Soton Equity and Trusts - alastairhudson.com

Topic 1. CERTAINTY OF INTENTION AND
CERTAINTY OF SUBJECT
MATTER
General reading: Hudson, chapter 3; Martin 98-106; Pettit 47-
58
The need for the three certainties
Reading: Hudson, sections 3.1 and 3.2
Wright v. Atkyns (1823) Turn. & R. 143, 157, per Lord Eldon: “...first...the words
must be imperative...; secondly...the subject must be certain...; and thirdly...the object
must be as certain as the subject"
Knight v Knight (1840) 3 Beav 148
(A) CERTAINTY OF INTENTION.
Reading: Hudson, section 3.3, and also 2.6; Martin 98-
101; Pettit 47-50
Question: When a person seeks to create a trust (the settlor) in what ways must that person’s
intention be manifested?
(1) The core principle: an intention to create a trust can be inferred from the
circumstances
Reading: Hudson, section 3.3.1
**Paul v Constance [1977] 1 W.L.R. 527
**Re Kayford [1975] 1 WLR 279, Megarry J:
“The sender may create a trust by using appropriate words when he sends
the money (though I wonder how many do this, even if they are equity
lawyers), or the company may do it by taking suitable steps on or before
receiving the money. If either is done, the obligations in respect of the
money are transformed from contract to property, from debt to trust.
Payment into a separate bank account is a useful (though by no means
conclusive) indication of an intention to create a trust, but of course there is
nothing to prevent the company from binding itself by a trust even if there
are no effective banking arrangements.”
Twinsectra Ltd v Yardley [2002] UKHL 12 at [71], [2002] 2 All ER 377 at [71],
[2002] 2 AC 164:
'A settlor must, of course, possess the necessary intention to create a trust,
but his subjective intentions are irrelevant. If he enters into arrangements
which have the effect of creating a trust, it is not necessary that he should
appreciate that they do so; it is sufficient that he intends to enter into them.'
Don King Productions v. Warren [1998] 2 All E.R. 608 (an example of how the court may
have to infer the intention to create a trust even in complex commercial cases)
Re Farepak Food and Gifts Ltd [2006] All ER (D) 265 (Dec) (an anomalous decision of
Mann J which was per incuriam Re Kayford and which sought to rely on Quistclose trust)
*Annabel’s (Berkley Square) Ltd v Revenue and Customs Commissioners [2009]
EWCA Civ 361, [2009] 4 All ER 55 (tronc system for restaurant wait staff = trust in favour of
staff, held by troncmaster as trustee)
Byrnes v Kendle [2011] HCA 26, 14 ITELR 299 (use of the word “trust” usually suggests a
trust – here husband disingenuously seeking to argue that when he had used word “trust” it had not
meant trust)
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