The document discusses the three certainties required to create a valid private express trust: (1) intention, (2) subject matter, and (3) object. It provides details on each certainty, including examples from case law. For certainty of intention, the words used must show the settlor's clear intention to create a trust. For certainty of subject matter, the trust property must be clearly defined or ascertainable. For certainty of object, the beneficiaries must be human and ascertainable as individuals or as members of a defined class.

1. CHAPTER 3: THREE
CERTAINTIES
LLS4203: EQUITY & TRUST II
SEMESTER II, 2013/2014

2. Private express trust
• Meaning: an express declaration by the
person who wants to create trust during
his lifetime
– By way of
• Trust deed
• Will
• Other form
• Condition of a valid private express trust
– Three certainties!

3. Three
certainties
Three
certainties
Validtrust
intention Subject
matter
object

4. Knight v Knight (1840) 3 Beav
148
“As a general rule, it has been laid down
that when property is given absolutely to
command, recommended or entreated or
wished, to dispose of that property in
favour of another, the recommendation
entreaty, or wish shall be held to create a
trust
First, if the words so used, that upon the
whole they ought to be construed as
imperative.

5. • Secondly, if the subject of the
recommendation or wish be certain.
• Thirdly, if the objects or persons intended
to have the benefit of the
recommendations or wish be also certain”

6. A. CERTAINTY OF
INTENTION

7. a. Certainty of Intention
• Certainty of intention on part of the
settlor/testator to create a trust
• Words used?
– No particular words – no technical words
required
– Imperative words
– Trust may be created without using the
word ‘trust’
– Depends on the construction of the
language used

8. Equity looks at the substance rather than
form

9. What are imperative words?
• Clear commanding or authoritative
language – one party’s interest (the
beneficiary) is safeguarded as much as
possible
• Words must be imperative in nature in
order to construe the essentials to create
trust
• E.g: I direct my trustee…/I instruct my
trustee…/I have full confidence
that…./fully trusting that…./in firm

10. The question is:
Whether, on the proper construction of
the words used, the settlor or testator has
shown an intention to create a trust

11. Re Hamilton (1895) 2 Ch 270
• Lindley LJ
“You must take the will which you have
construe and see what it means and if you
come to the conclusion that no trust was
intended, you say so, although previous
judge have said to the contrary on some
wills more or less similar to the one you
have construe”

12. Lambes v Eames (1871) LR 6
Ch 597
The settlor gave his estate to his widow “to
be at her disposal in any way she may
think best, for the benefit of herself and
her family.”
By will, the widow gave part of the estate to
outsider.
Held: She had been absolutely entitled to
the property and the gift was valid.
No trust was created.

13. Re Adams and The Kensington
Vestry (1884) 27 CHD 395**
• The testator gave his real and personal
estate to his wife
‘unto and to the absolute use of my dear
wife, Harriet…in full confidence that she
will what is right as to the disposal thereof
between my children, either in her lifetime
or by will after her death’.
• Held: No trust was created.
• The words absolutely indicated that the
property was left to the wife alone.

14. Precatory words are not
sufficient to show clear intention
• An expression of hope or desire is not
sufficient
• Eg: “It is my sincere wish that…/it is my
hope that…
• There is a need to examine and construe
the trust as a whole in order to show
intention on part of the settlor/testator

15. Comiskey v Bowring Hanbury
(1905) AC 84
• A testator gave to his wife “the whole of
my real and personal estate…in full
confidence that…at her death she will
devise it to such one or more of my nieces
as she may think fit and in default of any
disposition by her thereof by her will…I
hereby direct that all my estate and
property acquired by her under this my will
shall at her death be equally divided
among the surviving said nieces”

16. House of Lords
• The testator intended to make a gift to his
wife, with a gift over of the whole property
at her death to such of her nieces as
should survive her, shared according to
the wife’s will and otherwise equally.
• Trust was created.

17. No document to construe?
Whether the acts or words of the parties
indicate an intention to create a trust

18. Paul v Constance (1977) 1 WLR
527
Mr Paul, who parted with his wife, lived with
Mrs Constance, practically as husband and
wife. They set up a house together. Mr P &
Mrs C opened up an account together but
was under Mr P’s name since they were not
married and allowed and told Mrs Paul that
“The money is as much as your as mine” in
a number of situations.
Mr P died intestate and Mrs Paul (the wife)
claimed for the money.

19. • The question, therefore, is whether, in all
the circumstances, the use of those words
on numerous occasions as between the
deceased and the plaintiff constituted an
express declaration of trust

20. • We are concerned only with the first of the
three certainties and it is this: "The words" --
that is the words of the declaration relied on
-- "must be so used that on the whole they
ought to be construed as imperative ... No
particular form of expression is necessary for
the creation of a trust, if on the whole it can
be gathered that a trust was intended. 'A trust
may well be created, although there may be
an absence of any expression of terms
imposing confidence.' A trust may thus be
created without using the word 'trust,' for
what the court regards is the substance and
effect of the words used."

21. Intention to create a trust be genuine - not a
sham
•Where the settlor did not intend the trust to
be acted upon, but entered into it for some
ulterior motive

22. Midland Bank plc v Wyatt [1995]
1 FLR 696
• A declaration of trust was executed by a
husband and wife in 1987 (when the
husband was contemplating a new
business) whereby the family home, their
only asset, was apparently settled on the
wife and daughters. He kept the trust
document in a safe. The couple continued
to act as real owners by mortgaging it. The
husband’s business failed and the bank
obtained a charging order against the

23. Held
• The trust was a sham.
• The husband had ‘kept it up his sleeve for
a rainy day’ in order to defeat future
creditors and had not otherwise intended it
to have any effect.

24. B. CERTAINTY OF
SUBJECT MATTER

25. Subject matter
• Interest in land
• Chattels
• Money
• Chose in action
• General rule: the property subject to the
trust must either be clearly defined or be
capable of ascertainment.

26. Re Golay’s Will Trust (1965) 1 WLR
969
• The settlor made a gift directing the
executors to allow a beneficiary to “enjoy
one of my flats during her lifetime and to
receive a reasonable income from my
other properties”
• Issue: ‘one of my flats’
‘reasonable income’
Held: ‘one of my flats’ is determinable.

27. • ‘reasonable income’ – the words
‘reasonable income were not intended
to allow the trustees to make a
subjective decision, but they provided a
sufficient objective determinant to
enable the court, if necessary, to
quantify the amount.
• The question is that no objective
determination of words such as
reasonable can be made unless the
context is known.
• Criterion taken into consideration to
determine reasonable : the

28. Where property in bulk and
unappropriated

29. • The question whether property in bulk must be
ascertainable
• 2 views
• The older view : the property to be settled out of
a bulk must be clearly identified.
• The recent view : The question of certainty
depends not on the application of any immutable
principle based on the requirements of a need
for segregation or appropriation, but rather on
whether, immediately after the purported
declaration of trust, the court could, if asked,
make an order for the execution of the purported
trust.

30. Palmer v Simmonds (1854) 2
DREW 221
• A testatrix by her will gave her residuary to
Thomas Harrison “for his own use and
benefit as I have full confidence in him,
that if he should die without lawful issue
he will leave the bulk of my said residuary
estate to A, B, C, D (certain named
persons)
• Issue: Whether ‘the bulk of my residuary
estate’ constitute certainty of subject
matter.

31. Kindersley V.C
“What is the meaning of the bulk? The
appropriate meaning according to its
derivation is something which bulges out.
It is a popular meaning. When a person is
said to have given the bulk of his property,
what is meant is not the whole but the
greater part and that is in fact consistent
with its classical meaning..”
• The bulk is not determinable.
• Testamentary gift was not valid.

32. Hunter v Moss [1994] 3 All ER
215
• The defendant was the absolute beneficial
owner of 950 shares in a company which
had issued share capital of 1,000 ordinary
shares. The plaintiff claimed that as a
condition of his employment by the
company the defendant had agreed to
give him a 5% shareholding (ie 50 shares)
in the company. The defendant refused to
transfer the shares and the plaintiff issued
a writ claiming to be beneficially entitled to

33. • issue : whether the defendant had made
an oral declaration of trust declaring
himself a trustee for the plaintiff of 5% of
the shares (ie 50 shares).
• Evidence: in the course of a conversation
between the parties, the defendant had
declared himself to be a trustee for the
plaintiff of a 5% holding in the company,
and that therefore the defendant held 50
shares out of the total of 1,000 issued
shares on an express oral trust for the
plaintiff.

34. • The defendant applied to have the
judgment set aside on the ground, that the
purported trust failed for want of certainty
as to its subject matter since there had
been no identification of the 50 shares out
of the 1,000 issued shares in the
company.

35. Court of Appeal
• It was well established that for the creation of a
trust there had to be certainty of subject matter.
However, since all the shares were of one class
in one company and were of such a nature as to
be indistinguishable from one another they were
all equally capable of satisfying the trust. The
owner of shares in a company could declare
himself trustee of a specified number of shares
in the company, which would be effective to give
a beneficial proprietary interest to the beneficiary
under the trust and no question of a blended
fund would thereafter arise.

36. Subject matter
uncertain
Trust is not
created
Effect: the property will be held
on a resulting trust for the settlor
Unless :
the
trustees
have a
discretion
to
determine
the
amounts

37. Subject Matter Is Not Identified Or
Identifiable

38. MacJordan Construction Ltd v Brookmount
Erostin Ltd [1992] BCLC 350
• A building contract provided that the
employer would retain 3% of the contract
price as trustee for the builder (pending
confirmation of the work was satisfactory).
The retention fund was never set up. The
employer went for insolvency. The builder
claimed entitlement to the retention
money.
• Held: no trust created as there was no
identifiable assets that had been

39. Beneficial interests must be
certain

40. Trust for class of beneficiaries
• Fixed trust : the quantum each beneficiary
is to take must be known or be
ascertainable.
• Discretionary trust: although the exact
amount a beneficiary is entitled to may not
be known, it is ascertainable precisely
upon the trustees' exercise of the
discretion.
• E.g: ‘residue of my estate/income’ – not
necessarily invalid

41. C. CERTAINTY OF OBJECT

42. Re Vandervell’s Trust (No.2)
(1974)
Per Lord Denning
“It is clear law that a trust (other than
charitable trust) must be for ascertainable
beneficiaries”

43. Object of the trust
• Human
– Wife/girlfriend
– Children/father-mother/brother-sister
– Best friend
– Nephews and nieces

44. The rules
• Trust must be for human beneficiaries
• Ascertainable beneficiaries is a must for a
trust other than charitable trust
• Lack of certainty of object : trust will be
void
• The beneficiaries must be identifiable:
they can be given their appropriate shares
for their beneficial interest

45. Re Endacott (1960) Ch 232
Evershed MR
“No principle has greater sanction or
authority behind it than the general
proposition that a trust by English law, not
being charitable trust, must be ascertained
or ascertainable beneficiaries”

46. The Test
• Depends on the nature of trust
– Fixed trust or discretionary trust

47. (a) Fixed trust
• A fixed trust is one in which the share or
interest of the beneficiaries is specified in
the instrument
• The beneficiary is the owner of the
equitable interest allocated to him
• E.g: the testator creates a trust for A and
B in respect of 2 lots of lands, Lot 123 and
Lot 345 respectively

48. A gift for a class of beneficiaries
• It is necessary to lay down what share
each beneficiary is to take
• If the trust property is to be divided among
a class of beneficiaries in equal, the trust
cannot, in the nature of things, be
administered unless the number and
identity of the beneficiaries are known.

49. • Test : the list principle
– Identity of the beneficiaries is known
– Number of beneficiaries is known
– Their whereabout or continued
existence is discoverable
– for example: 'old friends', 'business
associates', 'customers of my company',
'members of my family‘ – void for
uncertainty

50. (b) Discretionary trust
• Where the trustees hold the trust property
on trust for such member or members of a
class of beneficiaries as they shall in their
discretion determine
• No beneficiary owns any part of the trust
fund unless and until the trustees have
exercised their discretion in his favour

51. Trustee & the test
• Need to determine the object with
certainty
• Failure : breach of trust
• Two tests
– Criterion certainty test
– In and out test
• whether a person is or is not within
the class of the beneficiaries intended
in the trust instrument

52. A gift for a class of beneficiaries
• The trustee is to exercise a discretion in
the selection of a beneficiary
• Where a trust property is to be divided into
specific shares, it is necessary for the
trustees to know exactly how many
beneficiaries there are.
• The trustee will determine whether a
person is or is not within the class of the
beneficiaries intended in the trust
instrument

53. McPhail v Doulton [1971] A.C.
424
• A deed recited that a settlor would transfer
to trustees shares in a company to form
the nucleus of a fund for the benefit of the
staff of the company, their relatives and
dependents. Clause 9 provided:
• "(a) The trustees shall apply the net
income of the fund in making at their
absolute discretion grants … in such
amounts at such times and on such
conditions (if any) as they think fit …”

54. • (b) The trustees shall not be bound to
exhaust the income of any year or other
period in making such grants … and any
income not so applied shall be … [placed
in a bank or invested].
• Clause 10 provided that all benefits being
at the discretion of the trustees, no person
had any interest in the fund otherwise than
pursuant to the exercise of such
discretion.
• the appellants, the settlor's executors,
alleged that the deed was wholly void and

55. House of Lords
(i) If the class of beneficiaries of a
discretionary trust is so defined that it is
possible to ascertain whether any given
person is a member of the class, it matters
not for purposes of its validity that a
complete list of beneficiaries cannot be
made.
(ii) A discretionary trust is valid if at its inception
the class of beneficiaries is ascertainable
with sufficient certainty for the trust to be
carried out according to the expressed

56. RE GULBENKIAN'S
SETTLEMENT [1970] A.C. 508
The settlor made a trust instrument stated
that:
"all or any one or more to the exclusion of
the other or others of the following
persons, namely, [G.] and any wife and his
children or remoter issue for the time
being in existence whether minors or
adults and any person or persons in
whose house or apartments or in whose
company or under whose care or control

57. House of Lords
• there was a valid gift over in default of
appointment a mere or bare power of
appointment among a class was valid if it
could be said with certainty whether any
given individual was or was not a member
of the class, and that it did not fail simply
because it was impossible to ascertain
every member of the class.

58. Three kinds of uncertainty
i. Conceptual uncertainty
ii. Evidential uncertainty
iii. Administrative uncertainty

59. i. Conceptual uncertainty
• Meaning: problem in the vagueness of the
language used by the testator to express
his intention
• E.g: /my shorter employee/my old friends
and business associates/my fans/for my
friends who are good citizen

60. Effect
• Express trust fails
• It will be held on resulting trust
Curable
• the uncertainty can be cured by conferring
a residual power upon the trustees to
determine conclusively any doubts as to
who are members of the beneficial class
– The settlor leaves the definition of a
term to the third party (trustee)

61. Halsbury’s Law of Malaysia
• If a trust accords trustees a discretion to
elect among a class of beneficiaries, it no
longer fails if a list of every member of the
class cannot be drawn up; it suffices if it is
possible to predicate of any proposed
beneficiary that he is or is not a member of
the class. If there remains a number of
persons who cannot be proved to be
inside or outside the class, for example old
friends of the testator, then the trust fails.

62. Re Barlow's Will Trusts [1979] 1
All ER 296
The testatrix directed the sale of some
paintings subject to the provision that 'any
members of my family and any friends of
mine who may wish to do so' be allowed
to purchase any painting at a price well
below its value.
Held that the direction was valid as it was
possible in the circumstances to say that
at least one or more than one of the
claimants qualified.

63. • if a trust is construed as conferring
individual gifts to persons qualifying under
some condition precedent, then it is valid if
one or more persons undoubtedly qualify,
even though the conceptual uncertainty
makes it impossible to determine whether
other persons qualify

64. ii. Evidential uncertainty
(difficulties)
• Meaning: the language used in precise but
the trustee will have to find evidence to
carry out the settlor’s intention
• It must be possible to show either that any
person is within the class or that he is not
within it
• The court is never defeated by evidential
uncertainty
• It does not invalidate a discretionary trust

65. • No need to proof that every person is or is
not within the class - the old rule of
making a list
• Does not require the ascertainment of the
whole class

66. Re Baden's Deed Trusts (No 2)
[1973] Ch 9, [1972] 2 All ER
1304, CA (Eng)
• The tests
• Stamp LJ (strict literal view-preferred) :
require the trustee to be in a position to
say affirmatively whether any given person
is within or outside the class

67. • Megaw LJ : if as regards a substantial
number of objects it could be said with
certainty that they fell within the trust, even
though as regards a substantial number of
other people the answer would have to be
not that they were outside the trust, but
that it was not proved whether they were
in it or not.
– ‘substantial number’ test

68. • Stamp LJ : ‘relatives’ means ‘next of kin’
or ‘nearest blood relations’
• Megaw and Sachs LJJ : 'relatives' meant
dependants from a common ancestor.
– The trustee ought not to pay an
individual who failed to prove that he is
a relative

69. iii. Administrative uncertainty
• If a conceptually uncertain class of
beneficiaries is specified in a trust
instrument: the trust is administratively
unworkable
• if the class is certain enough but the
definition of beneficiaries is so hopelessly
wide as not to form anything like a class :
the trust is administratively unworkable or
which cannot be executed
• E.g: “…trust for all residents in Greater

70. Why?
• trust must be justiciable
• court must act judicially according to
sensible criteria expressly or impliedly
provided by the trust instrument so that it
may control or execute the trust.

71. R v District Auditor, ex p West Yorkshire
Metropolitan County Council (1986) 26 R
VR 24
• A local authority, purporting to act under
statutory powers, resolved to set up a trust
“for the benefit of any or all or some of the
inhabitants of the Country of Wesy
Yorkshire”. There were 2,5000,000
potential beneficiaries.
• Held: the ‘inhabitant’ was sufficiently
certain but it was administratively
unworkable as the class was far too large

72. Re Chin Sem Lin's Settlement, Yong Tet
Foong v Chin Thin Lee [1971] 2 MLJ 152
at 155
• Chang Min Tat J
Where the settlor directed payment to an
ancestral graveyard in China the trust
failed by reason of the existing political
situation and the fact that no members of
the settlor's family were resident in that
country