Certainty of Subject Matter Cases

Subscribe on YouTube (NEW CHANNEL)

I help people navigate the complexities of crypto!

🎓 Simple and digestible information on cryptocurrencies, web3, and beyond.

🎬 One new video every week (I accept requests and reply to everything!)

📚 FREE courses, content, and other exciting giveaways.

Gareth Evans' personal youtube channel

Boyce v Boyce (1849) 60 ER 959

Facts: The testator devised “all my houses” – probably two but the report is ambiguous on this point – on trust to convey one to the eldest daughter Maria (of which she could select which house she wanted) and the other house would go to the other daughter, Charlotte. Maria died before her mother without making a choice as to which house she wanted

Held: The court held that the bequest to Charlotte failed since there could be no certainty as to which house should be held on trust for her → both properties were therefore held on resulting trust for the testator’s heirs, his grandson

Henry v Hammond [1913] 2 KB 515

Facts: The question is whether you can you have a trust over part of the money in a bank account or is it that trust money mixed in an account with non-trust money is fatal to the formation of a trust?

Held: In this case, the high court said that if the 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)

  • Court said if a person receives money and bound to keep it in a separate bank account “then he is a trustee of that money”, if he is not bound to keep the money separate then “he is not a trustee of the money, but merely a debtor”

Hunter v Moss [1994] 3 All ER 215

Facts: An employer agreed to give 50 of his 950 shares to the finance director. The employer did no transfer the shares nor were any attempts made to identify those shares which were to be subject to the arrangement. An issue arose as to whether or not the finance director could assert a proprietary right over the 50 shares

  • If we were to apply the rule in Re Goldcorp to these facts, there would have been no valid trust over the shares because it would be impossible to know which 50 shares out of the total holding of 950 shares were to be held on trust

Held: It was held that a trust over the shares had been formed (so a different approach was taken from that set out in Goldcorp and held there was a valid trust here)

  • In essence, the Court of Appeal appeared to hold that it was not necessary to segregate the property comprising the trust fund if the property was intangible property, like ordinary shares, with each unit being indistinguishable from another unit

Dillon LJ justified the theoretical possibility of creating trust rights over a collection of identical property by cross-referring the rights of the claimant in this case with the position of the executor on a testator’s death

  • His Lordship explained that on the testator’s death, the executor is required to distribute the property between the legatees, even if the testator had not indicated which beneficiary was required to acquire interests in which property; rather, it was argued that the executor is required to divide the general fund of property between the legatees
  • This line of argument has faced strong criticism → one objection is that an executor occupies a very different position from an inter vivos trustee

McJordan Construction Ltd v Brookmount Erostin Ltd [1992] BCLC 350

Facts: In this case, a claim arose as to a trust over a bank account. Under the terms of a construction contract periodic payments were to be made to a sub-contractor. The amounts of money had been paid into one large bank account during the performance of the construction contract, but the periodic payments to the sub-contractor had not been segregated from other amounts held in that account

It was argued on behalf of the sub-contractor that money owed to it ought to have been deemed to have been held on trust for it

Held: For the formation of a valid trust over those moneys, it would have been necessary to segregate any money which was to be held on trust from other money in the bank account by paying that money into a new bank account

  • Therefore, a trust over intangible property in the form of money in a bank account would require segregation before it could be made subject to a trust

Palmer v Simmons (1854) 2 Drew. 221

Facts: A testatrix left “the bulk of her estate” on certain trusts

Held: It was held that the subject matter of this trust was too uncertain by dint of the vagueness of the expression “the bulk”

  • However, a trust of all of the residue of an estate – the remaining property when all debts have been paid, money owed called in, tax paid and specific bequests made - will not fail for uncertainty of subjects → this is sufficiently certain!

Re Farepak Food and Gifts Ltd [2006] EWHC 3272 (Ch)

Facts: Thousands of low income families participated in a Christmas fund whereby they contributed a few pounds each month throughout the calendar year so they would have saved up a large amount by November to spend on Christmas presents, festive foodstuffs, and so on → these families would pay the money to an agent who would put the money into Farepak’s (FFG) accounts

  • The Christmas fund was therefore a pool of shared money contributed by the various customers, and was managed by FFG

Held: FFG’s directors ceased trading on 11 Oct 2006 after running into financial issues

Before its insolvency, attempts were made to create a new bank account into which any further customer contributions to the Christmas fund would be paid so as to keep those further contributions separate from the other assets of FFG → So, any money received on or after the 11 October was to be held on trust for the customers

  • The principal question was whether or not these funds were to be deemed to be held on trust for the customers who contributed to them

The Court had to decide whether or not there was sufficient certainty of subject matter i.e. whether or not it was sufficiently clear which customers’ money was paid into the Christmas fund after the administration began

  • So it was not clear when money was received before the date of the trust and when money was received after the date of the trust

If the customer paid before 11 Oct (i.e. before the date of the trust) the customer is merely an unsecured creditor with no proprietary interest, so will have to join the other creditors and hope for a distribution when the company is liquidated

Those who paid their money after the 11th October would, if the trust had been formed, be beneficiaries of the trust declared → and they would get their money back

The problem was determining when the company received the cash

  • As there were agents working on behalf of FFG, the money was legally paid to the principal (FFG) when the agent received the money
  • So if the agent went around on 10th October to collect money the company would have received it on the 10th October → so that person would be a debtor
  • If someone paid directly to the company by bank transfer on 11th October that person would be a beneficiary
  • So if an agent who received money on 10th paid it to FFG on the 11th that person would have been a debtor!
  • Because of the issue of disentangling which customers had paid on which date that the trust failed → it was impossible to tell which property was a debt (money paid to agent before 11th Oct and paid in after the 11th Oct) and who was a beneficiary (money received and paid after 11th Oct)

The Art of Getting a First in Law - ONLY £4.99

FOOL-PROOF methods of obtaining top grades

SECRETS your professors won't tell you and your peers don't know

INSIDER TIPS and tricks so you can spend less time studying and land the perfect job

We work really hard to provide you with incredible law notes for free...

The proceeds of this eBook helps us to run the site and keep the service FREE!

CONTENT

Re Golay's Will Trusts [1965] 1 WLR 969

Facts: In this case it was held that a provision that a ‘reasonable income’ be provided out of a fund could be held to be valid if one could make an objective measurement of what would constitute a reasonable income in any particular case

Held: So, although leaving ‘reasonable income’ does seem vague and uncertain, the court here held it to be sufficiently certain

  • They did this partly because if they didn't English law would fall apart → the court always talks about things being reasonable (e.g. the reasonable man, reasonable force etc.) where they have accepted it as having a valid and certain meaning

Re Goldcorp Exchange Ltd [1995] 1 AC 74

Facts: Customers of the exchange entered into contracts that required the exchange to acquire bullion for their customers and to hold the total amount of their order in their vaults. According to the terms of their contracts the customers should have been very happy with the arrangements; because the exchange was required to buy and to hold the total amount of their customers’ orders, it would (in theory) have been possible for the customers to know that the whole of their order and the whole of every customer’s orders were held physically by the exchange in its vault so that there could have been no question of the exchange failing to satisfy an order

Those contracts purported to create proprietary obligations in favour of the customers over the bullion that the exchange was required to acquire on their behalf. Unfortunately, the exchange broke its contracts → it only acquired enough bullion to meet the usual requirements of its customers on any working day and did not hold the entirety of the customers’ orders

When Goldcorp went into liquidation, the customers claimed that the bullion was being held for them on trust.

Held: 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

  • Those customers who could not demonstrate that their orders had been segregated from the general store of bullion could not demonstrate that they were bens under a trust because the subject matter of that trust was uncertain

Re Harvard Securities (Holland v Newbury) [1997] 2 BCLC 369

Facts: This case appears to have applied the rule drawn from the Court of Appeal in Hunter v Moss: A dealer in financial securities held securities as nominee for his clients. While the terms of the contracts suggested that the dealer held the securities on bare trust for each of his clients, the securities were not numbered and were not separated. In consequence, none of the clients were able to identify which securities were held on bare trust for which client

Held: Neuberger distinguished Re Wait, Re London Wine and Re Goldcorp on the basis that those cases concerned chattels and considered himself obliged by the doctrine of precedent to apply Hunter v Moss because that case similarly concerned intangible securities

  • It was therefore held that the trusts were not invalid for uncertainty of subject matter because the securities were intangible property and therefore did not require segregation
  • This means that in English law Hunter v Moss remains good law!

Re London Wine Co. [1986] PCC 121

Facts: A wine merchant bought and held wine for clients to their order. The stock of wine was held together without distinguishing which particular bottles were held for which client. The wine merchant company went into liquidation and the claimants argued that the wine they had ordered from the shipper was held on trust for them under the terms of their contracts. However, the creditors said it belonged to the company and was part of the company’s assets in insolvency

Held: There could not be a valid trust because the claimants could not identify which wine was held for them out of the general store

  • It would have been necessary for the claimant’s wine to be segregated: that is, to be separately identifiable from the general stock of wine

Sprange v Barnard (1789) 2 Bro.C.C. 585

Facts: A testatrix provided that property would be left to her husband to use absolutely but that “the remaining part of what is left, that he does not want for his own wants and use” was to be held on defined trusts

Held: This statement was too uncertain for the trust to take effect over any part of the property because the property was not sufficiently clearly identified by the expression “the remaining part of what is left”

White v Shortall [2006] NSWSC 1379

Facts: A single trust took effect over the entire holding of 1.5 million shares such that the trustees had the power to elect which 222,000 shares out of that entire shareholding were to be treated as being held for the claimant.

Held: This avoided the problem of certainty of subject matter because the trust took effect over the identified fund of 1.5 million shares, but there was no need to segregate out 222,000 shares under a separate trust if the trustees were to have a power to split off that number of shares from the valid trust fund: therefore, the claimant had an equitable interest in the large trust equal to 222,000 shares and the defendant was deemed to have an equitable interest equal to the remaining shares

  • In effect, the claimant and the defemdamt were treated as being beneficiaries under one trust in the ratio 1,500:222

Law Application Masterclass - ONLY £9.99

Learn how to effortlessly land vacation schemes, training contracts, and pupillages by making your law applications awesome. This eBook is constructed by lawyers and recruiters from the world's leading law firms and barristers' chambers.

✅ 60+ page eBook

✅ Research Methods, Success Secrets, Tips, Tricks, and more!

✅ Help keep Digestible Notes FREE

Course on the art of learning effectively, a reading masterclass