‘Court of Appeal’ that in
case of fixed trusts, linguistic, dialectal and evidential certainty in relation to the beneficiaries
shall be considered to be important. In this case, the trust failed and was unsuccessful because
the list of the beneficiaries could not be identified.
In Re Barlow’s Will Trusts [1979] 1 WLR 2786, it was ruled that the term ‘friends’ shall
not be adequately certain as the court may face difficulties to adjudicate in relation to such
concept, provided its subjectivity.
5 IRC v Broadway Cottages [1955] Ch 20.
6 Re Barlow’s Will Trusts [1979] 1 WLR 278.

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The case of IRC v Broadway Cottages [1955] Ch 207 shall be applied in the given
scenario. In this case, the trust failed and was unsuccessful because the list of the beneficiaries
could not be identified. However, in the given scenario, it had been made clear by Trevor that
Maisie shall have the first choice regarding the selection of the paintings. After her selection,
Kasey and daisy may share among themselves the remainder, in an equal manner.
Applying the case of Re Barlow’s Will Trusts [1979] 1 WLR 2788, it may be said that
Trevor made adequately certain regarding the beneficiaries and the court shall not face any
difficulty to adjudicate.
To conclude, it may be said that the clause where Trevor gave six treasured paintings to
Kasey, Daisy and Maisie, shall be valid.
Clause c
The third issue in the given scenario is in relation to the validity and the impact regarding
the clause where Trevor gave the remainder of his property to Paul Dison.
The case of McPhail v Dalton [1971] AC 4249 shall be considered to be a relevant case in
this regard. In this case, it was stated that in relation to a discretionary trust the
trustees should utilize their discretion. The trustee should divide or distribute the property and
utilize their discretion in a proper manner. Regarding a power, the trustee shall be able to utilize
their power, that is, the trustee may decide that whether he or she wants to divide and distribute
the property. However, it must be mentioned that that trustee shall not be obligated to do so. It
had been stated in Re Gulbenkian’s Settlement Trusts [1970] AC 50810 that a power merely
7 IRC v Broadway Cottages [1955] Ch 20.
8 Re Barlow’s Will Trusts [1979] 1 WLR 278.
9 McPhail v Dalton [1971] AC 424.
10 Re Gulbenkian’s Settlement Trusts [1970] AC 508.

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provides the holder the capacity to utilize that specific power without any kind of obligation or
responsibility to do so.
In the case of Re Ogden [1933] Ch 67811, a particular trustee had the discretion to divide
the amount of money in relation to specific political organizations. The Court applied the old
law, and utilized the ‘list’ test. Therefore, the trustee accumulated and created a list and it was
held by the court that the trust would be valid.
The case of McPhail v Dalton [1971] AC 42412 shall be applied in the given scenario. In
this case, it was stated that in relation to a discretionary trust the trustees should utilize their
discretion. Therefore, in the given scenario, Paul Dison should divide or distribute the property
and utilize their discretion in a proper manner. He shall be able to utilize his power, that is, he
may decide that whether he wants to divide and distribute the property. However, it must be
mentioned that that Paul shall not be obligated to do so. It had been stated in Re Gulbenkian’s
Settlement Trusts [1970] AC 508 that a power merely provides the holder the capacity to utilize
that specific power without any kind of obligation or responsibility to do so13.
The case of Re Ogden [1933] Ch 67814 shall be applied in the given scenario. In this
specific case, a particular trustee had the discretion to divide the amount of money in relation to
specific political organizations. The Court applied the old law, and utilized the ‘list’ test.
Therefore, the trustee accumulated and created a list and it was held by the court that the trust
would be valid. In a similar manner, Paul has the discretion to divide the remainder property in
relation to assigned people or he may also pass the property to RSPDAA, if he is not comfortable
with taking care of the division and distribution of the property.
11 Re Ogden [1933] Ch 678.
12 McPhail v Dalton [1971] AC 424.
13 Re Gulbenkian’s Settlement Trusts [1970] AC 508.
14 Re Ogden [1933] Ch 678.

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In the conclusion, it may be said that the clause where Trevor gave the remainder of his
property to Paul Dison, shall be considered to be valid.

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Bibliography
IRC v Broadway Cottages [1955] Ch 20.
Knight v Knight (1840) 49 ER 58.
McPhail v Dalton [1971] AC 424.
Re Barlow’s Will Trusts [1979] 1 WLR 278.
Re Denley's Trust Deed [1969] 1 Ch 373.
Re Gulbenkian’s Settlement Trusts [1970] AC 508.
Re Ogden [1933] Ch 678.