Equity and trusts problem question answers

Equity and commits problem question answersEquity and surenesss problem question (1500 words)This scenario relates to the purported creation of a trust. We atomic number 18 told that Michael has said to his daughter that I promise to carry to you within the year certain proportion. The first issue to determine is whether this is sufficient to clear a trust. One of the principal requirements for the successful pull inment of a trust is certainty, and in this instance, certainty of intention is relevant. Knight v Knight (1840) established that the three certainties mustiness be present certainty of intention, of subject matter, and of object. Also of relevance here is the equitable maxim that equity look to intent, non form. This means that it is not necessary for the resolution explicitly to include reference to the word trust. The fact that Michael does not refer to a trust does not, therefore, defeat the attempt to establish a trust. By way of example, in Paul v Constance (1977) the words the money is as much yours as mine in reference to deposits in a bank account were sufficient to realize a trust. There is no requirement that the declaration be in writing either, unless the trust property is land.The second certainty that is required is certainty of subject matter. What is the trust property? In this instance, Michael has sought to create a trust over certain property. This leave behind fail for evidential uncertainty there is no clear proper(postnominal)ation of what the trust property is. Lord Hailsham indicated in his judgment in IRC v McMullen (1981) that the courts are generally reluctant to invalidate a trust for uncertainty of subject matter and go forth, where possible, apply a reasonable construction to the wording of the trust in order to make them valid. In this instance, however, there is no reasonable construction that could make this vague declaration sufficiently certain. Michael goes on, however, to specify this property as b eing his Cartier watch, his shares in ABC plc, the legacy he expected to receive from his uncles go forth, and Tranquil View, a freehold house. This, then, will meet the evidential certainty criteria.The undermentioned issue to consider is who the trustee is over each of the trust properties. Michaels watch is a chattel. A trust only becomes fully constituted at once the property is in the hands of the person properly bound to be the trustee. In this instance, the bank is holding his watch. The bank, then, becomes the trustee as soon as the declaration is made. In Milroy v Lord (1862), Turner LJ set out his famous three modes of making a make an outright transfer of the legal ennoble to the property, a transfer of legal ennoble of the property to a trustee to hold on trust, and a self-declaration of trust. As we have seen, Michael has transferred, by his declaration, the legal title to the watch to the bank. There is no delivery requirement as it is already in the banks posses sion. In relation to Michaels shares in the national company, the Re Rose (1952) case is relevant. Another equitable maxim is that equity will not assist a volunteer, meaning that in order successfully to create the trust, Michael must have done everything possible to transfer the legal title to the trust property. In Re Rose, the Court of Appeal upheld a trust where the donor had done everything he was obliged to do to make the trust valid.In relation to the shares, Michael will have to execute a stock transfer form in order to create the trust. This principle was extended by Pennington v Waine (2002), although this still required the execution of a stock transfer form. Michael has excessively sought to create a trust over future property, his expected legacy from his uncle. This is a mere expectancy rather than a trust. Equity will only enforce this as a trust if some consideration was given for it, which does not appear to have been the case in this instance. It is a unmerited assignment and is not therefore legally enforceable. Tailby v Official Receiver (1888) is authority for equity enforcing an imperfect transaction where consideration was given. In relation to the freehold house, a trust over real property can only be fully created in writing (unlike trusts over personalty). There will not be a properly constituted trust, then, over the property.Michael has also verbally promised to his mistress that she will have the freehold house. This is a case of donationes mortis cause, or deathbed gifts, which are made hide vivos. What distinguishes this from a deathbed gift, however, is that it is not conditional upon Michaels death, as he says whether I die or not. Cain v Moon (1869) is authority for the fact that deathbed gifts must be in contemplation of death. He also gives his mistress the keys to the safe which contain the title deeds, and thus he has delivered to her the legal title, in essence. This is sufficient to create the trust although as ment ioned this is not a donationes mortis causa.We come to Michaels will which was validly created, and which takes effect upon his death. The 200,000 trust to create a sports ground for the employees will be successful as it is sufficiently certain as to the trust objects (i.e. the beneficiaries). This is a trust for a point, and pure purpose trusts will be invalid, however. Equity will not recognise a trust to carry out a purpose as the benefits of carrying out a purpose cannot be localised to specific individuals (see Morice v Bishop of Durham (1804)). The trust for the purpose of erecting and maintaining a monument will be invalid pursual Re Endacott (1960) in which a gift of some 20,000 was made for the purpose of providing some useful memorial to myself. This was invalid. The trust for the purpose of looking after his pet tortoise will be valid as an exception to the no purpose rule, following Pettingall v Pettingall (1842), in which a trust was valid for the purpose of looking after a horse. The gift for the purpose of educating his children is obviously no longer relevant so the trust property will revert to Michaels estate.Finally, he leaves a legacy for the purpose of make a new clubhouse. Gifts to unincorporated associations were discussed in Conservative and Unionist Central Office v Burrell (1982), and the lacrosse club meets the criteria for an unincorporated association. Once the association is dissolved, the property which is held by the members of the association is not bona vacantia but there is no resulting trust because the property was held under a bare trust. The members can therefore distribute the property among themselves as they see fit.Precatory words are words of prayer or request in wills. The gift of Michaels jewellery to Nileema is an example of this, and the case law suggests that these words are sufficient to create a trust, although in Lamb v Eames (1871) the Court of Appeal did not allow similar words to create a trust. The g ift of the majority of his model soldiers may fail for conceptual uncertainty of subject matter following Palmer v Simmonds (1854).The cy pres doctrine preserves kind-hearted trusts from failure, and strives to make the trust as near as possible. It is likely that the gift to the museum which has closed will be transferred to the Museum of Childhood which now holds the collection. The fund for sympathetic or benevolent works is a general charitable intention, following Buckley Js analysis in Re Lysaght (1966). This is wholly charitable and will be valid under the provisions of the Charities Act 2006. The gift to his trustees is a power rather than a trust and will be valid following Re Douglas (1887). The gift of half his shares in ABC plc will be valid, as it is sufficiently certain to determine the property following Hunter v Moss (1994) provided it can be discerned which shares Michael was referring to.BIBLIOGRAPHYStatutesCharities Act 2006CasesCain v Moon 1896 2 QB 283Conserva tive and Unionist Central Office v Burrell 1982 2 All ER 1Hunter v Moss 1994 3 All ER 215IRC v McMullen 1981 AC 1Knight v Knight (1840) 3 Beav 148Lambe v Eames (1871) 6 Ch App 597Milroy v Lord (1862) 4 De GF J 264Morice v Bishop of Durham (1805) 10 Ves 522Palmer v Simmonds (1854) 2 Drew 221Paul v Constance 1977 1 All ER 195Pennington v Waine 2002 EWCA Civ 227Pettingall v Pettingall (1842) 11 LJ Ch 176Re Douglas (1887) 35 Ch D 472Re Endacott 1960 Ch 232Re Lysaght1966 Ch 191Re Rose 1952 Ch 499Tailby v Official Receiver (1888) 13 App Cas 523Secondary sourcesMartin, J.E. (2001) unexampled Equity, 16th Edition (London Sweet Maxwell)Pearce, R. and Stevens, J. (2006) The Law of Trusts and Equitable Obligations, 4th Edition (Oxford OUP)Penner, J.E. (2004) The Law of Trusts, 4th Edition (London LexisNexis)