To create a valid trust, there must be formal validity and essential validity. Formalities for a declaration of trust only arise when there is land involved in the trust, this is governed by s52(1) of the Law of Property Act 1925. In order to have essential validity, there are three certainties required: intention, subject matter and objects. The rule came from the case of Knight v Knight. It is essential to analyse these validities with regards to Hannah’s lifetime trust to decipher whether her provisions can be upheld as a trust.
The first issue raised is that Hannah would like the proceeds from the sale of her vintage dresses to be placed in trust for the benefit of her children. This is an express trust, where the settlor may either declare that he or she holds property on trust for somebody else or that he or she intends to transfer property to somebody else to hold on trust for another. Firstly, it is important to establish whether there is a certainty of intention. In Re Hamilton Lindley LJ said the courts must look at all the words used by the testator or settlor to see if, on their true construction in the context of the particular gift, a trust was intended. The test asks what the actual intentions of the person were, looking at the words as a whole, rather than concentrating on particular words. Hannah uses the words ‘I direct’ and ‘placed in trust’. In Paul v Constance, the Court of Appeal held the parties’ words and conduct demonstrated that he wished for the money to be held in trust. Here, the language used by Hannah shows an obvious intention to create a trust. The next question is whether there is certainty of subject matter, if there is no certainty of subject matter, then there can be no trust. The proceeds from selling the dresses are sufficient to amount to subject matter. Finally, the certainty of objects needs to be considered. The test for certainty of objects was laid down in McPhail v Doulton where Lord Wilberforce in the House of Lords held the test as: ‘Can it be said with certainty that any given individual is or is not a member of the class?’. In this case, it is certain Hannah’s children are members of this class. To summarise, the proceeds from the sale of Hannah’s dresses can be validly held on trust.
The gift one of Hannah’s ‘dresses as keepsake’ obviously satisfies the test for certainty of intention as the word ‘trustees’ is used and certainty of subject matter is the gift of the dresses. The problem is with the certainty of objects. This looks like a gift with a condition precedent attached, as the dresses can only be taken by family or friends. The term ‘any member of my family’ can be reviewed as being conceptually certain. In Re Baden’s Deed Trusts (No 2) ‘Relatives’ were defined by Sachs and Megaw LJ as descendants from a common ancestor; whereas Stamp LJ defined them as the next of kin or nearest blood relations; this definition seems more appropriate as it is easier to identify the class of people whereas Sachs and Megaw LJ’s definition is too wide and therefore makes the class of people conceptually uncertain. Subsequently, In Re Barlow’s Will Trusts a testatrix directed her executor ‘to allow any member of my family and any friends of mine who wish to do so’ to purchase paintings belonging to her. The court held the trust was valid, even though the words ‘family’ and particularly ‘friends’ may have been uncertain. A trust for ‘my friends’ would presumably be considered as conceptually uncertain because there are so many different types of friendship. In Re Barlow’s Will Trusts, Browne Wilkinson J provided some guidance as to the definition of ‘a friend’. He considered the reasonable characteristics of friendship include: a long-standing relationship, which was social, rather than a business or professional, and in which the parties met frequently when they had an opportunity to do so. Therefore, Browne Wilkinson J held that the class of ‘family and friends’ would fail for certainty of objects because ‘friends’ is uncertain, however, this was not a discretionary trust where trustees had to ‘survey the field’ but a case of conditions being attached to ‘individual gifts’. On this basis the term ‘family’ is certain and ‘friends’ can be made so by applying Re Barlow, and the gift of the dresses can be upheld.
The bequest of £1,000,000 to Igor contains certainty of intention due to the use of the words ‘trust’ and ‘benefit’ and the sum of money is the subject matter. Here there is a condition subsequent attached; the money will be held in trust for Igor whilst he remains ‘unmarried’ and ‘faithful’ to Hannah’s memory. A condition subsequent will be valid only if it can be known with certainty, from the start the exact event that will result in the defeat of the beneficiary’s interest. If this cannot be established, the condition will be void. In Clayton v Ramsden, a condition subsequent would have the effect of losing property held on trust if the beneficiary were to marry a ‘person not of the Jewish faith’ was void for uncertainty due to the meaning of being a member of that faith. In Re Tepper’s Will Trusts, the condition subsequent was held as it was to be valid only if it could be determined with certainty what was meant by the ‘Jewish faith’, Scott J accepted that this could be considered conceptually uncertain, as had been concluded in Clayton v Ramsden, but he was willing to regard extrinsic evidence to resolve the uncertainty. Subsequently, in Blathwayt v Lord Cawley a condition subsequent that would result in the forfeiture of a beneficial interest if the beneficiary were to become a Roman Catholic was held to be sufficiently certain. These cases show that the courts appear to be more concerned with respecting the wishes of the settlor or testator by upholding the condition subsequent where possible. To uphold the trust Igor has to remain unmarried which is a very clear term to follow however, the term ‘faithful’ is ambiguous in meaning as Hannah may view the term ‘faithful’ in a different way to someone else. In fact, Igor becoming very close friends with Martha may even be viewed as unfaithful to which the trust will be held void. Therefore, as the term ‘faithful’ is so ambiguous and can hold such different meaning to different people, the term is not conceptually certain the condition will be held void and the trust will fail for uncertainty.
On Igor’s death, the sum of money will be divided between ‘old friends’ or their relatives to which the trustees can distribute in their ‘absolute discretion’. This clearly shows the certainty of intention to create a discretionary trust, the sum of money left over shows certainty of subject matter. For the certainty of objects, it is important to distinguish whether ‘old friends’ is conceptually certain. Emery, C states that an ‘‘Old friend is clearly less imprecise than friend’ however, in Brown v Gould the court held there was no certainty of objects due to a lack of precise definition. Furthermore, the money cannot be distributed under Re Barlow’s Will Trusts as this is a sum of money to be distributed and not individual gifts to take, therefore the trust cannot be upheld.
Hannah wishes to place her three properties on trust for Igor, on his death they will be placed in trust for her children. The intention here is clear: to set up a trust of the houses. The issue is the certainty of subject matter. A problem will only arise if Janice dies before she chooses a house. The facts are similar to Boyce v Boyce, in the Court of Chancery, the Vice Chancellor held that the trust failed because it was uncertain which house Maria would have chosen and which would go to Charlotte. Here, as all of Hannah’s children are alive the trust will be upheld. If Janice dies, then the other children may be able to rely on Burrough v Philcox. In this case, the court construed the will as showing sufficient intention on the part of the Testator, that the gift in favour of the nephews and nieces should take effect. Burrough v Philcox is an example of the court striving to uphold trusts wherever possible. Furthermore, Sachs LJ in Re Baden’s states: ‘If this is due to a tendency to construe deeds and wills so as to give effect to them rather than to invalidate trusts, that is an approach which is certainly in accord with modern thought’. Therefore, even if one of the children were to die, the court may still let the trust take effect.
Finally, Hannah wishes to hold £5,000,000 on trust for any of the ‘wonderful people’ who helped make Riba successful. The certainty of intention is clear as the words ‘hold on trust’ are stated, the £5,000,000 shows certainty of subject matter. However, for certainty of objects, the term ‘wonderful people’ is vague. If Hannah means the 250 people employed were the ‘wonderful people’ that helped with Riba then the trust could be upheld as the test in McPhail v Doulton could be applied. Thus it is open to any of her employees to come forward and show that they’re current employees for Riba. However, the term ‘wonderful people’ could include ex-employees, friends and family too; this makes the trust administratively unworkable. This is where the trust is so impractical that the trustees cannot carry out their duties. In McPhail v Doulton, Lord Wilberforce said that even though a description of beneficiaries complied with the test he had laid down it might be ‘so hopelessly wide as not to form anything like a class’. This principle was applied in R v District Auditor ex parte West Yorkshire Metropolitan County Council where a trust set up for the inhabitants of the County of West Yorkshire, was held for administrative unworkability. Lloyd LJ held that ‘A trust with as many as 2.5million potential beneficiaries is… simply unworkable’. If the court decides that the trust is administratively unworkable then the trust will fail. Moreover, ‘wonderful people’ is far too ambiguous to distinguish itself as a class. Lord Wilberforce’s dictum in McPhail v Doulton held that ‘it must be possible to say of any given person that he or she was or not within the class’. Here it is unclear whether someone was wonderful or not and therefore the trust will be held void for uncertainty of objects.
To conclude, most of Hannah’s provisions can be upheld by a trust or by individual gifts. The proceeds from the sale of Hannah’s dresses will be held in trust for her children as this fulfils all three certainties. Allowing her family and friends to take one of her dresses as keepsake cannot be held on trust due to the words ‘friends’ being conceptually uncertain, but can be seen as individual gifts as shown in Re Barlow’s Will Trust. Where Hannah has placed a condition subsequent on a provision, her wish for Igor to remain unmarried is clear, however, the word ‘faithful’ is too ambiguous and therefore the condition is void and the trust will fail for uncertainty. Whilst the term ‘old friends’ is more certain than ‘friends’, the trust will still be void under Brown v Gould. Hannah’s three properties will be held on trust if all three children are alive after Igor’s death, if not the trust may fail under Boyce v Boyce, but due to Burrough v Philcox the court may still uphold the trust in favour of the other children. Finally, the term ‘wonderful people’ is conceptually uncertain due to the ambiguity and the size of the class this may cover, therefore this provision of the trust will fail.