⇒ In order for a trust to be formed, there must be certainty as to which property is, and which is not, covered by the trust.
⇒ The underlying principle is that a trust, to be valid, must be enforceable. If there is uncertainty as to the property held on trust, then a court cannot enforce the settlor's wishes or the trustees' obligations.
⇒ Where the property is expressed in vague or uncertain terms, the trust will generally be held to be invalid.
⇒ In Sprange v Barnard (1789) property was not sufficiently clearly identified by the expression “the remaining part of what is left”. Thus, there was uncertainty of subject matter so no trust took effect
⇒ In Palmer v Simmons (1854) a testatrix left “the bulk of her estate” on certain trusts. It was held that the subject matter of this trust was too uncertain by dint of the vagueness of the expression “the bulk”
⇒ In Re Golay's Will Trusts [1965] it was held that a provision that a ‘reasonable income’ be provided out of a fund could be held to be valid
⇒ In other cases, the uncertainty arises from other considerations: usually, when it is not possible to say which property is the subject matter of the trust.
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⇒ In Re London Wine Co. [1986] it was held that there could not be a valid trust because the claimants could not identify which wine was held for them out of the general store
⇒ In Re Goldcorp Exchange Ltd [1995] it was held that only those customers who could prove that their order of bullion was in fact held separately from the general store of bullion would be entitled to enforce a trust against the exchange and consequently be able to take their bullion orders away as secured creditors
⇒ In general terms there is no reason why the orthodox approach considered above should not apply equally to intangible property as to tangible property
⇒ The principle in Re London Wine Co. [1986] was also applied by the Court og Appeal in the following case:
⇒ This is controversial with conflicting cases...
⇒ In Henry v Hammond [1913] the high court said that if trust money is placed in a separate account there will be a trust, but if it is mixed in it cannot be a trust (Channel J)
⇒ Megarry J in Re Kayford [1975]: “In Re Nanwa Gold Mines Ltd the money was sent on the faith of a promise to keep it in a separate account, but there is nothing in that case or in any other authority that I know of to suggest that this is essential.”
⇒ Hunter v Moss (High Court) [1993]: this case said a separate bank account is not required. Colin Rimer QC said he “can see no reason in principle why” it is necessary to have money kept in a separate bank account for a trust to form over it
⇒ Westdeutsche Landesbank v Islington LBC [1996]: this is the usual authority and is an important judgment. It says trust money must be kept in a separate bank account to set up a trust (as per Lord Browne-Wilkinson)
⇒ Re Lehman Brothers International [2012]: However, Lord Collins in this case (a more recent case in the Supreme Court) provided contradictory authority stating "there is no doubt that money in a mixed fund may be held on trust, and that a trust of money can be created without an obligation to keep it in a separate account"
⇒ The position appears to be that, if a person receives money on trust, they are bound to keep the money in a separate bank account. If the terms of the agreement under which the money is received allow the recipient to mix the money with their own, this is inconsistent with (but not necessarily fatal to?) an intention the money is held on trust.
⇒ Also see the case of Re Farepak Food and Gifts Ltd [2006]
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