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The three certainties
The three certainties refer to a rule within English trusts law on the creation of express trusts that, to be valid, the trust instrument must show certainty of intention, subject matter and object. Certainty of intention" means that it must be clear that the donor or testator wishes to create a trust; this is not dependent on any particular language used, and a trust can be created without the word "trust" being used. "Certainty of subject matter" means that it must be clear what property is part of the trust. more recently, the courts have drawn a line between tangible and intangible assets, holding that with intangible assets there is not always a need for segregation. "Certainty of objects" means that it must be clear who the beneficiaries, or objects, are. The test for determining this differs depending on the type of trust; it can be that all beneficiaries must be individually identified, or that the trustees must be able to say with certainty, if a claimant comes before them, whether he is or is not a beneficiary.
The rule came out of the case of Knight v Knight.
Langdale MR, hearing the case, held that this was not specific enough to create a valid trust; furthermore, to be held as valid, trust instruments would have to have:
Certainty of intention: it must be clear that the testator intends to create a trust Certainty of subject matter: it must be clear what property is part of the trust Certainty of objects: it must be clear who the beneficiaries (objects) are.
Certainty of intention The first principle when deciding if there is certainty of intention is the nature of the language used; the words, as said in Wright v Atkyns "must be imperative". In Re Kayford, Megarry J held that "it is well settled that a trust can be created without using the word "trust" or "confidence" or the like; the question is whether in substance a sufficient intention to create a trust has been manifested". In Paul v Constance, it was held that the phrase "the money is as much yours as it is mine" was sufficient to translate to a trust. Historically, precatory words such as "it is hoped" and "it is desired" were held to be valid. Since Lambe v Eames, the courts have instead taken the approach that the circumstances and the reading of the statement as a whole are the factors, and that no particular words will impose a trust on their own. Many trusts are formed through wills, which create additional issues when determining intention. In Re Hamilton, Lindley LJ set out the standard rule that to "take the will you have to construe and see what it means, and if you come to the conclusion that no trust was intended you say so"; essentially that judges should not simply assume that there is a trust.
Certainty of subject matter It is a requirement that the subject matter be certain — that the property intended to be in the trust be separated from other property, showing clarity in what is intended to be trust property. If there is no clear separation, the trust will fail, as in Re Goldcorp Exchange Ltd. his point was illustrated by Re London Wine where creditors of a bankrupt wine trading company argued that they should be able to claim the wine they had paid for. The problem was that these bottles were not individually
identifiable: I appreciate the point taken that the subject matter is a part of a homogeneous mass so that specific identity is of as little as importance as it is, for instance, in the case of money. Nevertheless to create a trust it must be possible to ascertain with certainty not only what the interest of the beneficiary is to be but to what property it is to attach. The exception to this rule is found in Hunter v Moss, which concerned 50 shares meant to be transferred to an employee out of a total holding of 950. These shares were not individually identified, but Dillon LJ held that this was irrelevant because the shares were all of the same type and in the same company, and so it made no difference which particular shares were transferred. This was applied in Re Harvard
Securities, where Neuberger J held that there was a difference between tangible property, such as wine, and intangible property, such as shares. Intangible property, by its very nature, does not require segregation.
Certainty of objects There is a requirement that the beneficiaries of a trust, known as the objects, be certain. Within express trusts this is a particularly complex area, because the test used to determine certainty varies between fixed trusts, mere powers and discretionary trusts. Fixed trusts are trusts for a specific, named list of individuals he test for fixed trusts is that the trustees must be able to give a complete list of the beneficiaries, as laid down in IRC v Broadway Cottages. If there are any potential beneficiaries who the trustees are not certain of, or the trustees cannot compile a complete list, the trust is void for uncertainty. A more complex test is found with mere powers. These are where a person is granted the power (the ability) to exercise a trust-like power, but without any obligation to do so, such as "the trustee may give £1,000 to X", or "the trustee can, at his discretion, give £1, to X" as opposed to "the trustee shall give £1,000 to X". In Re Hay's ST, The holder of a mere power is therefore free to do what he wants with the property he holds. Discretionary trusts are trusts which require that the trustees exercise their powers, in the same way as a fixed trust, but allow some discretion in how to do so, in a similar manner to mere powers. The leading test of certainty of objects here is also the "any given postulant test", applied to discretionary trusts in McPhail v Doulton. he courts attempted to mitigate this test in Re Baden (No. 2); however, all three judges of the Court of Appeal gave separate new tests and reasons. Stamp LJ had an approach based entirely on the facts, with no greater impact on certainty of objects. Sachs LJ took the approach that the burden of proof was on the claimants to prove they were beneficiaries, not on the trustees to prove the trust was valid. Megaw LJ, however, took the approach that a trust could be valid, even with uncertain beneficiaries, if there was a "core number" of beneficiaries who were certain.
Where there is not sufficient clarity, the trust may be held void as uncertain.
- Conceptual uncertainty.
- Evidential uncertainty.
- Ascertainability.
- Administrative unworkability
Conceptual uncertainty is the "most fundamental in the validity of a trust or power", and is where the language used in the trust is unclear. if the concept cannot be certain, the trust fails. Evidential uncertainty, on the other hand, is where there is a question of fact it is impossible to answer, such as when a claimant cannot prove he is a beneficiary. This does not necessarily invalidate the trust, as in Re Coxen. Ascertainability, is where it is impossible to find the beneficiaries, either because they have died, moved or changed names. This is not necessarily fatal; the test for deciding if it is or not was laid out by Wynn-Parry J it is a matter of degree, and it is only when one reaches, on the evidence, a conclusion that it is so vague or that the difficulty is so great that it must be treated as virtually incapable of resolution, that one is entitled, to my mind, to say that a gift of that nature is void for uncertainty". The final type of uncertainty is administrative unworkability — where the trust is, by its very nature, so impractical that the trustees cannot carry out their duties. Where this prevents the trustees carrying out their duties, the trust will be declared invalid, and not applied.
or in one party’s sole name.
Jointly owned property If the correct procedures are followed when the property is purchased, the couple’s intentions as to ownership will be, or at least should be, clearly demonstrated on the purchase documents (the Land Registry transfer) or in a declaration of trust. If however the parties have not declared their intention as to their beneficial interests, then land law and equity law principles apply. If they hold as “joint tenants” (a manner of owning property together) then it is presumed to be held equally, unless the contrary can clearly be shown as set out below.
If the property is owned as “tenants in common” (the other method of holding property together) and there is no declaration of trust, then the presumption is that the parties own the property in equal shares. The onus is on the party who wishes to show that the beneficial ownership should be divided non-equally, as shown below. It is however worth noting the warning of the Supreme Court that this task of showing unequal ownership is not to be embarked upon lightly or with a high expectation of success.
Legal estate in one name only If the property is in the sole name of one cohabiting person but is a shared home, the presumption is that ‘equity follows the law’ and therefore that party also owns the entire beneficial interest. In this situation as well as when the equal joint ownership does not show the true intended ownership interests, the other party will have to establish a claim in equity: through a resulting trust, constructive trust, or by claiming under proprietary estoppel.
Resulting Trusts A resulting trust can be established by evidence that the other party contributed directly to the purchase price. Recent authorities however (Stack v Dowden, Jones v Kernott) have indicated that in the domestic context resulting trusts are no longer the correct approach to establishing a claim in equity.
Constructive Trusts The Supreme Court in Stack v Dowden in 2007 made clear that for domestic couples, the constructive trust is the method by which the person who is not the legal owner should seek to demonstrate a claim to the property. For a constructive trust to come into existence a common intention to share ownership must be proved, along with the non legal owner acting in reliance to that shared intention
to their detriment. A common intention to share legal ownership can be established through either an express agreement or by inference from the parties’ conduct. The Courts are likely to find express agreement where the legal owner gives their partner an ‘excuse’ as to why the legal ownership is not being shared on the title deeds at all or in joint names. Payment of the mortgage will often be enough to infer a common intention to share, as will financing improvements to the property. However, in general, contributions to household expenses and performing the tasks expected of a ‘good wife’ are unlikely to establish a common intention. Where the amount of the share can be determined by the words or conduct of the parties, then that is the shares that the Courts will attribute. Where it is clear that the parties did not intend an equal sharing ownership, but it is not possible to ascertain by direct evidence or inference what their actual intention was, the Supreme Court answer is that each party is entitled to such share as the Court considers fair. Proprietary Estoppel The doctrine of propriety estoppel can be used to grant a party an interest in a property held in the name of another (Pascoe v Turner and Cobbe v Yeoman’s Row , ). The three essential features that need to be established are (a) an assurance or promise of an interest in the property, (b) reliance on that assurance, and (c) detriment suffered as a result. Having thus established an estoppel, the claimant is entitled to remedial relief. The court must then decide what remedy is appropriate in the circumstances to satisfy the expectation raised by the estoppel. The court can select from a range of remedies, but is guided by the concept that it should award the minimum right or interest necessary to do justice between the parties.
Jones v Kernott In the recent high profile case of Jones v Kernott, the family home was funded primarily by an endowment mortgage taken out in the parties’ joint names. In 1993, after 8 years, Mr Kernott moved out of the home leaving Mrs Jones the responsibility for many years of paying the mortgage and other outgoings on the house as well as raising the children. In 2006 he began proceedings claiming his 50% interest in the property. The lead judgment given by Lady Hale and Lord Walker in the Supreme Court offered the following summary of the position in cases where the parties own the property jointly: (1) The starting point where a home is bought in joint names is that the home is owned jointly in equity also; (2) That presumption may be displaced by evidence that the common intention of the parties was that the property be held differently, either at the time of purchase or formed subsequently;
However, many people would say that law reform is unnecessary. They would argue that it would be enough to improve public information and education about the true legal position to enable individuals to make informed choices. While improved public awareness of the law is essential, recent evidence suggests that this strategy is not sufficient, by itself. Many people think that cohabitants should have access to exactly the same remedies as married couples and civil partners.
Law Reform Commission The suggested definition of 'cohabitees' would apply to those who live together in a 'marriage like' relationship for a continuous period of three or two years where there is a child of the relationship. Such cohabitees are described as 'qualified cohabitees'. The Commission definition excludes couples where one party is married. Property Rights The consultation paper does not recommend that the same property rights be conferred on qualified cohabitees as are given to married persons. Rather, it is recommended that property adjustment orders for qualified cohabitees be legislated for. Such property adjustment orders should only be made in exceptional circumstances where the Court considers it just and equitable to do so having regard to the financial and non-financial contributions made directly or indirectly by either party. Succession Rights As the law currently stands, a cohabitee has no succession rights in the absence of a specific bequest from a partner. The Commission has recommended that a discretionary scheme be established to enable a qualified cohabitee to make an application to Court where he feels that proper provision has not been made. Such applications are currently made to Court on behalf of children of a deceased. Pensions No changes are recommended in relation to private sector pensions. Taxation In light of the current policy of individualisation, there are no recommendations to change. In Conclusion The Commission proposition is for a presumptive scheme of legally recognising cohabitees. There would be no requirement to register the cohabitation and no “opting out” would be available. Reservations have been expressed about conferring rights and obligations on those who have chosen not to marry or to register their union.
Mutual wills Joint wills and mutual wills are closely related terms used in the law of wills to describe two types of testamentary writing that may be executed by a married couple to ensure that their property is disposed of identically. Neither should be confused with mirror wills which means two separate,
identical wills, which may or may not also be mutual wills.
A joint will is a single document executed by more than one person (typically husband and wife), making which has effect in relation to each signatory's property on his or her death (unless he or she revokes (cancels) the will during his or her lifetime). Although a single document, the joint will is a separate distribution of property by each executor (signatory) and will be treated as such on admission to probate. Mutual wills are any two (or more) wills which are mutually binding, such
that following the first death the survivor is constrained in his or her ability to dispose of his or her
property by the agreement he or she made with the deceased. Historically such wills had an important role in ensuring property passed to children of a marriage rather than a widow or widower's spouse on a remarriage.
Although a single document, the joint will is a separate distribution of property by each executor (signatory) and will be treated as such on admission to probate. Mutual wills are any two (or more) wills which are mutually binding, such that following the first death the survivor is constrained in his or her ability to dispose of his or her property by the agreement he or she made with the deceased. Historically such wills had an important role in ensuring property passed to children of a marriage rather than a widow or widower's spouse on a remarriage.
Mutual wills have four basic requirements and a strict standard for enforceability:
- The agreement must be made in a particular form.
- The agreement must be contractual in effect. (Contrast Re Goodchild and Lewis v Cotton
- The agreement must be intended to be irrevocable.
- The surviving party must have intended the will to reflect the agreement.
Mutual wills are rare, and often another form of constructive trust is imposed (See Healey v Browne. It is also noted (see Carnwath J in Re Goodchild) that a mutual will is a technical legal device requiring an intention to form a binding agreement and that this often differs from the "loose moral obligation" presupposed as binding by the layman.
The major common law authority in this area is Re Oldham. This discussed the 18th century case of Dufour v Pereira which first evinced the doctrine, in which Lord Camden remarked "he, that dies first, does by his death carry the agreement on his part into execution". Astbury J in Oldham distinguished mutual wills from mirror wills - that they are made in identical terms "does not go nearly far enough". There must be "an arrangement proved to the satisfaction of the court" and this must be a binding, irrevocable agreement.
In Re Cleaver, Nourse J took a less strict approach in finding that identical wills went towards proving the existence of an agreement, however this approach was rejected in Re Goodchild where Carnwath J stated the importance of having specific evidence as to the testator's mutual intentions at the time of execution of the wills. Carnwath J approved the "floating trust" analogy, first proposed by Dixon J in Birmingham v Renfrew, which holds that the law will give effect to the intention (to create a mutually binding will) by imposing a floating trust which becomes irrevocable after the death of the first testator and crystallises after the death of the second.
In the Court of Appeal decision in Goodchild Legatt LJ approved the dicta of Carnwath J and added that "for the doctrine to apply there must be a contract". This approach raises problems as will be seen below. However, the contractual requirement has been rejected in other decisions, or at least diluted. Dixon J in Birmingham, commenting on Dufour v Pereira, noted that it is the trust arising from the course of conduct which is enforced, not the contract itself. This approach has received further credence in the decision of Blanchard J in Lewis v Cotton. "A formal legal contract is not
needed. A contract made without formality is enough...The crucial factor must be that the terms of the mutual engagement... are sufficiently certain that the Court can see its way to enforce them." The importance of this approach is, as Blanchard J notes, that the focus is on the obligation not to deal with property contrary to the agreement rather than on non-revocation. This therefore covers situations such as that in Healey v Browne where there has been an inter vivos transfer to avoid the will.
conventional sense of deceptive receipt of property. Instead an estoppel argument based on representation, reliance, detriment and irrevocability is utilised.
Re Hagger held that the constructive trust comes into existence on the death of the first testator, however this approach was revised in Re Hobley which decided that it must come into existence before the death of the first testator to satisfy the requirement of certainty of subject matter.
In the case of Ottaway v Norman, Brightman J held that a floating obligation attaches to secret trusts: "A valid trust is created in favour of the secondary donee which is in suspense during the lifetime of the donee, but attaches to the estate of the primary donee at the moment of the latter's death." Edward Nugee QC sitting as deputy High Court judge in Re Basham applied a comparable test in relation to proprietary estoppel. He held that the belief, for detrimental reliance, need not relate to a clearly identified piece of property. Following Cleaver and Birmingham, if it is established by cogent evidence that the intention was to leave the entire estate, proprietary estoppel will enforce that intention. (It is interesting to recall that Edward Nugee was counsel in Ottaway v Norman and that Brightman J adopted his floating obligation theory).
